Final Results - NAV Up 25%
Lowland Investment Co PLC
3 November 1999
LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 1999
Financial Highlights
Unaudited Year %
Year ended Change
ended 30
30 September
September 1998
1999
Earnings per ordinary 13.86p 12.55p +10.4
share
Net dividends per
ordinary share:
Interim paid 5.00p 4.50p +11.1
Final recommended 8.00p 7.50p +6.7
Total 13.00p 2.00p +8.3
Net asset value per 465.80p 372.60p +25.0
ordinary share
Extracts from the Chairman's Statement
Results
During the year the Company's net asset value (NAV) per share
rose from 372.60p to 465.80p, an increase over the year of
25%. This compares with a rise in the FTSE All-Share Index of
20.5%.
The earnings per share for the year were 13.86p, an increase
of 10.4% over last year's 12.55p. The recommended final
dividend is 8p which brings the total for the year to 13p per
ordinary share, compared to last year's dividend of 12p, an
increase of 8.3%.
Investment Background
It has been a volatile year in stock markets but the sound
economic backdrop of low inflation and reasonable economic
growth have remained in place. The benefits of an improving
economy have not been evenly felt. UK exporters have had to
battle with sterling strength and the consumer has remained
price and value conscious. Some famous high street names have
had a difficult period. The Manager has maintained our bias
towards smaller companies, searching out investments where
valuations are low, but where there are prospects for solid
growth. Valuations of smaller companies had become unduly
depressed. This led to a high level of merger activity as
well as management buyouts. Your portfolio has benefited from
this trend.
Share Buy Backs
At an Extraordinary General Meeting held in December last
year, shareholders granted the Board authority to buy back for
cancellation up to 3,540,792 shares. During the year,
2,255,826 shares were bought back, which is 9.6% of the issued
share capital, at an average cost of 391p. The shares were
bought back at an average discount of around 15%. Purchases
have enhanced the NAV per share by about 1.5%. The Board will
be seeking to renew the authority to purchase up to 14.99% of
the existing issued shares for cancellation at this year's
Annual General Meeting. This is the maximum authority
permitted by the London Stock Exchange.
The Board
Having served as a director since the inception of the trust
in October 1963 and having attained the age of 72, I feel it
is time to stand down. I shall do so by not offering myself
for re-election on retiring by rotation at this year's Annual
General Meeting on 15 December 1999. I am pleased that Mr Ian
Trotter has agreed to take over as Chairman.
Outlook
In recent years the fashion for indexation has led to a
concentration of capital in the shares of companies that
feature heavily in the FTSE All-Share Index. This led to a
neglect by investors of medium and small capitalised
companies. During this year interest returned to these
sectors of the market which has assisted our performance. The
portfolio is well placed to benefit from further value
recognition.
Statement of Total Return (incorporating the revenue account)
for the year ended 30 September 1999
Unaudited Audited
Year ended 30 Year ended 30
September September
1999 1998
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital - 19,987 19,987 - (4,910) (4,910)
gains/(losses) on
investments
Income from fixed asset 5,688 - 5,688 5,092 - 5,092
investments
Other interest receivable 95 - 95 163 - 163
and similar income
------- ------- ------- ------- ------- -------
Gross revenue and capital 5,783 19,987 25,770 5,255 (4,910) 345
gains/(losses)
Management fee (642) - (642) (585) - (585)
Other administrative (190) - (190) (139) - (139)
expenses
------- ------- ------- ------- ------- -------
Net return/(loss) on
ordinary activities 4,951 19,987 24,938 4,531 (4,910) (379)
before interest
payable and taxation
Interest payable (1,121) - (1,121) (787) - (787)
------- ------- ------- ------- ------- -------
Net return/(loss) on
ordinary activities 3,830 19,987 23,817 3,744 (4,910) (1,166)
before taxation
Taxation on net return on
ordinary (638) - (638) (779) - (779)
activities
------- ------- ------- ------- ------- -------
Net return/(loss) on
ordinary activities
after taxation 3,192 19,987 23,179 2,965 (4,910) (1,945)
------- ------- ------- ------- ------- -------
Dividends
Interim paid - 5.0p (1998 (1,146) - (1,146) (1,063) - (1,063)
: 4.5p)
Final proposed - 8.0p (1,709) - (1,709) (1,772) - (1,772)
(1998 : 7.5p)
------- ------- ------- ------- ------- -------
(2,855) - (2,855) (2,835) - (2,835)
------- ------- ------- ------- ------- -------
Transfer to/(from) 337 19,987 20,324 130 (4,910) (4,780)
reserves
====== ====== ====== ====== ====== ======
Return/(loss) per 13.86p 86.82p 100.68p 12.55p (20.79p)(8.24p)
ordinary share
====== ====== ====== ====== ====== ======
The revenue columns of this statement represent the revenue accounts of
the Company.
Summary of Net Assets
at 30 September 1999
Audited
30 30
September September
1999 1998
£'000 £'000
Investments at market value 122,716 100,443
At directors' valuation 1,033 1,255
----------- -----------
123,749 101,698
Net current liabilities (18,229) (7,685)
----------- -----------
Total assets less current 105,520 94,013
liabilities
Creditors : amounts falling due (6,000) (6,000)
after more than one year
----------- -----------
Net assets attributable to ordinary 99,520 88,013
shares
======== ========
Number of ordinary shares in issue 21,365,205 23,621,031
======== ========
Net asset value per ordinary share 465.80p 372.60p
======== ========
Notes :
1. Share Buy Backs
During the year the Company made authorised market purchases for
cancellation of 2,255,826 ordinary shares of 25p.
2. Loss of Investment Company Status
As a result of the share buy backs during the year which were
paid for out of capital profits, the Company ceased to be an
investment company within the meaning of Section 266 of the
Companies Act 1985. However, it continued to conduct its
affairs as an investment trust for taxation purposes under
Section 842 of the Income and Corporation Taxes Act 1988, and
the Articles of the Company prohibit capital profits from being
distributed by way of dividend. As such, the directors consider
it necessary to continue to present the accounts in accordance
with the SORP. Under the SORP, the financial performance of the
Company is presented in a statement of total return in which the
revenue column is the profit and loss account of the Company.
The revenue column excludes net profit on disposals of
investments of £8,636,000 (1998: £6,150,000) as calculated by
reference to their previous carrying amounts. The Companies Act
and/or FRS3 would ordinarily require this amount to be included
in the profit and loss account. However, in the opinion of the
directors, this would be misleading because it would obscure and
distort both the revenue and capital performance of the Company,
and would not show clearly the revenue profits emerging to be
distributable by way of dividend. The directors therefore
consider that these departures from the specific provisions of
Schedule 4 of the Companies Act relating to
Unaudited Preliminary Results for the year ended 30 September 1999
the form and content of accounts for companies other than
investment companies and these departures from accounting
standards are necessary to give a true and fair view. The
departures have no effect on total return or on the balance
sheet.
3. Dividend
The recommended final dividend of 8.0p net per ordinary share,
subject to approval at the Annual General Meeting, is payable on
16 December 1999 to shareholders on the register of members at
the close of business on 26 November 1999. The Company's shares
will be quoted ex dividend on 22 November 1999.
4. Return per Ordinary Share
Revenue return per ordinary share is based on the net return on
ordinary activities after taxation of £3,192,000 (1998:
£2,965,000) and on the weighted average 23,022,097 ordinary
shares in issue during the year (1998: 23,621,631). Capital
return/(loss) per ordinary share is based on net capital gains
of £19,987,000 (1998: £4,910,000 loss) and on the weighted
average 23,022,097 ordinary shares in issue during the year
(1998: 23,621,031).
5. 1999 Accounts
The preliminary figures for the year ended 30 September 1999 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.
6. 1998 Accounts
The figures and financial information for the year ended 30
September 1998 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 either under Section
237(2) or 237(3) of the Companies Act 1985.
7. Annual General Meeting
The Annual General Meeting will be held on Wednesday, 15
December 1999 at 2.15pm at 3 Finsbury Avenue, London, EC2M 2PA.
For further information please contact :
James Henderson/Norman Brown
Henderson Investors
Telephone: 0171 410 4100
Vicki Staveacre
Henderson Press Office
Telephone: 0171 410 4222
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