267694 EdinburghIT AR 2024 WEB - Flipbook - Page 18
16 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC
BUSINESS REVIEW / CONTINUED
PERFORMANCE
The Board reviews the Company’s performance by reference
to a number of key performance indicators (KPIs) which are
shown on page 2. 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 Chair’s Statement on pages 5 to 7 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 23 investment trusts in the UK
Equity Income sector (including the Company). As at 31 March
2024 the Company was ranked 3rd by NAV performance in
this sector over one year, 1st over three years and 4th over
five years (source: JP Morgan Cazenove).
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 on pages 19 to 22.
FINANCIAL POSITION AND BORROWINGS
for the
for the
year ended
year ended
31 March 2024 31 March 2023
%
%
Benchmark total return(1)
Portfolio outperformance [A]
Borrowings:
8.4
3.4
2.9
1.6
Net gearing effect
Interest
Market value movement
Management fee
Other expenses
Tax
Share buybacks
Subtotal
[B]
Relative performance [A+B]
1.2
-0.3
0.4
-0.4
-0.1
0.0
0.8
1.6
5.0
0.4
-0.5
3.8
-0.4
-0.1
-0.1
0.3
5.0
6.6
(1)
LSEG Data & Analytics.
Performance Attribution – analyses the performance of
the Company relative to its benchmark index. The Analysis
of Relative Performance 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.
The Company’s balance sheet on page 59 shows the assets
and liabilities at the year end. Borrowings at the year end
comprised of £120 million of Unsecured Senior Loan Notes
(2023: £120 million).
Net gearing effect – measures the impact of the unsecured senior
loan notes and cash on the Company’s relative performance. This
will be positive if the portfolio has positive capital performance
and negative if capital performance is negative.
PERFORMANCE ATTRIBUTION
Interest – the unsecured senior loan notes and bank facility
interest paid has a negative impact on performance.
The following table illustrates the differing contributions to
NAV excess returns, split between underlying stock selection
and other factors such as gearing, costs and share buybacks.
for the
for the
year ended
year ended
31 March 2024 31 March 2023
%
%
Total Return Basis(1)
NAV (debt at fair value)
Benchmark
Relative performance
Analysis of Relative
Performance
Portfolio total return
13.4
8.4
5.0
11.8
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 fee reduces the Company’s net assets
and decreases returns.
7.9
2.9
5.0
Other expenses and tax – reduce the level of assets and
therefore result in a negative effect on relative performance.
4.5
Share buybacks – measures the effect of ordinary shares
bought back at a discount to net asset value on the
Company’s relative performance.
