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%
|
Benchmark1 Total
Return
|
6.9%
|
Dividend in respect of the
period
|
3.20p
|
1 FTSE All-Share Index
Financial highlights
|
Half-year
ended
31 Mar 2024
|
Half-year
ended
31 Mar 2023
|
Year ended
30 Sept
2023
|
NAV per ordinary
share1
|
136.3p
|
131.9p
|
129.3p
|
Share price2
|
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
yield3
|
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 Price1
|
8.9
|
1.8
|
14.4
|
17.1
|
29.5
|
769.0
|
Benchmark2
|
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
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
As at 31
Mar
20241
|
Net assets2
(£m)
|
362
|
355
|
387
|
440
|
439
|
386
|
279
|
394
|
313
|
349
|
368
|
NAV3*
|
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
|
3.20p4
|
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
|
Benchmark1
|
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
|
Benchmark1
|
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
|
Benchmark1
|
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
Company
|
Sector
|
Market
value
£'000
|
% of
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 companies
|
4,080
|
1.0
|
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)
Half-year
ended
31 March
2024
|
(Unaudited)
Half-year
ended
31 March
2023
|
(Audited)
Year
ended
30
September 2023
|
|
Revenue
return
£'000
|
Capital
return
£'000
|
Total
£'000
|
Revenue
return
£'000
|
Capital
return
£'000
|
Total
£'000
|
Revenue
return
£'000
|
Capital
return
£'000
|
Total
£'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
expenses (note 2)
|
(360)
|
-
|
(360)
|
(367)
|
-
|
(367)
|
(686)
|
-
|
(686)
|
|
---------
|
--------
|
---------
|
---------
|
--------
|
---------
|
---------
|
---------
|
---------
|
|
|
|
|
|
|
|
|
|
|
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
taxation
|
4,610
|
22,936
|
27,546
|
5,769
|
45,905
|
51,674
|
18,207
|
34,662
|
52,869
|
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
share - basic and diluted
(note 3)
|
1.71p
|
8.49p
|
10.20p
|
2.13p
|
16.99p
|
19.12p
|
6.71p
|
12.83p
|
19.54p
|
|
======
|
======
|
======
|
======
|
======
|
======
|
=====
|
======
|
======
|
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
|
|
Called up
share capital
£'000
|
Share
premium account
£'000
|
Capital
redemption
reserve
£'000
|
Other
capital reserves
£'000
|
Revenue
reserve
£'000
|
Total
£'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
£'000
|
Share
premium account
£'000
|
Capital
redemption
reserve
£'000
|
Other
capital reserves
£'000
|
Revenue
reserve
£'000
|
Total
£'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
|
|
Called up
share capital
£'000
|
Share
premium
account
£'000
|
Capital
redemption
reserve
£'000
|
Other
capital reserves
£'000
|
Revenue
reserve
£'000
|
Total
£'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)
As at
31 March
2024
£'000
|
(Unaudited)
As
at
31 March
2023
£'000
|
(Audited)
As
at
30
September 2023
£'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)
Half-year
ended
31 March
2024
£'000
|
(Unaudited)
Half-year
ended 31 March 2023
£'000
|
(Audited)
Year
ended
30
September 2023
£'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)
Half-year
ended
31 March
2024
£'000
|
(Unaudited)
Half-year
ended
31 March
2023
£'000
|
(Audited)
Year
ended
30
September 2023
£'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
31
March 2024 (unaudited)
|
Level 1
£'000
|
Level 2
£'000
|
Level 3
£'000
|
Total
£'000
|
|
Investments
|
414,153
|
-
|
2,228
|
416,381
|
|
|
|
|
|
|
|
Investments held at fair value
through profit or loss at
31 March 2023 (unaudited)
|
Level
1
£'000
|
Level
2
£'000
|
Level
3
£'000
|
Total
£'000
|
|
Investments
|
403,775
|
-
|
2,974
|
406,749
|
|
|
|
|
|
|
|
Investments held at fair value
through profit or loss at
30 September 2023
(audited)
|
Level
1
£'000
|
Level
2
£'000
|
Level
3
£'000
|
Total
£'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
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
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.