Final Results

Edinburgh Investment Trust PLC

28 May 2024

 

The Edinburgh Investment Trust plc

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED 31 MARCH 2024

28 May 2024 - The Directors of the Edinburgh Investment Trust plc ("the Company") have today announced the annual results for the year ended 31 March 2024.

Highlights

·      Net asset value ("NAV") per share (with debt at fair value) on a total return basis increased by 13.4%, exceeding the 8.4% return on the FTSE All-Share Index. The share price total return was 8.9%

·      Final dividend proposed of 6.9p per share. Dividends for the financial year +3.8% compared with the previous year, equivalent to a yield of 3.9%

·      Net gearing at 31 March 2024 of 3.1%, compared with 4.7% in the previous year

·      New fee agreed with the Manager, resulting in a pro-forma 11% reduction in the annual management fee

·      Despite positive performance, share price discount to NAV widened to 11.5% from 7.5% reflecting widening discounts in the sector

Elisabeth Stheeman, Chair, said: "When comparing the Company's performance against its two key objectives - increasing the NAV per share in excess of the FTSE All-Share Index and growth in dividends per share in excess of inflation - the year to 31 March 2024 has been a positive one. The NAV total return rose by 13.4% compared to 8.4% for the index. Despite the challenging backdrop for UK equities, a double digit return for the Company is an excellent outcome. Dividends are set to rise this year by 3.8%, compared with CPI inflation of 3.2%.

"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 and wish them well in their retirement. The Board is equally excited to have Imran and Emily in place as the new management team.

"Many UK equity market constituents in the Company's portfolio continue to stand at a valuation discount to their international peers. These valuation anomalies are being exploited by the companies themselves, through share buy backs and also from time to time by takeovers by third parties. Whether through these types of actions or through greater demand for UK equities over time, the Company is well placed to continue to meet its key objectives and generate attractive returns for shareholders."

Imran Sattar, Portfolio Manager, said: "It is a great honour to take over as the management team of the Company. Emily and I were fortunate to work closely with James and Chris, and we look forward to building on the strong foundations and excellent track record that they put in place.

"UK equities are out of fashion, for a host of well-rehearsed reasons. Quite what the catalyst for an improvement in fortunes will be is hard to say, but strong businesses generating attractive returns don't go unnoticed for long. We believe the UK equity market offers a compelling universe of businesses at attractive valuations. Further, some of the very best investment opportunities arise when sentiment is poor. It strikes us that we are in one of those times now.

"Over the financial year, a diversified set of stocks has driven the portfolio's excess returns. Key outperformers included Marks & Spencer, BAE Systems and Centrica. These three stocks are all excellent examples of businesses that were purchased when out of favour, and which have enjoyed significant share price appreciation as their operating models have improved.

"We are mindful of changing expectations for the path of interest rate normalisation, as inflation remains more entrenched than expected. This period of heightened monetary policy uncertainty coincides with a period of elevated geopolitical risks - making a flexible and pragmatic approach important. We expect risks to remain high, with 2024 seeing a significant number of elections globally - most notably the US, India, and the UK. China continues to face growth headwinds as the economy seeks to transition from investment-led to consumption-led growth.

"With the elevated uncertainty, our focus remains on owning businesses where growth is helped by exposure to structural growth tailwinds, or where there is a change in industry structure or company strategy which will enable future profit growth. Our confidence in the portfolio comes from owning strong businesses, managed by intelligent management teams executing on their business plans to drive total shareholder growth."

Enquiries
Liontrust Fund Partners LLP James Mowat [e-mail]	[phone]
Investec Bank plc Tom Skinner	[phone]
Montfort Communications Gay Collins Shireen Farhana Ella Henderson [e-mail]	[phone] [phone] [phone]
NSM Funds (UK) Limited (Company Secretary) Brian Smith Ciara McKillop [e-mail]	[phone]

 Notes to editors

About the Edinburgh Investment Trust plc

Founded over 130 years ago, the Edinburgh Investment Trust plc is listed on the London Stock Exchange and is a member of the FTSE 250 index. It invests primarily in a portfolio of UK listed shares and has net assets of approximately £1.2 billion. The Company's twin investment objectives for the long term are to outperform the FTSE All-Share index on a Net Asset Value (NAV) basis and to produce dividend growth in excess of the rate of UK inflation.

Financial Information and Performance Statistics

	Year Ended	Year Ended
Total Return(1)(3)(4) (all with dividends reinvested)	31 March 2024	31 March 2023
Net asset value(1) (NAV) - debt at fair value	+13.4%	+7.9%
Share price(2)	+8.9%	+8.4%
FTSE All-Share Index(2)	+8.4%	+2.9%

The Company's benchmark is the FTSE All-Share Index.

Capital Return(1)(4)		At 31 March 2024	At 31 March 2023	Change %
Net asset value - debt at fair value		779.97p	713.75p	+9.3
Share price(2)		690.00p	660.00p	+4.5
FTSE All-Share Index(2)		4,338.05	4,157.88	+4.3
Discount(1)(3)(4) - debt at fair value		(11.5)%	(7.5)%
Gearing (debt at fair value)(1)(3)(4)	- gross gearing	6.2%	6.6%
	- net gearing	3.1%	4.7%

			Year Ended	Year Ended
Revenue and Dividends(3)			31 March 2024	31 March 2023	Change %
Revenue return per ordinary share			23.93p	25.99p	-7.9
Dividends	- first interim		6.70p	6.40p
	- second interim		6.70p	6.40p
	- third interim		6.90p	6.70p
	- proposed final		6.90p	6.70p
	- total dividends		27.20p	26.20p	+3.8
Consumer Price Index(2)(4) - annual change			3.2%	10.2%
Dividend Yield(1)(3)(4)			3.9%	4.0%
Ongoing Charges Ratio(1)(3)(4)			0.53%	0.53%

Notes:

⁽¹⁾              These terms are defined in the Glossary of Terms and Alternative Performance Measures, including reconciliations. NAV with debt at fair value is widely used by the investment company sector for the reporting of performance, premium or discount, gearing and ongoing charges.

⁽²⁾              Source: LSEG Data & Analytics.

⁽³⁾              Key Performance Indicator.

⁽⁴⁾              Alternative Performance Measures.

Overview / Ten Year Historical Information

			Per ordinary share
Year ended 31 March	Ordinary shareholders' funds £m	Shares (bought back)/ issued m	Revenue return p	Dividend rate p	Net asset value (debt at fair value) p	Share price p	Discount (debt at fair value) %	Gross gearing (debt at fair value) %	Net gearing (debt at fair value) %
2015	1,376	-	24.83	23.85	686.07	662.00	(3.5)	13.9	13.8
2016	1,392	0.55	26.66	24.35	695.30	665.00	(4.4)	15.5	15.3
2017	1,535	-	27.94	25.35	768.81	713.50	(7.2)	15.9	15.7
2018	1,400	-	29.25	26.60	703.34	642.00	(8.7)	12.1	11.8
2019	1,382	(0.19)	28.66	28.00	696.91	644.00	(7.6)	11.0	10.8
2020	872	(20.80)	27.83	28.65	490.40	434.00	(11.5)	13.4	8.3
2021	1,091	(2.50)	16.21	28.65(1)	628.29	600.00	(4.5)	10.1	7.1
2022	1,176	(1.10)	22.41	24.80	686.69	634.00	(7.7)	10.3	4.4
2023	1,139	(5.60)	25.99	26.20	713.75	660.00	(7.5)	6.6	4.7
2024	1,135	(13.99)	23.93	27.20	779.97	690.00	(11.5)	6.2	3.1

⁽¹⁾         including special dividend of 4.65p

Capital Returns (excluding dividends paid) to 31 March 2024

	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	3yr	5yr	10yr
NAV (debt at fair value) (%)	11.9	1.3	10.6	-8.5	-0.9	-29.6	28.1	9.3	3.9	9.3	24.2	11.9	27.2
Share Price (%)	11.4	0.5	7.3	-10.0	0.3	-32.6	38.2	5.7	4.1	4.5	15.0	7.1	16.2
FTSE All-Share Index (%)	3.0	-7.3	17.5	-2.4	2.2	-21.9	23.3	9.3	-0.7	4.3	13.2	9.0	22.0

Source: LSEG Data & Analytics.

Total Returns (with dividends reinvested) to 31 March 2024

	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	3yr	5yr	10yr
NAV (debt at fair value) (%)	16.2	5.0	14.7	-5.9	2.9	-26.7	34.8	14.1	7.9	13.4	39.6	38.0	87.5
Share Price (%)	15.7	4.0	11.2	-6.7	4.6	-29.4	46.4	10.6	8.4	8.9	30.5	34.9	76.2
FTSE All-Share Index (%)	6.6	-3.9	22.0	1.2	6.4	-18.5	26.7	13.0	2.9	8.4	26.1	30.3	75.3

Source: LSEG Data & Analytics.

Chair's Statement

DEAR SHAREHOLDERS,

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. 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 135^th 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 about this change, the investment process for the Company - with its focus on total returns from capital and dividends - remains unchanged. There have been modest changes to the portfolio since the formal handover in February and this, along with more colour on the portfolio and outlook, is set out in the Portfolio Manager's report.

DIVIDENDS

The Board recommends a final dividend of 6.9p per share: shareholders will be able to vote on this at our Annual General Meeting in July. If approved, this will result in total dividends for the year of 27.2p per share. This figure, divided by the year end share price of 690p, means a dividend yield to shareholders of 3.9% - in-line with the index yield.

Underpinning the Company's dividend payments are the revenues generated by the portfolio. This year this figure is 23.9p per share, which is lower than 2023 primarily because of a reduction in some 'special' dividend payments - particularly from the banking sector. With a dividend of 27.2p due to be paid, it means the dividend is 'uncovered' by 3.3p per share. One of the advantages of an investment trust is the flexibility to draw on 'revenue reserves' to smooth dividend payments and support attractive distributions. We have used these 'revenue reserves' to varying degrees over the last five years, particularly in the immediate aftermath of the pandemic. Revenue reserves remain in a healthy position at 30.7 pence per share. The Portfolio Manager sets out thoughts about dividend generation from the portfolio in his report. In particular, they explore the recent pressures on dividends being paid and the extent to which this is explained by investee companies' preference for buying back shares instead.

BORROWINGS

The Company has long-term borrowings via four tranches of debt which mature between 2037 and 2057. This helped boost investment returns over the year. The face value of the debt (debt at 'par') is £120m, and at the year end the 'fair value' was £73m. The difference between the two numbers is due to changes in reference gilt yields, which are significantly higher than when the debt was arranged in 2021. The fair value of the debt a year ago was £78m. As we always quote investment returns after deducting debt at fair value (not at par), the reduction in the value of the debt has been a small positive performance tailwind. As the Portfolio Manager notes in their report, we are content with the current level of debt and have no immediate plans to borrow more.

SHARE PRICE DISCOUNT TO NET ASSET VALUE

In common with many other equity investment trusts, the Company's discount widened over the year. As a Board we have sought to turn this to the Company's advantage, and have authorised the Company's broker to repurchase shares in the open market. The permission of shareholders for repurchases is sought annually at our Annual General Meeting. The buyback process enhances the NAV per share for remaining shareholders. Over the year, the Company returned £92m to shareholders through buybacks - or 8.5% of shares in circulation at the beginning of the period (2023: £35m and 3.5%). This boosted NAV by 0.8%. This return of capital is significantly more than the £42m that is due to be paid in dividends and is therefore the single largest allocation of capital over the year.

FEES

Following discussions with the Manager, we have agreed a new lower fee scale as follows:

·          First £500m of market capitalisation at 0.45% per annum

·          Next £500m of market capitalisation at 0.40% per annum

·          Balance of market capitalisation at 0.35% per annum

This new fee scale applies from the start of the new financial year, i.e. 1 April 2024. Based on the Company's market capitalisation at the year end, it will reduce the pro-forma management fee by 11%. This will position the Company as one of the most competitively priced investment trusts in its sector, and should further support the role of the Company as a natural home for long-term equity investors.

MARKETING

We are continuing with a range of promotional activities. These include regular market updates (video and written articles) on the Company's website, events, press advertisements, and digital promotion through avenues such as LinkedIn and X, formerly Twitter. We also take part in various media events on investment platforms. The Board is monitoring the effectiveness of marketing expenditure via a series of Key Performance Indicators and I am pleased to report that the scorecard is in good shape.

BOARD AND GOVERNANCE

Since the retirement from the Board of Vicky Hastings at last year's AGM, the membership of the Board has been stable at five Directors including myself. The Board continues to meet the FCA Listing Rules targets on gender diversity, female representation in senior roles and ethnic representation on the Board. All Directors also conform with the UK Corporate Governance Code's guidance on board tenure. I thank all my fellow directors for their hard work on behalf of shareholders over the last year.

During the year we reviewed Directors' fees. After reviewing reports from two remuneration consultants, and taking account of the fact that Directors' remuneration has not been changed since 2021, the Board approved a 7% increase in fees for the year to 31 March 2024.

ANNUAL GENERAL MEETING ('AGM')

This year's AGM will take place on Wednesday 17 July 2024 at 11.00 a.m. at the Balmoral Hotel in Edinburgh. The Board looks forward to meeting as many shareholders there as possible. As usual there will be votes on resolutions as set out in this report. I encourage shareholders to vote in person at the AGM or through the proxy facility on the voting card. The holders of shares on investment 'platforms' should be able to vote through their service provider. After the voting, there will be a presentation by the Portfolio Manager. There will also be an informal lunch and a chance to meet a range of colleagues and advisors that manage the Company on a day-to-day basis. For those unable to attend in person, the AGM will be streamed online, with the ability to post questions live into the meeting. The link for electronic access will be displayed prominently on the Company's website.

ARTICLES OF ASSOCIATION ('ARTICLES')

The Board is recommending that the Company adopt new Articles of Association (the 'New Articles'). A description of the proposed amendments being introduced in the New Articles. The proposed changes seek to update the Company's approach to share register dormancy in line with modern practice, and, the Board believes, good corporate governance. The amendments seek to achieve this by reducing the periods until unclaimed dividends and shares of untraced shareholders are forfeited. Under the current articles, this period is twelve years of dormancy and the Board proposes to reduce it to eight years.

The New Articles would also permit the Company to engage a professional asset reunification company or other tracing agent to locate untraced shareholders. If the Company's attempts to trace shareholders are unsuccessful after the proposed eight year period, forfeited shares would be sold and, according to the proposed New Articles, the proceeds of sale may be used for investment purposes or for charitable or good causes.

Finally, the New Articles facilitate the removal of cheques as a method to pay dividends. The Board will keep this under consideration, and will only remove this option having given shareholders notice of its intention to do so.

LONDON RETAIL SHAREHOLDER EVENT

We will host a presentation to shareholders at the Royal Society of Arts on 9 October 2024 at 11am. This will be another chance to meet the Board, Portfolio Manager and other members of the team. Further details will be posted on the Company's website in due course.

OUTLOOK

As you will see from the Portfolio Manager's report, enthusiasm for the underlying holdings of the Company is supported by strong operational performance and attractive valuations. Many UK equity market constituents in the Company's portfolio continue to stand at a valuation discount to their international peers. These valuation anomalies are being exploited by the companies themselves, through share buybacks, and also from time to time by takeovers by third parties. Whether through these two types of action, or through simply greater demand for UK equities over time, your Company is well placed to continue to meet its two key objectives and generate attractive returns for shareholders.

ELISABETH STHEEMAN / Chair / 24 May 2024

Portfolio Manager's Report

Dear Shareholders,

It is a great honour for us to take over as the management team of your Company. We were fortunate to work closely with the previous management team, James de Uphaugh and Chris Field, during the four years they managed the Company and we observed first-hand how they transformed the track record and credibility of the Company. We look forward to building on the strong foundations and excellent investment track record that they put in place. The Company's key features and structure mean it is an ideal vehicle for long-term savers to capitalise on the excellent potential returns to come from publicly-listed businesses both in the UK and overseas.

As is clearly set out on the first page of the report, your Company focuses on its home market, the UK equity market, with at least 80% of the portfolio to be listed in London. We start as your Portfolio Managers at a time when UK equities are out of fashion, for a host of well-rehearsed reasons, not least as their returns have been lower than many other markets (especially the US equity market) for a long period of time. Quite what the catalyst for an improvement in fortunes will be is hard to say - there are no shortage of ideas, whether from government or the private sector - but strong businesses generating attractive returns don't go unnoticed for long, regardless of where they are listed. We believe the UK equity market offers a compelling universe of businesses standing at attractive valuations.

Further, some of the very best investment opportunities arise when sentiment is poor. It strikes us that we are in one of those times now. We are very excited about the potential of the portfolio we inherit, as well as the changes that we have made to date, and look forward to reporting to you over the years ahead how the returns develop. We recognise the importance of generating returns from an equity portfolio that can measure up with the best. We think this portfolio will be able to do just that.

As your Board emphasised when they announced our appointment last autumn, there is absolutely no change to the investment process and team approach. We continue to manage the Company's portfolio with a 'bottom-up' stock selection process and an emphasis on generating attractive total returns - the same approach that has underpinned the exceptional results of the last four years. The key features of the portfolio remain:

·          40-50 holdings, typically drawn from the lower reaches of the FTSE100, the higher reaches of the FTSE250 and selected overseas stocks;

·          Diversification by both company and economic exposure; and

·          Enthusiasm for utilising the Company's attractively priced long-term debt facilities.

We take a pragmatic approach to stock selection, with a focus on exploiting market anomalies that present across the growth-value spectrum. Within this pragmatic approach, we have a focus on identifying growing companies with strong economic moats. Further detail on the investment approach can be found in the section titled 'Portfolio Manager's Core Investment Beliefs'.

The majority of the portfolio has remained unchanged since we took over management at the start of the calendar year. In the final three months of the Company's financial year we made some modest changes to the portfolio (detailed further below), reflecting the investment opportunities that have arisen and our own views on which stocks will drive future returns. Some 16% of the portfolio has been reorganised in the first three months of the calendar year and we anticipate a similar level of degree of change over the rest of 2024. The core of the portfolio, designed to drive returns through a combination of capital and income growth, remains the same.

PORTFOLIO RETURNS AND ATTRIBUTION

The portfolio that James and Chris had in place this time last year has delivered a fourth consecutive year of NAV outperformance. Over the financial year, a diversified set of stocks - in keeping with the aim of the investment process - has driven the portfolio's excess returns. Key outperformers included Marks & Spencer (Retailers), BAE Systems (Aerospace and Defence) and Centrica (Gas, Water and Multi-Utilities). These three stocks are all excellent examples of businesses that were purchased when out of favour, and which have enjoyed significant share price appreciation as their operating models have been restructured and improved. All remained prominent holdings at the year end. Other significant contributors to excess returns came from avoiding large index constituents whose share prices fell, such as Diageo (Alcoholic Beverages), Reckitt Benckiser (Consumer Goods), Prudential (insurance) and British American Tobacco.

On the negative ledger, the holdings in Anglo American (Industrial Metals and Mining) and RS (Industrial Support Services) were weaker, making them the two largest stock-specific headwinds. We also missed out on two index constituents that performed well, namely Rolls-Royce (Engineering/Aerospace) and RELX (Media).

TRANSACTIONS

Over the year, the largest purchases have been Verisk Analytics (a US-listed business focusing on data analysis), Haleon (Pharmaceuticals and Biotechnology), Lloyds (Banks), Rotork (Electronic and Electrical Equipment - see below), Diploma (Industrial Support Services), Rentokil (Industrial Support Services) and Autotrader (Software and Computer Services). All bar Haleon and Lloyds have been new additions to the portfolio since January. The funding for these purchases over the year came from sales or reductions in a wide range of stocks, with the leading sales by value being BAE Systems (Aerospace and Defence), WPP (Advertising), Weir (Industrial Engineering) and Standard Chartered (Banks).

Rotork, a recent purchase, is an excellent example of the features we find appealing in a company. Rotork, is a market leading industrials company in flow control and instrumentation products. It is exposed to attractive long-term growth drivers such as oil and gas upstream electrification, and industrial process automation. Rotork is the market leader in pneumatic actuators and has a strong long term track record of product quality and reliability. Where it has had more challenges historically has been with organic growth, which the new chief executive is addressing through a strategy to focus the business on higher growth business lines, reinforcing and improving the customer value proposition, and improving innovation. If successful, this shift in the business should lead to mid to high single digit sales growth and gentle margin accretion over the medium term.

CURRENT SHAPE OF PORTFOLIO

The portfolio remains well diversified across stocks and sectors with a range of different economic characteristics. The most significant positions in the portfolio (which we define those holdings whose weightings are most different from that of the index) were three different retailers: Dunelm, Marks & Spencer and Tesco, the energy company Centrica, and the banking group NatWest.

The stocks where we have below average (versus the index weight) zero holdings - which as noted in the attribution section above can also be important for relative returns - are AstraZeneca (pharmaceuticals), Diageo, RELX, HSBC (banking) and Rio Tinto (mining).

At the year end we held 5.6% in non-UK stocks. We use this element of the portfolio to gain access to businesses with the kind of characteristics or features that we seek but which are not available in the UK market. The principal non-UK holding was Verisk Analytics, a world-leading data technology business, as flagged above. Other holdings in this category included Novartis (pharmaceuticals), Intel (semiconductors), and Newmont Mining.

DISTRIBUTIONS TO SHAREHOLDERS

As the Chair has written in her report, dividends paid to the Company by investee holdings fell compared with the previous financial year. This was a function primarily of lower special dividends from the banks. For your Company, the revenue received from dividends was £42.1m, which is equivalent to 3.6% of the NAV at fair value at the end of the period. Once certain costs are deducted (such as a share of the running costs of the Company and debt interest costs), the dividend paid to Edinburgh's shareholders is 'uncovered' by £3.3m.

However, a growing number of companies choose to return cash to shareholders through share buybacks. We estimate that the 'buyback yield' of the portfolio at the year end was approximately 2.3%. This figure does not form part of your Company's accounts, as the cash spent on buybacks has by definition been returned to ex-shareholders. Nonetheless, the process of buying back shares, as long as it is done at prices that enhance value, benefits the shareholders that remain.

As Portfolio Managers of the Company, we think carefully about the portfolio's balance of returns coming from dividends or share buybacks: we are not trying to maximise short term income performance by investing in high yielding shares, as this could challenge the ability of the Company to generate strong longer-term NAV total returns.

Putting this all this together, we take the view that the dividend paid to Edinburgh's shareholders is supported by the portfolio's underlying economic characteristics, even if the trend continues for management teams to divert more of their cashflows towards buybacks instead of dividends.

MATERIALITY ASSESSMENT AND ENGAGEMENT

Our investment process seeks to take account of the significant variables that influence a company's prospects. Whether these variables be financial, strategic, reputational or have any other feature, our process tracks the most material ones.

When we consider making an investment for Edinburgh's portfolio, we take a holistic bottom-up approach to assessing the company in question, and combine this with a macroeconomic overlay. From a bottom-up perspective we will examine company specific opportunities (such as new products, margin enhancement activities, M&A opportunities), and company specific risks such as the risk of technological obsolescence, the need to restructure an underperforming division, or poor employee engagement leading to high levels of churn and resultant loss of customers. This bottom-up rigorous assessment is then combined with a macroeconomic overlay to inform position sizing, and the structure of the portfolio. This overlay includes an assessment of the economic and market cycles, and also longer-term risks and opportunities that could impact companies. We focus on materiality - what matters for the companies in the portfolio. These material risks and opportunities are both bottom-up and top-down and may include more ESG oriented risks and opportunities. Top-down risks and opportunities we consider for the portfolio include:

·          The evolution in the global geopolitical environment and how this might impact companies with significant operations in China - these are governance and capital allocation topics of consideration, alongside growth and supply chain topics;

·          The growing commitments to increased defence spending globally - a social topic of consideration, alongside a new product development and growth topic;

·          The ability for companies to pass through cost inflation - a pricing power topic, as well as mitigate cost inflation particularly in labour intensive businesses (a social consideration).

We then combine our macro-economic overlay alongside our bottom-up holistic assessment to pinpoint where we believe the best medium to long term risk adjusted return opportunities are for the portfolio. These material opportunities and risks may or may not include specific ESG factors for the company in question. For example, on cost inflation, this may be a material social issue for a company which is particularly labour intensive, and for another company it may be a material pricing power opportunity, or margin risk. The analysis differs for each company: it is nuanced and focuses on the material specific exposures that company faces. To help us incorporate this analysis, we assign a Resiliency score, using a descending 1-5 scale, based on how well a holding is managing its key exposures. We also assign Conviction scores, again on a 1-5 scale, which reflect the team's conviction in owning a stock. Portfolio weightings are also determined to some extent by conviction scores and changes in these over time.

The following three examples illustrate how we engage with companies and track the material issues of each investment case.

QINETIQ

Investment Rationale

Qinetiq is strategically well placed as a defence contractor able to work across platforms, systems, and lifecycles. Qinetiq forms strong partnerships with defence buyers, is platform agnostic, and is therefore able to capture growth from multiple areas, which leaves it well placed in a world of growing multipolarity. Following the acquisition of Avantus, Qinetiq needed to demonstrate adequate return on that investment. The key priorities, in our view, are capital discipline and demonstrating future growth potential.

More broadly, the growing commitments to increased defence spending globally are a key factor influencing the conviction score of the company. Further, a key factor influencing the resiliency score is what we have learnt from our engagement with the company about the evolution of the culture of the organization. Whilst there is still work to do, the company has refreshed a significant proportion of its top one hundred executives in the last five years, evolved to have a greater focus on the customer, and is speeding up the response time to customers by enhancing levels of empowerment in the organization. These are both social factors which are material to Qinetiq and realizing the future growth potential, alongside the need to demonstrate capital allocation discipline.

Areas of engagement and feedback

We engaged with the management team of Qinetiq around capital allocation priorities and the benefits of clear communication around capital requirements for the long term growth plan as described in the company's communications with shareholders. We also discussed the subsequent range of options for use of excess capital over and above that requirement. Demonstration of a returns focused mindset is important as Qinetiq is in the process of proving out the returns from a recent sizeable US acquisition, Avantus, which has initially not gone as well as expected at the time of the acquisition.

Escalated issues

This feedback was followed up and expanded upon through an engagement as part of an externally facilitated Shareholder Perception study, with feedback being passed to the Qinetiq Board of Directors.

Outcomes

Our conviction in the medium term outlook for Qinetiq has increased, and we have improved confidence around capital allocation discipline following the announcement of a share buyback.

Conviction and Resiliency scores - both 3.

MONDI

Investment rationale

Mondi is a competitively-advantaged, vertically-integrated producer of paper and packaging. It has a structurally lower cost base than peers due to the location of its mills. High barriers to entry exist in the industry as paper mills are expensive to build/retrofit and leaves vertically integrated players at a significant advantage. The company is well positioned to benefit from the plastic to paper switch in packaging. Mondi has historically generated attractive 'through the cycle' returns, provided consistent stewardship of its asset base and overseen a strong balance sheet.

Areas of engagement and feedback

We most recently engaged with the management team of Mondi around the proposed deal with DS Smith. We discussed whether a combination with DS Smith would make sense for Mondi shareholders and gave feedback around the importance of maintaining the high-quality nature of Mondi's asset base, strong track record of capital allocation and clean financial model. Further, asset stewardship and management's strong track record of capital allocation are an important 'governance' topic and this feeds into both the resiliency and conviction scores.

Escalated issues

None

Outcomes

Conviction score and Resiliency score both remain at 3 following the engagement, and the subsequent announcement from Mondi that the Board has decided the transaction would not be in the best interests of its shareholders.

WEIR

Investment rationale

Weir predominantly sells equipment to the mining and extraction industries and to a lesser degree the construction industry. A significant proportion of its profits come from the aftermarket sales, products that are consumed by their customers and need replacing on a regular basis as they wear out. Weir's market shares are strong and it is a global leader in many of its products. The key drivers of Weir's growth are:

1.      more rock processing at mines as ore grades are declining globally;

2.      mining equipment age and underinvestment; and

3.      technological progress and need for mining companies to meet sustainability targets will drive investment cycle.

Areas of engagement and feedback

We have engaged with the management team of Weir around the importance of demonstrating continued strong free cash flow conversion, and free cash flow growth. We discussed the link between a more typically used free cash flow definition, and the definition used by Weir in both their published targets, and remuneration targets; and the potential benefits in aligning these.

We have also engaged with Weir around the Environment and Social considerations of extending the time for approval of new greenfield mining sites globally and how this could impact Weir's future growth, the growth opportunity in HGPR (high pressure grinding rolls) which result in energy savings for their customers, and recent M&A which has enabled Weir to build out a platform to collect data from machines to enable condition monitoring and predictive maintenance - a key efficiency, and safety topic.

Escalated issues

Upon meeting the new Chief Financial Officer of Weir, we reiterated the importance around continuing to demonstrate strong free cash flow conversion, a continued reduction in exceptional and adjusting items, and discussed shareholder perceptions around the use of off-balance sheet financing.

Outcomes

Our Resiliency score for Weir remains at a 3, and our conviction score remains at a 2.

Thus, for each piece of investment research, whatever the issue an investment faces, we take a holistic approach to ensure that we consider the most likely and potentially meaningful exposures for a holding. It is not uncommon for some companies' risks and opportunities to have a longer time horizon than for our investment focus - for example, where physical or transitional risks arise from global warming. We therefore also consider a company's emerging exposures to macroeconomic and other evolving factors. This helps us develop a view of how competitive a group will be in three years and beyond.

Finally, we are sometimes asked about the carbon profile of the portfolio. As a general point, we think that the profile should naturally be below average, as our investment process often leads us to companies that operate on a comparatively light asset base. The recent purchases of Verisk, Autotrader and Diploma are examples. We tend not to own more capital heavy businesses, although there are some in the portfolio that fall into this category such as Shell and Anglo American.

The data that we use to measure the portfolio's carbon profile supports its below average nature, although the data in this field is changeable, especially for an index like the UK with large companies in the extractive industries which are themselves changing their business structures. The key metric that we use to monitor the portfolio's carbon profile is its weighted average carbon intensity ("WACI") and how it compares with the benchmark's WACI.

The portfolio's WACI is derived from data published by each holding for the amount of carbon emitted for every one million dollars of sales, and compiled by MSCI. Thus for a portfolio composed of high emitting companies (e.g. oil stocks or airlines) we would expect an above index reading, and for a portfolio with companies with lower emissions (perhaps companies with lighter capital intensity, such as media or digital businesses) the reading should be lower. For Edinburgh's portfolio at end March, the WACI was 66.8 tonnes of carbon dioxide equivalent ("tco2e") per million dollars of sales, versus the index figure of 84.6 tco2e/$m. The portfolio has had a below index level of carbon intensity throughout the year. Note that these data are based on what is disclosed by each holding. Some 95% + of the portfolio and index have published their carbon data, but the sample is incomplete because some companies do not publish a full set of data.

During the year your Company's assets were added to Liontrust's commitment to the Net Zero Asset Managers Initiative. A signatory commits to manage client assets to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degree Celsius. The WACI figure is important in this context as a signatory also commits to achieving interim targets. These are (1) by 2025 a 25% reduction in portfolio Weighted Average Carbon Intensity (WACI) versus the WACI of the relevant benchmark at the end of 2019, and (2) by 2030 a 50% reduction of WACI compared with the 2019 benchmark. The current portfolio comfortably meets the 2025 objective (the 2019 benchmark figure was 125.0) and is very close to complying with the 2030 target. We will keep shareholders appraised of progress against these targets and about the carbon profile of the portfolio more generally.

OUTLOOK

As always, the focus for us remains on the bottom-up and maintaining the flexible investment style that served James de Uphaugh well over the preceding four years. Our pragmatic approach leads, we believe, to the construction of a portfolio of advantaged businesses across the range of growth, value, and recovery opportunities. The end result is a high conviction portfolio that should perform whatever the economic weather.

From a macroeconomic perspective we are mindful of changing expectations for the path of interest rate normalisation, as inflation remains more entrenched than expected. This period of heightened monetary policy uncertainty coincides with a period of elevated geopolitical risks - making a flexible pragmatic approach to managing your portfolio important, in our view. Looking forward we expect risks to remain high, with 2024 seeing a significant number of elections globally - in countries accounting for over 50% of global GDP and over 50% of the global population - mostly notably the US, India, and the UK. China continues to face growth headwinds as the economy seeks to transition from an investment led to a more balanced model with consumption led growth. With consumer confidence in China intimately tied to the property market, this transition is unlikely to be smooth.

With the elevated uncertainty across a range of factors, our focus remains on owning businesses where growth is helped by exposure to structural growth tailwinds, or where there is a change in industry structure or company strategy which will enable future profit growth. Our confidence in Edinburgh's portfolio comes from owning strong businesses, managed by intelligent management teams executing on their business plans to drive total shareholder returns.

IMRAN SATTAR / PORTFOLIO MANAGER

EMILY BARNARD / DEPUTY PORTFOLIO MANAGER

24 MAY 2024

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 Portfolio Manager operates, and our investment approach produces portfolios designed 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, the vast majority of our effort takes the form of in-depth stock research. The remainder is spent on macroeconomicl analysis.

Materiality assessment is a core part of the investment process. As part of the investment process, we identify and prioritise the key risks and opportunities that each holding (or potential holding) faces over our investment time horizon. These risks and opportunities cover all categories, including ESG related areas. Some of these have financial implications for the portfolio's holdings and, as such, we engage each holding on its key issues or exposures. The outcomes from our in-depth analysis and engagement help form our conviction level and investment decisions.

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 generally prefer companies with organic investment opportunities, but will sometimes hold companies with acquisitive profiles. Either way, companies with growth tailwinds are preferred. 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 of the investment team is 16 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 co-invest 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 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 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, 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.

PERFORMANCE

The Board reviews the Company's performance by reference to a number of key performance indicators (KPIs). 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 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 in the report.

FINANCIAL POSITION AND BORROWINGS

The Company's balance sheet 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).

PERFORMANCE ATTRIBUTION

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)		13.4	7.9
Benchmark		8.4	2.9
Relative performance		5.0	5.0
Analysis of Relative
Performance
Portfolio total return		11.8	4.5
Benchmark total return(1)		8.4	2.9
Portfolio outperformance [A]		3.4	1.6
Borrowings:
Net gearing effect		1.2	0.4
Interest		-0.3	-0.5
Market value movement		0.4	3.8
Management fee		-0.4	-0.4
Other expenses		-0.1	-0.1
Tax		0.0	-0.1
Share buybacks		0.8	0.3
Subtotal	[B]	1.6	5.0
Relative performance	[A+B]	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.

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.

Interest - the unsecured senior loan notes 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 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.

Investments in Order of Valuation

AT 31 MARCH 2024

UK LISTED ORDINARY SHARES UNLESS OTHERWISE STATED

		At Market Value	% of
Company	Sector	£'000	Portfolio
Shell	Oil, Gas and Coal	101,519	8.4
Unilever	Personal Care, Drug and Grocery Stores	54,563	4.5
Tesco	Personal Care, Drug and Grocery Stores	49,582	4.1
Centrica	Gas, Water and Multi-Utilities	46,425	3.8
Haleon	Pharmaceuticals and Biotechnology	46,101	3.8
BAE Systems	Aerospace and Defence	45,883	3.8
GSK	Pharmaceuticals and Biotechnology	45,753	3.8
Dunelm	Retailers	45,684	3.8
NatWest	Banks	43,360	3.6
AstraZeneca	Pharmaceuticals and Biotechnology	43,061	3.6
TOP TEN HOLDINGS		521,931	43.2
Marks & Spencer	Retailers	42,287	3.5
Compass	Consumer Services	34,096	2.8
Ashtead	Industrial Transportation	33,330	2.8
HSBC	Banks	33,154	2.7
Admiral	Non-Life Insurance	31,449	2.6
Verisk - US Listed	Industrial Support Services	27,147	2.2
ConvaTec	Medical Equipment and Services	26,441	2.2
Whitbread	Travel and Leisure	24,947	2.1
Lloyds Bank	Banks	23,737	2.0
Greggs	Personal Care, Drug and Grocery Stores	23,665	2.0
TOP TWENTY HOLDINGS		822,184	68.1
Anglo American	Industrial Metals and Mining	23,575	2.0
BP	Oil, Gas and Coal	22,385	1.9
Serco	Industrial Support Services	21,235	1.8
Hays	Industrial Support Services	19,900	1.6
Mondi	General Industrials	17,697	1.5
Diploma	Industrial Support Services	17,363	1.4
Rotork	Electronic and Electrical Equipment	17,321	1.4
Rentokil	Industrial Support Services	17,043	1.4
Weir	Industrial Engineering	16,779	1.4
Howden Joinery	Retailers	15,876	1.3
TOP THIRTY HOLDINGS		1,011,358	83.8
Auto Trader	Software and Computer Services	14,409	1.2
Sainsbury's	Personal Care, Drug and Grocery Stores	13,800	1.1
Spirax-Sarco Engineering	Industrial Engineering	13,773	1.1
Novartis - Swiss Listed	Pharmaceuticals and Biotechnology	13,685	1.1
easyJet	Travel and Leisure	13,472	1.1
Standard Chartered	Banks	13,442	1.1
RS	Industrial Support Services	11,833	1.0
3i	Investment Banking and Brokerage Services	11,589	1.0
London Stock Exchange Group	Finance and Credit Services	10,995	0.9
Baltic Classifieds	Software and Computer Services	10,373	0.9
TOP FORTY HOLDINGS		1,138,729	94.3
QinetiQ	Aerospace and Defence	8,298	0.7
AJ Bell	Investment Banking and Brokerage Services	7,754	0.6
Roche - Swiss Listed	Pharmaceuticals and Biotechnology	7,688	0.6
Newmont - US Listed	Precious Metals and Mining	7,041	0.6
KPN - Dutch Listed	Telecommunications Service Providers	6,806	0.6
LondonMetric Property	Real Estate Investment Trusts	6,664	0.6
Intel - US Listed	Technology Hardware and Equipment	6,478	0.5
Morgan Sindall	Construction and Materials	6,178	0.5
SSE	Electricity	5,479	0.5
Thales - French Listed	Aerospace and Defence	5,448	0.5
TOP FIFTY HOLDINGS		1,206,563	100.0
Eurovestech (UQ)	Investment Banking and Brokerage Services	-	-
Raven Property (S) - Preference shares	Real Estate Investment and Services	-	-
TOTAL HOLDINGS 52 (31 MARCH 2023: 48)		1,206,563	100.0

UQ - Unquoted investment

S - Delisted

Principal Risks and Uncertainties

RISK MANAGEMENT AND MITIGATION

The Manager (AIFM) is responsible for the portfolio management of the Company and for exercising the risk management function in respect of the Company. As part of this risk management function, the AIFM maintains a register of identified risks including emerging risks likely to impact the Company. This is updated regularly, following discussions with the Manager and highlighted to the Board.

The Board, through the Audit Committee and with the assistance of the Manager, 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 UK 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 are delegated to the Manager. The Board has carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The following sets out a description of the principal and emerging risks and how they are being managed or mitigated.

MARKET RISK

All the Company's investments are traded on recognised stock exchanges, bar a very small number that have delisted/been suspended since purchase. 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, a recurrence of a 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 prepared by the Manager and reviewed by the Board at each meeting. Additionally, the Board receives reports on the performance of the portfolio at each meeting. The portfolio is positioned by the Portfolio Manager for medium to long-term returns.

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 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 the 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 growth in the dividend per share. 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 prepared by the Manager and 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. As part of an annual assessment, the Board reviews the performance of the Manager and the management contract at the Management Engagement Committee meeting.

The Board also reviews the annual depository report and report from the compliance department of the Manager and any breaches of the investment policy, limits or guidelines are reported immediately to the Board and Audit Committee Chairs.

Investment risk is increased through the Company's borrowing, namely the £120m Unsecured Senior Loan Notes. This facilitates additional investment exposure than would be the case for an unleveraged portfolio; if the investments fall in value, this will increase the adverse impact on performance. On a routine basis the Board monitors the appropriateness of gross and net gearing levels, and the amount of headroom above minimum NAV levels as agreed with the lenders.

INCOME/DIVIDEND 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 and dividend forecasts and comparison against budget. These are contained within the Board papers and the Board considers the level of income at each meeting. Revenue estimates are presented at each Board meeting and Board committee meeting which determine the three interim dividends and propose the final dividend.

The Board also takes into account the size of the Company's accumulated income and capital reserves which can be used to supplement dividends for a period where income levels alone do not cover the proposed dividend payments.

DISCOUNT CONTROL 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 and that the Company's objectives are no longer meeting investors' expectations.

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 13,985,000 shares for holding in treasury (2023: 5,601,604).

Risk management activity includes systematic reviews of the investment objective and investment strategy and regular dialogue with major shareholders and marketing activities.

Share price and discount control risk is included in the risk control summary report that is prepared by the Manager and reviewed by the Board at each meeting. In addition, the Board monitors the Company's investment performance against its stated objectives and peer group and reviews the marketing report at every Board 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 mentioned contracts relate to the 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.

Investment trust status is assessed by the Manager, reviewed at every Board meeting and confirmed by the Audit Committee and HMRC annually. Taxation matters are dealt with by independent accountants.

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 Liontrust Fund Partners LLP who have been appointed as the Company's AIFM. 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 at the Audit Committee meeting.

-    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, Imran Sattar, who was appointed in February 2024, in line with the Manager's succession plan. Imran has been a member of the Liontrust Global Fundamental Team since 2018, managing UK equity client portfolios jointly alongside the Company's previous Portfolio Manager and Deputy Portfolio Manager, James Uphaugh and Chris Field. Since Chris and James retired Imran is responsible for managing The Edinburgh Investment Trust plc and also continues to be lead manager for two other UK equity strategies.

-    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, Emily Barnard, as Deputy Portfolio Manager works closely with Imran on a daily basis and would be able to manage the portfolio if Imran Sattar 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.

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 considering climate risk relating to each portfolio holding are supplied in the s.172 statement. The Company invests in a broad portfolio of businesses with operations spread geographically, which should limit the impact of location-specific weather events.

Climate change related risks are regularly monitored by the Manager and reviewed by the Board as required, together with any new guidance.

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 consider 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 Chair and the Audit Committee Chair if needed during the year.

Please see Note 16 to read more about risk management and financial instruments.

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. Failure to identify emerging risks may cause reactive rather proactive actions. The experience and knowledge of the Board is invaluable in consideration of emerging risks, as are updates and advice received from the Board's key service providers such as the Company's Manager, Broker, Company Secretary and Auditor. The Association of Investment Companies ("AIC") also provides regular updates and draws members' attention to forthcoming industry and/ or regulatory issues.

There are currently a growing number of risks as a result of emerging geopolitical factors that may translate into greater stock market risk, as well as heightened macro-economic changes in inflation, interest rates and energy costs, the ever-evolving global regulatory and trade environments and a risk of re-emergence of a global pandemic. Geopolitical factors include the continuing war in Ukraine, the conflict in Israel and Gaza, political elections this year in many countries and global supply chain issues. Whilst these risks currently exist, their extent and long-term impact are yet to emerge but they are regularly assessed by the Manager and the Board.

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 time frame for a 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 above or in line with benchmark 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 conflict in Israel and Gaza, the continuation of the war in Ukraine and climate change), 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; 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, the Directors have undertaken a reverse stress test seeking to identify the financial circumstances that might result in the Company becoming unviable. This concluded that the viability of the Company becomes challenged if the value of Total Shareholders' Funds were to fall permanently by approximately 80% from the level at the year end, a fall that the Board considers to be near implausible having noted that since the inception of the Company's FTSE 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

The responsibilities of the Board include setting the Company's strategic aims, providing the leadership to put them into effect, supervising the Manager and reporting to shareholders on their stewardship. The Board is ultimately responsible for the direction, management, performance and long-term sustainable success of the Company.

The Board sets the Company's strategy and objectives, taking into account the interests of all its stakeholders. 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

A good understanding of the Company's stakeholders enables the Board to consider the potential impact of strategic decisions on each stakeholder group during the decision-making process. By considering the Company's purpose, vision and values, together with its strategic priorities, the Board aims for its decisions to be fair and take account of the interests of the key stakeholder groups. 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 and investee companies.

SECTION 172 STATEMENT

Section 172 of the Companies Act 2006 requires the Board to act in the way that it consider would most likely promote the success of the Company for the benefit of all stakeholders, taking into consideration the interests of stakeholders in their decision-making and to share how they have discharged this duty. During the year under review, the Board believes that it has acted in good faith and discharged its duties under Section 172 of the Companies Act 2006. The fulfilment of this duty not only helps the Company achieve its investment objective but ensures decisions are made in a responsible and sustainable way for shareholders.

The following sections include examples of how the Company's stakeholders were considered during the key Board decisions. Key Board decisions include payment of dividends, liquidity management via share issuance and share buy-backs, marketing, performance evaluation, negotiation on debt and re-appointment of the Manager and other key service providers, ESG integration into investment decisions and Board succession planning. Please see the table below for a reference to where this information can be found:

Section 172 statement area	Reference
The likely consequences of any decision in the long-term	See Chair's Statement, The Portfolio Manager's Report, Core Investment Beliefs and Business Review, Going Concern and Viability Statements and Stakeholder Engagement section below.
The interests of the Company's employees	As a closed-ended investment company, the Company has no employees. Stewardship section refers to how the Company assesses its impact on social issues.
The need to foster the Company's business relationships with suppliers, customers and others	As a closed-ended investment company, the Company has no customers in the traditional sense. See Stakeholder Engagement section below Principal Risks and Uncertainties and Stewardship section on how the Company assesses its impact on and engages with its key stakeholders.
The impact of the Company's operations on the community and environment	See Principal Risks and Uncertainties, Stewardship section and ESG matters disclosure below on how the Company assesses its impact on the community and environment of its investee companies.
The desirability of the Company maintaining a reputation for high standards of business conduct	See Stakeholder Engagement section, Anti-Bribery and Corruption and Modern Slavery disclosures.
The need to act fairly as between members of the Company	See Stakeholder Engagement section and Corporate Governance Report.

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. In October 2023 James de Uphaugh, Imran Sattar and Emily Barnard also spoke at the Company's annual retail investor presentation event.

Shareholders can also visit the Company's website www.edinburgh-investment-trust.co.uk 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. Shareholders can send their questions using a dedicated section of the Company's website.

Typically, at each AGM, a presentation is made by the Portfolio Manager following the formal business of the meeting and shareholders have the opportunity to attend, vote and most importantly to communicate directly with the Portfolio Manager and Board. Presentations to both institutional shareholders and analysts also follow the publication of the annual results. The Company held a physical AGM on 19 July 2023, with voting on a show of hands. Shareholders also had the opportunity to join the meeting virtually via a live weblink using their smartphone, tablet or computer, with the option to submit questions to the meeting in real time. In addition to the AGM and presentations, the Board and Portfolio Manager hosted a presentation to retail investors in central London in October 2023. The Chair uses these events to lead the Company's engagement with its retail shareholders. Please see the report for the notice of 2024 Annual General Meeting and for details of the 2024 shareholder event.

Regular dialogue is maintained between the Portfolio Manager and a wide range of 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 Portfolio Manager and shareholders are reported to the Board and the directors receive regular updates on the shareholder register and trading activity.

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 Chair all correspondence addressed to the Board of the Company.

The strategy of the Company is reviewed regularly and formally by the Board on an annual basis. At the strategy day on 27 September 2023 the Board discussed ESG matters, discount management, share buybacks, marketing and Portfolio Manager succession. 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 maintains a constructive and collaborative working relationship with the Portfolio Manager, encouraging open discussion. The Board has regular dialogue with and receives reports from the Portfolio Manager on the portfolio of investments, including performance against set objectives and risk management. The Portfolio Manager and Deputy Portfolio Manager normally attend each Board meeting to provide updates and answer questions from the Board. The Board has also discussed the AIFM's responsibility under the FCA Consumer Duty with the Manager and received comfort as to how those responsibilities will be met.

As outlined in the Chair's Report, from 1 April 2024 the Board has agreed a new lower management fee scale, further supporting the role of the Company as a natural home for long-term equity investors.

Following James de Uphaugh's retirement in February 2024 he was replaced as Portfolio Manager by his colleague Imran Sattar and Deputy Portfolio Manager Emily Barnard. As part of the succession plan, Imran had been appointed as the Company's deputy Portfolio Manager in October 2023, replacing Chris Field who retired from Liontrust in November 2023. The Board met frequently with the Management team throughout the succession planning process to ensure a smooth transition and are confident that Imran and his colleagues are well placed to build on the strong foundations put in place since 2020.

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 its key service providers including the Manager and receives and considers their internal control reports on a quarterly basis covering their operations, policies and control environments.

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 reviews the quarterly reports of the service providers and whether the services meet the requirements of the Company, represent value for money and are therefore in the best interests of shareholders. The Board treats all service providers fairly, to maintain a reputation as a trusted, fair and reliable partner. The Board and/or delegates of the Board engage with key providers on a periodic basis through service review meetings or, by invitation, attendance at Board or committee meetings. Such engagement gives opportunity to both parties to discuss any challenges being experienced and potential solutions thereon, and to identify planned developments at the Company or the service provider. We aim to pay promptly and if in dispute, to engage openly to resolve matters in a timely manner.

The Board continues to ensure that service providers are as prepared as possible for all such eventualities which could disrupt the performance of their respective functions.

ENGAGEMENT WITH INVESTEE COMPANIES

The Portfolio Manager is a long-term investor and typically develops strong relationships with both investee and potential investee companies. Both the Board and the Portfolio 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.

The Board supports the Portfolio Manager's approach to ESG in the context of its management of the portfolio, as discussed below.

ENVIRONMENTAL SOCIAL AND GOVERNANCE ("ESG") MATTERS

As an investment company with no employees, property or activities outside investment, environmental policy has limited application. Nevertheless, the Board is committed to taking a responsible approach to ESG matters. The Company's compliance with the AIC Code of Corporate Governance is detailed in the Corporate Governance Statement, which demonstrates the Company's own responsibilities on matters such as governance.

In respect of the Company's investments, the Portfolio Manager and the other members of the investment team integrate ESG risks and opportunities (including climate change related risks) as part of a material assessment undertaken for all holdings. Consistent with the Portfolio Manager's investment 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 on holdings with the investee companies. These frequently include issues related to global warming, including those focused on transitional risks, legislation risks, and/or physical risks. The Manager is a signatory to the Principles of Responsible Investment ('PRI') and the Company's assets form part of its commitment to the Net Zero Asset Managers Initiative. Further information is available at www.liontrust.co.uk and through the investment company ESG disclosures at www.theaic.co.uk.

The Board recognises that the most material way in which the Company can have an impact is through responsible ownership of its investments. The Manager discusses below how it engages with the management of investee companies to encourage that high standards of ESG practice are adopted.

The Company made no political donations during the year in review.

STEWARDSHIP CODE AND EXERCISE OF VOTING POWERS

The Board considers that the Company has a responsibility as a shareholder to ensure that high ESG standards are maintained in the companies in which it invests. One of the principal means of putting shareholder responsibility into practice is through the exercise of voting rights. The Company aims to provide investment specific active stewardship and 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 investee companies protect shareholder 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.

Members of the Portfolio 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. The Portfolio 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.

The Board reviews the Portfolio Manager's voting record at each meeting. The table below demonstrates how the Portfolio Manager voted during the year in review. The Portfolio Manager voted at all meetings, except for an unlisted legacy holding in Raven Property.

			Total	%
	For	Against	Items	Against
Audit related	89	0	89	0%
Capitalisation	187	3	190	2%
Company articles	6	0	6	0%
Compensation	101	4	105	4%
Director election	462	0	462	0%
Environmental	2	2	4	50%
Misc	41	1	42	2%
Routine business	92	3	95	3%
Social	16	10	26	38%
Strategic transactions	8	0	8	0%
Total	1,004	23	1,027	2%

The Portfolio Manager's policy is to invest in well-managed companies. We therefore expect few contentious votes, but in any given twelve month period there will be a handful. The examples below are drawn from this handful and demonstrate how the Portfolio Manager voted on certain ESG issues and the rationale behind each vote.

RS Group. Resolution summary: to approve the company's remuneration policy. As was also the case in 2022, this was a contentious vote, with some third-party advisors recommending their clients to vote against it. Nevertheless, the Portfolio Manager supported the resolution. The Portfolio Manager believes the CEO and Financial Director have done an outstanding job in reversing the fortunes of the company and positioning the business for long term success. It is important for their remuneration to be competitive and for the award targets to be stretching. The resolution was passed, albeit with 38% of votes cast against.

Shell Group. Resolution summary: this was a shareholder‑filed resolution, which requested Shell to align its greenhouse gas (GHG) targets with those of the Paris Climate Agreement.

The shareholder resolution stated that the Company's existing GHG reduction plan does not comply with the Paris Climate Agreement. However, the Company argues that its overall goals are Paris-aligned. The Portfolio Manager was comfortable with Shell's overall GHG reduction strategy and its Paris alignment. The shareholder resolution would have required a change in strategy which may not be appropriate given that a new strategy is due to be unveiled at the 2024 AGM. As such, the Portfolio Manager voted against the resolution. At the AGM, the resolution attracted 20% of votes in favour and was not therefore carried.

Unilever. The Portfolio Manager voted against the remuneration policy. The incoming CEO's base salary was set at c.18.5% higher than his predecessor and is significantly higher than his current salary at Royal Friesland Campina, and UK market peers. The Company did not provide compelling justification for this remuneration package, and as such the Remuneration Report was opposed. At the vote, 58% of shareholders voted against, which meant the Remuneration vote was not carried. Subsequently, the Company engaged with shareholders and amended the CEO's pay structure, stating that his fixed pay structure would be frozen for two years, meaning that he would next be eligible for an increase in his fixed pay terms in 2026.

In addition, the Manager publishes 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 on its website www.liontrust.co.uk.

MODERN SLAVERY DISCLOSURE

The Company aims to adopt the highest standards of conduct 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 or employees. 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 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 and the appropriate training has been undertaken by the Board and key service providers.

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.

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 directly to its key stakeholders. The work of the Board and its Committees is described in the Governance Report.

This Strategic Report was approved by the Board on 24 May 2024.

Signed by order of the Board of Directors

NSM FUNDS (UK) LIMITED

COMPANY SECRETARY 24 MAY 2024

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.

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 controls as they determine are 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

ELISABETH STHEEMAN

CHAIR

24 MAY 2024

Income Statement

For the year ended 31 March

			2024			2023
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value	9(b)	-	99,095	99,095	-	6,023	6,023
Losses on foreign exchange		-	(41)	(41)	-	(191)	(191)
Income	2	42,095	-	42,095	48,998	-	48,998
Investment management fee	3	(1,493)	(3,483)	(4,976)	(1,492)	(3,482)	(4,974)
Other expenses	4	(1,179)	(14)	(1,193)	(1,092)	(7)	(1,099)
Net return before finance costs and taxation		39,423	95,557	134,980	46,414	2,343	48,757
Finance costs	5	(888)	(2,071)	(2,959)	(1,718)	(4,015)	(5,733)
Return/(loss) on ordinary activities before taxation		38,535	93,486	132,021	44,696	(1,672)	43,024
Tax on ordinary activities	6	(316)	-	(316)	(781)	-	(781)
Return/(loss) on ordinary activities after taxation for the financial year		38,219	93,486	131,705	43,915	(1,672)	42,243
Return/(loss) per ordinary share:
Basic and diluted	7	23.93p	58.55p	82.48p	25.99p	(0.99)p	25.00p

The total column of this statement represents the Company's profit and loss account, prepared in accordance with UK Accounting Standards. The return after taxation is the total comprehensive income 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.

The accompanying notes are an integral part of these financial statements.

Balance Sheet

At 31 march

		2024	2023
	Notes	£'000	£'000
Non current assets
Investments held at fair value	9(a)	1,206,563	1,226,649
Current assets
Debtors	10	19,878	12,392
Cash and cash equivalents		36,314	22,362
Total assets		1,262,755	1,261,403
Non current liabilities
Unsecured Senior Loan Notes	12	(120,000)	(120,000)
Current liabilities
Other payables	11	(7,708)	(2,059)
Total assets less current liabilities		1,255,047	1,259,344
Total liabilities		(127,708)	(122,059)
Net assets		1,135,047	1,139,344
Equity
Called up share capital	13	48,917	48,917
Share premium account	14	10,394	10,394
Capital redemption reserve	14	24,676	24,676
Capital reserve	14	1,004,498	1,003,989
Revenue reserve	14	46,562	51,368
Total equity		1,135,047	1,139,344
Net asset value per ordinary share:
Basic and diluted - debt at par value	15	749.25p	688.52p
Basic and diluted - debt at fair value	15	779.97p	713.75p

The financial statements were approved and authorised for issue by the Board of Directors on 24 May 2024.

ELISABETH STHEEMAN / CHAIR

Signed on behalf of the Board of Directors

Company Number SC001836

The accompanying notes are an integral part of these financial statements.

Financial Review / Statement of Changes in Equity

For the year ended 31 March

				Capital
		Share	Share	Redemption	Capital	Revenue
		Capital	Premium	Reserve	Reserve1	Reserve1	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2022		48,917	10,394	24,676	1,041,086	50,764	1,175,837
(Loss)/return on ordinary activities		-	-	-	(1,672)	43,915	42,243
Dividends paid	8	-	-	-	-	(43,311)	(43,311)
Shares bought back and held in treasury2	13	-	-	-	(35,425)	-	(35,425)
At 31 March 2023		48,917	10,394	24,676	1,003,989	51,368	1,139,344
Return on ordinary activities		-	-	-	93,486	38,219	131,705
Dividends paid	8	-	-	-	-	(43,025)	(43,025)
Shares bought back and held in treasury2	13	-	-	-	(92,977)	-	(92,977)
At 31 March 2024		48,917	10,394	24,676	1,004,498	46,562	1,135,047

1          The revenue reserve and certain amounts of the capital reserve are distributable by way of dividend.

2          Shares bought back and held in treasury includes transaction costs.

The accompanying notes are an integral part of these financial statements.

Cash Flow Statement

For the year ended 31 March

		2024	2023
	Notes	£'000	£'000
Cash flow from operating activities
Net return before finance costs and taxation		134,980	48,757
Tax on overseas income	6	(316)	(781)
Adjustments for:
Purchase of investments		(329,331)	(254,040)
Sale of investments		444,660	251,961
Gains on investments held at fair value		(99,095)	(6,023)
Decrease/(increase) in debtors		2,280	(2,706)
(Decrease)/increase in creditors		(2,211)	37
Net cash inflow from operating activities		150,967	37,205
Cash flow from financing activities
Interest paid on overdraft		(9)	(3)
Interest and commitment fees paid on bank facility		-	(12)
Interest paid on Unsecured Senior Loan Notes/debenture stocks		(2,093)	(4,372)
Issue of Unsecured Senior Loan Notes		-	100,000
Redemption of debenture loan stock		-	(100,000)
Shares bought back and held in treasury		(91,888)	(35,873)
Dividends paid	8	(43,025)	(43,311)
Net cash outflow from financing activities		(137,015)	(83,571)
Net increase/(decrease) in cash and cash equivalents		13,952	(46,366)
Cash and cash equivalents at start of the year		22,362	68,728
Cash and cash equivalents at the end of the year		36,314	22,362
Reconciliation of cash and cash equivalents to the Balance Sheet is as follows:
Cash held at custodian		2,768	1,093
Goldman Sachs Liquidity Reserve International Fund - Money Market Fund		33,546	21,269
Cash and cash equivalents		36,314	22,362
Cash flow from operating activities includes:
Dividends received		43,681	45,820
Interest received		11	6

	At 1 April		Non-cash	At 31 March
	2023	Cash flow	movement	2024
	£'000	£'000	£'000	£'000
Reconciliation of net debt
Cash and cash equivalents	22,362	13,952	-	36,314
Unsecured Senior Loan Notes	(120,000)	-	-	(120,000)
Total	(97,638)	13,952	-	(83,686)

The accompanying notes are an integral part of these financial statements.

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 the Companies Act 2006, 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 (as amended in July 2022).

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 are given in the report

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 to present additional relevant information to readers of the financial statements.

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 transaction price, being the fair value. For liabilities issued at a discount or with significant associated transaction costs, such discount and costs 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 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 financial statements 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

No critical accounting judgements or estimates were made during the 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.

L. Shares repurchased and held in treasury

The cost of repurchasing ordinary shares (for cancellation or to hold in treasury) including the related stamp duty and transaction cost is charged to the capital reserve and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. Where shares are cancelled (or are subsequently cancelled having previously been held in treasury), the nominal value of those shares is transferred out of Called up share capital and into the Capital redemption reserve. Should shares held in treasury be reissued, the sales proceeds will be treated as a realised capital profit up to the amount of the purchase price of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase price will be transferred to Share premium.

2. INCOME

This note shows the income generated from the portfolio (investment assets) of the Company and income received from any other source.

	2024	2023
	£'000	£'000
Income from investments:
UK zero coupon bond income	-	148
UK dividends	35,857	35,807
UK special dividends	2,095	6,999
Overseas dividends	2,789	5,287
Overseas special dividends	318	358
Interest from money market funds	1,025	393
	42,084	48,992
Other income:
Deposit interest	11	6
	11	6
Total income	42,095	48,998

Special dividends of £2,251,000 were recognised in capital during the year (2023: nil).

3. INVESTMENT MANAGEMENT FEE

This note shows the fee due to the Manager. This is calculated and paid monthly.

		2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee	1,493	3,483	4,976	1,492	3,482	4,974

Details of the investment management and secretarial agreement is disclosed in the Directors' Report.

At 31 March 2024, investment management fees of £411,000 (2023: £429,000) were accrued.

4. OTHER EXPENSES

The other expenses⁽ⁱ⁾ of the Company are presented below, those paid to the Directors and the auditors are separately identified.

		2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Other expenses	1,182	14	1,196	1,092	7	1,099
Other expenses include the following:
Directors' remuneration(ii)	168	-	168	189	-	189
Auditors' fees(iii):
-    for audit of the Company's annual financial statements	51	-	51	48	-	48

The maximum Directors' fees authorised by the Articles of Association are £250,000 per annum.

I.    Other expenses include:

-    £300 (2023: £18,000) of employer's National Insurance payable on Directors' remuneration. This has been reduced from the previous year due to the release of prior years' accruals in the current period. As at 31 March 2024, the amounts outstanding on Directors' remuneration and employer's National Insurance was £nil (2023: £64,000); and

-    custodian transaction charges of £14,000 (2023: £7,000). These are charged to capital.

II.    There were six directors for a period during the year and the Directors' Remuneration Report provides further information on Directors' fees

III.   Auditors' fees include expenses but exclude VAT.

5. FINANCE COSTS

Finance costs arise on any borrowing facilities the Company has used. Borrowing facilities are the £120m (2023 £120m notes). Please see Note 12 for additional details of the terms.

		2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Interest payable on borrowings repayable not by instalment:
-    Commitment fees due on loan facility	-	-	-	4	8	12
-    Interest on overdraft facility	3	6	9	1	2	3
-    Debenture stock repayable within 1 year	-	-	-	1,235	2,883	4,118
-    Unsecured Senior Loan Notes repayable after 5 years	885	2,065	2,950	442	1,032	1,474
Amortised debenture stock discount and
issue costs	-	-	-	36	90	126
	888	2,071	2,959	1,718	4,015	5,733

6. TAXATION

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

	2024	2023
	£'000	£'000
Overseas taxation	316	781

(b) Reconciliation of tax charge

	2024	2023
	£'000	£'000
Return before taxation	132,021	43,024
Theoretical tax at the current UK Corporation Tax rate of 25% (2023: 19%)	33,005	8,175
Effects of:
- Non-taxable UK dividends	(8,929)	(6,803)
- Non-taxable UK special dividends	(603)	(1,398)
- Non-taxable overseas dividends	(706)	(982)
- Non-taxable gains on investments	(24,773)	(1,145)
- Non-taxable losses on foreign exchange	10	36
- Excess of allowable expenses over taxable income	1,993	2,116
- Disallowable expenses	3	1
- Overseas taxation	316	781
Tax charge for the year	316	781

(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 £510,654,000 (2023: £502,750,000 ) that are available to offset future taxable revenue. A deferred tax asset of £127,663,574 (2023: £125,687,483) at 25% (2023: 25%) 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 deferred tax assets can be offset.

7. RETURN 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/loss after taxation and on 159,690,463 (2023: 168,985,796) ordinary shares, being the weighted average number of ordinary shares in issue throughout the year.

8. DIVIDENDS ON ORDINARY SHARES

Dividends represent the distribution of income to shareholders. The Company pays four dividends a year - three interim and one final dividend.

	2024		2023
	pence	£'000	pence	£'000
Dividends paid and recognised in the year:
- third interim paid in respect of previous year	6.70	11,050	6.40	10,934
- final paid in respect of previous year	6.70	11,036	6.40	10,925
- first interim paid	6.70	10,622	6.40	10,783
- second interim paid	6.70	10,317	6.40	10,669
	26.80	43,025	25.60	43,311

	2024		2023
	pence	£'000	pence	£'000
Dividends payable in respect of the year:
- first interim	6.70	10,622	6.40	10,783
- second interim	6.70	10,317	6.40	10,669
- third interim	6.90	10,429	6.70	11,087
- proposed final	6.90	10,429	6.70	11,087
	27.20	41,797	26.20	43,626

The proposed final dividend is subject to approval by ordinary shareholders at the AGM.

9. INVESTMENTS HELD AT FAIR VALUE

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

	2024	2023
	£'000	£'000
Investments listed on a recognised investment exchange	1,206,563	1,226,649

(b) Analysis of investment gains:

	2024	2023
	£'000	£'000
Opening book cost	1,040,163	1,048,510
Opening investment holding gains	186,486	170,215
Opening fair value	1,226,649	1,218,725
Movements in year:
Purchases at cost	335,245	252,724
Sales - proceeds	(454,426)	(250,823)
Gains on investments in the year	99,095	6,023
Closing fair value	1,206,563	1,226,649
Closing book cost	976,923	1,040,163
Closing investment holding gains	229,640	186,486
Closing fair value	1,206,563	1,226,649

The Company received £454,426,000 (2023: £250,823,000) from investments sold in the year. The book cost of these investments when they were purchased was £398,434,000 (2023: £261,072,000) realising a gain of £55,992,000 (2023: loss of £10,249,000). 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 £1,642,000 (2023: £1,162,000) on purchases and £222,000 (2023: £99,000) 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.

	2024	2023
	£'000	£'000
Amounts due from brokers	9,766	-
Overseas withholding tax recoverable	2,229	2,316
Income tax recoverable	28	-
Prepayments and accrued income	7,855	10,076
	19,878	12,392

11. OTHER PAYABLES

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 have historically been the long term debt and bank borrowings. The other creditors include any amounts due to brokers for the purchase of investments, amounts owing on share buy backs awaiting settlement or amounts owed to suppliers (accruals) such as the Manager and auditors.

	2024	2023
	£'000	£'000
Amounts due to brokers	5,914	-
Share buybacks awaiting settlement	1,098	-
Accruals and deferred income	696	2,059
	7,708	2,059

12. UNSECURED SENIOR LOAN NOTES

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.

	2024	2023
	£'000	£'000
Unsecured Senior Loan Notes - 2.26% interest rate, maturity 30 September 2037	35,000	35,000
Unsecured Senior Loan Notes - 2.49% interest rate, maturity 30 September 2047	35,000	35,000
Unsecured Senior Loan Notes - 2.53% interest rate, maturity 30 September 2051	20,000	20,000
Unsecured Senior Loan Notes - 2.53% interest rate, maturity 30 September 2057	30,000	30,000
	120,000	120,000

The Unsecured Senior Loan Notes comprise four separate notes. As shown above, each has a fixed interest rate and contracted maturity date when the par value must be repaid. Interest is payable on a semi-annual basis, with equal amounts payable on each of 31 March and 30 September each year. These notes require the net assets of the Company to remain not less than £300m and net debt to remain less than 35% of net assets. This requirement was met throughout the year.

13. CALLED UP SHARE CAPITAL

Share capital represents the total number of shares in issue, including treasury shares.

	2024	2023
	£'000	£'000
Share capital:
Ordinary shares of 25 pence each	37,873	41,369
Treasury shares of 25 pence each	11,044	7,548
	48,917	48,917

	2024	2023
Number of ordinary shares in issue:
Brought forward	165,476,525	171,078,129
Shares bought back and held in treasury	(13,985,000)	(5,601,604)
Carried forward	151,491,525	165,476,525
Number of shares held in treasury:
Brought forward	30,190,209	24,588,605
Shares bought back into treasury	13,985,000	5,601,604
Carried forward	44,175,209	30,190,209
Total ordinary shares	195,666,734	195,666,734

During the year the Company bought back, into treasury 13,985,000 (2023: 5,601,604) ordinary shares at an average price of 664.84p (2023: 632.40p) (including costs).

Since the year end to 22 May 2024, (being the last practicable day prior to the publication of this report), 640,000 shares have been bought back into treasury. Note 1L explains the policy on the transaction costs related to the shares repurchased and held in treasury.

The Directors' Report 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 (excluding treasury shares).

NAV - debt at par value

The shareholders' funds in the balance sheet are accounted for in accordance with accounting standards.

	2024		2023
	NAV	Shareholders'	NAV	Shareholders'
	per share	funds	per share	funds
	pence	£'000	pence	£'000
Shareholders' funds	749.25	1,135,047	688.52	1,139,344
NAV - debt at par	749.25	1,135,047	688.52	1,139,344

A reconciliation showing the NAV per share and Shareholders' funds using debt at fair value is shown in the Alternative Performance Measures.

16. RISK MANAGEMENT, FINANCIAL ASSETS AND LIABILITIES

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, Unsecured Senior 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.

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. 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 £120 million Unsecured Senior Loan Notes.

16.1.1 Currency risk

The majority of the Company's assets and liabilities are denominated in sterling. There is some exposure to US dollar, Swiss franc and the Euro.

16.1.2 Inflation risk

The Company has no assets or liabilities that have direct inflation link properties.

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 (2023: 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 £74.3 million (2023: £93.8 million) representing 6.2% (2023: 7.7%) 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.

	2024				2023
	USD	DKK	CHF	EUR	USD	DKK	CHF	EUR
Currency exposure	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Foreign currency exposure on net monetary items	2,730	38	2,183	584	3,137	40	1,420	1,495
Investments at fair value through profit or loss that are equities	40,666	-	21,373	12,254	22,356	-	32,549	52,668
Total net foreign currency exposure	43,396	38	23,556	12,838	25,493	40	33,969	54,163

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 1.7% (2023: 3.9%) against the US dollar, 1.4% (2023: 3.5%) for the Swiss franc, 1.0% (2023: 2.0%) for the Euro, and for the Danish Krone, 1.0% (2023: 2.0%) during the year, the capital return and net assets of the Company would have increased for all currency exposures by £1.2 million (2023: £3.2 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.

16.1.3 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 (International) Limited.

The Company has Unsecured Senior Loan Notes of £120 million (2023: £120 million). The Unsecured Senior Loan Notes have a fixed interest rate which only exposes the Company to changes in market value in the event that the debt is repaid before maturity. Specifics of the Unsecured Senior Loan Notes are shown in Note 12. The details of their fair value and the affect on net asset value within the Net Asset Value (NAV) - Debt at Fair Value reconciliation within the Alternative Performance Measures.

The Company held no fixed income securities during the year (2023: two short-term zero coupon government bonds which matured during the financial year). As at 31 March 2024 no government bonds (2023: none) were 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.

	2024				2023
		Between				Between
		one	After			one	After
	Within	and five	five		Within	and five	five
	one year	years	years	Total	one year	years	years	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Exposure to floating interest rates:
Cash and cash equivalents	36,314	-		36,314	22,488	-		22,488
Unsecured Senior Loan Notes - debt at par value	-	-	(120,000)	(120,000)	-	-	(120,000)	(120,000)
Total exposure to interest rates	36,314	-	(120,000)	(83,686)	22,488	-	(120,000)	(97,512)

16.1.4 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 risks

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 £120.7 million (2023: £122.7 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.

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 less	More than
	months	than	one
	or less	one year	year	Total
2024	£'000	£'000	£'000	£'000
Unsecured Senior Loan Notes - debt at par value	-	-	120,000	120,000
Interest on Unsecured Senior Loan Notes	-	2,928	67,573	70,501
Amounts due to brokers	5,914	-	-	5,914
Share buybacks awaiting settlement	1,098	-	-	1,098
Accruals	696	-	-	696
	7,708	2,928	187,573	198,209

		More than
		three
		months
	Three	but less	More than
	months	than	one
	or less	one year	year	Total
2023	£'000	£'000	£'000	£'000
Unsecured Senior Loan Notes - debt at par value	-	-	120,000	120,000
Interest on Unsecured Senior Loan Notes	-	2,928	70,500	73,428
Accruals	2,059	-	-	2,059
	2,059	2,928	190,500	195,487

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.

16.4 Custody risk

All investment assets are held in custody by The Bank of New York Mellon (International) Limited in accounts segregated from the bank's own assets.

17. CLASSIFICATION UNDER FAIR VALUE HIERARCHY

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).

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.

	2024
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Financial assets designated at fair value through profit or loss:
Quoted investments:
Equities and preference shares	1,206,563	-	-	1,206,563
Total for financial assets	1,206,563	-	-	1,206,563

	2023
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Financial assets designated at fair value through profit or loss:
Quoted investments:
Equities and preference shares	1,226,649	-	-	1,226,649
Total for financial assets	1,226,649	-	-	1,226,649

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 (2023: no Level 2 investments). There were two Level 3 investments at the year end totaling £nil (2023: two investments totalling: £nil).

The holding in Eurovestech did not change during the year and the fair value was unchanged at £nil (2023: £nil).

Raven Property is the other unquoted investment. Their issued preference shares were suspended in March 2022 due to sanctions on the company's Russian businesses. At the balance sheet date the shares remain de-listed and recorded a fair value of £nil (2023: £nil).

The book cost and fair value of the Unsecured Senior Loan Notes, are as follows:

	2024		2023
	Book	Fair	Book	Fair
	Value	Value	Value	Value
	£'000	£'000	£'000	£'000
Unsecured Senior Loan Notes	120,000	73,461	120,000	78,253
	120,000	73,461	120,000	78,253

Incorporating the fair value of the Unsecured Senior Loan Notes, results in the increase of the net asset value per ordinary share to 779.97p (2023: 713.75p).

18. CAPITAL MANAGEMENT

The Company's total capital employed at 31 March 2024 was £1,255,047,000 (2023: £1,259,276,000) comprising borrowings of £120,000,000 (2023: £120,000,000) and equity share capital and other reserves of £1,135,047,000 (2023: £1,139,344,000).

The Company's total capital employed is managed to achieve the Company's objective and investment policy, 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 3.1% (2023: 4.7%) 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. 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, current borrowings comprise the Unsecured Senior Loan Notes.

19. CONTINGENCIES, GUARANTEES AND FINANCIAL COMMITMENTS

There were no contingencies, guarantees or other financial commitments of the Company as at 31 March 2024 (2023: nil).

20. RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH 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, 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 and in note 3.

21. POST BALANCE SHEET EVENTS

There are no significant events after the end of the reporting period requiring amendment to financial amounts.

NOTICE OF ANNUAL GENERAL MEETING

Notice of the Annual General Meeting of the Company is included in the Annual Financial Report.

The Annual General Meeting of the Company will be held at The Balmoral Hotel, Edinburgh, EH2 2EQ on 17 July 2024 at 11am.

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, First Floor, 9 Haymarket Square, Edinburgh, EH3 8RY.

A copy of the Annual Financial Report will be available from the Company's  website: www.edinburgh-investment-trust.co.uk

 By order of the Board:

NSM Funds (UK) Limited

Company Secretary

28 May 2024

 

END