TIDMEDIN
RNS Number : 8981M
Edinburgh Investment Trust PLC
26 May 2022
The Edinburgh Investment Trust plc
ANNUAL FINANCIAL REPORT
FOR THE YEARED 31 MARCH 2022
Financial Information and Performance Statistics
Year Ended Year Ended
31 March 31 March
Total Return(1)(4) (all with dividends reinvested) 2022 2021
--------------------------------------------------- ---------- ----------
Net asset value(1) (NAV) - debt at market value +14.1% +34.8%
Share price(2) +10.6% +46.4%
FTSE All-Share Index(2) +13.0% +26.7%
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The Company's benchmark is the FTSE All-Share Index.
At 31 At 31
March March Change
Capital Return(1) 2022 2021%
-------------------------------------------------------------------------------------- ---------- ---------- -----
Net asset value - debt at market value 686.69p 628.29p +9.3
Share price(2) 634.00p 600.00p +5.7
FTSE All-Share Index(2) 4,187.78 3,831.05 +9.3
-------------------------------------------------------------------------------------- ---------- ---------- ------
Discount(1)(4) - debt at market value (7.7)% (4.5)%
-------------------------------------------------------------------------------------- ---------- ---------- ------
Gearing (debt at market value) (1)(4) -
gross gearing 10.3% 10.1%
- net
gearing 4.4% 7.1%
-------------------------------------------------------------------------------------- ---------- ---------- ------
Year Ended Year Ended Change
31 March 31 March
Revenue and Dividends(4) 2022 2021 %
------------------------------------------------ ---------- ---------- ------
Revenue return per ordinary share 22.41p 16.21p +38.2
Dividends - first interim 6.00p 6.00p
- second interim 6.00p 6.00p
- third interim 6.40p 6.00p
- proposed final 6.40p 6.00p
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- total dividends excluding
special dividend 24.80p 24.00p +3.3
- special dividend nil 4.65p
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- total dividends including special
dividend 24.80p 28.65p -13.4
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Retail Price Index(2)(3) - annual change 9.0% 1.5%
------------------------------------------------ ---------- ---------- ------
Consumer Price Index(2) - annual change 7.0% 0.7%
------------------------------------------------ ---------- ---------- ------
Dividend Yield(1)(4) 3.9% 4.0%
------------------------------------------------ ---------- ---------- ------
Ongoing Charges Ratio(1)(4)(5) 0.52% 0.43%
------------------------------------------------ ---------- ---------- ------
Notes:
(1) These terms are defined in the Glossary of Terms and
Alternative Performance Measures, including reconciliations, below.
NAV with debt at market value is widely used by the investment
company sector for the reporting of performance, premium or
discount, gearing and ongoing charges. The prior year Dividend
Yield was exclusive of a special dividend of 4.65p per share.
Including the special dividend, the dividend yield was 4.8%.
(2) Source: Refinitiv.
(3) This measure of inflation will not be shown in future
reports. The Consumer Price Index will then become the sole measure
of inflation in future reports.
(4) Key Performance Indicator.
(5) Majedie Asset Management Limited waived its investment
management fee for the first three months of its appointment from 4
March 2020. The Ongoing Charges Ratio disclosed above for the prior
year show the actual charges incurred during the period. The
pro-forma charges had the investment management fees not been
waived over that period would have been 0.51%.
Chairman's Statement
DEAR SHAREHOLDER
After a long and difficult period in the aftermath of the
Financial Crisis, and then Brexit and most recently a challenging
two year period during the Covid pandemic, markets now have to
contend with a crisis in Ukraine and all the economic consequences
that flow from that.
The situation in Ukraine is above all a humanitarian crisis,
which puts all other matters firmly in the shade. Few of us surely
remain unmoved after seeing pictures of dead civilians, bombed out
cities, train stations packed with people fleeing in fear. And,
tragically, it is happening on our own continent.
All these events have created a huge economic challenge in the
UK market. Both the Office of Budget Responsibility and the
Monetary Policy Committee of the Bank of England have recently
published gloomy forecasts for the economy over the next few years.
The Monetary Policy Committee, in particular, expects the country
to be teetering on the edge of recession for the next two years,
with inflation peaking at over 10% this year, slowly returning to
its 2% target by 2025 after several interest rate rises and big
falls in living standards.
Despite this difficult backdrop, the Company has continued to
make progress.
It is now two full years since we appointed Majedie and James de
Uphaugh as Manager of the Company - and I am pleased to report that
the Company has recorded its second consecutive year of strong
investment returns - both absolute and relative to the comparator
index. So, we continue to make solid progress in our objective of
making the Company once again a core holding in UK equity
portfolios.
While the Majedie team remains the same, the ownership of the
team has changed after Liontrust Asset Management PLC acquired
Majedie Asset Management Limited on 1 April 2022. The Board has
reviewed the transaction after it was announced on 7 December 2021.
James will continue to be the Portfolio Manager and we are
satisfied that the change of ownership does not materially change
the way in which the portfolio will be managed. We expect (and have
been promised) that the change of ownership will bring enhanced
marketing resources.
RETURNS
As you know, the Company has two long-term investment
objectives: first, to increase Net Asset Value per share in excess
of the growth in the FTSE All-Share Index; and secondly, to grow
dividends per share in excess of the rate of UK inflation.
For the first objective, it is encouraging to be able to report
another year in which the growth in Net Asset Value (NAV) has
exceeded that of the FTSE All-Share Index. This is despite the
profound headwinds facing the economy over this period. As the
Portfolio Manager's Report below sets out, the diversified nature
of the portfolio has contributed to this result. This bottom-up
stock-led investment approach is driven by the Portfolio Manager's
total return philosophy, incorporating environmental, social and
governance factors throughout. The return was also boosted by the
effect of the Company's borrowings and, to a smaller degree, share
buybacks. Both these are discussed in more detail below, and their
numerical impact is set out in the table below.
The Company's NAV growth on a total return basis, i.e. including
reinvested dividends, was +14.1% over the financial year ended 31
March 2022 and the share price returned +10.6%. These compare with
a total return of +13.0% for the FTSE All-Share Index. The
equivalent returns on a capital only basis are +9.3% for the NAV,
+5.7% for the share price, and +9.3% for the index.
The difference between the NAV total return and capital return
is explained not only by the dividends paid by the Company, but
also because the Company has been using some of its reserves to pay
dividends to shareholders (discussed in more detail below). Over
the past three years, the Company's NAV return has been -1.5%
cumulatively, with the Company's benchmark index returning +5.3%
over the same period. Over the past five years, the Company's NAV
return has been -10.7% cumulatively, with the Company's benchmark
index returning +5.0% over the same period. In all these cases, the
NAV is stated after deducting debt at market values.
I would like to take this opportunity to remind shareholders
that investment returns, especially from an active manager such as
our own, are not delivered in a linear fashion. While it is
satisfying to be able to report two years of positive absolute and
relative returns, at some point the portfolio may produce a
negative absolute return and/or lag the index. However, longer time
periods enable more meaningful assessments of manager skill. By
this time next year for example we will have a three year track
record: a more significant period over which to make informed
judgements. For now, it remains the case that under the new
Portfolio Manager we have made a very encouraging start.
DIVIDS
The Company's second objective is to grow the dividend in excess
of inflation. In the short term, the Board has the ability to
decide on the level of the dividend - by paying dividends out of
revenue or capital reserves if appropriate. But in the medium term
dividend progression is a function of the Company's finances. An
important aspect of this is the Company's income from dividends
paid by companies held in the portfolio, after the deduction of
expenses.
This year, the Company's income does not cover the cost of
dividends to shareholders. And it was the same last year. This
reflects, as I explained in my report to you last year, the
difficult environment that companies in the market have faced over
several years, culminating in reduced dividend payouts during the
COVID crisis. As James explains in his Portfolio Manager's Report,
things are getting better and portfolio income continues to improve
after the lows of the pandemic. Furthermore, James believes that
the stocks he holds in the portfolio have strong economic
advantages, such as pricing power, that should provide some
additional inflation protection to the Company's revenues. This
strengthening position in the Company's finances is important in
the Board's view and was behind the Board's decision to increase
the third interim dividend and to recommend the same increased
payout in the final dividend.
In making its recommendations for the final dividend, the Board
has also taken into account the strength of the Company's financial
position: the refinancing of the Company's borrowings last year at
a much lower cost will allow the interest expense to fall in future
years, creating further capacity to support the dividend. And on
top of this, the Company's balance sheet has a healthy 'revenue
reserve' of GBP50.8m which can be distributed by way of dividend.
This should allow the Board to address any shortfall in dividend
cover in the short term. Shareholders should note that these
revenue reserves are an accounting record and are not, in any
actual sense, ring fenced cash.
Our approach to dividends is consistent with the Portfolio
Manager's investment approach. This approach, remember, seeks to
maximise total return, whether that return comes from capital
growth or dividend payouts. This means that while we expect the
Company's income typically to finance dividend, there may also be
periods (years) when capital returns are more important.
Overall, a healthy combination of income and capital growth over
the medium term should support a dividend that grows faster than
inflation. We have returned to a growing dividend this year -
albeit not at the rate of the current elevated level of inflation -
and believe this is a platform from which it will increase ahead of
normalised inflation over time.
SHARE PRICE DISCOUNT TO NET ASSET VALUE
The Board keeps the Company's share price discount under careful
review. The level of the discount has slightly widened in the last
twelve months, from 4.5% to 7.7%. At 23 May 2022, the last
practical date before signing this report, the discount was 8.3 %.
To be clear, the rest of the Board and I would like to see the
Company's share price much closer to Net Asset Value. An important
part of this process is the rebuilding of the Company's profile in
the savings market, to which Liontrust are committed. While the
profile has improved in the last two years, there is more to do.
Building an impressive three year track will, for example, be part
of this. In the meantime, the Board will do what we can to help the
discount. One tangible action is to buy back shares. We restarted a
buyback programme in early 2022. As a result, in the financial year
we have bought back 1,104,800 shares.
Ultimately, we would like to return the Company to a position
from which it can issue shares at a small premium to asset value.
This would enhance net asset value per share and enable the
Company's fixed costs to be spread across a larger asset base.
BORROWINGS
The Company's borrowings currently comprise a GBP100m debenture
repayable in September this year, a loan note of GBP20m repayable
in 2051, and a revolving credit facility which is currently
undrawn. As the table below illustrates, the borrowings have
enhanced shareholder returns.
As we announced last autumn, we took advantage of the low
interest rates then available to arrange refinancing for the
debenture. GBP100m of new debt was prearranged and will be
available to replace the debenture when it matures this September.
This new debt, combined with a new additional GBP20m tranche that
was taken out last October, has a blended average interest rate of
2.44%. Our debt markets adviser is of the opinion that raising the
same sums today would incur an equivalent annual cost of c. 3.51%,
which when fully drawn would be an increase of 44% or c. GBP1.3m
per annum compared with the actual costs agreed last autumn . As a
reminder, the annual cost of the outgoing debenture is 7.75%. A
more efficient debt structure is clearly attractive in its own
right. More importantly, the refinanced borrowings should provide a
structure to enhance shareholder returns over time.
The revolving credit facility, which has not been used in the
last financial year, will expire this June. We do not intend to
renew it. This means that all remaining borrowings will be
long-term in nature.
At the end of March, net gearing (borrowing less cash balances)
was 4.4%. Had all cash balances been invested, net gearing would
have been 10.3%. The Portfolio Manager expands further on his
approach to using the gearing facility in his report below.
APPOINTMENT OF MANAGER
Since Liontrust's acquisition of Majedie Asset Management was
announced, the Board has had extensive conversations with both the
existing team that manages your Company (principally James de
Uphaugh and his immediate colleagues) and the broader team at
Liontrust. We are reassured by the 'business as usual' aspect of
the investment management process underpinning the day-to-day
operation of the Company. This includes the team's consideration of
environmental, social and governance factors in their work. We also
anticipate that Liontrust should offer some enhanced capabilities,
particularly in the marketing of the Company. We also note that the
process of migrating all the systems, controls and permissions
concerning the Company's assets from the old management company to
the new one has taken place seamlessly. Taking all this together,
the Board therefore considers that the transfer of management to
Liontrust that has resulted from the takeover to be in the best
interests of shareholders.
ANNUAL GENERAL MEETING ('AGM')
We held last year's AGM in person in Edinburgh, although there
were Covid-driven restrictions on the number of attendees that
could attend. This year we do not anticipate any such limitations:
we therefore encourage shareholders to attend if possible. All
members of the Board - and the Portfolio Manager and his colleagues
- look forward to meeting as many shareholders as possible at this
event. For those that are unable to attend in person, the meeting
will again be 'hybrid' with a live on-line link to the speakers and
their presentations. This worked well last year and included a
helpful facility for shareholders to submit questions on-line. We
will post details on how to register for on-line access via the
Company's website. Should there be any changes to plans for the AGM
because of changing Covid restrictions, we will issue a regulatory
announcement and post details of new arrangements on the Company's
website.
The Company is also pleased to invite shareholders to a
presentation by James de Uphaugh on 22 September 2022. I do hope
that shareholders unable to attend the AGM will be able to attend
this meeting to hear from the Portfolio Manager and meet with
directors. Please note that shareholders will not be able to vote
at this meeting. Shareholders can register to attend by visiting
the Company's website at www.edinburghinvestmenttrust.com
BOARD
I will be stepping down from the Board after having served nine
years, the last five years as Chairman. During this period the
Board has made some big changes to improve the performance of the
Company: the Manager, Auditor and Company Secretary have been
changed; the long term debt has been refinanced; the dividend
rebased and a major share-buy programme has been conducted. This
year the Board has overseen the impact on the Company of the change
in ownership of Majedie. The Board is now focused on improving the
way in which the Company is marketed. This has all been carried out
alongside the normal activities of monitoring performance and
portfolio risk as well as the broader control risks that the
Company faces. This has all required a huge time commitment from
Directors. So I would like to thank my fellow Board colleagues,
both past and present, for the time, thought and, most of all, the
judgment that each of them has brought to the Board's
deliberations, which has made my task as Chairman easier than it
might otherwise have been.
The new Chairman, as I flagged in last year 's Chairman's
Statement will be Elisabeth Stheeman who has been a Director of
your Company since 2019. She will take over at the AGM this year.
Elisabeth was appointed Chairman-Elect after a thorough process
overseen by Vicky Hastings, the Senior Independent Director.
Elisabeth has made a significant contribution to the Board, drawing
on her extensive experience both of investment markets and of the
broader macroeconomic and regulatory backdrop.
I am also delighted about the appointment to the Board of Aidan
Lisser, which will take effect from 27 May 2022. Aidan has
considerable experience as an investment trust non -- executive
director and has a background specifically in asset and wealth
management retail marketing. Aidan is currently a non -- executive
director of JPMorgan Global Emerging Markets where he is
Chair-designate, Henderson International Income Trust (formerly
Henderson Global) and Chapter Zero, an organisation to assist
non-executive directors with the impact of climate change. He is
also a member of the AIC's Marketing Committee. On behalf of all
the Directors, we welcome Aidan and very much look forward to
working with him.
OUTLOOK
As the Portfolio Manager describes below, the Company is in the
fortunate position of owning a distinctive set of businesses that
are performing strongly on the world stage. Their robust underlying
operational progress, combined with attractive starting valuations,
should underpin attractive returns to shareholders over the long
term. The Company has the added advantages of attractively priced
long-term borrowings and a pragmatic approach to growing the
dividend.
I am also confident that in the years ahead the Portfolio
Manager will continue to build on the strong start to his tenure.
Despite the potential for significant headwinds from macroeconomic
and geopolitical forces, the potential is firmly in place for the
Portfolio Manager's stock-driven approach to generate a long-term
record that pleases existing shareholders and attracts new
ones.
Finally, I would also like to thank shareholders for their
loyalty to the Company. I am confident, under the Manager and Board
that is now in place, that the Company will become again a core UK
equity holding for long-term savers.
GLEN SUAREZ / CHAIRMAN / 25 MAY 2022
Portfolio Manager's Report
For the year ended 31 March 2022
For much of the last twelve months there has been improving
economic sentiment, as western economies have emerged from varying
degrees of Covid restrictions. However, much of the economic
progress has been overturned by the depressing turn of events in
Ukraine.
If the events in Ukraine are a reminder of anything, they are of
the importance of managing a sensibly diversified portfolio. As a
result, positive contributors to the portfolio's performance since
the start of the war have come from existing holdings in sectors
such as oil and defence stocks.
Naturally our core task is to meet the Company's two investment
objectives - which are set above of this document. As we said from
the outset of our appointment in 2020, we believe the best way to
meet the Company's objectives is to manage the portfolio on a total
return basis. We also believe that, over time, listed equities
provide a sound base from which to achieve these objectives. To
deliver them, we apply an investment approach that looks for
attractive returns both from dividends and from capital growth.
Which of these two factors dominates at any point in time is a
function of market sentiment and the strengths (or indeed
weaknesses) of the companies in the portfolio.
The income element of total return comes in differing forms. In
addition to ordinary dividends, companies also have the option of
paying income to shareholders in the form of special dividends -
which by their nature are harder to forecast. There are also share
buybacks, which while not income in any sense, are sometimes used
by company managements in lieu of cash payout to shareholders.
Buybacks are becoming more common among UK-listed stocks - indeed
about 40% of the stocks in the current portfolio have ongoing
buyback programmes. We are relatively indifferent to these
different forms of distribution to shareholders; the key point is
that capital and income form the underlying bedrock of Edinburgh's
returns to its own shareholders.
As the Chairman has noted, the team remains the same, but our
firm changed ownership during the financial year. Our team approach
and core investment beliefs (which we describe in more detail
below) remain the same. The flexible investment approach, combined
with in-depth work on Environmental, Social and Governance (ESG)
factors, are at the core of our work.
INVESTMENT RESULTS
Over the twelve months to the Company's year end the Net Asset
Value (NAV) rose 14.1% in total return terms. The share price rose
10.6%. These returns compare with the FTSE All Share index return
of 13.0%. It is pleasing to deliver a second year of double digit
returns since our appointment, albeit those two years followed the
lows of markets around the start of the pandemic in early 2020.
The discount, which moved out from 4.5% to 7.7%, explains the
slightly weaker share price return. As the Chairman has explained
in his report, the Company has been buying back shares since the
start of the calendar year.
In keeping with the diversified nature of the portfolio,
prominent positive contributors to performance have come from a
range of different sectors and industries. The biggest contributors
were Anglo American (commodity metal mining), BAE Systems
(defence), WM Morrison (the food retailer that was acquired by
private equity during the period), Newmont (gold mining), Centrica
(gas distribution) and Tesco. We have long considered the ESG
issues facing companies such as BAE Systems: to date we have been
comfortable with this long-standing holding. The sad turn of events
highlights the important reality of defence spending by western
governments. Liberal democracy requires defence - and a lot of
catch-up spending is in order. BAE Systems is a prime
beneficiary.
Negative contributors to performance came from long-standing
positions in Mondi (paper production), Hays (recruitment) and Weir
(engineering) which had modestly weaker share prices and all of
which we remain happy to hold. Glencore, another large mining group
which performed well and was not held in the portfolio, was also a
negative contributor.
Over the two years since our appointment, the NAV has risen
24.0% per annum and the share price 27.3% per annum, compared with
the index return of 19.7%. Overall, we are encouraged by the first
two years under our tenure.
ACTIVITY OVER THE YEAR
The largest purchase over the year was in the pharmaceutical
group GlaxoSmithKline. The forthcoming demerger of GSK's consumer
health unit should release value, in turn supporting greater
investment in the pharmaceutical pipeline which is relatively weak.
The company has also flagged a dividend cut and this, along with
the consumer health unit being demerged with a meaningful
proportion of the group's debt, should leave the remaining
pharmaceutical business in a stronger long-term position.
Another prominent purchase was Novartis, itself another large
player in the pharmaceutical sector. It has one of the broadest
product portfolios and pipelines, plus a strong record of
innovation. After a period of high single digit revenue growth,
sales growth has slowed and the shares have derated, providing the
opportunity to purchase a business that is still confident of
delivering 4% plus annual sales growth over the period to 2026 and
above peer median growth thereafter.
Ascential has a fast growing and attractive digital commerce
division which helps brands understand consumer trends and optimise
their e-commerce execution on marketplaces like Amazon through data
and analytics. In July it made an acquisition of ASR following
which Ascential issued new shares to help fund the purchase. We
support the management's digital strategy and added to the position
through buying some of the newly-issued shares.
Other prominent non-UK purchases were Intel and Thales. Intel
has a new CEO, a technologist, who has the aim of re-establishing
Intel's industry leadership. We think he has a credible plan to
evolve their product offering. In the short term this reduces
profitability but longer term should improve returns as it
re-establishes Intel's competitive position. Thales is a leading
defence and aerospace group with a focus on communications,
sensors, flight management, surveillance, satellites and digital
security. Thales has a record of good organic growth and a strong
order book, while its shares languish on relatively low valuation
metrics. There is also an attractive dividend yield, and the
company has announced the intention to buy back shares.
We sold the holding in Associated British Foods. Much of the
value in this conglomerate resides in the medium term prospects for
Primark. We are doubtful that sales per square foot will recover to
match consensus expectations, as consumer consciousness gradually
embraces sustainability in clothing to the detriment of
volumes.
We also sold Rio Tinto. Its strategically important Australian
iron ore assets were milked under the previous management. The
group is now undergoing a cultural and capex reset under the new
CEO. Meanwhile a key determinant of the cashflows is the iron ore
price which has remained elevated because of Brazilian supply
issues. As this comes back on stream, against the backdrop of a
deflating Chinese property market, we see downside in the iron ore
price.
Sales have included Barclays - the CEO has left the business and
there may be future downward pressure on investment banking fee
income. We also sold NXP, the chip manufacturer for cars, after a
strong run in the shares.
CURRENT PORTFOLIO
The emphasis remains firmly on managing a diversified portfolio
with all-weather potential. In terms of traditional labels, we hold
a balance of 'growth' (examples include Ascential and
Electrocomponents), 'value' (Tesco, HSBC and Shell) and 'recovery'
stocks (NatWest, Centrica).
More importantly, we tend to think about stocks in terms of
their financial and operational characteristics. As such, important
characteristics include Darwinism (businesses gently crunching the
competition such as Marshalls and easyJet), cookie-cutter expansion
models (Greggs and Ashtead), supply chain resilience (Compass and
Intel) and users of data analytics (Dunelm and Weir). We look to
blend these different features to produce a portfolio that is
'core' in nature, with a bias towards mid and large cap stocks.
Our ESG integration work is an important factor in the
investment case for each stock. Challenges such as the pandemic and
war in Ukraine highlight the importance of investing in robust
businesses that can address - and indeed capitalise on - these
changes while simultaneously managing ESG risks and opportunities.
Our thinking on each company's approach to managing their key
issues has helped shape a portfolio of stocks of which some - such
as Anglo American and Shell - are generating attractive shareholder
returns in the face of some of these difficulties, as well as
making meaningful ESG strides forwards.
Taken together, these features should deliver a portfolio of
companies that have pricing power. With inflation running at
elevated levels, this is an important feature which should in turn
support Edinburgh Investment Trust's ability to deliver a
shareholder dividend that has the potential to rise in excess of
core inflation over time.
DIVIDS
After the dividend cuts that many companies announced early in
the pandemic, it seems reasonable from today's position that the UK
market should in total produce dividend growth of about 3% per
annum over the medium term. This would be somewhat less than the
market weighted average growth in pre-tax profits, which should be
something akin to Eurozone nominal GDP of circa 5% per annum. The
difference between these two numbers is explained by the headwind
from rising UK corporate tax rates.
We have worked through a range of different scenarios with the
Board. While making estimates is particularly fraught at present,
there are in fact two factors in which we have high confidence. The
first is that we expect the boards of operating companies to be
cautious about future dividend increases. After the various 'black
swans' of recent years - Brexit, supply chain difficulties, Covid,
Ukraine - they are unlikely to push for sizeable dividend increases
after adjusting for inflation.
The second factor is the strength of the Company's balance
sheet. With stated revenue reserves of GBP50.8m at the year end,
this provides a buffer for current shortfalls in income versus
dividend expenditure.
Overall, we remain of the view that, after taking into account
the Board's decision to increase this year's dividend, the
Company's net revenues - underpinned by the operational features
described above - should begin to cover the cost of the dividend in
the medium term. The current position of the Company's income
profile, along with its strong balance sheet, should enable the
current growth trajectory to be maintained.
BORROWINGS
The Company carries a modest amount of gearing. This should
boost returns to shareholders, assuming positive underlying
portfolio returns. Net gearing has been reduced since the half year
stage, when it stood at 7.7%. This reflects the various
uncertainties: Ukraine, rising interest rates, inflation. Net
gearing was 4.4% at the year end. As the Chairman described in more
detail, attractive new funding is due to come on stream this
September. We expect to put more of this capital to work in the
months ahead, particularly if the current market weakness
persists.
LOOKING TO THE FUTURE: WHY INVEST IN THE UK EQUITY MARKET?
This is a question we are often asked. Our short answer is that
the opportunity set remains huge and there are multiple factors
underpinning our medium term confidence. There are inevitably risks
too: the war in Ukraine, plus factors such as ongoing supply chain
issues, make the shorter term harder to predict. But for now we
observe that the UK equity market has regained its mojo, but the
valuation on a whole host of metrics is still low relative to many
markets.
The factors driving the low starting valuation are unduly skewed
towards muscle memory: factors that are firmly in the past, less
evident in UK quoted companies or of rapidly declining impact.
Taking each in turn: first, the prolonged uncertainty around
Brexit. It was difficult enough understanding the range of outcomes
as a UK voter. It is therefore unsurprising that global investors
parked it in the 'too difficult' category and gave the UK market
the proverbial long spoon treatment. But that is over - quoted
companies can live with the reality of Brexit. Second, UK
productivity lags our major peers - this may well be right at a
macro level but the companies we invest in certainly do not lag
their peers. Third, the long trend towards global equities - which
in reality means buying the US given it makes up about 60% of
global benchmarks - and pension scheme de-risking which amounts to
selling equities and buying bonds are both decreasing in intensity.
The starting point of underownership and skinny positioning is a
good set up for the current trends.
So what are the trends? Economies are late cycle and central
bankers are looking to raise interest rates and where applicable
shrink their balance sheets in order to reduce inflation
expectations before they get entrenched at higher levels. All this
is not easy with actual inflation rates reaching generational highs
and more in the pipe near term. One of the economic effects of the
tragic events in Ukraine is to layer yet more inflation on already
high inflation. Food inflation is one of the myriad examples
consumers face.
Input cost inflation combined with waning corporate and consumer
confidence means earnings downgrades but the downgrades could well
be greatest in a number of the faster growing segments of the
market. Here the UK market scores highly as its "par earnings run
rate" has over the last few years lagged the US. What investors
consider to be a competitive run rate of earning per share is
likely to take a step down and the UK will be back in the running.
Markets are often about rates of change and changing perceptions.
So that ticks off a recurrent concern that the UK doesn't have any
growth shares. Not only is it off beam - as the Edinburgh portfolio
itself illustrates - but it is also less relevant for the current
environment.
The next concern from some investors about the UK is that the
market is full of banks, international energy companies and miners.
This is seen to be the Achilles heel. Again taking each in turn:
banks - it has been a long work out since the Global Financial
Crisis ("GFC") in 2007-08. Regulators have forced capital raises,
profits have been eaten up in conduct charges - remember PPI? - but
that is all over. A good example is NatWest which is seeing profits
convert into distributable cash and has a chunky dividend and an
ongoing buyback programme. These purchases are being done at a
discount to its accounting value: a compelling level. Next up are
the international energy companies. The Russian invasion of Ukraine
has shown that it matters where energy comes from. Shell is ranked
number one in globally traded liquefied natural gas. It could well
generate up to 40% of its market capitalisation in cash over the
next three years. A good chunk will be reinvested in energy
transition spend, so it is not only supplying our current energy
needs responsibly but also is investing to help its customers
decarbonise their energy needs in the future. Then among the miners
there is Anglo American, which is about to bring on stream a
significant long duration copper project in the form of Quellaveco.
The world desperately needs copper to transition our energy
sources. Anglos is an agent of that change. So what was an Achilles
heel is now definitively a positive. This is also an excellent
example of our engagement with management to understand how they
manage their key ESG issues, which in this case includes safety of
operations, energy efficiency and management of waste from the
mining process. Investment is full of 180 degree changes in
perception but they take time to take effect. We are in the early
innings of one now.
Then let us look at the UK through the lens of private equity or
an activist investor. The growth in money allocated to private
equity has been huge over the last decade - "dry powder" that needs
to be invested to earn its fees. The UK is a fertile hunting
ground: there will be more Morrisons as the gap between the
earnings yield and the cost of borrowing remains wide. Then there
are the activists who can accelerate change and are currently on
the register of three of the UK's largest companies: Shell,
Unilever and GSK. Mega cap is no longer too large for such
action.
So there are multiple reasons why we believe the UK equity
market is in the foothills of a multi-year rehabilitation.
We also carefully consider the broader backdrop to global equity
markets. As many have observed in the last year or so, the long era
of low interest rates since the financial crisis of 2008 may have
resulted in some excessive valuations, particularly in some
technology stocks. Their potential to recover after the recent
sell-off is a live debate. As we described earlier, Edinburgh's
portfolio contains selected attractive technology stocks both at
home and abroad. We are using the current lower share prices to
consider other opportunities. However, we will maintain a balanced
portfolio and an open-minded approach to all types of stock.
In our opinion the core of the portfolio comprises sound,
profitable businesses trading at attractive valuations. This means
it is ideally placed to drive attractive returns through to
shareholders in the years ahead.
JAMES DE UPHAUGH / PORTFOLIO MANAGER CHRIS FIELD / DEPUTY
PORTFOLIO MANAGER
25 MAY 2022
The Portfolio Manager's Core Investment Beliefs
Our competitive edge rests on the combination of our Global
Fundamental team's structure within Liontrust and our flexible
investment style. Liontrust provides a stable environment in which
our fund portfolio managers operate, and our investment approach
produces portfolios that aim to deliver long-term outperformance on
a repeatable basis.
ACTIVE MANAGEMENT
Stock-driven. Share prices follow fundamentals over the long
term. Through our proven investment approach, we expect to
outperform over the long term, net of fees.
High conviction portfolio. We expect the portfolio to contain
around 40 to 50 stocks. Holdings sizes reflect the conviction we
have in each company and our assessment of the upside and downside
potential of its share price.
Risk. We think of risk as permanent capital loss. To mitigate
this, our analysis of a company's valuation is the first line of
defence. Our risk management process combines our depth of
knowledge of the stocks in the portfolio, plus separate oversight
by Liontrust's Portfolio Risk Committee.
FLEXIBLE INVESTMENT STYLE
Open-minded approach. We do not have dogmatic style biases, such
as 'growth' or 'value'. We are also prepared to invest in companies
that we identify as having scope for recovery through management
change, business transformation or an improving business
environment. We expect the profile of the portfolio to evolve,
depending on our assessment of individual companies, and our
reading of the economic and market background.
Disciplined, rigorous, fundamental research. In keeping with the
stock-driven nature of the portfolio, typically approximately three
quarters of our effort takes the form of in-depth stock research.
The remainder is spent on macroeconomic and geopolitical
analysis.
Full Environmental, Social and Governance ('ESG') integration.
ESG-related considerations have financial implications for the
portfolio's holdings. We prioritise and engage our holdings on
their key, material issues, many of which are ESG-related. The
outcomes from our in-depth analysis and engagements help form our
conviction level and investment decisions. In this way, ESG lies at
the heart of our investment process.
TOTAL RETURN STRATEGY
A focus on both capital growth and income. We take a total
return approach: investor returns should derive over the long term
from both capital appreciation and dividend income. We often prefer
companies with organic investment opportunities: as such, we
normally expect companies with growing profits - and share prices -
to contribute to returns. We view income as an important component
rather than the primary driver of investment return. This aligns
with the Company's twin objectives.
LONG TERM
Typical holding period of 3-5 years. This is an appropriate
period to ensure that underlying corporate fundamentals drive
investment returns. It is therefore also a sensible period over
which to measure an active manager.
Gearing should enhance shareholder returns. One of the
advantages of an investment trust is the ability to borrow to
enhance equity returns. We therefore expect gearing to boost
investment returns over time.
CAPACITY MANAGEMENT
Scale diseconomies. In our view, investment performance can
rapidly suffer if assets under management become too large. We
carefully manage capacity to ensure that the interests of existing
clients take precedence over new clients. The approach ensures we
retain a size advantage. It enables us to reposition the portfolio
- and those of all our other clients - quickly and efficiently when
required.
DEEP INVESTMENT RESOURCE WITH GLOBAL PERSPECTIVE
A close-knit investment team. Average experience for each member
of the team is 15 years. The team has been stress-tested across
various market cycles.
Challenge and debate. This is encouraged within a structured
risk control environment, with robust oversight processes. Team
members own Liontrust equity and coinvest in the team's investment
strategies, which in turn underpins teamwork and collaboration.
Business Review
STRATEGY AND BUSINESS MODEL
The Edinburgh Investment Trust plc is an investment company and
its investment objective is set out below. The strategy the Board
follows to achieve that objective is to set investment policy and
risk guidelines, together with investment limits, and to monitor
how they are applied. These are also set out below and have been
approved by shareholders.
The business model the Company has adopted to achieve its
investment objective has been to contract the services of the
Manager to manage and administer the portfolio in accordance with
the Board's strategy and under its oversight. The portfolio manager
with individual responsibility for the day-to-day management of the
portfolio is James de Uphaugh and the deputy portfolio manager is
Chris Field.
In addition, the Company has contractual arrangements with Link
Group to act as registrar, The Bank of New York Mellon
(International) Limited as depositary and custodian, and Sanne Fund
Services UK Limited (formerly PraxisIFM Fund Services (UK) Limited)
Fund Services (UK) Limited to act as Company Secretary.
INVESTMENT OBJECTIVE AND POLICY
Investment Objective
The Company invests primarily in UK securities with the
long-term objective of achieving:
1. an increase of the Net Asset Value per share in excess of the
growth in the FTSE All-Share Index; and
2. growth in dividends per share in excess of the rate of UK inflation.
Investment Policy
The Company will generally invest in companies quoted on a
recognised stock exchange in the UK. The Company may also invest up
to 20% of the market value of the Company's investment portfolio,
measured at the time of any acquisition, in securities listed on
stock exchanges outside the UK. The portfolio is selected by the
Portfolio Manager on the basis of its assessment of the fundamental
value available in individual securities. Whilst the Company's
overall exposure to individual securities is monitored carefully by
the Board, the portfolio is not primarily structured on the basis
of industry weightings. No acquisition may be made which would
result in a holding being greater than 10% of the market value of
the Company's investment portfolio. Similarly, the Company may not
hold more than 5% of the issued share capital (or voting shares) in
any one company. Investment in convertibles is subject to normal
security limits. Should these or any other limit be exceeded by
subsequent market movement, each resulting position is specifically
reviewed by the Board.
The Company may borrow money to provide gearing to the equity
portfolio of up to 25% of net assets.
Use of derivative instruments is monitored carefully by the
Board and permitted within the following constraints: the writing
of covered calls against securities which in aggregate amount to no
more than 10% of the value of the portfolio and the investment in
FTSE 100 futures which when exercised would equate to no more than
15% of the value of the portfolio. Other derivative instruments may
be employed, subject to prior Board approval, provided that the
cost (and potential liability) of exercise of all outstanding
derivative positions at any time should not exceed 25% of the value
of the portfolio at that time. The Company may hedge exposure to
changes in foreign currency rates in respect of its overseas
investments.
RESULTS AND DIVIDS
At the year end the share price was 634.00p per ordinary share
(2021: 600.00p). The net asset value (debt at market value) per
ordinary share was 686.69p (2021: 628.29p).
The directors have declared a third interim dividend for the
year ended 31 March 2022 of 6.40 pence per ordinary share (2021:
6.00 pence), an increase of 6.7% compared with each of the first
two interim dividends. This dividend is payable on 27 May 2022 to
ordinary shareholders on the register on 6 May 2022. The shares
were quoted ex--divided on 5 May 2022.
The Board is recommending a final dividend of 6.4p per share,
which is the same as the third interim dividend declared last month
implying a full year payout of 24.80 pence per share. This
represents an increase of 3.3% compared with the total underlying
ordinary dividends paid for the financial year to 31 March
2021.
PERFORMANCE
The Board reviews the Company's performance by reference to a
number of key performance indicators (KPIs) which are shown above.
Notwithstanding that some KPIs are beyond its control, they are
measures of the Company's absolute and relative performance. The
KPIs assist in managing performance and compliance and are reviewed
by the Board at each meeting.
The Chairman's Statement above gives a commentary on the
performance of the Company during the year, the gearing and the
dividend.
The Board reviews an analysis of expenditure at each Board
meeting, and the Audit and Management Engagement Committees
formally review the fees payable to the main service providers,
including the Manager, on an annual basis. The ongoing charges
figure is calculated in accordance with the AIC methodology and is
reviewed by the Board annually in comparison to peers.
The Board also regularly reviews the performance of the Company
in relation to the 22 investment trusts in the UK Equity Income
sector (including the Company). As at 31 March 2022 the Company was
ranked 5th by NAV performance in this sector over one year, 17th
over three years and 19th over five years (source:
Morningstar).
OUTLOOK, INCLUDING THE FUTURE OF THE COMPANY
The main trends and factors likely to affect the future
development, performance and position of the Company's business can
be found in the Portfolio Manager's Report. Details of the
principal risks affecting the Company can be found below.
FINANCIAL POSITION AND BORROWINGS
The Company's balance sheet below shows the assets and
liabilities at the year end. Borrowings at the year end comprised
the GBP100 million 7 3/4 % debenture which matures in 2022, GBP20m
of Unsecured Senior Loan Notes and GBPnil (2021: GBPnil) drawn down
on the Company's GBP25 million bank revolving credit facility
(2021: GBP50 million). Details of this bank facility are contained
in note 11.
PERFORMANCE ATTRIBUTION
for year ended
31 March 2022
%
--------------------------------- --------------
Total Return Basis(1)
NAV (debt at market value) 14.1
Less: Benchmark 13.0
--------------------------------- --------------
Relative performance 1.1
--------------------------------- --------------
Analysis of Relative Performance
Portfolio total return 13.9
Less: Benchmark total return(1) 13.0
--------------------------------- --------------
Portfolio outperformance 0.9
Borrowings:
Net gearing effect 0.8
Interest -0.7
Market value movement 0.7
Management fee -0.4
Other expenses -0.1
Tax -0.1
Share buybacks 0.0
--------------------------------- --------------
Total 1.1
--------------------------------- --------------
(1) Source: Refinitiv.
Performance Attribution - analyses the performance of the
Company relative to its benchmark index. The Analysis of Relative
Performance seeks to estimate the quantum of relative performance
that is attributable to each of the factors set out in this table.
The table is intended to be indicative rather than precise; the
accuracy of each estimate is determined by a variety of factors
such as the volatility of investment returns over the year and
intra-month, and the timing of income receipts and expenditure
payments.
Relative performance - represents the arithmetic difference
between the NAV and benchmark returns.
Portfolio total return - represents the return of the holdings
in the portfolio including transaction costs, cash and income
received, but excluding expenses incurred by the Company.
Net gearing effect - measures the impact of the debenture stock,
bank facility and cash on the Company's relative performance. This
will be positive if the portfolio has positive capital performance,
total return is positive and negative if capital performance total
return is negative.
Interest - the debenture stock and bank facility interest paid
has a negative impact on performance.
Market value movement - represents the change in market value of
the Company's borrowings, measured to the end of the financial year
or maturity from the start of the financial year or issuance, each
as appropriate.
Management fee - the base fee reduces the Company's net assets
and decreases returns.
Other expenses and tax - reduce the level of assets and
therefore result in a negative effect on relative performance.
Share buybacks - measures the effect of ordinary shares bought
back at a discount to net asset value on the Company's relative
performance.
Strategic Report / Investments in Order of Valuation
At 31 March 2022
UK LISTED ORDINARY SHARES UNLESS OTHERWISE STATED
Value % of
Company Sector GBP'000 Portfolio
------------------------------- -------------------------------------- --------- ---------
Shell Oil, Gas and Coal 89,094 7.3
Personal Care, Drug and Grocery
Tesco Stores 63,192 5.2
Anglo American Industrial Metals and Mining 60,815 5.0
AstraZeneca Pharmaceuticals and Biotechnology 54,918 4.5
BAE Systems Aerospace and Defence 53,545 4.4
Personal Care, Drug and Grocery
Unilever Stores 52,043 4.3
NatWest Banks 45,242 3.7
Ashtead Industrial Transportation 44,743 3.7
Electrocomponents Industrial Support Services 36,994 3.0
Weir Industrial Engineering 36,567 3.0
------------------------------- -------------------------------------- --------- ---------
TEN TOP HOLDINGS 537,153 44.1
----------------------------------------------------------------------- --------- ---------
Newmont - US Listed Precious Metals and Mining 35,458 2.9
GlaxoSmithKline Pharmaceuticals and Biotechnology 32,290 2.6
Telecommunications Service
KPN - Dutch Listed Providers 31,396 2.6
Ascential Software and Computer Services 30,760 2.5
Smith & Nephew Medical Equipment and Services 30,114 2.5
Hays Industrial Support Services 29,484 2.4
HSBC Banks 29,051 2.4
TotalEnergies - French Listed Oil, Gas and Coal 27,865 2.3
Centrica Gas, Water and Multi-Utilities 27,488 2.3
Dunelm Retailers 26,127 2.1
------------------------------- -------------------------------------- --------- ---------
TWENTY TOP HOLDINGS 837,186 68.7
----------------------------------------------------------------------- --------- ---------
Standard Chartered Banks 24,831 2.0
WPP Media 23,344 1.9
Compass Consumer Services 23,258 1.9
Mondi General Industrials 22,178 1.8
Serco Industrial Support Services 21,552 1.8
Personal Care, Drug and Grocery
Reckitt Stores 21,037 1.7
Diageo Beverages 19,442 1.6
Direct Line Non-Life Insurance 18,311 1.5
Personal Care, Drug and Grocery
Greggs Stores 17,934 1.5
Novartis - Swiss Listed Pharmaceuticals and Biotechnology 17,588 1.5
------------------------------- -------------------------------------- --------- ---------
THIRTY TOP HOLDINGS 1,046,661 85.9
----------------------------------------------------------------------- --------- ---------
Marks & Spencer Retailers 14,902 1.2
Marshalls Construction and Materials 14,805 1.2
Genuit Construction and Materials 12,906 1.1
easyJet Travel and Leisure 12,810 1.1
Bellway Household Goods and Home Construction 12,731 1.0
Whitbread Travel and Leisure 12,400 1.0
ConvaTec Medical Equipment and Services 12,060 1.0
Redrow Household Goods and Home Construction 11,624 0.9
Thales - French Listed Aerospace and Defence 10,771 0.9
QinetiQ Aerospace and Defence 10,068 0.8
------------------------------- -------------------------------------- --------- ---------
FORTY TOP HOLDINGS 1,171,738 96.1
----------------------------------------------------------------------- --------- ---------
Roche - Swiss Listed Pharmaceuticals and Biotechnology 10,047 0.8
Intel - US Listed Technology Hardware and Equipment 9,054 0.8
Domino's Travel and Leisure 8,409 0.7
Investment Banking and Brokerage
St James's Place Services 5,148 0.4
Dr. Martens Personal Goods 4,711 0.4
RELX Media 4,025 0.3
Made.com Household Goods and Home Construction 3,158 0.3
Cazoo - US Listed Retailers 2,129 0.2
Raven Property(S) - Preference Real Estate Investment and
shares Services 237 -
Investment Banking and Brokerage
Eurovestech(UQ) Services 69 -
------------------------------- -------------------------------------- --------- ---------
TOTAL HOLDINGS 50 (2021:
50) 1,218,725 100.0
----------------------------------------------------------------------- --------- ---------
(S) Temporary suspension
(UQ) Unquoted investment
Strategic Report / Principal Risks and Uncertainties
RISK MANAGEMENT AND MITIGATION
The Board, through the Audit Committee and with the assistance
of the Manager, maintains and regularly reviews a report of
potential risks to the Company in the form of a risk control
summary. The document includes a description of each identified
risk, the mitigating action taken, reporting and disclosure to the
Board and an impact and probability risk rating. The rating is
given both prior to and after the Board's mitigation of each risk.
The information is then displayed in matrix form which allows the
Board to identify the Company's key risks. As the changing risk
environment in which the Company operates has evolved, the total
number of risks has fluctuated, with certain risks having been
removed and new risks added with emerging risks actively discussed
as part of this process and, so far as practicable, mitigated.
The composition of the Board is regularly reviewed to ensure its
members offer sufficient knowledge and experience to assess,
anticipate and mitigate these risks, as far as possible.
The Company's key long-term investment objectives are an
increase in the net asset value per share in excess of the growth
in the FTSE All-Share Index (the 'benchmark') and an increase in
dividends in excess of the annual rate of inflation. The principal
risks and uncertainties facing the Company are an integral
consideration when assessing the operations in place to meet these
objectives, including the performance of the portfolio, share price
and dividends. The Board is ultimately responsible for the risk
control systems but the day-to-day operation and monitoring is
delegated to the Manager. The Board has carried out a robust
assessment of the principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity with consideration being given to the effect
of the COVID-19 pandemic, Russia's invasion of Ukraine, supply
chain issues globally and risks of stagflation. The following sets
out a description of the principal risks and how they are being
managed or mitigated.
MARKET RISK
A great majority of the Company's investments are traded on
recognised stock exchanges. The principal risk for investors in the
Company is a significant fall, and/or a prolonged period of decline
in those markets. The Company's investments, and the income derived
from them, are influenced by many factors such as general economic
conditions, interest rates, inflation, the severe impact of the
COVID-19 pandemic, geopolitical events, the war in Ukraine and
government policies as well as by supply and demand reflecting
investor sentiment. Such factors are outside the control of the
Board and Manager and may give rise to high levels of volatility in
the prices of investments held by the Company. The asset value and
price of the Company's shares and its earnings and dividends may
consequently also experience volatility and may decline.
Fluctuations in interest rates and exchange rates could reduce
returns and lead to depreciation of the Company's net asset
value.
Market risk is included in the risk control summary report that
is reviewed by the Board at each meeting. Additionally, the Board
receives reports on the performance of the portfolio at each
meeting.
INVESTMENT PERFORMANCE RISK
The Board sets investment policy and risk guidelines, together
with investment limits, and monitors adherence to these at each
Board meeting. All individual investment decisions are delegated to
the Portfolio Manager. The Portfolio Manager's approach is to
construct a portfolio which should benefit from expected future
trends in the UK and global economies. The Portfolio Manager is a
long-term investor, prepared to take substantial positions in
securities and sectors across a range of different types of stock.
This reflects the Portfolio Manager's high conviction, stock-driven
investment process and total return approach. Strategy, asset
allocation and stock selection decisions by the Portfolio Manager
can lead to underperformance of the portfolio relative to the
benchmark and/or income targets.
The Portfolio Manager's style may result in a concentrated
portfolio with significant overweight or underweight positions in
individual stocks or sectors compared to the index and consequently
the Company's performance may deviate significantly, possibly for
extended periods, from that of the benchmark. In a similar way, the
Portfolio Manager manages other portfolios holding many of the same
stocks as the Company which reflects the Portfolio Manager's high
conviction style of investment management. This could increase the
liquidity and price risk of certain stocks under certain scenarios
and market conditions. However, the Board and Portfolio Manager
believe that the investment process and policy outlined above
should, over the long term, meet the Company's objectives of Net
Asset Value per share growth in excess of the benchmark and real
dividend per share growth. Investment selection is delegated to the
Portfolio Manager. The Board does not specify asset allocations.
Information on the Company's performance against the benchmark and
peer group is provided to the Board at each Board meeting. The
Board uses this to review the performance of the Company, taking
into account how performance relates to the Company's objectives.
The Portfolio Manager is responsible for monitoring the portfolio
selected and seeks to ensure that individual stocks meet an
acceptable risk-reward profile.
As described in the investment policy, derivatives may be used
provided that the market exposure arising is less than 25% of the
value of the portfolio.
Investment Performance risk is included in the risk control
summary report that is reviewed by the Board at each meeting. The
Board also receives reports on the performance of the portfolio and
on compliance with the Company's investment policy guidelines from
the Manager at each meeting.
BORROWING RISK
The Company may borrow to provide gearing to the equity
portfolio of up to 25% of net assets. Borrowing is a mix of the
Company's GBP100 million debenture stock which will mature at 30
September 2022 and GBP20m of long-term fixed rate Unsecured Senior
Loan Notes and a GBP25 million bank facility. The Company has in
place agreements for replacement funding for the debenture through
additional fixed rate notes. Details of all borrowings are given in
Notes 11 and 12. The principal gearing risk is that the level of
gearing may have an adverse impact on performance. Secondary risks
include whether the cost of borrowing is too high and whether the
bank facility which is currently undrawn can be renewed and on
terms acceptable to the Company.
Within an overall limit set by the Board, the Manager has full
discretion over the amount of the borrowing it uses to gear its
portfolio, whilst the issuance, repurchase, or restructuring of
borrowing are for the Board to decide.
Borrowing and gearing risk is included in the risk control
summary report that is reviewed by the Board at each meeting.
Additionally, compliance with the Company's investment policy
guidelines is continuously monitored by the Manager and reported to
the Board at each meeting.
INCOME/DIVID RISK
The Company is subject to the risk that income generation from
its investments fails to reach the level of income required to meet
its objectives.
The Board monitors this risk through the review of detailed
income forecasts and comparison against budget. These are contained
within the Board papers and the Board considers the level of income
at each meeting.
SHARE PRICE RISK
There is a risk that the Company's prospects and NAV may not be
fully reflected in the share price from time-to-time.
The share price is monitored on a daily basis and, at the
request of the Board, the Company is empowered to repurchase shares
within agreed parameters which are regularly reviewed with the
Company's broker. The discount at which the shares trade to NAV can
be influenced by share repurchases. During the year, the Company
repurchased 1,104,800 shares for holding in treasury (2021:
2,500,000).
Share price risk is included in the risk control summary report
that is reviewed by the Board at each meeting.
CORPORATE GOVERNANCE AND INTERNAL CONTROLS RISK
The Board has delegated to third party service providers the
management of the investment portfolio, depositary and custody
services (which include the safeguarding of the assets),
registration services, accounting and company secretarial
services.
The principal risks arising from the above contracts relate to
performance of the Manager, the performance of administrative,
registration, depositary, custodial and banking services, and the
failure of information technology systems used by third party
service providers. These risk areas could lead to the loss or
impairment of the Company's assets, inadequate returns to
shareholders and loss of investment trust status. Consequently, in
respect of these activities the Company is dependent on the
Manager's control systems and those of its administrator,
depositary, custodian and registrar.
An annual review of the control environments of all service
providers is carried out by the Company Secretary who provides an
assessment of these risks and the operation of the controls for
consideration by the Audit Committee and is formally reported to
and considered by the Board.
RELIANCE ON THE MANAGER AND OTHER THIRD PARTY PROVIDERS RISK
The Company is reliant upon the performance of third party
service providers for its executive function and other service
provisions. The Company's most significant contract is with the
Manager, to whom responsibility for management of the Company's
portfolio is delegated. The Company has other contractual
arrangements with third parties to act as administrator, company
secretary, registrar, depositary and broker. The Company's
operational structure means that all cyber risk (information and
physical security) arises at its third party service providers,
including fraud, sabotage or crime against the Company. Failure by
any service provider to carry out its obligations to the Company in
accordance with the terms of its appointment could have a
materially detrimental impact on the operation of the Company and
could affect the ability of the Company to pursue successfully its
investment policy and expose the Company to risk of loss or to
reputational risk.
In particular, the Manager performs services which are integral
to the operation of the Company. The Manager may be exposed to the
risk that litigation, misconduct, operational failures, negative
publicity and press speculation, whether or not it is valid, will
harm its reputation. Any damage to the reputation of the Manager
could result in counterparties and third parties being unwilling to
deal with the Manager and by extension the Company. This could have
an adverse impact on the ability of the Company to pursue its
investment policy.
The Board seeks to manage these risks in a number of ways:
- The Company Secretary reviews the performance and the service
organisation control reports of third party service providers and
reports to the Board on an annual basis.
- The Board reviews the performance of the Manager at every
Board meeting and otherwise as appropriate. The Board has the power
to replace the Manager and reviews the management contract formally
once a year.
- The day-to-day management of the portfolio is the
responsibility of the named portfolio manager, James de Uphaugh,
Head of the Liontrust Global Fundamental team. James joined
Liontrust in April 2022 as part of the acquisition of Majedie Asset
Management where he was Chief Investment Officer. He is a Fund
Manager and Analyst with 34 years' investment experience in UK and
international equity markets. James is responsible for co-managing
the UK Equity Fund of Liontrust and managing the Edinburgh
Investment Trust.
- The risk that the portfolio manager might be incapacitated or
otherwise unavailable is mitigated by the fact that he works
within, and is supported by, the wider Liontrust team. Moreover,
Chris Field, as deputy portfolio manager, would be able to manage
the portfolio if James de Uphaugh was unable to do so for any
reason.
- The Board has set guidelines within which the portfolio
manager is permitted wide discretion. Any proposed variation
outside these guidelines is referred to the Board and compliance
with the guidelines and the guidelines themselves are reviewed at
every Board meeting.
EMERGING RISKS
The Board has put in place robust procedures to assist with
identifying emerging risks that arise from existing risks or from
new situations. The Board is kept informed through its advisors and
Manager regarding any political, economic or legal or regulatory
changes that affect the Company.
For example, there are currently a growing number of risks as a
result of emerging geopolitical factors that may translate into
greater stock market risk. These geopolitical factors include the
war in Ukraine, global supply chain issues and stagflation.
Physical and Transitional Climate Change
Globally, climate change effects are already emerging in the
form of changing weather patterns. Extreme weather events could
potentially impair the operations of individual investee companies,
potential investee companies, their supply chains and their
customers. Legislative changes are driving an economic adjustment
towards a low-carbon economy. There are considerable risks to the
value, business model and operations of investee and potential
investee companies due to stranded assets and how investors,
financial regulators and policymakers respond to climate concerns.
The Portfolio Manager takes such risks into account, along with the
downside risk to any company - whether in the form of its business
prospects, market valuation or sustainability of dividends - that
is perceived to be making a detrimental contribution to climate
change. Further details on the Portfolio Manager's process for
managing climate risk relating to each portfolio holding is
supplied in the s.172 statement below. The Company invests in a
broad portfolio of businesses with operations spread
geographically, which should limit the impact of location-specific
weather events.
Pandemic (COVID-19)
There is a risk of re-emergence of future strains of COVID-19 or
other pandemics and lockdowns.
OTHER RISKS
The Company is subject to laws and regulations by virtue of its
status as an investment trust and is required to comply with
certain regulatory requirements that are applicable to listed
closed-ended investment companies. The Company is subject to the
continuing obligations imposed by the UK Listing Authority on all
companies whose shares are listed on the Official List.
The Manager reviews compliance with investment trust tax
conditions and other financial and regulatory requirements on a
daily basis with any issues being immediately brought to the
attention of the Board.
The Company may be exposed to other business, strategic and
political risks in the future, as well as regulatory risks (such as
an adverse change in the tax treatment of investment companies),
credit, liquidity and concentration risks. The risk control summary
report allows the Board to considers all these risks, the measures
in place to control them and the possibility of any other risks
that could arise.
The Board ensures that satisfactory assurances are received from
the service providers. The Manager's compliance officers produce
regular reports for review by the Company's Audit Committee.
Additionally, the depositary monitors stock, cash, borrowings
and investment restrictions throughout the year. The depositary
reports formally once a year and also has access to the Company
Chairman and the Audit Committee Chairman if needed during the
year.
Viability Statement
The directors' view of the Company's viability has not changed
since last year. The Company, as an investment trust, is a
collective investment vehicle rather than a commercial business
venture and is designed and managed for long term investment. The
Company's investment objective clearly sets this out. Long term for
this purpose is considered by the Directors to be at least five
years a timeframe in which the accuracy of estimates and
assumptions is deemed to be reasonable. The Company's viability has
thus been assessed over that period. Five years is considered a
reasonable timeframe before forecast, however, the life of the
Company is not intended to be limited to that or any other
period.
There are no current plans to amend the investment strategy,
which has delivered long term good investment performance for
shareholders and, the directors believe, should continue to do so.
The investment strategy and its associated risks are kept under
constant review by the board.
In assessing the viability of the Company under various
scenarios, the Directors undertook a robust assessment of the risks
to which it is exposed (including the issues arising from the
COVID-19 pandemic, Russia's invasion of Ukraine and climate
change), as set out above together with mitigating factors. The
risks of failure to meet the Company's investment objective, and
contributory market and investment risks, were considered to be of
particular importance. The Directors also took into account: the
investment capabilities of the portfolio manager; the liquidity of
the portfolio, with nearly all investments being listed and readily
realisable; the Company's borrowings as considered in further
detail in the Going Concern Statement below; the ability of the
Company to meet its liabilities as they fall due; the Company's
annual operating costs and that, as a closed ended investment
trust, the Company is not affected by the liquidity issues of
open-ended companies caused by large or unexpected redemptions.
In taking account of these factors and on reviews conducted as
part of the detailed internal controls and risk management
processes set out below, the Directors have concluded that the
viability of the Company may start to be challenged if the value of
investments reduced by over 80% from the aggregate level at the
year end and the board considers this implausible having noted that
since the inception of the Company's All-Share Index Total Return
benchmark in December 1985, the largest fall over any calendar year
has been 29.9%, the largest fall over any rolling five year period
was 28.8% and the largest fall over any period was 42.9% (all based
on benchmark calendar month end values).
Based on the above, and assuming there is no adverse change to
the regulatory environment and tax treatment of UK investment
trusts to the extent that would challenge the viability of the UK
investment trust industry as a whole, 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 five
year period of assessment.
Section 172 Statement, Company Sustainability and
Stakeholders
BOARD RESPONSIBILITIES
As set out in the Directors' Report below the Directors have a
statutory duty to promote the success of the Company, whilst also
having regard to certain broader matters, including the need to
engage with employees, suppliers, customers and others, and to have
regard to their interests (s172 Companies Act 2006). However, the
Company has no employees and no customers in the traditional sense.
Consistent with the Company's nature as an investment trust, the
Board's principal concern has been, and continues to be, the
interests of the Company's shareholders taken as a whole.
COMPANY SUSTAINABILITY AND STAKEHOLDERS
As an externally managed investment company, the Company does
not have any employees. The Board considers its main stakeholders
to be its shareholders, service providers, investee companies and
the Manager.
ENGAGEMENT WITH SHAREHOLDERS
Shareholder relations are given high priority by both the Board
and the Manager and the Board welcomes feedback from shareholders
throughout the year. The prime medium by which the Company
communicates with shareholders is through the half-yearly and
annual financial reports, which aim to provide shareholders with a
full understanding of the Company's activities and results. This
information is supplemented by the daily publication of the net
asset value, monthly factsheets as well as dividend and other
announcements.
Feedback from shareholders forms part of the discussion at all
Board meetings and at the Board's annual strategy meeting which
involves consideration of how the Company is meeting shareholder
expectations.
Shareholders can also visit the Company's website
www.edinburghinvestmenttrust.com in order to access copies of the
annual and half-yearly financial reports, pre-investment
information, Key Information Documents (KIDs), proxy voting
results, factsheets and stock exchange announcements. The Company's
website also hosts videos and other applicable written materials by
the Manager to enhance the information available.
Typically at each AGM, a presentation is made by the Manager
following the formal business of the meeting and shareholders have
the opportunity to attend, vote and most importantly to communicate
directly with the Manager and Board. Presentations to both
institutional shareholders and analysts also follow the publication
of the annual results. Due to COVD-19 restrictions the Board held a
hybrid AGM on 21 July 2021 which allowed shareholders to join via a
live weblink and to submit questions during the meeting. In
addition to the AGM and presentations, the Board and Manager will
host a shareholder event in London on 22 September 2022 and
shareholders can register via the Company's website. The Chairman
uses these events to lead the Company's engagement with its
shareholders.
Regular dialogue is maintained between the Manager and major
institutional shareholders throughout the year to discuss aspects
of investment performance, governance and strategy and to listen to
shareholder views in order to help develop an understanding of
their issues and concerns. All meetings between the Manager and
shareholders are reported to the Board. As a part of the process of
change of Chairman from Glen Suarez, the next Chair, Elisabeth
Stheeman, has been in attendance at meetings with shareholders
during the financial year.
There is a clear channel of communication between the Board and
the Company's Shareholders via the Company Secretary. The Company
Secretary passes to the Chairman all correspondence addressed to
the Board of the Company.
The strategy of the Company is reviewed by the Board on an
annual basis. At the strategy day in October 2021 the Board
discussed the refinancing of the debenture, discount management,
marketing and board recruitment. Whilst feedback from shareholders
is sought regularly, shareholders' feedback provided by the
Company's broker and Manager is a major consideration at this
meeting.
ENGAGEMENT WITH THE MANAGER
The Board has regular dialogue with and reporting from the
Manager on the portfolio of investments and a representative of the
Manager attends each Board meeting to provide updates and answer
questions from the Board.
During the financial year ended 31 March 2022, the Manager
assisted with sourcing new debt finance through the issue of a loan
note of GBP20m repayable in 2051 and GBP100m of pre-arranged new
debt which will be available to replace the debenture when it
matures in September 2022.
ENGAGEMENT WITH SERVICE PROVIDERS
As an externally managed investment trust, the Company conducts
all its business through its key service providers. The Board
believes that maintaining a collaborative relationship with each of
the Company's service providers Is essential to the Board's
decision making and the ongoing success of the Company. At least
annually the Board reviews the performance and services of all its
service providers including the Manager, and receives and considers
the internal control reports on a quarterly basis covering their
operations, policies and control environments.
The Board reviews the quarterly reports of the service providers
and assesses annually whether the services meet the requirements of
the Company, represent value for money and are therefore in the
best interests of shareholders.
Following the COVID-19 pandemic, the Board continues to ensure
that service providers are as prepared as possible for all such
eventualities which could disrupt performance of their respective
functions.
ENGAGEMENT WITH INVESTEE COMPANIES
The Manager is a long-term investor and develops strong
relationships with both investee and potential investee companies
and reports their conversations back to the Board. Both the Board
and the Manager believe that engagement with investee companies is
positive, beneficial and welcomed.
Voting is a key activity in the dialogue with investee companies
and these decisions are reported to the Board on a quarterly basis.
Voting is undertaken by the same team that manages the portfolio
assets rather than it being delegated to an independent third
party.
The Board supports the Manager's approach to ESG in the context
of its management of the portfolio. In July 2021 the Board held a
meeting to which the Head of Responsible Capitalism at Majedie was
invited to provide an overview of developments in ESG and the
implications for the Company.
CONCLUSION
The Directors believe that they have fulfilled their duties
under s172 of the Companies Act 2006 in their deliberations on all
matters. The Board takes into account the interests of all the
Company's key stakeholders, as outlined above, in its decision --
making which reflects the Board's belief that the long -term
sustainable success of the Company is linked direct ly to its key
stakeholders.
ENVIRONMENTAL SOCIAL AND GOVERNANCE ("ESG") MATTERS
As an investment company with no employees, property or
activities outside investment, environmental policy has limited
application. In respect of the Company's investments, the Manager
and the other members of the investment team integrate ESG risks
and opportunities as part of a material assessment undertaken for
all holdings. Consistent with the Manager's approach, this analysis
is undertaken on a bottom-up, stock basis. The risks and
opportunities that each holding faces over a three to five year
period are then identified and prioritised. Many of these issues
can be sub-categorised as "E", "S" and "G" issues. The issues that
are identified as the key ones are at the forefront of engagement
discussions with holdings. As part of the materiality assessments.,
the manager identifies and prioritises any key issues for a company
over the three to five year period. These frequently include issues
related to global warming, including those focussed on transitional
risks, legislation risk, and/or physical risks. The Manager is a
signatory to the Principles of Responsible Investment ('PRI').
Further information is available at www.liontrust.co.uk and through
the investment company ESG disclosures at www.theaic.co.uk
EXERCISE OF VOTING POWERS AND STEWARDSHIP CODE
Stewardship
The Board considers that the Company has a responsibility as a
shareholder towards ensuring that high Environmental, Social and
Governance standards are maintained in the companies in which it
invests. To achieve this, the Board does not seek to intervene in
daily management decisions, but aims to support high standards of
governance and, where necessary, will take the initiative to ensure
those standards are met. The principal means of putting shareholder
responsibility into practice is through the exercise of voting
rights. The Company's voting rights are exercised on an informed
and independent basis.
The Manager has adopted a clear and considered policy towards
its stewardship responsibility on behalf of the Company. The
Manager takes steps to satisfy itself about the extent to which the
companies in which it invests look after shareholders' value and
comply with local recommendations and practices, such as the UK
Corporate Governance Code. The Manager's approach to corporate
governance and the UK Stewardship Code can be found on the
Manager's website at www.liontrust.co.uk together with a copy of
the Manager's Stewardship Policy and the Manager's global proxy
voting policy.
M embers of the Manager's investment team are responsible for
overseeing all aspects of the Stewardship process, including voting
on all resolutions at all Annual General Meetings and Extraordinary
General Meetings in the UK and overseas ballots. The Manager
assesses corporate governance, remuneration policies and if deemed
necessary will challenge management where it is felt that the best
interests of shareholders are not being met.
When voting against or abstaining in a vote the Manager may
communicate with management beforehand, either setting out its
position in its regular meetings with the management of investee
companies or in a communication to management.
The Manager discloses its voting record to the Board at each
meeting with notes explaining the reasons for any votes against
resolutions.
In addition, the Manager discloses to all clients an annual
Responsible Capitalism report, providing cumulative voting
statistics, full disclosure on voting policy and extracts of
engagement for the year. The Manager publishes a quarterly voting
record for the previous year on its website
www.liontrust.co.uk.
MODERN SLAVERY DISCLOSURE
The Company aims to adopt the highest standards and is committed
to integrating responsible business practices throughout its
operations. The prevention of modern slavery is an important part
of corporate good governance.
The Company is an investment vehicle and does not provide goods
or services in the normal course of its business, or have
customers. Accordingly, the Directors consider that the Company is
not required to make any slavery or human trafficking statement
under the Modern Slavery Act 2015.
ANTI-BRIBERY AND CORRUPTION
It is the Company's policy to conduct all of its business in an
honest and ethical manner. The Company takes a zero-tolerance
approach to bribery and corruption and is committed to acting
professionally, fairly and with integrity in all its business
dealings and relationships wherever it operates. The Company's
policy and the procedures that implement it are designed to support
that commitment.
PREVENTION OF THE FACILITATION OF TAX EVASION
The Board has adopted a zero-tolerance approach to the criminal
facilitation of tax evasion.
GREENHOUSE GAS EMISSIONS AND STREAMLINED ENERGY AND CARBON
REPORTING ('SECR')
The Company has no employees, physical assets, property or
operations of its own, does not provide goods or services and does
not have its own customers. It follows that the Company has little
or no direct environmental impact. In consequence, the Company has
limited greenhouse gas emissions to report from its operations
aside from travel to board meetings, nor does it have
responsibility for any other sources of emissions under the
Companies Act 2006 (Strategic Report and Directors' Reports)
Regulations 2013.
As the Company has no material operations and therefore has low
energy usage, it has not included an energy and carbon report.
This Strategic Report was approved by the Board on 25 May
2022
SANNE FUND SERVICES (UK) LIMITED / COMPANY SECRETARY
Statement of Directors' Responsibilities
in respect of the preparation of the Annual Financial Report
The Directors are responsible for preparing the annual financial
report and 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 they are
required to prepare the financial statements in accordance with UK
accounting standards, including FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland.
The revised SORP issued in April 2021 is applicable for
accounting periods beginning on or after 1 January 2021. The SORP
has no substantive changes but has been updated to reflect changes
IFRS standards and regulatory requirements. No accounting policies
or disclosures have changed as a result of the revised SORP.
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 its profit or
loss for that period.
In preparing these financial statements, the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and 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;
- assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and
- use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
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
its financial statements comply with the Companies Act 2006.
They are responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website, which is maintained by the Company's Manager.
Legislation in the UK governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
ANNUAL FINANCIAL REPORT
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company; and
- the Strategic Report includes 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.
We consider the annual financial 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.
Signed on behalf of the Board of Directors
GLEN SUAREZ / CHAIRMAN / 25 MAY 2022
Income Statement
For the year ended 31 March
2022 2021
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ----- ------- ------- ------- ------- ------- -------
Gains on investments held
at fair value 9(b) - 101,815 101,815 - 247,596 247,596
Losses on foreign exchange - (148) (148) - (91) (91)
Income 2 44,211 10,036 54,247 32,842 11,041 43,883
Investment management fee 3 (1,512) (3,528) (5,040) (1,016) (2,371) (3,387)
Other expenses 4 (977) (9) (986) (814) (13) (827)
---------------------------------- ----- ------- ------- ------- ------- ------- -------
Net return before finance
costs and taxation 41,722 108,166 149,888 31,012 256,162 287,174
Finance costs 5 (2,492) (5,815) (8,307) (2,438) (5,690) (8,128)
---------------------------------- ----- ------- ------- ------- ------- ------- -------
Return on ordinary activities
before taxation 39,230 102,351 141,581 28,574 250,472 279,046
Tax on ordinary activities 6 (663) - (663) (495) - (495)
---------------------------------- ----- ------- ------- ------- ------- ------- -------
Return on ordinary activities
after taxation for the financial
year 38,567 102,351 140,918 28,079 250,472 278,551
---------------------------------- ----- ------- ------- ------- ------- ------- -------
Return per ordinary share:
Basic 7 22.41p 59.47p 81.88p 16.21p 144.58p 160.79p
---------------------------------- ----- ------- ------- ------- ------- ------- -------
The total column of this statement represents the Company's
income statement, prepared in accordance with UK Accounting
Standards. The return/(loss) after taxation is the total
comprehensive income/(expense) and therefore no additional
statement of comprehensive income is presented. The supplementary
revenue and capital columns are presented for information purposes
in accordance with the Statement of Recommended Practice issued by
the Association of Investment Companies. All items in the above
statement derive from continuing operations of the Company. No
operations were acquired or discontinued in the year.
Financial Review / Balance Sheet
As at 31 March
2022 2021
Notes GBP'000 GBP'000
-------------------------------------------------------- ----- --------- ---------
Fixed assets
Investments held at fair value through profit or loss 9(a) 1,218,725 1,151,008
-------------------------------------------------------- ----- --------- ---------
Current assets
Debtors 10 10,824 7,974
Cash and cash equivalents 68,728 32,570
-------------------------------------------------------- ----- --------- ---------
79,552 40,544
Creditors: amounts falling due within one year
Other payables 11 (2,566) (698)
7.75% Debenture Stock 30 Sep 2022 11 (99,874) -
-------------------------------------------------------- ----- --------- ---------
(102,440) (698)
-------------------------------------------------------- ----- --------- ---------
Net current (liabilities)/assets (22,888) 39,846
-------------------------------------------------------- ----- --------- ---------
Total assets less current liabilities 1,195,837 1,190,854
Creditors: amounts falling due after more than one year 12 (20,000) (99,623)
-------------------------------------------------------- ----- --------- ---------
Net assets 1,175,837 1,091,231
Capital and reserves
Share capital 13 48,917 48,917
Share premium 14 10,394 10,394
Capital redemption reserve 14 24,676 24,676
Capital reserve 14 1,041,086 945,728
Revenue reserve 14 50,764 61,516
-------------------------------------------------------- ----- --------- ---------
Total Shareholders' funds 1,175,837 1,091,231
Net asset value per ordinary share:
Basic - debt at par value 15 687.24p 633.54p
- debt at market value 15 686.69p 628.29p
-------------------------------------------------------- ----- --------- ---------
These financial statements were approved and authorised for
issue by the Board of Directors on 25 May 2022.
GLEN SUAREZ / CHAIRMAN
Signed on behalf of the Board of Directors
The accompanying notes are an integral part of these financial
statements.
Financial Review / Statement of Changes in Equity
Capital
Share Share Redemption Capital Revenue
Capital Premium Reserve Reserve(1) Reserve(1) Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ----- ------- ------- ---------- ---------- ---------- ---------
At 31 March 2020 48,917 10,394 24,676 706,726 81,771 872,484
Return on ordinary activities - - - 250,472 28,079 278,551
Dividends paid 8 - - - - (48,334) (48,334)
Shares bought back and held in treasury - - - (11,470) - (11,470)
---------------------------------------- ----- ------- ------- ---------- ---------- ---------- ---------
At 31 March 2021 48,917 10,394 24,676 945,728 61,516 1,091,231
---------------------------------------- ----- ------- ------- ---------- ---------- ---------- ---------
Return on ordinary activities - - - 102,351 38,567 140,918
Dividends paid 8 - - - - (49,319) (49,319)
Shares bought back and held in treasury - - - (6,993) - (6,993)
---------------------------------------- ----- ------- ------- ---------- ---------- ---------- ---------
At 31 March 2022 48,917 10,394 24,676 1,041,086 50,764 1,175,837
---------------------------------------- ----- ------- ------- ---------- ---------- ---------- ---------
(1) The revenue reserve and certain amounts of the capital
reserve are distributable by way of dividend.
The accompanying notes are an integral part of these financial
statements.
Financial Review / Cash Flow Statement
For the year ended 31 March
2022 2021
Notes GBP'000 GBP'000
-------------------------------------------------------------------------------- ----- --------- ---------
Cash flow from operating activities
Net return before finance costs and taxation 149,888 287,174
Tax on overseas income 6 (663) (495)
Adjustments for:
--------- ---------
Purchase of investments (426,367) (417,672)
Sale of investments 462,132 437,425
--------- ---------
35,765 19,753
Gains on investments held at fair value (101,815) (247,596)
Increase in debtors (3,201) (2,303)
Increase/(decrease) in creditors 128 (141)
-------------------------------------------------------------------------------- ----- --------- ---------
Net cash inflow from operating activities 80,102 56,392
-------------------------------------------------------------------------------- ----- --------- ---------
Cash flow from financing activities
Interest paid on overdraft (1) -
Interest and commitment fees paid on bank facility (85) (158)
Interest paid on debenture stocks (7,994) (7,750)
Issue of Unsecured Senior Loan Notes 2.53% redeemable 7 October 2051 20,000 -
Shares bought back and held in treasury (6,545) (11,538)
Dividends paid 8 (49,319) (48,334)
-------------------------------------------------------------------------------- ----- --------- ---------
Net cash outflow from financing activities (43,944) (67,780)
-------------------------------------------------------------------------------- ----- --------- ---------
Net increase/(decrease) in cash and cash equivalents 36,158 (11,388)
Cash and cash equivalents at start of the year 32,570 43,958
-------------------------------------------------------------------------------- ----- --------- ---------
Cash and cash equivalents at the end of the year 68,728 32,570
-------------------------------------------------------------------------------- ----- --------- ---------
Reconciliation of cash and cash equivalents to the Balance Sheet is as follows:
Cash held at custodian 1,021 844
Goldman Sachs Liquidity Reserve International Fund - Money Market Fund 47,727 31,726
UK Government Treasury Bill - matures on 30 May 2022 19,980 -
-------------------------------------------------------------------------------- ----- --------- ---------
Cash and cash equivalents 68,728 32,570
-------------------------------------------------------------------------------- ----- --------- ---------
Cash flow from operating activities includes:
Dividends received 50,447 39,963
Interest received - 4
-------------------------------------------------------------------------------- ----- --------- ---------
At 1 At
April Cash Non-cash 31 March
2021 flows movement 2022
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- --------- ---------
Reconciliation of net debt:
Cash and cash equivalents 32,570 36,158 - 68,728
Debenture Stock 7 3/4 % 30 September 2022 (99,623) - (251) (99,874)
Unsecured Senior Loan Notes 2.53% 7 October
2051 - (20,000) - (20,000)
-------------------------------------------- -------- -------- --------- ---------
Total (67,053) 16,158 (251) (51,146)
-------------------------------------------- -------- -------- --------- ---------
Financial Review / Notes to the Financial Statements
1. PRINCIPAL ACCOUNTING POLICIES
Accounting policies describe the Company's approach to
recognising and measuring transactions during the year and the
position of the Company at the year end.
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied during the year and the preceding
year.
A. Basis of Preparation
Accounting Standards Applied
The financial statements have been prepared in accordance with
applicable United Kingdom Accounting Standards and applicable law
(UK Generally Accepted Accounting Practice (UK GAAP)) including 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, issued by the Association of Investment Companies
(SORP) in April 2021.
The financial statements are issued on a going concern basis.
Details of the Directors assessment of the going concern status of
the Company, which considered the adequacy of the Company's
resources and the impacts of the COVID-19 Pandemic, are given
above.
As an investment fund the Company has the option not to present
a cash flow statement. A cash flow statement is not required when
an investment fund meets all the following conditions:
substantially all investments are highly liquid and are carried at
market value, and where a Statement of Changes in Equity is
provided: all of which are satisfied.
However the Directors' have elected to present a cash flow
statement in the annual financial report this year to present
additional relevant information to readers of the accounts.
Significant Accounting Estimates, Assumptions and Judgements
The preparation of the financial statements may require the use
of estimates, assumptions and judgements which may affect the
reported amounts of assets and liabilities at the reporting date.
While estimates are based on best judgement using information and
financial data available the actual outcome may differ from these
estimates. The Directors have applied their judgement for the
allocation of the investment management fee and finance costs
between capital and revenue in the income statement as set out in
Note 1G and the treatment of special dividend income between
capital and income, as set out in Note 1J. The directors do not
believe that these judgements nor any accounting estimates,
assumptions or judgements that have been applied to the financial
statements have a significant risk of causing material adjustment
to the carrying amount of assets and liabilities within the next
financial year.
B. Foreign Currency and Segmental Reporting
(i) Functional and presentational currency
The financial statements are presented in sterling, which is the
Company's functional and presentational currency and the currency
in which the Company's share capital and expenses, as well as its
assets and liabilities, are denominated.
(ii) Transactions and balances
Transactions in foreign currency, whether of a revenue or
capital nature, are translated to sterling at the rates of exchange
ruling on the dates of such transactions. Foreign currency assets
and liabilities are translated to sterling at the rates of exchange
ruling at the balance sheet date. Any gains or losses, whether
realised or unrealised, are taken to the capital reserve or to the
revenue account, depending on whether the gain or loss is of a
capital or revenue nature. All gains and losses are recognised in
the income statement.
(iii) Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business of investing in equity and debt
securities, issued by companies quoted mainly on the UK or other
recognised stock exchanges.
C. Financial Instruments
The Company has chosen to apply Section 11 and 12 of FRS102 in
full in respect of the financial instruments.
(i) Recognition of financial assets and financial liabilities
The Company recognises financial assets and financial
liabilities when the Company becomes a party to the contractual
provisions of the instrument. The Company will offset financial
assets and financial liabilities if the Company has a legally
enforceable right to set off the recognised amounts and intends to
settle on a net basis.
(ii) Derecognition of financial assets
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire or it transfers the
right to receive the contractual cash flows on the financial asset
in a transaction in which substantially all the risks and rewards
of ownership of the financial asset are transferred. Any interest
in the transferred financial asset that is created or retained by
the Company is recognised as an asset.
(iii) Derecognition of financial liabilities
The Company derecognises financial liabilities when its
obligations are discharged, cancelled or have expired.
(iv) Trade date accounting
Purchases and sales of financial assets are recognised on trade
date, being the date on which the Company commits to purchase or
sell the assets.
(v) Classification and measurement of financial assets and financial liabilities
- Financial assets
The Company's investments are classified as held at fair value
through profit or loss.
Financial assets held at fair value through profit or loss are
initially recognized as fair value, which is taken to be their
acquisition price, with transaction costs expensed in the income
statement. These are subsequently valued at fair value.
Fair value for investments that are actively traded in organised
financial markets is determined by reference to stock exchange
quoted bid prices at the balance sheet date. Fair value for
investments that are actively traded but where active stock
exchange quoted bid prices are not available is determined by
reference to a variety of valuation techniques including broker
quotes and price modelling. Unquoted, unlisted or illiquid
investments are valued by the Directors at fair value using a
variety of valuation techniques including earnings multiples,
recent transactions and other market indicators, cash flows and net
assets.
- Financial liabilities
Financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs and are
subsequently measured at amortised cost using the effective
interest method.
D. Cash and Cash Equivalents
Cash and cash equivalents may comprise cash (including short
term deposits which are readily convertible to a known amount of
cash and are subject to an insignificant risk of change in value)
as well as cash equivalents, including money market funds.
Investments are regarded as cash equivalents if they meet all of
the following criteria: short term in duration (typically three
months or less from the date of acquisition), highly liquid
investments held in the Company's base currency that are readily
convertible to a known amount of cash, are subject to an
insignificant risk of change in value and provide a return no
greater than the rate of a three-month high quality government
bond.
E. Hedging
Forward currency contracts entered into for hedging purposes are
valued at the appropriate forward exchange rate ruling at the
balance sheet date. Profits or losses on the closure or revaluation
of positions are recognised in the income statement and taken to
capital reserves.
F. Income
Interest income arising from fixed income securities and cash is
recognised in the income statement using the effective interest
method. Dividend income arises from equity investments held and is
recognised on the date investments are marked 'ex-dividend'.
Special dividends are looked at individually to ascertain the
reason behind the payment. This will determine whether they are
treated as income or capital in the income statement.
Deposit interest and underwriting commission receivable are
taken into account on an accruals basis.
G. Expenses and Finance Costs
Expenses are recognised on an accruals basis and finance costs
are recognised using the effective interest method in the income
statement.
The investment management fee and finance costs are allocated
70% to capital and 30% to revenue. This is in accordance with the
Board's expected long-term split of returns, in the form of capital
gains and income respectively, from the portfolio.
Transaction costs are recognised as capital in the income
statement. All other expenses are allocated to revenue in the
income statement.
H. Taxation
The liability to corporation tax is based on net revenue for the
year, excluding non-taxable dividends. The tax charge is allocated
between the revenue and capital account on the marginal basis
whereby revenue expenses are matched first against taxable income
in the revenue account.
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the balance
sheet date where transactions or events that result in an
obligation to pay more tax or a right to pay less tax in the future
have occurred. Timing differences are differences between the
Company's taxable profits and its results as stated in the
financial statements. Deferred taxation assets are recognised
where, in the opinion of the Directors, it is more likely than not
that these amounts will be realised in future periods.
A deferred tax asset is only recognised in respect of surplus
management expenses, losses on loan relationships and eligible
unrelieved foreign tax to the extent that it is probable that the
Company will be able to recover them from future taxable
revenue.
I. Dividends Payable
Dividends are not recognised in the accounts unless there is an
obligation to pay at the balance sheet date. Proposed dividends are
recognised in the year in which they are paid to shareholders.
J. Critical accounting estimates and judgements
The Directors made one significant accounting judgement during
the year as set out in the paragraph below.
Daily Mail & General Trust ("DMGT") Capital Special Dividend
- GBP10,036,000
On 12 July 2021, DMGT announced that its controlling
shareholder, Rothermere Continuation Limited ("RCL"), had notified
it of a possible offer for the entire issued, and to be issued,
share capital of DMGT not already owned by RCL.
On 3 November 2021, it was announced that the Non-conflicted
DMGT Directors and RCL had reached agreement on the terms of a
recommended cash offer for DMGT by RCL, and a conditional special
distribution, to all shareholders, of substantially all of the cash
in the Group and its stake in Cazoo Group.
This Special Dividend was treated as Capital in nature due to
the source being covered by the proceeds of disposal of the
non-core parts of the business and the distribution of surplus
capital leaving Rothermere Continuation Limited to purchase the
remaining newspaper businesses. The Special Dividend was declared
on 16 December 2021 and went ex-dividend on 17 December 2021.
This amount is disclosed as part of the amount in the footnote
of Note 2 Income.
With the exception of this and the allocation of the investment
management fee and finance costs between capital and revenue as
described in Note 1G, the Directors do not believe that any other
significant accounting judgements have been made. There are no
estimates that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities within
the next financial year.
K. Accounting for reserves
The share premium comprises the net proceeds received by the
Company following the issue of shares, after deduction of the
nominal amount of 25 pence and any applicable issue costs. The
capital redemption reserve maintains the equity share capital of
the Company and arose from the nominal value of any shares bought
back and cancelled; both are non-distributable.
The capital reserve includes the investment holding
gains/(losses), being the difference between cost and market value
at the balance sheet date. It also includes cumulative realised
gains/(losses) and costs related to share buybacks. Capital
investment gains and losses are shown in note 9(b) and form part of
the capital reserve.
The revenue reserve shows the net revenue retained after payment
of any dividends. The revenue reserve and certain amounts of the
capital reserve are distributable by way of dividend.
2. INCOME
This note shows the income generated from the portfolio
(investment assets) of the Company and income received from any
other source.
2022 2021
GBP'000 GBP'000
------------------------------- ------- -------
Income from investments:
UK zero coupon bond income 11 -
UK dividends 32,253 26,028
UK special dividends 6,689 2,432
Overseas dividends 5,193 4,368
Income from money market funds 28 11
------------------------------- ------- -------
44,174 32,839
Other income:
Deposit interest - 3
Underwriting commission 37 -
------------------------------- ------- -------
37 3
------------------------------- ------- -------
Total income 44,211 32,842
------------------------------- ------- -------
Special dividends of GBP10,036,000 were recognised in capital
during the year (2021: GBP11,041,000).
3. INVESTMENT MANAGEMENT FEE
This note shows the fee due to the Manager. This is calculated
and paid monthly.
2022 2021
------- ------- ------- ------- ------- -------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------- ------- ------- ------- ------- -------
Investment management
fee 1,512 3,528 5,040 1,016 2,371 3,387
---------------------- ------- ------- ------- ------- ------- -------
Details of the investment management agreement is disclosed
above in the Directors' Report. At 31 March 2022 investment
management fees of GBP427,000 (2021: GBP407,000) were accrued.
4. OTHER EXPENSES
The other expenses of the Company are presented below; those
paid to the Directors and the auditor are separately
identified.
2022 2021
------- ------- ------- ------- ------- -------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------- ------- ------- ------- ------- ------- -------
Other expenses 977 9 986 814 13 827
---------------------------------------------------------- ------- ------- ------- ------- ------- -------
Other expenses include
the following:
Directors' remuneration(i) 184 - 184 187 - 187
Auditor's fees(ii)
:
* for audit of the Company's annual financial
statements 41 - 41 33 - 33
* additional fees in respect of COVID-19 audit
procedures in prior year - - - 8 - 8
* audit related assurance services in respect of the
Debenture Stock - - - 3 - 3
---------------------------------------------------------- ------- ------- ------- ------- ------- -------
The maximum Directors' fees authorised by the Articles of
Association are GBP250,000 per annum.
(i) There were seven directors for a period during the year and
the Director's Remuneration Report above provides further
information on Directors' fees.
(ii) Auditor's fees include expenses but excludes VAT.
(iii) Other expenses include:
- GBP17,000 (2021: GBP18,000) of employer's National Insurance
payable on Directors' remuneration. As at 31 March 2022, the
amounts outstanding on Directors' remuneration and employer's
National Insurance was GBPnil (2021: GBP42,000); and
- custodian transaction charges of GBP9,000 (2021: GBP14,000). These are charged to capital.
5. FINANCE COSTS
Finance costs arise on any borrowing facilities the Company has
used. Borrowing facilities are the GBP100 million debenture stock,
GBP20 million loan note and a GBP25 million bank revolving credit
facility.
2022 2021
------- ------- ------- ------- ------- -------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------ ------- ------- ------- ------- ------- -------
Interest payable on borrowings repayable not by
instalment:
- Commitment fees due on loan facility 18 42 60 38 89 127
- Interest on overdraft facility - 1 1 - - -
- Debenture stock repayable within 1 year 2,325 5,425 7,750 - - -
- Debenture stock repayable within 2 years - - - 2,325 5,425 7,750
- Unsecured Senior Loan Notes repayable after 5 years 73 171 244 - - -
Amortised debenture stock discount and issue costs 76 176 252 75 176 251
------------------------------------------------------ ------- ------- ------- ------- ------- -------
2,492 5,815 8,307 2,438 5,690 8,128
------------------------------------------------------ ------- ------- ------- ------- ------- -------
6. TAX AND TOTAL RETURN ON ORDINARY ACTIVITIES
As an investment trust the Company pays no tax on capital gains.
As the Company invests principally in UK equities, it has little
overseas tax and the overseas tax charge is the result of
withholding tax deducted at source. This note also clarifies the
basis for the Company having no deferred tax asset or
liability.
(a) Tax charge
2022 2021
GBP'000 GBP'000
------------------ ------- -------
Overseas taxation 663 495
------------------ ------- -------
(b) Reconciliation of tax charge
2022 2021
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Return on ordinary activities before taxation 141,581 279,046
Theoretical tax at the current UK Corporation Tax
rate of 19% (2021: 19%) 26,900 53,019
Effects of:
- Non-taxable UK dividends (6,128) (4,945)
- Non-taxable UK special dividends (972) (2,560)
- Non-taxable overseas dividends (3,178) (830)
- Non-taxable gains on investments (19,345) (47,037)
- Non-taxable losses on foreign exchange 28 11
- Excess of allowable expenses over taxable income 2,693 2,340
- Disallowable expenses 2 2
- Overseas taxation 663 495
------------------------------------------------------- -------- --------
Tax charge for the year 663 495
------------------------------------------------------- -------- --------
(c) Deferred tax
Owing to the Company's status as an investment company, and the
Directors' intention that it continues to meet the conditions
required to maintain that approval in the foreseeable future, no
deferred tax has been provided on any capital gains and losses
arising on the revaluation or disposal of investments.
(d) Factors that may affect future tax changes
The Company has cumulative excess management expenses of
GBP491,547,000 (2021: GBP477,190,000) that are available to offset
future taxable revenue.
A deferred tax asset of GBP122,886,688 (2021: GBP90,666,112) at
25% (2021: 19%) has not been recognised in respect of these
expenses since the Directors believe that there will be no taxable
profits in the future against which the deferred tax assets can be
offset
7. RETURN/(LOSS) PER ORDINARY SHARE
Return per share is the amount of gain generated for the
financial year divided by the weighted average number of ordinary
shares in issue.
The basic revenue, capital and total return per ordinary share
is based on each of the returns on ordinary activities after
taxation and on 172,100,486 (2021: 173,236,905) ordinary shares,
being the weighted average number of ordinary shares in issue
throughout the year.
8. DIVIDS ON ORDINARY SHARES
Dividends represent the distribution of income to shareholders.
The Company pays four dividends a year - three interims and one
final dividend.
2022 2021
-------------- --------------
pence GBP'000 pence GBP'000
-------------------------------------------- ----- ------- ----- -------
Dividends paid and recognised in the year:
- third interim paid in respect of previous
year 6.00 10,331 6.40 11,180
- final paid in respect of previous year 6.00 10,331 9.45 16,492
- special dividend 4.65 8,006 - -
- first interim paid 6.00 10,331 6.00 10,331
- second interim paid 6.00 10,320 6.00 10,331
-------------------------------------------- ----- ------- ----- -------
28.65 49,319 27.85 48,334
-------------------------------------------- ----- ------- ----- -------
2022 2021
-------------- --------------
pence GBP'000 pence GBP'000
------------------------------------------ ----- ------- ----- -------
Dividends payable in respect of the year:
- first interim 6.00 10,331 6.00 10,331
- second interim 6.00 10,320 6.00 10,331
- third interim 6.40 10,934 6.00 10,331
- proposed final 6.40 10,927 6.00 10,331
------------------------------------------ ----- ------- ----- -------
24.80 42,512 24.00 41,324
- declared special dividend 0.00 0 4.65 8,007
------------------------------------------ ----- ------- ----- -------
24.80 42,512 28.65 49,331
------------------------------------------ ----- ------- ----- -------
The proposed final dividend is subject to approval by ordinary
shareholders at the AGM.
9. INVESTMENTS
The portfolio comprises investments which are principally listed
on a regulated stock exchange or traded on AIM. A very small
proportion of investments are valued by the Directors as they are
unlisted.
Gains or losses are either:
- realised, usually arising when investments are sold; or
- unrealised, being the difference from cost on those investments still held at the year end.
(a) Analysis of investments by listing status
2022 2021
GBP'000 GBP'000
---------------------------------------------------------- --------- ---------
Investments listed on a recognised investment exchange 1,218,419 1,150,903
Unlisted or suspended investments at Directors' valuation 306 105
---------------------------------------------------------- --------- ---------
1,218,725 1,151,008
---------------------------------------------------------- --------- ---------
(b) Analysis of investment gains/(losses):
2022 2021
GBP'000 GBP'000
------------------------------------------ --------- ---------
Opening book cost 1,026,675 1,068,853
Opening investment holding gains/(losses) 124,333 (146,420)
------------------------------------------ --------- ---------
Opening valuation 1,151,008 922,433
Movements in year:
- Purchases at cost 427,683 416,676
- Sales proceeds (461,781) (435,697)
Gains on investments in the year 101,815 247,596
------------------------------------------ --------- ---------
Closing valuation 1,218,725 1,151,008
------------------------------------------ --------- ---------
Closing book cost 1,048,510 1,026,675
Closing investment holding gains 170,215 124,333
------------------------------------------ --------- ---------
Closing valuation 1,218,725 1,151,008
------------------------------------------ --------- ---------
The Company received GBP461,781,000 (2021: GBP435,697,000) from
investments sold in the year. The book cost of these investments
when they were purchased was GBP405,848,000 (2021: GBP458,854,000)
realising a profit of GBP55,933,000 (2021: GBP23,157,000). These
investments have been revalued over time and until they were sold
any unrealised profits/losses were included in the fair value of
the investments.
The transaction costs included in gains on investments amount to
GBP1,698,000 (2021: GBP1,917,000) on purchases and GBP152,000
(2021: GBP167,000) for sales.
10. DEBTORS
Debtors are amounts which are due to the Company, such as monies
due from brokers for investments sold and income which has been
earned (accrued) but not yet received.
2022 2021
GBP'000 GBP'000
------------------------------------- ------- -------
Amounts due from brokers 1,138 1,489
Overseas withholding tax recoverable 1,897 1,592
Prepayments and accrued income 7,789 4,893
------------------------------------- ------- -------
10,824 7,974
------------------------------------- ------- -------
11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Creditors are amounts which must be paid by the Company and are
split between those payable within 12 months of the balance sheet
date and those payable after that time. The main creditors are the
debenture and bank borrowings. The other creditors include any
amounts due to brokers for the purchase of investments or amounts
owed to suppliers (accruals) such as the Manager and auditor.
2022 2021
GBP'000 GBP'000
----------------------------------------------------- ------- -------
Debenture Stock 7 3/4 % redeemable 30 September 2022 99,874 -
Amounts due to brokers 1,316 -
Share buybacks awaiting settlement 448 -
Accruals 802 698
----------------------------------------------------- ------- -------
102,440 698
----------------------------------------------------- ------- -------
The debenture is secured by a floating charge on the Company,
under which borrowing must not exceed a sum equal to the Adjusted
Total of Capital and Reserves.
The effect on the net asset value of deducting the debenture
stock at market value, rather than at par, is disclosed in note
15.
The Company has a 364 day committed revolving credit facility
(the 'bank facility') of GBP25 million (2021: GBP50 million) with
the lender, The Bank of New York Mellon. The bank facility was
renewed on 16 June 2021 and matures on 15 June 2022. Interest is
payable at 1.00% over LIBOR for drawn amounts, with a commitment
fee of 0.20% per annum for undrawn amounts. Under the bank
facility's covenants, the Company's total indebtedness must not
exceed 25% of net assets and net assets must not be less than
GBP300 million (2021: GBP500 million).
The Company has arranged refinancing for the debenture as
previously noted.
12. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
These creditors are amounts that must be paid, as shown by note
11, but are due more than one year after the balance sheet
date.
2022 2021
GBP'000 GBP'000
----------------------------------------------------- ------- -------
Debenture Stock and Loan Notes:
Unsecured Senior Loan Notes 20,000 -
Debenture Stock 7 3/4 % redeemable 30 September 2022 - 100,000
Unamortised discount and issue expenses on debenture
stock - (377)
----------------------------------------------------- ------- -------
20,000 99,623
----------------------------------------------------- ------- -------
13. SHARE CAPITAL
Share capital represents the total number of shares in issue,
including treasury shares.
2022 2021
-------------------------------------- ------ ------
Share capital:
Ordinary shares of 25p each (GBP'000) 42,770 43,046
Treasury shares of 25p each (GBP'000) 6,147 5,871
-------------------------------------- ------ ------
48,917 48,917
-------------------------------------- ------ ------
2022 2021
---------------------------------------- ----------- -----------
Number of ordinary shares in issue:
Brought forward 172,182,929 174,682,929
Shares bought back and held in treasury (1,104,800) (2,500,000)
---------------------------------------- ----------- -----------
Carried forward 171,078,129 172,182,929
---------------------------------------- ----------- -----------
Number of shares held in treasury:
Brought forward 23,483,805 20,983,805
Shares bought back into treasury 1,104,800 2,500,000
---------------------------------------- ----------- -----------
Carried forward 24,588,605 23,483,805
---------------------------------------- ----------- -----------
Total ordinary shares 195,666,734 195,666,734
---------------------------------------- ----------- -----------
During the year the Company bought back, into treasury,
1,104,800 (2021: 2,500,000) ordinary shares at an average price of
632.95p (2021: 458.79p) (including costs). Since the year end,
290,000 shares have been bought back into treasury.
The Directors' Report above sets out the Company's share capital
structure, restrictions and voting rights.
14. RESERVES
This note explains the different reserves attributable to
shareholders. The aggregate of the reserves and share capital (see
previous note) make up total shareholders' funds.
The share premium comprises the net proceeds received by the
Company following the issue of shares, after deduction of the
nominal amount of 25 pence and any applicable issue costs. The
capital redemption reserve maintains the equity share capital of
the Company and arose from the nominal value of any shares bought
back and cancelled; both are non-distributable.
The capital reserve includes the investment holding
gains/(losses), being the difference between cost and market value
at the balance sheet date. It also includes cumulative realised
gains/(losses) and costs related to share buybacks. Capital
investment gains and losses are shown in note 9(b) and form part of
the capital reserve.
The revenue reserve and certain amounts of the capital reserve
are distributable by way of dividend.
15. NET ASSET VALUE PER ORDINARY SHARE
The Company's total net assets (total assets less total
liabilities) are often termed shareholders' funds and are converted
into NAV per ordinary share by dividing by the number of shares in
issue.
The NAV - debt at par is the NAV with the value of the GBP100
million debenture and the GBP20 million Unsecured Senior Loan
Notes, issued during the year, (the debt) at their combined nominal
(equivalent to the par) value of GBP120 million. The NAV - debt at
market value reflects the debenture stock at the value that a third
party would be prepared to pay for the debt, and this amount
fluctuates owing to various factors including changes in interest
rates and the remaining life of the debt. The number of ordinary
shares in issue at the year end was 171,078,129 (2021:
172,182,929).
(a) NAV - debt at par value
The shareholders' funds in the balance sheet are accounted for
in accordance with accounting standards; however, this does not
reflect the rights of shareholders on a return of assets under the
Articles of Association. These rights are reflected in the net
assets with debt at par value and the corresponding NAV per share.
A reconciliation between the two sets of figures follows:
2022 2021
------------------------ ------------------------
NAV Shareholders' NAV Shareholders'
per share funds per share funds
pence GBP'000 pence GBP'000
------------------------------------------ --------- ------------- --------- -------------
Shareholders' funds 687.31 1,175,837 633.76 1,091,231
Less:
Unamortised discount and expenses arising
from debenture stock issue (0.07) (126) (0.22) (377)
------------------------------------------ --------- ------------- --------- -------------
NAV - debt at par 687.24 1,175,711 633.54 1,090,854
------------------------------------------ --------- ------------- --------- -------------
(b) NAV - debt at market value
The market value of the debenture stock is determined by
reference to the daily closing price, and is subject to review
against various data providers to ensure consistency between data
providers and against the reference gilt.
The net asset value per share adjusted to include the debenture
stock and Unsecured Senior Loan Notes at market value rather than
at par is as follows:
2022 2021
------------------------ ------------------------
NAV Shareholders' NAV Shareholders'
per share funds per share funds
pence GBP'000 pence GBP'000
------------------------------------------------------------------ --------- ------------- --------- -------------
NAV - debt at par 687.24 1,175,711 633.54 1,090,854
Debenture stock and
Unsecured Senior Loan Notes - debt
at par 70.14 120,000 58.08 100,000
- debt
at
market
value (70.69) (120,938) (63.33) (109,041)
------------------------------------------------------------------ --------- ------------- --------- -------------
NAV - debt at market value 686.69 1,174,773 628.29 1,081,813
------------------------------------------------------------------ --------- ------------- --------- -------------
16. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Financial instruments comprise the Company's investment
portfolio, derivative instruments (if any) as well as cash, and any
borrowings, debtors and creditors. This note sets out the Company's
financial instruments and the risks related to them.
Financial instruments
The Company's financial instruments mainly comprise its
investment portfolio (as shown above), a debenture, loan notes, a
bank facility as well as its cash, debtors and creditors that arise
directly from its operations such as sales and purchases awaiting
settlement and accrued income. For the purpose of this note 'cash'
should be taken to comprise cash and cash equivalents as defined in
note 1D. The accounting policies in note 1C include criteria for
the recognition and the basis of measurement applied for financial
instruments. Note 1 also includes the basis on which income and
expenses arising from financial assets and liabilities are
recognised and measured.
The main financial risks that the Company faces from its
financial instruments are market risk, liquidity risk, and credit
risk. These are set out below:
Market risk - arising from fluctuations in the fair value or
future cash flows of a financial instrument because of changes in
market prices. Market risk comprises three types of risk: currency
risk, interest rate risk and other price risk:
- Currency risk - arising from fluctuations in the fair value or
future cash flows of a financial instrument because of changes in
foreign exchange rates;
- Interest rate risk - arising from fluctuations in the fair
value or future cash flows of a financial instrument because of
changes in market interest rates; and
- Other price risk - arising from fluctuations in the fair value
or future cash flows of a financial instrument for reasons other
than changes in foreign exchange rates or market interest
rates.
Liquidity risk - arising from any difficulty in meeting
obligations associated with financial liabilities.
Credit risk - arising from financial loss for a company where
the other party to a financial instrument fails to discharge an
obligation.
Risk Management Policies and Procedures
The Directors have delegated to the Manager the responsibility
for the day-to-day investment activities and management of gearing
of the Company as more fully described in the Directors'
Report.
As an investment trust the Company invests in equities and other
investments for the long-term so as to fulfil its investment policy
(incorporating the Company's investment objective). In pursuing its
investment objective, the Company is exposed to a variety of risks
that could result in either a reduction in the Company's net assets
or a reduction of the profits available for dividends. The
associated risk management policies are summarised below and have
remained substantially unchanged for the two years under review
16.1 Market Risk
The Company's Manager assesses the Company's exposure when
making each investment decision, and monitors the overall level of
market risk for the whole of the investment portfolio on an ongoing
basis. The Board has meetings in each calendar quarter to assess
risk and review investment performance, as disclosed in the Board
Responsibilities above. Any borrowing to gear the investment
portfolio is used to enhance returns but also increases the
Company's exposure to market risk and volatility. The Company has
the ability to gear using its GBP100 million debenture 2022
together with the newly issued GBP20m Unsecured Senior Loan Notes.
In addition there is a bank facility of GBP25 million (2021: GBP50
million).
16.1.1 Currency risk
The majority of the Company's assets and all of its liabilities
are denominated in sterling. There is some exposure to US dollar,
Swiss franc and the Euro.
Management of the currency risk
The Manager monitors the Company's direct exposure to foreign
currencies on a daily basis and reports to the board on a regular
basis. Forward currency contracts can be used to reduce the
Company's exposure to foreign currencies arising naturally from the
Manager's choice of securities. All contracts are limited to
currencies and amounts commensurate with the assets denominated in
currencies. No Forward currency contracts were used during the year
(2021: none).
Income denominated in foreign currencies is converted to
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.
The Company may invest up to 20% of the portfolio in securities
listed on non-UK stock exchanges. At the year end holdings of non
-- UK securities total GBP144.3 million (2021: GBP98.8 million)
representing 12.0% (2021: 8.6%) of the portfolio.
Currency exposure
The fair values of the Company's monetary items that had a
material currency exposure at 31 March are shown below. Where the
Company's equity investments (which are not monetary items) are
priced in a foreign currency, they have been included separately in
the analysis so as to show the overall level of exposure.
2022 2021
------------------------- -------------------------
USD CHF EUR USD CHF EUR
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------------- ------- ------- ------- ------- ------- -------
Foreign currency exposure on net monetary items 3,793 1,106 2,389 1,915 859 979
Investments at fair value through profit or loss that are
equities 46,641 27,635 70,032 39,881 12,393 39,593
---------------------------------------------------------------- ------- ------- ------- ------- ------- -------
Total net foreign currency exposure 50,434 28,741 72,421 41,796 13,252 40,572
---------------------------------------------------------------- ------- ------- ------- ------- ------- -------
The above may not be representative of the exposure to risk
during the year, because the levels of foreign currency exposure
may change significantly throughout the year.
Currency sensitivity
In respect of the Company's material direct foreign currency
exposure to investments denominated in currencies, if sterling had
weakened by 2.0% (2021: 4.1%) for the US dollar, 1.5% (2021: 2.6%)
for the Swiss franc and 1.2% (2021: 1.9%) for the Euro during the
year, the capital return and net assets of the Company would have
increased for all currency exposures by GBP2.3 million (2021:
GBP3.0 million). Conversely, if sterling had strengthened to the
same extent for the currencies mentioned above, the capital return
and net assets of the Company would have decreased by the same
amount. The exchange rate variances noted above have been based on
market volatility in the year, using the standard deviation of
sterling's fluctuation to the applicable currency. This sensitivity
takes no account of any impact on the market values of the
Company's investments arising from the foreign currency mix of
their respective revenues, expenses, assets and liabilities.
16.1.2 Interest rate risk
Interest rate movements will affect the level of income
receivable on cash deposits and money market funds, and the
interest payable on variable rate borrowings. When the Company has
cash balances, they are held on variable rate bank accounts
yielding rates of interest dependent on the base rate determined by
the custodian, The Bank of New York Mellon.
The Company has in place a revolving credit facility (the 'bank
facility'), details of which are shown in note 11. The Company uses
the bank facility when required at levels monitored by the Board.
At the maximum possible bank facility gearing of GBP25 million
(2021: GBP50 million), the effect of a 1% increase/decrease in the
interest rate would result in a decrease/increase to the Company's
income of GBP250,000 (2021: GBP500,000) per annum.
The Company also has an uncommitted bank overdraft facility
which it uses for settlement purposes and the interest rate is
dependent on the base rate as determined by the custodian. At the
year end, no amounts were overdrawn (2021: none).
The Company's debt of GBP120 million (2021: GBP100 million) of
debenture stock and Unsecured Senior Loan Notes is fixed which
exposes the Company to changes in market value in the event that
the debt is repaid before maturity. Details of the debenture stock
interest is shown in note 12, with details of its market value and
the affect on net asset value in note 15(b).
The Company held one fixed income security during the year
(2021: nil), being a short-term zero coupon government bond which
matures on the 30 May 2022. As at 31 March 2022 this government
bond was recognised as a Cash and Cash Equivalent on the Balance
Sheet.
Interest rate exposure
At 31 March the exposure of financial assets and financial
liabilities to interest rate risk is shown by reference to:
- floating interest rates (giving cash flow interest rate risk)
- when the interest rate is due to be re-set; and
- fixed interest rates (giving fair value interest rate risk) -
when the financial instrument is due for repayment.
2022 2021
--------------------------------------- -----------------------------
Within Between After Within Between
one one and five one one and
five five
year years years Total year years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- ------- -------- --------- ------- --------- ---------
Exposure to floating interest
rates:
Cash and cash equivalents 48,748 - - 48,748 32,570 - 32,570
Exposure to fixed interest
rates:
UK Government Treasury Bill 19,980 - - 19,980 - - -
Debenture stock - debt at
par value (100,000) - - (100,000) - (100,000) (100,000)
Unsecured Senior Loan Notes
- debt at par value - - (20,000) (20,000) - - -
------------------------------ --------- ------- -------- --------- ------- --------- ---------
Total exposure to interest
rates (31,272) - (20,000) (51,272) 32,570 (100,000) (67,430)
------------------------------ --------- ------- -------- --------- ------- --------- ---------
16.1.3 Other price risk
Other price risks (i.e. changes in market prices other than
those arising from interest rate risk or currency risk) may affect
the value of the equity investments, but it is the business of the
Manager to manage the portfolio to achieve the best return that he
can.
Management of the other price risk
The Directors manage the market price risks inherent in the
investment portfolio by meeting regularly to monitor on a formal
basis the Manager's compliance with the Company's stated objectives
and policies, and to review investment performance.
The Company's portfolio is the result of the Manager's
investment process and need not be highly correlated with the
Company's benchmark or the market in which the Company invests. The
value of the portfolio will not move in line with the market but
will move as a result of the performance of the company shares
within the portfolio.
If the value of the portfolio fell by 10% at the balance sheet
date, the profit after tax for the year and the net assets of the
Company would decrease by GBP121.9 million (2021: GBP115.1
million). Conversely, if the value of the portfolio rose by 10%,
the profit after tax and the net assets of the Company would
increase by the same amounts.
16.2 Liquidity risk
Liquidity risk is minimised as the majority of the Company's
investments constitute a diversified portfolio of readily
realisable securities which can be sold to meet funding commitments
as necessary. In addition, the Company has a bank facility which it
can use to provide short-term funding flexibility.
Liquidity risk exposure
The contractual maturities of the financial liabilities at the
year end, based on the earliest date on which payment can be
required, are as follows:
More
than three
months
Three but
months less than More than
or less one year one year Total
2022 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------- ---------- --------- -------
Debenture stock - debt at par value - 100,000 - 100,000
Loan note - debt at par value - - 20,000 20,000
Interest on debenture stock - 3,875 - 3,875
Interest on loan note - 506 14,421 14,927
Amounts due to brokers 1,316 - - 1,316
Share buybacks awaiting settlement 448 - - 448
Accruals 802 - - 802
------------------------------------ ------- ---------- --------- -------
2,566 104,381 34,421 141,368
------------------------------------ ------- ---------- --------- -------
More
than three
months
Three but
months less than More than
or less one year one year Total
2021 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------- ---------- --------- -------
Debenture stock - debt at par value - - 100,000 100,000
Interest on debenture stock - 7,750 3,875 11,625
Accruals 698 - - 698
------------------------------------ ------- ---------- --------- -------
698 7,750 103,875 112,323
------------------------------------ ------- ---------- --------- -------
16.3 Credit risk
Credit risk encompasses the failure by counterparties to deliver
securities which the Company has paid for, or to pay for securities
which the Company has delivered, and cash balances. Counterparty
risk is minimised by using only approved counterparties. The
Company's ability to operate in the short-term may be adversely
affected if the Company's custodian suffers insolvency or other
financial difficulties. However, with the support of the
depositary's restitution obligation the risk of outright credit
loss on the investment portfolio is remote. The Board reviews the
custodian's annual controls report and the Manager's management of
the relationship with the custodian. Cash balances are limited to a
maximum of 1% of net assets with any one deposit taker, with only
approved deposit takers being used, and a maximum deposit of 6% of
net assets in aggregate in liquidity funds with credit ratings of
AAAm (or equivalent). These limits are at the discretion of the
Board and are reviewed on a regular basis. The investment policy
also allows for UK Government Treasuries to be held. Such holdings
are recorded as cash equivalents if they meet the criteria set out
in Note 1D above.
17. FAIR VALUE
The values of the financial assets and financial liabilities are
carried either at their fair value (investments), or at a
reasonable approximation of fair value (amounts due from brokers,
dividends receivable, accrued income, amounts due to brokers,
accruals, cash and any drawings on the bank facility) or at
amortised cost (debenture).
Fair Value Hierarchy Disclosures
All except two of the Company's portfolio of investments are in
the Level 1 category as defined in FRS 102 as amended for fair
value hierarchy disclosures (March 16). The three levels set out in
this follow.
Level 1 - the unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date.
Level 2 - Inputs other than quoted prices included within Level
1 that are observable (i.e. developed using market data) for the
asset or liability, either directly or indirectly.
Level 3 - Inputs are unobservable (i.e. for which market data is
unavailable) for the asset or liability.
Categorisation within the hierarchy is determined on the basis
of the lowest level input that is significant to the fair value
measurement of each relevant asset/liability.
The valuation techniques used by the Company are explained in
the accounting policies note.
2022
--------------------------------------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ --------- ------- ------- ---------
Financial assets designated at fair value
through profit or loss:
Quoted investments:
Equities and preference shares 1,218,419 - - 1,218,419
Unquoted and suspended investments - - 306 306
------------------------------------------ --------- ------- ------- ---------
Total for financial assets 1,218,419 - 306 1,218,725
------------------------------------------ --------- ------- ------- ---------
2021
--------------------------------------
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ --------- ------- ------- ---------
Financial assets designated at fair value through profit or loss:
Quoted investments:
Equities and preference shares 1,150,903 - - 1,150,903
Unquoted investments - - 105 105
------------------------------------------------------------------ --------- ------- ------- ---------
Total for financial assets 1,150,903 - 105 1,151,008
------------------------------------------------------------------ --------- ------- ------- ---------
The valuation techniques used by the Company are explained in
the accounting policies note. At the end of the financial year
there were no Level 2 investments. There were two investments in
Level 3 at the year end (2021: one investment) totalling GBP306,000
(2021: GBP105,000).
The holding in Eurovestech did not change during the year, but
the fair value was GBP69,000 (2021: reduced to GBP105,000).
Raven Property is the other unquoted investment. Their issued
preference shares of Raven Property were suspended on 2 March 2022
due to sanctions on the company's Russian businesses. At the date
of suspension the quoted price was 20p share, however the
Directors' revalued the shares to 10p per share resulting in a fair
value of GBP237,000. On 17 March 2022 Raven Property announced
their intention to de-list their issued ordinary and preference
shares, a process which is still underway.
The book cost and fair value of the debenture stock, based on
the offer value at the balance sheet date, are as follows:
2022 2021
---------------- ----------------
Book Fair Book Fair
Value Value Value Value
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------- ------- ------- -------
Debenture stock repayable within one
year:
7 3/4 % Debenture Stock 30 September
2022 100,000 102,734 100,000 109,041
Discount on issue of debenture stock (126) - (377) -
Loan notes repayable after five year:
Unsecured Senior Loan Notes 20,000 18,204 - -
-------------------------------------- ------- ------- ------- -------
119,874 120,938 99,623 109,041
-------------------------------------- ------- ------- ------- -------
Incorporating the fair value of the debt, results in the
reduction of the net asset value per ordinary share to 686.69p
(2021: 628.29p).
18. CAPITAL MANAGEMENT
The Company's total capital employed at 31 March 2022 was
GBP1,295,711,000 (2021: GBP1,190,854,000) comprising borrowings of
GBP119,874,000 (2021: GBP99,623,000) and equity share capital and
other reserves of GBP1,175,837,000 (2021: GBP1,091,231,000).
The Company's total capital employed is managed to achieve the
Company's objective and investment policy as set out above,
including that borrowings may be used to provide gearing of the
equity portfolio up to the maximum authorised by shareholders,
currently 25% of net assets. Net gearing was 4.4% (2021: 7.1%) at
the balance sheet date. The Company's policies and processes for
managing capital were unchanged throughout the year and the
preceding year.
The main risks to the Company's investments are shown in the
Strategic Report under the 'Principal Risks and Uncertainties'
section above. These also explain that the Company is able to use
borrowings to gear and that gearing will amplify the effect on
equity of changes in the value of the portfolio.
The Board can also manage the capital structure directly since
it has taken the powers, which it is seeking to renew, to issue and
buy-back shares and it also determines dividend payments.
The Company is subject to externally imposed capital
requirements with respect to the obligation and ability to pay
dividends by section 1158 Corporation Tax Act 2010 and by the
Companies Act 2006, respectively, and with respect to the
availability of the bank facility by the terms imposed by the
lender. The Board regularly monitors, and has complied with, the
externally imposed capital requirements. This is unchanged from the
prior year. As detailed in note 11 and note 12, borrowings comprise
the debenture stock and unsecured senior loan notes, a bank
facility and an uncommitted overdraft facility which may be used
for short-term funding requirements.
19. CONTINGENCIES, GUARANTEES AND FINANCIAL COMMITMENTS
This note would show any liabilities the Company is committed to
honour, and which are dependent on future circumstances or events
occurring.
There are no contingencies, guarantees or financial commitments
of the Company at the year end (2021: GBPnil).
20. RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE
MANAGER
A related party is a company or individual who has direct or
indirect control or who has significant influence over the Company.
Under accounting standards, the Manager is not a related party.
Under UK GAAP, the Company has identified the Directors as
related parties. The Directors' remuneration and interests have
been disclosed above with additional disclosure in note 4. No other
related parties have been identified.
Details of the Manager's services and fees are disclosed in the
Directors' Report above, and in note 3.
21. POST BALANCE SHEET EVENTS
On 1 April 2022 Majedie Asset Management Limited, the Company's
AIFM since its appointment on 4 March 2020, was acquired by
Liontrust Asset Management PLC. Liontrust Fund Partners LLP became
the Company's AIFM. The responsibility for the-day-today investment
management activities of the Company has been delegated to
Liontrust Investment Partners LLP. The Company's portfolio
management team, with James de Uphaugh as the portfolio manager and
Chris Field as the deputy manager, remains unchanged. The Majedie
investment team will continue to be led by James de Uphaugh and
will operate as the Liontrust Global Fundamental team.
There are no other significant events or adjustment to the
financial statements after the end of the reporting year requiring
disclosure.
The Annual Financial Report will be available from the Company's
website: www.edinburghinvestmenttrust.com
The Annual Financial Report will be submitted to the National
Storage Mechanism and will shortly be available for inspection at:
National Storage Mechanism | FCA
The Audited Annual Financial Report will be posted to
shareholders shortly. Copies may be obtained during normal business
hours from the Company's registered office, Quartermile One, 15
Lauriston Place, Edinburgh EH3 9EP.
A copy of the Annual Financial Report will be available from the
Company's website: www.edinburghinvestmenttrust.com
The Annual General Meeting of the Company will be held at 11am
on 21 July 2022 at The Hawthorden Lecture Theatre, The National
Galleries of Scotland, Weston Link, The Mound, Edinburgh EH2
2EL.
By order of the Board
Sanne Fund Services (UK) Limited
Company Secretary
25 May 2022
Enquiries:
Edinburgh Investment Trust plc
Glen Suarez (Chairman) via Liontrust below
Liontrust Fund Partners LLP
James Mowat + 44 20 3908 8822
Investec Bank plc
Tom Skinner + 44 20 7597 4000
Sanne Fund Services (UK) Limited (Company Secretary)
Brian Smith +44 20 3327 9720
Montfort Communications
Gay Collins +44 7798 626282
Shireen Farhana +44 7757 299250
Ella Henderson +44 7762 245122
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END
FR FIFVEERIRFIF
(END) Dow Jones Newswires
May 26, 2022 02:01 ET (06:01 GMT)
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