Lowland projects strong earnings growth for 2011

Lowland Investment Company, a trust managed by Henderson Global Investors, handily outperformed the FTSE All-Share index last year, with a 17.2% increase in net asset value.The trust's net asset value (NAV) per share at the end of September stood at 770.3p, up from 657.3p a year earlier. Factoring in total dividends of 27p, up from 26.5p the year before, NAV total return over the year was 21.9% compared to a 12.5% rise in the value of the FTSE All-Share index (on a total return basis).Gearing at the end of September stood at 12.6%, up from 11.7% at the end of September 2009.Gains on investments held at fair value in the year to end September totalled £30.92m, versus a loss of £3.76m the year before. Income from investments grew to £8.30m from £7.40m the year before.Net return on ordinary activities before taxation jumped to £36.94m from £2.24m a year earlier."Our projections for next year suggest that earnings will grow strongly. Most of the stocks held in the portfolio are generating cash, so our expectation is that earnings growth will lead to robust dividend increases next year. We expect at least to cover the dividend next year, and if our expectations prove correct, we would hope to be in a position to consider a further increase," the company chairman, John Hancox said, after noting that the second interim dividend for the year of 17p (up from 16.5p the year before) required the company to dip into its reserves to pay it."The global economy is expected to continue to grow. For the UK this growth will be relatively weak, as the spending cuts combined with tax increases reduce demand," Hancox said."The [Lowland] portfolio is not a proxy for the UK economy; rather it is a collection of strong companies that bring to the portfolio a diversified earnings profile and the prospect of good dividend growth. We therefore expect the recovery in Lowland's net asset value to continue," he added.