267694 EdinburghIT AR 2024 WEB - Flipbook - Page 17
THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 15
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 Imran Sattar and the Deputy
Portfolio Manager is Emily Barnard. Imran Sattar and Emily
Barnard took on these new roles on 6 February 2024, following
the retirement of James de Uphaugh, after 36 years in the
industry.
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 NSM
Funds (UK) Limited to act as Company Secretary.
INVESTMENT OBJECTIVE AND POLICY
Investment Objective
The Company invests primarily in UK securities with the longterm 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, nor will the Company invest more than
15% of the market value of its investment portfolio in any other
UK-listed investment trusts or investment companies. Further,
the Company may not hold more than 5% of the issued share
capital (or voting shares) of 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.
Amendment to the Company’s investment policy
(November 2023)
The Company, after discussion with the Manager, determined
that it would be beneficial to amend the existing Investment
Policy. The change provided that it was clear that the
Company would not hold more than 15% of its assets in other
investment trusts. Shareholder approval was not required for
this amendment as these were immaterial changes. HMRC were
notified of the change.
RESULTS AND DIVIDENDS
At the year end the share price was 690.00p per ordinary share
(2023: 660.00p). The net asset value (debt at fair value) per
ordinary share was 779.97p (2023: 713.75p).
The Directors declared a third interim dividend for the year
ended 31 March 2024 of 6.90 pence per ordinary share (2023:
6.70 pence), an increase of 3.0% compared with each of the
first two interim dividends. This dividend is payable on 24 May
2024 to ordinary shareholders on the register on 3 May 2024.
The shares were quoted ex-divided on 2 May 2024.
The Board is recommending a final dividend of 6.90 pence per
share which is the same as the third interim dividend declared
last month, implying a full year payout of 27.20 pence per share.
This represents an increase of 3.8% compared with the total
underlying ordinary dividends paid for the financial year to 31
March 2023.
Subject to approval at the Company’s AGM, the dividend will
have an ex-dividend date of 6 June 2024 and will be paid on
26 July 2024, to shareholders on the register at 7 June 2024.
