Final Results

RNS Number : 9531C

Lowland Investment Co PLC

23 November 2009

 



LOWLAND INVESTMENT COMPANY PLC

Annual Financial Report for the year ended 30 September 2009

23 November 2009

This announcement contains regulated information

Key Data (per ordinary share)	Year ended 30 September 2009	Year ended 30 September 2008	Change %
Net asset value per ordinary share#	657.3p	675.4p	-2.7
Share price#	610.0p	625.0p	-2.4
Net revenue return	22.7p	33.0p	-31.2
Total return/(loss)	8.4p	(344.4p)
First interim dividend	10.0p	10.0p
Second Interim/Final dividend	16.5p	16.5p
Gearing*	11.7%	15.8%
Total expense ratio (excluding VAT write back) **	0.83%	0.74%

    #   Excluding reinvested income.

    *   Defined here as investments less short dated gilts as a percentage of equity shareholders funds minus 100.

    ** Defined here as total management and administrative expenses, as a percentage of the average shareholders' funds over the year.

Performance	1 year %	5 years %	10 years %
Net asset value total return(1)	4.7	27.4	88.1
Share price total return(1)	3.5	21.9	106.4
Peer group net asset value total return(2)	8.4	29.5	33.1
FTSE All-Share Index (total return)(3)	10.8	38.4	28.5

    (1)    Source:  AIC Information Services Ltd (net income reinvested).

    (2)    Source: AIC Information Services Ltd.  The performance of a group of leading investment trust     competitors (arithmetic average).

    (3)    Source:  AIC Information Services Ltd (gross income reinvested).

MANAGEMENT REPORT

Commenting on the results Chairman, John Hancox, said:

During the year ended 30 September 2009, Lowland's net assets per share fell by 2.7%, the revenue return per share fell by 31.2%. Total dividend payments, at 26.5p, will be the same as last year.

Performance for the year to 30 September 2009 

Net Asset Value Total Return

Over the year the Company's Net Asset Value (NAV) total return was 4.7% compared with the total return of 10.8% for the FTSE All-Share. The disappointing overall performance was the result of two very different six month periods: in the first six months, to 31 March 2009, Lowland had a negative total return NAV of 36.0% compared with a negative total return of 18.3% for the FTSE All-Share, whilst in the second six months, to 30 September 2009, Lowland had a positive total return NAV of 63.6%, compared with a positive total return of 35.7% for the FTSE All-Share. The shares of the economically sensitive and smaller companies in the portfolio, which were the worst performers in the first half, were those most responsible for the recovery in the second half. Some  of  these  shares had been sold down, in a general panic by investors, to  substantially  undervalued  levels in the first half of the year. The Portfolio 

Manager remains of the view that the stocks held still offer very good value in spite of their partial recovery.

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Chairman's comments (continued)

Earnings and Dividends

The total dividend for the year has been kept at last year's level of 26.5p, comprising a first interim dividend of 10.0p per share followed by a second interim dividend of 16.5p per share. The revenue return per share was 22.7p which is down from last year's 33.0p. Both years benefited from a VAT reclaim (including interest) from HMRC of £831,000 in 2008 and £778,000 in 2009. The fall in underlying earnings is the result of dividend cuts by some of the stocks held in our portfolio. The Portfolio Manager's view is that most of the cuts in dividends from the holdings in our portfolio have now happened and that underlying dividend growth for the market will resume during 2010. This gives the Board confidence that the revenue reserve can be used to maintain the dividend. The revenue reserve has been built up in recent years in order that dividends can be at least maintained during poor years. In the previous two years, £2.3m and £1.7m respectively were added to the revenue reserve. The total revenue reserve is now £8.4m, which compares with the cost of last year's dividend of £7.0m. The dividend per share has never been reduced. 

The second interim dividend will be paid on 22 December 2009 to shareholders on the register at 4 December 2009. The AGM will be held on 22 January 2010, which is after the payment day of the dividend. This means it is designated a second interim dividend rather than a final dividend. The Board decided to maintain the same dividend payment date, despite moving the AGM to a later date, in order to provide more time for the preparation of the Annual Report and Financial Statements. This is likely to be the practice in the future.

Expenses

The total expense ratio (TER), which is the investment management fee and other non-interest expenses as a percentage of shareholders' funds, was 0.83%. This is competitive compared with other investment trusts and with other actively managed equity funds.

Investment Report

Lowland had a difficult period when the stock market fell. The biases within the portfolio of a large weighting to medium and smaller companies, as well as to higher yielding stocks, were detrimental to performance during the year. However, over the longer term, the Trust has outperformed its benchmark. These structural biases have aided the performance over the long term and this is expected to be the case in the future. There is greater scope for the Portfolio Manager to find bargains as he is looking for value across UK companies of all sizes, rather than being restricted to focusing only on large or small companies. The list of high-yielding large companies is a relatively short one, forcing managers restricted to investing only in large companies to have substantial holdings in a limited number of sectors. The flexibility to invest in any size of company allows the Portfolio Manager greater scope to diversify the portfolio by having more holdings and greater sectoral spread. We will continue to adopt this investment approach, which we believe will serve us well in the future.

Borrowings

During the year, gearing was reduced mainly as a result of selling the holdings in HBOS, Lloyds and Royal Bank of Scotland. These companies will not be paying a dividend in the coming year. Since the period end, a new facility of £32 million has been negotiated to replace our existing facility of £20 million. This will allow the Portfolio Manager to increase gearing when there are good investment opportunities and give flexibility in the repayment of the 11.25% debenture when it matures on 1 July 2010.

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Chairman's comments (continued)

The Board

We are delighted that Kevin Carter agreed to join the Board from 1 October 2009. He is a director of Murray International Trust Plc, Legal and General Investment Management (Holdings) Ltd and is Chairman of the Investment Committee of JP Morgan Pension Trustees Ltd. He brings a wealth of experience which will complement the balance of the Board. 

Michael Moule is to retire from the Board at the AGM. Michael has made an immense contribution to the Company as a director over the past 12 years. We will miss his incisive and original thoughts on investment matters and his extensive knowledge and experience of the investment trust industry.

Annual General Meeting

At the Annual General Meeting on 22 January 2010, one of the items of special business to be put to the shareholders is a special resolution to adopt new articles of association, primarily to reflect the implementation of the Shareholder Rights Directive in the UK in August 2009 and the remaining provisions of the Companies Act 2006 in October 2009.  Further details on this and the other items of special business are contained in the Annual Report and Financial Statements and an explanation of the main changes between the proposed and new articles of association is set out as an Appendix to the Notice of the Annual General Meeting which can also be found in the Annual Report and Financial Statements.  As usual our Portfolio Manager, James Henderson, will be making a presentation and all shareholders are most welcome to attend.

Outlook

The UK economy is facing several major problems, which include a ballooning budget deficit and high unemployment. However, Lowland is holding individual companies that are competitive, sound businesses in their own right: it is not a proxy for the UK economy. The depreciation of sterling and determined cost cutting has positioned many of these companies to come through this turbulent economic period with their profitability and balance sheets largely intact. The Portfolio Manager believes that the progression of their earnings as the global economy expands will positively surprise investors. For this reason the Board and your Portfolio Manager believe that the future should be rewarding for Lowland shareholders.

John Hancox
Chairman

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PRINCIPAL RISKS AND UNCERTAINTIES

With the assistance of the Investment Manager, the Board has drawn up a Risk Matrix, which identifies the key risks to the Company. These key risks fall broadly under the following categories:

● Investment and Strategy

An inappropriate investment strategy, for example, in terms of asset allocation or level of gearing, may result in underperformance against the Company's benchmark index and the companies in its peer group, and also in the Company's shares trading on a wider discount. The Board manages these risks by ensuring a diversification of investments and a regular review of the extent of borrowings. The Investment Manager operates in accordance with investment limits and restrictions and policy determined by the Board, which includes limits on the extent to which borrowings may be employed. The Board reviews the limits and restrictions on a regular basis and the Investment Manager confirms adherence to them every month. The Investment Manager provides the Board with management information, including performance data and reports and shareholder analyses. The directors monitor the implementation and results of the investment process with the Portfolio Manager at each Board meeting and monitor risk factors in respect of the portfolio. Investment strategy is reviewed at each meeting.

● Market

Market risk arises from uncertainty about the future prices of the Company's investments. 

● Accounting, legal and regulatory

In order to qualify as an investment trust, the Company must comply with section 842 of the Income and Corporation Taxes Act 1988 ("s.842"). A breach of s.842 could result in the Company losing investment trust status and, as a consequence, realised gains in the Company's portfolio would be subject to Corporation Tax. The s.842 criteria are monitored by the Investment Manager and the results are reported at each Board meeting. 

The Company must comply with the provisions of the Companies Act and, since its shares are listed on the London Stock Exchange, the UKLA's Listing and Disclosure Rules. A breach of the Companies Act could result in the Company and/or the Directors being fined or the subject of criminal proceedings. A breach of the UKLA Rules could result in the suspension of the Company's shares; which in turn would breach s.842. The Board relies on its Company Secretary and advisers to ensure adherence to the Companies Act and UKLA Rules. 

● Operational

Disruption to, or the failure of, the Investment Manager's accounting, dealing or payment systems or the Custodian's records could prevent the accurate reporting or monitoring of the Company's financial position. The Investment Manager contracts some of the operational functions (principally those relating to trade processing, investment administration and accounting), to BNP Paribas Securities Services. 

Details of how the Board monitors the services provided by the Investment Manager and other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls section in the Annual Report and Financial Statements. 

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PRINCIPAL RISKS AND UNCERTAINTIES (continued)

● Financial

The financial risks faced by the Company include market price risk, interest rate risk, liquidity risk and credit risk. Details of these risks and how they are managed are disclosed in the Annual Report and Financial Statements.

RELATED PARTY TRANSACTIONS

Investment management, accounting, company secretarial and administration services are provided to the Company by wholly-owned subsidiary companies of Henderson Global Investors (Holdings) plc ("Henderson" or the "Investment Manager"). This is the only related party arrangement currently in place. Other than fees payable by the Company in the ordinary course of business, there have been no material transactions with this related party affecting the financial position or performance of the Company during the year under review.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

In accordance with Disclosure and Transparency Rule 4.1.12, each of the directors, confirms that,  to the best of their knowledge:

•    the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted
     Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of
     the assets, liabilities, financial position and profit of the Company; and

•    the Directors' Report in this Annual Report includes a fair review of the development and performance of the
      business and the position of the Company, together with a description of the principal risks and uncertainties
      that it faces.

For and on behalf of the Board

John Hancox

Chairman

23 November 2009

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Audited Income Statement

for the year ended 30 September 2009

	Year ended 30 September 2009			Year ended 30 September 2008
	Revenue Return £'000	Capital Return £'000	Total £'000	Revenue Return  £'000	Capital Return £'000	Total £'000
Losses on investments held at fair value through profit or loss	-	(3,764)	(3,764)	-	(99,709)	(99,709)
Income from investments (Note 2)	7,402	-	7,402	11,974	-	11,974
Other interest receivable and similar income (Note 3)	362	-	362	352	-	352
Interest on VAT refunds (Note 3)	371	-	371	-	-	-
	---------	---------	---------	---------	---------	---------
Gross revenue and capital losses	8,135	(3,764)	4,371	12,326	(99,709)	(87,383)
Management fee	(1,030)	-	(1,030)	(1,319)	-	(1,319)
Write back of prior-years' VAT	407	-	407	831	-	831
Other administrative expenses	(423)	-	(423)	(357)	-	(357)
	---------	---------	---------	---------	---------	---------
Net return/(loss) on ordinary activities before finance charges and taxation	7,089	(3,764)	3,325	11,481	(99,709)	(88,228)
Finance charges	(1,083)	-	(1,083)	(2,700)	-	(2,700)
	---------	---------	---------	---------	---------	---------
Net return/(loss) on ordinary activities before taxation	6,006	(3,764)	2,242	8,781	(99,709)	(90,928)
Taxation on net return/(loss) on ordinary activities	(19)	-	(19)	(57)	-	(57)
	---------	---------	---------	---------	---------	---------
Net return/(loss) on ordinary activities after taxation	5,987	(3,764)	2,223	8,724	(99,709)	(90,985)
	=====	=====	=====	=====	=====	=====
Return/(loss) per ordinary share  - basic and diluted (Note 4)	22.7p	(14.3p)	8.4p	33.0p	(377.4p)	(344.4p)
	=====	=====	=====	=====	=====	=====

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. 

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Reconciliation of Movements in Shareholders' Funds

for the years ended 30 September 2009 and 30 September 2008

Year ended 30 September 2009	Called up  share  capital  £'000	Share  premium  account £'000	Capital  redemption  reserve £'000	Other  capital  reserves £'000	Revenue  reserve £'000	Total £'000
At 30 September 2008	6,604	53,561	1,007	107,833	9,406	178,411
Net (loss)/return on ordinary  activities after taxation	-	-	-	(3,764)	5,987	2,223
Final dividend (16.5p) for the year ended 30 September 2008 paid 22 December 2008 (Note 5)	-	-	-	-	(4,359)	(4,359)
Interim dividend (10.0p) for the year ended 30 September 2009 paid 19 June 2009 (Note 5)	-	-	-	-	(2,642)	(2,642)
	---------	---------	---------	---------	---------	---------
At 30 September 2009	6,604	53,561	1,007	104,069	8,392	173,633
	=====	=====	=====	=====	=====	=====
Year ended 30 September 2008	Called up  share  capital £'000	Share  premium  account £'000	Capital  redemption  reserve £'000	Other  capital  reserves £'000	Revenue  reserve £'000	Total £'000
At 30 September 2007	6,604	53,561	1,007	207,542	7,154	275,868
Net (loss)/ return on ordinary activities after taxation	-	-	-	(99,709)	8,724	(90,985)
Final dividend (14.5p) for the year ended 30 September 2007  paid 21 December 2007  (Note 5)	-	-	-	-	(3,830)	(3,830)
Interim dividend (10.0p) for the year ended 30 September 2008 paid 20 June 2008  (Note 5)	-	-	-	-	(2,642)	(2,642)
	---------	---------	---------	---------	---------	---------
At 30 September 2008	6,604	53,561	1,007	107,833	9,406	178,411
	=====	=====	=====	=====	=====	=====

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Audited Balance Sheet

at 30 September 2009

	2009 £'000	2008 £'000
Investments held at fair value through profit or loss
Listed at market value in the United Kingdom	174,949	184,265
Quoted at market value on AIM	14,028	15,551
Listed at market value overseas	3,687	3,690
Unquoted	1,276	3,111
	-----------	---------
	193,940	206,617
	-----------	---------
Current assets
Debtors	1,357	5,279
Cash at bank	2,334	1,116
	-----------	---------
	3,691	6,395
Creditors: amounts falling due within one year	(23,998)	(28,601)
	-----------	-----------
Net current liabilities	(20,307)	(22,206)
	-----------	-----------
Total assets less current liabilities	173,633	184,411
Creditors: amounts falling due after more than one year	-	(6,000)
	-----------	-----------
Total net assets	173,633	178,411
	======	======
Capital and reserves
Called up share capital	6,604	6,604
Share premium account	53,561	53,561
Capital redemption reserve	1,007	1,007
Other capital reserves	104,069	107,833
Revenue reserve	8,392	9,406
	-----------	-----------
Shareholders' funds	173,633	178,411
	======	======
Net asset value per ordinary share (Note 7)	657.3p	675.4p
	======	======

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Audited Cash Flow Statement

for the year ended 30 September 2009

	2009 £'000	2009 £'000	2008 £'000	2008 £'000
Net cash inflow from operating activities		8,074		10,307
Servicing of finance
Interest paid	(1,021)		(2,687)
	----------		---------
Net cash outflow from servicing of finance		(1,021)		(2,687)
Taxation
Overseas withholding tax recovered	-		5
	----------		---------
Net tax recovered		-		5
Financial investment
Purchase of investments	(45,959)		(88,718)
Sales of investments	57,678		74,802
	----------		-----------
Net cash inflow/(outflow) from financial investment		11,719		(13,916)
Equity dividends paid		(7,001)		(6,472)
		----------		---------
Net cash inflow/(outflow) before financing activities		11,771		(12,763)
Financing
Net loans (repaid)/drawn down	(10,586)		14,069
	-----------		-----------
		(10,586)		14,069
		----------		----------
Increase in cash		1,185		1,306
		----------		----------
Reconciliation of net cash flow to movement  in net debt
Increase in cash as above		1,185		1,306
Net cash outflow/(inflow) from movement in loans		10,586		(14,069)
Exchange movements		33		(16)
		---------		----------
Movement in net debt		11,804		(12,779)
Net debt at 1 October		(32,470)		(19,691)
		----------		-----------
Net debt at 30 September		(20,666)		(32,470)
		======		======

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Notes to the Accounts:

1.	Accounting policies
	The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting, as modified to include the revaluation of investments. The financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice and with the Statement of Recommended Practice ("the SORP") for investment trusts issued by the Association of Investment Companies ("the AIC") in January 2009. All of the Company's operations are of a continuing nature. The Company's accounting policies are consistent with the prior year.
2.	Income from investments		2009 £'000		2008 £'000
	UK dividends
	Quoted investments		6,700		10,206
	Unquoted		41		43
			--------		-------
			6,741		10,249
	Non UK dividends
	Overseas dividend income		317		1,194
	Stock dividends		24		180
	Property income dividends		210		214
	Interest income		110		137
			--------		--------
			7,402		11,974
			=====		=====
3.	Other interest receivable and similar income		2009 £'000		2008 £'000
	Deposit interest		11		22
	Stock lending fees		55		273
	Income from underwriting		296		57
			-------		-------
			362		352
	Interest on VAT refunds		371		-
			--------		--------
			733		352
			=====		=====
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 £2,223,000 (2008: loss of £90,985,000) and on 26,417,427 ordinary shares (2008: 26,417,427) 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:
		2009 £'000		2008 £'000
	Net revenue return	5,987		8,724
	Net capital loss	(3,764)		(99,709)
		---------		---------
	Net total return/(loss)	2,223		(90,985)
		=====		=====
	Weighted average number of ordinary shares in issue during the year	26,417,427		26,417,427
	Revenue return per ordinary share	22.7p		33.0p
	Capital loss per ordinary share	(14.3p)		(377.4p)
		--------		--------
	Total return/(loss) per ordinary share	8.4p		(344.4p)
		=====		=====
	The Company does not have any dilutive securities, therefore basic and diluted returns per share are the same.

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Notes to the Accounts (continued):

5.	Dividends paid and payable on the ordinary shares
	Dividends on ordinary shares	Record Date		Payment Date		2009 £'000	2008 £'000
	Final dividend (14.5p)  for the year ended 30 September 2007	14 November 2007		21 December 2007		-	3,830
	Interim dividend (10.0p) for the year ended 30 September 2008	21 May 2008		20 June 2008		-	2,642
	Final dividend (16.5p) for the year ended 30 September 2008	19 November 2008		22 December 2008		4,359	-
	First interim dividend (10.0p) for the year   ended 30 September 2009	27 May 2009		19 June 2009		2,642	-
						--------	-------
						7,001 =====	6,472 ====
	The second interim dividend has not been included as a liability in these financial statements. The total dividends  payable in respect of the financial year, which forms the basis of one of the retention test under Section 842 of the  Income and Corporation Taxes Act 1988, are set out below.
					2009 £'000
	Revenue available for distribution by way of dividend for the year				5,987
	First interim dividend (10.0p) for the year ended 30 September 2009				(2,642)
	Second interim dividend (16.5p) for the year ended 30 September 2009 (based on 26,417,427 ordinary shares in issue at 23 November 2009)				(4,359)
					----------
	Undistributed revenue for section 842 purposes*				(1,014)
					======
	* All current year revenue after tax has been distributed. The shortfall of £1,014,000 has been funded    from the revenue reserve.
6.	Called up share capital		2009 £'000		2008 £'000
	Allotted, issued and fully paid
	26,417,427 (2008: 26,417,427) ordinary shares of 25p each		6,604		6,604
			======		======
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 £173,633,000 (2008: £178,411,000) and on 26,417,427 (2008: 26,417,427) shares in issue on 30 September 2009. An alternative net asset value per ordinary share can be calculated by deducting from the total assets less current liabilities of the Company the debenture stock at market (or fair) value rather than at par (or book) value. The net asset value per ordinary share at 30 September 2009 calculated on this basis was 655.5p (2008: 672.9p) The movements during the year of the assets attributable to the ordinary shares were as follows:
					2009 £'000
	Total net assets at 1 October 2008				178,411
	Total net return on ordinary activities after taxation				2,223
	Dividends paid in the year: Ordinary shares				(7,001)
					----------
	Net assets attributable to the ordinary shares at 30 September 2009				173,633
					======

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Notes to the Accounts (continued):

8.	VAT on Management Fees
	In 2004 the Association of Investment Companies (the "AIC"), together with JPMorgan Claverhouse Investment Trust plc, launched a case against HM Revenue & Customs ("HMRC") to challenge whether Value Added Tax ("VAT") should be charged on fees paid for management services provided to investment trust companies. On 28 June 2007 the European Court of Justice delivered its judgement on the case in favour of the AIC. Since then, HMRC has accepted that the provision of investment management services to investment trust companies is VAT exempt and has acknowledged its liability to pay claims in respect of VAT borne by investment companies.   An estimate of the VAT borne by the Company on investment management fees invoiced in the period from 1 October 2000 to 30 June 2007 was written back in the prior year, in accordance with an agreement reached between the Investment Manager and the Company. An amount of £831,000 was recognised in 2008 and £926,000 was received by the Company in February 2009. Consequently, a further write-back of £95,000 has been recognised in 2009. The Company has also been able to recover further amounts in respect of the VAT charged on investment management fees in the period from 1 January 1990 to 4 December 1996 (following the decision of the House of Lords in the Fleming/Conde Nast case) amounting to £312,000, all of which has been recognised in 2009, giving a total recovery for the year of £407,000. The write-back for both periods has been allocated to revenue return according to the allocation of the amounts originally paid.   The Company has also received from the investment Manager interest paid by HMRC on the amounts recovered. Therefore, £371,000 of interest on the VAT refunds has been recognised in the current financial year: £147,000 of interest relates to the VAT reclaim for 2000-2007 and £224,000 of interest relates to the VAT reclaim for 1990-1996.

9.	2009 Accounts
	The figures and financial information for the year ended 30 September 2009 are extracted from the Company's annual financial statements for that period and do not constitute statutory accounts. The Company's annual financial statement for the year to 30 September 2009 have been audited but have not yet been delivered to the Registrar of Companies. The auditors' report on the 2009 annual financial statements was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain any statements under section 498 of the Companies Act 2006.
10.	2008 Accounts
	The figures and financial information for the year ended 30 September 2008 are compiled from an extract of the published accounts for that year and do not constitute statutory accounts. 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.
11.	Dividend
	The second interim dividend, in lieu of a final dividend, of 16.5p per ordinary share, will be paid on 22 December 2009 to shareholders on the register of members at the close of business on 4 December 2009. The Company's shares will be quoted ex-dividend on 2 December 2009.
12.	Annual Report
	The Annual Report and Financial Statements will be posted to shareholders in December 2009 and will be available on the Company's website (www.lowlandinvestment.com) or in hard copy format from the Company's Registered Office, 201 Bishopsgate, London, EC2M 3AE.
13.	Annual General Meeting
	The Annual General Meeting will be held on Friday, 22 January 2010 at 12.00 noon at 201 Bishopsgate, London, EC2M 3AE.

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Notes to the Accounts (continued):

Twenty Largest Holdings as at 30 September 2009

Rank (2009)	Rank (2008)	Company	Valuation 2008 £'000	Purchases £'000	Sales £'000	Appreciation/ (Depreciation) £'000	Valuation 2009 £'000
1	(1)	BP	8,816	-	(1,015)	1,600	9,401
2	(4)	Royal Dutch Shell	6,312	887	-	613	7,812
3	(2)	Senior	8,545	76	-	(2,259)	6,362
4	(7)	Aviva	5,280	593	-	176	6,049
5	(5)	GlaxoSmithKline	5,964	620	(1,161)	110	5,533
6	(9)	Barclays	4,724	1,946	(1,702)	(19)	4,949
7	(13)	Vodafone	3,528	742	-	602	4,872
8	(11)	Carclo	3,778	-	-	755	4,533
9	(14)	Hill & Smith	3,390	166	-	863	4,419
10	(16)	Meggitt	3,315	133	-	923	4,371
11	(*)	Interserve	2,032	2,346	-	(25)	4,353
12	(3)	HSBC	8,109	897	(3,884)	(1,363)	3,759
13	(*)	GKN	1,272	1,568	-	662	3,502
14	(*)	BHP Billiton	-	2,334	-	1,082	3,416
15	(*)	Daily Mail & General	-	2,211	-	1,003	3,214
16	(*)	Delta	1,172	601	-	1,372	3,145
17	(10)	Hiscox	3,931	-	(2,201)	1,397	3,127
18	(20)	Croda	2,716	108	-	292	3,116
19	(*)	H&T	1,596	306	-	1,179	3,081
20	(12)	Amlin	3,551	-	(1,207)	637	2,981
			---------	---------	---------	---------	---------
			78,031 =====	15,534 =====	(11,170) =====	9,600 =====	91,995 =====

These investments total £91,995,000 or 47.4% of the portfolio.

* Not in the 20 largest investments last year.

For further information please contact:
James H Henderson,	James de Sausmarez,
Portfolio Manager,	Head of Investment Trusts,
Lowland Investment Company plc	Henderson Global Investors
Telephone: [phone]	Telephone: [phone]
Sarah Gibbons-Cook,
Investor Relations and PR Manager,
Henderson Global Investors
Telephone: [phone]

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