LOWLAND INVESTMENT COMPANY PLC

ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2025

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.

INVESTMENT POLICY

Asset Allocation

The Company invests in a combination of large, medium and smaller companies listed predominantly 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 quarterly 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 20% of the portfolio valuation. Borrowing will be a mixture of short and long-dated debt, depending on relative attractiveness of rates.

Key Data at 30 September

Sources: Morningstar Direct, Janus Henderson, Factset

Historical Performance

Source: Morningstar Direct. All performance on a total return basis 

CHAIR'S STATEMENT

Performance

I am pleased to report that Lowland has delivered another year of strong performance, building on the momentum of the past two years. Over the twelve months to the end of September 2025, the Company achieved a total return on net asset value ('NAV') of 20.8%, significantly outperforming its benchmark, the FTSE All-Share Index, which rose by 16.2% over the same period, and the AIC UK Equity Income sector, which rose by 13.3%. The share price return was even higher, at 24.4%, reflecting a narrowing of the discount over the course of the year. In comparison, the Deutsche Numis Smaller Companies Plus AIM (excluding investment companies) Index rose by 8.3%.

The longer-term performance is now looking increasingly healthy, with the Company outperforming the FTSE All-Share over 3 and 5 years, albeit continuing to lag over 10 years. The performance over 25 years demonstrates the robustness of the investment process, with both the NAV and share price returns substantially outperforming the benchmark (721.8% and 855.7% respectively compared to 298.2%).

Performance was driven primarily by strong stock selection, particularly among the largest companies, with standout contributions from HSBC, Barclays and Standard Chartered. At the other end of the scale, the smaller AIM-listed companies also performed well, boosted by takeovers of two of them. The portfolio as a whole saw five takeovers over the course of the year, as foreign and private investors took advantage of the UK market's modest ratings and solid fundamentals. While this boosts short-term performance, the net effect is a depletion in both size and quality of the UK stock market. It is disappointing that stock market investors still do not appear to appreciate this value, and the UK market therefore continues to shrink and lose successful companies. Aside from the takeover candidates, there continued to be a lack of interest in mid and small-cap UK companies.

The performance of the revenue account, which reflects dividend income, was more muted, but still produced encouraging growth of 7%. As noted in the Fund Managers' Report, companies are increasingly using share buybacks rather than dividends to return capital to shareholders, although those that do pay dividends have generally posted useful increases. The use of gearing has enhanced performance, as has the share buyback (see Fund Managers' Report).

Dividends

The Company is proposing a final dividend of 1.70p per share. If approved at the AGM, this will mean a full year dividend of 6.625p, a 3.1% increase year on year. This dividend is fully covered by earnings per share of 6.73p during the year. The Board remains committed to maintaining the Company's quarterly progressive dividend.

Gearing

The Board sees the ability to deploy gearing as one of the key advantages of the investment trust structure. Lowland has both a £30m fixed term note at 3.15% (due in 2037) and a revolving credit facility of £40m. Gearing was little changed during the year, ending at 11.5% compared to the prior year end figure of 11.0%. Gearing was predominantly within a low to mid teens range during the year, a reflection of the Fund Managers' view that there remain considerable valuation opportunities in UK equities.

Ongoing Charges

Ongoing charges for the year were slightly higher than the previous year at 0.71% (2024: 0.66%), predominantly due to an increase in marketing spend in the year. The Board believes it is important for the Company to be promoted to a new generation of investment trust buyers in order to stimulate demand for the shares and ultimately narrow the discount.

Discount

While the Board continues to believe that a formal discount control mechanism would not be in shareholders' interests, we believe that there are occasions when share buybacks can be of use and have acted accordingly this year. During the financial year, 50.2m shares were bought back. The shares varied between a discount of 6.5% and 12.5%, ending the year at 10.7%.

The Board

This year marked my first as Chair of Lowland, following my appointment at the 2025 AGM and the handover from Robbie Robertson. I would like to take this opportunity to thank Robbie for his many years of outstanding leadership. His strategic guidance, steady stewardship, and commitment to building a strong, supportive, and genuinely diverse Board have been invaluable. We continue to review our Board succession planning regularly to ensure we maintain a healthy balance of experience and fresh perspectives.

Contact with Shareholders

The Board and I are always pleased to hear from shareholders. Please contact me with comments or questions via ITSecretariat@janushenderson.com or sign up for updates on Lowland by using the QR code on the inside front cover of the Annual Report.

Annual General Meeting

The AGM will be held at the offices of Janus Henderson on Wednesday, 28 January 2026 at 12.30pm. Full details of the business to be conducted at the meeting are set out in the Notice of Meeting which is included at the end of the Annual Report. Our Fund Managers, James Henderson and Laura Foll, will be making a presentation to shareholders. The Board and Fund Managers always welcome the opportunity to hear from shareholders, and we encourage as many as possible to attend.

Outlook

As ever, there are reasons to remain cautious about the outlook. The UK continues to face relatively high inflation, rising taxes and a sluggish economic environment. Geopolitical uncertainty persists, and the full impact of tariffs is yet to be determined. Nonetheless, despite strong performance over the last twelve months, the UK equity market continues to trade at a discount to international markets, in particular the US. The portfolio of companies held by Lowland trades at a discount to the broader UK market, and Lowland's shares themselves trade at a discount to its NAV. This valuation is further underpinned by a growing dividend, with the shares currently yielding approximately 4.4%. The Board believes that the Company's shares represent an attractive proposition to investors.

Helena Vinnicombe

Chair

8 December 2025

FUND MANAGERS' REPORT

Source: Morningstar Direct, Janus Henderson. All figures shown on a total return basis

Overview

The returns from the portfolio and more broadly from UK equities have been strong, despite the challenging economic background with minimal economic growth. Simply put, UK companies quoted on the London Stock Exchange are not a proxy for the UK economy but are often vibrant, well-managed businesses with leadership teams adept at managing different market conditions. At times investors can forget this and shy away from UK companies because of perceived macroeconomic concerns. This presents opportunities for a contrarian, patient investor. Patience has sometimes been needed with our approach in recent years; we have bought sound businesses with undemanding valuations but the share price has often remained subdued. Some of this patience has been rewarded over the last year, particularly in the larger companies. The improved short-term performance has lifted the three and five year returns, notably relative to the FTSE All-Share Index.

As well as the upward move in the share price of some of the larger companies, particularly the financials, the pick-up in corporate activity has helped the portfolio. It came as no surprise that takeovers of lowly priced UK businesses, particularly by US companies, would be a feature. An example of this was the pawnbroker, H&T - a long-term holding of Lowland - which was taken over by the US lender FirstCash at a reasonable premium.

In spite of the strong returns over the last year, the valuations on UK equities are, by historical standards, at relatively low levels and the portfolio has in aggregate a valuation considerably below the benchmark index. The dividend yield appears secure and is expected to keep growing as the underlying UK companies have in recent years reduced their debt levels and increased their dividend cover. This puts them in a robust position.

During the year we bought back 50.2m shares. This has enhanced the NAV per share by just over 1% and will, over the course of a full financial year, benefit Lowland's earnings and therefore the dividend growth potential. However, shrinking the number of shares in issue is not a long-term solution for the Company. The lack of investor interest which has resulted in the need for the buybacks can be addressed by continued strong performance and increased marketing stressing the benefit of Lowland for potential investors' savings.

Performance Attribution

The Company's outperformance of its FTSE All-Share benchmark during the year was predominantly driven by the holdings in the largest UK companies that sit within the FTSE 100 Index. Within this, positive stock selection was driven by the financials sector, with a number of banks and insurers performing well. There was also positive stock selection on AIM (comparing the second and fourth columns of the table below), driven by holdings such as Renold and Serica Energy. Within the FTSE 250 and FTSE SmallCap Indices, stock selection was negative, driven by holdings exposed to weaker areas of domestic economic activity such as building materials producers Ibstock and Marshalls, and free-to-air broadcaster STV.

Weights for Lowland and for the FTSE All-Share Index are shown as at the financial year end. Note the weights for Lowland do not add up to 100%, as the small overseas weight and the FTSE Fledgling Index are not shown here. Lowland portfolio returns are shown ex cash

Taken in aggregate and as shown in the waterfall chart below, stock selection was positive during the year, as was the contribution from gearing. The size allocation of the portfolio (in other words holding more than the benchmark in smaller companies) acted as a drag on relative performance, with all smaller company indices producing good absolute returns but underperforming the FTSE 100.

http://www.rns-pdf.londonstockexchange.com/rns/7273K_1-2025-12-8.pdf

Turning to stock specifics, four of the top ten absolute contributors to performance were banks, as the return to a 'normal' interest rate environment allowed them to generate substantially improved returns (much of which were distributed to shareholders via dividends and share buybacks), while loan losses remained subdued. Outside of banks, the holding in Babcock was a good performer, as it benefited from the expectation of growing European defence spending as well as improved operating performance. Takeovers were also a theme, with pawnbroker H&T, industrial chain producer Renold and overseas consumer lender International Personal Finance all receiving takeover approaches.

http://www.rns-pdf.londonstockexchange.com/rns/7273K_2-2025-12-8.pdf

Among the detractors, the majority were cyclical businesses operating in challenging end markets. Free-to-air broadcaster STV, for example, saw a deterioration in its advertising backdrop which led to a substantial drop in earnings. When business confidence falters, it is often TV advertising budgets that are the first to be cut. Having met with the company management team and new chairman, we are confident the company is looking to address its cost base in response to the difficult circumstances. While the end markets of Marshalls (which makes building materials) are clearly different to STV, there are some parallels in the challenges they are facing. In this case, consumer confidence is lacklustre and therefore consumers are deferring areas of discretionary spend (such as a new patio). As with STV, the company is doing what it can to offset the challenges (for example reducing costs and complexity).

The top ten absolute contributors to performance at the stock level were:

* Period 30 September 2024 to 14 August 2025, when the company was taken over

The top ten absolute detractors from performance at the stock level were:

Portfolio Activity

Takeover activity has meant a certain amount of cash coming in to help finance the share buybacks. The announced takeovers of Epwin and H&T brought in proceeds, while the likely increase in defence expenditure meant the share price of Babcock rose, allowing us to reduce the holding at historically high prices. The holding in Marks & Spencer was reduced as some of the recovery in the company's fortunes was priced into the shares. It was a similar story with Tesco where we reduced the holding after a period of share price strength.

We refreshed the portfolio through purchases of companies of all market cap sizes. Examples include Vesuvius, a producer of consumables for the steel industry, and Segro, the industrial property company. We will keep adding to a diverse list of companies of all sizes that are fundamentally good value and selling those where we believe the future prospects are discounted.

Portfolio Valuation

Since the Company was launched in the early 1960s, Lowland has invested across the breadth of the UK market (in small, medium and large companies). These smaller, more domestic businesses continue to see their valuations penalised relative to larger, majority overseas earners. For this reason, Lowland continues to trade at a valuation discount to the broader UK equity market, with a 12-month historic P/E on the portfolio of 12.1x as at 30 September 2025, compared to 13.8x for the FTSE All-Share.

Dividends

It was pleasing to see a recovery in revenue return per share to 6.73p this year, covering the proposed total dividend of 6.625p, after the modest fall last year. We spoke in the report last year about the growing tendency for UK companies to buy back shares. This year has seen a continuation of that trend, with even a number of the smaller companies held choosing to initiate share buybacks in preference to dividend distributions.

For Lowland, the impact has been that special dividends as a proportion of overall investment income have been on a declining trend in recent years and this year totalled just 4% of overall investment income. If we compare this to a decade ago, in 2015 special dividends totalled 14% of investment income. This trend does not overly concern us so long as share buybacks are a use of genuinely surplus capital, rather than crowding out spend that could be used for longer-term earnings growth potential, such as capex. Broadly, where we see companies buying back shares, it tends to be company boards responding to the perceived undervaluation of their shares, so we could feasibly see the trend reverse in a more buoyant backdrop for UK equity valuations (it was encouraging to see Next suspend its buyback for precisely this reason).

Outlook

Analysts' consensus forecasts suggest that earnings from the underlying companies in the portfolio are expected to grow at around 9%. The earnings growth will probably result in the same sort of level of dividend growth. Lowland will benefit from fewer shares in issue and this helps to underpin the dividend growth going forward.

There are plenty of challenges facing the UK. A further reduction in interest rates is needed in order to stimulate broader economic activity. Should rates decline, we would expect this to be reflected across the yield curve, with the 30-year gilt yield falling from its current level of 5.2%. This would likely benefit companies whose asset valuations are linked to long-term yields - particularly high-quality property firms such as British Land and Shaftesbury. In anticipation of this, we have been increasing our exposure to the property sector. Additionally, we have added to the holdings in building materials companies. These businesses are well-positioned to benefit from any uptick in construction and infrastructure activity, given their high operational gearing. Historically, analysts have tended to underestimate the earnings potential of such firms during periods of recovery, and we believe current forecasts may similarly undervalue their growth prospects.

Economic growth has the potential to alleviate many of the prevailing concerns surrounding the UK. As activity picks up, tax revenues will improve and therefore the Government's fiscal position will not look as dire as currently suggested. Productivity, which remains subdued, is likely to recover as turnover increases and capital investment begins to flow through the economy. This should help lift some of the current gloom. In the midst of a normal economic cycle, despondency is always greatest somewhere near the bottom. Therefore we are taking advantage of the closed-end structure by having a reasonable level of debt. We continue to add exposure to UK domestic companies whose valuations, in our view, significantly undervalue their underlying strengths and earnings potential.

James Henderson and Laura Foll

Fund Managers

8 December 2025

    Twenty Largest Holdings as at 30 September 2025

     The stocks in the portfolio are a diverse mix of businesses operating in a wide range of end markets.

*Not in the top 20 largest investments last year

1. Overseas listed stock (Ireland)

2. AIM stock

MANAGING RISKS  

The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks and uncertainties, including emerging risks, facing the Company. The assessment took into account those risks that would threaten its business model, future performance, solvency or liquidity and reputation. The Board regularly considers the principal risks facing the Company and has drawn up a matrix of risks. The Board has put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy.

The principal risks which have been identified and the steps taken by the Board to mitigate these are set out in the table below. The principal financial risks are detailed in note 14 to the financial statements in the Annual Report. Details of how the Board monitors the services provided by Janus Henderson and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls section of the Corporate Governance Statement in the Annual Report.

Emerging Risks

In addition to the principal risks facing the Company, the Board also regularly considers potential emerging risks, which are defined as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of the probability of them happening and the possible effects on the Company. Should an emerging risk become sufficiently clear, it may be moved to a principal risk.

The Board has not identified any emerging risks which are not already encompassed within the existing principal risks.

VIABILITY STATEMENT

The Company is a long-term investor; as such, the Board believes it is appropriate to assess the Company's viability over a five-year period in recognition of its long-term horizon and what the Directors believe to be investors' horizons, taking account of the Company's current position and the potential impact of the principal and emerging risks and uncertainties as documented above. The Directors have completed their assessment for the year under review and report as set out below.

The assessment has considered the impact of the likelihood of the principal and emerging risks and uncertainties facing the Company, in particular investment strategy and performance against benchmark, whether from asset allocation or the level of gearing, and market risk, including climate risk, in severe but plausible scenarios, and the effectiveness of any mitigating controls in place.

The Board has reviewed three additional model scenarios which evaluate the impact on the revenue forecast and reserves. These range from a worst case scenario which includes a 10% reduction in income and net assets, through to a scenario where there is no income growth and no reduction in income or net assets. Increasing dividends to shareholders could continue under all three scenarios, although the Company would need to use its capital reserves in some cases. None of the results of the scenarios used would therefore threaten the viability of the Company.

The Board has taken into account the liquidity of the portfolio and the gearing in place when considering the viability of the Company over the next five years and its ability to meet liabilities as they fall due. This included consideration of the duration of the Company's loan facilities and how a breach of the loan facility covenants could impact on the Company's liquidity, NAV and share price.

The Board does not expect there to be any significant change in the current principal risks and adequacy of the mitigating controls in place. Also, the Directors do not envisage any change in strategy or objectives or any events that would prevent the Company from continuing to operate over that period as the Company's assets are liquid, its commitments are limited and the Company intends to continue to operate as an investment trust. Only a substantial financial crisis affecting the global economy could have an impact on this assessment.

In coming to this conclusion, the Directors have considered the ongoing impact of global conflicts and changes in the international political landscape, in particular the impact on income and the Company's ability to meet its investment objective. The Board does not believe that these will have a long-term impact on the viability of the Company and its ability to continue in operation, notwithstanding the short-term uncertainty it has caused in the markets.

Based on this assessment, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five-year period.

The Directors have also concluded that the Company has adequate resources to continue in operational existence until 31 December 2026, which is a period of at least 12 months from the date of approval of these financial statements, and it is therefore appropriate to prepare these financial statements on a going concern basis.

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. The fees and expenses paid to Directors are set out in the Annual Report. There were no outstanding amounts payable at the year 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 marketing services, there have been no material transactions with Janus Henderson affecting the financial position of the Company during the year under review. More details on transactions with Janus Henderson, including amounts outstanding at the year end, are given in note 20 in the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

In accordance with Disclosure Guidance and Transparency Rule 4.1.12, each of the Directors, who are listed below, confirms that, to the best of their knowledge:

·   the Company's financial statements, which have been prepared in accordance with UK Accounting Standards and applicable law give a true and fair view of the assets, liabilities, financial position and return of the Company; and

·   the Strategic Report, Report of the Directors and financial statements include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Helena Vinnicombe

Chair

8 December 2025

INCOME STATEMENT

The total columns of this statement represent the Profit and Loss Account of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. The Company had no other comprehensive income. The net return is both the profit for the year and the total comprehensive income.

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF FINANCIAL POSITION

STATEMENT OF CASH FLOWS

  NOTES TO THE FINANCIAL STATEMENTS

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