Half-year Report
19/05/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230519:nRSS9505Za&default-theme=true
RNS Number : 9505Z Lowland Investment Co PLC 19 May 2023
JANUS HENDERSON FUND MANAGEMENT UK LIMITED
LOWLAND INVESTMENT COMPANY PLC
Legal Entity Identifier: 2138008RHG5363FEHV19
19 May 2023
LOWLAND INVESTMENT COMPANY PLC
Unaudited results for the half-year ended 31 March 2023
This announcement contains regulated information.
Investment objective
The Company aims to give shareholders a higher than average return with growth
of both capital and income over the medium to long-term, by investing in a
broad spread of predominantly UK companies. The Company measures its
performance against the FTSE All-Share Index Total Return.
Investment policy
Asset Allocation
The Company will invest in a combination of large, medium and smaller
companies listed in the UK. We are not constrained by the weightings of any
index; we focus instead on controlling absolute risk by diversifying on the
basis of underlying company characteristics such as size, industry, economic
sensitivity, clients and management. In normal circumstances up to half the
portfolio will be invested in FTSE 100 companies; the remainder will be
divided between small- and medium-sized companies. On occasions the Manager
will buy shares listed overseas. The Manager may also invest a maximum of 15%
in other listed trusts.
Dividend
The Company aims to provide shareholders with better-than-average dividend
growth.
Gearing
The Board believes that debt in a closed-end fund is a valuable source of
long-term outperformance, and therefore the Company will usually be geared.
At the point of drawing down debt, gearing will never exceed 29.99% of the
portfolio valuation. Borrowing will be a mixture of short and long-dated debt,
depending on relative attractiveness of rates.
Key data for the six months to 31 March 2023
Net Asset Value ('NAV') Total Return 16.1%
Benchmark(1) Total Return 12.3%
Dividend in respect of the period 3.05p
(1) FTSE All-Share Index
Financial highlights
Half-year ended Half-year ended Year ended
31 Mar 2023 31 Mar 2022 30 Sept 2022
NAV per ordinary share(1) 131.9p 141.1p 115.9p
Share price(2) 124.3p 133.0p 104.5p
Market capitalisation £336m £359m £282m
Dividend per share 3.05p 3.05p 6.10p
Ongoing charge 0.7% 0.6% 0.6%
Dividend yield(3) 4.9% 4.5% 5.8%
Gearing 14.1% 13.1% 12.5%
Discount 5.8% 5.7% 11.5%
( )
(1) NAV with debt at par value
(2) Using mid-market closing price
(3) Based on dividends paid and declared in respect of the previous twelve
month period
Total return performance (including dividends reinvested and excluding
transaction costs)
6 months 1 year 3 years 5 years 10 years 25 years
% % % % % %
NAV 16.1 (0.4) 61.2 8.1 63.9 576.7
Share Price(1) 21.9 (1.5) 63.8 7.7 60.0 659.9
Benchmark(2) 12.3 2.9 47.4 27.9 75.9 244.6
( )
(1) Using mid-market closing price
(2) FTSE All-Share Index
Sources: Morningstar Direct, Funddata, Refinitiv Datastream and Janus
Henderson
Historical record - Year to 30 September
As at
31 Mar 2023(1)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Net assets(2) (£m) 347 362 355 387 440 439 386 279 394 313 356
NAV(3*) 130.7p 134.6p 131.8p 143.2p 162.8p 162.5p 142.8p 103.1p 145.9p 115.9p 131.9p
Share price* 132.5p 135.5p 128.7p 133.7p 150.4p 151.5p 128.0p 91.4p 131.5p 104.5p 124.3p
Net revenue* 3.67p 3.94p 4.64p 4.77p 4.91p 5.86p 6.80p 3.38p 4.27p 6.10p 2.13p
Net dividends paid per ordinary share* 3.40p 3.70p 4.10p 4.50p 4.90p 5.40p 5.95p 6.00p 6.025p
6.10p
3.05p(4)
( )
(1) Net revenue and net dividends paid are for the six month period ended 31
March 2023
(2) Attributable to ordinary shares
(3) NAV per ordinary share with debt at par value
(4) First interim dividend of 1.525p per ordinary share paid on 28 April 2023
and second interim dividend of 1.525p per ordinary share that will be paid on
31 July 2023.
* Figures for 2013 to 2021 have been restated due to the sub-division of each
ordinary share of 25p into ten ordinary shares of 2.5p each on 7 February
2022.
INTERIM MANAGEMENT REPORT
CHAIRMAN'S STATEMENT
Overview
Lowland's Net Asset Value ('NAV') rose by 16.1% over the six months ended 31
March, outperforming the FTSE All-Share Index, which increased by 12.3%. This
is a tentative recovery in the Company's performance, which has been
disappointing since the Brexit vote. Returns over relatively short periods can
be volatile. This is demonstrated by the fact that the three year return,
which was slightly negative at the year end and lagged the benchmark, is now
61.2%, some way above the benchmark's 47.4% return. Performance over five
years still lags the benchmark, increasing by 8.1% compared with
27.9%.
Dividends
The recovery in income during the half year continued with Earnings per Share
rising to 2.13p against a comparable 1.72p. This is still a little below the
2019 pre-pandemic level of 2.22p. There have not been any special dividends in
the period, while there were in the comparable period last year.
The Board has maintained its progressive quarterly dividend policy. We have
today declared our second interim of 1.525p, bringing the total so far to
3.05p, the same as last year.
Gearing
Gearing was again fairly steady during the half year, in the range of 12.1% to
14.9%, and now stands at 13.4%. We believe that the ability to employ gearing
is an advantage offered by investment trusts. The Company was a modest net
investor over the period, to the tune of £9.4m, with most of the disposals
coming from take-over bids.
Share Price and Discount
During the period the share price increased by 18.9% to 124.3p and the
discount at which the shares trade reduced from 11.5% to 5.8%. After careful
consideration of the issue the Board continues to believe that a discount
control mechanism is not in shareholders' interests. The current share price
is 122.0p and discount 9.5%.
Board
In line with my statement in the Annual Report, the process of recruiting a
new director has begun, and an announcement will be made in due
course.
Outlook
Generating a reasonable level of growth, while getting inflation under
control, is a challenge faced by most economies. We tend to the view that this
challenge is fully recognised in UK market valuations, as considered more
fully in the Fund Managers' Report. We are therefore looking for growth,
particularly from the lower section of the market cap spectrum, to which we
would expect Lowland's weighting to increase.
Robert Robertson
Chairman
Equity allocation
Sector Weightings % as at 31 March 2023
Company Benchmark(1)
Basic Materials 5.0 7.8
Consumer Discretionary 8.6 11.7
Consumer Staples 4.0 15.5
Energy 8.0 11.1
Financials 34.5 22.2
Health Care 3.6 11.4
Industrials 25.3 11.6
Real Estate 2.9 2.5
Technology 1.7 1.1
Telecommunications 2.6 1.5
Utilities 3.8 3.6
Total 100.0 100.0
(1) FTSE All-Share Index
Sector Weightings % as at 30 September 2022
Company Benchmark(1)
Basic Materials 5.1 8.2
Consumer Discretionary 7.5 10.1
Consumer Staples 4.5 16.8
Energy 9.5 11.9
Financials 33.4 22.1
Health Care 5.4 11.1
Industrials 23.6 10.6
Real Estate 2.6 2.7
Technology 1.5 1.3
Telecommunications 3.2 1.8
Utilities 3.7 3.4
Total 100.0 100.0
(1) FTSE All-Share Index
Market Cap Weightings % as at 31 Mar 2023
Company Benchmark(1)
FTSE 100 47.4 83.9
FTSE 250 19.9 13.8
FTSE Small-Cap 10.9 2.3
FTSE AIM 13.7 -
FTSE Fledgling 1.1 -
Overseas 4.8 -
Other 2.2 -
Total 100.0 100.0
(1) FTSE All-Share Index
FUND MANAGERS' REPORT
Performance Review
Lowland achieved an increase in NAV of 16.1% which is satisfactory in absolute
terms, and in relative terms against the benchmark, which returned 12.3%. As
mentioned in the last Annual Report, our performance had been hampered by our
bias towards medium and small companies, which are more UK focused than the
very large companies which had been the main outperformers in the market. The
table below shows that, over the half-year, the main UK indices for large and
medium sized companies registered returns in the region of 12%. The smaller
companies and AIM indices again underperformed in relative terms. Lowland
outperformed the indices relative to each of the market cap groups, with a
modest exception in AIM. This enabled Lowland to outperform its benchmark,
despite it having a much greater exposure to the smaller end of the market.
The outperformance is due mainly to stock selection and takeovers, as
mentioned below.
There are signs that investors may be beginning to see value in the UK market,
which is at a marked discount to its international peers. Factors behind this
include normalisation after the pandemic, and the fact that Government is no
longer in a state of chaos. Furthermore, some of the Brexit issues are finally
being put behind us, the Windsor Framework on Northern Ireland being a case in
point. We would expect medium and smaller companies, including AIM companies,
to outperform in terms of income and growth, as economic recovery
materialises.
Portfolio performance and weightings
Lowland Weighting Lowland Total Return FTSE Index
All-Share Weighting (%) Return
(%) (%)
(%)
FTSE 100 47.4 15.5 83.9 12.5
FTSE 250 19.9 20.1 13.8 11.6
FTSE Small Cap 10.9 18.6 2.3 5.7
FTSE AIM All Share 13.7 -0.6 N/A 1.1
Source: Janus Henderson Investors, six months to 31 March 2023
It has been a very busy period for news perceived to be relevant to the stock
market. The Autumn Budget of 2022 brought about the end of the Truss
government and its central premise of growth at any cost was abandoned. In
April this year we nearly experienced a new banking crisis emanating from
Silicon Valley Bank, but investors have largely shrugged the news off and the
market has made reasonable forward progress.
The reason for the advance in stock prices when investor sentiment is so poor
is that valuations are very low. The evidence for this view is not just borne
out by long-term valuation charts but also the increasing level of corporate
activity. There were three takeovers of stocks in the portfolio during the
period, with bids received for very different sorts of business. The most
notable was K3 Capital, a regional corporate adviser. The quoted market was
simply not valuing the shares highly enough. Devro, the sausage skin maker,
and Appreciate Group, a corporate gift operator, were also taken over. These
stocks received cash offers that existing shareholders accepted. Whilst
these offers were at reasonable premia to the pre-bid price, they are likely
to prove good purchases for the acquirers. It is unlikely that takeover
activity will abate unless investors attribute a fair value to UK quoted
companies. Similarly, there was no overriding theme to other portfolio
companies which contributed to, or detracted from, performance. The chart
below shows the value of UK earnings is at a low point.
UK Equity Market is cheap relative to the Global Market
Please click here to review the chart.
http://www.rns-pdf.londonstockexchange.com/rns/9505Z_1-2023-5-18.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9505Z_1-2023-5-18.pdf)
Source: JPMorgan/Janus Henderson Investors as at 31 December 2022
P/E = price/earnings per share
Five Highest Contributors
We show the absolute stock contributions in the tables below as these are what
drive the NAV. It is important to note however, that in comparing index
performance against your Company's, what we do not own is also relevant. For
instance, not having a holding in British American Tobacco aided relative
performance. It was the agreed takeover of K3 that was the biggest absolute
contributor to Lowland's return, while Serica, the North Sea gas company, was
the biggest detractor due to the imposition by the British government of a
windfall tax.
Share Price Total Return (%) Contribution to Return (%)
K3 Capital 51.5 1.0
BP 20.3 0.7
FBD Holdings 40.9 0.6
Morgan Advanced Materials 27.3 0.6
Rolls-Royce 114.1 0.5
· K3 Capital Group was subject to a successful
takeover during the period.
· BP benefitted from high energy prices.
· FBD Holdings is an Irish insurer which benefits
from pricing power in its sector.
· Morgan Advanced Materials has a strong market position,
and is well-placed to benefit from infrastructure spending.
· Rolls-Royce has challenging plans for restructuring the
business and we expect it to benefit as air travel increases.
Five largest detractors
Share Price Total Return (%) Contribution to Return (%)
Serica Energy -39.4 -0.8
Direct Line Insurance -25.9 -0.3
Ilika -24.8 -0.2
Vodafone -7.9 -0.2
DWF -22.5 -0.1
Serica Energy suffered from the UK Government windfall tax on energy
companies, whilst poor underwriting and adverse weather conditions caused
Direct Line to suffer losses, and to cut its dividend. The other largest
detractors had no straightforward identifying factors for their performance
other than continued market weakness in valuations.
The UK Economy
In the fourth quarter of last year economists were chasing one another down
with their economic forecasts for the current year. They took them too low and
they are now quietly upgrading their growth targets. The resilience of the
economy has been underestimated by the forecasters. There are economic issues
to be faced in the UK, the most pressing of which are the low level of
productivity growth and persistent inflation. The solution lies in a vibrant
corporate sector that is investing in the future. A UK stock market with
long-term investors providing capital will be a major part of this recovery.
Activity
During the period £35.1m was invested into UK stocks with disposals of
£27.3m being made. The disposals predominantly came via the cash takeovers,
with K3 being the largest. The holding in Direct Line was reduced as a result
of a reassessment of the company's underwriting performance which has been
disappointing. The purchases were a diverse range of companies. The holdings
in Financials which are trading satisfactorily, but with strengths not
reflected in their valuations, were increased; these include M&G, Legal
and General, Vanquis, Numis and Brooks Macdonald. The Industrial sector
remains a major part of the portfolio and the holding in the paper and
packaging company DS Smith was increased. The Building Materials sector has
seen marked share price weakness as investors are concerned that the higher
mortgage rates will lead to severe house price falls and a large slowdown in
activity. This is not being borne out by current trading which, although
subdued, is not markedly weak. There is, therefore, an opportunity to increase
exposure to the strongest companies in the area. The holdings in Marshalls,
Bellway, Springfield Properties, and Epwin were increased. Certain of the
Retailers we hold have used several years of difficult trading to reduce their
cost base and focus their business in preparation for more normal times.
Examples of this can be found at M&S and Halfords where holdings were
built up. Purchases were also made in Cranswick, the meat processor,
H&T, the pawn broker, and Hipgnosis, a investment trust which provides
pure play exposure to song rights. The thing these companies have in common is
that they are all excellent at what they do. They bring a diverse blend of end
market exposures, while individually we believe they have some control over
their own destiny.
Outlook
GDP forecasts are being upgraded for 2023 by economic forecasters, and the
inflation rate is falling, but slowly. The stickiness in inflation partially
reflects many companies preserving operating margins. This suggests that, to
protect the real value of capital in an inflationary period, a good hedge is a
well-diversified portfolio of excellent companies which have pricing power
through operational strengths and product excellence. If inflation falls
faster than expected, interest rates may peak sooner and should fall faster,
benefitting company valuations. In the meantime, we anticipate that dividend
growth from the underlying portfolio should improve, backed by the predicted
progression in earnings.
James Henderson and Laura Foll
Fund Managers
Related party transactions
The Company's current related parties are its Directors and Janus Henderson.
There have been no material transactions between the Company and its Directors
during the year and the only amounts paid to them were in respect of
Directors' remuneration and expenses incurred on the Company's business, for
which there were no outstanding amounts payable at the period end.
In relation to the provision of services by Janus Henderson, other than fees
payable by the Company in the ordinary course of business and the provision of
sales and marketing services, there have been no material transactions with
Janus Henderson affecting the financial position of the Company during the
year under review.
Principal risks and uncertainties
The principal risks and uncertainties associated with the Company's business
can be divided into various areas:
Market, geopolitical, macroeconomic or environmental;
Global pandemic;
Investment activity and strategy;
Portfolio and market price;
Dividend income;
Financial;
Gearing;
Tax and regulatory; and
Operational.
Information on these risks and how they are managed is given in the Annual
Report for the year ended 30 September 2022. The Board has completed a
thorough review of the principal risks, and the uncertainties facing the
Company. As a result of this review, the Board considers that the principal
risks and uncertainties remain largely unchanged and that they are as
applicable to the remaining six months of the financial year as they were to
the six months under review.
Statement of Directors' Responsibilities
The Directors confirm that, to the best of their knowledge:
(a) the set of financial statements for the half-year to 31
March 2023 has been prepared in accordance with "FRS 104 Interim Financial
Reporting";
(b) the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.7R
(indication of important events during the first six months and description of
principal risks and uncertainties for the remaining six months of the year);
and
(c) the Interim Management Report includes a fair review of the
information required by the Disclosure Guidance and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes therein).
On behalf of the Board
Robert Robertson
Chairman
INVESTMENT PORTFOLIO
As at 31 March 2023
Market value % of
Company Sector £’000 portfolio
Shell Oil and Gas 12,694 3.1
BP Oil and Gas 12,514 3.1
Vanquis Banking Group Finance and Credit Services 9,273 2.3
HSBC Banks 9,233 2.3
FBD (Ireland) Non-Life Insurance 9,167 2.2
National Grid Gas, Water and Multi-utilities 8,951 2.2
GSK Pharmaceuticals and Biotechnology 8,345 2.1
Standard Chartered Banks 8,162 2.0
Aviva Life Insurance 7,963 2.0
M&G Investment Banking and Brokerage Services 7,920 1.9
10 largest 94,222 23.2
Anglo American Industrial Metals and Mining 7,231 1.8
Irish Continental (Ireland) Industrial Transportation 7,218 1.8
NatWest Banks 7,098 1.7
Rio Tinto Industrial Metals and Mining 6,846 1.7
Morgan Advanced Materials Electronic and Electrical Equipment 6,721 1.7
Phoenix Life Insurance 6,679 1.6
Tesco Personal Care, Drug and Grocery Stores 6,664 1.6
Hiscox Non-Life Insurance 6,557 1.6
Severn Trent Gas, Water and Multi-utilities 6,478 1.6
Lloyds Banking Banks 6,317 1.5
20 largest 0 Largest 162,031 39.8
Barclays Banks 5,832 1.5
Senior Aerospace and Defence 5,813 1.4
AstraZeneca Pharmaceuticals and Biotechnology 5,784 1.4
Redde Northgate Industrial Transportation 5,448 1.3
BT Group Telecommunications Service Providers 5,395 1.3
Land Securities Real Estate Investment Trusts 5,275 1.3
Balfour Beatty Construction and Materials 5,237 1.3
International Personal Finance Finance and Credit Services 5,159 1.3
BAE Systems Aerospace and Defence 5,159 1.3
Vodafone Telecommunications Service Providers 5,106 1.3
30 largest 216,239 53.2
IMI Electronic and Electrical Equipment 5,037 1.2
Kingfisher Retailers 5,024 1.2
Clarkson Industrial Transportation 4,986 1.2
Prudential Life Insurance 4,959 1.2
Conduit Non-Life Insurance 4,655 1.2
H&T Group ¹ Finance and Credit Services 4,539 1.1
Marks & Spencer Retailers 4,426 1.1
Headlam Household Goods and Home Construction 4,409 1.1
TT Electronics Technology Hardware and Equipment 4,376 1.1
Epwin ¹ Construction and Materials 4,315 1.1
40 largest 262,965 64.7
Finsbury Food Group ¹ Food Producers 4,230 1.0
Somero Enterprises ¹ (USA) Industrial Engineering 4,144 1.0
Direct Line Non-Life Insurance 4,125 1.0
Henderson Opportunities Trust Closed End Investments - Investment Trust focusing primarily on UK smaller 4,080 1.0
companies
Chesnara Life Insurance 4,072 1.0
Marshalls Construction and Materials 3,991 1.0
Serica Energy ¹ Oil and Gas 3,987 1.0
DS Smith General Industrials 3,972 1.0
Mondi General Industrials 3,844 0.9
DCC (Ireland) Industrial Support Services 3,750 0.9
50 largest 303,160 74.5
Hill & Smith Industrial Metals and Mining 3,652 0.9
Legal & General Life Insurance 3,583 0.9
Rolls-Royce Aerospace and Defence 3,551 0.9
Castings Industrial Engineering 3,534 0.9
Alpha Financial Markets ¹ Industrial Support Services 3,506 0.9
Johnson Service ¹ Industrial Support Services 3,414 0.8
Jupiter Fund Management Investment Banking and Brokerage Services 3,385 0.8
Vertu Motors ¹ Retailers 3,289 0.8
Numis ¹ Investment Banking and Brokerage Services 3,218 0.8
Hipgnosis Closed End Investments - Investment Trust investing in song back catalogues 3,175 0.8
60 largest 337,467 83.0
Halfords Retailers 3,173 0.8
Ibstock Construction and Materials 3,110 0.8
STV Media 3,106 0.7
Cranswick Food Producers 3,094 0.7
Palace Capital Real Estate Investment Trusts 2,925 0.7
XPS Pensions Group Investment Banking and Brokerage Services 2,800 0.7
Ricardo Construction and Materials 2,726 0.7
Renold ¹ Industrial Engineering 2,482 0.6
Reckitt Benckiser Group Personal Care, Drug and Grocery Stores 2,463 0.6
Elementis Chemicals 2,442 0.6
70 largest 365,788 89.9
IP Group Investment Banking and Brokerage Services 2,434 0.6
Eleco ¹ Software and Computer Services 2,428 0.6
Tyman Construction and Materials 2,400 0.6
Bellway Household Goods and Home Construction 2,207 0.6
Churchill China ¹ Household Goods and Home Construction 2,194 0.6
Oxford Sciences Enterprises ² Venture Capital business investing predominantly in Pharmaceuticals and 2,160 0.5
Biotechnology
DWF Group Industrial Support Services 2,075 0.5
Springfield Properties ¹ Household Goods and Home Construction 2,071 0.5
Helical Real Estate Investment and Services 1,950 0.5
Ilika ¹ Electronic and Electrical Equipment 1,780 0.4
80 largest 387,487 95.3
Sabre Insurance Non-Life Insurance 1,720 0.4
RWS Holdings ¹ Industrial Support Services 1,645 0.4
Hammerson Real Estate Investment Trusts 1,566 0.4
Brooks MacDonald Group ¹ Investment Banking and Brokerage Services 1,503 0.4
Airea ¹ Household Goods and Home Construction 1,485 0.4
Reach Media 1,447 0.3
Jadestone Energy ¹ Oil and Gas 1,173 0.3
Flowtech Fluidpower ¹ Electronic and Electrical Equipment 1,165 0.3
DFS Furniture Retailers 1,158 0.3
Indus Gas ¹ Oil and Gas 930 0.2
90 largest 401,279 98.7
R&Q Insurance ¹ Non-Life Insurance 888 0.2
International Distributions Services Industrial Transportation 842 0.2
I3 Energy ¹ Oil and Gas 824 0.2
Wadworth - Ordinary shares ² Travel and Leisure 689 0.2
Carclo General Industrials 468 0.1
Velocys ¹ Alternative Energy 356 0.1
Faron Pharmaceuticals ¹ (Finland) Pharmaceuticals and Biotechnology 300 0.1
Severfield Construction and Materials 269 0.1
Paypoint Industrial Support Services 264 -
Harbour Energy Oil and Gas 171 -
100 largest 406,350 99.9
(1) AIM Stocks
(2) Unlisted Investments
Source: Janus Henderson
CONDENSED INCOME STATEMENT
(Unaudited) (Unaudited) (Audited)
Half-year ended Half-year ended Year ended
31 March 2023 31 March 2022 30 September 2022
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments held at fair value through profit or loss - 46,791 46,791 - (8,850) (8,850) - (79,801) (79,801)
Income from investments 6,980 - 6,980 5,692 - 5,692 18,666 - 18,666
Other interest receivable and similar income 43 - 43 32 - 32 70 - 70
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Gross revenue and capital gains/(losses) 7,023 46,791 53,814 5,724 (8,850) (3,126) 18,736 (79,801) (61,065)
Management fee (note 2) (440) (440) (880) (434) (434) (868) (862) (861) (1,723)
Other administrative (367) - (367) (310) - (310) (645) - (645)
expenses (note 2)
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Net return/(loss) before finance costs and taxation 6,216 46,351 52,567 4,980 (9,284) (4,304) 17,229 (80,662) (63,433)
Finance costs (447) (446) (893) (311) (311) (622) (657) (657) (1,314)
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Net return/(loss) before 5,769 45,905 51,674 4,669 (9,595) (4,926) 16,572 (81,319) (64,747)
taxation
Taxation on net return (2) - (2) (8) - (8) (81) - (81)
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Net return/(loss) after taxation
5,767 45,905 51,672 4,661 (9,595) (4,934) 16,491 (81,319) (64,828)
====== ====== ====== ====== ====== ====== ===== ======= ======
Return/(loss) per ordinary 2.13p 16.99p 19.12p 1.72p (3.55p) (1.83p) 6.10p (30.10p) (24.00p)
share - basic and diluted
(note 3)
====== ====== ====== ====== ====== ====== ===== ====== ======
The total columns of this statement represent the Income Statement of the
Company, prepared in accordance with FRS 104. The revenue and capital columns
are supplementary to this and are published under guidance from the
Association of Investment Companies.
The Company has no recognised gains or losses other than those disclosed in
the Income Statement and Statement of Changes in Equity.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period.
The accompanying notes are an integral part of the condensed financial
statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
Half-year ended 31 March 2023
Share premium account Capital redemption Other capital reserves
Called up share capital £'000 reserve £'000 Revenue
£'000 £'000 reserve Total
£'000 £'000
At 1 October 2022 6,755 61,619 1,007 235,389 8,266 313,036
Net return after taxation - - - 45,905 5,767 51,672
Third interim dividend (1.525p) for
the year ended 30 September 2022 - - - - (4,120) (4,120)
Final dividend (1.525p) for
the year ended 30 September 2022 - - - - (4,120) (4,120)
------------ ------------ ----------- ----------- ----------- -----------
At 31 March 2023 6,755 61,619 1,007 281,294 5,793 356,468
======= ======= ======= ====== ======= =======
(Unaudited)
Half-year ended 31 March 2022
Called up share capital Share premium account Capital redemption Other capital reserves
£'000 £'000 reserve £'000 Revenue
£'000 reserve Total
£'000 £'000
At 1 October 2021 6,755 61,619 1,007 318,244 6,660 394,285
Net (loss)/return after taxation - - - (9,595) 4,661 (4,934)
Costs relating to sub-division of shares - - - (23) - (23)
Third interim dividend (1.50p*) for
the year ended 30 September 2021 - - - - (4,053) (4,053)
Final dividend (1.525p*) for
the year ended 30 September 2021 - - - (1,513) (2,607) (4,120)
Refund of unclaimed distributions - - - - 15 15
------------ ------------ ----------- ----------- ----------- -----------
At 31 March 2022 6,755 61,619 1,007 307,113 4,676 381,170
======= ======= ======= ====== ======= =======
(Audited)
Year ended 30 September 2022
Share Capital Other capital reserves
Called up share capital premium redemption £'000 Revenue reserve
£'000 account reserve £'000 Total
£'000 £'000 £'000
At 1 October 2021 6,755 61,619 1,007 318,244 6,660 394,285
Net (loss)/return after taxation - - - (81,319) 16,491 (64,828)
Costs relating to sub-division of shares - - - (23) - (23)
Third interim dividend (1.50p*) for
the year ended 30 September 2021 - - - - (4,053) (4,053)
Final dividend (1.525p*) for
the year ended 30 September 2021 - - - (1,513) (2,607) (4,120)
First interim dividend (1.525p) for the
year ended 30 September 2022 - - - - (4,120) (4,120)
Second interim dividend (1.525p) for the
year ended 30 September 2022 - - - - (4,120) (4,120)
Refund of unclaimed distributions - - - - 15 15
----------- ----------- ----------- ----------- ------------ -----------
At 30 September 2022 6,755 61,619 1,007 235,389 8,266 313,036
======= ======= ======= ======= ======= =======
____________________
* Dividend rates have been restated due to the sub-division of each ordinary
share of 25p into ten ordinary shares of 2.5p each on 7 February 2022.
The accompanying notes form an integral part of these condensed financial
statements.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
As at As at As at
31 March 2023 31 March 2022 30 September 2022
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss (note 4)
406,749 430,969 352,081
----------- ----------- -----------
Current assets
Debtors 6,110 3,490 1,228
Cash at bank 2,065 2,930 9,395
----------- ----------- -----------
8,175 6,420 10,623
Creditors: amounts falling due within one year
(28,650) (26,423) (19,866)
----------- ----------- -----------
Net current liabilities (20,475) (20,003) (9,243)
----------- ----------- -----------
Total assets less current liabilities 386,274 410,966 342,838
----------- ----------- -----------
Creditors: amounts falling due after more than one year
(29,806) (29,796) (29,802)
----------- ----------- -----------
Net assets 356,468 381,170 313,036
====== ====== =======
Capital and reserves
Called up share capital 6,755 6,755 6,755
Share premium account 61,619 61,619 61,619
Capital redemption reserve 1,007 1,007 1,007
Other capital reserves 281,294 307,113 235,389
Revenue reserve 5,793 4,676 8,266
----------- ----------- -----------
Total shareholders' funds 356,468 381,170 313,036
====== ====== =======
Net asset value per ordinary share - basic and diluted (note 7)
131.9p 141.1p 115.9p
======= ======= =======
The accompanying notes form an integral part of these condensed financial
statements.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Half-year ended Half-year ended 31 March 2022 Year ended
31 March 2023 £'000 30 September 2022
£'000 £'000
Cash flows from operating activities
Net gain/(loss) before taxation 51,674 (4,926) (64,747)
Add back: finance costs 893 622 1,314
Add: (gains)/losses on investments held at fair value through profit or loss (46,791)
8,850 79,801
Withholding tax on dividends deducted at source (16) (16) (59)
(Increase)/decrease in debtors (2,120) (1,645) 41
(Decrease)/increase in creditors (47) 16 98
----------- ----------- -----------
Net cash inflow from operating activities 3,593 2,901 16,448
----------- ----------- -----------
Cash flows from investing activities
Purchase of investments (33,928) (19,832) (40,491)
Sale of investments 24,505 28,608 57,726
----------- ----------- -----------
Net cash (outflow)/inflow from investing activities (9,423) 8,776 17,235
Cash flows from financing activities
Equity dividends paid (net of refund of unclaimed distributions and reclaimed
distributions)
(8,241) (8,158) (16,398)
Costs relating to sub-division of shares - (23) (23)
Loans drawn down 41,096 2,139 9,149
Loans repaid (33,532) (10,054) (23,726)
Interest paid (837) (631) (1,294)
----------- ----------- -----------
Net cash outflow from financing activities (1,514) (16,727) (32,292)
Net (decrease)/increase in cash and cash equivalents
(7,344) (5,050) 1,391
Cash and cash equivalents at start of year 9,395 7,976 7,976
Effect of foreign exchange rates 14 4 28
----------- ----------- -----------
Cash and cash equivalents at end of year 2,065 2,930 9,395
====== ====== ======
Comprising:
Cash at bank 2,065 2,930 9,395
====== ====== ======
The accompanying notes are an integral part of these condensed financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
The half-year financial statements cover the period from 1 October 2022 to 31
March 2023 and have not been audited or reviewed by the Company's auditors.
1. Accounting policies - basis of preparation
The condensed set of financial statements has been prepared in accordance with
FRS 104, Interim Financial Reporting, FRS 102, the Financial Reporting
Standard applicable in the UK and Republic of Ireland, and the Statement of
Recommended Practice for "Financial Statements of Investment Trust Companies
and Venture Capital Trusts" which was issued by the Association of Investment
Companies in July 2022.
The accounting policies applied are consistent with those of the most recent
annual financial statements for the year ended 30 September 2022.
2. Expenses
Management fees and finance costs are charged 50% to revenue and 50% to
capital. All other administrative expenses are charged wholly to revenue.
Expenses which are incidental to the purchase or sale of an investment are
included in the cost or deducted from the proceeds of sale of the investment.
3. Return per ordinary share - basic and diluted
(Unaudited) (Unaudited) (Audited)
Half-year ended Half-year ended Year ended
31 March 2023 31 March 2022 30 September 2022
£'000 £'000 £'000
The return/(loss) per ordinary share is based on the following figures:
Net revenue return 5,767 4,661 16,491
Net capital return/(loss) 45,905 (9,595) (81,319)
---------- ---------- ----------
Net total return/(loss) 51,672 (4,934) (64,828)
====== ====== ======
Weighted average number of ordinary shares in issue for each period
270,185,650 270,185,650 270,185,650
Revenue return per ordinary share
2.13p 1.72p 6.10p
Capital return/(loss) per ordinary share
16.99p (3.55p) (30.10p)
---------- ---------- ----------
Total return/(loss) per ordinary share
19.12p (1.83p) (24.00p)
====== ====== ======
The Company does not have any dilutive securities; therefore, basic and
diluted returns per share are the same.
4. Fair value of financial assets and liabilities
The table below analyses fair value measurements for investments held at fair
value through profit or loss. These fair value measurements are categorised
into different levels in the fair value hierarchy based on the valuation
techniques used and are defined as follows:
Level 1: valued using quoted prices in active markets for identical assets
Level 2: valued by reference to valuation techniques using observable inputs
other than quoted prices included in Level 1
Level 3: valued by reference to valuation techniques using inputs that are not
based on observable market data
Investments held at fair value through profit Level 1 Level 2 Level 3 Total
£'000
or loss at 31 March 2023 (unaudited) £'000 £'000 £'000
Investments 403,775 - 2,974 406,749
Investments held at fair value through profit or loss at Level 1 Level 2 Level 3 Total
31 March 2022 (unaudited) £'000 £'000 £'000 £'000
Investments 428,106 - 2,863 430,969
Investments held at fair value through profit or loss at Level 1 Level 2 Level 3 Total
£'000
30 September 2022 (audited) £'000 £'000 £'000
Investments 349,173 - 2,908 352,081
A reconciliation of movements within Level 3 is set out below:
2023
£'000
Opening balance 2,908
Disposal -
proceeds
Transfers in -
Total profit included in the Income Statement
- on investments held 66
Closing balance 2,974
The valuation techniques used by the Company are explained in the accounting
policies note in the Company's Annual Report for the year ended 30 September
2022.
The fair value of the senior unsecured loan notes at 31 March 2023 has been
estimated to be £25,318,000 (31 March 2022: £31,032,000; 30 September 2022:
£23,851,000). The fair value of the senior unsecured loan notes is calculated
using a discount rate which reflects the yield on a UK Gilt of similar
maturity plus a suitable credit spread.
The senior unsecured loan notes are categorised as level 3 in the fair value
hierarchy.
5. Share capital
At 31 March 2023 there were 270,185,650 ordinary shares of 2.5p each in issue
(31 March 2022: 270,185,650; 30 September 2022: 270,185,650). During the
half-year ended 31 March 2023 no shares were issued or bought back (31 March
2022 and 30 September 2022: no shares were issued or bought back).
6. Transaction costs
Purchase transaction costs for the half-year ended 31 March 2023 were
£154,000 (31 March 2022: £100,000; 30 September 2022: £184,000). Sale
transaction costs for the half-year ended 31 March 2023 were £8,000 (31 March
2022: £11,000; 30 September 2022: £21,000). These comprise mainly stamp duty
and commission.
7. Net asset value per ordinary share - basic and diluted
The net asset value per ordinary share of 131.9p (31 March 2022: 141.1p; 30
September 2022: 115.9p) is based on the net assets attributable to the
ordinary shares of £356,468,000 (31 March 2022: £381,170,000; 30 September
2022: £313,036,000) and on 270,185,650 ordinary shares (31 March 2022 and 30
September 2022: 270,185,650), being the number of ordinary shares in issue at
the end of each period.
8. Dividend
On 28 April 2023, a first interim dividend of 1.525p (2022: 1.525p) per
ordinary share was paid in respect of the year ending 30 September 2023. A
second interim dividend of 1.525p per ordinary share for the year ending 30
September 2023 has been declared and will be paid on 31 July 2023 to
shareholders on the register of members at the close of business on 29 June
2023. The ex-dividend date will be 30 June 2023. Based on the number of shares
in issue on 18 May 2023 of 270,185,650, the cost of the dividend will be
£4,120,000 (second interim dividend for the year ended 30 September 2022:
£4,120,000).
9. Going concern
The assets of the Company consist of securities that are readily realisable.
The Directors have also considered the ongoing impact of the conflict in
Ukraine along with all other risks, including the impact on income and
gearing, and believe that the Company has adequate resources to continue in
operational existence for at least twelve months from the date of approval of
the financial statements. Having assessed these factors and the principal
risks, the Board has determined that it is appropriate for the financial
statements to be prepared on a going concern basis.
10. Comparative Information
The financial information contained in this half-year report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The financial information for the half-years ended 31 March 2023 and 31
March 2022 has not been audited nor reviewed by the Company's auditor.
The figures and financial information for the year ended 30 September 2022 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 independent auditors,
which was unqualified and did not include a statement under either section
498(2) or 498(3) of the Companies Act 2006.
A glossary of terms and details of alternative performance measures can be
found in the Annual Report for the year ended 30 September 2022.
11. Manager
Janus Henderson Fund Management UK Limited ('JHFM') is appointed to act as the
Company's Alternative Investment Fund Manager. JHFM delegates investment
management services to Janus Henderson Investors UK Limited. References to
Janus Henderson within these results refer to the services provided by both
entities.
12. General information
Company Status
The Company is a UK-domiciled investment trust company. The registered number
is 670489.
The London Stock Exchange Daily Official List SEDOL number is BNXGHS2.
The ISIN number is GB00BNXGHS27.
The London Stock Exchange (TIDM) Code is LWI.
The Global Intermediary Identification Number (GIIN) is 2KBHLK.99999.SL.826.
The Legal Entity Identifier Number (LEI) is 2138008RHG5363FEHV19
Directors
The Directors of the Company are Robert Robertson (Chairman), Gaynor Coley
(Audit Committee Chairman), Duncan Budge, Helena Vinnicombe and Thomas Walker.
Corporate Secretary
Janus Henderson Secretarial Services UK Limited.
Email: ITSecretariat@janushenderson.com
(mailto:ITSecretariat@janushenderson.com)
Registered Office
201 Bishopsgate, London EC2M 3AE.
Website
Details of the Company's share price and net asset value, together with
general information about the Company, monthly factsheets and data, copies of
announcements, reports and details of general meetings can be found at
https://www.janushenderson.com/en-gb/investor/product/lowland-investment-company-plc/
(http://www.lowlandinvestmentcompany.com) .
13. Half-year report
The half-year report will shortly be available on the Company's website or in
hard copy from the Company's registered office. An abbreviated version of
the half-year report, the 'Update', will be posted to shareholders in June
2023. The Update will also be available on the Company's website, and hard
copies will be available at the Company's registered office, 201 Bishopsgate,
London EC2M 3AE.
For further information, please contact:
James Henderson and Laura Foll
Fund Managers
Lowland Investment Company plc
Tel: 020 7818 4370
Dan Howe
Head of Investment Trusts
Janus Henderson Investors
Tel: 020 7818 4458
Harriet Hall
PR Manager, Investment Trusts
Janus Henderson Investors
Telephone: 020 7818 2919
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR NKFBBABKDOPD