Strategic Report
Key Data	2
Historical Performance	3
Chairman’s Statement	4-6
Fund Managers’ Report	7-11
Portfolio Analysis	12-13
Twenty Largest Holdings	14-17
Investment Portfolio	18-20
Our approach to Environmental, Social and Governance Matters	21-23
Business Model	24-27
Biographies	28-29
Corporate Information	30-34

Corporate Report
Report of the Directors	36-37
Statement of Directors’ Responsibilities	38
Directors’ Remuneration Report	39-41
Corporate Governance Statement	42-48
Report of the Audit Committee	49-51
Independent Auditor’s Report	52-57

Financial Statements
Income Statement		59
Statement of Changes in Equity		60
Statement of Financial Position		61
Statement of Cash Flows	62
Notes to the Financial Statements	63-76
Securities Financing Transactions	77-78
General Shareholder Information	79-80
Glossary	81
Alternative Performance Measures	82-83

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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 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 never exceed 29.99% 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.

Strategic Report: Key Data

Net Asset Value Total Return^1,8		Benchmark Total Return²
2023		2023
17.2%		13.8%

2022		2022
-14.8%		-4.0%
Growth in Dividend		Dividend for the Year³

2023		2023
2.5%		6.25p

2022		2022
1.2%		6.10p

	Year ended 30 September 2023	Year ended 30 September 2022
NAV per share at year end (debt at par)4	129.3p	115.9p
NAV per share at year end (debt at fair value)4,8	131.7p	118.1p
Share price at year end5	113.0p	104.5p
Market Capitalisation	£305m	£282m
Dividend per share	6.25p	6.10p
Ongoing Charge8	0.6%	0.6%
Dividend Yield6,8	5.5%	5.8%
Gearing at year end8	12.3%	12.5%
Discount at year end7,8	14.2%	11.5%
AIC UK Equity Income Sector – Average Discount	5.5%	3.9%

1. Net asset value per share total return (including dividends reinvested) with debt at fair value

2. FTSE All-Share Index (including dividends reinvested)

3. Includes the final dividend of 1.6p per ordinary share for the year ended 30 September 2023 that will be put to shareholders for approval at the Annual General Meeting on Wednesday 24 January 2024

4. NAV per share for both figures is before deduction of the third interim dividend paid in October of each year

5. Mid-market closing price

6. Based on dividends paid and payable in respect of the financial year and the share price at year end

7. Calculated using year end fair value NAVs including current year revenue

8. Alternative Performance Measures (‘APM’)

Sources: Morningstar Direct, Janus Henderson, Factset

A glossary of terms including Alternative Performance Measures is included on pages 81 to 83

Strategic Report: Historical Performance1

Performance

	1 year %	3 years %	5 years %	10 years %	25 years %
Net asset value3	17.2	50.8	2.5	47.6	706.1
Share price3	13.9	46.0	-3.0	29.5	826.4
FTSE All-Share	13.8	39.8	19.7	71.8	309.1

Source: Morningstar Direct

Lowland’s Dividend Growth over the past 25 years as compared to the Retail Price Index

Total Return basis and shown on a logarithmic scale (30 September 1998 = 100) Source: Janus Henderson

Historical Performance

Year ended 30 September	Dividend per ordinary share in pence1	Total return/(loss) per ordinary share in pence1	Net revenue return per ordinary share in pence1	Total net assets in £’000	Net asset value per ordinary share in pence1	Share price per ordinary share in pence1
2013	3.400	33.01	3.67	347,202	130.7	132.5
2014	3.700	7.33	3.94	361,856	134.6	135.5
2015	4.100	1.18	4.64	354,563	131.8	128.7
2016	4.500	15.64	4.77	386,910	143.2	133.7
2017	4.900	24.32	4.91	439,896	162.8	150.4
2018	5.400	4.74	5.86	438,934	162.5	151.5
2019	5.950	(13.87)	6.80	385,904	142.8	128.0
2020	6.000	(33.69)	3.38	278,653	103.1	91.4
2021	6.025	48.79	4.27	394,285	145.9	131.5
2022	6.100	(24.00)	6.10	313,036	115.9	104.5
2023	6.250	19.54	6.71	349,345	129.3	113.0

1. Comparative numbers for 2013 to 2021 have been restated to reflect the ten for one share split which took place on 7 February 2022

2. Includes the final dividend of 1.6p per ordinary share for the year ended 30 September 2023 that will be put to shareholders for approval at the Annual General Meeting on Wednesday 24 January 2024

3. Alternative Performance Measures. Further details can be found on pages 82 to 83

Chairman’s Statement

Robert Robertson

Chairman

Strategic Report: Chairman’s Statement

Performance

I am pleased to report that your Company made sound progress during its sixtieth year in meeting its twin objectives of growth in capital and income. Net Asset Value (‘NAV’) increased by 17.2%, outstripping the FTSE All-Share benchmark return of 13.8%. In addition, Earnings per Share (‘EPS’) grew by 10% to 6.7p, fully covering the recommended total dividend of 6.25p. It is a source of some satisfaction that the Company has maintained or increased its annual dividend each year since its first dividend in 1963.

I will cover capital growth first. In previous years we have referred to the Company’s weighting in small and medium- sized companies, much greater than that of the Company’s benchmark, as having held back capital growth. The long- term trend for such companies to outperform larger companies was interrupted by Brexit and then COVID. We are confident that the trend will reverse, but it has not happened yet. In the year ended 30 September 2023, the FTSE 100 returned 14.7%, a better return than the indices for medium and smaller companies, and most especially AIM, which registered a negative 8.3%. Lowland’s portfolio was invested 47.2% in the FTSE 100, against the benchmark’s 84.4%. However, the portion of Lowland’s portfolio invested in each segment of the market outperformed each of the relevant indices, as indicated below. This enabled Lowland to beat the benchmark, an achievement given its bias to the smaller end of the market.

Total Returns (%)

	Lowland	Index
FTSE 100	19.7	14.7
FTSE 250	16.5	10.0
FTSE SmallCap	17.6	7.5
FTSE AIM All-Share	4.1	-8.3
Overall	17.2	13.8*

*Benchmark – FTSE All-Share

I mentioned last year that the Board also monitors performance against a composite index, being 50% FTSE All-Share/50% Numis Smaller Companies ex Investment Trusts, which is more representative of the universe in which we invest. Lowland substantially outperformed this composite index which returned 8.4%. We aim to beat the FTSE All- Share, but use the composite index as a check – if we are not beating the All-Share, is it because we are consciously biased to out-of-fashion segments of the market, or are we getting it wrong. In this case the health check is, thankfully, doubly reassuring.

The Fund Managers go into more detail as to the weighting of the portfolio, and indeed the reasons why it performed very satisfactorily. It is worth highlighting that a significant factor underlying performance has been the number of take-overs at values which, while at a premium to pre-bid prices, are not necessarily reflective of the true value of the company. I refer further to this in the outlook section on the next page.

Turning to the revenue account, your Board is highly cognisant of the importance to shareholders of a regular, dependable and growing level of dividend. Despite moments of concern resulting from the hiatus in normal economic activity which accompanied COVID, the Board stuck by its progressive quarterly dividend policy. It did this mindful of the availability of reserves, and with confidence that the Company’s income would recover. Happily, that confidence has been rewarded and the EPS increased by 10% in the year.

Dividends

Having maintained the first and second dividends at 1.525p, your Board had sufficient confidence to increase the third and now recommend an increase in the final dividend, to 1.60p. These last two dividends represent an increase of 4.9%, resulting in a 2.5% increase in the year’s total dividend.

Total dividends for the year have risen each year since 2009 and have been at least maintained since the Company’s launch in 1963. In 2012, prompted by feedback from shareholders at an AGM, the Company adopted a quarterly dividend policy.

It is fair to say that when we began paying quarterly dividends, we did not necessarily envisage that each quarterly dividend would be equal to or greater than its previous equivalent. We have nurtured this practice since 2012 and feel that it has been suitably tested under fire, to be promoted from an aspiration to a firm Board policy, which we will strive hard to follow. Research tells us that a regular and growing dividend is especially valued by private investors; we believe we will be able to meet their requirement.

It flows from the above that shareholders should expect to receive quarterly dividends of no less than 1.60p in respect of the 2024 financial year.

Gearing

The Company has a medium-term borrowing facility of £40m, and £30m of long-term debt at a fixed rate of 3.15%, maturing in 2037. We see the ability to gear the portfolio as a key benefit of an investment trust. We do not tend to move gearing levels dramatically. Gearing amounted to 12.3% at the year-end compared with 12.5% a year earlier.

Ongoing charges

Ongoing charges remained around 0.6%. We reviewed the fee arrangements with Janus Henderson during the year and believe them to be competitive.

Discount

During the financial year the discount varied from 5.2% to 14.9%, ending the year at 14.2%. The Board has a clear policy with regard to discount, which is set out on page 33.

The Board

As previously indicated, an external recruitment process is underway for the appointment of a new Director. We expect to announce the appointment shortly. The process involved a diverse range of individuals, and the successful candidate will be the one we believe will contribute most to the success of the Company.

I intend to step down at the 2025 AGM. My replacement as Chairman is expected to be one of the serving Directors, and will be announced before then.

The changes set out here are part of the orderly planned process of Board renewal, and are consistent with the policy on tenure and diversity set out on pages 45 to 47.

Contact

I and the Board 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 this report.

AGM

The AGM will be held at the Janus Henderson office on 24 January 2024. Full details of the business to be conducted at the meeting are set out in the Notice accompanying this 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

Chairmen, and other commentators, are apt to open by remarking on ‘uncertain times’. No-one would dispute that we are in such times now. In reality, however, we always are, and what varies is the depth of uncertainty.

I think it more constructive to comment on some more measurable considerations, and one in particular, which is value. The Fund Managers refer to the miserly valuation of the UK market in general, the discount then applied to the smaller end of the market, and finally to the extraordinarily low valuation of our own portfolio, chosen as it is to grow value and income. This amounts to 8.5 times historic earnings, which reduces to 7.3 times on a ‘look-through’ basis after taking the Lowland share price discount into account. The attractiveness of valuations is underlined by two other considerations; firstly the level of take-over activity, and secondly the dividend yield, which amounts to 5.5% on your Company’s shares.

There can have been few times when valuation considerations have been more persuasive.

Robert Robertson

Chairman

4 December 2023

Fund Managers’ Report

James Henderson

Fund Manager

Laura Foll

Fund Manager

Strategic Report: Fund Managers’ Report

Overview

It is pleasing to report on a year of positive absolute NAV growth, modest outperformance versus the Company’s FTSE All-Share benchmark and further income recovery. On a longer term basis the Company’s NAV performance remains volatile. The three year NAV return captures the post pandemic economic recovery, while the five year returns remain disappointing, reflecting poor performance in the years following the Brexit referendum.

	1 year %	3 years %	5 years %	10 years %
Lowland NAV	17.2	50.8	2.5	47.6
Lowland Share Price	13.9	46.0	-3.0	29.5
FTSE All-Share	13.8	39.8	19.7	71.8

It is always worth remembering that our portfolio is invested in a blend of small, medium and large UK companies, which results in greater exposure to the UK economy than the highly international FTSE All-Share benchmark. This is for the simple reason that smaller businesses tend to focus first on their domestic market before expanding overseas. This means that when the UK economy performs better than expected (as the ONS data now shows that it did in the post-pandemic recovery), Lowland has a tendency to outperform. Performance in the 2023 financial year reflects this. In the autumn of 2022 the consensus among economists was that 2023 would be a recession year, whereas the consensus is now for modest real GDP growth of 0.4%.

While it is gratifying to be reporting on a period of better NAV growth and a modestly better than expected UK economy, arguably the Company’s performance this year has come about due to a continuation of a concerning trend in the UK equity market, namely de-equitisation.

We have long written about the valuation discount of UK equity markets relative to developed overseas markets. This valuation gap has shown no signs of narrowing (see chart below).

UK equity valuations relative to Rest of World

Source: JP Morgan as at 9 October 2023

There are a variety of ways this valuation discount could theoretically close:

● Positive UK net fund flows, raising valuation levels (a ‘rising tide lifts all boats’ scenario). This has (so far) not been the case, with UK fund flows disappointingly showing no signs of improving (see chart below).

UK Equity Net Fund Flows (£bn)

Source: Numis as at 9 October 2023

● Falling overseas valuations. This has also not been the case with the US cyclically adjusted P/E, for example, reaching 31.7x.

● Takeover activity, whether from private equity or peers. This is what we have seen this year, where we have had six companies bid for (namely DWF, Devro, Numis, K3 Capital, Finsbury Food and Appreciate Group).

Our frustration is that while we have seen a short-term performance benefit from these takeovers, many are at valuation levels that do not reflect the long-term prospects of the business. Therefore a short-term boost to performance means these companies are lost to the UK stock market, with very little replacing them via Initial Public Offerings (‘IPOs’).

In order to counteract this trend, smaller company boards (often feeling vulnerable to acquisition) are announcing increasing share buyback activity (see chart overleaf). While this is boosting valuation levels across certain companies, and is arguably attractive from a capital allocation perspective given where UK valuation levels are, it further contributes to the de-equitisation of the market. We are hopeful that in writing next year’s report we will be able to demonstrate better underlying health of the UK equity market, whether through more buoyant economic conditions and/or from government initiatives focused on the area (such as the Mansion House Compact).

2.5% of the FTSE 350 market capitalisation disappeared in buybacks in 2022 alone, a trend which has accelerated in 2023.

FTSE 350 Share Buybacks (£bn, LHS) and Buyback Yield (%, RHS)

Source: FTSE Russell, Bloomberg, HSBC

Performance attribution

This financial year saw a repeat of trends in the previous year, in that small and medium sized UK companies underperformed larger ones (see the fifth column, ‘index total return’ in the table below). It is therefore pleasing to note that Lowland outperformed its FTSE All-Share benchmark despite this ‘company size’ headwind to performance. If we break down the portfolio returns by index, it can be seen that in each size allocation, the Company outperformed (comparing the third and fifth columns in the table). We go into more details of the stock-specific drivers of this later in this section.

	Lowland weighting (%)	Lowland total return (%)	FTSE All-Share weighting (%)	Index total return (%)
FTSE 100	47.2	19.7	84.4	14.7
FTSE 250	18.3	16.5	13.4	10.0
FTSE Small Cap	12.9	17.6	2.2	7.5
FTSE AIM All-Share	13.6	4.1	–	-8.3
Overall	92.0	17.2	100.0	13.8

Weights for Lowland and the FTSE All-Share are shown as at financial year end. Note the weights for Lowland do not add up to 100, as there is a small % of the portfolio held overseas and held in the FTSE Fledgling Index. Lowland portfolio returns are calculated excluding cash

Illustrated in a different way, while there was a ‘size allocation’ headwind to performance this year, this was more than offset by stock selection (and gearing), resulting in NAV growth ahead of the benchmark:

Attribution Returns

Source: Janus Henderson Investors, Factset

While in the previous financial year there was a clearly identifiable reason for the FTSE 100 outperformance, which was driven by the war in Ukraine (causing fossil fuel prices to increase materially, boosting large index positions such as Shell and BP), this year the reasons for the FTSE 100 outperformance were less clear cut.

Smaller companies are, on average, both more domestic in their exposure and also more cyclical. There was therefore an element this year of smaller company shares de-rating in the face of perceived earnings risk, as interest rates rose and consumers saw real wages under pressure. There were clear pockets of weakness in the economy and this can be seen in the stock detractors table (the second table overleaf). Advertising revenue, for example, has been under pressure as corporates looked to curtail spending – this caused earnings pressure in companies such as free-to-air broadcaster STV. There were also, however, pockets of strength – infrastructure spending, for example, particularly in the US, has continued to see good growth and this benefitted industrial conglomerate Hill & Smith (see the contributors table overleaf). As always, a top down view of the economy will only take you so far and it is important to remember we are investing in individual companies with the ability to steer their own ship, not proxies for the broader economy.

Turning to stock specifics, the top ten contributors to relative return during the year were:

	Company Name	Contribution to relative return (%)	Share price total return (%)
1	Diageo (not held)	+1.3	-18.2
2	British American Tobacco (not held)	+0.9	-13.4
3	Marks & Spencer	+0.8	+139.8
4	K3 Capital*	+0.6	+51.5
5	International Personal Finance	+0.6	+67.0
6	Hill & Smith	+0.5	+94.0
7	FBD Holdings	+0.5	+41.9
8	Vertu Motors	+0.5	+82.9
9	Numis	+0.4	+56.0
10	Devro*	+0.4	+100.1

*Share price performance up until the point of acquisition

Source: Share price total return sourced from Bloomberg. Attribution sourced from Factset

Looking in more detail at the drivers of these best performers, they tend to fall into distinct categories:

● Takeovers. Three of the top ten best performers were taken over (K3 Capital, Numis and Devro). Two of these were taken over by overseas peers, while K3 Capital was purchased by private equity.

● Shareholder returns via special dividends and buybacks. Vertu Motors, for example, was consistently buying back shares during the year while FBD Holdings paid a large special dividend.

● Earnings recovery, from a low starting valuation. Marks & Spencer and International Personal Finance have both positively surprised on earnings in the face of high levels of scepticism and low starting valuations.

● Structurally growing markets. Hill & Smith earns the majority of its profits in the US, where it is benefitting from growing infrastructure spend.

The largest ten detractors from relative return were:

	Company Name	Contribution to relative return (%)	Share price total return (%)
1	Vanquis Banking	-0.9	-17.6
2	HSBC (underweight)	-0.8	+46.0
3	Serica Energy	-0.7	-27.4
4	Somero Enterprises	-0.5	-25.2
5	STV	-0.4	-29.8
6	3i (not held)	-0.4	+96.0
7	CRH (not held)	-0.4	+59.4
8	Direct Line	-0.4	-7.2
9	Ilika	-0.4	-42.2
10	Strix Group	-0.4	-54.7

Source: Share price total return sourced from Bloomberg. Attribution sourced from Factset

Looking in more detail at the detractors they broadly fall into two categories (focusing on companies where we are overweight relative to the benchmark):

● Challenging end markets. Serica Energy, for example, saw falling fossil fuel prices (as well as a windfall tax in the North Sea), Somero Enterprises saw a challenging US construction market and falling advertising revenue impacted STV. In these cases we think long term fundamentals are sound and valuation levels are attractive, but they have been set back by external factors.

● Poor execution. These holdings have had operational issues which cannot be attributed to end market weakness. For example Vanquis Banking disappointed on cost overruns (the CEO has since left and we have been engaging with his replacement) and Direct Line reported weak underwriting results on mispricing their policies (the CEO has been replaced, and we have reduced the holding).

Portfolio valuation

While the first chart in this Managers’ Report demonstrates the degree of UK equity valuation discount relative to overseas peers, what is less widely discussed is that there is a subset of UK equities that trades on an even larger valuation discount. Domestic earners within the UK have meaningfully underperformed in the years following the Brexit referendum. Lowland, because of its investment in a blend of small, medium and large companies, is structurally more exposed to ‘domestic UK’. If, for example, we look at underlying portfolio sales, Lowland’s portfolio revenues are 49% in the UK compared to only 23% in the FTSE All-Share benchmark (both figures as at end September ’23). Lowland therefore captures more of these lowly valued domestic businesses. This can be seen at the portfolio level, where the portfolio trades at a discount to both the benchmark, and also relative to its own 10 year average:

12m historic P/E as at 30 September 2023

10 year average 12m historic P/E as at 30 September 2023

Lowland Portfolio

8.5x

12.5x

Source: Factset, weighted harmonic average

Note that at the financial year end, the Company also traded at a discount to its net asset value of 14.2% (NAV at fair value). Therefore taking this additional layer of discount into account, the current ‘look-through’ valuation on the portfolio is 7.3x

12 month historic earnings.

Portfolio Activity

The level of activity over the year has been low. Turnover, as defined by purchases plus sales divided by two, was £54.5m or 14.6%. Given the weakness in medium and smaller companies there is a desire to refresh the portfolio with purchases in this area. However, the headwinds of poor investor sentiment and a weakening economy have meant

it has been premature to buy other than very selectively.

The five largest purchases during the year were:

● Vanquis Banking

● Legal & General

● Conduit Holdings

● Marshalls

● Strix Group

Of the five largest purchases over the year, four were in smaller companies and three of those have fallen significantly since purchase, with one rising (Conduit). At the time of purchase the three fallers had already experienced substantial share price falls. However, in a bear market a large fall does not mean ‘it is all in the price’. With this in mind we have trodden gingerly in buying stocks that are at seeming bargain levels; they can fall further. We are positioned to buy more in the smaller company area as the weighting to it in the portfolio is low by historic standards and it is in smaller companies over the long term that the best returns have been made. We will slowly and selectively be buyers of smaller companies so the portfolio will be well positioned for a return of some investor confidence, which in time will happen.

The five largest sales during the period were:

● K3 Capital*

● AstraZeneca

● Numis*

● Convatec

● Devro*

Three of these (starred) came after cash takeover approaches; this should remind investors that there is very real long-term value in the quoted sector.

Dividends

2023 saw a further recovery in investment income, with the Company generating 6.7p in revenue earnings per share compared to 6.1p in the previous year. Excluding special dividends, revenue earnings per share were 6.4p, with positions such as Irish insurer FBD Holdings and iron castings producer Castings paying large special dividends. Elsewhere there was a further recovery in dividends from holdings such as Shell and BP which cut their dividends materially during the pandemic. Encouragingly for future dividends, the dividend pay-out ratio in the UK remains modest (see chart below). In our view this is because following the pandemic (and its associated widespread dividend cuts), some companies took the opportunity to permanently lower their pay-out ratios to arguably more sustainable levels.

Dividend payout %

Source: Lazarus Economics as at 11 September 2023

ESG

Our approach to environmental, social and governance (ESG) matters is laid out in more detail on pages 21 to 23 of this Report. We hold the view that seeking to better understand how companies are managing material ESG factors and engaging with them is a route more conducive to long-term progress than rigid sector exclusions. We have included case studies on some recent discussions with companies on pages 21 and 22.

Outlook

When we were writing last year’s annual report the expectation was that 2023 would be a recession year. This has not proven to be the case. While 0.4% real GDP growth in ‘23 (expected at the time of writing) cannot be classed as stellar it needs to be viewed in the context of interest rates rising to a decade high level and inflation coming down from over 10%.

When we look ahead to 2024 we continue to see pessimism reflected in both company valuations and economic growth forecasts. The best remedy for this pessimism is to meet company management teams, who serve as a reminder of the dynamism and innovation that exist in the UK.

The consumer is enjoying real wage growth, with unemployment remaining low. Corporate balance sheets are, on the whole, conservative. Yet company valuations continue to reflect a deep scepticism about the sustainability of earnings. We disagree. The challenging backdrop of recent years (COVID, the Ukraine war) has forced companies to look hard at their cost base and run leanly. On any pickup in sales, it is therefore our expectation that the boost to earnings will be meaningful.

The best returns can be made at times when earnings have the potential to grow and valuations are starting from a low base. It is hard to argue that we are not in those times currently.

James Henderson and Laura Foll

Fund Managers

4 December 2023

Strategic Report: Portfolio Analysis

Sector		United Kingdom %	Overseas %	Total 30 September 2023 %	FTSE All-Share Index 2023 %	Total 30 September 2022 %
Basic Materials	Chemicals	0.6	–	0.6	0.6	0.5
	Industrial Metals and Mining	4.5	–	4.5	6.6	4.6
	Precious Metals and Mining	–	–	–	0.2	–
		5.1	–	5.1	7.4	5.1
Consumer Discretionary	Consumer Services	–	–	–	1.5	–
	Household Goods and Home Construction	2.7	–	2.7	1.1	2.3
	Leisure Goods	–	–	–	0.2	–
	Media	1.6	–	1.6	3.7	1.3
	Personal Goods	–	–	–	0.4	–
	Retailers	4.8	–	4.8	1.8	3.6
	Travel And Leisure	0.1	–	0.1	3.1	0.3
		9.2	–	9.2	11.8	7.5
Consumer Staples	Beverages	–	–	–	3.3	–
	Food Producers	2.3	–	2.3	0.6	2.1
	Personal Care, Drug and Grocery Stores	1.4	–	1.4	7.6	2.4
	Tobacco	–	–	–	3.2	–
		3.7	–	3.7	14.7	4.5
Energy	Alternative Energy	–	–	–	–	0.1
	Oil and Gas	9.3	–	9.3	12.0	9.4
		9.3	–	9.3	12.0	9.5
Financials	Banks	10.1	–	10.1	9.7	9.4
	Closed End Investments	1.8	–	1.8	6.0	2.0
	Finance and Credit Services	4.2	–	4.2	1.8	2.8
	Investment Banking and Brokerage Services	4.4	–	4.4	2.6	6.1
	Life Insurance	6.8	–	6.8	2.3	6.1
	Non-Life Insurance	4.9	2.0	6.9	0.8	6.4
		32.2	2.0	34.2	23.2	32.8
Health Care	Medical Equipment and Services	–	–	–	0.6	1.0
	Pharmaceuticals and Biotechnology	2.7	0.1	2.8	11.2	5.0
		2.7	0.1	2.8	11.8	6.0
Industrials	Aerospace and Defence	4.2	–	4.2	2.7	3.3
	Construction and Materials	5.0	–	5.0	0.4	4.7
	Electronic and Electrical Equipment	3.7	–	3.7	1.0	3.6
	General Industrials	2.5	–	2.5	1.5	2.1
	Industrial Engineering	1.7	0.8	2.5	0.7	2.6
	Industrial Support Services	3.0	0.9	3.9	3.4	2.8
	Industrial Transportation	3.0	1.9	4.9	1.1	4.5
		23.1	3.6	26.7	10.8	23.6

Sector		United Kingdom %	Overseas %	Total 30 September 2023 %	FTSE All-Share Index 2023 %	Total 30 September 2022 %
Real Estate	Real Estate Investment and Services	–	–	–	0.4	0.7
	Real Estate Investment Trusts	2.9	–	2.9	2.0	1.9
		2.9	–	2.9	2.4	2.6
Technology	Software and Computer Services	0.7	–	0.7	1.2	0.6
	Technology Hardware and Equipment	1.0	–	1.0	–	0.9
		1.7	–	1.7	1.2	1.5
Telecommunications	Telecommunications Service Providers	2.2	–	2.2	1.2	3.2
		2.2	–	2.2	1.2	3.2
Utilities	Electricity	–	–	–	0.9	–
	Gas, Water and Multi-Utilities	2.2	–	2.2	2.6	3.7
		2.2	–	2.2	3.5	3.7
	Total at 30 September 2023	94.3	5.7	100.0	100.0	–
	Total at 30 September 2022	94.0	6.0	–	–	100.0

Strategic Report: Twenty Largest Holdings

Twenty Largest Holdings as at 30 September 2023

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

Rank 2023 (2022)	Company	% of portfolio	Approximate market capitalisation	Valuation 2022 £’000	Purchases £’000	Sales £’000	Appreciation/ (depreciation) £’000	Valuation 2023 £’000
1 (1)	Shell A vertically integrated oil & gas company. At the current oil price the company is capable of generating substantial amounts of free cash flow. This cash is being allocated partly to shareholders (via a growing dividend and share buybacks) and partly to investing in the necessary transition away from fossil fuels.	3.6	£173.3bn	12,356	–	–	1,977	14,333
2 (2)	BP A vertically integrated oil and gas business. The company has announced ambitious plans to reach net zero carbon emissions by 2050 and gradually transition away from fossil fuels towards renewable energy. The cash generation from their oil & gas business should enable this transition to take place, while also continuing to fund cash returns to shareholders via dividends and share buybacks.	3.3	£81.8bn	10,611	–	–	2,408	13,019
3 (3)	HSBC The global bank provides international banking and financial services. The diversity of the countries it operates in as well as its exposure to faster growing economies make it well placed.	2.8	£118.3bn	7,850	–	–	2,984	10,834
4 (6)	Standard Chartered A global bank providing international banking and financial services, with a particular focus on emerging markets. The position provides geographic diversification for the portfolio as well as being positively exposed to higher global interest rates.	2.6	£16.6bn	7,529	–	–	2,543	10,072
5 (4)	GSK A global pharmaceutical and vaccine company, which spun-off its consumer healthcare business (Haleon) in 2022. The remaining pharmaceutical company has leading franchises in areas such as HIV, however has had a mixed R&D track record in recent years. Under a new leadership team and with increased R&D spending it has the potential to reinvigorate its pharmaceutical pipeline.	2.2	£58.3bn	7,626	–	–	1,086	8,712
6 (20)	M&G The company is a financial services provider that was spun out of Prudential in 2019, providing insurance and asset management services. The capital generation of the group allows sizeable returns to shareholders via dividends and share buybacks.	2.0	£4.8bn	5,661	1,242	–	989	7,892

Rank 2023 (2022)	Company	% of portfolio	Approximate market capitalisation	Valuation 2022 £’000	Purchases £’000	Sales £’000	Appreciation/ (depreciation) £’000	Valuation 2023 £’000
7 (11)	FBD1 The company is an Irish insurer with a focus on insurance coverage for the agricultural sector. It is a disciplined underwriter with a history of good returns generation and pays an attractive dividend yield.	2.0	£375m	6,757	–	–	1,125	7,882
8 (17)	Aviva This company provides a wide range of insurance and financial services. Under a new CEO there is heightened focus on simplifying the business.	1.9	£11.1bn	5,901	2,067	–	(289)	7,679
9 (12)	Serica Energy The company is a large producer of natural gas in the North Sea. Its portfolio was built via acquisitions at attractive valuations from larger oil & gas companies. At current gas prices, the company is generating substantial amounts of cash with a strong (net cash) balance sheet.	1.9	£866.3m	6,705	2,694	–	(1,971)	7,428
10 (13)	Irish Continental1 The group provides passenger transport, roll-on and roll-off freight transport and container services between Ireland, the United Kingdom and Continental Europe. It is a well managed business operating in a duopolistic industry.	1.9	£624.4m	6,366	–	–	940	7,306
11 (*)	International Personal Finance The company provides consumer lending services in countries such as Mexico and Eastern Europe. It has successfully grown its lending in recent years while remaining disciplined on credit quality.	1.7	£273.5m	2,592	2,012	–	2,029	6,633
12 (14)	Rio Tinto The company is one of the world’s largest mining businesses with a particular focus on iron ore, aluminium and copper. Its mines are well positioned on the cost curve, often at the lowest cost quartile globally, meaning that it can continue to be highly cash generative despite volatile commodity prices. This cash generation combined with a strong balance sheet has resulted in an attractive ordinary dividend payment combined with some special dividends in recent years.	1.7	£65.5bn	6,120	–	–	347	6,467

*Not in the top 20 largest investments last year

1. Overseas listed stock (Ireland)

Rank 2023 (2022)	Company	% of portfolio	Approximate market capitalisation	Valuation 2022 £’000	Purchases £’000	Sales £’000	Appreciation/ (depreciation) £’000	Valuation 2023 £’000
13 (18)	Barclays The company has a strong retail lending franchise combined with an investment bank. Over time its strong retail franchise should allow it to generate good returns on capital, however in the past these have not consistently come through because of low interest rates and volatile returns from its investment bank. Higher interest rates and market share gains in its investment bank could allow a period of better returns generation that in our view is not reflected in the current valuation.	1.6	£20.5bn	5,772	–	–	586	6,358
14 (16)	NatWest The company is one of the leading retail and commercial lenders in the UK. Since the financial crisis the balance sheet has materially improved and the business has largely returned to its original focus on domestic lending. Higher interest rates are now allowing the business to generate a good return, which is not (in our view) reflected in the current valuation.	1.6	£17.2bn	6,080	–	–	264	6,344
15 (*)	Marks & Spencer The company is a clothing and food retailer. Under a new management team it has refreshed its strategy, for example re- setting prices lower and closing loss making stores. This has allowed it to gain market share on both sides of the business and upgrade earnings expectations.	1.6	£4.4bn	2,367	368	–	3,535	6,270
16 (9)	Anglo American A diversified mining company with exposure to commodities including copper, iron ore, diamonds and platinum. Its mix of commodity production means it could be well positioned to benefit from the need to decarbonise the global economy. For example, it is significantly exposed to copper where demand is likely to grow driven by its use in electric vehicles as well as renewable energy.	1.6	£28.6bn	7,386	–	–	(1,269)	6,117
17 (*)	Senior The company produces specialist components for use across aerospace and broader industrial end markets. Its earnings were severely impacted by COVID due to weakness in the aerospace market, however the business remains well positioned in its end markets with good recovery potential.	1.5	£661.8m	4,332	–	–	1,703	6,035

*Not in the top 20 largest investments last year

Rank 2023 (2022)	Company	% of portfolio	Approximate market capitalisation	Valuation 2022 £’000	Purchases £’000	Sales £’000	Appreciation/ (depreciation) £’000	Valuation 2023 £’000
18 (*)	Hiscox The company is a global insurance provider that is growing well in markets such as US small business insurance.	1.5	£3.4bn	5,218	–	–	727	5,945
19 (8)	Phoenix The company operates primarily in the UK and specialises in taking over and managing closed life insurance and pension funds.	1.5	£4.6bn	7,490	–	(1,091)	(506)	5,893
20 (*)	Lloyds Banking The company is one of the leading retail lenders in the UK. Higher interest rates are now allowing the business to generate a good return, which is not (in our view) reflected in the current valuation.	1.5	£26.7bn	5,484	–	–	395	5,879
				130,203	8,383	(1,091)	19,603	157,098

At 30 September 2023 these investments totalled £157,098,000 or 40.0% of portfolio.

*Not in the top 20 largest investments last year

Strategic Report: Investment Portfolio

30 September 2023 Position	Investments	Sector	Market value £’000	% of Portfolio
1	Shell	Oil and Gas	14,333	3.6
2	BP	Oil and Gas	13,019	3.3
3	HSBC	Banks	10,834	2.8
4	Standard Chartered	Banks	10,072	2.6
5	GSK	Pharmaceuticals and Biotechnology	8,712	2.2
6	M&G	Investment Banking and Brokerage Services	7,892	2.0
7	FBD	Non-Life Insurance (Ireland)	7,882	2.0
8	Aviva	Life Insurance	7,679	1.9
9	Serica Energy¹	Oil and Gas	7,428	1.9
10	Irish Continental	Industrial Transportation (Ireland)	7,306	1.9
10 largest			95,157	24.2
11	International Personal Finance	Finance and Credit Services	6,633	1.7
12	Rio Tinto	Industrial Metals and Mining	6,467	1.7
13	Barclays	Banks	6,358	1.6
14	NatWest	Banks	6,344	1.6
15	Marks & Spencer	Retailers	6,270	1.6
16	Anglo American	Industrial Metals and Mining	6,117	1.6
17	Senior	Aerospace and Defence	6,035	1.5
18	Hiscox	Non-Life Insurance	5,945	1.5
19	Phoenix	Life Insurance	5,893	1.5
20	Lloyds Banking	Banks	5,879	1.5
20 largest			157,098	40.0
21	Morgan Advanced Materials	Electronic and Electrical Equipment	5,819	1.5
22	Legal & General	Life Insurance	5,562	1.4
23	Conduit	Non-Life Insurance	5,526	1.4
24	Redde Northgate	Industrial Transportation	5,337	1.4
25	Tesco	Personal Care, Drug and Grocery Stores	5,305	1.4
26	Rolls-Royce	Aerospace and Defence	5,265	1.4
27	Vanquis Banking Group	Finance and Credit Services	5,241	1.3
28	BAE Systems	Aerospace and Defence	5,237	1.3
29	Direct Line	Non-Life Insurance	5,166	1.3
30	IMI	Electronic and Electrical Equipment	5,152	1.3
30 largest			210,708	53.7
31	National Grid	Gas, Water and Multi-Utilities	5,063	1.3
32	Land Securities	Real Estate Investment Trusts	5,013	1.3
33	DS Smith	General Industrials	4,920	1.3
34	Finsbury Food Group¹	Food Producers	4,905	1.2
35	Hill & Smith	Industrial Metals and Mining	4,686	1.2
36	H&T Group¹	Finance and Credit Services	4,561	1.2
37	Balfour Beatty	Construction and Materials	4,517	1.1
38	Clarkson	Industrial Transportation	4,413	1.1
39	Vodafone	Telecommunications Service Providers	4,393	1.1
40	BT Group	Telecommunications Service Providers	4,316	1.1
40 largest			257,495	65.6

1. AIM stocks

30 September 2023 Position	Investments	Sector	Market value £’000	% of Portfolio
41	Kingfisher	Retailers	4,297	1.1
42	Mondi	General Industrials	4,116	1.1
43	Vertu Motors¹	Retailers	4,109	1.0
44	Cranswick	Food Producers	4,014	1.0
45	Epwin¹	Construction and Materials	4,007	1.0
46	Prudential	Life Insurance	4,000	1.0
47	TT Electronics	Technology Hardware and Equipment	3,974	1.0
48	Johnson Service¹	Industrial Support Services	3,765	1.0
49	Henderson Opportunities Trust	Closed End Investments – Investment Trust focusing primarily on UK smaller companies	3,760	1.0
50	Chesnara	Life Insurance	3,732	1.0
50 largest			297,269	75.8
51	Marshalls	Construction and Materials	3,726	0.9
52	DCC	Industrial Support Services (Ireland)	3,664	0.9
53	Halfords	Retailers	3,598	0.9
54	Severn Trent	Gas, Water and Multi-Utilities	3,546	0.9
55	Castings	Industrial Engineering	3,492	0.9
56	XPS Pensions Group	Investment Banking and Brokerage Services	3,412	0.9
57	Reach	Media	3,347	0.9
58	Headlam	Household Goods and Home Construction	3,260	0.8
59	Hipgnosis	Closed End Investments – Investment Trust investing in song back catalogues	3,143	0.8
60	Palace Capital	Real Estate Investment Trusts	3,060	0.8
60 largest			331,517	84.5
61	Renold¹	Industrial Engineering	2,979	0.8
62	Somero Enterprises¹	Industrial Engineering (USA)	2,968	0.8
63	Tyman	Construction and Materials	2,890	0.7
64	Alpha Financial Markets¹	Industrial Support Services	2,888	0.7
65	Jupiter Fund Management	Investment Banking and Brokerage Services	2,883	0.7
66	Sabre Insurance	Non-Life Insurance	2,685	0.7
67	Eleco¹	Software and Computer Services	2,680	0.7
68	STV	Media	2,600	0.7
69	Ibstock	Construction and Materials	2,567	0.6
70	Elementis	Chemicals	2,546	0.6
70 largest			359,203	91.5
71	Ricardo	Construction and Materials	2,464	0.6
72	IP Group	Investment Banking and Brokerage Services	2,328	0.6
73	Churchill China¹	Household Goods and Home Construction	2,286	0.6
74	Bellway	Household Goods and Home Construction	2,282	0.6
75	Oxford Sciences Enterprises²	Pharmaceuticals and Biotechnology	2,053	0.5
76	Wincanton	Industrial Transportation	2,022	0.5
77	Inchcape	Industrial Support Services	1,707	0.5
78	Hammerson	Real Estate Investment Trusts	1,694	0.4
79	Speedy Hire	Industrial Support Services	1,597	0.4
80	Springfield Properties¹	Household Goods and Home Construction	1,471	0.4
80 largest			379,107	96.6

1. AIM stocks

2. Unlisted investments

30 September 2023 Position	Investments	Sector	Market value £’000	% of Portfolio
81	Helical	Real Estate Investment and Services	1,375	0.4
82	Ilika¹	Electronic and Electrical Equipment	1,335	0.3
83	Strix¹	Electronic and Electrical Equipment	1,320	0.3
84	RWS Holdings¹	Industrial Support Services	1,318	0.3
85	Airea¹	Household Goods and Home Construction	1,114	0.3
86	Flowtech Fluidpower¹	Electronic and Electrical Equipment	1,005	0.3
87	DFS Furniture	Retailers	921	0.2
88	I3 Energy¹	Oil and Gas	669	0.2
89	Brooks MacDonald Group¹	Investment Banking and Brokerage Services	650	0.2
90	Jadestone Energy¹	Oil and Gas	552	0.1
90 largest			389,366	99.2
91	Indus Gas¹	Oil and Gas	508	0.1
92	Carclo	General Industrials	405	0.1
93	Wynnstay¹	Food Producers	390	0.1
94	Paypoint	Industrial Support Services	303	0.1
95	Faron Pharmaceuticals¹	Pharmaceuticals and Biotechnology (Finland)	300	0.1
96	Severfield	Construction and Materials	275	0.1
97	Wadworth – Ordinary shares²	Travel and Leisure	189	0.1
98	Harbour Energy	Oil and Gas	161	0.1
99	Next 15¹	Media	144	–
100	Wadworth – Preference shares²	Travel and Leisure	126	–
100 largest			392,167	100.0
101	Velocys¹	Alternative Energy	102	–
102	Esken	Industrial Transportation	65	–
103	SIMEC Atlantis Energy¹	Alternative Energy	53	–
104	Chamberlin¹	Industrial Metals and Mining	22	–
105	Infrastructure India¹	Closed End Investments	17	–
106	Mercantile Ports & Logistics¹	Industrial Transportation	3	–
107	ACHP³	Non-Life Insurance	–	–
108	Barryroe Offshore Energy¹	Oil and Gas	–	–
109	Interserve³	Industrial Support Services	–	–
110	Studio Retail³	Retailers	–	–
Total investments			392,429	100.0

1. AIM stocks

2. Unlisted investments

3. In administration

Environmental, Social and Governance Matters

Our Approach to Environmental, Social and Governance Matters

The Board believes that integrating environmental, social and governance (ESG) factors into the investment decision making and ownership practices is an important element in delivering the Company’s investment objective. ESG considerations are a fully integrated component of the investment processes employed by the Fund Managers and the wider investment teams at Janus Henderson.

Defining ESG

● Environmental factors include climate change, energy efficiency, resource depletion and water and waste management.

● Social factors include employee and community relations, diversity, quality of life, enhancements in knowledge and advances in supportive technology for improved sustainability.

● Governance factors include risks such as bribery and corruption, board diversity, executive pay, accounting standards and shareholder rights, and corporate behaviour.

Investment Considerations

Business sustainability is at the core of the investment strategy of the Company which includes considerations on ESG issues. As with managing a business’s operational and financial risks, those companies with good processes for managing ESG risk factors outperform. While no sector is specifically excluded from investment on ESG grounds, the Fund Managers seek to understand how a company is managing ESG risks through its policies and processes and where its investments are targeted to evolve its business models to remain sustainable over the longer term.

The analysis of ESG factors is integrated into the stock selection and monitoring process. As with understanding a company’s fundamentals and financial health, the evaluation of ESG risks and opportunities is also integral to determine the value of a business.

Janus Henderson seeks to understand how investee companies are managing ESG risks, including climate change, through their policies and processes and where their investments are targeted to evolve their business models to remain sustainable over the long term. Janus Henderson engages actively with companies and their management teams and uses a variety of sources to help identify and monitor material ESG risks, including research from their fund managers and analysts, input from the Janus Henderson Governance and Responsible Investment team (‘GRI team’) and third-party data providers.

These issues are important not only as a standalone objective in order to allocate the capital of the Company to the companies with the most responsible practices, but are also an integral part of the investment process.

The Fund Managers’ core principles can be broken down into three main areas:

1. identifying investment opportunities

2. identifying material risks

3. active engagement and upholding strong governance standards.

Please see the website, www.lowlandinvestment.com, ESG Disclosure, for further details on how these are applied.

Stewardship and Company Engagement

Stewardship is an integral and natural part of Janus Henderson’s long-term, active approach to investment management. Strong ownership practices, such as management engagement and proxy voting, can help protect and enhance long-term shareholder value. Janus Henderson entities support a number of stewardship codes and broader initiatives around the world including being a founder signatory of the UN Principles for Responsible Investment. The intensive research of the portfolio managers and analysts involves conducting on an annual basis thousands of interviews with senior executives and chairmen of companies throughout the world. These teams naturally develop long- term relationships with the management of firms in which they invest. Should concerns arise over a firm’s practices or performance, they seek to leverage these constructive relationships by engaging with company management or expressing their views through voting on management or shareholder proposals. Escalation of the engagement activities depends upon a company’s individual circumstances.

Recent Examples of Engagement

Hipgnosis Songs Fund

Engagement topic – Governance

The portfolio holds a position in Hipgnosis Songs Fund (SONG), with the view that music streaming is an area of structural growth and the trust holds a high quality collection of assets. The SONG Board recently proposed an asset sale of a catalogue of songs to a related party (Hipgnosis Songs Capital, a partnership between SONG’s investment advisor and Blackstone) at a substantial discount to the published NAV. This proposed asset sale highlighted several corporate governance concerns. For example the majority of the disposal was agreed bilaterally, without the potential for competing third-party bids. While there was a ‘Go-Shop’ provision for competing bids potentially to be put forward, this came with a large termination fee if agreed which we felt was unjustifiable. We met with the management team and the Board of SONG on several occasions in the weeks leading up to the vote on the asset sale, as well as the continuation vote for the Trust. Following these meetings we decided to vote against both the proposed asset sale and the continuation of the Trust. The Trust has recently put in place a new Chairman and Non-Executive from Round Hill (a competing trust that was recently sold). We are meeting with the new Chairman in the coming weeks.

BP & Shell

Engagement topic – Environment

Over a number of engagements this year we have engaged with Shell and BP on the companies’ progress to decarbonise operations and work to reduce methane emissions.

We have spoken with both companies on methane emissions and believe there is positive progress being made as both companies are operating Leak Detection and Repair programmes, leveraging available satellite data and have already targeted the super emitting sites. Continued engagement is focused on increasing the scope of reporting and target setting, specifically to cover assets which the companies are part owners of.

We have also held meetings with BP on the company’s progress to decarbonise after it announced continued new oil exploration in the short term and downgrades of its 2030 decarbonisation targets. During the meeting the company reiterated its that its long-term purpose is still to be net zero on carbon emissions, however emphasised the need to maintain flexibility on the path to reaching this target.

Voting

The Board believes that voting at general meetings is an important aspect of corporate stewardship and a means of signalling shareholder views on board policy, practices and performance. The Board has chosen to delegate responsibility to Janus Henderson for voting the rights attached to the shares held in the Company’s equity portfolio and the Manager actively votes at shareholder meetings and engages with companies as part of the voting process.

Voting decisions are taken in keeping with the provisions of the Manager’s ESG Investment Principles. These can be found on the Manager’s website at www.janushenderson.com.

Corporate governance regimes vary significantly as a function of factors such as the relevant legal system, extent of shareholder rights and level of dispersed ownership. The voting and engagement activities vary according to the market and pay close attention to local market codes of best practice.

However, there are certain core principles that are universal:

● disclosure and transparency;

● board responsibilities;

● shareholder rights; and

● audit and internal controls.

A key element of the Board’s approach to proxy voting is to support these principles and to foster the long-term interests of the Company’s shareholders.

In order to retain oversight of the process, the Board receives an annual report on how the Manager has voted the shares held in the Company’s equity portfolio and reviews, at least annually, the Manager’s ESG Corporate Statement and ESG Investment Principles.

In the period under review, investee companies held 121 general meetings. The shares held in the Company’s equity portfolio were voted in respect of 98.4% of these meetings with the remaining 1.6% not voted due to voting impediments.

The level of governance in leading global companies is generally of a high standard in terms of best practice which has meant that support in favour of the resolutions proposed by management was warranted. However, out of the 121 meetings held there were 23 where the Manager voted against or abstained from at least one resolution, following discussion between the Fund Managers and the GRI Team. On occasion, the Manager takes voting decisions after consultation with the Chairman on behalf of the Board.

In terms of the resolutions not supported, these related to executive remuneration policies, concerns over board independence, the acceptance of financial report and accounts, changing borrowing powers and the acceptance of takeover terms.

Voting record

The Environment

As an investment company, the Company’s own direct environmental impact is minimal. The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. For the same reasons, the Company considers itself to be a low energy user under the Streamlined Energy & Carbon Reporting (“SECR”) regulations and therefore is not required to disclose energy and carbon information.

The Manager recognises the importance of managing its operational activities in a sustainable way and minimising any adverse impact on the environment.

In 2021 Janus Henderson reached its three-year target to reduce its carbon footprint by 15% per full-time employee (“FTE”) from 2018 levels. In 2022, using guidance from the Science-Based Target Initiative, Janus Henderson set ambitious new five-year reduction targets:

● reduction target of 29.4% in Scope 1 (fuel) and Scope 2 (electricity) emissions;

● reduction target of 17.5% in Scope 3 (business travel, freight, paper, water, waste) emissions; and

● reduction target of 17.5% on water and waste consumption by FTEs.

In addition to this, Janus Henderson has maintained a CarbonNeutral® certification since 2007 and offsets all its operational Scope 1, Scope 2 and Scope 3 emissions each year. Through this process, Janus Henderson has invested in a variety of offset projects around the world, delivering financial support to essential renewable energy, forestry and resource conservation projects that support reductions in greenhouse gas emissions. All projects Janus Henderson supports have been classified as ‘additional’ by an independent third party, meaning that they would not happen without the sale of carbon credits.

Janus Henderson discloses its carbon emissions annually through regulatory and voluntary reporting frameworks, including SECR and the Carbon Disclosure Project (“CDP”), as well as in its annual report and 2022 Impact Report, which provide more information.

Business Ethics

As the Company’s operations are delegated to third-party service providers, the Board seeks assurances, at least annually, from its service providers that they comply with the provisions of the UK Modern Slavery Act 2015 and maintain adequate safeguards in keeping with the provisions of the Bribery Act 2010 and Criminal Finances Act 2017.

Strategic Report: Business Model

Purpose and Values

The Company’s purpose is to deliver growth in income and capital for shareholders by investing in equities. We do this by following a disciplined process for investment and by controlling costs and using borrowings to enhance returns.

The Board aspires to follow high standards of governance, with a culture based on openness, mutual respect, integrity, constructive challenge and trust. The Board seeks always to act in the best interests of shareholders, making the most effective use possible of the diversity of skills and experience of its members. This culture of openness and constructive challenge extends to the Board’s interaction with the Manager, being the Company’s most important service provider. The Board expects the Manager and all of the Company’s other service providers to hold values which align with the high standards promoted by the Board.

Our Strategy

We fulfil our purpose by operating as an investment company, enabling us to delegate operational matters to specialised third-party service providers. Their performance is monitored and challenged by a Board of Directors which retains oversight of the Company’s operations.

The framework of delegation provides a cost-effective mechanism for delivering operations whilst allowing the Company to take advantage of the capital gains tax treatment afforded to investment trusts which are approved under section 1158/9 of the Corporation Tax Act 2010 as amended (‘s.1158/9’). The closed-end nature of the Company enables the Fund Managers to take a longer term view of investments and supports a fully invested portfolio as the Company has no redemptions to meet. A significant advantage over other investment fund structures is the ability to use leverage to increase returns for shareholders.

The Board is comprised entirely of non-executive Directors accountable to shareholders, who have the ability to remove a Director from office where they deem it to be in the interests of the Company.

The Company’s Status

The Company is registered as a public limited company, founded in 1960, and is an investment company as defined in Section 833 of the Companies Act 2006 (‘the Act’). The Company is not a close company. It operates as an investment trust in accordance with s.1158/9 and has obtained approval from HMRC for its status. The Directors are of the opinion that the Company has conducted its affairs in compliance with s.1158/9 since approval was granted and intends to continue to do so.

The Company is listed on the Main Market of the London Stock Exchange and is subject to the Listing Rules, Prospectus Rules and Disclosure Guidance and Transparency Rules published by the Financial Conduct Authority (‘FCA’). The Company is a member of the Association of Investment Companies (‘AIC’).

The Company, and the Board, is governed by its Articles of Association, amendments to which must be approved by shareholders by way of special resolution.

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 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 never exceed 29.99% 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.

Promoting the Company’s Success

Section 172 statement

The Directors’ overarching duty is to promote the success of the Company for the benefit of investors, with consideration of stakeholders’ interests, as set out in Section 172 of the Act. The Board regards a well governed business as essential for the successful delivery of its investment proposition.

Shareholders’ assets are managed taking account of our stakeholders and their interests. The Board maintains a map of the Company’s key stakeholders which supports it in understanding and fostering an appropriate level of interaction with them.

The Company has no employees, premises, assets other than financial assets or operations. The Board engages reputable third-party suppliers with established track records to deliver day-to-day operations. The most important of these is the Manager, in particular the Fund Managers, who are responsible for the management of the Company’s assets in line with the investment objective, the Corporate Secretary, the Head of Investment Trusts and the Financial Reporting Manager for Investment Trusts. The Board maintains a close working relationship with the Manager and holds it to account for the smooth running of the Company’s day-to-day business. There is continuous engagement and dialogue between Board meetings, with communication channels remaining open and information, ideas and advice flowing freely between the Board and the Manager.

The Board retains responsibility for decisions over corporate strategy, corporate governance, risk and internal control assessment, determining the overall limits and restrictions for the portfolio and in respect of gearing and asset allocation, investment performance monitoring and setting marketing budgets.

The Fund Managers promote the Company with the support of the Manager’s dedicated investment trust sales team and the Board makes additional spend available to support marketing activities aimed at raising the profile of the Company among retail investors in the UK.

The Manager co-ordinates the delivery of services from the Company’s third-party suppliers. The Board is confident that Janus Henderson has developed and maintains good working relationships with all of the Company’s third-party suppliers. To ensure the chosen service providers continue to deliver the expected level of service, the Board receives regular reports from them, evaluates the control environments in place at each service provider and formally assesses their appointment annually. By doing so, the Board seeks to ensure that the key service providers continue to be appropriately remunerated to deliver the level of service that it demands of them.

The Directors carry out their duties under Section 172 of the Act to act in good faith to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the likely consequences of any decisions in the long term, the need to foster the Company’s business relationships with suppliers, customers and others, the impact of the Company’s operations on the community and the environment and the desirability of the Company maintaining a reputation for high standards of business conduct.

The Directors are responsive to the views of shareholders and the Company’s wider stakeholders. Shareholders may contact the Board via the Corporate Secretary (please refer to page 30 for contact details).

For more information about the responsibilities with which the Board and its Committees are charged, please refer to the Corporate Governance Statement (pages 42 to 48), the Audit Committee Report (pages 49 to 51), the Directors’ Remuneration Report (pages 39 to 41) and the Report of the Directors (pages 36 to 37) in addition to the Strategic Report. The Schedule of Matters Reserved for the Board as well as the Terms of Reference for each of the Committees of the Board can be found on the Company’s website.

Engagement with Stakeholders

The Company’s main stakeholders are its shareholders and investors, the Manager and other third-party service providers and the companies in which it invests. Wider stakeholders include the Company’s lenders and regulatory and legislative bodies. Interaction is facilitated through meetings (both face-to-face and via video conferencing and other electronic means), seminars, presentations, publications and the Company’s website.

Example stakeholder considerations during the year.

The Board is always mindful of the need to act in the best interests of stakeholders as a whole and to have regard to other applicable s172 factors and this forms part of the Board’s decision-making process. The following key decisions taken by the Board during the year ended 30 September 2023 are examples of this.

● Short-term debt: the Company’s £40 million revolving credit facility with Industrial and Commercial Bank of China (London Branch) expired on 27 October 2022. The Board sought quotes for replacement of the facility, and entered into a new agreement with BNP Paribas, London Branch, which took effect on 27 October 2022.

● Buying back the Company’s shares: the Board continually monitors the discount to NAV at which the Company’s shares trade, and considers whether share buy-backs should be undertaken. After careful discussions when deemed necessary, the Board decided not to undertake buy-backs during the year.

● Monitoring portfolio income and consideration of dividend policy: the Board is conscious that dividend income is important to shareholders, and has monitored carefully the level of portfolio income versus proposed dividends. This prudent approach has allowed the Company to increase the dividend to shareholders for every year since 2009, and to have at least maintained the dividend since the Company’s inception.

Set out below are more general ways in which the Board and the Company interacts with its stakeholders and a list of the principal stakeholders.

Stakeholder	Engagement	Outcome
Shareholders and investors	The Board communicates with shareholders through the annual and half year reports, fact sheets, press releases, website and videos recorded by the Fund Managers. The Board meets with shareholders at the Annual General Meeting, which will be live-streamed and shareholders are therefore able to join the Meeting online if they cannot attend in person. The Annual General Meeting includes a Fund Manager presentation and Q&A session. The Chairman and Directors are available to meet with the Company’s largest shareholders. The Fund Managers, the Manager’s sales and marketing team, the broker and external marketing research providers (Edison) also meet with shareholders and analysts.	Shareholders are able to make informed decisions about their investments. Correspondence from shareholders is shared with the Chairman immediately and with the Board at each meeting. The Board looks forward to meeting with shareholders at the Annual General Meeting each year. The presentation from the Fund Managers will also be available to watch on the Company website after the Annual General Meeting.
Manager	The Fund Managers attend all Board meetings. The Board receives timely and accurate information from the Manager at meetings and engages with the Fund Managers and Corporate Secretary between meetings as well as with other representatives as and when it is deemed necessary. In addition to reporting at each meeting, the Board meets with key representatives of the Manager throughout the year to develop strategy and assess internal controls and risk management, e.g. sales and marketing activities, to promote the success of the Company and raise its profile.	The Board places great value on the expertise and experience of the Fund Managers to execute the investment objective and deliver returns for shareholders, and on the Manager’s internal controls and risk management. Throughout recent market volatility the Board has been in regular contact with the Manager, receiving updates on areas such as portfolio activity, gearing and the impact on income and the Company’s ability to meet its investment objective.
Service providers	As an investment company, all services are outsourced to third-party service providers. The Board considers the Company’s key service providers to be the Manager, Broker, Depositary, Registrar, Auditor and Administrator. The Board regularly considers the support provided by the service providers, including quality of service, succession planning and any potential interruption of service or other risks to provision. The Board is conscious of the need to foster good business relationships with its suppliers as well as its shareholders and others.	The Manager maintains the overall day-to-day relationship with the service providers and reports back to the Board on performance at least annually. The Board meets service suppliers as and when considered necessary or desirable.
Investee companies	The Board sets the investment objective and discusses stock selection and asset allocation with the Fund Managers regularly. On behalf of the Company, the Manager engages with the investee companies, exercising good stewardship practices, including a focus on ESG matters with an approach agreed with the Board.	The Manager has a dedicated Governance and Responsible Investment Team that the Fund Managers can use when making investment decisions and voting. Please also see the section “Our approach to Environmental, Social and Governance Issues” on pages 21 to 23.
Lenders	The Company employs gearing to enhance returns to shareholders. The Company confirms compliance with the covenants of its long- and short-term gearing facilities on a monthly basis. The Board makes all material decisions in relation to this and is kept informed at Board meetings.	The Company maintains a good relationship with its lenders and is able to raise financing to operate effectively as an investment trust.

Stakeholder	Engagement	Outcome
Auditors	The Auditor attends at least one Audit Committee meeting each year. The Board considers a letter of engagement for the Auditor and subject to considering the Auditor’s performance, asks shareholders at each AGM to appoint/re-appoint the Auditor depending on where it is in the audit tender cycle.	Shareholders, potential investors and the wider stakeholders who place reliance on the Company’s audited Annual Report and financial statements have the assurance that the audit has been carried out by an appropriate auditor and that the Board have reviewed the audit findings.
The Association of Investment Companies (‘AIC’)	The Company is a member of the AIC which is an organisation that looks after the interests of investment trusts.	The Board chooses to report under the AIC Code of Corporate Governance as this better reflects the unique aspects of an investment trust in the context of good corporate governance.
Regulatory and legislative bodies	The Company is listed on the London Stock Exchange. The Board mandates compliance with relevant law and regulation and the Company Secretary supports the Board in effective management of all legal and compliance requirements including those of the FCA, HMRC and the UK government. The Board also considers necessary regulatory and compliance issues in making its decisions.	Compliance with law and regulation maintains the Company’s licence to operate and helps to retain its reputation for high standards of business conduct.
Communities and the environment	The Board mandates the Manager, supported by its governance function, to engage with investee companies at the appropriate time on ESG matters in line with good stewardship practices, including a focus on ESG matters with an approach agreed with the Board. The Board is also conscious of the importance of providing an investment product which meets the needs of its investors, including retail investors.	An investment approach that meets the needs of investors provides a service valuable to the communities in which the Company operates. The Board is also conscious of the need to take appropriate account of broader ESG concerns and to act as a good corporate citizen.

Management

The Company qualifies as an Alternative Investment Fund (‘AIF’) in accordance with the Alternative Investment Fund Managers Directive (‘AIFMD’).

The Company has appointed Janus Henderson Fund Management UK Limited (‘JHFM’) to act as its Alternative Investment Fund Manager (‘AIFM’) in accordance with an agreement which was effective from 22 July 2014 and is terminable on six months’ notice (or less, in which case compensation would be payable to the Manager).

The Manager can terminate the agreement on twelve months’ notice. JHFM delegates investment management services to Janus Henderson Investors UK Limited. Both entities are authorised and regulated by the FCA. References to Janus Henderson and the Manager within this report refer to the services provided by both entities.

The fund management team is James Henderson and Laura Foll. James has been Manager since 1990 and Laura has been co-Manager since 2016.

Janus Henderson and its subsidiaries provide accounting, company secretarial and general administrative services. Some of the administration and accounting services are carried out, on behalf of Janus Henderson, by BNP Paribas SA. Helena Harvey ACG acts as Company Secretary on behalf of the Corporate Secretary, Janus Henderson Secretarial Services UK Limited.

Management Fee Arrangements

Net chargeable assets are defined as total assets less current liabilities and without limitation any borrowings at fair value, less the value of any investment in Janus Henderson Group plc and the value of any investment in any funds managed by Janus Henderson.

Strategic Report: Biographies

From left to right: Duncan Budge, Laura Foll, Helena Vinnicombe, Robert Robertson, Thomas Walker, Gay Coley, James Henderson.

All Directors are non-executive and considered independent of Janus Henderson and are members of the Audit (except the Chairman), Nominations, Management Engagement and Insider Committees.

Directors

Robert Robertson

Position: Chairman of the Board and of the Nominations and Management Engagement Committees (Chairman 24 January 2017)

Date of appointment: 1 May 2011

Robert is a director of a number of private companies. He was previously chairman of West China Cement Limited, a director of BlackRock Smaller Companies Trust plc, Buro Happold Engineers Limited, Metallon Corporation plc and Mondi Europe and chief executive of Tarmac Group Limited and Anglo American’s Industrial Minerals division. His early career was in finance, working in London, Paris, Johannesburg, New York and Rio de Janeiro. He brings over forty years’ involvement in companies of all sizes, many sectors and geographies, and in executive and non-executive capacities as well as investment experience.

Robert has been Chairman of the Board since 2017. He has a deep knowledge of the Company and many years of leadership experience both within and outside the Company. He uses his commercial experience to bring a pragmatic and objective view to Board discussions.

Duncan Budge

Position: Director

Date of appointment: 14 July 2014

Duncan has extensive experience within the investment trust sector. He is Chairman of Dunedin Enterprise Investment Trust PLC and Artemis Alpha Trust plc. He is a non-executive director of Biopharma Credit plc and Asset Value Investors Ltd. He was formerly a director and Chief Operating Officer of RIT Capital Partners plc, and a director of J. Rothschild Capital Management Limited (RIT’s management company). Prior to this he spent six years at Lazard Brothers & Co. Limited.

Duncan brings extensive experience in the investment trust sector which adds strength and technical depth to Board discussions and allows him to challenge the Fund Managers on their investment decisions and views.

(Susan) Gaynor Coley

Position: Director and Chairman of the Audit Committee

(Audit Chairman 24 January 2017)

Date of appointment: 1 November 2016

Gaynor is a director and Chair of the Audit Committee of Asia Dragon Trust plc and Foresight Enterprise VCT plc. She is also a partner in Coley Hill Consultancy. She was previously the Chairman of The Wave Group Ltd, Director of Public Programmes at the Royal Botanic Gardens Kew, Managing Director of the Eden Project in Cornwall, and Director of Finance at Plymouth University. A qualified chartered accountant, she has over 30 years of experience in private and public sector finance and governance.

Her broad commercial and finance experience allows her to consider the investment and financial performance of the Company with a broader perspective and she also brings a strong focus on marketing, particularly digital channels.

Helena Vinnicombe

Position: Director

Appointed: 1 May 2021

Helena is currently a director of The Lindsell Train Investment Trust plc, a Trustee for Child Health Research CIO and a member of the Advisory Committee for the M&G Charity Multi-Asset Fund. She also acts as an independent consultant to charities with Portfolio Review Services. She was formerly a senior partner at Smith & Williamson Investment Management, where she latterly chaired the Asset Allocation Committee as well as being a member of the Investment Strategy Group and Investment Process Committee.

Helena brings extensive experience of asset management, client relationships and sales, strategy and risk management, as well as strategic and operational experience in asset allocation, investment research and client management.

Thomas Walker

Position: Director

Date of appointment: 1 July 2019

Tom is currently a non-executive director of JPMorgan Japan Small Cap Growth and Income plc and has longstanding trustee experience with the Church of Scotland Investors Trust. He is a qualified chartered accountant and has broad international experience of managing funds, including investment trusts. He was formerly a Fund Manager with Martin Currie Investment Management, where latterly he headed up the global long-term unconstrained team and was also the manager of the global investment trust, Martin Currie Global Portfolio Trust plc.

His detailed knowledge of investment trusts brings scrutiny to the technical aspects of the management of the Company, as well as the ability to challenge the Fund Managers’ views and decisions.

Fund Managers

James Henderson

James Henderson is Director of UK Investment Trusts and a Fund Manager at Janus Henderson Investors, a position he has held as part of the Janus Henderson team since 2003. He joined Janus Henderson in 1983 as a trainee fund manager and, during his tenure with the firm, has been successfully managing a number of investment trusts, and Lowland since 1990. Prior to joining Janus Henderson he was an accountant trainee at Binder Hamlyn. James graduated with an MA (Hons) in economics from Cambridge University and has 40 years of financial industry experience.

Laura Foll

Laura Foll is a Fund Manager at Janus Henderson Investors, a position she has held as part of the Janus Henderson team since 2014. Laura joined Janus Henderson in 2009 as part of the graduate scheme. She was subsequently named a global analyst on the value and income team and later an assistant fund manager for the global equity income team. Laura graduated from the London School of Economics with an honours degree in economic history with economics. She holds the Chartered Financial Analyst designation and has 14 years of financial industry experience.

Strategic Report: Corporate Information

Registered Office

201 Bishopsgate

London EC2M 3AE

Service Providers

Alternative Investment Fund Manager

Janus Henderson Fund Management UK Limited

201 Bishopsgate

London EC2M 3AE

Corporate Secretary

Janus Henderson Secretarial Services UK Limited

201 Bishopsgate

London EC2M 3AE

Telephone: 020 7818 1818

Email: ITSecretariat@janushenderson.com

Depositary and Custodian

HSBC Bank plc

8 Canada Square

London E14 5HQ

Stockbrokers

J.P. Morgan Cazenove

25 Bank Street

Canary Wharf

London E14 5JP

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

Telephone: 0370 707 1057

Independent Auditor

Ernst & Young LLP

25 Churchill Place

London E14 5EY

Financial Calendar

Annual results announced December 2023

Ex dividend date 28 December 2023

Dividend record date 29 December 2023

Annual General Meeting 24 January 2024

Final dividend payable on 31 January 2024

Half year results announced May/June 2024

Information Sources

For more information about Lowland Investment Company plc, visit the website at www.lowlandinvestment.com.

To sign up for expert insights about investment trusts, updates from our fund managers as well as AGMs and Trust TV episodes please visit this page: https://www.janushenderson.com/en-gb/investor/subscriptions

Follow Janus Henderson Investment Trusts on LinkedIn

For alternative access to Janus Henderson’s insight you can now follow on LinkedIn.

Investing

Shares can be purchased in the market via a stockbroker or through share dealing platforms. They can also be held through share plans, ISAs or pensions and links to various providers are included on the website.

Potential investors are reminded that the value of investments and the income from them may go down as well as up and investors may not receive back the full amount invested. Tax benefits may vary as a result of statutory changes and their value will depend on individual circumstances.

Nominee Share Code

Where notification has been provided in advance, the Company will arrange for copies of shareholder communications to be provided to the operators of nominee accounts. Nominee investors may attend General Meetings and speak at them when invited to do so by the Chairman.

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 including those that would threaten its business model, future performance, solvency, 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, in order to mitigate these risks as far as practicable. 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.

At the half year stage, the Board completed a thorough review of the principal risks and uncertainties facing the Company. It was not considered necessary to make changes to the principal risks and uncertainties as a result of this review.

Principal risks

Mitigating measure

Market, geopolitical, macroeconomic or environmental conditions cause a material fall in market value

The wars in Ukraine and Israel have heightened tensions across the world, and significantly increased volatility in equity markets.

Macroeconomic conditions in the UK, including political uncertainty and rising inflation have led to increased volatility in the UK equity market.

The Fund Managers maintain close oversight of the Company’s portfolio, and in particular its gearing levels, and the performance of investee companies. Regular stress testing of the revenue account under different scenarios for dividends is carried out. The Board monitors volatility, and holds a regular dialogue with the Fund Managers to understand the impact on the Company’s portfolio.

Global pandemic

The residual impact of the coronavirus pandemic and the potential impact of further global health crises on the Company’s investments and its direct and indirect effects, including the effect on the global economy.

The Fund Managers maintain close oversight of the Company’s portfolio, and in particular its gearing levels, and the performance of investee companies. Regular stress testing of the revenue account under different scenarios for dividends is carried out. The Board monitors the effects of the pandemic on the operations of the Company and its service providers to ensure that they continue to be appropriate, effective and properly resourced.

Investment activity and strategy risk

An inappropriate investment strategy, failure to take account of climate risk impacts on the portfolio, or poor execution, for example, in terms of asset allocation or level of gearing, may result in underperformance against the Company’s benchmark index and the companies in its peer group, and also in the Company’s shares trading on a wider discount to the net asset value per share.

The Board manages these risks by ensuring a diversification of investments and a regular review of the extent of borrowings. Janus Henderson operates in accordance with investment limits and restrictions and policy determined by the Board, which includes limits on the extent to which borrowings may be employed.

The Board reviews the investment limits and restrictions on a regular basis and the Manager confirms adherence to them every month. Janus Henderson provides the Board with management information, including performance data and reports and shareholder analyses.

The Board monitors the implementation and results of the investment process with the Fund Managers at each Board meeting and monitors risk factors including ESG factors in relation to climate risk, in respect of the portfolio.

Investment strategy is reviewed at each meeting.

Portfolio and market price

Although the Company invests almost entirely in securities that are listed on recognised markets, share prices may move rapidly. The companies in which investments are made may operate unsuccessfully, or fail entirely. A fall in the market value of the Company’s portfolio would have an adverse effect on equity shareholders’ funds.

The Board reviews the portfolio at the five Board meetings held each year and receives regular reports from the Company’s brokers. A detailed liquidity report is considered on a regular basis.

The Fund Managers closely monitor the portfolio between meetings and mitigate this risk through diversification of investments. The Fund Managers periodically present the Company’s investment strategy in respect of current market conditions. Performance relative to the FTSE All-Share Index, and other UK equity income trusts is also monitored.

Principal risks

Mitigating measure

Dividend income

A reduction in dividend income could adversely affect the Company’s dividend record.

The Board reviews income forecasts at each meeting. The Company has revenue reserves of £9.9 million (before payment of the third interim and final dividend) and distributable capital reserves of £270.0 million.

Financial risk

The financial risks faced by the Company include market price risk, interest rate risk, liquidity risk, currency risk and credit and counterparty risk.

The Company minimises the risk of a counterparty failing to deliver securities or cash by dealing through organisations that have undergone rigorous due diligence by Janus Henderson. The Company holds its liquid funds almost entirely in interest bearing bank accounts in the UK or on short-term deposit. This, together with a diversified portfolio which comprises mainly investments in large and medium- sized listed companies mitigates the Company’s exposure to liquidity risk. Currency risk is mitigated by the low exposure to overseas stocks. Please also see note 14 to the accounts.

Gearing risk

In the event of a significant or prolonged fall in equity markets gearing would exacerbate the effect of the falling market on the Company’s NAV per share and, consequently, its share price.

At the point of drawing down debt, gearing will never exceed 29.99% of the portfolio valuation.

The Company minimises the risk by the regular monitoring of the levels of the Company’s borrowings in accordance with the agreed limits. The Company confirms adherence to the covenants of the loan facilities on a monthly basis.

Tax and regulatory

Changes in the tax and regulatory environment could adversely affect the Company’s financial performance, including the return on equity.

A breach of s.1158/9 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the Listing Rules could result in suspension of the Company’s shares, while a breach of the Companies Act 2006 could lead to criminal proceedings, or financial or reputational damage.

The Manager provides its services, inter alia, through suitably qualified professionals and the Board receives internal control reports produced by the Manager on a quarterly basis, which confirm legal and regulatory compliance. The Fund Managers also consider tax and regulatory change in their monitoring of the Company’s underlying investments.

Operational

Disruption to, or failure of, the Manager’s or its administrator’s (BNP Paribas) accounting, dealing or payment systems or the Depositary’s records could prevent the accurate reporting and monitoring of the Company’s financial position. Cyber crime could lead to loss of confidential data. The Company is also exposed to the operational risk that one or more of its suppliers may not provide the required level of service.

The Board monitors the services provided by the Manager and its other suppliers and receives reports on the key elements in place to provide effective internal control.

Cyber security is closely monitored and the Audit Committee receives an annual presentation from Janus Henderson’s Head of Information Security.

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 on page 43.

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.

Viability Statement

The Company is a long-term investor; the Board believes it is appropriate to assess the Company’s viability over a five-year period in recognition of our long-term horizon and what we 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 in this Strategic Report.

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, net asset value 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 the wars in Ukraine and Israel, 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.

Key Performance Indicators

In order to measure the success of the Company in meeting its objectives and to evaluate the performance of Janus Henderson, the Directors take into account the following key performance indicators:

Performance Measured against the Benchmark

The Board reviews and compares, at each meeting, the performance of the portfolio as well as the net asset value and share price for the Company and its benchmark, which is the FTSE All-Share Index Total Return.

Discount/Premium to Net Asset Value

At each Board meeting, the Board monitors the level of the Company’s discount/premium to NAV and reviews the average discount/premium for the Company’s relevant Association of Investment Companies (‘AIC’) sector (UK Equity Income).

The Board does not believe that a formal discount control mechanism is in the interests of shareholders. It would negate some of the benefits of a closed-end fund. It might force the Company to purchase its own shares at a time when it does not have spare cash; when it may be inopportune to realise investments; or when there are good buying opportunities in the market. Furthermore it could shrink the size of the Company, reducing the audience of potential investors, increase the ongoing charge ratio, and reduce liquidity in the Company’s shares. The Board may agree to purchase Lowland shares opportunistically if it believes that the benefits in terms of NAV enhancement are sufficient.

The Board believes that the best way of reducing or eliminating the discount is to provide superior returns to shareholders, and to elucidate the attractions of investment in Lowland to as large and diverse an audience as possible.

The Board is prepared to issue shares at a premium, provided the transaction will enhance NAV; and provided that a premium has prevailed for sufficient time for current shareholders to have had the opportunity to sell shares at a premium. The Board would see the advantages as including NAV enhancement, reducing the bid/offer spread (the difference in price between which investors can buy and sell shares), reducing the ongoing charge ratio, growing the Company, and increasing liquidity in its shares. The Board believes that each of these five factors will be in the interests of Lowland’s shareholders.

The Company publishes a NAV per share figure on a daily basis, through the official newswire of the London Stock Exchange. This figure is calculated in accordance with the AIC formula and includes current financial year revenue items.

Performance against the Company’s Peer Group The Company is included in the AIC UK Equity Income sector. In addition to comparison against the stated benchmark, the Board also considers the performance against its AIC peer group and against other metrics, such as blended indices, which more accurately reflect the composition of the Company’s portfolio at each Board meeting.

Ongoing Charge

The Ongoing Charge is a measure of the recurring expenses incurred by the Company expressed as a percentage of the average shareholders’ funds over the year calculated in accordance with AIC guidance. The Board regularly reviews the Ongoing Charge and monitors all Company expenses.

The charts and tables on pages 2 and 3 show how the Company has performed and the Chairman’s Statement and Fund Managers’ Report give more information on performance.

Borrowings

For the year ended 30 September 2023, on 27 October 2022, the 2 year revolving loan facility of up to £40m with Industrial and Commercial Bank of China (London Branch) expired. The Company then entered into a three year revolving loan facility of up to £40m with BNP Paribas, London Branch, which allowed it to borrow as and when appropriate. The Company also had a conditional option to increase the facility by £20m. This facility, which bore interest based on the compounded risk-free rate, is due to expire on 27 October 2025.

The maximum amount drawn down in the year under review was £28.1m (2022: £33.1m), with borrowing costs for the year totalling £1,098,000 (2022: £360,000). £17.8m (2022: £18.5m) of the facility was in use at the year end.

The Company has in issue £30m fixed rate 20 year senior unsecured loan notes at a fixed sterling coupon rate of 3.15%.

Gearing at 30 September 2023 was 12.3% (2022: 12.5%) of net asset value.

Future Developments

The future performance of the Company is dependent on international financial markets which are subject to various external factors, including political and economic conditions. It is the Board’s intention that the Company will continue to pursue its stated investment objective and policy. The Chairman’s Statement and the Fund Managers’ Report provide commentary on the outlook of the Company.

Board Diversity and Experience

The Company’s affairs are overseen by a Board comprised of five non-executive Directors – two females and three males. The Listing Rules of the FCA now require companies to report on whether they have met certain targets on board diversity, which is included later in this report on page 47. The Directors are diverse in their experience, bringing knowledge of investment markets, banking and accounting and auditing expertise to discussions regarding the Company’s business. The Directors regularly consider the leadership needs and specific skills required to achieve the Company’s investment objective, and are cognisant of diversity when making appointments to the Board. The Board welcomes the recommendations from the Hampton-Alexander Review on gender diversity on boards and the Parker Review about ethnic representation. The Board complies with the recommendations of the Hampton-Alexander Review. It is not yet in scope for the recommendations of the Parker Review, but will consider all relevant recommendations when making new appointments. The Company has no employees and therefore has no further disclosures to make in respect of gender representation within the Company.

Approval

The Strategic Report has been approved by the Board.

Robert Robertson

Chairman

4 December 2023

Corporate Report

Report of the Directors

The Directors present their report and the audited financial statements of the Company for the year ended 30 September 2023.

Lowland Investment Company plc (‘the Company’) (registered in England & Wales with company registration number 670489) was active throughout the year under review and was not dormant.

Results and Dividends

The results for the year are set out in the financial statements. Three interim dividends two of 1.525p each, and one of 1.600p, totalling 4.650p per share, have been declared and/or paid in respect of the year to 30 September 2023. See note 10 on page 68 for more information. A final dividend of 1.600p per share is being proposed for consideration by shareholders at the forthcoming AGM.

Directors’ Remuneration and Shareholdings

The Directors’ Remuneration Report on pages 39 to 41 provides information on the remuneration and interests of the Directors.

Directors’ Conflicts of Interest

The Company’s Articles of Association permit the Board to consider, and, if it sees fit, to authorise situations where a Director has an interest that conflicts, or may possibly conflict, with the interests of the Company (‘situational conflicts’). The Board has a formal system in place for Directors to declare situational conflicts to be considered for authorisation by those Directors who have no interest in the matter being considered. In deciding whether to authorise a situational conflict, the non-conflicted Directors must act honestly and in good faith with a view to the best interests of the Company and they may impose limits or conditions when giving the authorisation, or subsequently, if they think this is appropriate. Any situational conflicts considered, and any authorisations given, are recorded in the relevant meetings’ minutes. The prescribed procedures have been followed in deciding whether, and on what terms, to authorise situational conflicts and the Board believes that the systems it has in place for reporting and considering situational conflicts continue to operate effectively.

Share Capital

The Company’s share capital comprises ordinary shares with a nominal value of 2.5p each. The voting rights of the shares on a poll are one vote for every share held. There are no restrictions on the transfer of the Company’s ordinary shares or voting rights, no shares which carry specific rights with regard to the control of the Company and no agreement which the Company is party to that affects its control following a takeover bid. To the extent that they exist, the revenue profits of the Company (including accumulated revenue reserves and realised capital gains) are available for distribution by way of dividends to the holders of the ordinary shares. Upon a winding-up, after meeting the liabilities of the Company, the surplus assets would be distributed to the shareholders pro rata to their holding of ordinary shares. As at 30 September 2023, there were 270,185,650 ordinary shares in issue (2022: 270,185,650). No shares were issued during the year or in the period up to the date of this report. At the AGM held in January 2023 the Directors were granted authority to buy-back 40,500,820 shares. At 30 September 2023 no shares had been bought back from this authority. The Directors have remaining authority to purchase 40,500,820 shares. This authority will expire at the conclusion of the 2024 AGM.

The Company will seek authority from its shareholders at the 2024 AGM to renew the authorisation to allot new shares, to dis-apply pre-emption rights and to buy-back shares for cancellation or to be held in Treasury. The main circumstances in which the Board may choose to exercise these authorities are set out in the section on Discount/Premium to Net Asset Value on page 33 (see the Notice of Meeting (sent separately with this Annual Report)) for more information.

Reappointment of Auditor

Ernst & Young LLP act as the Company’s Auditor. Resolutions to reappoint Ernst & Young LLP as Auditor and to authorise the Audit Committee to determine the Auditor’s remuneration will be put to the AGM.

Holdings in the Company’s Shares

As at 30 September 2023, the Company has been notified that 1607 Capital Partners LLC has an interest in 5.15% of the Company’s issued share capital. There are no other declarations of interest as at 30 September 2023 in accordance with the Disclosure, Guidance and Transparency Rules.

No changes have been notified in the period 1 October 2023 to 1 December 2023.

Fund Managers’ Interests

James Henderson, Fund Manager, has a beneficial interest in 924,900 ordinary shares of the Company (2022: 924,900). Laura Foll, Fund Manager, has a beneficial interest in 114,406 ordinary shares of the Company (2022: 93,406).

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 on page 41. 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 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. More details on transactions with Janus Henderson, including amounts outstanding at the year end, are given in note 20 on page 76.

Annual General Meeting (‘AGM’)

The AGM will be held on Wednesday 24 January 2024 at 2.00 p.m. The Notice of Meeting and details of the resolutions to be put at the AGM are contained in the separate document being sent to shareholders with this report.

The meeting will be held at the offices of Janus Henderson at 201 Bishopsgate, London EC2M 3AE. It will also be broadcast live on the internet. If you are unable to attend in person, you can watch the meeting by visiting www.janushenderson.com/trustslive.

Corporate Governance

The Corporate Governance Statement set out on pages 42 to 48 forms part of the Report of the Directors.

Other Information

Information on future developments and financial risks are detailed in the Strategic Report and notes to the accounts.

Directors’ Statement as to Disclosure of Information to the Auditor

Each of the Directors who were members of the Board at the date of approval of this report confirms that to the best of his or her knowledge and belief, there is no information relevant to the preparation of the Annual Report of which the Company’s Auditor is unaware and he or she has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company’s Auditor is aware of that information.

Listing Rule 9.8.4

Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. The Directors confirm that there are no disclosures to be made in this regard.

Approval

The Directors’ Report has been approved by the Board.

Janus Henderson Secretarial Services UK Limited

Corporate Secretary

4 December 2023

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice comprising FRS 102 ‘The Financial Reporting Standard applicable in the UK and the Republic of Ireland’ (United Kingdom Accounting Standards) and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the net return or loss of the Company for that year. In preparing these financial statements, the Directors are required to:

● select suitable accounting policies and then apply them consistently;

● make judgements and accounting estimates that are reasonable and prudent;

● state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

● prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

Directors’ Responsibility Statement

Each of the Directors, who are listed on pages 28 and 29, confirms that, to the best of his/her 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

Robert Robertson

Chairman

4 December 2023

The financial statements are published on the Company’s website, www.lowlandinvestment.com.

The maintenance and integrity of the website is the responsibility of the Manager. The work carried out by the Auditor does not involve consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the Annual Report since it was initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors’ Remuneration Report

Remuneration Policy

The Remuneration Policy sets out the principles applied in the remuneration of the Company’s Directors. An ordinary resolution to approve the Remuneration Policy was last put to shareholders at the AGM on 25 January 2023 and will next be put to them at the AGM in 2026. The Remuneration Policy has been reviewed to ensure that it meets the requirements of The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019. It is also available on the website: www.lowlandinvestment.com.

The Board’s approach is that fees payable to the Directors should:

● reflect the time spent by them on the Company’s affairs;

● reflect the responsibilities borne by them as Directors;

● be sufficient to promote the long-term success of the Company; and

● not exceed the aggregate limit of £250,000 per annum as established by the Articles of Association.

Directors are remunerated in the form of fees which are payable quarterly in arrears.

No Director is eligible to receive bonuses, pension benefits, share options or other benefits and no long-term incentive schemes are in place.

The Directors may be reimbursed for all reasonable and properly documented expenses incurred in the performance of their duties. The level of remuneration paid to each Director is reviewed annually, although such review will not necessarily result in a change to the rate.

All Directors, including any new appointments to the Board, are paid at the same rate. The Chairman of the Board and Chairman of the Audit Committee are paid a higher fee in recognition of their additional responsibilities.

The Remuneration Policy has been in place since 22 January 2014 and will remain in place unless it is amended by way of an ordinary resolution put to shareholders at a general meeting. The Remuneration Policy, irrespective of any changes, should be put to shareholders at intervals of not more than three years. The Board may amend the levels of remuneration paid to individual Directors within the parameters of the Remuneration Policy.

Shareholders’ Views

Any feedback from shareholders on the fees paid to Directors would be taken into account by the Board when reviewing remuneration levels. None was received for the year under review.

Letters of Appointment

All Directors are non-executive and are appointed under a letter of appointment, which is an engagement for services and not a contract for employment. The appointment may be terminated at any time by written notice with no compensation payable. The Company has no executive directors or employees.

Annual Report on Remuneration

The Directors’ Remuneration Report (the ‘Report’) is prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Group (Accounts and Reports) Regulations 2008 as amended in August 2013 (the ‘Regulations’).

A resolution to approve this Report will be put to shareholders at the AGM to be held on Wednesday 24 January 2024.

Statement from the Chairman

As the Company has no employees and the Board is comprised entirely of non-executive Directors, the Board has not established a separate Remuneration Committee. Directors’ remuneration is determined by the Board as a whole, at its discretion, with an aggregate ceiling of £250,000 per annum.

Directors’ fees for the year under review were £42,000 for the Chairman, £33,000 for the Chairman of the Audit Committee and £27,500 for the remaining Directors.

The last fee increase took effect from 1 October 2022. During 2023, the Board carried out a review of Directors’ remuneration which included a comparative peer assessment of Directors’ fees together with external data. The Board reviewed the assessment and decided to increase the fees payable. Neither the Chairman nor the Audit Committee Chairman took any part in the discussion of their own remuneration. As a result, Directors fees are as follows from 1 October 2023: Chairman; £44,100 (5.0% increase): Audit Committee Chairman; £34,650 (5.0% increase): Directors; £28,875 (5.0% increase). No changes have been made to the way in which the policy will be implemented in the next financial year.

Directors’ Interests in Shares (audited)

The interests of the Directors in the ordinary shares of the Company at the beginning and end of the financial year under review are set out in the table below.

Ordinary shares of 2.5p
	30 September 2023	1 October 2022
Beneficial:
Robert Robertson	592,250	592,250
Duncan Budge	97,790	97,790
Gaynor Coley	10,450	10,450
Helena Vinnicombe	10,000	10,000
Thomas Walker	40,000	16,000
Non Beneficial:
Robert Robertson	120,000	120,000

There have been no changes to any of the Directors’ holdings in the period 1 October 2023 to the date of this report.

In accordance with the Company’s Articles of Association no Director is required to hold any shares of the Company by way of qualification.

Relative importance of Spend on Pay

Annual percentage change in Directors’ remuneration

The table below sets out the annual percentage change in fees for each Director who served during the year ended 30 September 2023:

Director	Year ended 30 September 2023 %	Year ended 30 September 2022 %	Year ended 30 September 2021 %	Year ended 30 September 2020 %	Year ended 30 September 2019 %
Robert Robertson	5.0	2.6	0.0	1.3	1.3
Duncan Budge	4.8	2.9	0.0	2.0	2.0
Gaynor Coley	4.8	3.3	0.0	1.7	1.7
Helena Vinnicombe1	4.8	2.9	n/a	n/a	n/a
Thomas Walker2	4.8	2.9	0.0	2.0	n/a

1. Appointed 1 May 2021

2. Appointed 1 July 2019

Comparative percentages reflect changes to the salary which would have been payable for a full year

Expenditure by the Company on remuneration and distributions to shareholders

The table below compares the total level of remuneration paid to Directors to the distributions made to shareholders in each year.

	Year ended 30 September 2023 £	Year ended 30 September 2022 £	Change £	Change %
Total remuneration paid to Directors1	157,500	155,172	2,328	1.5
Distributions to shareholders: – Ordinary dividends	16,481,325	16,413,778	67,547	0.4
– Buyback of ordinary shares	n/a	n/a	–	–

1. Increases/(decreases) will fluctuate due to the number of Directors in any one year

Directors’ Fees and Expenses (audited)

The remuneration paid to the Directors who served during the years ended 30 September 2023 and 30 September 2022 was as follows:

	Year ended 30 September 2023 Total salary and fees £	Year ended 30 September 2022 Total salary and fees £	Year ended 30 September 2023 Taxable benefits £	Year ended 30 September 2022 Taxable benefits £	Year ended 30 September 2023 Total £	Year ended 30 September 2022 Total £
Robert Robertson1	42,000	40,000	–	230	42,000	40,230
Gaynor Coley2	33,000	31,500	1,326	996	34,326	32,496
Duncan Budge	27,500	26,250	–	–	27,500	26,250
Thomas Walker	27,500	26,250	1,646	253	29,146	26,503
Helena Vinnicombe	27,500	26,250	286	121	27,786	26,371
Karl Sternberg3	–	4,922	–	–	–	4,922
Total	157,500	155,172	3,258	1,600	160,758	156,772

Notes:

The table above omits other columns set out in the relevant regulations because no payments of other types such as performance related pay, vesting performance- related pay and pension-related benefits were made

1. Chairman and highest-paid Director 2. Chairman of the Audit Committee 3. Retired 8 December 2021

HMRC view certain expenses incurred by Directors (primarily travel to/from Board meetings) as a taxable benefit. The Board has decided that with effect from the 2019/2020 tax year onward, Directors’ expenses in relation to travel to/from Board meetings will be reimbursed as a ‘grossed up’ amount to compensate the affected Directors for the additional tax cost that is incurred as a result of the HMRC decision.

The fees paid to the Directors during the year were: Chairman £42,000, Audit Committee Chairman £33,000 and Directors £27,500.

No other remuneration or compensation was paid or payable by the Company during the year to any of the current or former Directors or third parties specified by any of them.

Performance

The graph below compares the mid-market price of the Company’s ordinary shares over the ten-year period ended 30 September 2023 with the return from the FTSE All-Share Index Total Return over the same period.

Statement of Voting at AGM

A binding ordinary resolution adopting the Directors’ Remuneration Policy was approved at the AGM held on 25 January 2023. The votes cast by proxy were as follows:

	% of votes cast
For	99.15
Against	0.48
Discretionary	0.37
Votes withheld	281,318

A non-binding ordinary resolution adopting the Directors’ Remuneration Report for the year ended 30 September 2022 was approved by shareholders at the AGM held on 25 January 2023. The votes cast by proxy were as follows:

	% of votes cast
For	99.01
Against	0.62
Discretionary	0.37
Votes withheld	232,360

The percentage of votes in the tables above excludes votes withheld.

On behalf of the Board

Robert Robertson

Chairman

4 December 2023

Corporate Governance Statement

The Corporate Governance Statement forms part of the Report of the Directors.

Applicable Corporate Governance Codes

The Company is required by the Listing Rules and the Disclosure Guidance and Transparency Rules issued by the FCA to disclose how it has applied the principles and complied with the provisions of the corporate governance code to which it, as an issuer is subject. The UK Corporate Governance Code (the ‘UK Code’) issued by the Financial Reporting Council (‘FRC’) in July 2018 is applicable, along with the related Code of Corporate Governance issued by the AIC (the ‘AIC Code’) in February 2019 (together the ‘Governance Codes’).

The AIC Code addresses all of the applicable principles set out in the UK Code, as well as principles and recommendations which are of specific relevance to investment trust companies. The FRC has confirmed that by following the AIC Code, the boards of investment companies will meet their obligations in relation to the UK Code and the disclosure requirements of the Disclosure Guidance and Transparency Rules.

Copies of the AIC Code and the UK Code can be found on the respective organisations’ websites: www.theaic.co.uk and www.frc.org.uk.

Statement of Compliance

The Board has considered the principles and recommendations of the Governance Codes and believe the Company has complied with the applicable provisions throughout the period under review and up to the date of this report except as set out below.

The UK Code includes provisions relating to the role of the chief executive, executive directors’ remuneration and the need for an internal audit function. For the reasons explained in the AIC Code, the Board considers these provisions are not relevant to the Company as it is an externally managed investment trust company. The Company has no executive directors, employees or internal operations and has therefore not reported further in these respects.

All the Directors are non-executive, and as there is a Chairman and a Chairman of the Audit Committee amongst them, the appointment of a Senior Independent Director is considered to be superfluous but the need for such an appointment is reviewed every year.

The Board

As at the date of this report, the Board comprises five non-executive Directors. During the year, there were five non-executive directors, all of whom were in office throughout the period under review. Biographical details for each Director are set out on pages 28 and 29.

Responsibilities of the Board

Board leadership and purpose

The Board is collectively responsible for the success of the Company. Its role is to provide leadership within a framework of prudent and effective controls that enable risk to be assessed and managed. The Board is responsible for setting the Company’s standards and values and for ensuring that its obligations to its shareholders and others are understood and met. The Board sets the Company’s strategic aims, subject to the Company’s articles of association, and to such approval by shareholders in general meeting as may be required from time to time, and ensures that the necessary resources are in place to enable the Company’s objectives to be met. Information relating to the Company’s purpose, values and culture can be found on page 24.

The Chairman, Robert Robertson, is responsible for leading the Board and ensuring that it addresses all aspects of its role, promoting a culture of openness, challenge and robust debate. Robert leads the Board’s relationship and engagement with the Manager, shareholders and other stakeholders.

The Board meets formally at least five times a year, with additional Board or committee meetings arranged when required. The Directors have regular contact with the Fund Managers and other employees of the Manager in connection with the delivery of company secretarial, sales and marketing and other administrative services.

The Board has a formal schedule of matters specifically reserved for its decision, which includes setting strategy and providing oversight of performance against agreed measures. It approves any changes to the structure and capital arrangements for the Company, has oversight of financial reporting and assesses the effectiveness of the internal control framework. The Board approves communications with shareholders, the appointments of new Directors, oversees corporate governance matters and is responsible for determining the remuneration of Directors.

Each meeting follows an agenda agreed with the Chairman and includes a review of the Company’s investment performance, financial position, compliance with the investment parameters, reporting from the Depositary, a review of shareholder movements along with any sales or marketing activities undertaken and any other relevant business matters in order to ensure that control is maintained over the Company’s affairs.

The Board has delegated contractually to external third-party service providers the management of the investment portfolio, the custodial services (which encompasses the safeguarding of the Company’s assets by the Depositary and, separately, the Custodian), the day-to-day accounting, company secretarial, administration and registration services.

Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of the services offered, including the control systems in operation in so far as they relate to the affairs of the Company. The Board, and its committees, maintain oversight of the third-party service providers through regular and ad hoc reporting addressing any specific areas which the Board has requested.

The Manager ensures that the Directors receive all relevant management, regulatory and financial information. Employees of the Manager attend each Board meeting enabling the Directors to probe further on matters of concern. The Chairman is able to attend meetings of all the chairmen of the investment trust companies managed by Janus Henderson which provides a forum to discuss industry matters. The Directors have access to the advice and services of the Company Secretary through its designated representative who is responsible for ensuring that Board and committee procedures are followed and that the applicable rules and regulations are complied with. The proceedings of all Board and committee meetings are minuted, with any particular concerns raised by the Directors appropriately recorded. The Board and the Manager operate in a supportive, co-operative and open environment.

The Company has a procedure for Directors to take independent professional advice in the furtherance of their duties at the expense of the Company. In order to enable them to discharge their responsibilities, all Directors have full and timely access to relevant information.

Internal Controls

The Board has overall responsibility for the Company’s system of internal control and for reviewing its effectiveness as set out on the chart on the following page. The Board has established an ongoing process for identifying, evaluating and managing the principal risks faced by the Company.

The process accords with the FRC’s guidance on Risk Management, Internal Control and Related Business and Financial Reporting published in September 2014. The system was in operation throughout the year and up to the date of this report. The system is designed to meet the specific risks faced by the Company and takes account of the nature of the Company’s reliance on its service providers and their internal controls. The system therefore manages rather than eliminates the risk of failure to achieve the Company’s business objectives and provides reasonable, but not absolute assurance against material misstatement or loss.

The key components of the internal control framework include:

● Clearly defined investment criteria, specifying levels of authority and exposure limits. The Board reviews reports on investment performance against and compliance with the criteria at each meeting.

● Regular financial reporting which allows the Board to assess the Company’s financial position. The management accounts and forecasts are reviewed by the Board at each meeting.

● Contractual agreements with the Manager and all other third party service providers. The Board reviews performance levels and adherence to relevant provisions in the agreements on a regular basis through reports it receives and conducts a formal evaluation of the overall level of service provided at least annually.

● The review of controls at the Manager and other third party service providers. The Board receives quarterly reporting from the Manager and Depositary, and reviews annual assurance reports on the effectiveness of the control environments at the Company’s key service providers.

● Review of additional reporting provided by:

– The Manager’s Risk team on the control environment in operation at the Manager and their view of the control environments in place at the third party service providers used by the Company.

– The Manager’s Internal Audit team on areas of operation which are relevant to the Company.

The Audit Committee met with representatives of the Manager’s risk team to discuss internal controls and risk management. The discussion included a detailed overview of the Manager’s internal controls report and went on to provide a summary of the HSBC Bank, BNP Paribas and Computershare Investor Services (the Company’s other main third-party service providers) internal controls reports that had also been reviewed by the Manager’s risk team. The assurance report for one of the Company’s service providers was qualified by the respective service auditor. The Audit Committee reviewed the instances giving rise to the qualification and received confirmation that appropriate action to address the issues identified in the report was being taken. The exceptions identified had no impact on the Company.

The Board has reviewed the effectiveness of the Company’s system of internal controls for the year ended 30 September 2023. During the course of its review the Board has not identified or been advised of any failings or weaknesses that have been determined as significant.

In addition the Audit Committee has considered the cyber- attack safeguards its third party service providers have in place.

Internal Audit Function

Systems are in operation to safeguard the Company’s assets and shareholders’ investments, to maintain proper accounting records and to ensure that financial information used within the business, or published, is reliable. The Company’s management functions are delegated to third parties and the Board monitors the controls in place with support from the Manager’s internal audit department. As such the Board has determined that there is currently no need for the Company to have its own internal audit function.

System of Internal Controls

How the system of internal control operates

The Board delegates contractually to third-party service providers for all of the Company’s operational requirements. It maintains oversight of these providers throughout the year by receiving regular reporting on their activities. All are considered key stakeholders.

The Company’s principal third-party service providers are the Manager (Janus Henderson); the Depositary/Custodian (HSBC Bank plc) and the accountants (BNP Paribas).

In respect of its principal providers, the Board receives quarterly reporting on compliance with the control environment and assesses the effectiveness of the control environment through review of the annual assurance reports from each organisation. This reporting is supplemented by the view of the Manager’s Risk Team regarding the control environments in operation at the providers.

The Company’s secondary service providers report regularly to the Board. A failing in their services is deemed to have a minimal impact on the Company’s value and therefore less stringent reporting is required.

The Management Engagement Committee formally evaluates the performance and service delivery of all third-party service providers at least annually.

The Audit Committee evaluates the performance of the Auditors on completion of each audit cycle.

Board of Directors

(comprised entirely of non-executive Directors)

Ernst & Young LLP (Independent Auditors)

Principal third-party service providers

• receive regular reporting at meetings;

• review the annual assurance report produced by each organisation;

• receive additional reporting on the control environment from the Manager’s Risk Team;

• receive reporting from the Manager’s Internal Audit Team on areas relevant to investment trusts; and

• formally evaluate performance on an annual basis.

Janus Henderson (Investment management, company secretarial, sales, marketing, PR and administration)

Reporting

• Investment performance update (at each meeting)

• Compliance with investment limits and restrictions (monthly)

• Internal controls report (quarterly)

• Effectiveness of control environment (annually)

HSBC

(Depositary & Custodian)

Reporting

• Depositary report (quarterly)

• Presentation from the Depositary and Custodian (annually)

• Effectiveness of control environment (annually)

BNP Paribas (Administration and Accounting services (engaged by the Manager))

Reporting

• Balance sheet

• Liquidity and gearing

• Revenue forecasts

• Portfolio valuation

• Portfolio transactions

• Effectiveness of control environment (annually)

Secondary third-party service providers

• receive regular reporting on their activities at meetings; and

• formally evaluate performance on an annual basis.

Computershare (Registrar)

J. P. Morgan Cazenove (Corporate Broker)

Directors

Appointment, Retirement and Tenure

The Board may appoint Directors to the Board without shareholder approval. Any Director appointed during the year must stand for election by the shareholders at the next AGM in accordance with the provisions of the Articles. Directors are generally expected to serve two terms of three years, which may be extended at the discretion of the Board and subject to satisfactory performance evaluation and re-election by shareholders. The Chairman should be deemed independent on appointment.

The UK Code and AIC Code recommend that all directors stand for election annually. All Directors will stand for re-election at the 2024 AGM.

The Articles permit shareholders to remove a Director before the end of his or her term by passing an ordinary resolution at a general meeting. An appointment may be terminated by either party giving written notice without compensation payable.

The Board is anxious to ensure that each Director has sufficient time to devote to his or her duties, whether in normal times or in times of crisis. To this end, each Director, actual or prospective, is required to provide to the Nominations Committee an account of time commitments to all his or her professional activities. This procedure is repeated if a Director seeks the Chairman’s approval to take up an additional post.

With regard to tenure, the Board has a succession plan, which is reviewed each year to ensure it remains appropriate, and which intends that one Director be replaced on average every three years. This brings the benefit of, on the one hand, experience of past vicissitudes and, on the other, fresh thought. It should also facilitate a pool of internal candidates from which the Chair may be chosen, which is the current intention. The AIC Code, which has been adopted by the Board, and with which is it compliant, permits a tenure longer than nine years, where the Chairman was independent on appointment, and has not held any position or relationship which would compromise his or her independence. These conditions apply to Mr Robertson, who is due to retire as Chairman at the AGM in 2025.

Independence

The independence of the Directors is determined with reference to the AIC Code and is reviewed by the Nominations Committee at least annually. The Committee considers each of the Directors’ other appointments and commitments, as well as their tenure of service and any connections they may have with the Manager. Following conclusion of the evaluation in September 2023, the Committee concluded that all Directors continued to be independent in character and judgement.

The Chairman and one other Director who served throughout the year have served longer than nine years as a Director. Their independence was considered as part of the Board evaluation. Following an extensive review of their respective contributions, time commitments and conduct, (the review of the Chairman was conducted by the Audit Chair separately from the Board evaluation), the Chairman was also deemed independent, both in terms of his conduct and on appointment.

There were no contracts subsisting during or at the end of the year in which a Director of the Company is or was materially interested and which is or was significant in relation to the Company’s business. No Director has a contract of service with the Company and there are no agreements between the Company and its Directors concerning compensation for loss of office.

Induction and Ongoing Training

Newly appointed Directors are offered a bespoke induction programme which covers the legal and regulatory framework for investment trust companies and the operations of the Manager, including the compliance and risk management frameworks, accounting, sales and marketing, and other administrative services carried out by the Manager.

Directors are regularly provided with information on the Company’s policies, regulatory and statutory requirements affecting the Company, as well as changes to the Directors’ responsibilities as they arise.

Directors are encouraged to attend external training and industry seminars, and may do so at the expense of the Company.

Directors’ Insurance and Indemnification Directors’ and officers’ liability insurance cover is in place which indemnifies the Directors against certain liabilities arising from the carrying out of their duties. The Company’s Articles and the provisions of English law, permit a qualifying third party provision indemnity to be provided to Directors in respect of costs which they may incur relating to the defence of any proceedings brought against them arising out of their positions as Directors, in which they are acquitted or judgement is given in their favour by the Court. No indemnity was given during the year or up until the date of this report.

Meeting Attendance

The attendance of each Director at scheduled meetings is set out in the table below:

	Board	AC	MEC	NC
Number of meetings	5	2	1	1
Robert Robertson1	5/5	2/2	1/1	1/1
Duncan Budge	5/5	2/2	1/1	1/1
Gaynor Coley	5/5	2/2	1/1	1/1
Helena Vinnicombe	5/5	2/2	1/1	1/1
Thomas Walker	5/5	2/2	1/1	1/1

1. Mr Robertson is not a member of the Audit Committee but attends its meetings by invitation

There were three ad hoc Board meetings during the year, and an additional Committee of the Board meeting to approve various items of business including the Company’s half-

year results.

The Board’s committees

The Board has three principal committees: the Audit Committee, the Management Engagement Committee and the Nominations Committee.


		Board of Directors Comprised of five independent non-executive Directors


Audit Committee Chairman: Gaynor Coley Purpose: Ensure the integrity of the financial reporting, evaluate the effectiveness of the systems of internal control and risk management and oversee the relationship with the external auditors	Management Engagement Committee Chairman: Robert Robertson Purpose: Ensure that the performance of third-party service providers meets expectations and their terms of engagement remain appropriate		Nominations Committee Chairman: Robert Robertson Purpose: Ensure the Board has a balance of skills, experience and diversity, has a formal approach to the appointment of Directors and maintains an effective framework for succession planning

Contractually engages third-party service providers to deliver the Company’s operations, principal among them being the Manager

	Janus Henderson Investors Fund Managers: James Henderson Laura Foll

Performance Evaluation

The Board conducted a review of its own performance, together with that of its committees and each individual Director. The evaluation was carried out through the use of a questionnaire. The outcome concluded that the Board continued to have an appropriate balance of skills and experience and that each Director continued to make a significant contribution to the affairs of the Company.

Ms Coley led the performance evaluation of the Chairman who was not present for the discussion, taking feedback from all Directors after completion of a questionnaire. The review of the Chairman’s performance concluded that he had displayed effective leadership during the year and remained independent of the Manager.

Committees of the Board

The terms of reference for the Audit, Management Engagement and Nominations committees are available on the website www.lowlandinvestment.com.

The Board has also constituted an Insider Committee which meets when required to assist the Board in discharging its responsibilities under the Market Abuse Regulation.

Audit Committee

The Audit Committee is responsible for ensuring the integrity of the Company’s financial reporting, evaluating the effectiveness of the systems of internal control and risk management and monitoring the effectiveness and objectivity of the external Auditor.

The Committee is chaired by a qualified chartered accountant and all of the independent non-executive Directors (with the exception of the Chairman) are members of the Committee. The Board is satisfied that at least one member has recent and relevant experience and the Committee as a whole has competence relevant to the sector in which the Company operates.

The Audit Committee Report can be found on pages 49 to 51.

Nominations Committee

The Nominations Committee is responsible for ensuring the Board retains an appropriate balance of skills, experience and diversity, has a formal, rigorous and transparent approach to the appointment of Directors and maintains an effective framework for succession planning. In all the Nominations Committee’s activities, consideration is given to diversity.

The Committee is chaired by the Chairman of the Board. All of the independent non-executive Directors are members of the Committee. In discharging its duties over the course of the year, the Committee considered:

● The composition of the Board and each of its committees, taking account of the skills, experience and knowledge of each Director and whether the diversity of these continued to contribute to the success of the Company;

● The questionnaires completed by each Director and made conclusions as to the outcomes of the Board performance evaluation with a view as to whether adjustments should be made to the number of Directors or knowledge and skills represented on the Board;

● The tenure of each of the Directors, giving consideration as to whether the Board retained a sufficient balance of length of service without becoming ossified;

● The independence of the Directors taking account of the guidelines established by the AIC Code and the Directors’ other commitments; the time commitment of the Directors and whether this had been sufficient over the course of the year;

● Succession planning for appointments to the Board taking account of the provisions of the Articles of Association regarding the retirement and rotation of Directors and the tenure of the current Directors;

● The criteria for the appointment of a new Director, and evaluation of recruitment consultants to assist with the recruitment process, none of whom were connected to the Company; and

● The performance and contribution of the Directors standing for re-election at the 2024 AGM.

Following completion of its reviews, the Committee concluded that, with the exception of the recruitment of an additional Director, as detailed above, no changes to the composition of the Board were required at present and that each Director continued to commit sufficient time to fulfilling their duties. Taking account of the performance of individual Directors, the Committee recommended to the Board that it should support the re-appointment of each of the Directors, who are retiring and standing for re-election at the forthcoming AGM.

The Listing Rules of the FCA now require companies to report on whether they have met the following targets on board diversity: that at least 40% of the individuals on the board are women, at least one of the senior positions on the board is held by a woman and at least one member of the Board is from a minority ethnic background. As at 30 September 2023, the Company had met two of these requirements. Two out of the five Directors (40%) are women and one of the women holds a senior position, being the Audit Committee Chair. There is no Director from a minority ethnic background. As described above, the Board’s overriding aim in making any new appointments is to select the best candidate based on objective criteria and merit, which it did at the time the current Directors were selected. The Board actively seeks diversity in candidates for the Board, whether cognitive, gender or ethnicity, believing that such diversity adds strength and depth to Board discussion, and will continue to do so. There have been no changes to the Board or the roles of Directors since 30 September 2023.

The following tables set out the gender and ethnic diversity of the Board:

Gender diversity	Number of Board members	Percentage of the Board	Number of senior positions on the Board1
Men	3	60	1
Women	2	40	1
Ethnic diversity
White British	5	100	2

1. Senior positions include Chairman and Audit Committee Chair

Management Engagement Committee

The Management Engagement Committee is responsible for formally evaluating the overall performance of the Manager and other third-party service providers engaged by the Company. The Committee is chaired by the Chairman of the Board. All of the independent non-executive Directors are members of the Committee. In discharging its duties over the course of the year, the Committee considered:

● The investment performance of the Company, taking account of the benchmark and performance of competitors in the AIC UK Equity Income sector, the share price, level of discount and gearing;

● The quality and experience of the team involved in managing all aspects of the Company’s business;

● The fee structures of its closed-end competitors and other, similar sized investment trust companies;

● The key clauses of the investment management agreement, how the Manager had fulfilled these and whether these continued to be appropriate; and

● The performance and fees of the Company’s other third- party service providers, including the Broker, Depositary, Registrar and sales, marketing and research providers.

Following completion of its reviews, the Committee concluded that the continued appointment of the Manager remained in the best interests of the Company and the shareholders, and therefore recommended to the Board the re-appointment of Janus Henderson for a further year.

Bribery Act 2010

The Company has no employees. The Board has reviewed the implications of the Bribery Act 2010 and confirmed its zero tolerance to bribery and corruption in its business activities. It receives assurances from the Company’s main contractors and suppliers that they will maintain adequate safeguards to protect against any potentially illegal behaviour by their employees and agents.

Criminal Finances Act 2017

The Board has also considered the changes made by the Criminal Finances Act 2017, which came into effect in September 2018, which introduced a corporate criminal offence of failing to take reasonable steps to prevent the facilitation of tax evasion. The Company has received assurances from the Company’s main contractors and suppliers that they maintain a zero tolerance policy towards the provision of illegal services, including the facilitation of tax evasion.

Relations with Shareholders

Shareholder relations are given high priority by the Board. The prime medium by which the Company communicates with its shareholders is through the Annual Report and half year results which aim to provide shareholders with a clear understanding of the Company’s activities and financial position. This information is supplemented by the daily calculation and publication of the NAV per share and a monthly fact sheet which is available on the website. The Manager provides information on the Company and videos of the Fund Managers on the Company’s website. Shareholders can use the QR code printed on the inside front cover of this report to sign up for these insights directly.

The Board encourages shareholders to attend and participate in the AGM. Shareholders have the opportunity to address questions to the Chairman of the Board, the Fund Managers and all Directors. A summary of the proxy votes received on the resolutions proposed is displayed at the meeting and each substantial issue is dealt with in a separate resolution. It is the intention of the Board that the Annual Report and Notice of Meeting are issued to shareholders so as to provide at least 20 working days’ notice of the meeting. These documents are also available on the Company’s website.

Shareholders wishing to lodge questions in advance of the meeting, or raise issues or concerns at any time are invited to do so by contacting the Chairman at the registered office

or by email at ITSecretariat@janushenderson.com. General presentations to both shareholders and analysts follow the publication of the annual results. All meetings between the Fund Managers and shareholders are reported to the Board.

Report of the Audit Committee

Membership

The Chairman of the Committee is Gaynor Coley who is an experienced chartered accountant.

All of the independent non-executive Directors are members of the Committee with the exception of the Chairman of the Board. The Chairman of the Board attends the Committee meetings in the ordinary course of business.

Meetings

The Committee met twice during the year under review and invited the Auditor to attend as appropriate. The Fund Managers and the Manager’s designated Financial Reporting Manager for the Company also attend meetings. Other representatives of the Manager and BNP Paribas may also be invited to attend if deemed necessary by the Committee.

Roles and Responsibilities

The primary responsibilities of the Audit Committee are to ensure the integrity of the Company’s financial reporting, including oversight of the preparation and audit of the annual financial statements; to monitor and review the effectiveness of the systems of internal control and risk management in place at the Manager and the Company’s other third-party service providers; and to monitor the effectiveness and objectivity of the external Auditors and make recommendations to the Board regarding their appointment, re-appointment or removal.

The Audit Committee reports to the Board after each meeting and its responsibilities are set out in formal terms of reference which are reviewed at least annually.

In the year under review, the Committee considered the following matters:

Annual and half-year reports

● The appropriateness of the Company’s accounting policies and the quality and effectiveness of the accounting records and management information maintained on behalf of the Company.

● The areas of judgement in the financial statements, including the valuation of the Company’s unquoted investments.

● The disclosures made in the reports in relation to internal controls and risk management, viability, going concern and related parties and consideration of whether the report is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy in order to make recommendations to the Board.

Independent Auditors

● The nature, scope and cost of the external audit and reviewing the Auditors’ findings in this respect.

● The appointment and evaluation of the independence, effectiveness and objectivity of the Auditors.

Internal controls and management of risk

● The principal risks facing the Company, including consideration of emerging risks, the risk management systems in place and the Company’s risk map.

● Reports on the effectiveness of the internal controls in place at Janus Henderson and the Company’s other principal third-party service providers.

● The need for the Company to have its own internal audit function.

● The whistleblowing arrangements in place at the Manager and other key service providers for their staff to raise concerns, in confidence, about possible improprieties, including in relation to the Company.

● The Manager’s policies in relation to information security and business continuity, meeting with representatives of Janus Henderson’s internal audit and risk departments periodically.

● The Company’s anti-bribery policy, approach to tax evasion and the confirmations received from third-party service providers as to whether they have appropriate procedures in place in these respects.

● The annual confirmation from the Company’s Depositary in respect of the safe-keeping of the Company’s assets.

Appointment and Tenure of the Auditors

As a Public Interest Entity listed on the London Stock Exchange, the Company is required to put its audit out to tender after a period of 10 years and to actually change auditor every 20 years. Ernst & Young LLP (‘EY’) were appointed by the Board following a formal tender process which concluded in 2016.

This is the second year the current audit partner, Mike Gaylor, has been in place.

The Audit Committee remains satisfied with the effectiveness of the audit provided by EY. On the basis of the Auditor’s performance the Audit Committee recommended their continuing appointment to the Board. The Auditor has indicated their willingness to continue in office. Accordingly, resolutions to confirm the re-appointment of EY as Auditor to the Company and to authorise the Audit Committee to determine their remuneration will be proposed at the AGM.

The Committee discusses the audit process with the Auditor without representatives of Janus Henderson present and considers the effectiveness of the audit process after each audit. This is the seventh year EY has audited the Company’s Annual Report.

Audit Fees

The fees payable to the Auditor for audit services were

£52,000 (2022: £45,000) (exclusive of VAT). Further detail can be found in note 6 on page 66.

Policy on Non-Audit Services

The Committee reviewed the policy on the provision of non-audit services by the Auditor.

The Company’s Auditor will only be considered for non-audit work where these are not prohibited by the regulations and where they do not appear to affect the independence and objectivity of the Auditor. Such services require approval in advance by the Audit Committee, or Audit Committee Chairman, following due consideration of the proposed services. No non-audit services were provided by the Auditor during the year (2022: none).

Audit Independence

The Committee monitors the Auditor’s independence through three aspects of its work: the approval of a policy regulating the non-audit services that may be provided by the Auditor to the Company; assessing the appropriateness of the fees paid to the Auditor for all work undertaken by it; and by reviewing the information and assurances provided by the Auditor on its compliance with the relevant ethical standards. The Auditor provided no non-audit services during the year.

EY confirmed that all of its partners and staff involved with the audit were independent of any links to the Company, and that these individuals had complied with their ethics and independence policies and procedures, which are fully consistent with the FRC’s Ethical Standards. Having considered the above-mentioned aspects, the performance and behaviour of the Auditor during the audit process and the assurances received from EY, the Committee is satisfied that auditor independence and objectivity are safeguarded. The current audit partner, Mike Gaylor, is expected to serve until 2026.

Audit for the Year Ended 30 September 2023

In relation to the Annual Report for the year ended 30 September 2023 the following significant issues were considered by the Committee:

Significant issue	How the issue was addressed
Valuation and ownership of the Company’s investments	The Directors have appointed Janus Henderson, who outsource some of the administration and accounting services to BNP Paribas, to perform the valuation of the assets of the Company in accordance with its responsibilities under the AIFMD rules. As required under the AIFMD rules, Janus Henderson has adopted a written valuation policy, which may be modified from time to time. Actively traded investments are valued using stock exchange prices provided by third party pricing vendors. Unlisted investments are valued either by periodically published net asset value or most recently traded price. Ownership of listed investments is verified by reconciliation to the Custodian’s records and the Audit Committee has received quarterly reports of the Depositary who has responsibility for overseeing operations of the Company, including verification of ownership and valuation. For more information please refer to note 1(c) on page 63.
Recognition of income	Income received is accounted for in line with the Company’s accounting policies (as set out in note 1(e)) on page 64 and is reviewed by the Committee at each meeting. The Committee also considers the treatment of income received from special dividends and the revenue forecast at each meeting.
Compliance with Section 1158/9 of the Corporation Tax Act 2010	The Committee regularly considers the controls in place to ensure that the regulations for ensuring investment trust status are observed at all times, receiving supporting documentation from Janus Henderson and BNP Paribas.
Assessment of management judgements	The Committee reviewed those areas where management applies judgements (which relate to the treatment of special dividends and the valuation of unlisted investments). These are reviewed at every Audit Committee meeting. The Committee also assessed whether there were areas in which the Auditors challenged management’s judgements. It concluded that there were few areas where such judgement was applied, and where it did apply, the Auditor appropriately challenged and evidenced the outcome.
Maintaining internal controls	The Committee receives regular reports on internal controls from Janus Henderson, BNP Paribas and HSBC and its delegates and has access to the relevant personnel of Janus Henderson who have a responsibility for risk management and internal audit. The Audit Committee noted that there were no qualifications from the service auditor’s qualification in respect of the assurance report of Janus Henderson. The Audit Committee was satisfied that neither the qualification of one report, nor the exceptions noted across the other assurance reports were considered to have a material impact on the Company.

Effectiveness of the External Audit

The Committee’s process for evaluating the effectiveness of the external audit comprises two components: consideration is given to the findings of the FRC’s Audit Quality Inspection Report and a post-audit assessment is carried out led by the Committee Chairman.

The Auditor is able to present and discuss the findings of the latest Audit Quality Inspection Report and report on the progress made by the firm in addressing the areas identified for improvement in the prior year’s report.

In addition, the audit of the Company’s 2022 Financial Statements was selected for review by the FRC as part of its Audit Quality Inspection. The FRC rated the audit as “good” with no areas identified for improvement. The Auditor attended two Audit Committee meetings in the year, when the Committee was considering the half year and the annual results. The Committee Chair also met with the Auditor to review the audit results prior to these being presented to the Audit Committee.

In assessing the effectiveness of the audit process, the Committee Chairman invites views from the Directors, the Fund Managers and other members of the Manager’s staff in assessing the robustness of the audit, level of challenge offered by the audit team, the quality of the audit team and timeliness of delivering the tasks required for the audit and reporting to the Committee. The Committee also met privately with the Audit Partner to discuss how the audit operated from his perspective. Overall, the Committee considers that the audit quality for the year ended 30 September 2023 has been high and that the Manager and EY have worked together to enhance and improve reporting to shareholders.

Following completion of the assessment, the Committee remained satisfied with the effectiveness of the audit provided by EY and therefore recommended to the Board its continuing appointment. The Auditor has indicated its willingness to continue in office. Accordingly, resolutions reappointing EY as Auditor to the Company and authorising the Committee to determine its remuneration will be proposed at the upcoming Annual General Meeting.

Annual Report for the year ended 30 September 2023

The Audit Committee in conclusion recommended to the Board that the Annual Report, taken as a whole, was fair, balanced and understandable and provided the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

Gaynor Coley

Audit Committee Chairman

4 December 2023

Independent Auditor’s Report to the Members of Lowland Investment Company plc

Opinion

We have audited the financial statements of Lowland Investment Company plc (‘the Company’) for the year ended 30 September 2023 which comprise the Income Statement, Statement of Changes in Equity, Statement of Financial Position and Statement of Cash Flows and the related notes 1 to 20, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

● give a true and fair view of the Company’s affairs as at 30 September 2023 and of its profit for the year then ended;

● have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

● have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent of the Company in conducting the audit.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included the following procedures:

● We confirmed our understanding of the Company’s going concern assessment process and engaged with the Directors and the Company Secretary to determine if all key factors that we have become aware of during our audit were considered in their assessment.

● We inspected the Directors’ assessment of going concern, including the revenue forecast. In preparing the revenue forecast, the Company has concluded that it is able to continue to meet its ongoing costs as they fall due.

● We have reviewed the factors and assumptions, including the impact of the current economic environment, as applied to the revenue forecast and the liquidity assessment of the investments. We considered the appropriateness of the methods used to calculate the revenue forecast and the liquidity assessment and determined, through testing of the methodology and calculations, that the methods, inputs and assumptions utilised were appropriate to be able to make an assessment of the Company.

● We assessed the risk of breaching the debt covenants applicable to the Company’s debt arrangements as a result of a reduction in the value of the Company’s investment portfolio. We calculated the Company’s compliance with debt covenants and performed reverse stress testing in order to identify what factors would lead to the Company breaching those covenants.

● We considered the mitigating factors included in the revenue forecasts and covenant calculations that are within the control of the Company. We reviewed the Company’s assessment of the liquidity of investments held and evaluated the Company’s ability to sell those investments in order to cover working capital requirements should revenue decline significantly.

● We reviewed the Company’s going concern disclosures included in the annual report in order to assess that the disclosures were appropriate and in conformity with the reporting standards.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from the date the financial statements were authorised for issue.

In relation to the Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors have considered it appropriate to adopt the going concern basis of accounting.

Independent Auditor’s Report to the Members of Lowland Investment Company plc (continued)

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s ability to continue as a going concern.

Overview of our audit approach

Key audit matters

● Risk of incomplete or inaccurate revenue recognition, including classification of special dividends as revenue or capital items in the Income Statement.

● Risk of incorrect valuation or ownership of the investment portfolio.

Materiality

● Overall materiality of £3.49m which represents 1% of net assets.

An overview of the scope of our audit

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the Company and effectiveness of controls, the potential impact of climate change and changes in the business environment when assessing the level of work to be performed.

Climate change

Stakeholders are increasingly interested in how climate change will impact the Company. The Company has determined that the most significant future impacts from climate change on its operations will be from how climate change could affect the Company’s investments and overall investment process. This is explained on page 31 in the principal risks and uncertainties. This disclosure forms part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.

Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements as set out in Note 1a and conclusion that there was no further impact of climate change to be taken into account as the investments are valued based on market pricing as required by United Kingdom Generally Accepted Accounting Practice. We also challenged the Directors’ considerations of climate change in their assessment of viability and associated disclosures.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Independent Auditor’s Report to the Members of Lowland Investment Company plc (continued)

Risk

Our response to the risk

Key observations communicated to the Audit Committee

Incomplete or inaccurate revenue recognition, including the classification of special dividends as revenue or capital items in the Income Statement (as described on page 50 in the Report of the Audit Committee and as per the accounting policy set out on page 64).

The total revenue for the year to 30 September 2023 was £20.78m

(2022: £18.74m), consisting primarily of dividend income from listed equity investments.

The investment income receivable by the Company during the year directly affects the Company’s revenue return. There is therefore a risk of incomplete or inaccurate recognition of revenue through the failure to recognise proper income entitlements or to apply an appropriate accounting treatment.

In addition to the above, the Directors may be required to exercise judgement in determining whether income receivable in the form of special dividends should be classified as ‘revenue’ or ‘capital’ in the Income Statement.

We have performed the following procedures:

● We obtained an understanding of the processes and controls surrounding revenue recognition, including the classification of special dividends, by performing walkthrough procedures.

● For 100% of dividends received and accrued, we recalculated the income by multiplying the investment holdings at the ex-dividend date, traced from the accounting records, by the dividend per share, which was agreed to an independent data vendor. We also agreed a sample of dividends received and accrued to bank statements.

● Where dividends were received or accrued in foreign currency, we translated the amount into the reporting currency of the Company using exchange rates sourced from an independent data vendor.

● For all dividends accrued, we reviewed the investee company announcements to assess whether the dividend entitlements arose prior to 30 September 2023.

● To test completeness of recorded income, we verified that expected dividends for each investee company held during the year had been recorded as income with reference to investee company announcements obtained from an independent data vendor.

● For all investments held during the year, we reviewed the type of dividends paid with reference to an external data vendor to identify those which were special. Based on the work performed, we identified five special dividends received during the year, four classed as revenue and one classed as capital. One was above our testing threshold, and we assessed the appropriateness of management’s classification as revenue by reviewing the underlying rationale for the distribution.

The results of our procedures identified no material misstatement in relation to incomplete or inaccurate revenue recognition, including incorrect classification of special dividends as revenue or capital items in the Income Statement.

Independent Auditor’s Report to the Members of Lowland Investment Company plc (continued)

Risk

Our response to the risk

Key observations communicated to the Audit Committee

Incorrect valuation or ownership of the investment portfolio

(as described on page 50 in the Report of the Audit Committee and as per the accounting policy set out on page 63).

The valuation of the investment portfolio at 30 September 2023 was

£392.43m (2022: £352.08m) primarily consisting of listed investments.

The fair value of quoted investments is determined by reference to stock exchange quoted market bid prices at the close of business on the reporting date. The fair value of unquoted investments is determined by the Directors using primary valuation techniques such as recent transactions and net assets.

The valuation of the assets held in the investment portfolio is the primary driver of the Company’s net asset value and total return. Incorrect investment pricing, or a failure to maintain proper legal title of the assets held by the Company could have a significant impact on the portfolio valuation and the return generated for shareholders.

We have performed the following procedures:

● We obtained an understanding of the processes and controls surrounding investment valuation and legal title of listed investments by performing walkthrough procedures.

● For all quoted investments in the portfolio, we compared the market prices and exchange rates applied to an independent pricing vendor and recalculated the investment valuations as at the year-end.

● For all quoted investments in the portfolio, we obtained the market prices from an independent pricing vendor for five business days pre and post the year end date and calculated the day-on-day movements to identify any stale prices. We verified that the listed prices are valid fair values through review of trading activity.

● The two unquoted investments are individually and in aggregate, below our materiality levels. We reviewed the valuation methodology and calculation, agreeing the inputs to underlying source data.

● We compared the Company’s investment holdings at 30 September 2023 to an independent confirmation received directly from the Company’s Custodian and Depositary.

The results of our procedures identified no material misstatement in relation to the risk of incorrect valuation or ownership of the investment portfolio.

There have been no changes to the areas of audit focus raised in the above risk table from the prior year.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Company to be £3.49m (2022: £3.13m), which is 1% (2022: 1%) of net assets.

We believe that net assets provide us with a materiality aligned to the key measure of the Company’s performance.

During the course of our audit, we reassessed initial materiality and found no reason to alter the basis of calculation at year end.

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our judgement was that performance materiality was 75% (2022: 75%) of our planning materiality, namely £2.62m (2022: £2.35m).

Given the importance of the distinction between revenue and capital for investment trusts, we have also applied a separate testing threshold for the revenue column of the Income Statement of £0.91m (2022: £0.83m) being 5% (2022: 5%)

of the revenue profit before taxation.

Independent Auditor’s Report to the Members of Lowland Investment Company plc (continued)

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.17m (2022: £0.16m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

Other information

The other information comprises the information included in the annual report set out on pages other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

● the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

● the Strategic Report and Directors’ Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or Directors’ Report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

● adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

● the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or

● certain disclosures of Directors’ remuneration specified by law are not made; or

● we have not received all the information and explanations we require for our audit.

Corporate Governance Statement

We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:

● Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 38;

● Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate, set out on pages

● 32 to 33;

● Directors’ statement on whether it has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities, set out on page 63;

● Directors’ statement on fair, balanced and understandable set out on page 38;

● Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 32;

● The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 43; and

● The section describing the work of the Audit Committee set out on page 49.

Independent Auditor’s Report to the Members of Lowland Investment Company plc (continued)

Responsibilities of Directors

As explained more fully in the Directors’ Responsibilities Statement set out on page 38, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company and management.

● We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are United Kingdom Generally Accepted Accounting Practice, the Companies Act 2006, the Listing Rules, UK Corporate Governance Code, the Association of Investment Companies’ Code and Statement of Recommended Practice, Section 1158 of the Corporation Tax Act 2010 and the Companies (Miscellaneous Reporting) Regulations 2018.

● We understood how the Company is complying with those frameworks through discussions with the Audit Committee and the Company Secretary and review of Board minutes and the Company’s documented policies and procedures.

● We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to the incomplete or inaccurate revenue recognition through the incorrect classification of special dividends in the Income Statement. Further discussion of our approach is set out in the section on key audit matters above.

● Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved review of the reporting to the Directors with respect to the application of the documented policies and procedures and review of the financial statements to ensure compliance with the reporting requirements of the Company.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditor’s report.

Other matters we are required to address

● Following the recommendation from the Audit Committee, we were appointed by the Company on 24 January 2017 to audit the financial statements for the year ending 30 September 2017 and subsequent financial periods.

● The period of total uninterrupted engagement including previous renewals and reappointments is 7 years, covering the years ending 30 September 2017 to 30 September 2023.

● The audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Mike Gaylor (Senior Statutory Auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

4 December 2023

Financial Statements

Income Statement

Year ended 30 September 2023 Year ended 30 September 2022

	Revenue return	Capital return	Total	Revenue return	Capital return	Total
Notes	£’000	£’000	£’000	£’000	£’000	£’000
2 Gains/(losses) on investments held at fair value through profit or loss	–	36,546	36,546	–	(79,801)	(79,801)
3 Income from investments	20,669	–	20,669	18,666	–	18,666
4 Other interest receivable and similar income	107	–	107	70	–	70
Gross revenue and capital gains/(losses)	20,776	36,546	57,322	18,736	(79,801)	(61,065)
5 Management fee	(856)	(857)	(1,713)	(862)	(861)	(1,723)
6 Administrative expenses	(686)	–	(686)	(645)	–	(645)
Net return/(loss) before finance costs and taxation	19,234	35,689	54,923	17,229	(80,662)	(63,433)
7 Finance costs	(1,027)	(1,027)	(2,054)	(657)	(657)	(1,314)
Net return/(loss) before taxation	18,207	34,662	52,869	16,572	(81,319)	(64,747)
8 Taxation on net return	(80)	–	(80)	(81)	–	(81)
Net return/(loss) after taxation	18,127	34,662	52,789	16,491	(81,319)	(64,828)
9 Return/(loss) per ordinary share – basic and diluted	6.71p	12.83p	19.54p	6.10p	(30.10p)	(24.00p)

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.

The notes on pages 63 to 76 form part of these financial statements

Statement of Changes in Equity

	Year ended	Called up share capital	Share premium account	Capital redemption reserve	Other capital reserves	Revenue reserve	Total shareholders’ funds
Notes	30 September 2023	£’000	£’000	£’000	£’000	£’000	£’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
10	Third interim dividend (1.525p) for the year ended 30 September 2022 paid 31 October 2022	–	–	–	–	(4,120)	(4,120)
10	Final dividend (1.525p) for the year ended 30 September 2022 paid 31 January 2023	–	–	–	–	(4,120)	(4,120)
10	First interim dividend (1.525p) for the year ended 30 September 2023 paid 28 April 2023	–	–	–	–	(4,120)	(4,120)
10	Second interim dividend (1.525p) for the year ended 30 September 2023 paid 31 July 2023	–	–	–	–	(4,120)	(4,120)
	At 30 September 2023	6,755	61,619	1,007	270,051	9,913	349,345
		Called up	Share	Capital	Other		Total
		share	premium	redemption	capital	Revenue	shareholders’
	Year ended	capital	account	reserve	reserves	reserve	funds
Notes	30 September 2022	£’000	£’000	£’000	£’000	£’000	£’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)
10	Third interim dividend (1.5p1) for the year ended 30 September 2021 paid 29 October 2021	–	–	–	–	(4,053)	(4,053)
10	Final dividend (1.525p1) for the year ended 30 September 2021 paid 31 January 2022	–	–	–	(1,513)	(2,607)	(4,120)
10	First interim dividend (1.525p) for the year ended 30 September 2022 paid 29 April 2022	–	–	–	–	(4,120)	(4,120)
10	Second interim dividend (1.525p) for the year ended 30 September 2022 paid 29 July 2022	–	–	–	–	(4,120)	(4,120)
10	Return of unclaimed dividends	–	–	–	–	15	15
	At 30 September 2022	6,755	61,619	1,007	235,389	8,266	313,036

1. 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 notes on pages 63 to 76 form part of these financial statements

Statement of Financial Position

Notes		As at 30 September 2023 £’000	As at 30 September 2022 £’000
	Fixed assets
11	Investments held at fair value through profit or loss:
	Listed at market value in the United Kingdom	294,983	247,017
	Listed at market value on AIM	52,186	58,664
	Listed at market value overseas	15,484	15,503
	Unlisted	2,368	2,908
	Investments on loan	27,408	27,989
		392,429	352,081
	Current assets
12	Debtors	2,805	1,228
	Cash at bank	2,926	9,395
		5,731	10,623
13	Creditors: amounts falling due within one year	(19,003)	(19,866)
	Net current liabilities	(13,272)	(9,243)
	Total assets less current liabilities	379,157	342,838
13	Creditors: amounts falling due after one year	(29,812)	(29,802)
	Net assets	349,345	313,036
	Capital and reserves
15	Called up share capital	6,755	6,755
	Share premium account	61,619	61,619
	Capital redemption reserve	1,007	1,007
16	Other capital reserves	270,051	235,389
	Revenue reserve	9,913	8,266
	Total shareholders’ funds	349,345	313,036

17	Net asset value per ordinary share – basic and diluted	129.3p	115.9p

The financial statements on pages 59 to 76 were approved and authorised for issue by the Board of Directors on 4 December 2023 and signed on their behalf by:

Robert Robertson

Chairman

The notes on pages 63 to 76 form part of these financial statements

Statement of Cash Flows

	Year ended 30 September 2023 £’000	Year ended 30 September 2022 £’000
Cash flows from operating activities
Net return/(loss) before taxation	52,869	(64,747)
Add back: finance costs	2,054	1,314
Add: (gains)/losses on investments held at fair value through profit or loss	(36,546)	79,801
Withholding tax on dividends deducted at source	41	(59)
(Increase)/decrease in other debtors	(1,697)	41
(Decrease)/increase in other creditors	(496)	98
Net cash inflow from operating activities	16,225	16,448
Cash flows from investing activities
Purchase of investments	(56,075)	(40,491)
Sale of investments	52,572	57,726
Net cash (outflow)/inflow from investing activities	(3,503)	17,235
Cash flows from financing activities
Equity dividends paid (net of refund of unclaimed distributions and reclaimed distributions)	(16,480)	(16,398)
Costs relating to sub-division of shares	–	(23)
Loans drawn down	55,092	9,149
Loans repaid	(55,796)	(23,726)
Interest paid	(1,996)	(1,294)
Net cash outflow from financing activities	(19,180)	(32,292)
Net (decrease)/increase in cash and cash equivalents	(6,458)	1,391
Cash and cash equivalents at start of year	9,395	7,976
Effect of foreign exchange rates	(11)	28
Cash and cash equivalents at end of year	2,926	9,395
Comprising:
Cash at bank	2,926	9,395
	2,926	9,395

Cash inflow from dividends net of taxation was £18,934,000 (2022: £18,835,000) and interest received was £62,000 (2022: £4,000).

Notes to the Financial Statements

1 Accounting Policies

a) Basis of Preparation

The Company is a registered investment company as defined in section 833 of the Companies Act 2006 and is incorporated in the United Kingdom. It operates in the United Kingdom and is registered at the address on page 30.

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 – The Financial Reporting Standard applicable in the UK and Republic of Ireland and with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (‘the SORP’) amended in July 2022 by the Association of Investment Companies.

The principal accounting policies applied in the presentation of these financial statements are set out below. These policies have been consistently applied to all the years presented.

The Financial Statements have been prepared under the historical cost basis except for the measurement of fair value of investments. In applying FRS102, financial instruments have been accounted for in accordance with Section 11 and 12 of the standard. All of the Company’s operations are of a continuing nature.

The preparation of the Company’s financial statements on occasion requires the Directors to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures.

These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the next financial year.

The Directors do not believe that any accounting judgements have been applied to this set of financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities. Nor do they believe that there are any estimates that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. In line with UK GAAP investments are valued at fair value which are predominantly quoted prices for the investments in active markets and therefore reflect participants’ views of climate change risk.

b) Going Concern

The Directors have considered the liquidity of the portfolio and concluded that the assets of the Company consist of securities that are readily realisable. They have also considered the impact of the wars in Ukraine and Israel, including revenue forecasting, and a review of covenant compliance including the headroom above the most restrictive covenants. They have concluded that they are able to meet their financial obligations as they fall due for at least twelve months from the date of approval of these financial statements. Having assessed these factors, the principal risks and other matters discussed in connection with the viability statement, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

c) Investments held at Fair Value through Profit or Loss

Listed investments, including AIM stocks are held at fair value through profit or loss and accordingly are valued at fair value, deemed to be the quoted bid price or the last trade price depending on the convention of the exchange on which the investment is quoted.

Unlisted investments have also been classified as held at fair value through profit or loss and are valued by the Directors using primary valuation techniques such as recent transactions and net assets.

Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as ‘gains or losses on investments held at fair value through profit or loss’. Also included in this are transaction costs incurred on the purchase and disposal of investments. All purchases and sales are accounted for on a trade date basis.

d) Foreign Currency

The results and financial position of the Company are expressed in pounds sterling, which is the functional and presentational currency of the Company. Sterling is the functional currency because it is the currency of the primary economic environment in which the Company operates.

Transactions recorded in overseas currencies during the year are translated into sterling at the appropriate daily exchange rates. Monetary assets and liabilities and equity investments held at fair value through profit or loss which are denominated in foreign currencies at the Statement of Financial Position date are translated into sterling at the exchange rates ruling at that date.

Any gains or losses on the translation of foreign currency balances, whether realised or unrealised, are taken to the capital or to the revenue return of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature.

1 Accounting Policies (continued)

e) Income

Dividends receivable on equity shares are taken to the revenue return on an ex-dividend basis except where, in the opinion of Directors, the dividend is capital in nature in which case it is taken to the ‘gains/(losses) on investments’ in the capital return column. The ordinary element of scrip dividends received in lieu of cash dividends is recognised as revenue.

Any enhancement above the cash dividend is treated as capital.

Bank interest is accounted for monthly on an accruals basis and shown in the revenue return based on amounts to which the Company is entitled.

Fees earned from stock lending are accounted for monthly on an accruals basis and shown in the revenue return after deduction of amounts withheld by the counterparty arranging the stock lending facility.

f) Management Fees, Administrative Expenses and Finance Costs

All expenses and finance costs are accounted for on an accruals basis. All administrative expenses except the management fee and finance costs, are charged to the revenue return of the Income Statement. The management fee and finance costs are charged 50% to the capital return of the Income Statement and 50% to the revenue return of the Income Statement.

g) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from return before taxation as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using the applicable rate of corporation tax for the accounting period.

In line with the recommendations of the AIC SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Income Statement is the ‘marginal basis’.

Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Income Statement, then no tax relief is transferred to the capital return column.

Deferred taxation is provided on all timing differences that have originated but not reversed by the Statement of Financial Position date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. Any liability to deferred tax is provided at the average rate of tax expected to apply based on tax rates and laws that have been enacted or substantively enacted at the Statement of Financial Position date. Deferred tax assets and liabilities are not discounted to reflect the time value of money.

h) Borrowings

Interest bearing bank loans and overdrafts are recorded initially at fair value, being the proceeds received, less direct issue costs. They are subsequently measured at amortised cost. Finance costs including interest payable, premiums on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Income Statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Senior unsecured notes are recorded initially at proceeds received, less direct issue costs. They are subsequently measured at amortised cost. The issue costs will be amortised over the life of the loan notes. Finance costs, including interest payable, are accounted for on an accruals basis in the Income Statement using the effective interest rate method.

i) Dividends Payable to Shareholders

Dividends payable to shareholders are recognised in the financial statements when they are paid, or in the case of final dividends, when they are approved by shareholders. Dividends are dealt with in the Statement of Changes in Equity.

1 Accounting Policies (continued)

j) Capital and Reserves

Called up share capital represents the nominal value of ordinary shares issued.

The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs.

The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to shareholders as a dividend.

The capital redemption reserve represents the nominal value of ordinary shares that have been repurchased and cancelled.

Other capital reserves are split into two components, the capital reserve arising on investments sold and the capital reserve arising on investments held. The following analyses what is accounted for in each of these components.

Capital reserve arising on investments sold

The following are accounted for in this reserve:

● gains and losses on the disposals of investments;

● realised foreign exchange differences of a capital nature;

● cost of repurchasing ordinary share capital; and

● expenses and finance costs allocated to capital net of tax relief.

Capital reserve arising on revaluation of investments held

The following are accounted for in this reserve:

● increases and decreases in the valuation of investments held at the year end; and

● unrealised foreign exchange differences of a capital nature.

k) Distributable Reserves

The Company’s capital reserve arising on investments sold (which may be restricted by unrealised losses) and revenue reserve may be distributed by way of a dividend.

2 Gains/(losses) on investments held at fair value through profit or loss

	2023 £’000	2022 £’000
Gains on the sale of investments based on historical cost	7,085	12,602
Less: revaluation gains/(losses) recognised in previous years	3,499	(7,450)
Gains on investments sold in the year based on carrying value at previous Statement of Financial Position date	10,584	5,152
Revaluation gains/(losses) on investments held at 30 September	25,973	(84,981)
Exchange (losses)/gains	(11)	28
	36,546	(79,801)

3 Income from Investments

	2023 £’000	2022 £’000
UK dividends:
Listed investments	17,210	16,180
Unlisted	13	13
Property income dividends	615	460
	17,838	16,653
Non UK dividends:
Overseas dividend income	2,831	2,013
	2,831	2,013
	20,669	18,666

4 Other Interest Receivable and Similar Income

	2023 £’000	2022 £’000
Stock lending commission	42	62
Bank interest	65	8
	107	70

Stock lending commission has been shown net of brokerage fees of £11,000 (2022: £16,000).

5 Management fees

2023

2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Management fee

856

857

1,713

862

861

1,723

A description of the basis for calculating the management fee is given in the Strategic Report on page 27.

6 Administrative Expenses

	2023 £’000	2022 £’000
Directors’ fees and expenses (see Directors’ Remuneration Report on page 41)1	161	157
Auditors’ remuneration – for audit services	52	45
AIC subscriptions	21	21
Directors’ and Officers’ liability insurance	28	23
Listing fees (Stock Exchange, newspapers and internet)	39	32
Safe custody and bank charges	22	23
Loan facility fees	106	59
Printing and postage	27	20
Registrar’s fees	20	19
General expenses and marketing expenses payable to Janus Henderson	56	96
Depositary fees	31	32
Other expenses	71	63
Irrecoverable VAT	52	55
	686	645

1. All transactions with Directors, as disclosed in the Directors’ Remuneration Report, are related party transactions

7 Finance Costs

		2023			2022
	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
On bank loans and overdrafts repayable within one year	549	549	1,098	180	180	360
On senior unsecured loan notes	478	478	956	477	477	954
	1,027	1,027	2,054	657	657	1,314

The allocation between revenue return and capital return is explained in note 1(f) on page 64.

8 Taxation on Net Return

Analysis of tax charge for the year

		2023			2022
	Revenue return £’000	Capital return £’000	Total £’000	Revenue return £’000	Capital return £’000	Total £’000
Overseas tax suffered	80	–	80	84	–	84
Overseas tax reclaimable	–	–	–	(3)	–	(3)
Total taxation for the year	80	–	80	81	–	81

Factors affecting the tax charge for the year

		2023			2022
	Revenue return £’000	Capital return £’000	Total £’000	Revenue return £’000	Capital return £’000	Total £’000
Net return/(loss) before taxation	18,207	34,662	52,869	16,572	(81,319)	(64,747)
Corporation tax at effective rate of 22%1	4,006	7,626	11,632	3,149	(15,451)	(12,302)
Effects of:
Non–taxable UK dividends	(3,789)	–	(3,789)	(3,077)	–	(3,077)
Other non–taxable income	(623)	–	(623)	(382)	–	(382)
Overseas tax suffered	80	–	80	81	–	81
Excess management expenses	406	414	820	310	289	599
Currency losses/(gains)	–	2	2	–	(5)	(5)
Non-taxable/deductible capital (gains)/losses	–	(8,042)	(8,042)	–	15,167	15,167
Total tax charge	80	–	80	81	–	81

1. The Company’s profit for the accounting year is taxed at effective rate of 22% (six months at prior standard rate of 19% and six months at prevailing standard rate of 25%). The standard rate of corporation tax changed to 25% on 1 April 2023

No provision for deferred taxation has been made in the current or prior accounting year. The Company has not provided deferred tax on capital gains or losses arising on the revaluation and disposal of investments as it is exempt from tax on these items because of its investment trust status. The Company can offset management fees, other administrative expenses and interest costs against taxable income to eliminate any tax charge on such income. The tax legislation refers to these as management expenses (management fees and other administrative expenses) and non-trade loan relationship deficits (interest costs) and these are captured together under the heading ‘Excess management expenses’ in the table above. Where these are not fully utilised, they can be carried forward to future years. As the Company is unlikely to generate future taxable profits to utilise these amounts, the Company cannot recognise an asset to reflect them, but must still disclose the deferred tax amount carried forward arising from utilised amounts. Consequently, the Company has not recognised a deferred tax asset totalling £17,488,000 (2022: £16,556,000) arising as a result of having unutilised management expenses and unutilised non-trade loan relationship deficits totalling £69,954,000 (2022: £66,224,000), and based on a prospective tax rate of 25% (2022: 25%).

9 Return per Ordinary Share – Basic and Diluted

The return/(loss) per ordinary share is based on the net return attributable to the ordinary shares of £52,789,000 (2022: net loss of £64,828,000) and on 270,185,650 ordinary shares (2022: 270,185,650) being the weighted average number of ordinary shares in issue during the year. The return/(loss) per ordinary share can be further analysed between revenue

and capital, as below.

9 Return per Ordinary Share – Basic and Diluted (continued)

	2023 £’000	2022 £’000
Net revenue return	18,127	16,491
Net capital return/(loss)	34,662	(81,319)
Net total return/(loss)	52,789	(64,828)
Weighted average number of ordinary shares in issue during the year	270,185,650	270,185,650

	2023 Pence	2022 Pence
Revenue return per ordinary share	6.71	6.10
Capital return/(loss) per ordinary share	12.83	(30.10)
Total return/(loss) per ordinary share	19.54	(24.00)

The Company does not have any dilutive securities, therefore the basic and diluted returns per share are the same.

10 Dividends Paid and Payable on the Ordinary Shares

Dividends on ordinary shares

Record date

Payment date

2023

£’000

2022

£’000

Third interim dividend (1.5p1) for the year ended 30 September 2021

30 September 2021

29 October 2021

–

4,053

Final dividend (1.525p1) for the year ended 30 September 2021

30 December 2021

31 January 2022

–

4,120

First interim dividend (1.525p) for the year ended 30 September 2022

31 March 2022

29 April 2022

–

4,120

Second interim dividend (1.525p) for the year ended 30 September 2022

30 June 2022

29 July 2022

–

4,120

Third interim dividend (1.525p) for the year ended 30 September 2022

30 September 2022

31 October 2022

4,120

–

Final dividend (1.525p) for the year ended 30 September 2022

30 December 2022

31 January 2023

4,120

–

First interim dividend (1.525p) for the year ended 30 September 2023

31 March 2023

28 April 2023

4,120

–

Second interim dividend (1.525p) for the year ended 30 September 2023

30 June 2023

31 July 2023

4,120

–

Return of unclaimed dividends

–

(15)

16,480

16,398

The third interim dividend and the final dividend for the year ended 30 September 2023 have not been included as a liability in these financial statements. The total dividends payable in respect of the financial year, which form the basis of the retention test under Section 1158 of the Corporation Tax Act 2010, are set out below.

	2023 £’000
Revenue available for distribution by way of dividends for the year	18,127
First interim dividend (1.525p) for the year ended 30 September 2023	(4,120)
Second interim dividend (1.525p) for the year ended 30 September 2023	(4,120)
Third interim dividend (1.600p) for the year ended 30 September 2023	(4,323)
Final dividend (1.600p) for the year ended 30 September 2023 (based on 270,185,650 ordinary shares in issue at 1 December 2023)	(4,323)
Transfer to reserves	1,2412

1. 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

2. The residual will be transferred to the revenue reserve (2022: £26,000 transferred to the revenue reserve)

11 Investments held at Fair Value through Profit or Loss

	2023 £’000	2022 £’000
Cost at start of year	397,448	401,769
Investment holding (losses)/gains at start of year	(45,367)	47,063
Valuation at start of year	352,081	448,832
Analysis of transactions made during the year
Additions at cost	56,363	40,470
Disposal proceeds received	(52,572)	(57,392)
Unrealised gains/(losses) on investments	29,472	(92,431)
Realised gains on investments	7,085	12,602
Valuation at end of year	392,429	352,081
Cost at end of year	408,325	397,448
Investment holding losses at end of year	(15,896)	(45,367)
Valuation at end of year	392,429	352,081

Included in the total investments are unlisted investments shown at the Directors fair value of £2,368,000 (2022: £2,908,000).

At 30 September 2023 the total value of securities on loan by the Company for stock lending purposes was £27,408,000 (2022: £27,989,000). The maximum aggregate value of securities on loan at any time during the year ended 30 September 2023 was £45,900,000 (2022: £64,859,000). The Company’s agent holds collateral comprising FTSE 100 stocks, gilts, overseas equities and overseas government bonds with a collateral value of £28,864,000 (2022: £29,432,000) amounting to a minimum of 105% (2022: minimum 104%) of the market value of any securities on loan.

Purchase transaction costs for the year ended 30 September 2023 were £232,000 (2022: £184,000). These comprise mainly stamp duty and commission. Sale transaction costs for the year ended 30 September 2023 were £19,000 (2022: £21,000).

The Company received £52,572,000 (2022: £57,392,000) from investments sold in the year. The book cost of these investments when they were purchased was £45,487,000 (2022: £44,790,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.

As at 30 September 2023, the Company holds 3% or more of any class of capital in 11 investee companies (2022: 11). Within the 11, there were 3 whose valuation represented more than 1% of the value of the total investment portfolio held by the Company, which are:

	2023 Valuation £’000	2023 % of share capital	2022 Valuation £’000	2022 % of share capital
Finsbury Food Group	4,905	3.4	–	–
Epwin	4,007	4.2	4,166	3.9
Henderson Opportunities Trust	3,760	5.1	3,808	5.1

12 Debtors

	2023 £’000	2022 £’000
Prepayments and accrued income	2,739	1,041
Taxation recoverable	66	187
	2,805	1,228

13 Creditors

Amounts falling due within one year

	2023 £’000	2022 £’000
Unsecured sterling bank loans	17,818	18,522
Purchases for future settlement	288	–
Other creditors	897	1,344
	19,003	19,866

On 27 October 2022, the 2 year revolving loan facility of up to £40m with Industrial and Commercial Bank of China (London Branch) expired. The Company then entered into a three year revolving loan facility of up to £40m with BNP Paribas (London Branch). As at 30 September 2023 £17.8m (2022: £18.5m) of the facility was drawn down. This facility is due to expire 27 October 2025.

Amounts falling due after more than one year

2023

£’000

2022

£’000

3.15% senior unsecured loan notes 2037

29,812

29,802

On 5 January 2017 the Company issued £30m 3.15% senior unsecured notes due 2037, net of costs totalling £255,000. The issue costs will be amortised over the life of the notes.

The £30m senior unsecured notes are redeemable at par on 5 January 2037.

14 Financial Risk Management Policies and Procedures

As an investment trust, the Company invests in equities and other investments for the long-term so as to secure its investment objective and policy as stated on page 24. In pursuing its investment objective and policy, the Company is exposed to a variety of financial risks that could result in either a reduction in the Company’s net assets or a reduction in the profits available for distribution by way of dividends.

These financial risks, including market risk (comprising market price risk, currency risk and interest rate risk), liquidity risk and credit and counterparty risk, and the Directors’ approach to the management of these risks, are set out below and have not changed from the previous accounting period. The Board and Janus Henderson co-ordinate the Company’s risk management and there are various risk management systems in place as detailed below:

● straight-through processing via a deal order and management system (‘OMS’) is utilised for securities, with connectivity to third-party affirmation and trade repository services;

● portfolio modelling and investment management functions (including order-raising, dealing and trade execution) are performed using one of, or a combination of, the following third-party software applications: Charles River Development, OMS and/or Imagine;

● fund pricing and accounting services are outsourced to a third-party administrator (currently BNP Paribas) which utilises HiPortfolio software; and

● the IT tools to which the Janus Henderson risk, compliance and operations teams have access for independent monitoring and risk measurement purposes include:

– Charles River Compliance module for investment restrictions monitoring;

– SAI Global Bwise operational risk database;

– Riskmetrics, UBS Delta, Style Research, Cognity and Barra for market risk measurement;

– Bloomberg for market data and price-checking; and

– HiPortfolio for portfolio holdings and valuations.

These are supplemented by in-house developments: derivatives risk and compliance database (‘DRAC’) and counterparty exposure (‘CER’) reports.

14.1 Market Risk

The fair value of a financial instrument held by the Company may fluctuate due to changes in market prices. This market risk comprises market price risk (see note 14.1.1), currency risk (see note 14.1.2) and interest rate risk (see note 14.1.3). The Board reviews and agrees policies for managing these risks. Janus Henderson assesses the exposure to market risk when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

14 Financial Risk Management Policies and Procedures (continued)

14.1.1 Market Price Risk

Market price risk (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the fair value of listed and unlisted investments.

The Company’s exposure to market price risk at 30 September 2023 is represented by its investments held on the Statement of Financial Position under the heading ‘Investments held at fair value through profit or loss’ on page 61.

Management of the Risk

The Board manages the risks inherent in the investment portfolio by ensuring full and timely access to relevant information from Janus Henderson. The Board meets regularly and at each meeting reviews investment performance. The Board monitors Janus Henderson’s compliance with the Company’s objectives, and is directly responsible for investment strategy and asset allocation.

Concentration of Exposure to Market Price Risks

An analysis of the Company’s investment portfolio is shown on pages 12 to 20. This shows that the majority of the investments’ value is in UK listed companies. Accordingly, there is a concentration of exposure to market price risk, though it is recognised that an investment’s country of domicile or of listing does not necessarily equate to its exposure to the economic conditions in that country.

Market Price Risk Sensitivity

The following table illustrates the sensitivity of the total return after taxation for the year and the net assets to an increase or decrease of 20% (2022: 20%) in the fair values of the Company’s investments including the impact on the management fee. This level of change is considered to be reasonably possible based on observation of market behaviour in the last few years.

Sensitivity analysis – Market prices if prices change by 20%

	2023		2022
	If prices go up £’000	If prices go down £’000	If prices go up £’000	If prices go down £’000
Investments at year end	392,429	392,429	352,081	352,081
Impact on income statement:
Revenue return	(157)	157	(141)	141
Capital return	78,329	(78,329)	70,275	(70,275)
Impact on net assets and total return (excluding gearing)	78,172	(78,172)	70,134	(70,134)

14.1.2 Currency Risk

A proportion of the Company’s assets, liabilities and income are denominated in currencies other than sterling (the Company’s functional currency and presentational currency). As a result, movements in exchange rates may affect the sterling value of those items. As the Company’s investments are predominantly in sterling denominated securities its exposure to currency risk is not considered material and no sensitivity analysis has been presented. Investments held in currencies other than sterling were £15,188,000 (2022: £13,527,000) representing 3.9% (2022: 3.8%) of the total investments of the Company.

Management of the Risk

Janus Henderson monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board at each Board meeting. Janus Henderson measures the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset value and total return of a movement in the exchange rates to which the Company’s assets, liabilities, income and expenses are exposed.

Investment income denominated in foreign currencies is converted into sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt.

14 Financial Risk Management Policies and Procedures (continued)

14.1.3Interest Rate Risk

Interest rate movements may affect:

● the fair value of investments in fixed interest securities;

● the level of income receivable from interest-bearing securities and cash at bank and on deposit; and

● the interest payable on the Company’s variable rate borrowings.

Management of the Risk

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and borrowing under the loan facility. The Company, generally, does not hold significant cash balances, with short term borrowings being used when required. The Company finances part of its activities through borrowings at levels approved and monitored by the Board. Derivative contracts have not been used during the year to hedge against the exposure to interest rate risk.

Interest Rate Exposure

The Company’s exposure to floating interest rates can be found on the Statement of Financial Position under the heading ‘Cash at bank’ and in note 13 under the heading ‘Unsecured sterling bank loans’.

Interest receivable and finance costs are at the following rates:

● Interest received on cash balances, or paid on bank overdrafts, is at a margin linked to SONIA; and

● Interest paid on borrowings under the loan facility is at a margin over SONIA for the type of loan. The weighted average interest rate of these is 6.29% as at 30 September 2023 (2022: 2.68%).

The Company had fixed interest rate asset exposure at 30 September 2023 on the holding in Wadworth at £126,000 (2022: £126,000). The Company also had fixed interest rate liability exposure through the senior unsecured loan notes.

Interest Rate Risk Sensitivity

The Company is primarily exposed to interest rate risk through its loan facility. During the year, this was with BNP Paribas, London Branch (previously, Industrial and Commercial Bank of China (London Branch)). The sensitivity is as follows:

● Borrowings vary throughout the year as a result of the Board’s borrowing policy. Borrowings (net of cash) at the year end were £14,892,000 (2022: £9,127,000) and if that level of borrowing was maintained for a full year, then a 200 basis points change in SONIA (up or down) would decrease or increase net revenue and total net return after taxation by approximately £298,000 (2022: £183,000).

14.2 Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Management of the Risk

Liquidity risk is not significant as the majority of the Company’s assets are investments in quoted securities that are readily realisable. The Company had unsecured sterling loan facilities totalling £60,000,000 (2022: £60,000,000) and an overdraft facility with the custodian, the extent of which is determined by the custodian on a regular basis by reference to the value of the securities held by it on behalf of the Company. The facilities are subject to regular review.

The Board gives guidance to Janus Henderson as to the maximum amount of the Company’s resources that should be invested in any one company. The policy is that the Company should generally remain fully invested and that short-term borrowings be used to manage short-term cash requirements.

The contractual maturities of the financial liabilities at 30 September based on the earliest date on which payment can be required are as follows:

At 30 September 2023	Due within 1 year £’000	Due within 1-5 years £’000	Due after 5 years £’000
Bank loans1	17,989	–	–
Senior unsecured notes2	945	3,780	38,033
Other creditors	867	–	–
	19,801	3,780	38,033

14 Financial Risk Management Policies and Procedures (continued)

14.2 Liquidity Risk (continued)

At 30 September 2022	Due within 1 year £’000	Due within 1-5 years £’000	Due after 5 years £’000
Bank loans1	18,601	–	–
Senior unsecured notes2	945	3,780	38,978
Other creditors	1,074	–	–
	20,620	3,780	38,978

1. Includes the interest payable to maturity

2. The above figures show interest payable over the remaining term of the senior unsecured notes. The figures in the ‘due after 5 years’ column also include the capital to be repaid. Details of the repayment are set out on page 70

14.3 Credit and Counterparty Risk

The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss.

Management of the Risk

The risk is managed as follows:

● Investment transactions are carried out with a large number of brokers, whose credit standard is reviewed periodically by Janus Henderson, and limits are set on the amount that may be due from any one broker; and

● Cash at bank is held only with reputable banks with high quality external credit ratings.

The table below summarises the credit risk exposure of the Company at year end.

	2023 £’000	2022 £’000
Fixed interest securities	126	126
Cash	2,926	9,395
Debtors:
– prepayments and accrued income	2,701	1,015
	5,753	10,536

14.4 Fair Values of Financial Assets and Financial Liabilities

Except as noted below, the financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments) or the Statement of Financial Position amount is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank, bank overdrafts and amounts due under the loan facilities). The senior unsecured loan notes are carried in the Statement of Financial Position at amortised cost.

At 30 September 2023, the fair value of the senior unsecured loan notes was estimated to be £23,224,000 (2022: £23,851,000). The fair value of the senior unsecured loan notes is calculated using a discounted rate which reflects the yield on a UK Gilt of similar maturity plus a suitable credit spread.

14.5 Fair Value Hierarchy Disclosures

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 under FRS 102:

14 Financial Risk Management Policies and Procedures (continued)

14.5 Fair Value Hierarchy Disclosures (continued)

Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset 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 within Level 1. Level 3 – valued by reference to valuation techniques using inputs that are not observed on observable market data.

Financial assets at fair value through profit or loss at 30 September 2023

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Investments

390,061

–

2,368

392,429

Financial assets at fair value through profit or loss at 30 September 2022

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Investments

349,173

–

2,908

352,081

There have been no transfers during the year between any of the levels. A reconciliation of movements within Level 3 is set out below:

	2023 £’000	2022 £’000
Opening balance	2,908	2,868
Total (loss)/gain included in the Income Statement
– on investments held	(540)	40
Closing balance	2,368	2,908

The Company’s Level 3 holdings in Oxford Sciences Enterprises and in Wadworth were revalued downward during the year (2022: Oxford Sciences Enterprises upward and Wadworth downward).

14.6 Capital Management Policies and Procedures

The Company’s capital management objectives are to ensure that it will be able to continue as a going concern and to maximise the revenue and capital return to its equity shareholders. This is achieved through an appropriate balance of equity capital and debt.

The Company’s capital at 30 September 2023 comprises its equity share capital, reserves and loans that are shown in the Statement of Financial Position at a total of £396,975,000 (2022: £361,360,000).

The Board, with the assistance of Janus Henderson, monitors and reviews the structure of the Company’s capital on an ongoing basis. This review includes the planned level of gearing.

The Company is subject to several externally imposed capital requirements:

● borrowings under the bank facility are not to exceed 30% of the adjusted net asset value;

● net asset value not to be less than £150,000,000;

● total borrowings not to exceed 35% of the net asset value;

● as a public company, the Company has a minimum share capital of £50,000; and

● in order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet the capital restriction tests imposed on investment companies by company law.

The Company has complied with these requirements.

15 Called Up Share Capital

Number of shares entitled to dividend

Total number

of shares

Nominal value

of shares

£’000

At 30 September 2023 and 2022

270,185,650

6,755

No shares were allotted or bought back during the year (2022: nil).

16 Other Capital Reserves

	Capital reserve arising on revaluation of investments held £’000	Capital reserve arising on investments sold £’000	Other capital reserves total £’000
At 1 October 2022	(45,390)	280,779	235,389
Transfer on disposal of investments	3,499	(3,499)	–
Net gains on investments	25,973	10,584	36,557
Expenses and finance costs allocated to capital	–	(1,884)	(1,884)
Exchange differences	–	(11)	(11)
At 30 September 2023	(15,918)	285,969	270,051

The capital reserve arising on revaluation of investments held at 30 September 2023 includes a gain of £984,000 (2022: £718,000) based on historical book cost, in respect of the revaluation of unlisted investments.

	Capital reserve arising on revaluation of investments held £’000	Capital reserve arising on investments sold £’000	Other capital reserves total £’000
At 1 October 2021	47,064	271,180	318,244
Transfer on disposal of investments	(7,450)	7,450	–
Net (losses)/gains on investments	(84,981)	5,152	(79,829)
Payment of dividend	–	(1,513)	(1,513)
Costs relating to sub-division of shares	(23)	–	(23)
Expenses and finance costs allocated to capital	–	(1,518)	(1,518)
Exchange differences	–	28	28
At 30 September 2022	(45,390)	280,779	235,389

17 Net Asset Value per Ordinary Share

The net asset value per ordinary share of 129.3p (2022: 115.9p) is based on the net assets attributable to the ordinary shares of £349,345,000 (2022: £313,036,000) and on 270,185,650 (2022: 270,185,650) shares in issue on 30 September 2023.

The movements during the year of the assets attributable to the ordinary shares were as follows:

	2023 £’000	2022 £’000
Total net assets at start of year	313,036	394,285
Total net return/(loss) after taxation	52,789	(64,828)
Costs relating to sub-division of shares	–	(23)
Net dividends paid in the year: Ordinary shares	(16,480)	(16,398)
Net assets attributable to the ordinary shares at 30 September	349,345	313,036

18 Net Debt Reconciliation

	Cash and cash equivalents £’000	Bank loans and overdraft repayable within one year £’000	Other debt repayable after more than one year £’000	Total £’000
Net debt at 1 October 2022	9,395	(18,522)	(29,802)	(38,929)
Cash flows	(6,458)	704	–	(5,754)
Exchange movements	(11)	–	–	(11)
Non cash flow:
Amortisation of issue costs	–	–	(10)	(10)
Net debt at 30 September 2023	2,926	(17,818)	(29,812)	(44,704)

	Cash and cash equivalents £’000	Bank loans and overdraft repayable within one year £’000	Other debt repayable after more than one year £’000	Total £’000
Net debt at 1 October 2021	7,976	(33,099)	(29,791)	(54,914)
Cash flows	1,391	14,577	–	15,968
Exchange movements	28	–	–	28
Non cash flow:
Amortisation of issue costs	–	–	(11)	(11)
Net debt at 30 September 2022	9,395	(18,522)	(29,802)	(38,929)

19 Capital Commitments and Contingent Liabilities

Capital Commitments

There were no capital commitments as at 30 September 2023 (2022: £nil).

Contingent Liabilities

There were no contingent liabilities as at 30 September 2023 (2022: £nil).

20 Transactions with the Manager and related parties

Under the terms of an agreement effective from 22 July 2014, the Company has appointed Janus Henderson to provide investment management, accounting, administrative and secretarial services. Janus Henderson has contracted with BNP Paribas to provide accounting and administration services.

The management fee is calculated on a tiered basis at the rate of 0.5% per annum of the first £325m of the average net chargeable assets with the balance above that charged at a reduced rate of 0.4% per annum for the financial year under review and are invoiced on a quarterly basis. Further details of the fee arrangements for these services including the definition of net chargeable assets are given in the Strategic Report on page 27. The total of the management fees paid or payable to Janus Henderson under this agreement in respect of the year ended 30 September 2023 was £1,713,000 (2022: £1,723,000). The amount outstanding at 30 September 2023 was £411,000 (2022: £855,000).

In addition to the above services, Janus Henderson facilitates marketing activities with third parties which are recharged to the Company. Janus Henderson also provided sales and marketing services. The total amounts paid to Janus Henderson in respect of marketing for the year ended 30 September 2023 amounted to £56,000 (2022: £96,000).

Details of fees paid to Directors are included in the Directors’ Remuneration Report on page 41 and in note 6 on page 66.

Securities Financing Transactions

The Company engages in Securities Financing Transactions (as defined in Article 3 of Regulation (EU) 2015. Securities financing transactions include repurchase transactions, securities or commodities lending and securities or commodities borrowing,

buy-sell back transactions or sell-buy back transactions and margin lending transactions). In accordance with Article 13 of the Regulation, the Company’s involvement in and exposures related to securities lending for the year ended 30 September 2023 are detailed below.

Global Data

The amount of securities on loan as a proportion of total lendable assets and the Company’s net assets as at 30 September are disclosed below:

Stock lending 2023
Market value of securities on loan £’000	% of lendable assets	% of assets under management
27,408	6.98	7.85

Concentration Data

The ten largest collateral issuers across all the securities financing transactions as at 30 September are disclosed below:

Issuer	2023 Market value of collateral received £’000
Government of Germany	12,773
Government of Belgium	3,193
Government of Japan	2,919
UK Treasury	1,190
BP	851
Enel	851
Intesa Sanpaolo	851
Edenred	851
Terna	851
Shell	851
	25,181

The top seven counterparties of each type of securities financing transactions as at 30 September are disclosed below:

Counterparty	2023 Market value of securities on loan £’000
Barclays	15,205
Natixis	8,026
Morgan Stanley	2,452
HSBC	1,133
UBS	366
JP Morgan	122
Macquarie	104
	27,408

All counterparties have been included.

Securities Financing Transactions (continued)

Aggregate Transaction Data

The following table discloses a summary of aggregate transaction data related to the collateral received from securities on loan as at 30 September:

Stock lending 2023
Counterparty	Counterparty country of origin	Type	Quality	Collateral currency	Settlement basis	Custodian	Market value of collateral received £’000
Barclays	United Kingdom	Government Debt	Investment Grade	EUR	Tri-party	HSBC	15,966
Natixis	France	Equity	Main Market Listing	EUR	Tri-party	HSBC	5,105
		Equity	Main Market Listing	GBP	Tri-party	HSBC	1,702
		Equity	Main Market Listing	USD	Tri-party	HSBC	1,701
Morgan Stanley	United States	Government Debt	Investment Grade	JPY	Tri-party	HSBC	2,572
		Equity	Main Market Listing	HKD	Tri-party	HSBC	3
HSBC	Hong Kong	Government Debt	Investment Grade	GBP	Bilateral	HSBC	861
		Government Debt	Investment Grade	GBP	Tri-party	HSBC	329
UBS	Switzerland	Government Debt	Investment Grade	JPY	Tri-party	HSBC	346
		Equity	Main Market Listing	HKD	Tri-party	HSBC	38
		Equity	Main Market Listing	USD	Tri-party	HSBC	2
JP Morgan	United States	Government Debt	Investment Grade	USD	Tri-party	HSBC	128
Macquarie	Australia	Equity	Main Market Listing	HKD	Tri-party	HSBC	100
		Equity	Main Market Listing	USD	Tri-party	HSBC	11
							28,864

Re-use of Collateral

The Company does not engage in any re-use of collateral.

Return and Cost

The return and cost of engaging in securities lending by the Company and the securities lending agent in absolute terms and as a percentage of overall returns are disclosed below:

Total gross amount of securities lending income

Direct and indirect costs and fees deducted by securities lending agent

% return of the securities lending agent

Net securities lending income received by the Company

% return of the Company

£53,000

£11,000

20%

£42,000

80%

General Shareholder Information

AIFMD Disclosures

In accordance with the Alternative Investment Fund Managers Directive (‘AIFMD’), information in relation to the Company’s leverage (leverage is considered in terms of the Company’s overall exposure to financial or synthetic gearing and includes any method by which its exposure is increased whether through borrowing of cash or securities, foreign currency holdings, leverage embedded in derivative positions or by any other means) and remuneration of Janus Henderson Fund Management UK Limited, as the Company’s Alternative Investment Fund Manager (‘AIFM’) are required to be made available to investors. These disclosures, including those on the AIFM’s remuneration policy, are contained in a separate document called ‘AIFMD Disclosures’ which can be found on the Company’s website.

BACS

Dividends can be paid to shareholders by means of BACS (Bankers’ Automated Clearing Services); mandate forms for this purpose are available from the Registrar, Computershare Investor Services PLC. Alternatively, shareholders can write to the Registrar (the address is given on page 30) to give their instructions; these must include the bank account number, the bank account title and the sort code of the bank to which payments are to be made.

Common Reporting Standard

With effect from 1 January 2016 tax legislation under The Organisation for Economic Co-operation and Development Common Reporting Standard for Automatic Exchange of Financial Account Information was introduced. The legislation requires the Company to provide personal information to HMRC on certain investors who purchase shares in investment trusts. This information will have to be provided annually to the local tax authority of the tax residencies of a number of non-UK based certificated shareholders and corporate entities.

Equality Act

Copies of this report and other documents issued by the Company are available from the Company Secretary. If needed, copies can be made available in a variety of formats, including Braille or larger type as appropriate.

You can contact the Registrar, Computershare Investor Services PLC, which has installed textphones to allow speech and hearing impaired people who have their own textphone to contact them directly, without the need for an intermediate operator by dialling 0370 707 0005. Specially trained operators are available during normal business hours to answer queries via this service.

Alternatively, if you prefer to go through a ‘typetalk’ operator (provided by the Royal National Institute for Deaf People) dial 18001 followed by the number you wish to dial.

General Data Protection Regulation (‘GDPR’)

The General Data Protection Regulation (‘GDPR’) came into force on 25 May 2018. It aims to protect and empower individual data privacy and reshape the way organisations approach data privacy. A privacy statement can be found on the website www.janushenderson.com.

ISA

The Company intends to continue to manage its affairs in order to qualify as an eligible investment for a stocks and shares ISA.

Key Information Document

Information in relation to the Company’s disclosures in accordance with the Packaged Retail and Insurance-based Investment Products (‘PRIIPs’) Regulation are contained in a ‘Key Information Document’ which can be found on the Company’s website.

Non-Mainstream Pooled Investment (‘NMPI’) Status

The Company currently conducts its affairs so that its ordinary shares of 2.5p each can be recommended by IFAs to ordinary retail investors in accordance with the FCA Rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust.

Packaged Retail and Insurance-based Investment Products Regulation (‘PRIIPs’)/ Key Information Document (‘KID’)

Investors should be aware that the PRIIPs Regulation requires the Manager, as the PRIIP manufacturer, to prepare a key information document in respect of the Company. This KID must be made available by the Manager to retail investors prior to them making any investment decision and is available on the Company’s website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by the law. The figures in the KID may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed.

Performance Details/Share Price Information

Details of the Company’s share price and NAV can be found on the website. The address is www.lowlandinvestment.com.

The Company’s NAV is published daily.

Shareholder Details

Shareholders who hold their shares in certificated form can check their shareholding with the Registrar, Computershare Investor Services PLC, via www.computershare.com.

Please note that to gain access to your details on the Computershare site you will need the holder reference number shown on your share certificate.

Share Price Listings

The market price of the Company’s ordinary shares is published daily in The Financial Times. The Financial Times also shows figures for the estimated NAV and the discount.

The market price of the Company’s shares can be found in the London Stock Exchange Daily Official List.

Taxonomy Regulation

Regulation (EU) 2020/852 establishes the basis for the EU taxonomy. The EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities to provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable. In accordance with the Taxonomy Regulation, the Company confirms that the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

Voting at shareholder meetings

If you hold your shares in your own name, you will receive notices of shareholder meetings with details of how to vote. If you hold shares via a nominee or platform, please see the helpful information on the AIC website on how you can vote your shares, https://www.theaic.co.uk/how-to-vote- your-shares.

Warning to Shareholders

Many companies are aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders offering to sell them what often turn out to be worthless or high risk shares in US or UK investments. They can be very persistent and extremely persuasive. Shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports.

Please note that it is very unlikely that either the Company or the Company’s Registrar, Computershare Investor Services PLC, would make unsolicited telephone calls to shareholders and that any such calls would relate only to official documentation already circulated to shareholders and never in respect of investment ‘advice’.

If you are in any doubt about the veracity of an unsolicited phone call, please call the Company Secretary at the number provided on page 30.

Glossary

Alternative Investment Fund Managers Directive (‘AIFMD’)

Agreed by the European Parliament and the Council of the European Union and transposed into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (‘AIFs’) and requires them to appoint an Alternative Investment Fund Manager (‘AIFM’) and Depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders.

Association of Investment Companies (‘AIC’)

The Company is a member of the AIC which is the trade body for investment companies and represents the industry in relation to various matters which impact the regulation of such entities.

Benchmark

An index against which performance is compared. For the Company this is the FTSE All-Share Index Total Return.

Custodian

The Custodian is responsible for ensuring the safe custody of the Company’s assets and that all transactions in the underlying holdings are transacted in an accurate and timely manner.

Depositary

With effect from 22 July 2014 all AIFs were required to appoint a Depositary which has responsibility for overseeing the operations of the Company including safekeeping, cash monitoring and verification of ownership and valuation of the underlying holdings. The Depositary is strictly liable for the loss of any investments or other assets in its custody unless it has notified that it has discharged its liability in certain markets. The Depositary has confirmed that it has not discharged liability in relation to any of the Company’s assets.

Derivative

A contract between two or more parties in relation to an underlying security. The value of a derivative will fluctuate in accordance with the value of the security and is a form of gearing as the fluctuations in value are usually greater than the fluctuations in the underlying security’s value. Examples of derivatives are put and call options, swap contracts, futures and contracts for difference. Foreign exchange, interest rates and commodities may also be traded using derivative contracts. The Company did not use derivatives in the year under review.

Dividend Dates

When declared or recommended, each dividend will have three key dates applied to it. The payment date is the date on which shareholders will receive their dividend, either by BACS transfer or by receipt of a dividend cheque. The record date applied to the dividend is used as a cut-off for the Company’s registrars to know which shareholders should be paid a dividend. Only shareholders on the register of members at the close of business on the record date will receive the dividend. The ex-dividend date is the business day before the record date and is the date upon which the Company’s net asset value will be disclosed ex-dividend.

Investment Trusts

Investment trusts are public limited companies, listed on the London Stock Exchange, which provide shareholders with a professionally managed portfolio of investments. Investment trusts are exempt from tax on the capital gains arising on their investments subject to meeting certain criteria. Income, net of expenses and tax, is substantially distributed to shareholders. Investment trusts are also known as investment companies, although the tax legislation retains the reference to investment trusts.

Initial Public Offering (‘IPO’)

The first time that the stock of a private company is offered to the public.

Liquidity

In the context of the liquidity of shares in the stock market, this refers to the availability of buyers in the market for the share in question. Where the market in a particular share is described as liquid, that share will be in demand and holders wishing to sell their shares should find ready buyers. Conversely, where the market in a share is illiquid the difficulty of finding a buyer will tend to depress the price that might be negotiated for a sale.

Market Capitalisation (‘Market Cap’)

The market value of a company, calculated by multiplying the mid-market price per share by the number of shares in issue.

Retail Price Index

An inflationary indicator that measures the change in the cost of a fixed basket of retail goods.

Alternative Performance Measures

The Company uses the following Alternative Performance Measures (‘APMs’) throughout the Annual Report, financial statements and notes to the financial statements. The APMs are reconciled to the financial statements through the narrative below. The Board believes that each of the APMs, which are typically used within the investment trust sector, provide additional useful information to shareholders to help assess the Company’s performance against its peer group.

Capital Return per Ordinary Share

The capital return per share, is the capital profit/(loss) for the year (see Income Statement) divided by the weighted average number of ordinary shares in issue during the year (see note 9 on pages 67 to 68).

Discount or Premium

The amount by which the market price per share of an investment trust is either higher (premium) or lower (discount) than the NAV per share, expressed as a percentage of the NAV per share.

NAV with Debt at fair value

NAV with Debt

at par

Share price

(Discount)/ premium to fair

value NAV

(Discount)/ premium to par

value NAV

At 30 September 2023

131.7p

129.3p

113.0p

(14.2%)

(12.6%)

At 30 September 2022

118.1p

115.9p

104.5p

(11.5%)

(9.8%)

NAV with debt at par and fair value

	2023 £’000	2022 £’000
Investments held at fair value through profit or loss (see note 11)	392,429	352,081
Current assets (see page 61)	5,731	10,623
Creditors amounts falling due within one year (see note 13)	(19,003)	(19,866)
Creditors amounts falling due after one year (see note 13)	(29,812)	(29,802)
NAV with debt at par (A)	349,345	313,036
Less: fair value of senior unsecured notes (see note 14.4)	(23,224)	(23,851)
Add back: amortised cost of senior unsecured notes	29,812	29,802
NAV with debt at fair value (B)	355,933	318,987

Ordinary shares in issue (see note 15) (C)	270,185,650	270,185,650

NAV per ordinary share with debt at par (see page 61) (A/C x 100) (p)	129.3	115.9

NAV per ordinary share with debt at fair value (B/C x 100) (p)	131.7	118.1

The aggregate NAV is also referred to as Total shareholders’ funds in the Statement of Financial Position. The NAV per ordinary share is published daily and the year end NAV can be found on page 3 and further information is available on page 75 in note 17 within the notes to the financial statements.

Gearing/(Net Cash)

Gearing represents the excess amount above shareholders’ funds of total investments, expressed as a percentage of the shareholders’ funds. If the amount calculated is negative, this is a ‘net cash’ position and there is no gearing.

		2023	2022
Investments held at fair value through profit or loss (page 61) (£’000)	(A)	392,429	352,081
Net assets (page 61) (£’000)	(B)	349,345	313,036
Gearing (C = A/B – 1) (%)	(C)	12.3	12.5

Ongoing Charge

The ongoing charge ratio has been calculated in accordance with guidance issued by the AIC as the total investment management fees and administrative expenses and expressed as a percentage of the average daily net asset values throughout the year.

	2023 £’000	2022 £’000
Management fees (note 5)	1,713	1,723
Other administrative expenses (note 6)	686	645
Less: non-recurring expenses	(127)	(77)
Ongoing charges	2,272	2,291
Average net assets¹	355,221	370,147
Ongoing charge ratio	0.64%	0.62%

1. Calculated using the average daily net asset value

The ongoing costs provided in the Company’s Key Information Document (‘KID’) is calculated in line with the PRIIPs regulations. The ongoing costs in the KID includes finance costs.

Revenue Return per Ordinary Share

The revenue return per ordinary share, is the revenue return for the year (see Income Statement) divided by the weighted average number of ordinary shares in issue during the year (see note 9 on pages 67 to 68).

Total Return

The return on the share price or NAV with debt at fair value taking into account both the rise and fall of NAV/share prices and dividends paid to shareholders. Any dividends received by a shareholder are assumed to have been reinvested in either additional shares (for share price total return) or the Company’s assets (for NAV total return). Dividends paid and payable are set out in note 10 on page 68.

	NAV per share	Share price
NAV/Share Price per ordinary share at 30 September 2022 (pence)	118.1	104.5
NAV/Share Price per ordinary share at 30 September 2023 (pence)	131.7	113.0
Change in the year (%)	11.5	8.5
Impact of dividends reinvested (%)	4.8	5.2
Total return for the year	17.2	13.9

Yield

The yield is the annual dividend expressed as a percentage of the year end share price.

		30 September 2023	30 September 2022
Annual dividend (pence)	(A)	6.250	6.100
Share price (pence)	(B)	113.0	104.5
Yield (C=A/B) (%)	(C)	5.5	5.8

Lowland Investment Company plc

Registered as an investment company in England and Wales with registration number 670489

Registered office: 201 Bishopsgate, London EC2M 3AE

SEDOL/ISIN number: BNXGHS2/GB00BNXGHS27

London Stock Exchange (TDIM) Code: LWI

Global Intermediary Identification Number (GIIN): 2KBHLK.99999.SL826

Legal Entity Identifier (LEI): 2138008RHG5363FEHV19

Telephone: 0800 832 832

Email: support@janushenderson.com

www.lowlandinvestment.com

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Annual Report 2023

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

Dividend

The Company aims to pay a progressive dividend, with each quarterly dividend equal to or greater than its previous equivalent.

Gearing

Performance

Historical Performance

Performance

Dividends

Gearing

Ongoing charges

Discount

The Board

Contact

AGM

Outlook

Overview

Performance attribution

Portfolio valuation

Portfolio Activity

Dividends

Outlook

Twenty Largest Holdings as at 30 September 2023

Our Approach to Environmental, Social and Governance Matters

Defining ESG

Investment Considerations

Stewardship and Company Engagement

Recent Examples of Engagement

Voting

The Environment

Business Ethics

Purpose and Values

Our Strategy

The Company’s Status

Investment Objective

Investment Policy

Promoting the Company’s Success

Management

Directors

Fund Managers

Registered Office

Service Providers

Independent Auditor

Financial Calendar

Information Sources

Follow Janus Henderson Investment Trusts on LinkedIn

Investing

Nominee Share Code

Managing Risks

Emerging risks

Viability Statement

Key Performance Indicators

Borrowings

Future Developments

Board Diversity and Experience

Approval

Results and Dividends

Directors’ Remuneration and Shareholdings

Directors’ Conflicts of Interest

Share Capital

Reappointment of Auditor

Holdings in the Company’s Shares

Fund Managers’ Interests

Related Party Transactions

Annual General Meeting (‘AGM’)

Corporate Governance

Other Information

Directors’ Statement as to Disclosure of Information to the Auditor

Listing Rule 9.8.4

Approval

Directors’ Responsibility Statement

Remuneration Policy

Shareholders’ Views

Letters of Appointment

Annual Report on Remuneration

Statement from the Chairman

Directors’ Interests in Shares (audited)