Lowland chops management fee as its interims show the fund outperforming its benchmark.
In Lowland’s current management agreement the management fee is charged at 0.5% per annum. This rate will continue to apply to the first GBP375m of net chargeable assets but, with effect from 1 July 2017, a reduced management fee of 0.4% per annum on assets above GBP375m will apply.
The cap on total fees, base management fee plus performance fee, of 0.75% per annum will be replaced by a cap on the performance fee of 0.25% per annum so that the maximum of fees payable will therefore be 0.75% per annum on the first GBP375m and 0.65% per annum on the excess.
The amendments have also clarified that net chargeable assets should reflect the company’s unsecured loan note at fair value. Net chargeable assets amounted to GBP423 million at 30 April 2017.
Interim results
The chairman said: “Over the six months under review the Company’s net asset value total return was 10.5%, which compares with a total return of 8.1% from the FTSE All-Share Index. Equities rose as the UK economy proved to be resilient to the surprise vote in favour of leaving the EU. The growth in consumer spending has not suffered and the fall in sterling has started to stimulate exports. Inflation began to rise as the weakness of sterling has increased the cost of imported goods. This has not so far caused any concerns in the Gilt market. Low interest rates at all maturities underpin the equity market making equity dividends relatively appealing. Companies that can increase their dividends from a reasonable initial yield are attracting investor support. Our focus on this type of company is a major contributor to the Company’s out-performance.
The Company has long operated a progressive dividend policy, with annual dividends having increased in every year since 1975, except in 2009, when it was held. Since we started paying quarterly dividends in 2013 the final quarterly dividend has been increased each year and has set the new base level for the following three quarterly dividends.
It is our ambition to continue this pattern of dividend increase over the next three years should circumstances permit. The Board would only change the pattern if it felt that it might hold back capital growth. Capital growth over the long term is essential to give us the base for greater dividends. The Company’s annual average rate of dividend growth over the last twenty five years has been 7%.
The Company’s revenue earnings per share (‘EPS’) in the six months under review totalled 16.2p which compares with 13.7p last year. Excluding special dividends EPS totalled 15.1p, compared to 12.6p last year. The Company paid a first interim dividend of 12p per share at the end of April and has declared a second interim dividend of 12p, payable at the end of July. Interim dividends in respect of the first half of the current financial year therefore amounted to 24p per share, an increase of 9.1% from 22p at the same time last year. Barring unforeseen circumstances, the Board’s intention is to pay a total dividend for this financial year of 49p, an increase of 8.9% on last year’s 45p.”
LWI : Lowland chops management fee