267694 EdinburghIT AR 2024 WEB - Flipbook - Page 44
42 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC
DIRECTORS’ REPORT / CONTINUED
twelve months after the signing of the balance sheet, for
the same reasons as set out in the Viability Statement on
page 23. In considering this, the Directors took into account
both ongoing expenses and any obligations under the
Company’s borrowing (Unsecured Senior Loan Notes). In
reaching this conclusion, the Directors have considered the
liquidity of the Company’s portfolio of investments as well as
its cash position, income and expense flows. As at 31 March
2024, the Company held £36.3m (2023: £22.4m) in cash
and cash equivalents and £1,206.6m (2023: £1,226.6m) in
quoted investments. The Company’s audited net assets as at
31 March 2024 were £1,135.0m (2023: £1,139.3m).
In anticipation of potential market volatility, the Manager
has performed stress tests on the Company’s portfolio of
investments under various scenarios (for example, a jump up
in interest rates, further escalation of the Ukraine war, and a
crash in technology stocks). Separately, the Board remains
comfortable with the liquidity of the portfolio. It is estimated
that some 99% by value of the quoted investments held at
the year-end could be realised in thirty working days under
normal market conditions.
The Board also considered the Company’s obligations
with respect to the Company’s borrowing. The Company
has issued £120m of Unsecured Senior Loan Notes with a
weighted average cost of 2.44% of which £20m was drawn
in October 2021 and £100m in September 2022. These notes,
which are long-term in nature, do not require repayment
until 2037, 2047, 2051 and 2057 as detailed in Note 12. A
requirement of this borrowing is that the Net Assets of the
Company must remain not less than £300m. The Board,
which routinely monitors borrowing restrictions, does not
anticipate difficulties in meeting this. The Company has no
other borrowing.
The total ongoing charges (excluding taxation, non-recurring
legal and professional fees and finance costs) for the year
ended 31 March 2024 were £6.2 million (2023: £6.1 million) or
0.53% of Net Assets (2023: 0.53%).
THE MANAGER
The Alternative Investment Fund Manager is Liontrust
Fund Partners LLP, with responsibility for the day-today investment management activities of the Company
delegated to Liontrust Investment Partners LLP. Liontrust
Fund Partners LLP was appointed the Manager on 1 April
2022, following completion of the acquisition of Majedie by
Liontrust Asset Management Plc.
Investment Management Agreement (‘IMA’)
The Manager provides investment and administration services
to the Company under an investment management agreement
dated May 2024, which replaced the original agreement dated
3 March 2020. The agreement is terminable by either party by
giving not less than three months’ notice in writing.
The monthly management fee was calculated on 0.04000%
on the first £500 million and 0.03875% on the remainder of
the market capitalisation of the Company’s ordinary shares
at each month end and paid monthly in arrears (equivalent to
an annualised fee of 0.480% on the first £500m and 0.465%
on the remainder).
From 1 April 2024, following discussions with Liontrust, the
Board has agreed a new lower fee scale. The new monthly
management fee is calculated on 0.03750% per month
on the first £500 million, falling to 0.03333% on the next
£500 million and 0.02917% on the remainder of the market
capitalisation of the Company’s ordinary shares at each
month end and paid monthly in arrears (equivalent to an
annualised fee of 0.45% on the first £500m, 0.40% on the
next £500m and 0.35% on the remainder).
There is no performance fee. In 2024 the Ongoing Charges
Ratio (OCR) was 0.53%. A pro-forma OCR under the new fee
arrangement is 0.48%.
Assessment of the Manager
The Management Engagement Committee has carried out a
review of the Manager and following recommendation from
the Committee, the Board considers that the continuing
appointment of Liontrust Fund Partners LLP as Manager is in
the best interests of the Company and its shareholders.
COMPANY SECRETARY
During the year the Board conducted a competitive tender
process to review its company secretarial arrangements. As
a result, it was agreed to appoint NSM Funds (UK) Limited
as the Company Secretary of the Company, effective 1 March
2024. Following a period of handover, Apex Listed Companies
Services (UK) Limited (previously Sanne Fund Services (UK)
Limited) resigned as Company Secretary on 1 March 2024.
The Board has continuous direct access to the advice and
services of the corporate Company Secretary, who are
responsible for ensuring that the Board and Committee
procedures are followed, and that applicable rules and
regulations are complied with. The Company Secretary
provides full company secretarial services to the Company,
ensuring that the Company complies with all legal, regulatory
and corporate governance requirements and officiating at
Board meetings and shareholders’ meetings. The Company
Secretary is also responsible to the Board for ensuring timely
delivery of information and reports and that the statutory
obligations of the Company are met. Finally, the Company
Secretary is responsible for advising the Board through the
Chair on all governance matters.
SHARE CAPITAL
Capital Structure
At the year end, the Company’s allotted and fully paid share
capital consisted of 195,666,734 ordinary shares of 25p each,
of which 44,175,209 shares were held in treasury. To enable
the Board to take action to deal with any significant overhang
or shortage of shares in the market, it seeks approval from
shareholders every year to buy back and sell shares. No shares
were issued in the year. During the year 13,985,000 ordinary
