REG - Lowland Inv. Co. - Half-year Report
30/05/2024 15:45
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RNS Number : 5208Q Lowland Investment Co PLC 30 May 2024
JANUS HENDERSON FUND MANAGEMENT UK LIMITED
LOWLAND INVESTMENT COMPANY PLC
Legal Entity Identifier: 2138008RHG5363FEHV19
30 May 2024
LOWLAND INVESTMENT COMPANY PLC
Unaudited results for the half-year ended 31 March 2024
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 invests in a combination of large, medium and smaller companies
listed in the UK. We are not constrained by the weightings of any index; we
limit risk by running a diversified portfolio, which is constructed on a
bottom-up, stock-picking basis. In normal circumstances up to half the
portfolio is invested in FTSE 100 companies; the remainder is divided between
small and medium-sized companies. The Manager may also invest a maximum of 15%
in other listed trusts.
Dividend
The Company aims to pay a progressive dividend, with each dividend equal to or
greater than its previous equivalent.
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 not exceed 30% of the
portfolio valuation but generally will be around half that level. 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 2024
Net Asset Value ('NAV') Total Return 7.5%
Benchmark(1) Total Return 6.9%
Dividend in respect of the period 3.20p
(1) FTSE All-Share Index
Financial highlights
Half-year ended Half-year ended Year ended
31 Mar 2024 31 Mar 2023 30 Sept 2023
NAV per ordinary share(1) 136.3p 131.9p 129.3p
Share price(2) 121.5p 124.3p 113.0p
Market capitalisation £328m £336m £305m
Dividend per share 3.20p 3.05p 6.25p
Ongoing charge 0.7% 0.7% 0.6%
Dividend yield(3) 5.2% 4.9% 5.5%
Gearing 13.1% 14.1% 12.3%
Discount 10.9% 5.8% 14.2%
( )
(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 7.5 8.5 18.8 23.1 45.9 634.8
Share Price(1) 8.9 1.8 14.4 17.1 29.5 769.0
Benchmark(2) 6.9 8.4 26.1 30.3 75.3 249.9
( )
(1) Using mid-market closing price
(2) FTSE All-Share Index
Sources: Morningstar Direct, Funddata, Factset and Janus Henderson
Historical record - Year to 30 September
As at 31 Mar
2024(1)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Net assets(2) (£m) 362 355 387 440 439 386 279 394 313 349 368
NAV(3*) 134.6p 131.8p 143.2p 162.8p 162.5p 142.8p 103.1p 145.9p 115.9p 129.3p 136.3p
Share price* 135.5p 128.7p 133.7p 150.4p 151.5p 128.0p 91.4p 131.5p 104.5p 113.0p 121.5p
Net revenue* 3.94p 4.64p 4.77p 4.91p 5.86p 6.80p 3.38p 4.27p 6.10p 6.71p 1.71p
Net dividends paid per ordinary share* 3.70p 4.10p 4.50p 4.90p 5.40p 5.95p 6.00p 6.025p
6.10p 6.25p 3.20p(4)
( )
(1) Net revenue and net dividends paid are for the six month period ended 31
March 2024
(2) Attributable to ordinary shares
(3) NAV per ordinary share with debt at par value
(4) First interim dividend of 1.60p per ordinary share paid on 30 April 2024
and second interim dividend of 1.60p per ordinary share that will be paid on
31 July 2024.
* Figures for 2014 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
Overview
Lowland's Net Asset Value ('NAV') increased by 7.5% in the six months ended 31
March 2024, just above the 6.9% increase in the FTSE All-Share index, our
benchmark (all figures on a total return basis). Shareholders are benefitting
from a dividend yield in excess of 5%, in addition to modest capital
appreciation. However, it is fair to say that the undervaluation of the UK
market remains unrecognised in the main, other than in the number of take-over
bids from outside the market, and by numerous commentators.
Dividends
Lowland's earnings are strongly weighted to the second half of its financial
year. The decline in Earnings Per Share ('EPS') from 2.13p to 1.71p in the
first half should be seen in this light, influenced as it is by small
movements in quantum and timing. Nevertheless, there is a discernible trend in
favour of share buy-backs to the detriment of dividend payments, particularly
of special dividends. This does not impact on Lowland's overall strategy of
growing capital and, with that, income. A second interim dividend of 1.6p has
been declared today, meaning both interim dividends declared this year being
4.9% above their prior year equivalents. We expect to maintain our quarterly
progressive dividend policy, so that the last two dividends in respect of the
current year should be at least at this rate.
Gearing
Gearing has not varied greatly over the period, ending at 13.1%, up modestly
from 12.3% at the financial year end. We see this level of gearing as being
appropriate to position ourselves in an undervalued market.
Share price and discount
In common with almost all investment trusts, share price discounts have
fluctuated significantly, in our case between 8.0% and 15.4%. Our share
price rose by 8.9% over the half year, just above the increase in NAV, with
the discount at which our shares trade narrowing slightly from 14.2% to 10.9%.
The Board believes that a discount control mechanism is not in shareholders'
interests, for reasons set out in the Annual Report.
Board
As previously announced, Mark Lam joined the Board on 1 January this year.
Also previously announced is that I am to step down at the AGM in January next
year. I am delighted to announce that Helena Vinnicombe will succeed me as
Chair. With a background in investment management, and having been on the
board since 2021, Helena is very qualified for the role.
Outlook
Portfolio companies are making operational progress; there are tentative signs
of improvement in the UK economy; and there are prospects for a reduction in
interest rates. The UK economic environment is largely supportive, with a
return to growth and fall in headline inflation, albeit that a reduction in
interest rates may have to await further progress on underlying
inflation. The UK market continues to be undervalued by comparison with other
markets and historic norms. The Company maintains a progressive dividend
policy and our shares yield 5.2%. Lowland's mildly contrarian portfolio trades
at a discount to the UK market, and the shares at a discount to NAV. I can
only conclude that the outlook is favourable for our shareholders.
At the time of writing, in the period from 31 March to close of business on 28
May, the NAV has increased by 8.5% and the share price by 7.6%, compared to a
rise in the benchmark of 4.7%.
Robert Robertson
Chairman
30 May 2024
Equity allocation
Sector Weightings % as at 31 March 2024
Company Benchmark(1)
Basic Materials 5.0 6.8
Consumer Discretionary 8.9 12.5
Consumer Staples 4.9 13.6
Energy 7.2 11.0
Financials 31.2 23.6
Health Care 3.3 11.4
Industrials 29.5 12.5
Real Estate 4.3 2.6
Technology 1.6 1.4
Telecommunications 1.9 1.1
Utilities 2.2 3.5
Total 100.0 100.0
( )
(1) FTSE All-Share Index
Sector Weightings % as at 30 September 2023
Company Benchmark(1)
Basic Materials 5.1 7.4
Consumer Discretionary 9.2 11.8
Consumer Staples 3.7 14.7
Energy 9.3 12.0
Financials 34.2 23.2
Health Care 2.8 11.8
Industrials 26.7 10.8
Real Estate 2.9 2.4
Technology 1.7 1.2
Telecommunications 2.2 1.2
Utilities 2.2 3.5
Total 100.0 100.0
(1) FTSE All-Share Index
Market Cap Weightings % as at 31 Mar 2024
Company Benchmark(1)
FTSE 100 44.6 84.2
FTSE 250 22.9 13.7
FTSE Small-Cap 10.7 2.1
FTSE AIM 13.8 -
FTSE Fledgling 1.1 -
Overseas 4.5 -
Other 2.4 -
Total 100.0 100.0
(1) FTSE All-Share Index
FUND MANAGERS' REPORT
Performance review
During the six month period Lowland's net asset value modestly outperformed,
rising 7.5% while the FTSE All-Share index benchmark rose 6.9% (both figures
are total return). The drivers of performance did not change from the previous
financial year, with recovery stories and takeovers leading the way. However,
the performance is beginning to move down the market capitalisation scale.
The final column of the table below shows that the FTSE 250 index,
representing mid-sized companies, outperformed indices for both large and
small companies. The portfolio's holdings in the mid and large companies
outperformed their relative benchmarks but the holdings in the small company
indices underperformed. This was due to stock selection, particularly the
holding in the unsecured lender Vanquis Banking Group, where profit forecasts
fell substantially as a result of temporarily higher costs.
Lowland weighting (%) Lowland total return (%) FTSE All-Share weighting (%) Index return (%)
FTSE 100 44.6 11.8 84.2 6.4
FTSE 250 22.9 14.6 13.7 10.3
FTSE SmallCap 10.7 -9.1 2.1 6.5
FTSE AIM All-Share 13.8 2.2 - 3.3
The tables of absolute stock contributors and detractors during the six month
period are shown below, with winners and losers to be found across the
market. That investors have been reminded of the recovery potential of
overly maligned stocks is a positive feature of the period.
Ten largest absolute contributors
Share price total return (%) Contribution to return (%)
Rolls-Royce 93.2 1.5
Aviva 27.4 0.6
Clarkson 46.6 0.6
DS Smith 40.9 0.6
Wincanton 122.5 0.5
M&G 18.4 0.5
Hiscox 23.4 0.4
GSK 16.8 0.4
Springfield Properties 72.7 0.4
Morgan Advanced Materials 19.1 0.3
In a similar trend to the previous financial year, many of the best performers
during the six months were companies subject to takeover offers such as
logistics firm Wincanton and paper and packaging firm DS Smith. In addition,
since the period end, BHP, the Australian based company, has made a withdrawn
approach for Anglo American. In the previous annual report we spoke about the
vulnerability of UK companies to takeover approaches given their valuation
discount to overseas peers. This very much remains the case, although
interestingly we are seeing some corporate activity within UK companies (such
as within the housebuilding sector). Until we see UK valuation levels
meaningfully improve relative to overseas, we expect to see this trend
continue and indeed in the period since the half year end we have seen further
corporate activity (a recommended offer for both Hipgnosis Songs Fund and
IDS). Outside of corporate activity the most meaningful contributor to
performance was engine manufacturer Rolls-Royce, which has seen a strong
recovery in flying hours for its engines post Covid as well as substantial
'self help' in the form of cost reductions and price rises.
Ten largest absolute detractors
Share price total return (%) Contribution to return (%)
Vanquis Banking Group -58.2 -0.9
Serica Energy -21.2 -0.5
Standard Chartered -9.2 -0.4
International Personal Finance -13.5 -0.3
Anglo American -12.3 -0.3
BP -4.4 -0.2
Headlam -20.1 -0.2
Prudential -15.1 -0.2
Halfords -17.8 -0.2
Hipgnosis -14.0 -0.2
Turning to detractors during the period, there are a few themes that can be
drawn out:
· Consumer spending on bigger ticket areas has been slow to recover. The
areas that were 'Covid winners', such as spending on the home and on, for
example, cycling, have taken longer to normalise than expected, particularly
in an environment where until recently there has been pressure on real wages.
This has impacted Headlam (a carpet distributor) and retailer Halfords.
· Consumer lenders continue to face challenges around uncertain regulatory
backdrops and unexpected costs. For example the regulatory backdrop for
consumer lending remains uncertain in Poland which has impacted International
Personal Finance and UK consumer lender Vanquis has experienced an unexpected
jump in costs following a claims management company targeting their credit
card business. While this is disappointing, under a new management team
Vanquis has a much greater focus on returns, as well as ambitions for lending
growth that can be funded from the existing balance sheet. We have therefore
maintained the holding.
· Commodity price weakness continued to impact the earnings of some holdings
including North Sea gas producer Serica and diversified miner Anglo American.
Activity
During the period we continued to refresh the portfolio, partly with the
proceeds of the aforementioned takeover offers which led to full sales of
positions including Finsbury Food and Wincanton. Other disposals included BAE
Systems which, following good performance, trades on a much higher valuation
than it has in the past.
New positions during the period were spread across the breadth of the UK
market, and included global underwriter Beazley, defence services provider
Babcock, property owners Shaftesbury Capital and Workspace and food retailer
Sainsbury. There is little commonality to these businesses except for the fact
they are making substantial operational progress that in our view is not
reflected in the current valuation. Taking Sainsbury as an example, they are
back winning market share in the UK following a period of adjusting their
price competitiveness. More broadly for the listed food retailers (we own both
Tesco and Sainsburys) the competitive dynamic has been improved with two
substantial competitors now under private equity ownership with high levels of
indebtedness.
At the end of the period gearing within the Company stood at 13.1%, up
modestly from 12.3% at the financial year end. We continue to see the ability
to gear as a key advantage of the investment trust structure and it is
particularly advantageous at times such as now when we can see considerable
value within the UK market.
Outlook
The UK is fast approaching the criteria required for an interest cut.
Inflation is falling near to the desired level, wage pressure is moderating
and the economy (while showing tentative signs of improvement) is more or less
flat lining. There is certainly no 'irrational exuberance', in fact quite
the reverse. There is a lack of investment going on by both companies with
their capital spend programmes and with equity investors into shares. In some
respects a cut in interest rates now could lower inflation by easing upward
pressure on wages stimulated by the rise in the cost of living. A cut in
interest rates might be the catalyst that is needed to stimulate the economy
and interest in the market.
That UK stocks are undervalued is generally accepted and can be evidenced by
the high level of takeovers. If economic growth is stimulated, and earnings
upgrades start to come through, the low valuation on corporate earnings will
look very stark. A cut in interest rates, and being the other side of the UK
general election, could lead to a pick-up in capital spend as uncertainties
ease. Some capital spend programmes have been put on hold and could be
reactivated. The resulting pick-up in activity would feed through to profits
as companies have controlled their cost bases well, reacting to the current
difficult operating environment. Interest rate cuts, low valuations and
earnings upgrades are a positive background for a UK stock market revival.
James Henderson and Laura Foll
Fund Managers
30 May 2024
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 2023. 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 2024 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
30 May 2024
INVESTMENT PORTFOLIO
As at 31 March 2024
Market value % of
Company Sector £'000 portfolio
BP Oil and Gas 12,145 2.9
HSBC Banks 10,397 2.5
Rolls-Royce Aerospace and Defence 10,170 2.4
GSK Pharmaceuticals and Biotechnology 9,978 2.4
Shell Oil and Gas 9,844 2.4
Aviva Life Insurance 9,779 2.4
Standard Chartered Banks 8,922 2.1
M&G Investment Banking and Brokerage Services 8,820 2.1
FBD (Ireland) Non-Life Insurance 8,690 2.1
Irish Continental (Ireland) Industrial Transportation 7,812 1.9
10 largest 96,557 23.2
Hiscox Non-Life Insurance 7,335 1.8
Barclays Banks 7,328 1.8
NatWest Banks 7,147 1.7
Marks & Spencer Personal Care, Drug and Grocery Stores 7,025 1.7
DS Smith General Industrials 6,791 1.6
Morgan Advanced Materials Electronic and Electrical Equipment 6,769 1.6
Phoenix Life Insurance 6,737 1.6
Serica Energy ¹ Oil and Gas 6,594 1.6
Senior Aerospace and Defence 6,546 1.6
Clarkson Industrial Transportation 6,462 1.5
20 largest 165,291 39.7
Legal & General Life Insurance 6,358 1.5
Rio Tinto Industrial Metals and Mining 6,271 1.5
Conduit Non-Life Insurance 6,204 1.5
IMI Electronic and Electrical Equipment 5,963 1.4
Tesco Personal Care, Drug and Grocery Stores 5,955 1.4
Direct Line Non-Life Insurance 5,852 1.4
International Personal Finance Finance and Credit Services 5,738 1.4
Land Securities Real Estate Investment Trusts 5,593 1.4
National Grid Gas Water and Multi-Utilities 5,505 1.3
Balfour Beatty Construction and Materials 5,378 1.3
30 largest 224,108 53.8
Hill & Smith Industrial Metals and Mining 5,318 1.3
Anglo American Industrial Metals and Mining 5,270 1.3
Kingfisher Retailers 4,797 1.2
Cranswick Food Producers 4,627 1.1
Epwin ¹ Construction and Materials 4,623 1.1
Redde Northgate Industrial Transportation 4,378 1.0
Marshalls Construction and Materials 4,319 1.0
STV Media 4,127 1.0
Henderson Opportunities Trust Closed End Investments - Investment Trust focusing primarily on UK smaller 4,080 1.0
companies
BT Group Telecommunications Service Providers 4,057 1.0
40 largest 269,704 64.8
Vodafone Telecommunications Service Providers 4,028 0.9
H&T Group ¹ Finance and Credit Services 4,011 0.9
Elementis Chemicals 3,901 0.9
Somero Enterprises ¹ (USA) Industrial Engineering 3,752 0.9
Renold ¹ Industrial Engineering 3,724 0.9
Severn Trent Gas Water and Multi-Utilities 3,703 0.9
TT Electronics Technology Hardware and Equipment 3,702 0.9
Vertu Motors ¹ Retailers 3,702 0.9
Johnson Service ¹ Industrial Support Services 3,659 0.9
DCC (Ireland) Industrial Support Services 3,570 0.9
50 largest 307,456 73.8
Chesnara Life Insurance 3,570 0.9
Ibstock Construction and Materials 3,470 0.8
Babcock International Aerospace and Defence 3,460 0.8
Castings Industrial Engineering 3,408 0.8
Prudential Life Insurance 3,343 0.8
Springfield Properties ¹ Household Goods and Home Construction 3,278 0.8
Midwich ¹ Industrial Support Services 3,180 0.8
Sabre Insurance Non-Life Insurance 3,164 0.8
Reach Media 3,075 0.8
Palace Capital Real Estate Investment Trusts 3,074 0.7
60 largest 340,478 81.8
Inchcape Industrial Support Services 2,968 0.7
Halfords Retailers 2,913 0.7
Tyman Construction and Materials 2,895 0.7
Shaftesbury Capital Real Estate Investment Trusts 2,886 0.7
Eleco ¹ Software and Computer Services 2,870 0.7
Hipgnosis Closed End Investments - Investment Trust investing in song back catalogues 2,701 0.7
Bellway Household Goods and Home Construction 2,664 0.6
Beazley Non-life Insurance 2,662 0.6
Alpha Financial Markets ¹ Industrial Support Services 2,640 0.6
Workspace Group Real Estate Investment Trusts 2,560 0.6
70 largest 368,237 88.4
Headlam Household Goods and Home Construction 2,510 0.6
Churchill China ¹ Household Goods and Home Construction 2,343 0.6
Next 15 ¹ Media 2,307 0.6
J Sainsbury Personal Care, Drug and Grocery Stores 2,298 0.6
Ricardo Construction and Materials 2,242 0.5
Hammerson Real Estate Investment Trusts 2,231 0.5
Vanquis Banking Group Finance and Credit Services 2,192 0.5
IP Group Investment Banking and Brokerage Services 2,095 0.5
FRP Advisory Group ¹ Industrial Support Services 1,995 0.5
Oxford Sciences Enterprises ² Pharmaceuticals and Biotechnology 1,933 0.5
80 largest 390,383 93.8
Smith & Nephew Medical Equipment and Services 1,735 0.4
Strix ¹ Electronic and Electrical Equipment 1,703 0.4
Dunelm Group Retailers 1,697 0.4
TP ICAP Group Investment Banking and Brokerage Services 1,689 0.4
Keir Group Construction and Materials 1,673 0.4
Videndum Industrial Engineering 1,515 0.4
Speedy Hire Industrial Support Services 1,509 0.4
International Distribution Services Industrial Transportation 1,490 0.3
Helical Real Estate Investment and Services 1,352 0.3
Airea ¹ Household Goods and Home Construction 1,320 0.3
90 largest 406,066 97.5
Ilika ¹ Electronic and Electrical Equipment 1,201 0.3
XPS Pensions Group Investment Banking and Brokerage Services 1,150 0.3
DFS Furniture Retailers 1,051 0.3
RWS Holdings ¹ Industrial Support Services 1,031 0.3
XP Power Electronic and Electrical Equipment 940 0.2
Flowtech Fluidpower ¹ Electronic and Electrical Equipment 937 0.2
Watkin Jones ¹ Household Goods and Home Construction 916 0.2
Wynnstay ¹ Food Producers 586 0.1
I3 Energy ¹ Oil and Gas 518 0.1
Jadestone Energy ¹ Oil and Gas 338 0.1
100 largest 414,734 99.6
( )
(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 2024 31 March 2023 30 September 2023
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 on investments held at fair value through profit or loss - 23,883 23,883 - 46,791 46,791 - 36,546 36,546
Income from investments 5,849 - 5,849 6,980 - 6,980 20,669 - 20,669
Other interest receivable and similar income 68 - 68 43 - 43 107 - 107
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Gross revenue and capital gains 5,917 23,883 29,800 7,023 46,791 53,814 20,776 36,546 57,322
Management fee (note 2) (430) (430) (860) (440) (440) (880) (856) (857) (1,713)
Other administrative (360) - (360) (367) - (367) (686) - (686)
expenses (note 2)
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Net return before finance costs and taxation 5,127 23,453 28,580 6,216 46,351 52,567 19,324 35,689 54,923
Finance costs (517) (517) (1,034) (447) (446) (893) (1,027) (1,027) (2,054)
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Net return before 4,610 22,936 27,546 5,769 45,905 51,674 18,207 34,662 52,869
taxation
Taxation on net return - - - (2) - (2) (80) - (80)
--------- -------- --------- --------- -------- --------- --------- --------- ---------
Net return after taxation 4,610 22,936 27,546 5,767 45,905 51,672 18,127 34,662 52,789
====== ====== ====== ====== ====== ====== ===== ======= ======
Return per ordinary 1.71p 8.49p 10.20p 2.13p 16.99p 19.12p 6.71p 12.83p 19.54p
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 2024
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 2023 6,755 61,619 1,007 270,051 9,913 349,345
Net return after taxation - - - 22,936 4,610 27,546
Third interim dividend (1.60p) for
the year ended 30 September 2023 - - - - (4,323) (4,323)
Final dividend (1.60p) for
the year ended 30 September 2023 - - - - (4,323) (4,323)
Return of unclaimed dividends - - - - 8 8
------------ ------------ ----------- ----------- ----------- -----------
At 31 March 2024 6,755 61,619 1,007 292,987 5,885 368,253
======= ======= ======= ====== ======= =======
(Unaudited)
Half-year ended 31 March 2023
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 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
======= ======= ======= ====== ======= =======
(Audited)
Year ended 30 September 2023
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 2022 6,755 61,619 1,007 235,389 8,266 313,036
Net return after taxation - - - 34,662 18,127 52,789
Third interim dividend (1.525p) for
the year ended 30 September 2022 - - - - (4,120) (4120)
Final dividend (1.525p) for
the year ended 30 September 2022 - - - - (4,120) (4,120)
First interim dividend (1.525p) for the
year ended 30 September 2023 - - - - (4,120) (4,120)
Second interim dividend (1.525p) for the
year ended 30 September 2023 - - - - (4,120) (4,120)
----------- ----------- ----------- ----------- ------------ -----------
At 30 September 2023 6,755 61,619 1,007 270,051 9,913 349,345
======= ======= ======= ======= ======= =======
____________________
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 2024 31 March 2023 30 September 2023
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss (note 4)
416,381 406,749 392,429
----------- ----------- -----------
Current assets
Debtors 2,713 6,110 2,805
Cash at bank 1,487 2,065 2,926
----------- ----------- -----------
4,200 8,175 5,731
Creditors: amounts falling due within one year
(22,510) (28,650) (19,003)
----------- ----------- -----------
Net current liabilities (18,310) (20,475) (13,272)
----------- ----------- -----------
Total assets less current liabilities 398,071 386,274 379,157
----------- ----------- -----------
Creditors: amounts falling due after more than one year
(29,818) (29,806) (29,812)
----------- ----------- -----------
Net assets 368,253 356,468 349,345
====== ====== =======
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 292,987 281,294 270,051
Revenue reserve 5,885 5,793 9,913
----------- ----------- -----------
Total shareholders' funds 368,253 356,468 349,345
====== ====== =======
Net asset value per ordinary share - basic and diluted (note 7)
136.3p 131.9p 129.3p
======= ======= =======
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 2023 Year ended
31 March 2024 £'000 30 September 2023
£'000 £'000
Cash flows from operating activities
Net gain before taxation 27,546 51,674 52,869
Add back: finance costs 1,034 893 2,054
Add: gains on investments held at fair value through profit or loss (23,883) (46,791)
(36,546)
Withholding tax on dividends deducted at source 54 (16) 41
Decrease/(increase) in debtors 39 (2,120) (1,697)
Increase/(decrease) in creditors 48 (47) (496)
----------- ----------- -----------
Net cash inflow from operating activities 4,838 3,593 16,225
----------- ----------- -----------
Cash flows from investing activities
Purchase of investments (38,942) (33,928) (56,075)
Sale of investments 38,828 24,505 52,572
----------- ----------- -----------
Net cash outflow from investing activities (114) (9,423) (3,503)
Cash flows from financing activities
Equity dividends paid (net of refund of unclaimed distributions and reclaimed
distributions)
(8,638) (8,241) (16,480)
Loans drawn down 71,282 41,096 55,092
Loans repaid (67,782) (33,532) (55,796)
Interest paid (1,022) (837) (1,996)
----------- ----------- -----------
Net cash outflow from financing activities (6,160) (1,514) (19,180)
Net decrease in cash and cash equivalents (1,436) (7,344) (6,458)
Cash and cash equivalents at start of year 2,936 9,395 9,395
Effect of foreign exchange rates (3) 14 (11)
----------- ----------- -----------
Cash and cash equivalents at end of year 1,487 2,065 2,926
====== ====== ======
Comprising:
Cash at bank 1,487 2,065 2,926
====== ====== ======
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 2023 to 31
March 2024 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 2023.
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 2024 31 March 2023 30 September 2023
£'000 £'000 £'000
The return per ordinary share is based on the following figures:
Net revenue return 4,610 5,767 18,127
Net capital return 22,936 45,905 34,662
---------- ---------- ----------
Net total return 27,546 51,672 52,789
====== ====== ======
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
1.71p 2.13p 6.71p
Capital return per ordinary share
8.49p 16.99p 12.83p
---------- ---------- ----------
Total return per ordinary share
10.20p 19.12p 19.54p
====== ====== ======
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 or loss at Level 1 Level 2 Level 3 Total
31 March 2024 (unaudited) £'000 £'000 £'000 £'000
Investments 414,153 - 2,228 416,381
Investments held at fair value through profit or loss at Level 1 Level 2 Level 3 Total
31 March 2023 (unaudited) £'000 £'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
30 September 2023 (audited) £'000 £'000 £'000 £'000
Investments 390,061 - 2,368 392,429
A reconciliation of movements within Level 3 is set out below:
2024
£'000
Opening balance 2,368
Disposal -
proceeds
Transfers in -
Total loss included in the Income Statement
- on investments held (140)
Closing balance 2,228
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
2023.
The fair value of the senior unsecured loan notes at 31 March 2024 has been
estimated to be £24,682,000 (31 March 2023: £25,318,000; 30 September 2023:
£23,224,000). 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 2024 there were 270,185,650 ordinary shares of 2.5p each in issue
(31 March 2023: 270,185,650; 30 September 2023: 270,185,650). During the
half-year ended 31 March 2024 no shares were issued or bought back (31 March
2023 and 30 September 2023: no shares were issued or bought back).
6. Transaction costs
Purchase transaction costs for the half-year ended 31 March 2024 were
£147,000 (31 March 2023: £154,000; 30 September 2023: £232,000). Sale
transaction costs for the half-year ended 31 March 2024 were £16,000 (31
March 2023: £8,000; 30 September 2023: £19,000). 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 136.3p (31 March 2023: 131.9p; 30
September 2023: 129.3p) is based on the net assets attributable to the
ordinary shares of £368,253,000 (31 March 2023: £356,468,000; 30 September
2023: £349,345,000) and on 270,185,650 ordinary shares (31 March 2023 and 30
September 2023: 270,185,650), being the number of ordinary shares in issue at
the end of each period.
8. Dividend
On 30 April 2024, a first interim dividend of 1.6p (2023: 1.525p) per ordinary
share was paid in respect of the year ending 30 September 2024. A second
interim dividend of 1.6p per ordinary share for the year ending 30 September
2024 has been declared and will be paid on 31 July 2024 to shareholders on the
register of members at the close of business on 28 June 2024. The ex-dividend
date will be 27 June 2024. Based on the number of shares in issue on 30 May
2024 of 270,185,650, the cost of the dividend will be £4,323,000 (second
interim dividend for the year ended 30 September 2023: £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 conflicts in
Ukraine and Israel 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 2024 and 31
March 2023 has not been audited nor reviewed by the Company's auditor.
The figures and financial information for the year ended 30 September 2023 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 2023.
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, Mark Lam, 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
www.lowlandinvestment.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
2024. 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 4370/6364
Dan Howe
Head of Investment Trusts
Janus Henderson Investors
Tel: 020 7818 4458
Harriet Hall
PR Director, Investment Trusts
Janus Henderson Investors
Telephone: 020 7818 2919
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incorporated into, or forms part of, this announcement.
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