TRUST IN A STYLE TO LAST THROUGH THE AGES

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED 31 MARCH 2023

THE EDINBURGH INVESTMENT TRUST PUBLIC LIMITED COMPANY

REGISTERED IN SCOTLAND SC001836

The Company is a

If you wish to contact members of the Edinburgh Investment Trust Board then please

get in touch with the Company Secretary on +44 (0)20 3327 9720. If you have any

enquiries for the Manager, please contact them on +44 (0)20 7412 1700

www.edinburgh-investment-trust.co.uk

The Company is a

member of

CONTENTS

STRATEGY

OVERVIEW

Financial Information and Performance Statistics 2

Chair’s Statement 5

STRATEGIC REPORT

Portfolio Manager’s Report 9

Portfolio Manager’s Core Investment Beliefs 13

Business Review 14

Investments in Order of Valuation 16

Portfolio Analysis 17

Principal Risks and Uncertainties 18

Viability Statement 22

Section 172 Statement, Company Sustainability and Stakeholders 23

GOVERNANCE

The Directors 29

The Company’s Corporate Governance Framework 31

Corporate Governance Statement 32

Audit Committee Report 33

Directors’ Report 36

Statement of Directors’ Responsibilities 44

Directors’ Remuneration Report 45

FINANCIAL REVIEW

Independent Auditor’s Report 50

Income Statement 57

Balance Sheet 58

Statement of Changes in Equity 59

Cash Flow Statement 60

Notes to the Financial Statements 61

OTHER INFORMATION FOR SHAREHOLDERS

Notice of Annual General Meeting 77

Shareholder Information 81

Advisors and Principal Service Providers 82

Glossary of Terms and Alternative Performance Measures 83

Alternative Investment Fund Managers Directive Disclosures 87

THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 1

INVESTMENT OBJECTIVES

The Edinburgh Investment Trust plc (‘The Company’) is an investment trust whose

investment objective is to invest 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.

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 portfolio in securities listed on

stock exchanges outside the UK. The portfolio is selected on the basis of assessment of

fundamental value of individual securities and is not structured on the basis of industry

weightings.

NATURE OF THE COMPANY

The Company is a public listed Investment Company whose shares are traded on the

London Stock Exchange. The business of the Company consists of investing the pooled

funds of its shareholders, according to a specified investment objective and policy (set

out on page 14), with the aim of spreading investment risk and generating a return for

shareholders.

The Company uses borrowing to enhance returns to shareholders. This increases the

risk to shareholders should the value of investments fall.

The Company has contracted an external manager, Liontrust Fund Partners LLP,

(‘LFP’ or ‘the Manager’ or ‘Portfolio Manager’ as Alternative Investment Fund Manager

(‘AIFM’)) to manage its investments. Other administrative functions are contracted to

external services providers. The Company has a Board of non-executive directors who

oversee and monitor the activities of the Manager and other service providers on behalf

of shareholders and ensure that the investment objective and policy are adhered to. The

Company has no employees.

£1,139m

NET ASSETS

(2022: £1,176m)

660.00p

SHARE PRICE

(2022: 634.00p)

4.0%

DIVIDEND YIELD

(2022: 3.9%)

(7.5)%

DISCOUNT*

(2022: (7.7)%)

0.53%

ONGOING CHARGES

RATIO*

(2022: 0.52%)

4.7%

GEARING (NET)*

(2022: 4.4%)

*Alternative Performance

Measures as defined on

pages 83 to 86

OVERVIEW

2 / OVERVIEW / THE EDINBURGH INVESTMENT TRUST PLC

FINANCIAL INFORMATION AND

PERFORMANCE STATISTICS

Total Return

(1)(3)(4)

(all with dividends reinvested)

Year Ended

31 March 2023

Year Ended

31 March 2022

Net asset value

(1)

(NAV) - debt at fair value +7.9% +14.1%

Share price

(2)

+8.4% +10.6%

FTSE All-Share Index

(2)

+2.9% +13.0%

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

Capital Return

(1)(4)

At 31 March 2023 At 31 March 2022 Change %

Net asset value - debt at fair value 713.75p 686.69p +3.9

Share price

(2)

660.00p 634.00p +4.1

FTSE All-Share Index

(2)

4,157.88 4,187.78 -0.7

Discount

(1)(3)(4)

– debt at fair value (7.5)% (7.7)%

Gearing (debt at fair value)

(1)(3)(4)

– gross gearing 6.6% 10.3%

– net gearing 4.7% 4.4%

Revenue and Dividends

(3)

Year Ended

31 March 2023

Year Ended

31 March 2022 Change %

Revenue return per ordinary share 25.99p 22.41p +15.6

Dividends – first interim 6.40p 6.00p

– second interim 6.40p 6.00p

– third interim 6.70p 6.40p

– proposed final 6.70p 6.40p

– total dividends 26.20p 24.80p +5.6

Consumer Price Index

(2)(4)

– annual change 10.2% 7.0%

Dividend Yield

(1)(3)(4)

4.0% 3.9%

Ongoing Charges Ratio

(1)(3)(4)

0.53% 0.52%

Notes:

(1) These terms are defined in the Glossary of Terms and Alternative Performance Measures, including reconciliations, on pages 83 to 86. 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: Refinitiv.

(3) Key Performance Indicator.

(4) Alternative Performance Measures.

THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 3

TEN YEAR HISTORICAL

INFORMATION

Year ended

31 March

Per ordinary share

Ordinary

sharehold-

ers’

funds

£m

(bought

back)/

issued

Revenue

return

Dividend

rate

Net asset

value

(debt at

fair

value)

price

Discount

(debt at

fair

value)

Gross

gearing

(debt at

fair

value)

Net gearing

(debt at

fair

value)

2014 1,228 – 23.18 23.50 613.25 594.00 (3.1) 19.1 18.6

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 24.80 686.89 634.00 (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

(1) including special dividend of 4.65p

Capital Returns (excluding dividends paid) to 31 March 2023

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3yr 5yr 10yr

NAV (debt at fair

value) (%)

9.7 11.9 1.3 10.6 -8.5 -0.9 -29.6 28.1 9.3 3.9 45.5 1.5 27.7

Share Price (%) 3.8 11.4 0.5 7.3 -10.0 0.3 -32.6 38.2 5.7 4.1 52.1 2.8 15.4

FTSE All-Share Index (%) 5.2 3.0 -7.3 17.5 -2.4 2.2 -21.9 23.3 9.3 -0.7 33.8 6.8 23.0

Source: Refinitiv.

Total Returns (with dividends reinvested) to 31 March 2023

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3yr 5yr 10yr

NAV (debt at fair

value) (%)

14.3 16.2 5.0 14.7 -5.9 2.9 -26.7 34.8 14.1 7.9 65.9 25.3 88.8

Share Price (%) 8.0 15.7 4.0 11.2 -6.7 4.6 -29.4 46.4 10.6 8.4 75.5 29.6 74.8

FTSE All-Share Index (%) 8.8 6.6 -3.9 22.0 1.2 6.4 -18.5 26.7 13.0 2.9 47.4 27.8 75.9

Source: Refinitiv.

4 / OVERVIEW / THE EDINBURGH INVESTMENT TRUST PLC

TEN YEAR HISTORICAL INFORMATION / CONTINUED

Capital Returns Over Ten Years

Rebased to 100 at 31 March 2013

100

150

2023

200

2013 2014 2015 2016 2017 2018 2019 20202021 2022

Share price Net Asset Value - debt at fair value FTSE All-Share Index

Source: Refinitiv.

Total Returns Over Ten Years

Rebased to 100 at 31 March 2013

150

100

200

Share price Net Asset Value - debt at fair value FTSE All-Share Index

20232013 2014 2015 2016 2017 2018 2019 2020 2021 2022

250

Source: Refinitiv.

One Year Three Years

Cumulative Dividend Growth

-20%

40%

-10%

10%

20%

30%

Five Years Ten Years

31 March 2023

30.7%

14.9%

22.0%

17.7%

10.2%

-8.6%

-1.5%

5.6%

Dividends (excluding specials) Inflation (CPI)

Source: Refinitiv.

Source: Consumer Price Inflation - Office for National Statistics

THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 5

DEAR SHAREHOLDER

It has been a great pleasure to lead your Company in

my first year as the Chair of the Board. Together with

my fellow Directors, and the Company’s Manager, we

have continued to build on the strengthening investment

track record to position the Company as a core holding

for long-term savers.

I would particularly like to thank my predecessor,

Glen Suarez, who stood down as planned at last

year’s Annual General Meeting after nine years

on the Board. In recent years he oversaw a

transition of the Company with a new Manager

and supporting team, a sustainable and rising

dividend, very attractively priced long-term

debt financing and the initiation of a new

marketing strategy, which has been further

refined in the past year. This is an excellent

position from which the rest of the Board and I

look forward to building further.

PERFORMANCE

It has been another encouraging twelve

months for the Company’s investment returns.

Growth in both the Net Asset Value (NAV)

and the share price comfortably exceeded the

benchmark index, the FTSE All-Share Index.

The NAV return was 7.9% against the index

return of 2.9%. These are in total return terms

(i.e. the combination of capital appreciation

plus income received). We are therefore

building a track record under the new Manager

that meets the Company’s first investment

objective – a long-term increase of the NAV

per share in excess of the index.

The Company’s share price total return was 8.4%

over the year: the share price itself moved from

634p to 660p, a rise of 4.1%, with the balance

coming from the dividends paid to shareholders.

The share price return differs from the NAV

return because of the changing share price

discount to NAV. For this year the discount

narrowed marginally from 7.7% to 7.5%.

There are a number of investment factors that

have influenced the Company’s returns over the

year. Most important are the performance of

the businesses held in the Company’s portfolio.

Your Manager takes mainly a ‘bottom-up’

approach, seeking to construct a diversified

portfolio. Echoing this, some of the major

drivers of returns over the year included the

holdings in BAE Systems, NatWest, Centrica

and Greggs. To a lesser extent there were

offsetting negative returns from some of the

mining stocks held, including Anglo American

and Newmont. Other factors that contributed

to the overall return were:

l UK equities continue to rebound,

outperforming global equities. After an

extended period of dull returns for UK

equities, extending to before the Brexit

referendum of 2016, a combination of

strong fundamentals and attractive starting

valuations have come to the fore;

l The positive returns have been despite the

challenging geopolitical situation, including

the war between Russia and Ukraine;

l Another headwind for elements of the

equity market has been inflation. Here in

the UK there is hope that this might start

to recede and that the cost of living crisis

might in turn abate;

l The UK equity market appears to have taken

the recent concerns about some banks in the

US and Switzerland in its stride. The Manager

is alert to how this may affect bank lending

appetites, including in the UK, which could in

turn impact the economic outlook;

l The effect of marking the Company’s new

loan notes to fair value, reflecting the fall in

value of the debt that the Company issued in

2021/2 due to the rise in government bonds

yields. As I wrote in the interim report, this

boosted the NAV by c.4% during the year and

is explained in more detail below.

It is also important to consider longer term

returns: it has now been three years since the

change of Manager to James de Uphaugh and

CHAIR’S STATEMENT

ELISABETH STHEEMAN

CHAIR

6 / OVERVIEW / THE EDINBURGH INVESTMENT TRUST PLC

his team. It is gratifying to see that the Company’s growth in

NAV has exceeded that of the FTSE All-Share Index in each of

the three successive 12-month periods. Taken as a whole, over

the three years to 31 March 2023, the Company’s cumulative

NAV total return has been 65.9%, with the Company’s

benchmark index returning 47.4% over the same period. Over

the past five years, the Company’s NAV return has been 25.2%

cumulatively, compared with the Company’s benchmark index

returning 27.9% over the same period. In all these cases, the

NAV is stated after deducting debt at fair values.

In our view, three years is the minimum period over which

investment success can be properly assessed. It is clearly

positive that the Company has had such encouraging returns

over this period. Growth in the share price has been more

volatile, outperforming the index in two of these three years.

Further, the discount has narrowed from 11.5% in March 2020

to 7.5% at the end of March 2023. This results in an overall

share price return (which is ultimately what shareholders

experience – as distinct from the NAV) of 75.5%, which

exceeds the NAV return. I will come back to the approach we

have taken towards the discount below.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

INVESTMENT FACTORS

We believe an important component of profitable investment

decisions is the consideration of Environmental, Social and

Governance (ESG) factors. Well managed and governed

companies tend to make successful long-term investments.

The Manager therefore considers such issues as an integral

part of their research and investment process. The Manager’s

report describes this in more detail, as does the summary of

the Manager’s voting activities in respect of each investee

company. This is the first time that we have included the

detail of how we have exercised the Company’s voting rights

as a shareholder. You will also see that we have included

some examples of the engagement the Manager had with

investee companies on some of the more contentious issues.

I encourage you to read these interesting examples.

DIVIDENDS

We have announced three interim dividends so far this year,

totalling 19.5 pence per share. For the final dividend, the Board

is proposing a payment of 6.7p per share, taking the total to

26.2p per share. This final figure is a 5.6% increase on last year.

When divided by the year end share price of 660p, it results

in a dividend yield of 4.0%. This compares with the dividend

yield on the FTSE All-Share Index of 3.5% on average.

The dividend increase of 5.6% is behind the level of UK

inflation over the same period. As is evident from the bar

chart of longer-term dividend growth rates on page 4, we

are not currently meeting the second of the Company’s

two objectives: to grow dividends per share in excess of UK

inflation. We used these reserves to maintain the dividend

initially, but it became apparent that the natural level of

income generated by the portfolio was not going to be

sufficient, in the long run, to maintain the dividend and, after

much deliberation, decided to reduce it in the financial year to

March 2021. Looking forward, with expectations for inflation

coming down and noting our confidence in the ability of our

portfolio companies to grow their distributions, we anticipate

a return to the dividend rising above normalised inflation.

For this last financial year, I am pleased to report that

dividends received by the portfolio have continued to rise

and in conjunction with our lower costs of debt the P&L is

in better shape. This means that the dividends in respect of

this financial year are almost entirely covered by earnings: as

the table on page 2 shows, dividends for the year of 26.2p

compare with revenues of 26.0p.

Another important feature to note is that many of the stocks

held in the Company’s portfolio are buying back their own

shares for cancellation. The Manager explores this in more

detail in his report later in this document but suffice to

say, share buybacks are another form of redistribution to

shareholders, but in the form of capital rather than income.

Sometimes these buybacks complement dividends paid to

shareholders, other times they replace them. Either way, the

returns to shareholders of capital or income support the

broader concept of total returns which I used when reporting

performance at the beginning of this statement.

BORROWINGS

An element of borrowings, sensibly managed, should

enhance long-term returns to shareholders. For investment

companies this requires the returns from the equity portfolio

to exceed the cost of the debt.

This year has marked a major change in the borrowing costs

of the Company. The last of the Company’s debentures,

a £100m issue dating back to 1997 and costing 7.75% per

annum, matured last September. The debt that has replaced

it costs an average of 2.44%: an immediate interest saving of

over £5m a year. You may ask how such an attractive rate of

interest has been achieved, given the much higher interest

rates that have become prevalent of late. The answer is that

the Company contracted this interest rate with its lenders in

September 2021, a year in advance of the debenture maturing.

With hindsight, this proved extremely fortuitous timing.

To reiterate an earlier point, the fall in government bond

prices (and rise in their yields) has contributed to a reduction

in the fair value of the outstanding loans. This does not affect

the balance sheet presented later in this report, where loans

are stated at par. But this does effect the level of reported

gearing (and investment returns) for which our long-standing

practice – and that of the Investment Trust sector generally

– is to deduct loans at fair value. Gearing calculations on

this basis are set out in full in the Glossary on page 84. Net

gearing was 4.7% at the year end.

CHAIR’S STATEMENT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 7

The Board monitors the level of gearing against various

conservative thresholds. The stated policy is that it should

not exceed 25%. The current level of gearing is therefore

significantly below this threshold. But, in the event of

unhelpful market moves that drive up the level of gearing,

the portfolio is highly liquid. None of the NAV is attributed to

unlisted, unquoted, or private investments, and we have no

plans to go down that route.

Overall, the borrowings have positively enhanced shareholder

returns in the last financial year – this is quantified in the table

on page 15 – and we are optimistic that this should also apply

over the next three years and beyond.

SHARE PRICE DISCOUNT TO NET ASSET VALUE

The discount varied from a low of 12.0% to a high of 4.8%.

It finished the year at 7.5%. We consider this an acceptable

performance as discounts across the investment trust

universe as a whole have generally widened. But we are

not complacent. We would like to see the discount narrow

further as more investors are attracted to the Company as a

reliable long-term savings vehicle. The marketing initiatives

I describe below are designed to help narrow the discount.

While the discount is at current levels, we will continue with

our policy of periodic share buy backs. Over the year we

have bought back 3% of the Company’s shares which we

have retained in Treasury. These buybacks modestly enhance

net asset value for shareholders (see table on page 15) and

we are continuing with our policy of actively buying back

shares while the discount persists. A further 655,000 (0.33%

of the issued share capital) of the Company’s shares have

been repurchased since the end of the financial year.

MARKETING

As mentioned earlier we have embarked on a range of new or

enhanced promotional activities. You may have seen our new

website, press advertisements, or noticed our greater digital

promotion through avenues such as Twitter and LinkedIn.

The clear intention here is to raise the profile of the Company

and generate increased buying of shares, whether from new

or existing shareholders. The Board is monitoring a series of

Key Performance Indicators to assess the effectiveness of

this promotional spend and would encourage you to sign up

on our website to receive monthly updates.

BOARD AND GOVERNANCE

At this year’s Annual General Meeting, Vicky Hastings will

not be standing for re-election. The board has been very

fortunate to have had Vicky’s wise counsel and exceptional

attention to detail for ten years. The last twelve months

were an extension to the normal nine years, in order to

avoid having the Chair and the Senior Independent Director

standing down at the same time last year.

We will all miss Vicky’s hugely valuable insights and her

infectious enthusiasm, and we wish her all the very best with

her other corporate and charitable board responsibilities.

Aidan Lisser has kindly agreed to take on Vicky’s role as Senior

Independent Director after the conclusion of the Annual

General Meeting in July.

In February we welcomed Annabel Tagoe-Bannerman as

a non-executive Director to the Board. She brings particular

operational, legal and governance experience to the Board.

With Annabel’s appointment, it means that we are in the

fortunate position of having five directors going forward

each bringing different skills and expertise to the boardroom

discussions. These are in a range of relevant fields for your

Company, including equity portfolio management, marketing,

accounting, risk management and regulation. We also have a

board that meets or exceeds all the recommended diversity

guidelines. I thank all my fellow directors for their hard work on

behalf of shareholders over the last year.

ANNUAL GENERAL MEETING

This year’s Annual General Meeting will take place on

Wednesday 19 July 2023 at 11.00am at the Balmoral Hotel in

Edinburgh. Please note the change of venue from last year.

The whole Board and I look forward to meeting as many of

you as possible. For those unable to attend in person, the

AGM will also 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 and

it will not require a passcode. Please see page 77 for the

Notice of AGM for more information.

There will also be a shareholder presentation and update in

central London on 27 September. All members of the Board,

the Manager and members of his team will attend. Further

details will be posted on the Company’s website from next

month.

OUTLOOK

As you will see from the Portfolio Manager’s report, there is

enthusiasm about the underlying prospects for the stocks in

the Company’s portfolio. Set against this is the ever-uncertain

economic outlook. The Manager’s approach of maintaining

a diversified portfolio is therefore an important feature that

should help protect shareholders’ capital over time. Meanwhile,

many UK equity market constituents in the portfolio stand at

a valuation discount to their international peers. Over time,

if these companies deliver the operational results that we

believe they can, it seems reasonable to expect this valuation

differential to close. Combined with a dividend yield of 4.0%,

we believe this leaves the Company well positioned to deliver

to shareholders attractive total returns.

ELISABETH STHEEMAN / Chair / 26 May 2023

STRATEGIC REPORT

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 9

As we review the twelve months to the end of March

2023 and consider what may be ahead for stock markets

and economies, it is worth beginning with a reminder of

how we manage your Company:

• We manage the Company’s investments by

constructing a portfolio of 40-50 stocks.

While this is a relatively concentrated

portfolio by many standards, we also

manage it with the aim of ensuring an

adequate level of diversification across

industries and economic themes.

• In order to meet the Company’s two

investment objectives, we manage the

portfolio with a ‘total return’ approach,

with ESG factors considered throughout

the investment process.

• Most holdings are UK-listed, and we have

the flexibility to hold up to 20% in overseas

stocks.

• Our aim is to construct a portfolio that has

the potential to outperform the UK equity

index return over rolling three-year periods.

• We take the view that returns in excess

of the UK equity index should, over the

long term, provide a satisfactory return for

savers when compared with other equity

strategies and asset classes.

• An adequate degree of leverage,

appropriately managed, should further

enhance long-term shareholder returns.

TOTAL RETURNS OVER THE LAST

TWELVE MONTHS

Net Asset Value (NAV) per share rose 7.9%,

while the share price rose 8.4%. Both figures

exceed the UK equity index return of 2.9%. As

the Chair’s statement has described, the NAV’s

outperformance of the index came primarily

through superior stock selection as well as

through the revaluation of the Company’s

long-term debt.

In terms of the main stock contributors,

the top three were BAE Systems, NatWest

and Centrica. These stocks encapsulate the

diversified nature of the portfolio, a defence

contractor, a UK bank and a domestic energy

distribution company. Other contributions

came from food-on-the-go retailer Greggs, the

international bank Standard Chartered and the

mining technology group Weir. The portfolio

had exposure to mining stocks and two of the

three biggest negatives were Anglo American

and Newmont. The third notable negative was

from not holding BP for most of the period, as

its share price recovered (we bought shares

in BP towards the end of the period, as we

describe below).

The discount of the shares to NAV narrowed

slightly, hence the modestly higher return in

the shares than in the NAV.

TRANSACTIONS OVER THE LAST

TWELVE MONTHS

We have made fewer than average transactions

over the year, with portfolio turnover of 21%.

This means the holding period is equivalent to

just under five years on average.

The biggest change to the portfolio was the

purchase of a holding in BP. The shares were

acquired following its latest results, in which

the group increased its investment plans in high

return energy transition growth engines such

as Bioenergy and EV Charging. In addition, it

also announced new investment plans in high-

return upstream assets, which will help to meet

the global requirement for greater energy

security post the war in Ukraine. Consequently,

the projected medium-term return on

investment should improve through to 2030.

Capex on energy transition related projects

will still represent 45% of mid-term capex. We

funded the purchase of BP with a sale of the

French energy group Total Energies, which is

more exposed to fluctuations in the LNG and

gas price.

Other significant purchases included

GlaxoSmithKline and its de-merged consumer

goods unit, Haleon. Both stand at attractive

PORTFOLIO MANAGER’S REPORT

FOR THE YEAR ENDED 31 MARCH 2023

JAMES DE UPHAUGH

PORTFOLIO MANAGER

CHRIS FIELD

DEPUTY PORTFOLIO

MANAGER

10 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

valuations and should have the additional benefit of

refocused management teams. Elsewhere, among the more

stable growth stocks in the portfolio, we sold Diageo and

Reckitt Benckiser: where we view their share prices as fully

capturing their future prospects.

More recently, we have added selectively to our holdings in

UK cyclicals with strong market positions such as easyJet,

Dunelm, Travis Perkins and Marks & Spencer. The UK economic

pulse has been stronger than the consensus expected, with

energy bills coming down from the highs of last summer. This

takes some pressure off the consumer. These additions to

the portfolio were funded by reductions of a number of the

more internationally focussed companies such as KPN and

Smith & Nephew.

These changes leave the portfolio sensibly diversified, in our

view. In addition to diversification by industry and sector,

which is evident from the portfolio listing on pages 16 to 17,

we also think about the broader drivers of future investment

returns. Again, we believe there is suitable diversification

that should provide sources of portfolio outperformance,

whatever the economic development or condition. These

drivers of returns, and the holdings that should benefit,

include:

• Supply chain resilience – Tesco, Compass and Intel;

• Capitalising on data analytics technology – WPP, Dunelm

& Weir;

• The revenge of the incumbent – NatWest, Marks &

Spencer and Centrica;

• Businesses becoming stronger through corporate

Darwinism – Whitbread, Serco, RS Group;

• Profitability edge through cost curve positioning –

Howdens, Mondi and Anglo American.

ESG CONSIDERATIONS

We take careful account of the ESG considerations of any

investment case. Taking account of such things are essential

for good investment performance and we do not place any

major restrictions on what we can invest in. For this reason, as

we note above, stocks like BP and BAE Systems, which might

not make it into other investors’ portfolios, are acceptable to

us. The acceptability comes with the important caveat that

we have to be able to assure ourselves, to the best extent

possible, that they are behaving responsibly and making

positive change for the future.

To illustrate the kind of interactions we undertake when

assessing investments, the team engaged with Dunelm, the

British home furnishings retailer, in April and February 2023

and in September 2022:

• During the meeting in April 2023, the team engaged

on the group’s proposed remuneration policy ahead

of Dunelm’s 2023 AGM. The proposal included a new

maximum opportunity for the CEO of 375% of salary (up

from 325%) which the team felt was reasonable.

• In a subsequent meeting, the group asked for our input

on what we consider to be Dunelm’s most material issues,

such as the sourcing of their goods and relationship

with suppliers. We also fed back that we appreciate the

company’s clear efforts to demonstrate connectivity

between the group’s strategy, material issues, and

executive pay in its reporting.

• At the meeting in February 2023, the team discussed

the group’s near-term earnings and strategy. Dunelm

aims to develop product excellence across all price

points and effective marketing. It has increased efforts to

develop product mastery across more nascent categories

where market shares are lower, with the ultimate goal of

becoming the one-stop for home spend. The group is

also introducing credit to facilitate more spend in bigger-

ticket group sections, like Furniture, which is an area in

the market that is growing substantially.

• In September 2022, the team met with Dunelm to discuss

how it is controlling costs. The group reported that it was

seeing a high percentage of incremental UK homeware

spend which could fuel EPS growth through 2023. This

engagement work reinforces our view of Dunelm’s

business model resiliency. In turn this should support its

ability to deliver dividend growth in excess of inflation

over the long-term. This is the rationale for it being one

of the larger positions in the portfolio.

There are further examples of our ESG engagement with

companies on pages 25 to 26.

BORROWINGS

We were pleased to see the successful completion of the

Company’s long-term refinancing of its debt last September.

The new debt, with an average interest coupon of 2.44% per

annum, means a significantly reduced cost of borrowings,

leading in practice to a future saving of over £5m per annum

compared with the previous arrangements.

PORTFOLIO MANAGER’S REPORT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 11

We utilise this favourable financing by maintaining a fully

invested portfolio. The nature of the borrowings, with an

average maturity of 25 years, means that they are essentially

permanent in nature. We therefore tend to manage the

portfolio with the borrowings fully invested. When the

portfolio’s value rises, the gearing should enhance returns,

and the converse also applies: when underlying returns are

negative, the borrowings make the losses greater. With this

in mind, we take a tactical view of the economic and market

backdrop and can introduce a cash position to reduce this

impact by lowering ‘net’ gearing. For example, we may allow

the cash position to build up if we are struggling to find

attractively priced investment opportunities and fear the

market might be ripe for correction. However, shareholders

should think of us as investing the vast majority of the

borrowings under normal circumstances. Our gross gearing

(borrowings) total would amount to 6.6% as at year end with

an offsetting cash balance reducing the net gearing to 4.7%.

DIVIDENDS RECEIVED

Actual revenue per share for the 12 months to 31 March 2023

was 26.0p. This compares with 22.4p in the previous year – a

rise of 15.9%. Clearly this is a very satisfactory outcome. For

context, top line portfolio income was £49.0m (+10.8% on

2022), which was split between ordinary dividends of £41.6m

(+11.0%) and special dividends of £7.4m (+10.0%). The reason

for the revenue per share rise of 15.9% exceeding underlying

income growth of 10.8% is that revenues are calculated after

deducting costs including debt interest. The new borrowing

arrangements, as noted above, have resulted in a significant

fall in interest expense.

Looking ahead, we forecast more modest revenue per

share growth. Some of this is in part due to a mix effect in

the portfolio, with the sale of some higher yielding stocks

including Total Energies and Direct Line. Dividend generation

nonetheless is robust across the portfolio. Furthermore, the

ordinary and special dividends being received understate

the shareholder distributions made by investee companies

which also include share buybacks. These remain significant:

there are ongoing share buybacks by BP, Shell, Unilever and

NatWest, plus from many other portfolio holdings. Overall,

c40% of portfolio holdings have declared some form of

ongoing share buyback. This is supportive of the ‘total

return’ ethos that should underpin returns to the Company’s

shareholders – whether income or capital growth – in the

years ahead.

The Directors’ decision to recommend total dividends for the

year of 26.2p mean that dividends are almost entirely covered

by revenues for the year: a welcome position to be in.

THREE-YEAR REFLECTIONS

It is now just over three years since we became the Manager

of your Company. We took over in the midst of the market

sell-off in March 2020, as the full implications of the COVID-19

pandemic began to dawn.

Since then, our investment approach has helped us deal with

an at times rapidly changing economic and market backdrop.

The roll-out of COVID-19 vaccines, the “mini-budget” crisis,

rising interest rates, a falling sterling currency and the tech

sector sell-off have all had to be navigated. A key advantage

throughout this period has been the diversified portfolio.

As it turns out, we became stewards of your portfolio towards

the lowest levels of the market. Absolute returns have been

strong since then. The end result is, as the Chair has already

noted, a cumulative total return of the Company’s Net Asset

Value (NAV) per share of 65.9%. The share price, thanks to

a narrowing of its discount to NAV, has risen 75.5%. These

returns compare with a FTSE All-Share Index return of 47.4%.

In keeping with the stock-driven investment approach, when

we analyse the key drivers of returns over the period, we

look at the key stock contributors. For the last three years,

the big winners also reflect the flexible investment style

we take. To illustrate, the top five stock contributors to the

outperformance were Ashtead (industrial equipment hire),

NatWest (banking), BAE Systems (defence), Centrica (gas

utility) and Anglo American (mining). Hence clearly a bias

towards a mix of cyclical companies – benefitting from the

recovery in the economy over the period compared with

expectations at the depths of the pandemic.

Inevitably there have been some less successful decisions

along the way. Interestingly, the biggest factor was having

little or no exposure to two large commodity groups – BP

and Glencore. An important part of the portfolio construction

(and risk oversight) process is managing these larger risks.

A (very) small number of holdings disappointed in their

results, but in each case the holding size had been calibrated

to take account of the greater downside risk.

In terms of the income generated over the last three years,

revenue per share has been disappointing for shareholders,

moving from 27.8p in 2020 to 26.0p in the last financial

year. The portfolio was overly dependent on unsustainable

dividend income prior to March 2020. We believe it is on a

more sustainable and progressive footing now.

Our view is that underlying fundamentals of the portfolio’s

holdings ultimately drive the Company’s total returns.

Wetherefore prefer to hold stocks for sufficient time to allow

those fundamentals to come through. We have long held the

12 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

PORTFOLIO MANAGER’S REPORT / CONTINUED

view that this means a three-year period, and this does in

fact coincide with the average holding period since we were

appointed in 2020.

Overall, we believe the last three years demonstrate the merits

of a flexible, long-term total return investment approach.

OUTLOOK

While we are cautious about the outlook for equity markets

in general, the better recent returns from UK equities strike

us as being the early stages of a recovery in the market. This

recovery is rooted in the undervaluation of UK equities that

has built up over time for a variety of well-rehearsed reasons

such as Brexit and final-salary pension funds reducing equity

exposures. Just as these headwinds appear to be waning,

we remain optimistic about the specific prospects for the

Company’s holdings.

We are cautious about markets because inflation remains a

challenge. It will naturally come down to a degree, helped by

some inputs such as gas prices being markedly lower than

a year ago. But consumer expectations have ratcheted up.

Economic history tells us that it is much harder to squeeze

inflation back into the bottle, once the inflation genie is out.

At the market level, this economic slowdown is likely to be

different from those we have experienced since the turn of

the millennium. They may be more reminiscent of those of the

1980s and 1990s: more typical slowdowns when inflation has

been too high and interest rates have been raised to choke it

off. At the same time, bank lending criteria are likely to tighten

in the US because of the recent set of banking failures and

near failures in the US and Switzerland, which could present

downside risk to economic growth.

On a more positive note, at the corporate level, the current

elevated rate of inflation means nominal revenue growth

should be tolerable even if real GDP falters. Another help

is that China has ‘reopened’. Overall, 2023 could see lower

inflation, peaking interest rates and perhaps a slightly better

tenor from the consumer.

Therefore, a balanced, diversified portfolio is as important

as ever. In market terms, we may have entered a new and

different investing environment from that which has prevailed

since the financial crisis of 2008. For much of the period

since then, it often seemed that an investment style that

focused on buying and holding growth stocks – sometimes

with little regard to valuation or how durable the growth

would be – was all that was required. Now, we have a return

to an investment environment in which an understanding

of company fundamentals matters, as does an appreciation

of how the valuation paid for a stock ultimately determines

investment returns.

JAMES DE UPHAUGH

PORTFOLIO MANAGER

CHRIS FIELD

DEPUTY PORTFOLIO MANAGER

26 MAY 2023

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 13

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 that aim 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, approximately

three quarters of our effort takes the form of in-depth stock

research. The remainder is spent on macroeconomic and

geopolitical analysis.

Full Environmental, Social and Governance (‘ESG’) integration.

ESG-related considerations have financial implications for the

portfolio’s holdings. We prioritise and engage our holdings on

their key, material issues, many of which are ESG-related. The

outcomes from our in-depth analysis and engagements help

form our conviction level and investment decisions. In this

way, ESG lies at the heart of our investment process.

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

often prefer companies with organic investment opportunities:

as such, we normally expect companies with growing profits

– and share prices – to contribute to returns. 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 for

each member of the team is 15 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.

PORTFOLIO MANAGER’S CORE

INVESTMENT BELIEFS

14 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

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 James de

Uphaugh and the deputy portfolio manager is Chris Field.

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 Apex Listed Companies Services (UK)

Limited, (formerly Sanne Fund Services (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. Similarly, the Company may

not hold more than 5% of the issued share capital (or voting

shares) in 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.

RESULTS AND DIVIDENDS

At the year end the share price was 660.0p per ordinary share

(2022: 634.00p). The net asset value (debt at fair value) per

ordinary share was 713.73p (2022: 686.69p).

The Directors declared a third interim dividend for the year

ended 31 March 2023 of 6.70 pence per ordinary share

(2022: 6.40 pence), an increase of 4.7% compared with each

of the first two interim dividends. This dividend is payable

on 26 May 2023 to ordinary shareholders on the register

on 5 May 2023. The shares were quoted ex-divided on

4 May 2023.

The Board is recommending a final dividend of 6.70p per

share which is the same as the third interim dividend declared

last month, implying a full year payout of 26.20 pence per

share. This represents an increase of 5.6% compared with the

total underlying ordinary dividends paid for the financial year

to 31 March 2022.

PERFORMANCE

The Board reviews the Company’s performance by reference

to a number of key performance indicators (KPIs) which

are shown on page 2. Notwithstanding that some KPIs are

beyond its control, they are measures of the Company’s

absolute and relative performance. The KPIs assist in

managing performance and compliance and are reviewed by

the Board at each meeting.

The Chair’s Statement on pages 5 to 7 gives a commentary

on the performance of the Company during the year, the

gearing and the dividend.

The Board reviews an analysis of expenditure at each Board

meeting, and the Audit and Management Engagement

Committees formally review the fees payable to the main

service providers, including the Manager, on an annual basis.

BUSINESS REVIEW

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 15

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

2023 the Company was ranked 2nd by NAV performance in

this sector over one year, 5th over three years and 10th over

five years (source: Morningstar).

OUTLOOK, INCLUDING THE FUTURE OF THE

COMPANY

The main trends and factors likely to affect the future

development, performance and position of the Company’s

business can be found in the Portfolio Manager’s Report.

Details of the principal risks affecting the Company can be

found on pages 18 to 21.

FINANCIAL POSITION AND BORROWINGS

The Company’s balance sheet on page 58 shows the assets

and liabilities at the year end. Borrowings at the year end

comprised of £120 million of Unsecured Senior Loan Notes

(2022: £20 million and £100m Debenture).

PERFORMANCE ATTRIBUTION

for year

ended

31 March 2023

Total Return Basis

(1)

NAV (debt at fair value) 7.9

Benchmark 2.9

Relative performance 5.0

Analysis of Relative Performance

Portfolio total return 4.5

Benchmark total return

(1)

2.9

Portfolio outperformance [A] 1.6

Borrowings:

Net gearing effect

0.4

Interest

(0.5)

Market value movement

3.8

Management fee (0.4)

Other expenses (0.1)

Tax (0.1)

Share buybacks 0.3

Subtotal [B] 3.4

Relative performance [A+B] 5.0

(1)

Source: Refinitiv.

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, total return is positive and negative if

capital performance total return is negative.

Interest – the debenture stock, 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 base 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.

16 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

INVESTMENTS IN ORDER OF VALUATION

AT 31 MARCH 2023

UK LISTED ORDINARY SHARES UNLESS OTHERWISE STATED

Company Sector

Value

£’000

% of

Portfolio

Shell Oil, Gas and Coal 89,645 7.3

BAE Systems Aerospace and Defence 69,124 5.6

Unilever Personal Care, Drug and Grocery Stores 62,430 5.1

Tesco Personal Care, Drug and Grocery Stores 61,692 5.0

NatWest Banks 56,746 4.6

AstraZeneca Pharmaceuticals and Biotechnology 54,874 4.5

Centrica Gas, Water and Multi-Utilities 47,470 3.9

Ashtead Industrial Transportation 43,275 3.5

Anglo American Industrial Metals and Mining 41,372 3.4

HSBC Banks 39,037 3.2

TEN TOP HOLDINGS 565,665 46.1

Weir Industrial Engineering 37,609 3.1

RS Group Industrial Support Services 33,579 2.7

Dunelm Retailers 32,802 2.7

WPP Media 32,583 2.7

Standard Chartered Banks 31,345 2.5

Hays Industrial Support Services 28,750 2.3

Compass Consumer Services 27,658 2.3

GlaxoSmithKline Pharmaceuticals and Biotechnology 26,696 2.2

Novartis - Swiss Listed Pharmaceuticals and Biotechnology 24,125 2.0

Greggs Personal Care, Drug and Grocery Stores 23,961 1.9

TWENTY TOP HOLDINGS 864,773 70.5

Serco Industrial Support Services 22,259 1.8

Haleon Pharmaceuticals and Biotechnology 22,175 1.8

Marks & Spencer Retailers 22,107 1.8

Convatec Medical Equipment and Services 20,939 1.7

Mondi General Industrials 20,069 1.6

Admiral Non-Life Insurance 19,666 1.6

BP Oil, Gas and Coal 19,309 1.6

Whitbread Travel and Leisure 17,881 1.5

Smith & Nephew Medical Equipment and Services 17,222 1.4

easyJet Travel and Leisure 16,689 1.4

THIRTY TOP HOLDINGS 1,063,089 86.7

Newmont - US Listed Precious Metals and Mining 15,951 1.3

KPN - Dutch Listed Telecommunications Service Providers 15,653 1.3

Thales - French Listed Aerospace and Defence 15,644 1.3

CNH Industrial Industrial Engineering 13,780 1.1

Bellway Household Goods and Home Construction 12,638 1.0

Ascential Software and Computer Services 12,627 1.0

Travis Perkins Industrial Support Services 11,863 1.0

Redrow Household Goods and Home Construction 11,712 0.9

Howden Joinery Retailers 9,828 0.8

QinetiQ Aerospace and Defence 8,618 0.7

FORTY TOP HOLDINGS 1,191,403 97.1

Roche - Swiss Listed Pharmaceuticals and Biotechnology 8,424 0.7

Genuit Construction and Materials 6,812 0.6

Intel - US Listed Technology Hardware and Equipment 6,405 0.5

Marshalls Construction and Materials 6,014 0.5

Siemens - German Listed General Industrials 3,884 0.3

Publicis - French Listed Media 3,707 0.3

Raven Property(S) – Preference

Real Estate Investment Services

– –

Eurovestech(UQ) Investment Banking and Brokerage Services

– –

TOTAL HOLDINGS 46 (2022: 50) 1,226,649 100.0

S - Delisted

UQ - Unquoted investment

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 17

PORTFOLIO ANALYSIS

Financials Utilities

30%

10%

15%

20%

25%

2023 2022

Analysis of Portfolio by Industry

At 31 March 2023 and 2022

Technology Tele-

communications

Health

Care

Consumer

Discretionary

Consumer

Staples

IndustrialsBasic

Materials

Energy

30%

25%

20%

15%

10%

Portfolio FTSE All-Share Index

Comparison of Portfolio to FTSE All-Share Index by Industry

At 31 March 2023

Technology Tele-

communications

Health

Care

Financials Real

Estate

Consumer

Discretionary

Consumer

Staples

Industrials Basic

Materials

Energy Utilities

18 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

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

A great majority of the Company’s investments are traded on

recognised stock exchanges. 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 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 and sectors 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

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 19

stocks under certain scenarios and market conditions.

However, the Board and 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

dividend per share growth. 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 the 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.

SHARE PRICE 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

5,601,604shares for holding in treasury (2022: 1,104,800).

Risk management activity includes systematic reviews of the

investment objective and investment strategy and regular

dialogue with major shareholders and marketing activities.

Share price 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 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.

20 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

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

the Manager, to whom responsibility for the management

of the Company’s portfolio is delegated. 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, James

de Uphaugh, Head of the Liontrust Global Fundamental

team. James joined Liontrust in April 2022 as part of the

acquisition of Majedie Asset Management Limited where

he was Chief Investment Officer. He is a Fund Manager

and Analyst with 34 years’ investment experience in UK

and international equity markets. James is responsible

for co-managing the UK Equity Fund of Liontrust and

managing The Edinburgh Investment Trust plc.

– 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, Chris Field, as Deputy Portfolio Manager,

would be able to manage the portfolio if James de

Uphaugh 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 on page 23. 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 at every meeting as

required, together with any new guidance.

PRINCIPAL RISKS AND UNCERTAINTIES / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 21

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 on page 70 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. The Board is kept informed through its

advisors and Manager regarding any political, economic, legal

or regulatory changes that it is anticipated may significantly

affect the Company.

For example, 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 war in Ukraine, Scottish independence 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.

22 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

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 issues

arising from the COVID-19 pandemic, Russia’s invasion of

Ukraine and climate change), as set out on page 18 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 on page41;

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 set out on page 40, 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

may start to be 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 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.

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 23

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, investee companies and the Manager.

SECTION 172 STATEMENT

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 to promote the success of

the Company for the benefit of its members as a whole and

having regard to the interest of stakeholders and the factors

set out in s172. The Board performed its role as outlined in

the schedule of matters reserved for the Board and taking

into account the interest of the key stakeholders during the

decision-making process.

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 buy-

backs, marketing, performance evaluation, negotiation on

debt and re-appointment of the Investment 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 on page 5, The Portfolio Manager’s Report, Core Investment

Beliefs and Business Review on pages 9 to 15, Going Concern and Viability Statements

on pages 41 and 22 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 on page 25 refers to how the Company assesses its impact on the 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 on page 18 and Stewardship section on page 25 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 on page 18, Stewardship section on page 25

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 on page 24, Anti-Bribery and Corruption and

Modern Slavery disclosures on pages 26-27.

The need to act fairly as between

members of the Company

See Stakeholder Engagement section on page 24 and Corporate Governance Report

on pages 29 to 44.

24 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

SECTION 172 STATEMENT, COMPANY SUSTAINABILITY

AND STAKEHOLDERS / CONTINUED

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.

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

Manager following the formal business of the meeting and

shareholders have the opportunity to attend, vote and most

importantly to communicate directly with the Manager and

Board. Presentations to both institutional shareholders and

analysts also follow the publication of the annual results.

The Company held a physical AGM with virtual attendance

on 21 July 2022 which allowed shareholders to join via a

live weblink and to submit questions during the meeting.

In addition to the AGM and presentations, the Board

and Manager hosted a shareholder event in London on

22September 2022. The Chair uses these events to lead the

Company’s engagement with its shareholders. Please see

page 77 for the notice of 2023 Annual General Meeting and

page 7 for details of the 2023 shareholder event.

Regular dialogue is maintained between the Manager and

major institutional 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 Manager and shareholders are

reported to the Board.

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 by the Board on

an annual basis. At the strategy day in September 2022

the Board discussed discount management, marketing and

board recruitment. 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 has regular dialogue with and reports from

the Manager on the portfolio of investments, including

performance against set objectives and risk management

and the Manager attends each Board meeting to provide

updates and answer questions from the Board. The Board has

also discussed the AIFM’s responsibility under the Consumer

Duty Act with the Manager and received comfort as to how

those responsibilities will be met.

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 the

internal control reports on a quarterly basis covering their

operations, policies and control environments.

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. We expect to conduct

ourselves fairly with all service providers, 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 EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 25

Following the COVID-19 pandemic, 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 Manager is a long-term investor and develops strong

relationships with both investee and potential investee

companies and reports their conversations back to the Board.

Both the Board and the 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. Voting is undertaken by the same team that

manages the portfolio assets rather than it being delegated

to an independent third party.

The Board supports the Manager’s approach to ESG in the

context of its management of the portfolio, please see below

on ESG matters and stewardship of investee companies.

ENVIRONMENTAL SOCIAL AND GOVERNANCE

(“ESG”) MATTERS

As an investment company with no employees, property

or activities outside investment, environmental policy has

limited application, yet 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 on page 32,

which demonstrates the Company’s own responsibilities on

matters such as governance.

In respect of the Company’s investments, the 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 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’). 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. See below how the Manager

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 respons bility 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 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

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 Manager’s voting record at each meeting.

The table below demonstrates how the Manager voted during

the year in review. The Manager voted at all meetings, except for

an unlisted legacy holding in Raven Property.

26 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC

SECTION 172 STATEMENT, COMPANY SUSTAINABILITY

AND STAKEHOLDERS / CONTINUED

For Against

Total

Items

Against

Audit Related 84 0 84 0.0%

Capitalisation 186 5 191 2.6%

Company Articles 9 1 10 10.0%

Compensation 73 11 84 13.1%

Corporate Governance 1 0 1 0.0%

Director Election 436 13 449 2.9%

Director Related 7 0 7 0.0%

Environmental 6 2 8 25.0%

Miscellaneous 2 0 2 0.0%

Non-Routine Business 4 0 4 0.0%

Routine Business 87 1 88 1.1%

Social

4 21 25 84.0%

Strategic Transactions 4 0 4 0.0%

Takeover Related 37 0 37 0.0%

Total 940 54 994 5.4%

The Managers’ policy is to invest in well managed companies

with robust ESG policies. The examples below demonstrate

how the Manager voted on certain ESG issues and its

rationale behind it.

– NatWest Group. Resolution summary: to re-elect Frank

Dangeard as Director. The Manager voted against this

proposal because, in addition to his role as NED of the

Company, Frank Dangeard serves on the boards of three

other publicly listed companies. Furthermore, he is the

Chair of the Board in two of those companies. This could

potentially compromise his ability to commit sufficient

time to his role at NatWest Group. The outcome of the

vote was that the resolution was passed, albeit with 20%

of votes against. We will continue to engage with the

management on this issue.

– RS Group. Resolution summary: to approve the company’s

remuneration policy. Although it was a contentious

policy, with some third-party advisors recommending

their clients to vote against it, the Manager supported the

resolution. The Manager believe 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 the remuneration

to be competitive. Moreover, the award targets are

extremely stretching and have the strong underpinning

of the 20% ROCE

condition. The resolution was passed,

albeit with over 39% of votes against.

– Shell Group. Resolution summary: this was a

shareholder-filed resolution, which requested Shell

to set and publish targets for greenhouse gas (GHG)

emissions. The Manager voted against this proposal

as it was considered unnecessary, because a separate

management-filed proposal at the same meeting, to

approve the Shell energy transition progress update,

showed good progress with the plan. The shareholder-

filed resolution was therefore redundant as Shell had

already disclosed those targets. The resolution was not

passed, with 80% of votes against.

– Ashtead Group. Resolution summary: to approve the

company’s remuneration report. The Manager voted

against this management proposal. This was because

the actions taken by the Remuneration Committee in

response to the significant levels of dissent recorded

against the remuneration-related resolutions at the

2021 AGM were not considered sufficient to address the

underlying concerns raised. The resolution was passed,

with 33% of votes against the report. We will continue to

engage with the management on this issue.

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.

The term return on capital employed (ROCE) refers to a financial ratio that

can be used to assess a company’s profitability and capital efficiency.

The large number of against votes relates to a policy of voting against UK

Political Donations and Expenditure.

THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 27

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.

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. Work of the Board and its Committees is

described in the Governance Report on pages29 to 44.

This Strategic Report was approved by the Board on 26 May

2023

Signed by order of the Board of Directors

APEX LISTED COMPANIES SERVICES (UK) LIMITED

COMPANY SECRETARY / 26 MAY 2023

GOVERNANCE

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 29

VICKY HASTINGS

Senior Independent Director

Date of appointment:

23 May 2013, SID from 25 July 2019.

Committees:

Management Engagement

Nomination

Audit

Victoria (Vicky) has over 30 years’

experience in the investment

management industry. Vicky is Chair

of Henderson European Focus Trust

plc and a non-executive director

of Alliance Trust plc. She is also a

trustee of Moorfields Eye Charity.

In her executive career, she was a

European Equity fund manager and

then held investment leadership roles

at Merrill Lynch Investment Managers

and JOHambro Capital Management.

Previously held non-executive

directorships include Investment

Trusts as well as JPMorgan Asset

Management UK Ltd and JPMorgan

Asset Management International Ltd.

ELISABETH STHEEMAN

Chair of the Board

Date of appointment:

23 May 2019, became Chair on

21July2022

Committees:

Management Engagement

Nomination Chair

Audit

Elisabeth is currently an External

Member of the Financial Policy

Committee (FPC) and Financial

Markets Infrastructure (FMI) Board

of the Bank of England. She is an

independent member of the board of

US REIT W.P. Carey Inc, a member of

the Supervisory Board of German REIT

alstria AG and an External Member

of the Audit and Risk Committee of

The Asian Infrastructure Investment

Bank. She is also a member of Council

of the London School of Economics

and a member of Council of the

German British Chamber of Industry

and Commerce. Previously, she was a

senior advisor to the Bank of England’s

Prudential Regulation Authority and a

member of the Supervisory Board of

Aareal Bank AG.

AIDAN LISSER

Non-Executive Director

Date of appointment:

27 May 2022

Committees:

Management Engagement

Nomination

Audit

Aidan is the Chair of JPMorgan

Emerging Markets Investment Trust

plc, a non-executive director of

Henderson International Income Trust

plc and a board member of Chapter

Zero UK, an organisation to assist non-

executive directors with the impact of

climate change. He is also a marketing

ambassador for the Association

of Investment Companies. He was

formerly chief marketing officer and

subsequently head of strategy for

Investec Wealth & Investment. Before

this he held senior marketing roles

at Allianz Global Investors, Standard

Chartered Bank and Unilever.

THE DIRECTORS

All Directors are non-executive and considered independent.

30 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

ANNABEL TAGOE-BANNERMAN

Non-Executive Director

Date of appointment:

7 February 2023

Committees:

Management Engagement

Nomination

Audit

Annabel has considerable experience in

senior roles within quoted UK operating

companies within the retail, leisure,

food and beverage sectors. Annabel is

currently Group General Counsel and

Company Secretary of Bakkavor Group

plc, the FTSE 250 listed producer

of freshly prepared food, where she

also chairs the Diversity & Inclusion

Forum. She was previously at Britvic

plc and formerly General Counsel and

a member of the Executive Committee

of Ladbrokes plc. Prior to this Annabel

trained and practised as a solicitor

at SJ Berwin LLP (now King & Wood

Mallesons).

PATRICK EDWARDSON

Non-Executive Director

Date of appointment:

11 February 2021

Committees:

Management Engagement Chair

Nomination

Audit

Patrick joined Baillie Gifford in 1993 and

became a partner in 2005. In a wide-

ranging investment career, he managed

bond, equity and multi-asset portfolios,

was manager of the Scottish American

Investment Company plc between

2004 and 2014 and led Baillie Gifford’s

multi-asset investment team until his

retirement in 2020. He is currently

managing director of Atheian Ltd, a

family investment office and of CMH

Hope Limited, a property investment

company, a non-executive director of

two other investment trusts (JPMorgan

Multi Asset Growth and Income plc and

North American Income Trust plc) and

also a non-executive director at Tillit,

the retail investment platform.

STEVE BALDWIN

Non-Executive Director

Date of appointment:

10 September 2018

Committees:

Management Engagement

Nomination

Audit Chair

Steve is a Chartered Accountant. He

is currently Chairman of TruFin plc, a

non-executive director at Plus500 Ltd

and a Trustee at Howard de Walden

Estates Limited. He was formerly a

non-executive director of Elegant

Hotels Group plc and Panmure Gordon

& Co plc. He was the Head of European

Equity Capital Markets and Corporate

Broking at Macquarie Capital until

February 2015. Prior to this Steve was

a Director at JPMorgan Cazenove for

ten years and was a Vice President

of Corporate Finance at UBS from

1995-1998.

THE DIRECTORS / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 31

THE COMPANY’S CORPORATE GOVERNANCE

FRAMEWORK

THE BOARD AND COMMITTEES

The Board is ultimately responsible to shareholders for the direction, governance, management, performance and long-term

sustainable success of the Company. The responsibilities of the Board include setting the Company’s strategic aims, providing

the leadership to put them into effect, supervising the Investment Manager and reporting to shareholders on their stewardship.

In doing so, the Directors comply with their duties under section 172 of the Companies Act 2006.

The Board has established certain principal committees to assist it in fulfilling its oversight responsibilities, providing a

dedicated focus on particular areas, as set out below. Terms of reference of the Board Committees are available on the

Company’s website at www.edinburgh-investment-trust.co.uk

The Company’s corporate governance framework is designed to support a closed-end externally managed investment

company, where all of the Company’s day-to-day management and administrative functions are outsourced to third parties.

As a result, the Company has no executive Directors, employees or internal operations.

The Board

Chair Elisabeth Stheeman, Senior Independent Director Vicky Hastings, Four additional non-executive directors (NEDs)

Chair

Key responsibilities:

– to provide leadership of the Board, ensuring its effectiveness in all aspects of its role;

– to set up agenda and ensure that adequate time is available for discussion;

– to promote a culture of openness ensuring that each Board member’s views are considered;

– to ensure that Directors receive accurate, timely and clear information;

– to ensure the Board as a whole has a clear understanding of the views of shareholders;

– to ensure that the Board complies with its obligations under section 172 Companies Act 2006, by taking into account the

needs of the Company’s wider stakeholders;

– to ensure oversight of the Investment Manager and other external service providers; and

– to encourage constructive challenge and scrutiny of the performance of all outsourced activities.

Senior Independent Director (SID)

Key responsibilities:

– to provide a sounding board for the Chair;

– to serve as an intermediary for the other directors and shareholders; and

– to lead annual appraisal of the Chair’s performance and recruitment process for the position of the Chair.

Audit Committee

Management Engagement

Committee Nomination Committee

Remuneration Committee

Function

All NEDs All NEDs All NEDs The Board as a whole

performs this function

Chair: Steve Baldwin Chair: Patrick Edwardson Chair: Elisabeth Stheeman

Key responsibilities:

– to oversee the control

environment and financial

reporting;

– to make a recommendation

for the appointment of the

auditor; and

– to review the performance

of other service providers,

including the auditor.

Key responsibilities:

– to review regularly the

management contract and

the performance of the

Manager.

Key responsibilities:

– to review regularly

the Board’s structure,

composition and

performance; and

– to make recommendations

for any changes or new

appointments.

Key responsibilities:

– to set the remuneration

policy of the Company.

32 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

CORPORATE GOVERNANCE STATEMENT

FOR THE YEAR ENDED 31 MARCH 2023

COMPLIANCE WITH THE AIC CODE

This Corporate Governance statement forms part of the

Directors’ Report. The Board is committed to maintaining

high standards of Corporate Governance and is accountable

to shareholders for the governance of the Company’s affairs.

The Board of the Company has considered reporting against

the principles and provisions of the AIC Code of Corporate

Governance (the “AIC Code”). The AIC Code adapts the

principles and provisions set out in the UK Corporate

Governance Code (the “UK Code”) to make them relevant for

investment companies and includes supplementary guidance

on issues that are of specific relevance to the Company.

The Board considers that reporting against the principles

and provisions of the AIC Code, which has been endorsed

by the Financial Reporting Council provides more relevant

information to shareholders. This enables boards to make a

statement that, by reporting against the AIC Code, they are

meeting their obligations under the UK Code and associated

disclosure requirements under paragraph 9.8.6 of the FCA’s

Listing Rules.

The AIC Code is available on the AIC website (www.theaic.co.uk)

and the UK Corporate Governance Code can be found on the

Financial Reporting Council’s website (www.frc.org.uk)

Throughout the year ended 31 March 2023, the Company

complied with the principles and provisions of the AIC

Code, except for one provision regarding the remuneration

committee as explained below.

Provision 37 states that the board should establish a

remuneration committee of independent non-executive

directors with a minimum membership of three, or in the

case of smaller companies, two. The Board has resolved

that a remuneration committee is not appropriate for a

company of this size and nature. Remuneration is therefore

regarded as part of the Board’s responsibilities to be

addressed regularly. The Board as a whole, comprising of

independent non-executive directors, performs the function

of the remuneration committee with the key responsibility

to set the remuneration policy of the Company. Please see

Directors Report on page 36 for the Board’s responsibilities.

The UK Corporate Governance Code includes provisions

relating to the role of the chief executive, executive directors’

remuneration and the need for an internal audit function.

For reasons set out in the AIC Code, the Board considers

these provisions not relevant to the position of the Company,

being an externally managed investment company with no

executive Directors, employees, or internal operations. It

further considers an internal audit function unnecessary as

the relevant issues are addressed through the Manager’s own

control environment which itself is subject to routine external

independent review.

Information on how the Company has applied the principles

of the AIC Code is provided in the Governance Section,

including the Directors’ Report as follows:

– the composition and operation of the Board and its

committees are summarised on pages 31, and page 33 in

respect of the Audit Committee;

– the Company’s approach to internal control and risk

management is summarised on page 40;

– the contractual arrangements with, and assessment of,

the Manager are summarised on page 41:

– the Company’s capital structure and voting rights are

summarised on page 42;

– the substantial shareholders in the Company are listed on

page 42;

– the rules concerning the appointment and replacement

of directors are contained in the Company’s Articles

of Association and are discussed on pages 38 and 39.

There are no agreements between the Company and its

directors concerning compensation for loss of office;

– the annual powers to issue or buy back the Company’s

shares are explained in the notice of AGM on page 77;

and

– any amendments to the Company’s Articles of Association

require a resolution to be passed by shareholders.

By order of the Board

APEX LISTED COMPANIES SERVICES (UK) LIMITED

COMPANY SECRETARY

26 MAY 2023

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 33

AUDIT COMMITTEE REPORT

FOR THE YEAR ENDED 31 MARCH 2023

COMMITTEE COMPOSITION AND ROLE

The Audit Committee comprises all the Directors and the

Committee has written terms of reference which clearly

define its objective, authority, composition, roles, duties and

responsibilities, including reporting. These were reviewed

during the year, to ensure good practice and compliance with

the latest AIC Code. They can be inspected at the registered

office of the Company or viewed on the Company’s website.

AUDIT COMMITTEE RESPONSIBILITIES

The responsibilities of the Audit Committee include:

– consideration of the integrity of the annual and

half-yearly financial reports prepared by the Manager, the

appropriateness of the accounting policies applied and

any financial judgements and key assumptions, together

with ensuring compliance with relevant statutory and

listing requirements;

– at the Board’s request, advising it on whether the

Committee believes the annual financial report taken as a

whole is fair, balanced and understandable and provides

the necessary information for shareholders to assess the

Company’s position and performance, business model

and strategy;

– evaluation of the effectiveness of the internal control

systems and risk management systems, including reports

received on the operational controls of the Company’s

service providers and the Manager’s whistleblowing

arrangements;

– consideration of the scope of work undertaken by the

Manager’s compliance department, monitoring and

reviewing the effectiveness of the Manager’s and the

Company’s procedures for detecting fraud;

– management of the relationship with the external auditor,

including evaluation of their reports and the scope,

effectiveness, independence and objectivity of their

audit, as well as making recommendations to the Board

in respect of their appointment, re-appointment and

removal and for the terms of their audit engagement;

– developing and implementing policy on the engagement

of the external auditor to supply non-audit services; and

– considering annually whether there is a need for the

Company to have its own internal audit function.

AUDIT COMMITTEE ACTIVITIES

The Committee meets at least three times a year to review

the internal financial and non-financial controls and the

contents of the half-yearly and annual financial reports,

including accounting policies and financial judgements. In

addition, the Committee reviews the auditor’s independence,

objectivity and effectiveness, the quality of the services

provided to the Company and, together with the Manager,

reviews the Company’s compliance with financial reporting

and regulatory requirements as well as risk management

processes. Representatives of the Manager’s Compliance

Department attend at least two meetings each year.

Representatives of the auditor attend the Committee

meetings at which the draft half-yearly and annual financial

reports are reviewed and are given the opportunity to speak

to Committee members in the absence of representatives of

the Manager.

The external audit programme and timetable are drawn up

and agreed with the auditor in advance of the end of the

financial year and matters for audit focus are discussed and

agreed. The auditor ensures that these matters are given

particular attention during the audit process and reports

on them, and other matters as required, in its report to the

Committee. In addition, the Committee reviews any material

issues raised by the auditor. There have been no such

issues raised during the year. The auditor’s report, together

with reports from the Manager, the Manager’s Compliance

Department and the depositary, form the basis of the

Committee’s consideration and discussions with the various

parties and any recommendations to the Board, including

the Committee’s recommendation to sign the 2023 financial

statements.

34 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

ACCOUNTING MATTERS AND SIGNIFICANT AREAS

For the year-end, the following accounting matters were identified for specific consideration by the Committee:

Significant area How addressed

Accuracy of the portfolio valuation and controls related to

the valuation process.

Actively traded listed investments are valued using stock

exchange prices provided by third-party pricing vendors.

Investments that are unlisted or not actively traded are valued

using a variety of techniques to determine their fair value. This

is set out in accounting policies note 1C(v). Any such valuations

are carefully considered by the Manager’s pricing committee

and the Committee.

Proof of the existence of portfolio holdings. The Manager and the depositary confirmed that the

holdings shown in the accounting records agreed with the

custodianrecords.

Recognition of investment income and the treatment of

special dividends.

Investment income is recognised in accordance with

accounting policies note 1F. The Manager provides detailed

revenue estimates for the Board’s review, and income

is assessed to ensure it is complete and accounted for

correctly. Careful consideration is given to special dividends.

These are allocated to revenue or capital according to the

nature of the payment by the underlying company and the

allocation is also reviewed by the auditor.

The allocation of management fees and finance costs

between revenue and capital.

The allocation is reviewed by the Committee annually

taking into account the long-term split of returns from the

portfolio both historic and projected, yield, the objectives

of the Company, and the latest market practice of peers.

The Committee last reviewed the allocation at its meeting

in May 2023.

These matters were discussed with the Manager and the

auditor in pre-year-end audit planning and were satisfactorily

addressed through consideration of reports provided by,

and discussed with, the Manager and the auditor at the

conclusion of the audit process. As detailed below, the

Company operates within a robust control environment and

the Committee oversees the effectiveness of the controls of

the Manager, custodian and administrator.

Consequently, and following a thorough review process

of the 2023 annual financial report, the Audit Committee

advised the Board that the 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.

REVIEW OF THE EXTERNAL AUDITOR, INCLUDING

NON-AUDIT SERVICES

The Committee evaluated the performance and effectiveness

of the external auditor and their audit process. This included a

review of the audit planning, execution and reporting and the

quality of the audit work, results and audit team. This review

sought the view of the Manager in their dealings with the

auditor. The Committee also considered the independence

of PricewaterhouseCoopers LLP (PwC) and the objectivity of

the audit process. No significant modifications were required

to the external audit approach. Combining the output of all the

above, and the Audit Committee Chair’s and the Committee’s

direct interaction with PwC, the Committee concluded that it

continued to be satisfied with the performance of PwC and

that the auditor continued to display the necessary attributes

of objectivity and independence.

Prior to any engagement for non-audit services, the Audit

Committee considers whether the skills and experience of the

auditor make them a suitable supplier of such services and

ensures there is no threat to objectivity and independence

in the conduct of the audit as a result. Excluding VAT

and any expenses, the annual audit fee was £48,000

(2022: £41,000) and the non-audit fee was £nil (2022: £nil),

see note 4 on page 64. The Committee does not believe that

this has impaired the auditor’s independence and objectivity.

Non-audit services up to £5,000 do not require approval in

advance of the Audit Committee; amounts in excess of this

require the approval of the Audit Committee.

AUDIT COMMITTEE REPORT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 35

AUDITOR

PwC were appointed as the Company’s Auditors at the AGM

on 25 July 2019 and were re-appointed on 21 July 2022.

After due consideration, the Committee recommends the

re-appointment of PwC and their re-appointment will be put

forward to the Company’s shareholders at the 2023 AGM.

INTERNAL CONTROLS AND RISK MANAGEMENT

The Committee undertakes a robust assessment of the risks

to which the Company is exposed by reference to a risk

control summary, which maps the risks, mitigating controls

in place and relevant information reported to the Directors,

throughout the year. The resultant ratings of the mitigated

risks allow the Directors to concentrate on those risks that

are most significant and also form the basis of the list of

principal risks and uncertainties set out in the Strategic

Report on pages 18 to 21.

The Committee, on behalf of the Board, is responsible for

ensuring that the Company maintains a sound system of

internal control to mitigate risk and safeguard the Company’s

assets. The effectiveness of the Company’s system of internal

controls, including financial, operational and compliance

and risk management systems, is reviewed at least annually.

Appropriate action is taken to remedy any significant failings

or weaknesses identified from these reviews. No significant

items were identified in the year. As part of this, the Committee

receives and considers, together with representatives of the

Manager, reports in relation to the operational controls of

the Manager, accounting administrator, custodian, company

secretary and registrar. These reviews identified no issues of

significance during the year.

INTERNAL AUDIT

The Company, being an externally managed investment

company with no employees, does not require its own

specific internal audit function. Instead, it relies on the

control environment of the Manager. An external firm,

Grant Thornton, is engaged by the Manager to provide an

independent review of its control environment. The Manager

has been transparent with the Board in sharing the results of

the review.

COMMITTEE EVALUATION

The Committee’s activities fell within the scope of the review

of Board effectiveness performed in the year. Details of this

process can be found under ‘Board, Committee and Directors’

Performance Appraisal’ on page 39.

Signed on behalf of the Board of Directors

STEVE BALDWIN

CHAIR OF THE AUDIT COMMITTEE

26 MAY 2023

36 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

DIRECTORS’ REPORT

FOR THE YEAR ENDED 31 MARCH 2023

BUSINESS AND STATUS

The Company was incorporated and registered in Scotland

on 1 March 1889 as a public limited company, registered

number SC1836. It is an investment company as defined by

section 833 of the Companies Act 2006 and operates as an

investment trust within the meaning of the Corporation Tax

Act 2010 and the Investment Trust (Approved Company)

(Tax) Regulations 2011. HM Revenue & Customs have

approved the Company’s status as an investment trust and,

in the opinion of the Directors, the Company has conducted

its affairs so as to enable it to maintain such approval.

CORPORATE GOVERNANCE

The Corporate Governance Statement set out on page 32 is

included in this Directors’ Report by reference.

THE BOARD

At the year end the Board comprised six independent

non-executive Directors. The Company’s Corporate

Governance Framework is set out on page 31. This shows

the key objectives of the Board and also the membership

and key objectives of the Board’s committees which deal

with specific aspects of the Company’s affairs: the Audit,

Management Engagement and Nomination Committees.

The Board regards all the Directors to be wholly independent

of the Company’s Manager.

Chair

The Chair of the Company is Elisabeth Stheeman. She has

been a member of the Board since 2019 and was appointed

Chair on 21 July 2022.

Senior Independent Director

The Company’s Senior Independent Director is Vicky Hastings

who was appointed to the role on 25 July 2019. Vicky will be

retiring at the end of the forthcoming AGM of the Company

to be held on 19 July 2023 and will be succeeded by Aidan

Lisser.

Board Balance and Diversity

The Board’s policy for the appointment of non-executive

directors is based on its belief in the benefits of having a

diverse range of experience, skills, length of service and

backgrounds, including but not limited to gender diversity. The

Board has considered the recommendations of the Davies and

Hampton-Alexander reviews as well as the Parker review but

does not consider it appropriate to establish targets or quotas

in these regards. The policy is always to appoint the best

person for the job and there will be no discrimination on the

grounds of gender, race, ethnicity, religion, sexual orientation,

age or physical ability. The overriding aim of the policy is to

ensure that the Board is composed of a combination of people

with a range of business, financial or asset management skills

and experience relevant to the direction and control of the

Company for ensuring effective oversight of the Company

and constructive support and challenge to the Manager.

The Board comprises six non-executive directors of which,

atpresent, three are female. Summary biographical details of

the Directors are set out on pages 29 and 30.

Statement on Board Diversity – Gender and Ethnic

Background

According to new requirements of the Listing Rules LR 9.8.6

R(9) and (11) (applicable for periods from 1 April 2022), the

Company is required to include a statement in the annual

financial report setting out whether it has met the following

targets on board diversity as at 31 March 2023:

1) At least 40% of individuals on its board are women;

2) At least one of the senior board positions* is held by a

woman; and

3) At least one individual on its board is from a minority

ethnic background.

The following tables set out the prescribed format for

information in accordance with the requirements of LR 9

Annex 2.

(a) Table for reporting on gender identity or sex

Number

of board

members

Percentage

of the

board

Number

of senior

positions

on the

board (SID

and Chair)

Men 3 50% -

Women 3 50% 2

Not specified/

prefer not to say

- - -

(b) Table for reporting on ethnic background

Number

of board

members

Percentage

of the

board

Number

of senior

positions

on the

board (SID

and Chair)

White British

or other White

(including minority

white groups)

5 83% 2

Mixed Multiple

Ethnic Groups

- - -

Asian/Asian British - - -

Black/African/

Caribbean/Black

British

1 17% -

Other ethnic group,

including Arab

- - -

Not specified/

prefer not to say

- - -

* The Company considers the positions of the Chair and Senior

Independent Director (SID) to be senior positions of the Board.

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 37

The prescribed format includes provisions relating to the role

of the chief executive officer (CEO), chief financial officer

(CFO) and executive management. The Board considers

these provisions are not relevant to the Company as it is an

externally managed investment company. In particular, all of

the Company’s day-to-day management and administrative

functions are outsourced to third parties. As a result, the

Company has no CEO, CFO or executive management.

The Listing Rules require to include an explanation of the

Company’s approach to collecting the data used for the

purposes of making the disclosures in LR 9.8.6 R(9) and (10).

The Company Secretary circulated the above tables to each

director to complete individually and collated the responses

for inclusion in the annual financial report.

The Company has met the targets on board diversity as

required by the Listing Rules as at 31 March 2023.

BOARD RESPONSIBILITIES

The Board has overall responsibility for the Company’s

affairs. The Directors are equally responsible under UK law

for promoting the success of the Company and for the proper

conduct of the Company’s affairs taking into consideration:

– the likely consequences of any decision in the long-term;

– the need to foster business relationships with its Manager,

other service providers and advisors;

– the impact of the Company’s operations on the

community and the environment;

– the desirability of the Company maintaining a reputation

for high standards of business conduct; and

– the need to act fairly between shareholders of the

Company.

This is reported in the Section 172 Statement in the Strategic

Report on page 23. The Board is committed to the prevention

of corruption in the conduct of the Company’s affairs and,

taking account of the nature of the Company’s business and

operations, has put in place procedures for and on behalf of

the Company that the Board considers adequate to prevent

persons associated with it from engaging in bribery. It has a

zero tolerance approach towards the criminal facilitation of tax

evasion. In addition, the Directors are responsible for ensuring

that their policies and operations are in the interest of all of

the Company’s shareholders and that the interests of creditors

and suppliers to the Company are properly considered.

The Board has established a schedule of matters reserved

for its consideration, which clearly define the Directors’

responsibilities. The main responsibilities include:

– setting long-term strategy;

– setting the Company’s objectives, policies and standards;

– ensuring that the Company’s obligations to shareholders

and others are understood and met;

– selecting an appropriate Manager;

– approving accounting policies and dividend policy;

– determining dividends payable;

– managing the capital structure;

– reviewing investment performance;

– assessing risk;

– approving borrowing;

– and reviewing, and, if agreed, approving recommendations

made by the Board’s committees.

The schedule of matters reserved for the Board will be

available for inspection at the AGM and is otherwise

available at the registered office of the Company and on the

Company’s website.

The Board ensures that shareholders are provided with

sufficient information in order to understand the risk-reward

balance to which they are exposed by holding their shares,

through the portfolio details given in the half-yearly and

annual financial reports, factsheets and daily NAV disclosures.

The Board meets at least five times each year. Additional

meetings are arranged as necessary. Regular contact is

maintained by the Manager with the Board between formal

meetings. Board meetings follow a formal agenda, which

includes a review of the investment portfolio with a report

from the Manager on the current investment position and

outlook, strategic direction, performance against stock

market indices and the Company’s peer group, asset

allocation, gearing policy, cash management, revenue

forecasts for the financial year, investment policy guidelines,

marketing and shareholder relations, corporate governance,

regulatory changes and industry and other issues.

To enable the Directors of the Board to fulfil their roles, the

Manager and Company Secretary ensure that all Directors

have timely access to all relevant management, financial

and regulatory information. All directors have access to the

advice of the Company Secretary, who is responsible for

advising the Board on all governance matters.

There is an agreed procedure for the Directors, in the

furtherance of their duties, to take legal advice at the

Company’s expense up to an initial cost of £10,000, having

first consulted with the Chair.

Finally, the Board as a whole undertakes the responsibilities

which would otherwise be assumed by a remuneration

committee, determining the Company’s remuneration

policy. The Board takes into account all factors which are

deemed necessary in order to ensure that members of the

Board are provided with appropriate compensation and

are, in a fair and responsible manner, rewarded for their

individual contributions to the success of the Company.

The remuneration of Directors is reviewed periodically and

reported on in more detail in the Directors’ Remuneration

Report.

38 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

AUDIT INFORMATION

The Directors confirm that, so far as they are aware, there

is no relevant audit information of which the Company’s

auditor is unaware and each Director has taken steps

that he or she ought to have taken as a director to make

himself/herself aware of any relevant audit information

and to establish that the Company’s auditor is aware of

that information. This confirmation is given and should be

interpreted in accordance with the provisions of section 418

of the Companies Act 2006.

THE COMMITTEES

The Board has three committees: the Audit Committee, the

Management Engagement Committee, and the Nomination

Committee. Each committee has written terms of reference,

which clearly define each committee’s responsibilities

and duties. The terms of reference of each committee are

available for inspection at the AGM, at the registered office of

the Company and also available on the Company’s website.

The Audit Committee

The composition and activities of the Audit Committee are

summarised in the Audit Committee Report on pages33to35,

which is included in this Directors’ Report by reference.

The Management Engagement Committee

The Management Engagement Committee comprises

all directors and is chaired by Patrick Edwardson. The

Committee meets at least annually to review the investment

management agreement and to review the services provided

by the Manager and other key service providers. Additional

meetings are arranged as necessary.

The Committee carries out a thorough review of the

performance of the Manager including key metrics such as

overall investment performance, investment process, risk

management, individual stock performance, team resources,

notice period, the Managers fees level, marketing strategy

and relative fees.

During the year the Committee met twice to review and

consider the performance and continued appointment of the

Manager and other key service providers. The Committee

scrutinised both the Manager’s fee rate and all admin fees

in comparison with similar income-generating UK equity

products, in both the closed and open-ended sectors and is

confident that the fees are appropriate.

This year sees the introduction of the Financial Conduct

Authority’s Consumer Duty regulation, which seeks to

improve the quality of products and services to retail

investors. Whilst the Company is not directly within the

scope of the regulation, the Manager is through its roles as

AIFM and distributor. The Committee has routinely liaised

with the Manager during the year on its preparedness and

developments with regards the consumer outcomes that

cover products and services, price and value, consumer

understanding, and consumer support, and will continue to

do so into the future.

The Nomination Committee

All Directors are members of the Nomination Committee

which is chaired by Elisabeth Stheeman. The Committee

meets at least annually to review the composition of the

Board and its committees and evaluate whether they have the

appropriate balance of skills, experience, independence, and

knowledge of the Company and make recommendations to

the Board for the re-election of directors at AGMs. Additional

meetings are arranged as necessary.

The Committee is also responsible for the succession

planning and identifying and nominating to the Board

suitable candidates, taking into consideration the balance of

skills, knowledge, experience and independence of the Board

and having regard for the benefits of diversity and the ability

of any new director to devote sufficient time to the Company

to carry out his or her duties effectively. See page 36 for

Board’s statement on ethnic and gender diversity.

ar the Committee led the process for the appointment of

two new non-executive directors. The Committee requested

tenders from four executive recruitment specialists and

after careful assessment of recruitment methodology and

Company and the Directors have no other connection with

Odgers Berndtson. The recruitment process included long

and shortlist interviews involving all the existing directors

and choice of a candidate leading to the appointment. As

previously announced, Aidan Lisser joined the Board on 27

May 2022 and (as mentioned in the Chair’s statement on

page 7) Annabel Tagoe-Bannerman joined on 7 February

2023.

No Director has a contract of employment with the Company.

Directors’ terms and conditions of appointment are set out

in letters of appointment which are available for inspection

at the registered office of the Company and will also be

available at the AGM. A Director can be removed from office

without notice or compensation upon being served with a

written notice signed by all the other Directors.

APPOINTMENT, RE-ELECTION AND TENURE

New Directors are appointed by the Board following

recommendation by the Nominations Committee. The

Articles of Association require that a Director shall be subject

to election at the first AGM after their appointment and

re-election at least every three years thereafter. However, in

accordance with the UK Code of Corporate Governance, the

Board has resolved that all Directors shall stand for annual

re-election at the AGM.

DIRECTORS’ REPORT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 39

On being appointed to the Board, Directors are fully briefed

as to their responsibilities and are continually updated

throughout their term in office on industry and regulatory

matters. The Company Secretary and the Board have

formulated a programme of induction training for newly

appointed Directors. They have also put arrangements in

place to address ongoing training requirements of Directors

which include briefings from the Company Secretary and

the Company’s auditors which ensure that Directors are well

briefed on new legislation and the changing risk environment.

The Board has noted the implication of the provisions in the

UK Corporate Governance Code that non-executive directors

who have served for more than nine years should be presumed

not to be independent. The AIC does not believe that this

presumption is appropriate for investment companies and

therefore does not recommend that long-serving directors

be prevented from forming part of the independent majority

of an investment trust board. It is the Board’s policy that

all Directors, including the Chair, shall normally have tenure

limited to nine years from their first appointment to the

Board, except that the Board may determine otherwise if it is

considered that the continued participation on the Board of

an individual Director, or the Chair, is in the best interests of

the Company and its shareholders. This is also subject to the

Director’s re-election annually by shareholders. The Board

considers that this policy encourages regular refreshment

and is conducive to fostering diversity. As we highlighted last

year, whilst Vicky Hastings reached the tenth anniversary of

her appointment to the Board during the year she was asked

to stay on to smooth the transition for the new Chair but as

expected will be retiring at the AGM on 19July 2023 and is

therefore not standing for re-election.

BOARD, COMMITTEE AND DIRECTORS’

PERFORMANCE APPRAISAL

The Directors recognise the importance of the AIC Code’s

recommendation in respect of evaluating the performance

of the Board as a whole, the Committees of the Board and

individual Directors.

In 2023 the Board appointed Lintstock Limited, an external

consultant, to undertake a review of the Board and its

Committees. The Company and the individual Directors have

no other connection with Lintstock Limited.

The Board effectiveness review was externally facilitated by

Lintstock Limited and tailored to the needs of the Company

through a scoping exercise between a Lintstock Limited

partner and Company’s representatives. As part of the

evaluation, key governance enablers of Board and Committee

performance were reviewed, with a particular focus on the

Company’s strategic priorities, succession planning, and

engagement with the Manager. The Board effectiveness

review report and recommendations were presented to

the Nomination Committee meeting by a Lintstock Limited

partner in May 2023. The review was positive, and no critical

issues were identified. The recommendations from the

report were agreed by the Board. Key priorities identified

for the year ahead include executing the agreed marketing

strategy, long-term succession planning, and developing and

broadening relationships with the Manager’s wider team.

In addition to a self-assessment, the Chair conducted

telephone meetings with each Director individually to

discuss their performance and development needs. The Chair

evaluated the skills and performance of each Director and

concluded to take appropriate action when development

needs arise and that each Director is making a positive

contribution. Lintstock Limited also undertook a Chair

appraisal which was highly satisfactory - the SID relayed

back to the Chair privately and shared the highlights with

the Board.

ATTENDANCE AT BOARD AND COMMITTEE

MEETINGS

All Directors are considered to have a good attendance

record at Board and Committee meetings of the Company.

The table below sets out the number of scheduled Directors’

meetings held during the year and the number of meetings

attended by each Director. In addition, Directors attended a

number of ad hoc meetings during the year.

The number of scheduled meetings held during the year to

31 March 2023 and the attendance of individual Directors are

shown in the table below:

40 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

Board

Audit

Committee

Management

Engagement

Committee

Nominations

Committee

Number of meetings

(total possible/individual attendance)

5 3 2 2

Elisabeth Stheeman 5/5 3/3 2/2 2/2

Steve Baldwin 5/5 3/3 2/2 2/2

Patrick Edwardson 5/5 3/3 2/2 2/2

Vicky Hastings 5/5 3/3 2/2 2/2

Annabel Bannerman

1/1 1/1 1/1 1/1

Aidan Lisser

4/4 2/2 1/1 1/1

Glen Suarez

2/2 1/1 1/1 1/1

Annabel Bannerman was appointed on 7 February 2023

Aidan Lisser was appointed on 27 May 2022

Glen Suarez retired from the Board with effect from 21 July 2022

During the year in review, the individual Directors attended

100% of possible meetings of the Board and Committees.

DIRECTORS

Directors’ Interests in Shares

The Directors’ interests in the ordinary share capital of the

Company are disclosed in the Directors’ Remuneration

Report on page 45.

Disclosable Interests

No Director was a party to, or had any interests in, any

contract or arrangement with the Company at any time

during the year or at the year end.

Director’s Indemnities and Insurance

The Company maintains Directors’ and Officers’ liability

insurance which provides appropriate cover for any legal

action brought against its Directors. In addition, individual

deeds of indemnity have been executed on behalf of the

Company for each of the Directors under the Company’s

Articles of Association. Subject to the provisions of UK

legislation, these deeds provide that the Directors may be

indemnified out of the assets of the Company in respect of

liabilities they may sustain or incur in connection with their

appointment.

CONFLICTS OF INTEREST

A Director must avoid a situation where he or she has, or

can have, a direct or indirect interest that conflicts, or has

the potential to conflict with the Company’s interests. The

Articles of Association of the Company give the Directors

authority to authorise potential conflicts of interest and

there are safeguards which apply when Directors decide

whether to do so. First, only Directors who have no interest

in the matter being considered are able to take the relevant

decision, and second, in taking the decision the Directors

must act in a way they consider, in good faith, will be most

likely to promote the Company’s success. The Directors can

impose limits or conditions when giving authorisation if they

think this is appropriate.

The Directors have declared any potential conflicts of

interest to the Company. The register of potential conflicts

of interests is kept at the registered office of the Company.

It is reviewed regularly by the Board and Directors know

to advise the Company Secretary as soon as they become

aware of any potential conflicts of interest.

STREAMLINED ENERGY & CARBON REPORTING

‘SECR’

The Company’s disclosure with respect to SECR reporting is

given in the Strategic Report on page 27.

PROPOSED DIVIDENDS

The Directors propose payment of a final dividend to

shareholders, the details of this are given on page 14 of the

Strategic Report.

INTERNAL CONTROLS AND RISK MANAGEMENT

The AIC Code requires the Board to oversee the effectiveness

of the Company’s system of internal controls. The Board

assumes its ultimate responsibility for the Company’s system

of internal controls and for monitoring its effectiveness.

The Company’s system of internal controls is designed to

manage rather than eliminate risk of failure to achieve the

Company’s investment objective and/ or adhere to the

Company’s investment policy and/or investment limits.

This system can therefore provide only reasonable and not

absolute assurance against material misstatement or loss.

The Board has undertaken a review of the aspects covered by

the guidance and has identified risk management controls in

the key areas of business objectives, accounting, compliance,

operations and secretarial as being matters of particular

importance upon which it requires reports.

The Board believes that the existing arrangements, set out

below, represent an appropriate framework to meet the

internal control requirements. By these procedures the

Directors have kept under review the effectiveness of the

internal control system throughout the year and up to the

date of this report.

The Company’s internal controls and risk management

systems have been reviewed with the Manager against risk

DIRECTORS’ REPORT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 41

parameters approved by the Board. The Board reviews a

risk control summary at its quarterly Board meetings and

an annual formal review of the risk procedures and controls

in place at the Manager and other key service providers

isperformed.

The Audit Committee reviews and makes recommendations

to the Board, at least annually, the effectiveness of the

Company’s system of internal controls, including financial,

operational and compliance and risk management systems.

The Board confirms that necessary actions would be taken to

remedy any significant failings or weaknesses identified from

their review and that no significant failings or weaknesses

occurred throughout the year ended 31 March 2023 and up

to the date of this annual financial report.

The Board reviews financial reports and performance against

forecasts, relevant stock market criteria and the Company’s

peer group. In addition, the Manager and custodian maintain

their own systems of internal controls and risk management

and the Board and Audit Committee receive regular reports

from the Compliance Department of the Manager. Formal

reports are also produced annually on the internal controls

and procedures in place for the operation of secretarial,

administrative, custodial, investment management and

accounting activities.

GOING CONCERN

The financial statements have been prepared on a going

concern basis. The Directors consider this is the appropriate

basis as they have a reasonable expectation that the

Company has adequate resources to continue in operational

existence for the foreseeable future, being taken as at

least twelve months after the signing of the balance sheet,

for the same reasons as set out in the Viability Statement

on page 22. In considering this, the Directors took into

account both ongoing expenses and any obligations

under the Company’s borrowing (unsecured notes). In

reaching this conclusion, the Directors have considered

the liquidity of the Company’s portfolio of investments as

well as its cash position, income and expense flows. As at

31 March 2023, the Company held £22.4m (2022: £68.7m) in

cash and cash equivalents and £1,226.7m (2022: £1,218.7m) in

quoted investments. The Company’s audited net assets as at

31 March 2023 were £1,139.3m (2022: £1,175.8m).

Given the level of market volatility experienced due to the

impact of the COVID-19 pandemic and Russia’s invasion

of Ukraine, the Manager has performed stress tests on the

Company’s portfolio of investments under current conditions

and the Board remains comfortable with the liquidity of

theportfolio.

It is estimated that over 99% by value of the quoted

investments held at the year-end could be realised in one

month under normal market conditions.

The Board also considered the Company’s obligations with

respect to the Company’s borrowing. On 30 September 2021,

the Company announced an issue of £120m of long-term fixed

rate Unsecured Senior Loan Notes with a weighted average

cost of 2.44% of which £20m was drawn in October 2021.

The other £100m was drawn in September 2022 to repay

the £100m 7.75% debenture on its maturity. These notes

require the Net Assets of the Company to remain not less

than £300m. The Board, which routinely monitors borrowing

restrictions, does not anticipate difficulties in meeting this.

The Company previously had a £25m revolving credit facility

in place with The Bank of New York Mellon. This facility had

not been utilised for a number of years and was not renewed

when it matured in June 2022.

The total ongoing charges (excluding taxation, non-recurring

legal and professional fees and finance costs) for the year

ended 31 March 2023 were £6.1 million (2022: £6.0 million) or

0.53% of Net assets (2022:0.52%).

THE MANAGER

On 4 March 2020, the Board appointed Majedie Asset

Management Limited (‘Majedie’) as its Alternative Investment

Fund Manager. As disclosed last year with effect from

1April2022, Liontrust Fund Partners LLP was appointed the

Manager following completion of the acquisition of Majedie

by Liontrust Asset Management Plc. The responsibility

for the day-to-day investment management activities of

the Company has been delegated to Liontrust Investment

Partners LLP.

Investment Management Agreement (‘IMA’)

The Manager provides investment and administration

services to the Company under an investment management

agreement dated 3 March 2020. The agreement is terminable

by either party by giving not less than three months’ notice.

The monthly management fee is calculated on 0.04000% on

the first £500 million and 0.03875% on the remainder of the

market capitalisation of the Company’s ordinary shares at

each month end and paid monthly in arrears (equivalent to

an annualised fee of 0.480% on the first £500m and 0.465%

on the remainder). There is no performance fee. In 2023 the

Ongoing Charges ratio was 0.53%.

Assessment of the Manager

The Management Engagement Committee has carried out a

review of the Manager and following recommendation from

the Committee, the Board considers that the continuing

appointment of Liontrust Fund Partners LLP as Manager is in

the best interests of the Company and its shareholders.

COMPANY SECRETARY

The Board appointed Apex Listed Companies Services

(UK) Limited (formerly Sanne Fund Services (UK) Limited)

as a company secretary to the Company. The Board has

continuous direct access to the advice and services of

the corporate Company Secretary, who are responsible

for ensuring that the Board and Committee procedures

are followed, and that applicable rules and regulations

are complied with. The Company Secretary provides full

company secretarial services to the Company, ensuring

42 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

that the Company complies with all legal, regulatory and

corporate governance requirements and officiating at

Board meetings and shareholders’ meetings. The Company

Secretary is also responsible to the Board for ensuring timely

delivery of information and reports and that the statutory

obligations of the Company are met. Finally, the Company

Secretary is responsible for advising the Board through the

Chair on all governance matters.

During the year, Apex Group plc acquired Sanne Fund

Services (UK) Limited and subsequently the name of the

Company’s Company Secretary changed from Sanne Fund

Services (UK) Limited to Apex Listed Companies Services

(UK) Limited.

SHARE CAPITAL

Capital Structure

At the year end, the Company’s allotted and fully paid share

capital consisted of 195,666,734 ordinary and treasury shares

of 25p each of which 30,190,209 shares are held in treasury.

To enable the Board to take action to deal with any significant

overhang or shortage of shares in the market, it seeks approval

from shareholders every year to buy back and sell shares. No

shares were issued in the year. During the year 5,601,604

ordinary shares were repurchased for holding in treasury at an

average price of 632.40p per share (including costs). Since the

year end up until 22 May 2023, being the latest practicable

date before the printing of this report, 655,000 ordinary

shares have been bought back for holding in treasury.

SUBSTANTIAL HOLDINGS IN THE COMPANY

The Company has received notifications, or has otherwise

been made aware, in accordance with the Financial Conduct

Authority’s Disclosure Guidance and Transparency Rule 5 of

the following interests (% as at the date of notification):

Shares %

Rathbone Investment

Management

11,970,957 7.23

RESTRICTIONS

There are no restrictions concerning the transfer of securities

in the Company, no special rights with regard to control

attached to securities, no agreements between holders of

securities regarding their transfer known to the Company,

no restrictions on the distribution of dividends and the

repayment of capital, and no agreements to which the

Company is party that might affect its control following a

successful takeover bid.

Voting

At a general meeting of the Company, every shareholder

has one vote on a show of hands and, on a poll, one vote

for each share held. The notice of general meeting specifies

deadlines for exercising voting rights either by proxy or

present in person in relation to resolutions to be passed at a

generalmeeting.

Repurchase Powers

The Board’s current powers to repurchase shares and

proposals for their renewal are disclosed on page 43.

DISCLOSURES REQUIRED BY UKLA LISTING

RULE9.8.4

The above rule requires listed companies to report certain

information in a single identifiable section of their annual

financial reports. None of the prescribed information is

applicable to the Company for the year under review.

INDIVIDUAL SAVINGS ACCOUNT (ISA)

The ordinary shares of the Company are qualifying

investments under applicable ISA regulations.

BUSINESS OF THE ANNUAL GENERAL

MEETING(AGM)

The following summarises the business of the forthcoming

AGM of the Company, which is to be held on 19 July 2023

at 11.00am. The notice of the AGM and related notes can

be found on pages 77 to 80. All resolutions are ordinary

resolutions unless otherwise identified.

Resolution 1 is for members to receive and consider this

Annual Financial Report (AFR), including the financial

statements and auditor’s report.

Resolution 2 is for members to approve the Annual

Statement and Report on Remuneration for the year ended

31 March 2023.

Resolution 3 is to declare a final dividend for the year.

Resolutions 4 to 7 are to re-elect the Directors. Biographies

of the Directors can be found on pages 29 and 30.

Resolution 8 is to elect Annabel Tagoe-Bannerman as a

Director. Annabel’s biography can be found in the Chair’s

Statement on page 5 and on page 30.

Vicky Hastings will not be offering herself for re-election at

the AGM having completed a ten-year term as a director of

the Company. All other Directors will stand for re-election

by shareholders at the AGM. The Board has determined that

each of the Directors is independent, continues to perform

effectively and demonstrates commitment to their role. Their

balance of knowledge and skills combined with their diversity

and business experience makes a major contribution to the

functions of the Board and its Committees.

Elisabeth Stheeman has extensive executive and

non-executive experience in financial services and real estate

and governance that bring highly relevant and valuable skills

to the Board. Steven Baldwin is a Chartered Accountant and

his experience in a range of industries brings a breadth of

experience to the meetings. Patrick Edwardson has many

years of investment experience as a fund manager and

deep knowledge of the UK equity market and investment

companies. Aidan Lisser has considerable experience as an

investment trust non-executive director and is also a member

of the Association of Investment Companies’ Marketing

DIRECTORS’ REPORT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 43

Committee. Annabel Tagoe-Bannerman has considerable

experience in senior roles in commercial operations, law,

governance as well as in diversity, equity and inclusion within

quoted UK operating companies within the retail, leisure,

food and beverage sectors.

Resolutions 9 and 10 are to re-appoint

PricewaterhouseCoopers LLP as auditor and to authorise

the Audit Committee to determine their remuneration.

Special Business

Resolution 11: Authority to Allot Shares is an Ordinary

Resolution seeking renewal of the current authority for

the Directors to allot up to 10% of the issued ordinary

share capital, this being an aggregate nominal amount of

£4,891,668 as at 22 May 2023, (being the last practicable day

prior to the publication of this Notice).

Special Resolution 12: Authority to Allot Shares is a Special

Resolution which seeks renewal of the current authority to

allot equity securities pursuant to a rights issue or to issue

up to 10% of the issued ordinary share capital otherwise than

in connection with a rights issue, dis-applying pre-emption

rights. This will allow shares to be issued to new shareholders,

within the prescribed limits, without having to be offered to

existing shareholders first, thus broadening the shareholder

base of the Company. The Directors will not dilute the

interests of existing shareholders by using the authority to

issue shares at a price which is less than the Net Asset Value

(calculated with debt at fair value) of the existing shares in

issue at that time. These authorities will expire at the next

AGM of the Company or fifteen months after the passing of

the resolutions, whichever is the earlier.

Special Resolution 13: Authority to Buy Back Shares.

This resolution seeks to renew the Directors’ authority to

purchase up to 14.99% of the Company’s issued share capital,

this being 29,330,443 ordinary shares as at 22 May 2023,

(being the last practicable day prior to the publication of this

Notice). The authority will expire at the Company’s next AGM

or 15 months following the passing of this resolution, if earlier.

The principal purpose of share buy-backs is to enhance the

net asset value for remaining shareholders and purchases will

only be made if they do so.

In accordance with the UK Listing Rules, the maximum price

which may be paid for a share must not be more than the

higher of:

(i) 5% above the average of the mid-market values of the

shares for the five business days before the purchase is

made; and

(ii) the higher of the price of the last independent trade in the

shares and the highest then current independent bid for

the shares on the London Stock Exchange. The minimum

price which may be paid will be 25p per share, this being

the nominal value of a share. In making purchases, the

Company will deal only with member firms of the London

Stock Exchange.

The Company will finance the purchase of ordinary shares by

using its existing cash balance or borrowing facilities or by

selling securities in the Company’s portfolio.

The Directors might consider holding repurchased shares as

treasury shares with a view to possible resale.

Special Resolution 14: Notice Period for General Meetings.

The Shareholder Rights Directive increased the notice period

for general meetings of companies to 21 days unless certain

conditions are met in which case it may be 14 days’ notice.

A shareholders’ resolution is required to ensure that the

Company’s general meetings (other than Annual General

Meetings) may be held on 14 days’ notice. Accordingly,

Special Resolution 14 will propose that the period of notice

for general meetings of the Company (other than AGMs)

shall not be less than 14 days’ notice. It is intended that

this flexibility will be used only where the Board believes it

is in the best interests of shareholders as a whole, and an

explanation will be provided.

The Directors have carefully considered all the resolutions

proposed in the Notice of the AGM and, in their opinion,

consider them all to be in the best interests of shareholders

as a whole. The Directors therefore recommend that

shareholders vote in favour of each resolution as they intend

to do in respect of their own beneficial holdings.

By order of the Board

APEX LISTED COMPANIES SERVICES (UK) LIMITED

COMPANY SECRETARY / 26 MAY 2023

44 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

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

26 MAY 2023

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 45

DIRECTORS’ REMUNERATION REPORT

FOR THE YEAR ENDED 31 MARCH 2023

This report has been prepared under the requirements of The

Large and Medium-sized Companies and Group (Accounts

and Reports) (Amendment) Regulations 2013.

The Company’s auditor is required to audit certain of the

disclosures provided in this Report. Where disclosures

have been audited, they are indicated in this Report. The

independent auditor’s opinion is included on pages 50 to 56.

REMUNERATION RESPONSIBILITIES

The Board has resolved that a remuneration committee

is not appropriate for a company of this size and nature.

Remuneration is therefore regarded as part of the Board’s

responsibilities to be addressed regularly. All Directors are

non-executive and they all participate in meetings of the

Board at which Directors’ remuneration is considered.

DIRECTORS’ REMUNERATION POLICY

The Directors’ Remuneration Policy (the ‘Policy’) is put

before shareholders for approval every three years and was

approved by shareholders at the AGM on 21 July 2022 and

became effective on that date.

The policy is that the remuneration of Directors should be fair

and reasonable in relation to that of other investment trusts

and to the time commitment and responsibilities undertaken.

It should also be reviewed relative to movements in the Retail

Price Index and be sufficient and motivate appointees, as well

as ensure that candidates of a high calibre are recruited to

the Board but not be more than necessary for the purpose;

and take into consideration any committee memberships

and chairing duties.

Fees for the Directors are determined by the Board within

the limits stated in the Company’s Articles of Association

(’Articles’). The maximum currently is £250,000 in aggregate

per annum. The remuneration of the Directors is approved

by the Board under The Matters Reserved for the Board

document, which can be found, together with the Company’s

Articles or Association, in section Insights and Literature on

the Company’s website at www.edinburgh-investment-trust.

co.uk

Directors do not have service contracts. Directors are

appointed under letters of appointment, copies of which

are available for inspection at the registered office of the

Company. Directors are entitled to be reimbursed for any

reasonable expenses properly incurred by them in the

performance of their duties. Directors are not eligible for

bonuses, pension benefits, share options or other incentives

or benefits. There are no agreements between the Company

and its Directors concerning compensation for loss of office.

Notwithstanding the above, the Company’s Articles also

provide that additional discretionary payments can be made

for services which, in the opinion of the Directors, are outside

the scope of the ordinary duties of a Director.

The level of Directors’ remuneration is reviewed annually,

although such review will not automatically result in any

changes. This Directors’ Remuneration Policy will apply to any

new directors, who will be paid the appropriate fee based on

the Directors’ fees level in place at the date of appointment.

The Board will consider, where raised, shareholders’ views on

Directors’ remuneration.

The Board may amend the level of remuneration paid

to Directors within the parameters of the Directors’

Remuneration Policy. This Directors’ Remuneration Policy is

the same as that currently followed by the Board as disclosed

in last year’s Directors’ Remuneration Report.

The Company has no employees and consequently has no

policy on the remuneration of employees.

ANNUAL STATEMENT ON DIRECTORS’

REMUNERATION

For the year ended 31 March 2023, fees paid to the Directors

per annum were:

Role

Current fee

from

1 December

2022

fee before

1 December

2022

Percentage

increase

during the

year

Chair 44,000 44,000 –

Senior Independent

Director

31,500 31,500 –

Audit Committee

Chair

35,000 35,000 –

Director 28,500 28,500 –

There has been no change to the Board’s fees during the year

under review.

46 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

REMUNERATION FOR THE YEAR ENDED 31 MARCH 2023

THE COMPANY’S PERFORMANCE

The following graph plots, in annual increments, the net asset value total return and share price total return to ordinary

shareholders compared to the total return of the FTSE All-Share Index over the ten years to 31 March 2023. This index is the

benchmark adopted by the Company for comparison purposes.

Total Return Graph

200

150

100

Tot l Return G a h (Fi ures have be

Share Price Net Asset Value - debt at fair value FTSE All-Share Index

20222014 2015 2016 2017 2018 2019 2020 2021 2023

At 31 Marc 2013

2013

Source: Refinitiv.

Figures have been rebased to 100 at 31 March 2013.

SINGLE TOTAL FIGURE OF REMUNERATION FOR THE YEAR (AUDITED)

The single total figure of remuneration for each Director is detailed below, together with the prior year comparative:

Fees

Year

ended

31 March

2023

Taxable

Benefits

(1)

Total

Fees

Year

ended

31 March

2022

Taxable

Benefits

(1)

Total

Elisabeth Stheeman

(Chair from 21 July 2022)

40,063 901 40,964 27,167 228 27,395

Vicky Hastings 31,500 465 31,965 30,667 320 30,987

Steve Baldwin 35,000 785 35,785 31,720 – 31,720

Patrick Edwardson 28,500 1,620 30,120 27,167 1,226 28,393

Aidan Lisser

(appointed 27 May 2022)

24,140 741 24,881 – – –

Annabel Tagoe-Bannerman

(appointed 7 February 2023)

4,421 – 4,421 – – –

Glen Suarez (retired 21 July 2022) 14,307 6,819 21,126 44,000 4,887 48,887

Gordon McQueen

(retired 22 July 2021)

– – – 10,239 289 10,528

Maxwell Ward

(retired 22 July 2021)

– – – 8,222 – 8,222

Total 177,931 11,331 189,262 179,182 6,950 186,132

(1)

Taxable benefits relate to grossed up costs of travel.

DIRECTORS’ REMUNERATION REPORT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 47

In accordance with The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019,

this table has been included to show the annual percentage change over the preceding financial year by comparison to the

current financial year in respect of each Director. The Board will publish this annual percentage change cumulatively each

year going forward until there is an annual percentage change over the five financial years preceding the relevant financial

year in accordance with the new regulation. These fees exclude taxable benefits which could vary substantially as they reflect

expenses incurred whilst carrying out the boards duties.

The single total figure of remuneration for each Director is detailed below, with year on year changes since year ended 31 March

2020.

Non–executive directors

Fees

Year

ended

31 March

2023

Benefits

Fees

Year

ended

31 March

2022

Benefits

Fees

Year

ended

31 March

2021

Benefits

Fees

Year

ended

31 March

2020

Benefits

Elisabeth Stheeman

(Chair from 21 July

2022)

Total 40,063 901 27,167 228 24,967 0 20,763 0

% change 47% 295% 9% -% 20% -% -% -%

Vicky Hastings(1) Total 31,500 465 30,667 320 33,416 0 26,502 0

% change 3% 45% (8)% -% 26% -% -% -%

Steve Baldwin Total 35,000 785 31,720 0 24,967 0 24,200 0

% change 10% -% 27% -% 3% -% -% -%

Patrick Edwardson Total 28,500 1,620 27,167 1,226 3,515 – – –

% change 5% 32% 673% -% -% -% -% -%

Aidan Lisser

(appointed 27 May 2022)

Total 24,140 741 – – – – – –

% change -% -% -% -% -% -% -% -%

Annabel Tagoe-

Bannerman (appointed

7February 2023)

Total 4,421 – – – – – – –

% change -% -% -% -% -% -% -% -%

Glen Suarez

(retired 21 July 2022)

Total 14,307 6,819 44,000 4,887 44,000 0 44,000 9,327

% change (67)% 40% 0% -% 0% (100)% -% -%

Former directors

Gordon McQueen

(retired 22 July 2021)

Total – – 10,239 289 31,000 0 30,000 3,109

% change -% -% (67)% -% 3% (100)% -% -%

Maxwell Ward

(retired 22 July 2021)

Total – – 8,222 0 24,967 0 24,200 2,552

% change -% -% (67)% -% 3% (100)% -% -%

Sir Nigel Wicks

(retired 25 July 2019)

Total – – – – – – 8,759 –

% change -% -% -% -% -% -% -% -%

Total 177,931 11,331 179,182 6,950 186,832 – 178,424 14,988

Total % change (1)% 63% (4)% -% 5% -% – –

Notes

(1) In 2021 Vicky Hastings received a one-off discretionary payment of £5,000 in recognition of her work on the change of manager in the previous year.

48 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC

DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (AUDITED)

Save as here stated, no Director had any interests, beneficial or otherwise, in the ordinary shares or debenture stock of

the Company during the year. No changes to these holdings have been notified since the year end, except as notified on

13 April 2023, Elisabeth Stheeman’s holdings increased by 2,950 shares resulting in 11,900 total interest as at 22 May 2023,

(being the last practicable day prior to the publication of this report). No connected person interests have been notified.

Directors hold shares in the Company at their discretion. Share ownership is encouraged, but no guidelines have been set.

Thebeneficial interests of the Directors in the ordinary share capital of the Company are set out below:

31 March

2023

31 March

2022

Elisabeth Stheeman 8,950 6,000

Vicky Hastings 9,000 9,000

Steve Baldwin – –

Patrick Edwardson

60,000 60,000

Aidan Lisser 3,900 n/a

Annabel Tagoe-Bannerman – n/a

Glen Suarez

37,000 37,000

Patrick Edwardson’s holding includes 13,000 shares which are being held by a connected person.

Retired 21 July 2022.

RELATIVE IMPORTANCE OF SPEND ON PAY

The following table compares the remuneration paid to the non-executive Directors with aggregate distributions to shareholders

in respect of the year to 31 March 2023 and the prior year:

2023

£’000

2022

£’000

Change

£’000

Aggregate Directors’ Remuneration 189 185 4

Aggregate Shareholder Distributions 43,626 42,512 1,114

VOTING AT LAST ANNUAL GENERAL MEETING

At the Annual General Meeting of the Company held on 21 July 2022 a resolution approving the Chair’s Annual Statement and

Report on Remuneration were passed. The votes cast (including votes cast at the Chair’s discretion) were as follows.

Votes

For %

Votes

Against %

Votes

Withheld

Annual Statement and Report on Remuneration 52,038,494 99.39 320,648 0.61 117,994

APPROVAL

This Directors’ Remuneration Report was approved by the Board of Directors on 26 May 2023.

ELISABETH STHEEMAN

CHAIR

26 MAY 2023

Signed on behalf of the Board of Directors

DIRECTORS’ REMUNERATION REPORT / CONTINUED

FINANCIAL REVIEW

50 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF THE EDINBURGH INVESTMENT TRUST PLC

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

In our opinion, The Edinburgh Investment Trust plc’s financial statements:

– give a true and fair view of the state of the Company’s affairs as at 31 March 2023 and of its return and cash flows for the

year then ended;

– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United

Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic

of Ireland”, and applicable law); and

– have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Financial Report (the “Annual Report”), which

comprise: the Balance Sheet as at 31 March 2023; the Income Statement, the Statement of Changes in Equity and the Cash Flow

Statement for the year then ended; and the notes to the financial statements, which include a description of the significant

accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our

responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements

section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our opinion.

Independence

We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the

financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and

we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were

not provided.

We have provided no non-audit services to the Company in the period under audit.

OUR AUDIT APPROACH

Context

The Company is a standalone Investment Trust Company and engages Liontrust Fund Partners LLP (the “Manager”) to manage

its assets.

Overview

Audit scope

– We conducted our audit of the financial statements using information from Bank of New York Mellon (International) Limited

(the “Administrator” and the “Custodian”) and Apex Listed Company Services (UK) Limited (the “Company Secretary”) to

whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions.

– We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the

third parties referred to above, the accounting processes and controls, and the industry in which the Company operates.

– We obtained an understanding of the control environment in place at both the Manager and the Administrator, and adopted

a fully substantive testing approach using reports obtained from the Administrator.

Key audit matters

– Valuation and existence of investments

– Accuracy, completeness and occurrence of income

Materiality

– Overall materiality: £11,392,000 (2022: £11,758,000) based on 1% of Net Assets.

– Performance materiality: £8,544,000 (2022: £8,818,000).

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 51

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial

statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement (whether

or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the

allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we

make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole,

and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

The key audit matters below are consistent with last year.

Key audit matter How our audit addressed the key audit matter

Valuation and existence of investments

Refer to the Audit Committee Report, the Accounting

Policies and Notes to the Financial Statements.

The investment portfolio at the year end comprised

quoted equity investments valued at £1,227 million.

We focused on the valuation and existence of

investments because investments represent the

principal element of the net asset value as disclosed

on the Balance Sheet in the Financial Statements.

We tested the valuation of the quoted equity investments by

agreeing the prices used in the valuation to independent third-

party sources. No material misstatements were identified from

this testing.

We tested the existence of the quoted equity investment portfolio

by agreeing investment holdings to an independent custodian

confirmation.

No material misstatements were identified from this testing.

Accuracy, completeness and occurrence of income

Refer to the Audit Committee Report, the Accounting

Policies and Notes to the Financial Statements.

We focused on the accuracy, completeness and

occurrence of investment income recognition as

incomplete or inaccurate income could have a material

impact on the Company’s net asset value.

We also focused on the accounting policy for

investment income recognition and the presentation

of investment income in the Income Statement

for compliance with the requirements of The

Association of Investment Companies Statement of

Recommended Practice (the “AIC SORP”), as incorrect

application could indicate a misstatement in income

recognition.

We assessed the accounting policy for investment income

recognition for compliance with accounting standards and the

AIC SORP and performed testing to verify that income from

investments had been accounted for in accordance with this

stated accounting policy.

We found that the accounting policies implemented were in

accordance with accounting standards and the AIC SORP,

and that income from investments has been accounted for in

accordance with the stated accounting policy.

We tested accuracy of dividend receipts by agreeing the dividend

rates from investments to independent market data.

To test for completeness, we tested, for all investment holdings

in the portfolio, that all dividends declared in the market for

investment holdings had been recorded.

We tested occurrence by tracing a sample of dividends received

to bank statements.

We also tested the allocation and presentation of dividend

income between the revenue and capital return columns of the

Income Statement in line with the requirements set out in the

AIC SORP by determining reasons behind dividend distributions.

No material misstatements were identified from this testing.

52 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

INDEPENDENT AUDITOR’S REPORT / CONTINUED

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial

statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the

industry in which it operates.

The Company’s accounting is delegated to the Administrator who maintains the Company’s accounting records and who has

implemented controls over those accounting records. We obtained our audit evidence from substantive tests. However, as part

of our risk assessment, we understood and assessed the internal controls in place at both the Manager and the Administrator

to the extent relevant to our audit. This assessment of the operating and accounting structure in place at both organisations

involved obtaining and analysing the relevant controls reports issued by the independent service auditor of the Manager and

the Administrator in accordance with generally accepted assurance standards for such work. Following this assessment, we

applied professional judgement to determine the extent of testing required over each balance in the financial statements.

The impact of climate risk on our audit

In conducting our audit, we made enquiries of the Directors and the Investment Manager to understand the extent of the

potential impact of climate change risk on the Company’s financial statements. The Directors and Investment Manager

concluded that the impact on the measurement and disclosures within the financial statements is not material because the

majority of the Company’s investment portfolio is made up of level 1 quoted securities which are valued at fair value based

on market prices. We found this to be consistent with our understanding of the Company’s investment activities. We also

considered the consistency of the climate change disclosures included in the Strategic Report and Investment Manager Report

with the financial statements and our knowledge from our audit.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.

These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and

extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of

misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall Company materiality £11,392,000 (2022: £11,758,000).

How we determined it 1% of Net Assets

Rationale for benchmark applied We have applied this benchmark, which is a generally accepted auditing practice for

investment trust audits.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and

undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope

of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example

in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £8,544,000

(2022: £8,818,000) for the Company financial statements.

In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment

and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range

was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £569,000

(2022: £587,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 53

CONCLUSIONS RELATING TO GOING CONCERN

Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting

included:

– evaluating the Directors’ updated risk assessment and considering whether it addressed relevant threats;

– evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available

information and our understanding of the business and assessed the potential impact on the financial statements;

– reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected

operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and

oversight of key third-party service providers;

– assessing the premium/discount the Company’s share price trades as compared to the net asset value per share; and

– assessing the implication of significant reductions in NAV as a result of market performance on the ongoing ability of the

Company to operate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of

at least twelve months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company’s

ability to continue as a going concern.

In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material

to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors

considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant

sections of this report.

REPORTING ON OTHER INFORMATION

The other information comprises all of the information in the Annual Report other than the financial statements and our

auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements

does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise

explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained

in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material

misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial

statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that

there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based

on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK

Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions

and matters as described below.

Strategic Report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and

Directors’ Report for the year ended 31 March 2023 is consistent with the financial statements and has been prepared in

accordance with applicable legal requirements.

In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did

not identify any material misstatements in the Strategic Report and Directors’ Report.

Directors’ Remuneration

In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with

the Companies Act 2006.

54 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

INDEPENDENT AUDITOR’S REPORT / CONTINUED

CORPORATE GOVERNANCE STATEMENT

The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that

part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate

Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement

as other information are described in the Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate

governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and

we have nothing material to add or draw attention to in relation to:

– The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

– The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging

risks and an explanation of how these are being managed or mitigated;

– The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going

concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s

ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

– The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why

the period is appropriate; and

– The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in

operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing

attention to any necessary qualifications or assumptions.

Our review of the Directors’ statement regarding the longer-term viability of the Company was substantially less in scope than

an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking

that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether

the statement is consistent with the financial statements and our knowledge and understanding of the Company and its

environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

corporate governance statement is materially consistent with the financial statements and our knowledge obtained during

the audit:

– The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and

provides the information necessary for the members to assess the Company’s position, performance, business model and

strategy;

– The section of the Annual Report that describes the review of effectiveness of risk management and internal control

systems; and

– The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s

compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the

Listing Rules for review by the auditors.

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 55

RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT

Responsibilities of the Directors for the financial statements

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the

financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.

The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the

Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or

in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with

our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to

which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws

and regulations related to breaches of Chapter 4 of Part 24 of the Corporation Tax Act 2010, and we considered the extent to

which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations

that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives

and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and

determined that the principal risks were related to posting inappropriate journal entries to increase revenue (investment

income and capital gains) or to increase net asset value. Audit procedures performed by the engagement team included:

– Enquiries with management, including consideration of known or suspected instances of non-compliance with laws and

regulations and fraud;

– Understanding the controls implemented by Liontrust Fund Partners LLP (the “Manager”) and The Bank of New York

Mellon (International) Limited (the “Depository” and “Custodian”) designed to prevent and detect irregularities;

– Assessment of the Company’s compliance with the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010,

including recalculation of numerical aspects of the eligibility conditions;

– Identifying and testing journal entries, in particular year end journal entries posted by the Fund Accountant during the

preparation of the financial statements;

– Reviewing relevant meeting minutes, including those of the Audit Committee; and

– Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of

non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial

statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one

resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,

or through collusion.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data

auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete

populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,

we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.

frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

56 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

Use of this report

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with

Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or

assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may

come save where expressly agreed by our prior consent in writing.

OTHER REQUIRED REPORTING

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

– we have not obtained all the information and explanations we require for our audit; or

– adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been

received from branches not visited by us; or

– certain disclosures of Directors’ remuneration specified by law are not made; or

– the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the

accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit Committee, we were appointed by the Directors on 25 July 2019 to audit the

financial statements for the year ended 31 March 2020 and subsequent financial years. The period of total uninterrupted

engagement is 4 years, covering the years ended 31 March 2020 to 31 March 2023.

OTHER MATTER

As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements

form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct

Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance

over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.

Jeremy Jensen (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

26 May 2023

INDEPENDENT AUDITOR’S REPORT / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 57

INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH

Notes

Revenue

£’000

2023

Capital

£’000

Total

£’000

Revenue

£’000

2022

Capital

£’000

Total

£’000

Gains on investments held at fair

value

9(b) – 6,023 6,023 – 101,815 101,815

Losses on foreign exchange – (191) (191) – (148) (148)

Income 2 48,998 – 48,998 44,211 10,036 54,247

Investment management fee 3 (1,492) (3,482) (4,974) (1,512) (3,528) (5,040)

Other expenses 4 (1,092) (7) (1,099) (977) (9) (986)

Net return before finance costs

and taxation

46,414 2,343 48,757 41,722 108,166 149,888

Finance costs 5 (1,718) (4,015) (5,733) (2,492) (5,815) (8,307)

Return/(loss) on ordinary

activities before taxation

44,696 (1,672) 43,024 39,230 102,351 141,581

Tax on ordinary activities 6 (781) – (781) (663) – (663)

Return/(loss) on ordinary

activities after taxation for the

financial year

43,915 (1,672) 42,243 38,567 102,351 140,918

Return/(loss) per ordinary

Basic and diluted 7 25.99p (0.99)p 25.00p 22.41p 59.47p 81.88p

The total column of this statement represents the Company’s income statement, prepared in accordance with UK Accounting

Standards. The return/(loss) after taxation is the total comprehensive income/(expense) 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.

58 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

Notes

2023

£’000

2022

£’000

Non current assets

Investments held at fair value 9(a) 1,226,649 1,218,725

Current assets

Debtors

10 12,392 10,824

Cash and cash equivalents 22,362 68,728

Total assets

1,261,403 1,298,277

Non current liabilities

Unsecured Senior Loan Notes

12 (120,000) (20,000)

Current liabilities

Other payables 11 (2,059) (2,566)

7.75% Debenture Stock 30 Sep 2022 11 – (99,874)

Total liabilities

(122,059) (122,440)

Net assets

1,139,344 1,175,837

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 1,003,989 1,041,086

Revenue reserve 14 51,368 50,764

Total equity

1,139,344 1,175,837

Net asset value per ordinary share:

Basic and diluted - debt at par value

688.52p 687.24p

Basic and diluted - debt at fair value

713.75p 686.69p

The financial statements on pages 57 to 75 were approved and authorised for issue by the Board of Directors on 26 May 2023.

ELISABETH STHEEMAN

CHAIR

Signed on behalf of the Board of Directors

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

BALANCE SHEET

AT 31 MARCH 2023

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 59

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH

Notes

Capital

£’000

Premium

£’000

Capital

Redemption

Reserve

£’000

Capital

Reserve

£’000

Revenue

Reserve

£’000

Total

£’000

At 31 March 2021 48,917 10,394 24,676 945,728 61,516 1,091,231

Return on ordinary activities – – – 102,351 38,567 140,918

Dividends paid 8 – – – – (49,319) (49,319)

Shares bought back and held

in treasury

13 – – – (6,993) – (6,993)

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 treasury

13 – – – (35,425) – (35,425)

At 31 March 2023 48,917 10,394 24,676 1,003,989 51,368 1,139,344

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

Shares bought back and held in treasury includes transaction costs.

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

60 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

Notes

2023

£’000

2022

£’000

Cash flow from operating activities

Net return before finance costs and taxation

48,757 149,888

Tax on overseas income

6 (781) (663)

Adjustments for:

Purchase of investments

(254,040) (426,367)

Sale of investments

251,961 462,132

Gains on investments held at fair value

(6,023) (101,815)

Increase in debtors

(2,706) (3,201)

Increase in creditors

37 128

Net cash inflow from operating activities 37,205 80,102

Cash flow from financing activities

Interest paid on overdraft

(3) (1)

Interest and commitment fees paid on bank facility

(12) (85)

Interest paid on unsecured senior loan notes/debenture stocks

(4,372) (7,994)

Issue of unsecured senior loan notes 100,000 20,000

Redemption of debenture loan stock

(100,000) –

Shares bought back and held in treasury

(35,873) (6,545)

Dividends paid 8 (43,311) (49,319)

Net cash outflow from financing activities (83,571) (43,944)

Net (decrease)/increase in cash and cash equivalents

(46,366) 36,158

Cash and cash equivalents at start of the year

68,728 32,570

Cash and cash equivalents at the end of the year 22,362 68,728

Cash and cash equivalent comprises:

Cash held at custodian

1,093 1,021

Goldman Sachs Liquidity Reserve International Fund - Money Market Fund

21,269 47,727

UK Government Treasury Bill

– 19,980

Cash and cash equivalents 22,362 68,728

Cash flow from operating activities includes:

Dividends received

45,820 50,447

Interest received

6 –

At 1 April

2022

£’000

Cash flow

£’000

Non-cash

movement

£’000

At 31 March

2023

£’000

Reconciliation of net debt:

Cash and cash equivalents 68,728 (46,366) – 22,362

Debenture Stock 7

% 30 September 2022 (99,874) 100,000 (126) –

Unsecured Senior Loan Notes (20,000) (100,000) – (120,000)

Total (51,146) (46,366) (126) (97,638)

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

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 61

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 and the impacts of the COVID-19 pandemic, are

given on page 41.

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.

NOTES TO THE FINANCIAL STATEMENTS

62 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS / CONTINUED

(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

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 63

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.

2023

£’000

2022

£’000

Income from investments:

UK zero coupon bond income

148 11

UK dividends

35,807 32,253

UK special dividends

6,999 6,689

Overseas dividends

5,287 5,193

Overseas special dividends

358 –

Interest from money market funds 393 28

48,992 44,174

Other income:

Deposit interest 6 –

Underwriting commission – 37

6 37

Total income 48,998 44,211

No special dividends have been recognised in capital during the year (2022: £10,036,000).

64 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS / CONTINUED

3. INVESTMENT MANAGEMENT FEE

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

2023 2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Investment management fee 1,492 3,482 4,974 1,512 3,528 5,040

1,492 3,482 4,974 1,512 3,528 5,040

Details of the investment management agreement is disclosed on page 41 in the Directors’ Report. At 31 March 2023 investment

management fees of £429,000 (2022: £427,000) 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.

2023 2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Other expenses 1,092 7 1,099 977 9 986

Other expenses include the following:

Directors’ remuneration

(ii)

189 – 189 184 – 184

Auditors’ fees:

(iii)

– for audit of the Company’s annual financial

statements 48 – 48 41 – 41

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

(i) Other expenses include:

– £18,000 (2022: £17,000) of employer’s National Insurance payable on Directors’ remuneration. As at 31 March 2023, the

amounts outstanding on Directors’ remuneration and employer’s National Insurance was £64,000 (2022: £nil); and

– custodian transaction charges of £7,000 (2022: £9,000). These are charged to capital.

(ii) There were seven directors for a period during the year and the Director’s Remuneration Report on page 45 provides

further information on Directors’ fees.

(iii) Auditor’s fees include expenses but exclude VAT.

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 65

5. FINANCE COSTS

Finance costs arise on any borrowing facilities the Company has used. Borrowing facilities are the £120m notes (2022 £100m

debenture stock, £20m notes and a £25m bank revolving credit facility). Please see note 12 for additional details of the

Unsecured Senior Loan Note terms.

2023 2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Interest payable on borrowings repayable

not by instalment:

– Commitment fees due on loan facility

4 8 12 18 42 60

– Interest on overdraft facility

1 2 3 – 1 1

– Debenture stock repayable within 1 year

1,235 2,883 4,118 2,325 5,425 7,750

– Unsecured Senior Loan notes repayable

after 5 years 442 1,032 1,474 73 171 244

Amortised debenture stock discount and

issue costs 36 90 126 76 176 252

1,718 4,015 5,733 2,492 5,815 8,307

6. TAXATION AND TOTAL RETURN ON ORDINARY ACTIVITIES

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

2023

£’000

2022

£’000

Overseas taxation 781 663

(b) Reconciliation of tax charge

2023

£’000

2022

£’000

Return on ordinary activities before taxation

43,024 141,581

Theoretical tax at the current UK Corporation Tax rate of 19% (2022: 19%)

8,175 26,900

Effects of:

– Non-taxable UK dividends

(6,803) (6,128)

– Non-taxable UK special dividends

(1,398) (972)

– Non-taxable overseas dividends

(982) (3,178)

– Non-taxable gains on investments

(1,145) (19,345)

– Non-taxable losses on foreign exchange

36 28

– Excess of allowable expenses over taxable income

2,116 2,693

– Disallowable expenses

1 2

– Overseas taxation 781 663

Tax charge for the year 781 663

66 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS / CONTINUED

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 £502,750,000 (2022: £491,547,000) that are available to offset

future taxable revenue.

A deferred tax asset of £125,687,483 (2022: £122,886,688) at 25% (2022: 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/(LOSS) 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 on ordinary activities after

taxation and on 168,985,796 (2022: 172,100,486) 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 interims and

one final dividend.

2023 2022

pence £’000 pence £’000

Dividends paid and recognised in the year:

– third interim paid in respect of previous year

6.40 10,934 6.00 10,331

– final paid in respect of previous year

6.40 10,925 6.00 10,331

– special dividend paid in respect of previous year

– – 4.65 8,006

– first interim paid

6.40 10,783 6.00 10,331

– second interim paid 6.40 10,669 6.00 10,320

25.60 43,311 28.65 49,319

2023 2022

pence £’000 pence £’000

Dividends payable in respect of the year:

– first interim

6.40 10,783 6.00 10,331

– second interim

6.40 10,669 6.00 10,320

– third interim

6.70 11,087 6.40 10,934

– proposed final 6.70 11,087 6.40 10,927

26.20 43,626 24.80 42,512

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

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 67

9. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT AND LOSS

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

2023

£’000

2022

£’000

Investments listed on a recognised investment exchange 1,226,649 1,218,419

Unlisted or not regularly traded investments at Directors' valuation – 306

1,226,649 1,218,725

(b) Analysis of investment gains:

2023

£’000

2022

£’000

Opening book cost

1,048,510 1,026,675

Opening investment holding gains

170,215 124,333

Opening fair value

1,218,725 1,151,008

Movements in year:

Purchases at cost

252,724 427,683

Sales - proceeds

(250,823) (461,781)

Gains on investments in the year

6,023 101,815

Closing fair value 1,226,649 1,218,725

Closing book cost

1,040,163 1,048,510

Closing investment holding gains

186,486 170,215

Closing fair value

1,226,649 1,218,725

The Company received £250,823,000 (2022: £461,781,000) from investments sold in the year. The book cost of these

investments when they were purchased was £261,072,000 (2022: £405,848,000) realising a loss of £10,249,000 (2022: gain

of £55,933,000). 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 £1,162,000 (2022: £1,698,000) on purchases and £99,000

(2022: £152,000) 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.

2023

£’000

2022

£’000

Amounts due from brokers

– 1,138

Overseas withholding tax recoverable

2,316 1,897

Prepayments and accrued income 10,076 7,789

12,392 10,824

68 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS / CONTINUED

11. OTHER PAYABLES: AMOUNTS FALLING DUE WITHIN ONE YEAR

Creditors are amounts which must be paid by the Company and are split between those payable within 12 months of the balance

sheetdate and those payable after that time. The main creditors have historically been the debenture 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.

2023

£’000

2022

£’000

Debenture Stock 7

% redeemable 30 September 2022

– 99,874

Amounts due to brokers

– 1,316

Share buybacks awaiting settlement

– 448

Accruals 2,059 802

2,059 102,440

The debenture was redeemed at par on 30 September 2022.

The effect on the net asset value of deducting the debenture stock at fair value, rather than at par, is disclosed in the Alternative

Performance Measures on page 85.

As at 31 March 2022 the Company had a 364 day committed revolving credit facility (the ‘bank facility’) of £25 million with The

Bank of New York Mellon. The facility had not been utilised for a number of years, and a decision was taken that it would not

be renewed when it matured on 15 June 2022.

The Company has arranged refinancing for the debenture as previously noted.

12. UNSECURED SENIOR LOAN NOTES: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

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.

Loan Notes

2023

£’000

2022

£’000

Unsecured Senior Loan Notes – 2.26% interest rate, maturity 30 September 2037 35,000 –

Unsecured Senior Loan Notes – 2.49% interest rate, maturity 30 September 2047 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 –

120,000 20,000

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. 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.

2023

£’000

2022

£’000

Share capital:

Ordinary shares of 25p each

41,369 42,770

Treasury shares of 25p each 7,548 6,147

48,917 48,917

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 69

2023 2022

Number of ordinary shares in issue:

Brought forward

171,078,129 172,182,929

Shares bought back and held in treasury (5,601,604) (1,104,800)

Carried forward 165,476,525 171,078,129

Number of shares held in treasury:

Brought forward 24,588,605 23,483,805

Shares bought back into treasury 5,601,604 1,104,800

Carried forward 30,190,209 24,588,605

Total ordinary shares 195,666,734 195,666,734

During the year the Company bought back, into treasury, 5,601,604 (2022: 1,104,800) ordinary shares at an average price of

632.40p (2022: 632.95p) (including costs). Since the year end until 22 May 2023, (being the last practicable day prior to the

publication of this report), 655,000 shares have been bought back into treasury Note 1L on page 63 explains the policy on the

transaction costs related to the shares repurchased and held in treasury.

The Directors’ Report on pages 36 and 43 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. Prior to the redemption

of the £100m debenture stock on 30 September 2022 this did not reflect the rights of shareholders on a return of assets under

the Articles of Association. Those rights were reflected in the net assets with debt at par and the corresponding NAV per share.

A reconciliation between the two sets of figures follows. As the £120m Unsecured Senior Loan Notes were issued at and being

recorded at par, a reconciliation is not required.

2023 2022

NAV

per share

pence

Shareholders’

funds

£’000

NAV

per share

pence

Shareholders’

funds

£’000

Shareholders’ funds

688.52 1,139,344 687.31 1,175,837

Less:

Unamortised discount and expenses arising from debenture

issue

– – (0.07) (126)

NAV - debt at par 688.52 1,139,344 687.24 1,175,711

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

Performance Measures on page 85.

70 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS / CONTINUED

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 (as shown on pages 16 and 17), 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.

As an investment trust 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 on pages 35 and 36. 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 all of its 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 (2022: none).

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 71

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 £93.8 million (2022: £144.3 million) representing 7.7% (2022: 12.0%) 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.

2023 2022

Currency exposure

USD

£’000

DKK

£’000

CHF

£’000

EUR

£’000

USD

£’000

CHF

£’000

EUR

£’000

Foreign currency exposure on net

monetary items 3,137 40 1,420 1,495 3,793 1,106 2,389

Investments at fair value through profit or

loss that are equities 22,356 - 32,549 52,668 46,641 27,635 70,032

Total net foreign currency exposure 25,493 40 33,969 54,163 50,434 28,741 72,421

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 3.9% (2022: 2.0%) for the US dollar, 3.5% (2022: 1.5%) for the Swiss franc, 2.0% (2022: 1.2%) for the Euro, and

for the Danish Krone, 2.0% (2022: £nil) during the year, the capital return and net assets of the Company would have increased

for all currency exposures by £3.2 million (2022: £2.3 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 (2022: £20 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

on page 85.

The Company held two fixed income securities during the year (2022: one), both being short-term zero coupon government

bonds which matured during the financial year. As at 31 March 2023 no government bonds (2022: one) to the value of £nil

(2022: £19.98m) 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.

72 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS / CONTINUED

2023 2022

Within

one year

£’000

Between

one

and five

years

£’000

After

five

years

£’000

Total

£’000

Within

one year

£’000

Between

one

and five

years

£’000

After

five

years

£’000

Total

£’000

Exposure to floating interest

rates:

– Cash and cash equivalents

22,488 – 22,488 48,748 – 48,748

– Exposure to fixed interest

rates:

–

– UK Government Treasury

Bill

– – – 19,980 – 19,980

– Debenture stock - debt at

par value

– – – (100,000) (100,000)

– Unsecured Senior Loan

Notes - debt at par value

– – (120,000) (120,000) – – (20,000) (20,000)

Total exposure to interest

rates

22,488 – (120,000) (97,512) (31,272) – (20,000) (51,272)

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 risk

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 £122.7 million (2022: £121.9 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.

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 73

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:

2023

Three

months

or less

£’000

More than

three

months

but less

than

one year

£’000

More than

one

year

£’000

Total

£’000

Loan note - debt at par value

– – 120,000 120,000

Interest on loan notes

– 2,928 70,500 73,428

Accruals

2,059 – – 2,059

2,059 2,928 190,500 195,487

2022

Three

months

or less

£’000

More than

three

months

but less

than

one year

£’000

More than

one

year

£’000

Total

£’000

Debenture stock - debt at par value

– 100,000 – 100,000

Loan note - debt at par value

– – 20,000 20,000

Interest on debenture stock

– 3,875 – 3,875

Interest on loan note – 506 14,421 14,927

Amounts due to brokers 1,316 – – 1,316

Share buybacks awaiting settlement 448 – – 448

Accruals 802 – – 802

2,566 104,381 34,421 141,368

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 on page 59.

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) or at amortised cost (debenture).

74 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS / CONTINUED

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.

2023

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Financial assets designated at fair value through profit or loss:

Quoted investments:

Equities and preference shares

1,226,649 – – 1,226,649

Unquoted and suspended investments

– – – –

Total for financial assets 1,226,649 – – 1,226,649

2022

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Financial assets designated at fair value through profit or loss:

Quoted investments:

Equities and preference shares

1,218,419 – – 1,218,419

Unquoted investments

– – 306 306

Total for financial assets 1,218,419 – 306 1,218,725

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 (2022: no Level 2 investments). There were two Level 3 investments at the year end totalling

£nil (2022: two investments totalling: £306,000).

The holding in Eurovestech did not change during the year, but the fair value was reduced to £nil (2022: £69,000).

Raven Property is the other unquoted investment. Their issued preference shares were suspended on 2 March 2022 due to

sanctions on the company’s Russian businesses. At the balance sheet date the shares have been de-listed and recorded a fair

value of £nil (2022: £237,000).

THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 75

The book cost and fair value of the debenture stock, based on the offer value at the balance sheet date, are as follows:

2023 2022

Book

Value

£’000

Fair

Value

£’000

Book

Value

£’000

Fair

Value

£’000

Debenture stock repayable within one year:

/4% Debenture Stock 30 September 2022

– – 100,000 102,734

Discount on issue of debenture stock

– – (126) –

Loan notes repayable after five year:

Unsecured Senior Loan Notes

120,000 78,253 20,000 18,204

120,000 78,253 119,874 120,938

Please refer to page 85 which describes the fair valuation process of the Company’s loan notes.

18. CAPITAL MANAGEMENT

The Company’s total capital employed at 31 March 2023 was £1,259,276,000 (2022: £1,259,314,000) comprising borrowings

of £120,000,000 (2022: £119,874,000) and equity share capital and other reserves of £1,139,344,000 (2022: £1,175,837,000).

The Company’s total capital employed is managed to achieve the Company’s objective and investment policy as set out on

page 14, 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 4.7% (2022: 4.4%) 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 on pages 18 to 21. 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 2023 (2022: 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 in pages 45 and 48 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 on page 41, and in note 3.

21. POST BALANCE SHEET EVENTS

There are no significant events after the end of the reporting period requiring disclosure.

OTHER INFORMATION

FOR SHAREHOLDERS

THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 77

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR

IMMEDIATE ATTENTION.

If you are in any doubt as to what action to take, you should

consult your stockbroker, solicitor, accountant or other

appropriate independent professional advisor authorised

under the Financial Services and Markets Act 2000. If

you have sold or otherwise transferred all your shares in

The Edinburgh Investment Trust plc, please forward this

document and the accompanying Form of Proxy to the

person through whom the sale or transfer was effected, for

transmission to the purchaser or transferee.

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the one hundred and thirty third

Annual General Meeting of The Edinburgh Investment Trust

plc will be held at The Balmoral Hotel, Edinburgh, EH2 2EQ,

at 11am on 19 July 2023.

The 2023 AGM will be held in person and voting will be on

a show of hands. In addition, shareholders may follow the

proceedings virtually using a smartphone, tablet or computer.

Shareholders will be able to view and listen to a webcast of the

2023 AGM and submit questions to the Directors in writing.

Those following proceedings virtually will not be able to vote

on-line and are encouraged to vote ahead of the meeting.

To join the 2023 AGM virtually, please visit www.edinburgh-

investment-trust.co.uk from your device. The recording of

the 2023 AGM will be available on the Company’s website as

soon as practicable after the conclusion of the AGM.

Virtual access to the Annual General Meeting will be available

from 10.30 a.m. on 19 July 2023 although you will not be able to

submit questions until the Annual General Meeting is declared

open. If you wish to appoint a proxy and for them to attend

the Annual General Meeting on your behalf, please contact

Link Group on telephone number +44 (0) 371 277 1020*.

*Lines are open from 9.00 a.m. to 5.30 p.m. Monday to Friday,

calls are charged at the standard geographic rate and will

vary by provider. Calls outside the UK will be charged at the

applicable international rate.

AGM VOTING

Shareholders are encouraged to vote by proxy and to appoint

the “Chair of the Meeting” as their proxy. Details of how to vote,

either electronically, by proxy form or through CREST, can be

found in the Notes to the Notice of AGM on pages 79 to 80.

The results of the AGM will be announced to the London Stock

Exchange and placed on the Company’s website, as soon as

practicable after the conclusion of the AGM.

ORDINARY BUSINESS

To consider and, if thought fit, to pass the following resolutions

all of which will be proposed as Ordinary Resolutions.

1. To receive and consider the Annual Financial Report for

the year ended 31 March 2023;

2. To approve the Annual Statement and Report on

Remuneration for the year ended 31 March 2023;

3. To declare a final dividend on the ordinary shares;

4. To re-elect Steven Baldwin as a Director of the Company;

5. To re-elect Elisabeth Stheeman as a Director of the

Company;

6. To re-elect Patrick Edwardson as a Director of the

Company;

7. To re-elect Aidan Lisser as a Director of the Company;

8. To elect Annabel Tagoe-Bannerman as a Director of

the Company

9. To re-appoint PricewaterhouseCoopers LLP as auditors

of the Company; and

10. To authorise the Audit Committee to determine the

remuneration of the auditors.

SPECIAL BUSINESS

To consider and, if thought fit, to pass the following

resolutions of which resolution 11 will be proposed as an

Ordinary Resolution and resolutions 12, 13 and 14 as Special

Resolutions:

11. That:

in substitution for any existing authority under section 551

of the Companies Act 2006 (the ‘Act’) but without prejudice

to the exercise of any such authority prior to the date of this

resolution the Directors of the Company be generally and

unconditionally authorised in accordance with section 551 of

the Act as amended from time to time prior to the date of

the passing of this resolution, to exercise all powers of the

Company to allot shares and grant rights to subscribe for, or

convert any securities into, shares up to an aggregate nominal

amount within the meaning of sections 551(3) and (6) of the

Act) of £4,891,668 this being 10% of the Company’s issued

ordinary share capital as at 22 May 2023, such authority to

expire at the conclusion of the next Annual General Meeting

of the Company or the date fifteen months after the passing

of this resolution, whichever is the earlier unless the authority

is renewed or revoked at any other general meeting prior to

such time, but so that this authority shall allow the Company

to make offers or agreements before the expiry of this

authority which would or might require shares to be allotted,

or rights to be granted, after such expiry as if the authority

conferred by this resolution had not expired.

NOTICE OF ANNUAL GENERAL MEETING

78 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC

12. That:

subject to the passing of resolution number 11 set out in the

notice of this meeting (the ‘Section 551 Resolution’) and in

substitution for any existing authority under sections 570

and 573 of the Companies Act 2006 (the ‘Act’) but without

prejudice to the exercise of any such authority prior to the

date of this resolution, the Directors be and are hereby

empowered, in accordance with sections 570 and 573 of the

Act as amended from time to time prior to the date of the

passing of this resolution to allot equity securities (within

the meaning of section 560(1), (2) and (3) of the Act) for

cash, either pursuant to the authority given by the Section

551 Resolution or (if such allotment constitutes the sale of

relevant shares which, immediately before the sale, were held

by the Company as treasury shares) otherwise, as if section

561 of the Act did not apply to any such allotment, provided

that this power shall be limited:

(a) to the allotment of equity securities in connection

with a rights issue in favour of all holders of a class of

equity securities where the equity securities attributable

respectively to the interests of all holders of securities of

such class are either proportionate (as nearly as may be)

to the respective numbers of relevant equity securities

held by them or are otherwise allotted in accordance with

the rights attaching to such equity securities (subject in

either case to such exclusions or other arrangements

as the Directors may deem necessary or expedient in

relation to fractional entitlements or legal, regulatory or

practical problems under the laws of, or the requirements

of, any regulatory body or any stock exchange in any

territory or otherwise); and

(b) to the allotment (otherwise than pursuant to a rights

issue) of equity securities up to an aggregate nominal

amount of £4,891,668 this being 10% of the Company’s

issued ordinary share capital as at 22 May 2022.

and this power shall expire at the conclusion of the next

Annual General Meeting of the Company or the date fifteen

months after the passing of this resolution, whichever is the

earlier, unless the authority is renewed or revoked at any

other general meeting prior to such time, but so that this

power shall allow the Company to make offers or agreements

before the expiry of this power which would or might require

equity securities to be allotted after such expiry as if the

power conferred by this resolution had not expired; and so

that words and expressions defined in or for the purposes

of Part 17 of the Act shall bear the same meanings in this

resolution.

13. That:

the Company be generally and subject as hereinafter appears

unconditionally authorised in accordance with section 701

of the Companies Act 2006 (the ‘Act’) to make market

purchases (within the meaning of section 693(4) of the Act)

of the issued ordinary shares of 25p each in the capital of the

Company (‘Shares’)

Provided always that:

(a) the maximum number of Shares hereby authorised

to be purchased shall be 29,330,443 ordinary shares

(being 14.99% of the issued ordinary share capital of the

Company as at 22 May 2023);

(b) the minimum price which may be paid for a Share shall be

25p;

not be more than the higher of: (i) 5 per cent. above the

average of the mid-market values of the Shares for the

five business days before the purchase is made; and (ii)

the higher of the price of the last independent trade in

the Shares and the highest then current independent bid

for the Shares on the London Stock Exchange;

(d) any purchase of Shares will be made in the market for

cash at prices below the prevailing net asset value per

Share (as determined by the Directors);

(e) the authority hereby conferred shall expire at the

conclusion of the next Annual General Meeting of the

Company or the date fifteen months after the passing

of this resolution, whichever is the earlier, unless the

authority is renewed or revoked at any other general

meeting prior to such time;

(f) the Company may make a contract to purchase Shares

under the authority hereby conferred prior to the expiry

of such authority which will or may be executed wholly

or partly after the expiration of such authority and may

make a purchase of Shares pursuant to any such contract;

and

(g) any shares so purchased shall be cancelled, or, if the

Directors so determine and subject to the provisions of

section 724 to 731 of the Companies Act 2006 and any

applicable regulations of the United Kingdom Listing

Authority, be held (or otherwise dealt with in accordance

with section 727 or 729 of the Companies Act 2006) as

treasury shares.

14. That:

the period of notice required for general meetings of the

Company (other than AGMs) shall be not less than 14 days.

The resolutions are explained further in the Directors’ Report

on pages 42 and 43.

NOTICE OF ANNUAL GENERAL MEETING / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 79

Notes

1. The 2023 AGM will be held in person and voting will be

on a show of hands, however, shareholders may follow

the proceedings virtually using a smartphone, tablet

or computer. Shareholders should continue to monitor

the Company’s website at https://www.edinburgh-

investment-trust.co.uk/ and our announcements for any

updates in relation to the meeting.

2. A member entitled to attend and vote at the AGM is

entitled to appoint one or more proxies to attend, speak

and vote in his stead. A proxy need not be a member

of the Company. In order to be valid an appointment of

proxy must be returned by one of the following methods:

– via The Link Group website www.signalshares.com; or

– in hard copy form by post, by courier or by hand to

the Company’s Registrars, Link Group, PXS 1, Central

Square, 29, Wellington Street, Leeds, LS1 4DL; or

– in the case of CREST members, by utilising the CREST

electronic proxy appointment service in accordance

with the procedures set out below and in each case,

to be received by the Company not less than 48 hours

before the time of the meeting. Any amended proxy

appointment must be received by this time.

If you are an institutional investor you may be able to

appoint a proxy electronically via the Proxymity platform,

a process which has been agreed by the Company and

approved by the Registrar. For further information

regarding Proxymity, please go to www.proxymity.io.

Your proxy must be lodged by 11.00 am on 17 July 2023

in order to be considered valid. Before you can appoint

a proxy via this process, you will need to have agreed

to Proxymity’s associated terms and conditions. It is

important that you read these carefully as you will

be bound by them and they will govern the electronic

appointment of your proxy.

3. CREST members who wish to appoint a proxy by utilising

the CREST electronic proxy appointment service may do

so by utilising the procedures described in the CREST

Manual. CREST Personal Members or other CREST

sponsored members, and those CREST members who

have appointed a voting service provider(s), should refer

to their CREST sponsor or voting service provider(s)

who will be able to take the appropriate action on

their behalf. In order for a proxy appointment made by

means of CREST to be valid, the appropriate CREST

message (a ‘CREST Proxy Instruction’) must be properly

authenticated in accordance with Euroclear UK & Ireland

Limited’s specifications and must contain the information

required for such instructions, as described in the CREST

Manual. The message, regardless of whether it relates

to the appointment of a proxy or to an amendment to

the instruction given to a previously appointed proxy

must, in order to be valid, be transmitted so as to be

received by the issuer’s agent (ID RA10) by the latest

time(s) for receipt of proxy appointments specified

in this document. For this purpose, the time of receipt

will be taken to be the time (as determined by the time

stamp applied to the message by the CREST Applications

Host) from which the issuer’s agent is able to retrieve the

message by enquiry to CREST in the manner prescribed

by CREST. After this time any changes of instructions to

proxies through CREST should be communicated to the

appointee through other means.

The Company may treat as invalid a CREST Proxy

Instruction in the circumstances set out in Regulation

35(5)(a) of the Uncertificated Securities Regulations

2001. CREST members and, where applicable, their CREST

sponsors or voting service provider(s) should note that

Euroclear UK & Ireland Limited does not make available

special procedures in CREST for any particular messages.

Normal system timings and limitations will therefore

apply in relation to the input of CREST Proxy Instructions.

It is the responsibility of the CREST member concerned

to take or, if the CREST member is a CREST personal

member or sponsored member or has appointed a voting

service provider(s), to procure that his CREST sponsor

or voting service provider(s) take(s), such action as shall

be necessary to ensure that a message is transmitted by

means of the CREST system by any particular time. In

this connection, CREST members and, where applicable,

their CREST sponsors or voting service providers are

referred, in particular, to those sections of the CREST

Manual concerning practical limitations of the CREST

system and timings. The CREST Manual can be reviewed

at www.euroclear.com/CREST.

4. A form of appointment of proxy is enclosed.

To be effective, the form of appointment of proxy, duly

completed and executed, together with any power of

attorney or other authority under which it is signed (or a

notarially certified copy thereof) must be lodged at the

office of the Company’s Registrars, Link Group, PXS 1,

Central Square, 29, Wellington Street, Leeds, LS1 4DL by

no later than 11am on 17 July 2023.

5. A person entered on the Register of Members at close

of business on 17 July 2023 (a ‘member’) is entitled to

vote at the Meeting pursuant to Regulation 41 of the

Uncertificated Securities Regulations 2001. Any changes

to the Register of Members after such time and date shall

be disregarded in determining the rights of any person

to vote at the Meeting. If the Meeting is adjourned,

entitlement to vote at the adjourned meeting, and the

number of votes which may be cast thereat, will be

determined by reference to the Company’s register of

members 48 hours before the time fixed for the adjourned

meeting.

80 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC

6. The Terms of Reference of the Audit, Management

Engagement and Nominations Committees and the

Letters of Appointment for Directors will be available

for inspection at the website of the Company at

www.edinburgh-investment-trust.co.uk.

7. A copy of the Company’s Articles of Association is

available for inspection at the website of the Company at

https://www.edinburgh-investment-trust.co.uk/

8. Any person to whom this Notice is sent who is a person

nominated under section 146 of the Companies Act 2006

to enjoy information rights (a ‘Nominated Person’) may

have a right, under an agreement between him/her and

the shareholder by whom he/she was nominated, to be

appointed (or to have someone else appointed) as a

proxy for the meeting. If a Nominated Person has no such

proxy appointment right or does not wish to exercise it,

he/she may have a right, under such an agreement, to

give instructions to the shareholder as to the exercise of

voting rights.

The statement of the above rights of the shareholders in

relation to the appointment of proxies does not apply to

Nominated Persons. Those rights can only be exercised

by shareholders of the Company.

9. Any corporation which is a member can appoint one or

more corporate representatives who may exercise on its

behalf all of its powers as a member provided that they

do not do so in relation to the same shares.

10. You may not use any electronic address (within the

meaning of section 333(4) of the Companies Act 2006)

provided in this Notice (or in any related documents

including the proxy form) to communicate with the

Company for any purposes other than those expressly

stated.

11. As at 22 May 2023 (being the last practicable day prior

to the publication of this Notice) the Company’s issued

share capital consists of 195,666,734 ordinary shares of

25p each carrying one vote each.30,845,209 ordinary

shares held in treasury, therefore, the total voting rights

in the Company as at that date are 164,821,525.

12. A copy of this notice (which is at the back of the annual

financial report), and other information required by

section 311A of the Companies Act 2006, can be found at

https://www.edinburgh-investment-trust.co.uk/

13. Shareholders should note that it is possible that, pursuant

to requests made by members of the Company under

section 527 of the Companies Act 2006, the Company

may be required to publish on a website a statement

setting out any matter relating to: (i) the audit of the

Company’s financial statements (including the auditor’s

report and the conduct of the audit) that are to be laid

before the AGM for the financial year beginning on

1April 2022; or (ii) any circumstance connected with an

auditors of the Company appointed for the financial year

beginning on 1 April 2022 ceasing to hold office since the

previous meeting at which the annual financial report was

laid in accordance with section 437 of the Companies Act

2006 (in each case) that the members propose to raise at

the relevant AGM.

The Company may not require the members requesting

any such website publication to pay its expenses in

complying with sections 527 or 528 of the Companies

Act 2006. Where the Company is required to place

a statement on a website under section 527 of the

Companies Act 2006, it must forward the statement to

the Company’s auditors not later than the time when

it makes the statement available on the website. The

business which may be dealt with at the AGM includes

any statement that the Company has been required

under section 527 of the Companies Act 2006 to publish

on a website.

NOTICE OF ANNUAL GENERAL MEETING / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 81

HOW TO INVEST IN THE EDINBURGH INVESTMENT

TRUST PLC (THE COMPANY)

The Company’s shares are quoted on the London Stock

Exchange. There are a variety of ways by which investors

can buy the shares. Shares may be purchased through

discretionary wealth managers, banks, independent financial

advisors and via a large number of execution-only trading

platforms. The Manager’s website contains a list of some of

the larger dealing platforms as well as a link to unbiased.co.uk,

for those seeking financial advice, and to the AIC’s website

at www.theaic.co.uk for detailed information on investment

companies.

SHARE PRICE

The price of your ordinary shares can be found in the Financial

Times, Daily Telegraph, The Scotsman and The Times.

In addition, share price information can be found at the

London Stock Exchange website using the EDIN ticker code,

on the website of most share dealing platforms and on the

Company’s own website https://www.edinburgh-investment-

trust.co.uk/

NAV PUBLICATION

The NAV of the Company’s ordinary shares is calculated by

the Manager on a daily basis and is notified to the Stock

Exchange on the next business day. It is published daily in

the newspapers detailed above.

COMPANY’S WEBSITE

Information relating to the Company including investment

objective, supporting philosophy and investment

performance along with news, opinions, disclosures, results

and key information documents can be found on the

Company’s website https://www.edinburgh-investment-

trust.co.uk/.

The contents of websites referred to in this document,

or accessible from links within those websites, are not

incorporated in to, nor do they form part of this annual

financial report.

FINANCIAL CALENDAR

In addition, the Company publishes information according to

the following calendar:

ANNOUNCEMENTS

Annual financial report May

Half-yearly financial report November

LONDON SHAREHOLDER PRESENTATION

The Company intends to invite Shareholders to a presentation

by the portfolio manager, James de Uphaugh and to meet

with Directors in September.

Please note this is a non-voting meeting.

DIVIDEND PAYABLE TIMETABLE

1st interim November

2nd interim February

3rd interim May

Final July

ANNUAL GENERAL MEETING

July

YEAR END

31 March

LOCATION OF AGM

The one hundred and thirty third Annual General Meeting of

the Company will be held at The Balmoral Hotel, Edinburgh,

EH2 2EQ on 19 July 2023 at 11am.

UK GENERAL DATA PROTECTION REGULATION

(UKGDPR)

UK GDPR is a positive step towards individuals knowing

how their personal data is used and also having more

control over how it is used. The Company has a privacy

notice which sets out what personal data is collected, and

how and why it is used. The latest privacy notice can be

found at www.edinburgh-investment-trust.co.uk under the

‘Other Documents’ section, or a copy can be obtained from

the Company Secretary whose correspondence address is

shown on the next page.

SHAREHOLDER INFORMATION

82 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC

ADVISORS AND PRINCIPAL

SERVICE PROVIDERS

REGISTERED OFFICE

From 9 May 2023

First Floor

9 Haymarket Square,

Edinburgh EH3 8RY

Before 9 May 2023

Quartermile One 15 Lauriston Place

Edinburgh EH3 9EP

COMPANY NUMBER

Registered in Scotland.

Number: SC1836

ALTERNATIVE INVESTMENT FUND MANAGER

(MANAGER)

Liontrust Fund Partners LLP

2 Savoy Court

London WC2R 0EZ

020 7412 1700

COMPANY SECRETARY

Apex Listed Companies Services (UK) Limited

Floor, 125 London Wall Street

London EC2Y 5AY

020 3327 9720

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP

7 More London Riverside

London SE1 2RT

DEPOSITARY AND CUSTODIAN

The Bank of New York Mellon (International) Limited

160 Queen Victoria Street

London EC4V 4LA

BANKER

The Bank of New York Mellon

160 Queen Victoria Street

London EC4V 4LA

CORPORATE BROKER

Investec Bank plc

30 Gresham Street

London EC2V 7QP

THE ASSOCIATION OF INVESTMENT COMPANIES

The Company is a member of the Association of Investment

Companies. Contact details are as follows:

020 7282 5555

Email: enquiries@theaic.co.uk

Website: www.theaic.co.uk

LEGAL ADVISOR

Dentons UK and Middle East LLP

From 9 May 2023

First Floor

9 Haymarket Square,

Edinburgh EH3 8RY

Before 9 May 2023

Quartermile One 15 Lauriston Place

Edinburgh EH3 9EP

REGISTRAR

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds

LS1 4DL

If you hold your shares direct and not through a Savings

Scheme or ISA and have queries relating to your shareholding,

you should contact the Registrars on:

0371 664 0300.

Calls are charged at the standard geographic rate and will

vary by provider.

From outside the UK: +44 371 664 0300. Calls from outside

the United Kingdom will be charged at the applicable

international rate. Lines are open from 9.00am to 5.30pm,

Monday to Friday (excluding UK Public Holidays).

Shareholders can also access their holding details via Link’s

website:

www.signalshares.com.

Link Group provide an on-line and telephone share dealing

service to existing shareholders who are not seeking

advice on buying or selling. This service is available at

www.linksharedeal.com or

0371 664 0445.

Calls are charged at the standard geographic rate and will

vary by provider.

From outside the UK: +44 371 664 0445. Calls from outside

the UK will be charged at the applicable international rate.

Lines are open from 8.00am to 5.30pm, Monday to Friday

(excluding UK Public Holidays).

Link Group is the business name of Link Market Services Limited.

THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 83

ALTERNATIVE PERFORMANCE MEASURE (APM)

An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot

be directly derived from the financial statements. The calculations shown in the corresponding tables are for the financial years

ended 31 March 2023 and 31 March 2022. The APMs listed here are widely used in reporting within the investment company

sector and consequently aid comparability, providing useful additional information.

BENCHMARK (OR BENCHMARK INDEX)

A standard against which performance can be measured, usually an index that averages the performance of companies in a

stock market or a segment of the market. The benchmark most often referred to in this interim financial report is the FTSE

All-Share Index.

BENCHMARK RETURN

Total return on the benchmark is on a mid-market value basis, assuming all dividends received were reinvested, without

transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend.

DISCOUNT OR PREMIUM (APM)

Discount is a measure of the amount by which the mid-market price of an investment company share is lower than the

underlying net asset value of that share. Conversely, Premium is a measure of the amount by which the mid-market price

of an investment company share is higher than the underlying net asset value of that share. In this annual financial report

the discount is expressed as a percentage of the NAV per share with debt at fair value (see reconciliation of NAV per share

with debt at fair value within the Net Asset Value (NAV) Debt at Fair Value reconciliation within the Alternative Performance

Measures on page 85) and is calculated according to the formula set out below. If the shares are trading at a premium the result

of the below calculation will be positive and if they are trading at a discount it will be negative.

Page 2023 2022

Share price

2 a 660.00p 634.00p

Net asset value per share – debt at fair value APM 85 b 713.75p 686.69p

Discount c = (a-b)/b (7.5)% (7.7)%

DIVIDEND YIELD

The annual dividend payable expressed as a percentage of the year end share price.

Page 2023 2022

Dividends per share payable in respect of the year (note 8)

2 a 26.20p 24.80p

Share price 2 b 660.00p 634.00p

Dividend yield c = a/b 4.0% 3.9%

GEARING

The gearing percentage reflects the amount of borrowings that a company has invested. This figure indicates the extra amount

by which net assets, or shareholders’ funds, would move if the value of a company’s investments were to rise or fall. A positive

percentage indicates the extent to which net assets are geared; a nil gearing percentage, or ‘nil’, shows a company is ungeared.

A negative percentage indicates that a company is not fully invested and is holding net cash as described below.

There are several methods of calculating gearing and the following has been used in this report:

GLOSSARY OF TERMS AND ALTERNATIVE

PERFORMANCE MEASURES

84 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC

GROSS GEARING (APM)

This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on

gross borrowings as a percentage of net assets.

Page

2023

£’000

2022

£’000

Unsecured Senior Loan Notes – debt at fair value

75 78,253 18,204

Debenture stock – debt at fair value APM 75 – 102,734

Gross borrowings a 78,253 120,938

Net asset value – debt at fair value APM 85 b 1,181,091 1,174,773

Gross gearing c = a/b 6.6% 10.3%

NET GEARING OR NET CASH (APM)

Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in

money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash

and cash equivalents, as a percentage of net assets, after any offset against total borrowings.

Page

2023

£’000

2022

£’000

Unsecured Senior Loan Notes – debt at fair value

78,253 18,204

Debenture stock – debt at fair value 75 – 102,734

Less: cash and cash equivalents 58 (22,362) (68,728)

Net borrowings a 55,891 52,210

Net asset value – debt at fair value APM 85 b 1,181,091 1,174,773

Net gearing c = a/b 4.7% 4.4%

LEVERAGE

Leverage, for the purposes of the UK AIFM Directive is not synonymous with gearing as defined above. In addition to

borrowings, it encompasses anything that increases the Company’s exposure, including foreign currency and exposure gained

through derivatives. Leverage expresses the Company’s exposure as a ratio of the Company’s net asset value.

Accordingly, if a Company’s exposure was equal to its net assets it would have leverage of 100%. Two methods of calculating

such exposure are set out in the AIFMD, gross and commitment. Under the gross method, exposure represents the aggregate

of all the Company’s exposures other than cash balances held in base currency and without any offsetting. The commitment

method takes into account hedging and other netting arrangements designed to limit risk, offsetting them against the

underlying exposure.

NET ASSET VALUE (NAV)

Also described as shareholders funds, the NAV is the aggregate value of all assets less all liabilities. Liabilities for this purpose

include debt, deducted at either par value or fair value as described in more detail below. The NAV per share is calculated by

dividing the net asset value by the number of ordinary shares in issue (excluding shares held in treasury).

NET ASSET VALUE (NAV) – DEBT AT PAR

The NAV with debt at par recognises the value of the debt liability as the nominal amount that will be repaid at maturity. For

the £120m Unsecured Senior Loan Notes, this recognises a liability of £120m. This is the basis used in the preparation of the

Balance Sheet on page 58.

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 85

NET ASSET VALUE (NAV) – DEBT AT FAIR VALUE

The fair value of each tranche of the £120m Unsecured Senior Loan Notes is ascertained by the administrator by aggregating

the discounted value of future cashflows, being the contractual interest payments and the repayment of capital at maturity as

each falls due. The discount factor used for each tranche is based on the market yield of UK Treasuries with similar maturity

dates adjusted to incorporate a credit spread. The £100m debenture stock was redeemed in full on 30 September 2022. Prior

to its redemption, its fair value was determined by reference to the daily closing price.

The net asset value per share adjusted to include the Unsecured Senior Loan Notes (and in 2022 the debenture stock) at fair

value rather than at par is as follows:

NAV

per share

pence

2023

£’000

Shareholders’

funds

£’000

NAV

per share

pence

2022

£’000

Shareholders’

funds

£’000

NAV - debt at par

688.52 1,139,344 687.24 1,175,711

Debenture stock and Unsecured Senior Loan Notes 72.52 120,000 70.14 120,000

- debt at fair value (47.29) (78,253) (70.69) (120,938)

NAV - debt at fair value 713.75 1,181,091 686.69 1,174,773

ONGOING CHARGES RATIO (APM)

The ongoing administrative costs of operating the Company are encapsulated in the ongoing charges ratio, which is calculated

in accordance with guidance issued by the AIC. The calculation incorporates charges allocated to capital in the financial

statements as well as those allocated to revenue, but excludes non-recurring costs, transaction costs of investments, finance

costs, taxation, and the costs of buying back or issuing shares. The ongoing charges ratio is the aggregate of these costs

expressed as a percentage of the daily average net asset value reported in the year.

Page

2023

£’000

2022

£’000

Investment management fee

57 4,974 5,040

Other expenses 57 1,099 986

Less: costs in relation to custody dealing charges and one off

legalcosts

– (34)

Total recurring expenses a 6,073 5,992

Average daily net assets b 1,137,946 1,157,887

Ongoing charges ratio % c = a/b 0.53% 0.52%

RETURN

The return generated in a period from the investments.

CAPITAL RETURN

Reflects the return on NAV, excluding any dividends reinvested.

TOTAL RETURN

Total return is the theoretical return to shareholders that measures the combined effect of any dividends paid together with

the rise or fall in the share price or NAV. In this annual financial report these return figures have been sourced from Refinitiv

who calculate returns on an industry comparative basis.

TREASURY SHARES

Shares previously issued by a Company that have been bought back from shareholders to be held by the Company for

potential sale or cancellation at a later date. Such shares are not capable of voting and carry no rights to dividends.

86 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC

NET ASSET VALUE TOTAL RETURN (APM)

Total return on net asset value per share, with debt at fair value, assuming dividends paid by the Company were reinvested into

the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend.

SHARE PRICE TOTAL RETURN (APM)

Total return to shareholders, on a mid-market price basis, assuming all dividends received were re-invested, without transaction

costs, into the shares of the Company at the time the shares were quoted ex-dividend.

2023 Page

Net Asset

Value

Price

As at 31 March 2023

58 713.75p 660.00p

As at 31 March 2022 58 686.69p 634.00p

Change in year a 3.9% 4.1%

Impact of dividend reinvestments

(1)

b 4.0% 4.3%

Total return for the year c = a+b 7.9% 8.4%

2022 Page

Net Asset

Value

Price

As at 31 March 2022

58 686.69p 634.00p

As at 31 March 2021 58 628.29p 600.00p

Change in year a 9.3% 5.7%

Impact of dividend reinvestments

(1)

b 4.8% 4.9%

Total return for the year c = a+b 14.1% 10.6%

(1) Total dividends paid during the year of 25.60p (2022: 28.65p) reinvested at the NAV or share price on the ex-dividend date. NAV or share price falls

subsequent to the reinvestment date consequently further reduce the returns, vice versa if the NAV or share price rises.

COMPANY NAME

The Edinburgh Investment Trust plc is registered at Companies House as The Edinburgh Investment Trust Public Limited

Company.

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES / CONTINUED

THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 87

ALTERNATIVE INVESTMENT FUND

MANAGERS DIRECTIVE DISCLOSURE

ALTERNATIVE INVESTMENT FUND MANAGER AND

UK AIFM DIRECTIVE

UK AIFM DIRECTIVE (the UK AIFMD, the Directive)

The UK’s implementation of Directive 2011/61/EU of the

European Parliament and of the Council of 8 June 2011

on Alternative Investment Fund Managers, together with

Commission Delegated Regulation (EU) No. 231/2013 which

forms part of UK law by virtue of the European Union

(Withdrawal) Act 2018, and any transposing legislation

incorporating the same into UK law (including, but not

limited to, the UK Alternative Investment Fund Managers

Regulations 2013 (SI 2013/1773), as amended by The

Alternative Investment Fund Managers (Amendment etc.)

(EU Exit) Regulations 2019), all as may be amended or

supplemented from time to time.

ALTERNATIVE INVESTMENT FUND MANAGER

(AIFM, the Manager, the Portfolio Manager)

The Company falls within the definition of an Alternative

Investment Fund (AIF) under the Directive and, as such,

is required to have (or be) an authorised AIFM. On

1 April 2022 the Company appointed Liontrust Fund Partners

LLP (Liontrust) as AIFM following the acquisition of Majedie

Asset Management Ltd by Liontrust Asset Management

PLC. Liontrust is authorised and regulated by the FCA as a

full-scope AIFM.

The responsibility for the day-to-day investment management

activities of the Company has been delegated by AIFM to

Liontrust Investment Partners LLP.

Amongst other things, regulations implementing the

UK AIFMD require certain information to be provided

to prospective investors. This information can be

found in the Company’s page of the Manager’s website

(www.liontrust.co.uk) in a downloadable document titled

‘AIFMD Investor Information’. There has been no material

change to this document in the year except that relating to

the change in Manager from Majedie to Liontrust.

Any information requiring immediate disclosure pursuant to

the Directive will be disclosed through a primary information

provider. In addition, the Directive requires information

in relation to the Company’s leverage (both ‘gross’ and

‘commitment’ – see the Glossary of Terms and Alternative

Performance Measures on pages 83 to 86) and the

remuneration of the Company’s AIFM to be made available

to investors.

Accordingly:

– the leverage calculated for the Company at its year end

was 107% for gross and 104% for commitment (2022:

110% gross and 104% commitment). The limits the AIFM

has set for the Company remain unchanged at 250% and

200% respectively;

– the AIFM summary remuneration policy is available from

the corporate policies page of the Manager’s website

(www.liontrust.co.uk) and from the Company’s company

secretary, on request (see contact details on page 82);

and

– the AIFM remuneration paid for the year to 31 March 2023

is described below.

AIFM REMUNERATION

REMUNERATION POLICY

As AIFM, Liontrust Fund Partners LLP is required to

maintain a remuneration policy (the “Remuneration Policy”

or the “Policy”) that meets the requirements of the AIFM

Remuneration Code. The Policy governs the remuneration

of the AIFM’s key senior personnel, risk takers and control

functions (the “Code Staff”).

The table below provides an overview of the total

remuneration paid to the staff of the Management Company

for the year ended 31 March 2023:

l Aggregate total remuneration paid by the Manager to its

staff (employees and members).

l Aggregate total remuneration paid by the Manager to all

relevant code staff.

88 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC

Headcount

Total

Remuneration

(£’000)

Manager UK Staff

of which

83 18,744

Fixed Remuneration 83 8,116

Variable Remuneration 83 10,628

AIFM Remuneration Code Staff of which 5 399

Senior Management

2 185

Other control functions:

Other code staff / risk takers 3 214

The Manager’s UK Staff costs have been incurred by another Group entity and allocated to the AIFM. The most appropriate measure of staff costs are

those staff who are members of Liontrust Fund Partners LLP or Group staff who are employed by Liontrust Asset Management Plc but have theirs costs

apportioned to the LLP. The information has been disclosed on an annualised basis.

AIFM Aggregate Remuneration Code Staff applies only in respect of services to the AIFM funds rather than their total remuneration in the year. For senior

management and control function staff, remuneration is apportioned on the basis of assets under management for AIFM funds versus the total Group

assets under management.

Remuneration is made up of fixed pay (i.e. salary and

benefits such as pension contributions) and variable pay

(annual performance based or linked directly to investment

management revenues). Annual incentives are designed

to reward performance in line with the business strategy,

objectives, values and long term interests of the AIFM

and Liontrust Asset Management PLC (LAM) Group. The

annual incentive earned by an individual is dependent on

the achievement of financial and non-financial objectives,

including adherence to effective risk management practices.

The AIFM provides long-term incentives which are designed

to link reward with long-term success and recognise the

responsibility participants have in driving future success and

delivering value. Long-term incentive awards are conditional

on the satisfaction of corporate performance measures. The

structure of remuneration packages is such that the fixed

element is sufficiently large to enable a flexible incentive

policy to be operated.

Staff are eligible for an annual incentive based on their

individual performance, and depending on their role, the

performance of their business unit and/or the group. These

incentives are managed within a strict risk framework, and

the Directors of LAM retain ultimate discretion to reduce

annual incentive outcomes where appropriate.

The AIFM actively manages risks associated with delivering

and measuring performance. All our activities are carefully

managed within our risk appetite, and individual incentive

outcomes are reviewed and may be reduced in light of any

associated risk management issues.

The Liontrust Group operates a Remuneration Committee

(the “Committee”). The Committee reports to the Board. The

Committee reviews risk and compliance issues in relation

to the vesting of deferred awards for all employees and

members. Compliance is monitored throughout the vesting

period by the Committee.

These remuneration policies apply also to other entities in

the Liontrust Group to which investment management of

the Company has been delegated, and those delegates are

subject to contractual arrangements to ensure that policies

which are regarded as equivalent are applied.

The Board adopts, and reviews annually, the general

principles of the applicable remuneration policies, and the

implementation of the remuneration policies is, at least

annually, subject to central and independent internal review by

the Committee for compliance with policies and procedures.

SCOPE OF THE POLICY

The AIFM is subject to the requirements of the AIFM

Remuneration Code (SYSC 19B) (the “Code”).

The requirements of the Code are applicable to the

remuneration arrangements of individuals who fall within

the definition of Code staff under the Code and this policy

sets out the basis on which the rules contained within the

Code will be applied to Code Staff. The Committee itself

sets the remuneration and has oversight if remuneration

arrangements for all other Code Staff together with such

other senior employees as the Committee may determine

from time to time.

The Committee also reviews the remuneration arrangements

of other employees and the operation of the incentive plans

to ensure that remuneration arrangements have regard to pay

and employment conditions. However, decisions on individual

remuneration arrangements are made by management in the

area, with oversight by the Human Resources Director.

No hedging or other mitigation arrangements may be

entered into by employees as that would undermine risk

alignment effects.

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE DISCLOSURE / CONTINUED

CBP019051

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Vegetable based inks were used in the printing process.

MANAGED BY

Edinburgh Investment Trust plc

First Floor

9 Haymarket Square

Edinburgh

EH3 8RY

Telephone +44 (0)20 7412 1700

Email LionTA@liontrust.co.uk

edinburgh-investment-trust.co.uk