TIDMLWI
RNS Number : 9505Z
Lowland Investment Co PLC
19 May 2023
JANUS HERSON 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 Half-year ended Year ended
ended 31 Mar 2022 30 Sept
31 Mar 2023 2022
--------------------------- ------------- ---------------- -----------
NAV per ordinary share(1) 131.9p 141.1p 115.9p
Share price(2) 124.3p 133.0p 104.5p
Market capitalisation GBP336m GBP359m GBP282m
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
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023(1)
------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------- ------------
Net
assets(2)
(GBPm) 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 GBP9.4m, 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 Lowland FTSE Index
Weighting Total Return All-Share Return
Weighting
(%) (%) (%) (%)
---------------- ----------- -------------- ----------- --------
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
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 Contribution
Total Return 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 Contribution
Total Return 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 GBP35.1m was invested into UK stocks with
disposals of GBP27.3m 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 GBP'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
Closed End Investments - Investment Trust
Henderson Opportunities Trust focusing primarily on UK smaller companies 4,080 1.0
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
Closed End Investments - Investment Trust
Hipgnosis 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
Venture Capital business investing predominantly
Oxford Sciences Enterprises (2) in Pharmaceuticals and Biotechnology 2,160 0.5
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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
expenses (note
2) (367) - (367) (310) - (310) (645) - (645)
--------- -------- --------- --------- -------- --------- --------- --------- ---------
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
taxation 5,769 45,905 51,674 4,669 (9,595) (4,926) 16,572 (81,319) (64,747)
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
share - basic
and diluted
(note 3) 2.13p 16.99p 19.12p 1.72p (3.55p) (1.83p) 6.10p (30.10p) (24.00p)
====== ====== ====== ====== ====== ====== ===== ====== ======
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 Capital Other
Called account redemption capital Revenue
up share GBP'000 reserve reserves reserve Total
capital GBP'000 GBP'000 GBP'000 GBP'000
GBP'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 Share premium Capital Other
up share account redemption capital Revenue
capital GBP'000 reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
Called premium redemption capital Revenue
up share account reserve reserves reserve Total
capital GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'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
GBP'000 GBP'000 2022
GBP'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 Half-year Year ended
ended ended 31 30 September
31 March 2023 March 2022 2022
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 2022
GBP'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
or loss at 31 March 2023 (unaudited) GBP'000 GBP'000 GBP'000
GBP'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) GBP'000 GBP'000 GBP'000 GBP'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
30 September 2022 (audited) GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------- --------- --------- --------- ---------
Investments 349,173 - 2,908 352,081
A reconciliation of movements within Level 3 is set out below:
2023
GBP'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 GBP25,318,000 (31 March 2022: GBP31,032,000;
30 September 2022: GBP23,851,000). 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 GBP154,000 (31 March 2022: GBP100,000; 30 September 2022: GBP184,000).
Sale transaction costs for the half-year ended 31 March 2023 were
GBP8,000 (31 March 2022: GBP11,000; 30 September 2022: GBP21,000).
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 GBP356,468,000 (31 March 2022: GBP381,170,000;
30 September 2022: GBP313,036,000) 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 GBP4,120,000
(second interim dividend for the year ended 30 September 2022: GBP4,120,000).
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
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/
.
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
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END
IR NKFBBABKDOPD
(END) Dow Jones Newswires
May 19, 2023 02:00 ET (06:00 GMT)
Lowland Investment (LSE:LWI)
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