267694 EdinburghIT AR 2024 WEB - Flipbook - Page 7
THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 5
CHAIR’S STATEMENT
DEAR SHAREHOLDERS,
ELISABETH STHEEMAN
CHAIR
It is a pleasure to write to you again with a summary
of the year for Edinburgh Investment Trust plc (the
“Company”). My fellow directors and I never lose sight of
the fact that the Company exists to generate attractive
financial returns for shareholders.
We principally measure the success of this
endeavour by comparing the Company’s
performance against its two key objectives:
1.
an increase of the Net Asset Value (“NAV”)
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.
Over the last year the Company has met both
objectives. On the first, the NAV per share has
risen by 9.3% while the comparator index rose
by 4.3%. This has led to a rise in NAV total return
of 13.4% compared to 8.4% for the index. Despite
the challenging backdrop for UK equities,
especially when compared with some overseas
equities, a double digit return for the Company
is an excellent outcome. The Portfolio Manager
sets out the key stock contributors to returns,
and the broader market context, in the report on
the following pages. For the Company’s second
objective, the dividend is set to rise this year
by 3.8%, compared with CPI inflation of 3.2%.
On both fronts, the year to 31 March 2024 has
therefore been a positive one.
One year is just a snapshot, particularly in the
context of a Company which passes its 135th
anniversary this year. Longer periods than a
year are much more meaningful, especially
when it comes to judging investment skill. In
the four years since the Company changed its
management arrangements, the NAV per share
has risen at an annualised 17.1%, compared
with the index at 12.4%. The dividend was cut
in 2020/21, in the aftermath of the COVID
pandemic. Since then, it has grown by 4.7% per
annum. With the dividend now growing again,
the longer-term picture for both objectives is
improving.
While NAV returns are an appropriate yardstick
for measuring investment skill, we are also alert
to the share price performance. This does, after
all, reflect the realisable value of a holding in
the Company. During the last year the share
price total return was 8.9% (i.e. ahead of the
index) but behind the NAV total return, as the
discount widened. Over the last four years,
the cumulative share price and NAV total
returns have been 91.1% and 88.2% respectively,
compared with 59.8% for the index. I comment
further on the discount below.
Overall, it is encouraging to record that the
Company’s NAV and share price returns are
ahead of the index over three, five and ten
years. Over the three years to 31 March 2024,
the Company’s NAV return has been 39.6%
cumulatively, with the Company’s benchmark
index returning 26.1% over the same period.
Over the past five years, the NAV return has
been 38.0% cumulatively, compared with the
index returning 30.3%. Over the past ten years,
the NAV return has been 87.5% cumulatively,
compared with the index returning 75.3%. In all
these cases, the NAV is stated after deducting
debt at fair value.
NEW PORTFOLIO MANAGER
This year has also seen an internal change of
the Liontrust portfolio management team –
from James de Uphaugh and Chris Field, to
Imran Sattar and Emily Barnard. The Board
would like to express their sincere thanks to
James and Chris for steering the Company
through the Manager change in 2020 – just
as the COVID pandemic took hold – and for
overseeing strong investment returns since
their appointment. We were fortunate to
have them at the helm, and wish them well in
their retirement. The Board is equally excited
to have Imran and Emily in place as the new
management team. As we have been keen
to emphasise in previous communications
