Interim Results - 6 Months to 31 March 2000
Lowland Investment Co PLC
3 May 2000
2 May 2000
LOWLAND INVESTMENT COMPANY PLC
Unaudited Interim Results for the half year ended 31 March 2000
Chairman's Statement
Review
In my first six months as your Chairman it is disappointing to have to report
that the net asset value per ordinary share for the period ending 31 March
2000 fell 4.8% compared to a rise of 10.1% in the FTSE All Share Index. It
has been an extraordinary period with three sectors, namely Technology,
Telecoms and Media, rising strongly whilst other areas languished. The
favoured sectors contain shares with either low or no dividend yields combined
with relatively high valuations and Lowland has only a small exposure. The
FTSE All Share Index, without these three sectors, would be marginally down,
as was the FTSE 350 Higher Yield Index which fell by 4.9% over the six months.
This has been a challenging period for those adopting the value and income
approach to investment.
The companies that are in the Lowland portfolio have benefited operationally
from the pick up in global economic activity. This can be seen in the strong
earnings and dividend growth that many companies have been reporting.
However, investors have been more interested in the effect of the internet on
future margins than on good trading results. In March and April the more
mature companies have recovered to some extent with a small resurgence in
investor interest.
There has been a significant number of cash bids for companies in the
portfolio which suggests industrial buyers recognise value. Bids include
those for Tarmac, Rugby and Bristol United Press.
Dividend
The earnings per ordinary share for the half year is 3.91p versus 4.87p for
the same period last year. The fall is due to the timing of dividend
payments on underlying holdings. It is expected that earnings for the full
year will show an increase on last year. Underlying dividend growth from
Lowland's holdings has been satisfactory and the directors propose an interim
dividend of 5.50p (compared to 5.00p for the same period last year). The
directors would expect to at least maintain the final dividend.
Share Buy-Backs
During the period 1,025,000 shares were purchased by the Company for
cancellation at an average price of 365p. These purchases have enhanced the
net asset value per ordinary share of Lowland. Shareholders granted the
Company authority to buy-back up to 14.99% of the issued share capital
(3,202,644 shares) at the 1999 Annual General Meeting. The Board will
continue to use this authority if it can be clearly seen to be in the best
interests of existing shareholders.
- 2 -
LOWLAND INVESTMENT COMPANY PLC
Unaudited Interim Results for the half year ended 31 March 2000
The Board
Since the Annual General Meeting we have been fortunate to secure the services
of John Hancox as a non-executive director of your Company and we are
delighted that Rupert Barclay has rejoined the Board. They both bring a wide
range of relevant experience. Richard Smith has retired from the Board after
seventeen years. He was the very successful manager of Lowland in the 1980's
and we thank him for his most valuable contribution over so many years.
Outlook
The volatility of share prices is a reflection of large swings in sentiment
amongst investors - this may continue. A sensible course is to look for sound
growing companies that are undervalued. This investment style continues to be
our objective. Companies which are able to grow profits and dividends in the
future will prove to be rewarding investments. Lowland is focused on these
companies.
Ian M Trotter
Chairman
2 May 2000
- 3 -
LOWLAND INVESTMENT COMPANY PLC
Unaudited Interim Results for the half year ended 31 March 2000
Statement of Total Return (incorporating the revenue account)
for the half year ended 31 March 2000
(Unaudited) (Unaudited)
Half year ended 31 March Half year ended 31 March
2000 1999
(restated*)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital - (5,273) (5,273) - 14,069 14,069
(losses)/gains on
investments
Income from fixed asset 2,201 - 2,201 1,988 - 1,988
investments
Other interest receivable 54 - 54 44 - 44
and similar income
-------- -------- -------- -------- -------- -------
Gross revenue and capital 2,255 (5,273) (3,018) 2,032 14,069 16,101
(losses)/gains
Management fee (334) - (334) (306) - (306)
Other administrative (151) - (151) (84) - (84)
expenses
-------- -------- -------- -------- -------- -------
Net return/(loss) on
ordinary activities
before interest 1,770 (5,273) (3,503) 1,642 14,069 15,711
payable and taxation
Interest payable (947) - (947) (488) - (488)
-------- -------- -------- -------- -------- -------
Net return/(loss) on
ordinary activities
before taxation 823 (5,273) (4,450) 1,154 14,069 15,223
Taxation on net
return/(loss) on ordinary - - - (8) - (8)
activities after
taxation
-------- -------- -------- -------- -------- -------
Net return/(loss) on
ordinary activities 823 (5,273) (4,450) 1,146 14,069 15,215
after taxation
Dividend declared
Interim of 5.50p (1,119) - (1,119) (1,146) - (1,146)
(1999: 5.00p)
-------- -------- -------- -------- -------- -------
Transfer (from)/to (296) (5,273) (5,569) - 14,069 14,069
reserves
===== ====== ====== ===== ====== ======
Return/(loss) per 3.91p (25.07p) (21.16p) 4.87p 59.73p 64.60p
ordinary share
The revenue columns of this statement represent the revenue accounts of the
Company.
* See note 2.
- 4 -
LOWLAND INVESTMENT COMPANY PLC
Unaudited Interim Results for the half year ended 31 March 2000
Summary of Net Assets
at 31 March 2000
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2000 1999 1999
£'000 £'000 £'000
Investments at market value 113,113 115,792 123,749
Net current liabilities (16,921) (10,140) (18,229)
---------- ---------- ----------
Total assets less current 96,192 105,652 105,520
liabilities
Creditors: amounts falling due (6,000) (6,000) (6,000)
after more than one year
---------- ---------- ----------
Net assets attributable to 90,192 99,652 99,520
ordinary shareholders
====== ====== ======
Net asset value per ordinary 443.42p 434.95p 465.80p
share
Number of ordinary shares in 20,340,205 22,911,031 21,365,205
issue
Notes:
1. Share buy-backs
During the half year to 31 March 2000, the Company made authorised market
purchases for cancellation of 1,025,000 of its own issued ordinary shares
of 25p, representing 4.80% of its called up share capital, for an
aggregate consideration of £3,759,000.
2. Current taxation
The Company has adopted the recently issued Financial Reporting Standard
('FRS') 16 'Current Taxation' under which UK franked dividend income
should be accounted for net of the attributable tax credits. The
comparative figures for the half year ended 31 March 1999 have been
restated accordingly. Adoption of FRS 16 has no effect on the revenue or
capital returns per ordinary share, nor on the net asset value per
ordinary share.
3. Return per ordinary share
Revenue return per ordinary share is based on the net return on ordinary
activities after taxation of £823,000 (1999: £1,146,000) and on a
weighted average number of 21,030,839 ordinary shares in issue during the
period (1999: 23,552,157). Capital loss/return per ordinary share is
based on the net capital loss of £5,273,000 (1999: £14,069,000 gain) and
on a weighted average number of 21,030,839 ordinary shares in issue
during the year (1999: 23,552,157).
- 5 -
LOWLAND INVESTMENT COMPANY PLC
Unaudited Interim Results for the half year ended 31 March 1999
4. Loss of investment company status
As a result of the share buy-backs during the period 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 Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies' (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 profits on disposal of
investments, calculated by reference to their previous carrying amount,
of £4,375,000 (1999: £2,276,000). Since the Company is no longer an
investment company, the Companies Act and/or FRS3 would ordinarily
require this amount to be included in the profit and loss account. In the
opinion of the directors the inclusion of this item in the profit and
loss account 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 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.
5. Accounts for the year ended 30 September 1999
The figures and financial information for the year ended 30 September
1999 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.
6. Dividend
An interim dividend of 5.50p per ordinary share has been declared payable
on 9 June 2000 to shareholders on the register of members at the close of
business on 26 May 2000. The Company's shares will be quoted ex-dividend
on 22 May 2000.
- 6 -
7. Year 2000
The directors of Lowland Investment Company plc have been advised by
Henderson plc and its subsidiaries ('Henderson'), which provide
investment management, UK custodian, accounting, administrative and
company secretarial services to the Company, that the corporate programme
initiated by Henderson has been satisfactorily completed and that at the
date of this document no material or significant problems affecting the
Company have arisen from the Year 2000 date change. Costs relating to
this project were borne by Henderson.
8. Interim Report
Copies of the Company's interim report for the half year ended 31 March
2000 will be posted to shareholders in May 2000 and will be available
from the Secretary at the Registered Office, 3 Finsbury Avenue, London,
EC2M 2PA.
For further information please contact :
James Henderson Norman Brown
Lowland Investment Company plc Henderson Investors
Telephone: 020 7410 4370 Telephone: 020 7410 3185
Vicki Staveacre
Henderson Press Office
Telephone: 020 7410 4222
Latest directors dealings
- 37 minutes ago Prudential
- 49 minutes ago Vanquis Banking Group 20
- 3 hours ago Frasers Group
- 3 hours ago Cavendish Financial
- 3 hours ago Diaceutics