## strictly private & confidential ### Blackline levels ### In order for us to receive correct information regarding blackline levels and avoid confusion, particularly when ### requesting retrospective cumulative blacklined proofs, it is important that you understand our procedures and ### are aware of the real time status of a proof at any one time. The table below shows the history and status of this ### transaction and its blackline levels. ### Notes ### 1. Unless instructed otherwise, we will automatically produce a new level of blacklining and sequentially change ### the proof number at each stage. ### 2. If a proof is submitted and further corrections are then received on the same day, it is important that you clearly ### define your blacklining requirements whether you want us to add to the latest level or produce a new level. 3. It is not possible to make corrections to a proof with a new level of blacklining but keep the proof number the same. ### Proof No. Blackline level Date Proof No. Blackline level Date ### 1 0 02.05.2025 ### 2 1 06.05.2025 ### 3 2 08.05.2025 ### 4 3 14.05.2025 ### 4 3 15.05.2025 ### 5 4 15.05.2025 ### 6 5 19.05.2025 ### 7 6 20.05.2025 ## Job no. 270979 ## Clean proof ## Proof no. 7 ## Date 20.05.2025 tel 020 7562 2200 address 21 Worship Street, London EC2A 2DW email typesetting@perivan.com Perivan Limited. Registered in England No. 12066149 website www.perivan.com ISO27001 & ISO14001 registered, Certificate No. 4147 THE EDINBURGH INVESTMENT TRUST PLC ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MARCH 2025 ## ANNUAL FINANCIAL REPORT ## FOR THE YEAR ENDED 31 MARCH 2025 Edinburgh Investment Trust plc First Floor 9 Haymarket Square Edinburgh EH3 8RY Telephone +44 (0)20 7412 1700 ## MANAGED BY TRUST IN A STYLE TO LAST THROUGH THE AGES Email LionTA@liontrust.co.uk ### edinburgh-investment-trust.co.uk ## CONTENTS STRATEGY OVERVIEW Financial Information and Performance Statistics 2 Chair’s Statement 5 STRATEGIC REPORT Portfolio Managers’ Report 9 The Portfolio Managers’ Core Investment Beliefs 14 Business Review 15 Investments in Order of Valuation 18 Portfolio Analysis 19 Principal Risks and Uncertainties 20 Viability Statement 24 Section 172 Statement, Company Sustainability and Stakeholders 25 GOVERNANCE The Directors 31 The Company’s Corporate Governance Framework 33 Corporate Governance Statement 34 Audit Committee Report 35 Directors’ Report 38 Statement of Directors’ Responsibilities 46 Directors’ Remuneration Report 47 FINANCIAL REVIEW Independent Auditors’ Report 52 Income Statement 59 Balance Sheet 60 Statement of Changes in Equity 61 Cash Flow Statement 62 Notes to the Financial Statements 63 OTHER INFORMATION FOR SHAREHOLDERS Notice of Annual General Meeting 78 Shareholder Information 84 Advisors and Principal Service Providers 85 Glossary of Terms and Alternative Performance Measures 86 Alternative Investment Fund Managers’ Directive Disclosures 90 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 3697 5770. Alternatively, The Company is a please email the Board via the Company Secretary at EIT@nsm.group. If you have any member of enquiries for the Manager, please contact them on +44 (0)20 7412 1700. www.edinburgh-investment-trust.co.uk THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 1 # OVERVIEW £1,126m NET ASSETS (2024: £1,135m) 740.00p SHARE PRICE (2024: 690.00p) 3.9% DIVIDEND YIELD* (2024: 3.9%) (9.4)% DISCOUNT* (2024: (11.5)%) 0.51% ONGOING CHARGES RATIO* (2024: 0.53%) 5.0% GEARING (NET)* (2024: 3.1%) *Alternative Performance Measures as defined on pages 86 to 89. # 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 ('LSE'). The business of the Company consists of investing its assets according to a specified investment objective and policy (set out on page 15), 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 Managers' 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 Portfolio Managers and other service providers on behalf of shareholders and ensure that the investment objective and policy are adhered to. The Company has no employees. **The Company's ordinary shares are mainstream investment products suitable for both retail and professional investors. The Company's ordinary shares are eligible for investment in an ISA.** 2 / OVERVIEW / THE EDINBURGH INVESTMENT TRUST PLC ## FINANCIAL INFORMATION AND PERFORMANCE STATISTICS | Total Return^{(1)(2)(3)} (all with dividends reinvested) | Year Ended 31 March 2025 | Year Ended 31 March 2024 | | --- | --- | --- | | Net asset value^{(1)} (NAV) – debt at fair value | +8.3% | +13.4% | | Share price^{(4)} | +11.3% | +8.9% | | FTSE All-Share Index^{(4)} | +10.5% | +8.4% | The Company's benchmark is the FTSE All-Share Index. | Capital Return^{(1)(3)} | At 31 March 2025 | At 31 March 2024 | Change % | | --- | --- | --- | --- | | Net asset value – debt at fair value | 817.16p | 779.97p | +4.8 | | Share price^{(4)} | 740.00p | 690.00p | +7.2 | | FTSE All-Share Index^{(4)} | 4,623.62 | 4,338.05 | +6.6 | | **Discount^{(1)(2)(3)}** – debt at fair value | (9.4)% | (11.5)% | | | **Gearing** (debt at fair value)^{(1)(2)(3)} | | | | | – gross gearing | 5.6% | 6.2% | | | – net gearing | 5.0% | 3.1% | | | Revenue and Dividends^{(2)} | Year Ended 31 March 2025 | Year Ended 31 March 2024 | Change % | | --- | --- | --- | --- | | Revenue return per ordinary share | 25.02p | 23.93p | +4.6 | | Dividends | | | | | – first interim | 6.90p | 6.70p | | | – second interim | 6.90p | 6.70p | | | – third interim | 7.50p | 6.90p | | | – proposed final | 7.50p | 6.90p | | | **– total dividends** | **28.80p** | **27.20p** | **+5.9** | | **Consumer Price Index^{(3)(4)}** – annual change | 2.3% | 3.2% | | | **Dividend Yield^{(1)(2)(3)}** | 3.9% | 3.9% | | | **Ongoing Charges Ratio^{(1)(2)(3)}** | 0.51% | 0.53% | | ### Notes: 1. (1) These terms are defined in the Glossary of Terms and Alternative Performance Measures, including reconciliations, on pages 86 to 89. 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. (2) Key Performance Indicator. 3. (3) Alternative Performance Measures. 4. (4) Source: LSEG Data & Analytics. THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 3 ## TEN YEAR HISTORICAL ## INFORMATION Per ordinary share | | | | | | | | | | | | | | Net asset | | | | | | | | Gross | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Shares | | | | | | | | | value | | | | Discount | | gearing | | | gearing | | | | | Ordinary | | | (bought | | | | | | | | (debt at | | | | | (debt at | | (debt at | | | (debt at | | | | shareholders’ | | | | back)/ | | Revenue | | | Dividend | | | | | fair | Share | | | fair | | | fair | | fair | | Year ended | | | funds | | issued | | | return | | | rate | | | value) | | price | | | value) | | value) | | | value) | | 31 March | | | | £m | | m | | | p | | | p | | | p | | p | | % | | | % | | % | 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 (1) 2021 1,091 (2.50) 16.21 28.65 628.29 600.00 (4.5) 10.1 7.1 2022 1,176 (1.10) 22.41 24.80 686.69 634.00 (7.7) 10.3 4.4 2023 1,139 (5.60) 25.99 26.20 713.75 660.00 (7.5) 6.6 4.7 2024 1,135 (13.99) 23.93 27.20 779.97 690.00 (11.5) 6.2 3.1 2025 1,126 (7.17) 25.02 28.80 817.16 740.00 (9.4) 5.6 5.0 (1) including special dividend of 4.65p. Capital Returns (excluding dividends paid) to 31 March 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 3yr 5yr 10yr NAV (debt at fair 1.3 10.6 -8.5 -0.9 -29.6 28.1 9.3 3.9 9.3 4.8 19.0 66.6 19.1 value) (%) Share Price (%) 0.5 7.3 -10.0 0.3 -32.6 38.2 5.7 4.1 4.5 7.2 16.7 70.5 11.8 FTSE All-Share Index (%) -7.3 17.5 -2.4 2.2 -21.9 23.3 9.3 -0.7 4.3 6.6 10.4 48.8 26.2 Source: LSEG Data & Analytics. Total Returns (with dividends reinvested) to 31 March 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 3yr 5yr 10yr NAV (debt at fair 5.0 14.7 -5.9 2.9 -26.7 34.8 14.1 7.9 13.4 8.3 32.6 103.9 75.1 value) (%) Share Price (%) 4.0 11.2 -6.7 4.6 -29.4 46.4 10.6 8.4 8.9 11.3 31.4 112.7 69.5 FTSE All-Share Index (%) -3.9 22.0 1.2 6.4 -18.5 26.7 13.0 2.9 8.4 10.5 23.3 76.5 81.7 Source: LSEG Data & Analytics. 4 / OVERVIEW / THE EDINBURGH INVESTMENT TRUST PLC # TEN YEAR HISTORICAL INFORMATION / CONTINUED # **Total Returns Over Ten Years** Rebased to 100 at 31 March 2015 ![img-0.jpeg](img-0.jpeg) Source: LSEG Data & Analytics. # **Cumulative Dividend Growth** to 31 March 2025 ![img-1.jpeg](img-1.jpeg) Source: LSEG Data & Analytics. Source: Consumer Price Inflation - Office for National Statistics. # **Capital Returns Over Ten Years** Rebased to 100 at 31 March 2015 ![img-2.jpeg](img-2.jpeg) Source: LSEG Data & Analytics. THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 5 ## CHAIR’S STATEMENT DEAR SHAREHOLDERS, than UK inflation. This objective will be assessed The end of the Company’s financial year over the long term and performance against was an important milestone, as it was the the FTSE All-Share Index will be measured on fifth anniversary of the appointment of our a NAV total return basis. These changes to the management team. Most importantly, the strong wording of our investment objective and policy investment performance over these five years will change neither the manner in which the has been encouraging. We have also made a Company’s portfolio is managed nor what the series of other improvements to the Company Company is seeking to achieve. But we do hope ELISABETH STHEEMAN over this period, including reducing the they will resonate with investors. CHAIR investment management fee, therefore helping You can see this described in more detail in the to lower the ongoing cost ratio to 0.51%, putting Business Review section on page 15 and we seek in place attractive new long-term borrowing your approval to the changes at our upcoming arrangements and more recently returning the AGM – see resolution 12 in the notice of the AGM dividend back to getting ahead of inflation. The on page 78. Company also enjoys an increasingly high brand profile. All of this leaves us very well placed to PERFORMANCE develop and grow the Company further in the The Company’s NAV rose 8.3% over the twelve years ahead. months under review. The share price rose 11.3%. Both these returns compare with the While the Company has enjoyed a strong FTSE All-Share Index return of 10.5%. The period of operation, there have been significant underperformance of the NAV over the year was challenges to the broader investment trust sector primarily a function of share price weakness in in the last twelve months and beyond. The issues a small number of holdings, which the Portfolio faced have included corporate activity seeking Managers explore further in their statement. More to exploit wide discounts, as well as an evolving generally, it is encouraging that the UK equity regulatory approach towards cost disclosure market has had a better year compared with that has had the unintended consequence of other equity markets, particularly the US. The making the sector less attractive to some wealth MSCI US Index returned 7.8% over the period and managers. the MSCI All Country World Index returned 4.9%. As a Board we remain alert to all these challenges The returns of the UK market illustrate why in the sector. For the Company specifically, while we remain enthusiastic about the strength of the five year NAV and share price returns are the UK-listed businesses in the portfolio. As comfortably in excess of the benchmark, the a Board we regularly discuss the challenges share price discount to NAV has remained at or facing the UK equity market with the Portfolio around 10% for the last year. The challenge within Managers and shareholders – these include the investment trust sector is an imbalance of a shrinking universe of stocks (in common supply and demand for shares. The Company with many other markets) and some biases in has sought to address this by buying back a the composition of the benchmark towards significant number of shares over the period, sectors such as pharmaceuticals and extractive 17.4% cumulatively since March 2020, including industries. However, as the returns of the last 4.7% in the last twelve months. Idiscuss this and year demonstrate, and with three and five year other initiatives to address the discount later in returns for UK equities now much closer to global this statement. equity market returns, we remain confident that INVESTMENT OBJECTIVE AND POLICY the Portfolio Managers’ diversified portfolio One initiative we have undertaken recently is of deeply researched stocks should underpin to seek to simplify our investment objective attractive future returns to shareholders. and investment policy. In particular we propose | that the investment objective is set out in one | Overall, it is encouraging to record that the | | --- | --- | | clear statement. We are recommending: ‘The | Company’s NAV and share price returns are | | Company aims to exceed the total return on the | ahead of the benchmark over three and five | | FTSE All-Share Index and grow its dividend faster | years to 31 March 2025. Over ten years the | 6 / OVERVIEW / THE EDINBURGH INVESTMENT TRUST PLC # CHAIR'S STATEMENT / CONTINUED NAV is marginally behind the benchmark and the share price marginally ahead. Over the three years, the Company's NAV return has been 32.6%, with the Company's benchmark returning 23.3% over the same period. Over the past five years, the NAV return has been 103.9%, compared with the benchmark returning 76.5%. Over the past ten years, the NAV return has been 75.1%, compared with the benchmark returning 81.7%. In all these cases, the NAV is stated after deducting debt at fair value. # DIVIDENDS Last month, we declared the third interim dividend of 7.5 pence per share. As a Board we are proposing the same payment of 7.5 pence per share for the final dividend, which is paid this summer. Assuming this proposal is approved by shareholders at July's AGM, total dividends for the financial year as a whole will be 28.8 pence per share. This will represent an increase of 5.9% compared with the previous year and is comfortably in excess of the rate of UK inflation which was 2.3%, ensuring that we meet the second of our investment objectives. This year's dividend is funded largely by the portfolio's natural underlying income. Overall, the Company generated earnings per share of 25.0 pence. We are content that a modest draw on capital is sustainable. Additionally, as the Portfolio Managers note in their report, the headline level of portfolio income understates the overall distributions by portfolio holdings to shareholders including Edinburgh, as many companies also return surplus capital through share buybacks. Overall, the company's income generation and dividend paying capabilities are in strong shape – as the 5.9% increase indicates. # BORROWINGS The Company has £120m of long-term debt (the 'par' value) which was negotiated in 2021. The blended fixed annual coupon across the four tranches of debt is 2.4% and the average period to maturity is 23 years. Given our high expectations for portfolio returns over time, we expect this debt to be additive to the Company's returns. This was the case in the year under review, as is set out in the table on page 2. At the end of the financial year the Company had cash balances of 0.6%, meaning that net debt at par as a percentage of NAV was 10.0%. However, it is the general convention in the investment trust sector to look at the fair value of debt, which takes account of the change in bond yields. Such changes can have dramatic effects on the value of long-term debt such as ours. Indeed, as bond yields have risen since we negotiated the borrowings in 2021, the fair value of the debt has fallen from £120m to £67m. Once cash is deducted, net borrowing at fair value as a percentage of NAV is 5.0%. This is the figure quoted at the front of this report and in factsheets. # SHARE PRICE DISCOUNT TO NET ASSET VALUE The Company's discount averaged 10% over the year, having started at 11.5% and finishing at 9.4%. At the time of signing this statement, it had narrowed to 7.5%. We took advantage of the discount over the year, with an active share buyback programme, buying back 4.7% of the opening share count. This has enhanced the NAV by 0.4% over the period – again this is shown in the table on page 2. Over the last five years, we have bought back a cumulative 17% of shares in issue, which has enhanced the NAV by 1.7%. As a Board we have considered the scale of the buyback and whether we should go further with a view to achieving a tighter discount. We have also considered other measures that might help narrow the discount, such as continuation votes and tenders. For now, with strong long-term NAV total returns, including the dividend growth described above, as well as the marketing of the Company described below, we are confident that our approach will move market perceptions in Edinburgh's favour and allow the discount to tighten further. The Board will continue its strong focus on this and will keep all options under close consideration. # MARKETING We continue to execute a marketing plan to raise the profile of the Company and drive demand from new and existing shareholders. Initiatives have included podcasts, videos, a publication reviewing the last five years, and attendance at a range of events including a major AJ Bell investment trust conference in London. The management team have been quoted and interviewed in a range of publications over the year, including the Financial Times, Sunday Times and Daily Mail, and I was interviewed by the influential Money Makers podcast. We also hosted in-person events for shareholders in London in addition to the AGM in Edinburgh. The cost of this marketing is carefully assessed by the Board against a series of Key Performance Indicators (KPIs), to ensure value for money. # BOARD AND GOVERNANCE There have been no changes to the composition of the Board over the year. It has operated well throughout with all Directors making significant contributions to our discussions. As per the AIC Corporate Governance Code (the 'AIC Code') recommendations, an internal Board review was undertaken, covering performance of the Board, individual directors and the Chair. The overall results were good, providing useful insight for the Board. The Board continues to meet the FCA Listing Rules targets on gender diversity, female representation in senior roles and ethnic representation on the Board. All Directors also conform with the UK Corporate Governance Code's guidance on board tenure. I thank all my fellow Directors for their hard work on behalf of shareholders over the last year. THE EDINBURGH INVESTMENT TRUST PLC / OVERVIEW / 7 ANNUAL GENERAL MEETING (‘AGM’) This year’s AGM will take place on Tuesday 22 July 2025 at 11:00a.m. at the Balmoral Hotel in Edinburgh. The Board looks forward to meeting as many shareholders there as possible. As usual there will be votes on resolutions as set out on pages 78 to 83 of this report. I encourage shareholders to vote in person at the AGM or through the proxy facility on the voting card. The holders of shares on investment ‘platforms’ should be able to vote through their service provider. After the voting, there will be a presentation by the Portfolio Managers. There will also be an informal lunch and a chance to meet a range of colleagues and advisors that manage the Company on a day-to-day basis. For those unable to attend in person, the AGM will be streamed online, with the ability to post questions live into the meeting. The link for electronic access will be displayed prominently on the Company’s website. LONDON SHAREHOLDER EVENT We will host a presentation to shareholders on Wednesday 8October 2025 at 11:00 a.m.. This will be another chance to meet the Board, Portfolio Managers and other members of the team. Further details will be posted on the Company’s website in due course. We look forward to meeting shareholders at this event and at the AGM. OUTLOOK At the time of writing, equity markets have recovered much of the ground that was lost in early April after President Trump’s tariff plans were announced. The scale of any tariffs is yet to be confirmed and therefore the actual economic impact hard to predict. Nonetheless, the volatility in markets that followed the tariff announcements is another reminder of the short-term challenges that investors face as the global economic order evolves. We feel more strongly than ever that a stock-driven and flexible investment process, focusing on delivering attractive long-term total returns, is the best way of navigating the geopolitical and macroeconomic challenges to the advantage of shareholders. With the companies held in the portfolio in strong shape, we are confident that Edinburgh Investment Trust is well placed to deliver attractive returns to its shareholders in the years ahead. ELISABETH STHEEMAN / Chair / 20 May 2025 ## STRATEGIC REPORT THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 9 ## PORTFOLIO MANAGERS’ REPORT FOR THE YEAR ENDED 31 MARCH 2025 DEAR SHAREHOLDERS, approach, with the income generated by the It has been a great pleasure to complete our portfolio supporting the dividends that the first full year as the Portfolio Managers of your Company pays to its shareholders. Company, since taking over from colleagues RETURNS on the Global Fundamental team at Liontrust. Over the financial year the NAV total return was Over the year we have attended a range of 8.3% and the share price total return was 11.3%. in-person shareholder events, explaining These compare with a rise in the Company’s to attendees how we execute our day-to- IMRAN SATTAR benchmark, the FTSE All-Share index, of 10.5%. day responsibilities. We have enjoyed the PORTFOLIO MANAGER Operationally, the portfolio has had a strong opportunity to discuss how we are stewarding year with the profit and dividend growth of the the Company’s assets. We have also posted a holdings closely matching our expectations. series of updates on our investment views on However, the NAV return was modestly behind the Company’s website and on social media the index, primarily because of share price and trust that these have also been helpful. weakness in a small number of holdings such as We are looking forward to another year of Greggs (the value ‘food to go’ operator, which engagement with shareholders, starting has seen a slow down in sales and has reported with the Annual General Meeting this July in weak consumer confidence), Spirax (the Edinburgh, and then a shareholder update specialist engineering group, which is exposed EMILY BARNARD in London in October. We hope as many to slowing global industrial production and DEPUTY PORTFOLIO shareholders as possible will attend these MANAGER challenges within its thermal solutions division) events. and Dunelm (the UK homewares leader, Our approach is rooted in bottom-up also exposed to slowing retail demand). The fundamental analysis with the vast majority portfolio also had only a small position in HSBC, of our time spent on in-depth stock which in common with several other banking research. We identify companies we think stocks, had a strong year. This was an additional are underappreciated by the market through significant hinderance of the portfolio’s return in-depth research. These companies can be relative to that of theindex. across the style spectrum but generally we Positive contributors to returns included believe the best medium to long-term returns NatWest Group, Verisk (the US insurance are found in businesses that have a durable focused data and analytics company) and economic moat and exposure to structural Baltic Classifieds Group (classifieds business) growth. with Verisk and Baltic Classifieds new positions | However, no company operates in a vacuum; | in the portfolio. NatWest’s share price | | --- | --- | | it is important to understand what is going | responded to strong capital generation and | | on in the macroeconomic environment. | cash returns to shareholders, combined with | | We do this through both a more traditional | improving sentiment as the UK government’s | | macroeconomic overlay, but most importantly | stake – dating back to the financial crisis of | | in the approach we call ‘Macro from the Micro’, | 2008 – significantly reduced over the year. | | where we build a macroeconomic picture from | Having no holdings in either Diageo (alcoholic | | the ground up, by speaking to a broad range of | drinks) or Glencore (mining), both of which we | | companies and understanding what they are | have had concerns about the growth outlook, | | seeing at the coalface. | also helped relative performance as the share | prices of these large stocks fell. The end result is the construction of a | portfolio of high quality stocks, adopting a | The Company’s share price return was ahead | | --- | --- | | flexible investment style to produce an ‘all | of the index over the year. This was principally | | weather’ portfolio aiming to outperform in | because the share price discount to NAV | | different economic and market environments. | narrowed, from 11.5% to 9.4%. | We manage the portfolio with a total return 10 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC PORTFOLIO MANAGERS’ REPORT / CONTINUED Turning to the detail behind the dividend, the Company’s Grainger is a leader in the growing professional build to rent earnings per share rose from 23.9p to 25.0p, an increase property sector in the UK. The supply-demand dynamic of of 4.6%. Top line revenues were £40.7m, and as such, the this sector is attractive, with consistently strong demand approximate headline portfolio yield is 3.4%. As we flagged in for high-quality rental properties, set against a supply side this report last year, the revenues generated by the portfolio dominated by private rental landlords who are likely to understate the distributions made by investee companies struggle with new efficiency regulations. as some choose to return cash to shareholders through Segro is a leading owner, manager and developer of share buybacks. We estimate that the ‘buyback yield’ of warehouses and industrial property. With high-quality assets the portfolio over the year was approximately 1.9%, which strategically located in prime areas, Segro is well-positioned represents a significant return of capital even though it does to benefit from structural trends including the growing not affect the numbers immediately above. demand for data centres which continue to drive long-term As the Chair has written in her report, total dividends per growth opportunities. share for the year of 28.8p will represent growth of 5.9% The main sales from the portfolio were Marks and Spencer, compared with the previous financial year. We are confident Centrica (utility), and Mondi (paper and packaging). Marks that the Company should be able to generate mid-single and Spencer has delivered on a hard-fought turnaround digit growth in earnings over the medium term, which under the new management team, reinvesting in product, should be supportive of similar dividend growth in excess of price, and proposition. We felt the turnaround and future inflation for the Company. The main variable is the degree to prospects had become fairly priced, and exited the position. which companies return capital to shareholders via buybacks Centrica, like Marks and Spencer, has been on a self-help instead of conventional dividends. journey, with a significant improvement in capital allocation TRANSACTIONS and discipline over recent years, alongside an improvement Notable transactions during the year include purchases in operational and financial delivery. Candidly, we exited the in National Grid, LSEG (London Stock Exchange Group), position in Centrica too early as the business has continued Grainger, and Segro – all of which are new additions to your to surprise positively around its cash generation potential. portfolio. Mondi we exited owing to cyclical concerns and concerns that sector consolidation would likely place them at a National Grid is a leading US and UK regulated utility, playing strategic disadvantage. a critical role in the global energy transition. The company is exposed to the strong structural growth tailwind of electrification as a result of global moves to decarbonise, providing medium-term earnings visibility. We initiated the position following National Grid strengthening its balance sheet through a rights issue and a dividend cut, leaving it better equipped to capitalise on these trends over the medium term. THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 11 CURRENT SHAPE OF PORTFOLIO We think about portfolio construction very carefully and, by building a portfolio of around 40-50 advantaged businesses, we aim for a set of holdings that are economically and thematically well diversified. The current themes and economic diversification within the portfolio are shownbelow and will be dealt with in more detail at the shareholder event in October 2025. MULTIPLE THEMES Self-helpMarket Champions Innovation Consumer Bifurcation ## 16% ## 19% Data & Analytics Capital Optimisation ## 11% 11% Decarbonisation ## 16% 16% 10% ECONOMIC DIVERSIFICATION Industrials/ ## Multiple themes Defensives Tech/Data Consumer Healthcare Commodities Financials Cyclicals ## Economic diversification 23% 16% 12% 14% 10% 15% 9% Source: Liontrust, 31.03.25, ex Cash, example stocks. All use of company logos, images or trademarks in this presentation are for reference purposes only. Source: Liontrust, 31.03.25, ex Cash, example stocks. All use of company logos, images or trademarks in this presentation are for reference purposes only Source: Liontrust, 31.03.25, ex Cash, example stocks. All use of company logos, images or trademarks in this presentation are for reference purposes only 12 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC PORTFOLIO MANAGERS’ REPORT / CONTINUED The proportion of the portfolio invested in overseas stocks into how Dunelm is leveraging digital and data capabilities is 6.7%, with three names featuring: Verisk and Thermo to deepen customer engagement and expand market share. Fisher Scientific in the US, and KONE in Finland. These three We engaged with the Digital Director regarding Dunelm’s holdings each bring unique economic characteristics that we advertising strategy and thinking around introducing an cannot replicate from the universe of UK stocks. However, the app. We came out of the meeting confident that Dunelm remaining 42 holdings are all UK listed, reflecting the wide is thinking sensibly around different ways to drive organic range of strong businesses in the UK market combined with traffic to its site and boost conversion. attractive valuation both in absolute terms and relative to Overall, our conviction in Dunelm’s quality as a company has global peers. grown. Despite some near-term consumer uncertainty, we ENGAGEMENT WITH COMPANIES remain confident in the company’s medium-term outlook, Our investment process seeks to take account of the underpinning its standing as the top position in the portfolio significant variables that influence a company’s prospects. relative to the index. Whether these variables be financial, strategic, reputational or Rotork have any other feature, our process tracks the most material This company is a market leader in flow control and ones. The following three examples illustrate how we engage instrumentation products (actuators) and is exposed to with companies on key issues for each investmentcase. attractive long-term growth drivers such as oil and gas Greggs electrification, and industrial process automation. Rotork’s This company has made substantial investment in its CEO, appointed in 2022, brought a renewed focus on driving infrastructure and distribution assets. While the management organic growth through its ‘Growth +’ strategy, aiming to team’s decision to invest ahead of its anticipated growth deliver mid to high-single digit topline growth, with gentle is to be applauded, as this should underpin the long-term margin accretion medium term, through focusing on target competitive advantages of the business, the extent of the segments with higher growth rates, reinforcing and improving investment was higher than we (and the market) anticipated. the customer value proposition, and improving innovation. The consequence on the company is the financial impact of A site visit confirmed strong operational efficiency and a margin erosion. We have discussed this with the company, more customer centric culture. Lead times are now best-in- highlighting in particular how they have communicated the class and well below industry averages. The facility is well investment programme to the market. This subject will remain invested with plenty of capacity to support future growth. an area of focus for us in the year ahead, while for now the Incremental investments are delivering strong returns. company is a 2.5% weight in the portfolio, and remains one of Our thesis for Rotork revolves around a renewed focus on the top 15 positions relative to its index weight. organic growth. The organisation has become much more Dunelm front-footed and the mentality of the engineers has evolved In late 2024 we visited this market leader in the fragmented UK to be customer focused. Meeting the Managing Director of homewares and furniture market. Dunelm continues to gain Water & Power, a key growth driver for organic growth, it was market share by offering high-quality, own-brand products at evident that these changes had fed through the division and compelling prices – a proposition that is difficult for peers to had resulted in them winning new projects. For example, in replicate and creates a meaningful barrier toentry. Singapore they now have a 97% share at a water plant vs 50% a couple of years ago. The visit reinforced our conviction Our visit included a Dunelm store, their made-to-measure in Rotork’s ability to execute and deliver sustainable growth. manufacturing centre (curtains, blinds and other soft The holding remains a mid-sized 2% position in the portfolio. furnishings), and head office where we met the Digital Director and Group General Counsel & Company Secretary. Spirax We were given a store tour by a regional manager who Spirax is a steam specialities engineering business with a explained the strong return profile from store refits — a strong market position, providing low cost essential solutions key area of investment for Dunelm. The manufacturing visit to customers. Around 85% of their sales are exposed to highlighted operational strengths: lead times have been customer operating budgets rather than capex budgets, reduced from 27 to 7–8 days, with potential to deliver in as giving the business a degree of resilience relative to Industrial little as 3 days. Pleasingly there is ample capacity for further Production. While Spirax has faced recent challenges due growth. Our discussions at head office also provided insights to both company-specific and macroeconomic factors, we THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 13 believe the new management team is high calibre and has OUTLOOK implemented changes that should enable a return to good The re-election of Donald Trump has increased economic organic growth with margin expansion. uncertainty. The ‘Liberation’ day tariff announcement proved more severe than the markets had anticipated, The facility we visited has undergone major investment in triggering sharp sell-offs across global equity markets. recent years with the average age of a machine down from Tariffs are expected to increase the cost of doing business around 20 years to 10 years and more automation has been for companies and will weigh on consumer and corporate introduced. Several lines have already doubled output while confidence. Closer to home, the UK faces its own set of halving labour input, an achievement they want to achieve challenges alongside these announcements. The increase in more widely throughout the site. The management team employer National Insurance rates following Labour’s budget outlined plans to maximise floor space efficiency and drive will be a direct cost headwind for UK businesses, especially further productivity gains. The General Manager for UK those with high domestic exposure and labour-intensive Supply has a very strong background and seemed to be an models. We are assessing the extent to which companies are agent for change and would help drive these improvements able to offset these cost headwinds through efficiency gains across the site. Recently there has been an operational issue and pricing power. Our focus remains on constructing a well- at one of its plants and our visit reassured us that they are on balanced, and diversified portfolio of advantaged businesses. top of the supply chain issues. These actions helped us better Our confidence in the medium-term outlook for the portfolio understand the level of ongoing change in the business, as the comes from the excellent strategic, operational, and financial management team continues to drive operational efficiency progress that the vast majority of the companies in the and position the business for profitable growth. portfolio have made (and continue to make) over the last couple of years. More recently we have met with the Chair of the company to emphasise that not only has operational execution been poor, but also that financial guidance to the market has been lacking. We conveyed that these both need to improve. We also discussed the company’s historic acquisition strategy. In IMRAN SATTAR recent years the company has made a series of acquisitions, PORTFOLIO MANAGER of c. £1b, to create an electric thermal solutions business. To date the company has not earnt an attractive return on EMILY BARNARD capital on these investments and we discussed the likely DEPUTY PORTFOLIO MANAGER progression of returns from here. Like Greggs, the company 20 MAY 2025 is a 2.5% weight in the portfolio, and remains one of the top 15 positions relative to its index weight. 14 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC ## THE PORTFOLIO MANAGERS’ CORE ## INVESTMENT BELIEFS Our competitive edge rests on the combination of our TOTAL RETURN STRATEGY Global Fundamental team’s experience and our flexible A focus on both capital growth and income. We take a total investmentstyle. return approach: investor returns should derive over the long term from both capital appreciation and dividend income. ACTIVE MANAGEMENT We generally prefer companies with organic investment Stock-driven. Share prices follow fundamentals over the long opportunities, but will sometimes hold companies with term. Through our proven investment approach, we expect acquisitive profiles. Either way, companies with growth to outperform over the long term, net of fees. tailwinds are preferred. We view income as an important component rather than the primary driver of investment High conviction portfolio. We expect the portfolio to contain return. This aligns with the Company’s twin objectives. around 40 to 50 stocks. Holdings sizes reflect the conviction we have in each company and our assessment of the upside LONG TERM and downside potential of its share price. Typical holding period of three to five years. This is an appropriate period to ensure that underlying corporate Risk. We think of risk as permanent capital loss. To mitigate fundamentals drive investment returns. It is therefore also a this, our analysis of a company’s valuation is the first line of sensible period over which to measure an active manager. defence. Our risk management process combines our depth of knowledge of the stocks in the portfolio, plus separate Gearing should enhance shareholder returns. One of the oversight by Liontrust’s Portfolio Risk Committee. advantages of an investment trust is the ability to borrow to enhance equity returns. We therefore expect gearing to FLEXIBLE INVESTMENT STYLE boost investment returns over time. Open-minded approach. We do not have dogmatic style biases, such as ‘growth’ or ‘value’. We are also prepared CAPACITY MANAGEMENT to invest in companies that we identify as having scope Scale diseconomies. In our view, investment performance can for recovery through management change, business rapidly suffer if assets under management become too large. transformation or an improving business environment. We We carefully manage capacity to ensure that the interests expect the profile of the portfolio to evolve depending on of existing clients take precedence over new clients. The our assessment of individual companies and our reading of approach ensures we retain a size advantage. It enables us to the economic and market background. reposition the portfolio – and those of all our other clients – quickly and efficiently when required. Disciplined, rigorous, fundamental research. In keeping with the stock-driven nature of the portfolio, the vast majority DEEP INVESTMENT RESOURCE WITH GLOBAL of our effort takes the form of in-depth stock research. The PERSPECTIVE remainder is spent on macroeconomic analysis. A close-knit investment team. Average experience of the investment team is 14 years. The team has been stress-tested Materiality assessment is a core part of the investment across various market cycles. process. As part of the investment process, we identify and prioritise the key risks and opportunities that each holding Challenge and debate. This is encouraged within a structured (or potential holding) faces over our investment time risk control environment, with robust oversight processes. horizon. Some of these have financial implications for the Team members own Liontrust equity and co-invest in the portfolio’s holdings and, as such, we engage each holding on team’s investment strategies, including Edinburgh Investment its key issues or exposures. The outcomes from our in-depth Trust, which in turn underpins teamwork and collaboration. analysis and engagement help form our conviction level and investment decisions. THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 15 ## BUSINESS REVIEW STRATEGY AND BUSINESS MODEL trusts or investment companies. Further, the Company may The Edinburgh Investment Trust plc is an investment not hold more than 5% of the issued share capital (or voting company and its investment objective is set out below. The shares) of any one company. Investment in convertibles is strategy the Board follows to achieve that objective is to set subject to normal security limits. Should these or any other investment policy and risk guidelines, including investment limit be exceeded by subsequent market movement, each limits, and to monitor how they are applied. These are also resulting position is specifically reviewed by the Board. The set out below and have been approved by shareholders. Company may borrow money to provide gearing to the equity portfolio of up to 25% of net assets. The business model the Company has adopted to achieve its investment objective has been to contract the services Use of derivative instruments is monitored carefully by the of the Manager to manage and administer the portfolio in Board and permitted within the following constraints: the accordance with the Board’s strategy and under its oversight. writing of covered calls against securities which in aggregate The Portfolio Manager with lead individual responsibility amount to no more than 10% of the value of the portfolio, and for the day-to-day management of the portfolio is Imran the investment in FTSE 100 futures which when exercised Sattar and the Deputy Portfolio Manager is Emily Barnard. would equate to no more than 15% of the value of the Imran Sattar and Emily Barnard took on these new roles portfolio. Other derivative instruments may be employed, on 6 February 2024, following the retirement of James de subject to prior Board approval, provided that the cost (and Uphaugh, after 36 years in the industry. potential liability) of exercise of all outstanding derivative positions at any time should not exceed 25% of the value of In addition, the Company has contractual arrangements with the portfolio at that time. The Company may hedge exposure MUFG Corporate Markets to act as registrar, The Bank of to changes in foreign currency rates in respect of its overseas New York Mellon (International) Limited as depositary and investments. custodian, and NSM Funds (UK) Limited to act as Company Secretary. Amendment to the Company’s Investment Objective and Policy INVESTMENT OBJECTIVE AND POLICY The Company, after discussion with the Portfolio Managers, Investment Objective determined that it would be beneficial to amend the existing The Company invests primarily in UK securities with the investment objective and policy to simplify the wording and long-term objective of achieving: to clarify (in the investment objective) the nature of the shareholder returns targeted by the Company. The proposed 1. an increase of the Net Asset Value per share in excess of change to the investment objective and policy wording will the growth in the FTSE All-Share Index; and change neither the manner in which the Company’s portfolio is managed, nor what the Company is seeking to achieve. 2. growth in dividends per share in excess of the rate of UK inflation. It is proposed that the investment objective be simplified by using wording more easily understood by the investor which Investment Policy makes it clear that the Company aims to exceed the total The Company will generally invest in companies quoted on return on the FTSE All-Share Index on a net asset value total a recognised stock exchange in the UK. The Company may return basis and grow its dividend faster than UK inflation. also invest up to 20% of the market value of the Company’s This will be set out in one clear statement which may resonate investment portfolio, measured at the time of any acquisition, more effectively with the retail investor base, and which may in securities listed on stock exchanges outside the UK. The be more simply messaged in marketing campaigns and as a portfolio is selected by the Portfolio Manager on the basis short, memorable phrase going forwards. of its assessment of the fundamental value available in individual securities. Whilst the Company’s overall exposure To avoid any ambiguity, the stated investment objective will to individual securities is monitored carefully by the Board, be expanded upon to make it clear that (i) the Company’s the portfolio is not primarily structured on the basis of objectives will be assessed over the long term; and (ii) the industry weightings. No acquisition may be made which Company’s net asset value total return performance will be would result in a holding being greater than 10% of the measured against the FTSE All-Share Index total return. This market value of the Company’s investment portfolio, nor will will ensure that it is clear that the investment objective is to the Company invest more than 15% of the market value of target an attractive total return relative to the total return of its investment portfolio in any other UK-listed investment 16 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC BUSINESS REVIEW / CONTINUED the Index (which is how the portfolio is currently managed The ongoing charges figure is calculated in accordance with and, accordingly, the material change is to the wording of the the AIC methodology and is reviewed by the Board annually investment objective and not to its substance). in comparison to peers. The Board also regularly reviews the performance of the In addition, the Company proposes to make some Company in relation to the 20 investment trusts in the non-substantive changes to the wording of its investment UK Equity Income sector (including the Company). As policy, which will serve to re-order the text and break it into at 31 March 2025 the Company was ranked 20th by NAV shorter, more easily digestible sections for the reader. performance in this sector over one year, 2nd over three years and 4th over five years (source: JP Morgan Cazenove). The Board believes that the proposed amendments are in the best interests of the shareholders. OUTLOOK, INCLUDING THE FUTURE OF THE COMPANY The proposed amendments have been approved by the FCA The main trends and factors likely to affect the future and also require shareholder approval. The full text of the development, performance and position of the Company’s proposed amendments may be found in the appendix to the business can be found in the Portfolio Managers’ Report. notice of the AGM on pages 82 and 83. Details of the principal risks affecting the Company can be found on pages 20 to 23. RESULTS AND DIVIDENDS FINANCIAL POSITION AND BORROWINGS At the year end the share price was 740.00p per ordinary The Company’s balance sheet on page 60 shows the assets share (2024: 690.00p). The net asset value (debt at fair and liabilities at the year end. Borrowings at the year end value) per ordinary share was 817.16p (2024: 779.97p). comprised £120 million of Unsecured Senior Loan Notes (2024: £120 million). The Directors declared a third interim dividend for the year ended 31 March 2025 of 7.50 pence per ordinary share (2024: PERFORMANCE ATTRIBUTION 6.90 pence), an increase of 8.7% compared with each of the The following table illustrates the differing contributions to | first two interim dividends. This dividend is payable on 23May | NAV excess returns, split between underlying stock selection | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2025 to ordinary shareholders on the register on 2May 2025. | and other factors such as gearing, costs and share buybacks. | | | | | | | | | | | The shares were quoted ex-dividend on 1 May 2025. | | | | | for the | | | | for the | | | | | | | year ended | | | | year ended | | | | The Board is recommending a final dividend of 7.50 pence | | | 31 March 2025 | | | | 31 March 2024 | | | | | per share which is the same as the third interim dividend | | | | | | % | | | | % | | declared last month, implying a full year payout of 28.8 pence | | (1) | | | | | | | | | Total Return Basis | per share. This represents an increase of 5.9% compared with | NAV (debt at fair value) 8.3 13.4 | | --- | --- | | the total underlying ordinary dividends paid for the financial | Benchmark 10.5 8.4 | | year to 31 March 2024. | Relative performance -2.2 5.0 | | Subject to approval at the Company’s AGM, the dividend will | Analysis of Relative | Performance have an ex-dividend date of 5 June 2025 and will be paid on Portfolio total return 7.3 11.8 31 July 2025, to shareholders on the register at 6 June 2025. (1) | | Benchmark total return | 10.5 8.4 | | --- | --- | --- | | PERFORMANCE | Portfolio outperformance [A] -3.2 3.4 | | | The Board reviews the Company’s performance by reference | Borrowings: | | | to a number of KPIs which are shown on page 2. They are | Net gearing effect | 0.8 1.2 | | measures of the Company’s absolute and relative performance | Interest | -0.3 -0.3 | | and assist in managing performance and compliance and are | Market value movement | 0.6 0.4 | | reviewed by the Board at each meeting. | Management fee -0.4 -0.4 | | Other expenses -0.1 -0.1 The Chair’s Statement on pages 5 to 7 gives a commentary Tax 0.0 0.0 on the performance of the Company during the year, the Share buybacks 0.4 0.8 gearing and the dividend. Subtotal [B] 1.0 1.6 The Board reviews an analysis of expenditure at each Board Relative performance [A+B] -2.2 5.0 meeting, and the Audit and Management Engagement (1) LSEG Data & Analytics. Committees formally review the fees payable to the main service providers, including the Manager, on an annual basis. THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 17 Performance attribution – analyses the performance of the Company relative to its benchmark. The Analysis of Relative Performance estimates the quantum of relative performance that is attributable to each of the factors set out in this table. The table is intended to be indicative rather than precise; the accuracy of each estimate is determined by a variety of factors such as the volatility of investment returns over the year and intra-month, and the timing of income receipts and expenditure payments. Relative performance – represents the arithmetic difference between the NAV and benchmark returns. Portfolio total return – represents the return of the holdings in the portfolio including transaction costs, cash and income received, but excluding expenses incurred by the Company. Net gearing effect – measures the impact of the unsecured senior loan notes and cash on the Company’s relative performance. This will be positive if the portfolio has positive capital performance and negative if capital performance is negative. Interest – interest payable on the unsecured senior loan notes has a negative impact on performance. Market value movement – represents the change in market value of the Company’s borrowings, measured to the end of the financial year or maturity from the start of the financial year or issuance, each as appropriate. Management fee – the fee reduces the Company’s net assets and decreases returns. Other expenses and tax – reduce the level of assets and therefore result in a negative effect on relative performance. Share buybacks – measures the effect of ordinary shares bought back at a discount to net asset value on the Company’s relative performance. 18 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC # INVESTMENTS IN ORDER OF VALUATION AT 31 MARCH 2025 ## UK LISTED ORDINARY SHARES UNLESS OTHERWISE STATED | Company | Sector | At Market Value £'000 | % of Portfolio | | --- | --- | --- | --- | | Shell | Oil, Gas and Coal | 92,150 | 7.5 | | Unilever | Personal Care, Drug and Grocery Stores | 76,791 | 6.2 | | GSK | Pharmaceuticals and Biotechnology | 55,563 | 4.5 | | Haleon | Pharmaceuticals and Biotechnology | 55,456 | 4.5 | | Compass | Consumer Services | 49,687 | 4.0 | | NatWest | Banks | 49,167 | 4.0 | | Tesco | Personal Care, Drug and Grocery Stores | 47,345 | 3.8 | | AstraZeneca | Pharmaceuticals and Biotechnology | 46,497 | 3.8 | | Dunelm | Retailers | 45,561 | 3.7 | | National Grid | Gas, Water and Multi-utilities | 44,222 | 3.6 | | **TOP TEN HOLDINGS** | | **562,439** | **45.6** | | Whitbread | Travel and Leisure | 37,091 | 3.0 | | Auto Trader | Software and Computer Services | 35,583 | 2.9 | | Rentokil | Industrial Support Services | 34,573 | 2.8 | | Grainger | Real Estate Investment and Services | 33,179 | 2.7 | | Verisk - US Listed | Industrial Support Services | 32,729 | 2.7 | | London Stock Exchange Group | Finance and Credit Services | 31,354 | 2.5 | | Spirax-Sarco Engineering | Industrial Engineering | 30,899 | 2.5 | | Anglo American | Industrial Metals and Mining | 30,481 | 2.5 | | Greggs | Personal Care, Drug and Grocery Stores | 30,341 | 2.5 | | Segro | Real Estate Investment Trusts | 28,867 | 2.3 | | **TOP TWENTY HOLDINGS** | | **887,536** | **72.0** | | Admiral | Non-Life Insurance | 27,141 | 2.2 | | Baltic Classifieds | Software and Computer Services | 25,746 | 2.1 | | Rotork | Electronic and Electrical Equipment | 24,604 | 2.0 | | Rightmove | Real Estate Investment and Services | 24,549 | 2.0 | | Thermo Fisher Scientific - US Listed | Medical Equipment and Services | 22,661 | 1.8 | | KONE - B shares - Finnish Listed | Industrial Engineering | 20,701 | 1.7 | | Halma | Electronic and Electrical Equipment | 20,021 | 1.6 | | HSBC | Banks | 17,401 | 1.4 | | Sage | Software and Computer Services | 16,854 | 1.4 | | AJ Bell | Investment Banking and Brokerage Services | 16,431 | 1.3 | | **TOP THIRTY HOLDINGS** | | **1,103,645** | **89.5** | | BAE Systems | Aerospace and Defence | 16,376 | 1.3 | | Howden Joinery | Retailers | 15,377 | 1.3 | | RELX | Media | 14,701 | 1.2 | | Money Supermarket | Software and Computer Services | 13,420 | 1.1 | | Lloyds Bank | Banks | 12,482 | 1.0 | | Sainsbury's | Personal Care, Drug and Grocery Stores | 11,960 | 1.0 | | Diploma | Industrial Support Services | 10,993 | 0.9 | | 3i | Investment Banking and Brokerage Services | 10,492 | 1.0 | | SSE | Electricity | 5,291 | 0.4 | | Applied Nutrition | Food Producers | 5,152 | 0.4 | | **TOP FORTY HOLDINGS** | | **1,219,889** | **99.1** | | Oxford Instruments | Electronic and Electrical Equipment | 4,186 | 0.3 | | Renishaw | Electronic and Electrical Equipment | 3,623 | 0.3 | | LondonMetric Property | Real Estate Investment Trusts | 3,190 | 0.3 | | Eurovestech (UQ) | Investment Banking and Brokerage Services | - | - | | Raven Property (S) - Preference shares | Real Estate Investment and Services | - | - | | **TOTAL HOLDINGS 45 (31 MARCH 2024: 52)** | | **1,230,888** | **100.0** | UQ - Unquoted investment S - Delisted THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 19 ## PORTFOLIO ANALYSIS Analysis of Portfolio by Industry At 31 March 2025 and 2024 30% 2025 2024 25% 20% 15% 10% 5% 0% Health Financials Real EstateUtilitiesTechnology Tele- Consumer Consumer IndustrialsBasic Energy communications Care Discretionary Staples Materials Comparison of Portfolio to FTSE All-Share Index by Industry At 31 March 2025 30% Portfolio FTSE All-Share Index 25% 20% 15% 10% 5% 0% Health Financials UtilitiesEnergyTechnology Tele- Real Estate Consumer Consumer IndustrialsBasic communications Care Discretionary Staples Materials 20 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC ## PRINCIPAL RISKS AND ## UNCERTAINTIES RISK MANAGEMENT AND MITIGATION out a description of the principal and emerging risks and how The Manager (‘AIFM’) is responsible for the portfolio they are being managed or mitigated. management of the Company and for exercising the risk MARKET RISK management function in respect of the Company. As part All the Company’s investments are traded on recognised of this risk management function, the AIFM maintains a stock exchanges, bar a very small number that have delisted risk control summary of identified risks including emerging or suspended since purchase. The principal risk for investors risks likely to impact the Company. This is updated regularly, in the Company is a significant fall and/or a prolonged period following discussions with the Manager and highlighted to of decline in those markets. The Company’s investments the Board. and the income derived from them are influenced by many The Board, through the Audit Committee and with the factors such as general economic conditions, interest rates, assistance of the Manager, regularly reviews a report of inflation, currency movements, a recurrence of a pandemic, potential risks to the Company in the form of a risk control geopolitical events, the war in Ukraine and government summary. The document includes a description of each policies (e.g. the recent changes to tariffs by the Trump identified risk, the mitigating action taken, reporting and administration in the US) as well as by supply and demand disclosure to the Board and an impact and probability risk reflecting investor sentiment. Such factors are outside the rating. The rating is given both prior to and after the Board’s control of the Board and Manager and may give rise to mitigation of each risk. The information is then displayed in high levels of volatility in the prices of investments held by matrix form which allows the Board to identify the Company’s the Company. The asset value and price of the Company’s key risks. As the changing risk environment in which the shares and its earnings and dividends may consequently also Company operates has evolved, the total number of risks has experience volatility and may decline. fluctuated, with certain risks having been removed and new Changes in interest rates, inflation and currency could reduce risks added with emerging risks actively discussed as part of returns and lead to depreciation of the Company’s net asset this process and, so far as practicable, mitigated. value. Furthermore, the risk control summary underpins the Market risk is included in the risk control summary report Company’s preparation for the revised AIC Code, which that is prepared by the Manager and reviewed by the Board requires boards to make a declaration of the effectiveness at each meeting. Additionally, the Board receives reports of the material controls at the balance sheet date, which on the performance of the portfolio at each meeting. The applies to accounting periods beginning on or after 1 January portfolio is positioned by the Portfolio Managers for medium 2026. This particularly supports the new Provision 34 of the to long-term returns. AIC Code which ensures the Board has established and maintains procedures to manage risk, oversee the internal INVESTMENT RISK control framework and identify any material controls which The Board sets investment policy and risk guidelines, have not operated effectively, identifying both actions and together with investment limits, and monitors adherence improvements. to these at each Board meeting. All individual investment decisions are undertaken by the Portfolio Managers. The The composition of the Board is regularly reviewed to ensure Portfolio Managers’ approach is to construct a portfolio its members offer sufficient knowledge and experience to which should benefit from expected future trends in the UK assess, anticipate and mitigate these risks, as far as possible. and global economies. The Portfolio Manager is a long-term The principal risks and uncertainties facing the Company are investor, prepared to take substantial positions in securities an integral consideration when assessing the operations in across a range of different types of stock. This reflects the place to meet these objectives, including the performance Portfolio Managers’ high conviction, stock-driven investment of the portfolio, share price and dividends. The Board is process and total return approach. Strategy, asset allocation ultimately responsible for the risk control systems, but the and stock selection decisions by the Portfolio Managers can day-to-day operation and monitoring are delegated to the lead to underperformance of the portfolio relative to the Manager. The Board has carried out a robust assessment benchmark and/or income targets. of the principal and emerging risks facing the Company, The Portfolio Managers’ style may result in a concentrated including those that would threaten its business model, portfolio with significant overweight or underweight future performance, solvency or liquidity. The following sets positions in individual stocks or sectors compared to the THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 21 benchmark and, consequently, the Company’s performance Investment risk is increased through the Company’s may deviate significantly, possibly for extended periods, borrowing, namely the £120m Unsecured Senior Loan Notes. from that of the benchmark. In a similar way, the Portfolio This facilitates additional investment exposure than would be Managers manage other portfolios, holding many of the same the case for an unleveraged portfolio; if the investments fall in stocks as the Company which reflects the Portfolio Managers’ value, this will increase the adverse impact on performance. high conviction style of investment management. This could On a routine basis the Board monitors the appropriateness increase the liquidity and price risk of certain stocks under of gross and net gearing levels, and the amount of headroom certain scenarios and market conditions. However, the Board above minimum NAV levels as agreed with the lenders. and the Portfolio Managers believe that the investment INCOME/DIVIDEND RISK process and policy outlined above should, over the long The Company is subject to the risk that income generation term, meet the Company’s objectives of Net Asset Value per from its investments fails to reach the level of income share growth in excess of the benchmark and real growth required to meet its objectives. in the dividend per share. Investment selection is delegated to the Portfolio Managers. The Board does not specify asset The Board monitors this risk through the review of detailed allocations. Information on the Company’s performance income and dividend forecasts and comparison against against the benchmark and peer group is provided to the budget. These are contained within the Board papers and Board at each Board meeting. The Board uses this to review the Board considers the level of income at each meeting. the performance of the Company, taking into account Revenue estimates are presented at each Board meeting how performance relates to the Company’s objectives. and Board Committee meeting which determine the three The Portfolio Managers are responsible for monitoring interim dividends and propose the final dividend. the portfolio selected and seek to ensure that individual The Board also takes into account the size of the Company’s stocks meet an acceptable risk-reward profile. There is also accumulated income and capital reserves which can be used independent oversight of the portfolio and Company’s asset to supplement dividends when income levels alone do not structure by the Liontrust Investment Riskteam. cover the proposed dividend payments. These reserves are As described in the investment policy, derivatives may be currently being used to support the dividend and, given the used provided that the market exposure arising is less than nature of the portfolio’s underlying income generation, we 25% of the value of the portfolio. expect this to continue for the foreseeable future. Investment performance risk is included in the risk control DISCOUNT RISK summary report that is prepared by the Manager and The share price is monitored on a daily basis and, at the reviewed by the Board at each meeting. The Board also request of the Board, the Company is empowered to receives reports on the performance of the portfolio and on repurchase shares within agreed parameters which are compliance with the Company’s investment policy guidelines regularly reviewed with the Company’s broker. The discount from the Manager’s risk and compliance department at each at which the shares trade to NAV can be influenced by share meeting. As part of an annual assessment, the Board reviews repurchases. During the year, the Company repurchased the performance of the Manager and the management 7,170,500 shares for holding in treasury (2024: 13,985,000). contract at the Management Engagement Committee Risk management activity includes systematic reviews of the meeting. investment objective and investment strategy and regular dialogue with shareholders and marketing activities. The Board also reviews the annual depository report and report from the compliance department of the Manager Share price and discount risk is included in the risk control and any breaches of the investment policy, limits or summary report that is prepared by the Manager and guidelines are reported immediately to the Board and Audit reviewed by the Board at each meeting. In addition, the CommitteeChairs. Board monitors the Company’s investment performance against its stated objectives and peer group and reviews the marketing report at every Board meeting. 22 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC PRINCIPAL RISKS AND UNCERTAINTIES / CONTINUED CORPORATE GOVERNANCE AND INTERNAL In particular, the Manager performs services which are CONTROLS RISK integral to the operation of the Company. The Manager may The Board has delegated to third-party service providers be exposed to the risk that litigation, misconduct, operational the management of the investment portfolio, depositary failures, negative publicity and press speculation, whether or and custody services (which include the safeguarding of not it is valid, will harm its reputation. Any damage to the the assets), registration services, accounting and company reputation of the Manager could result in counterparties and secretarial services. third parties being unwilling to deal with the Manager and by extension the Company. This could have an adverse impact The principal risks arising from the above mentioned on the ability of the Company to pursue its investment policy. contracts relate to the performance of the Manager, the performance of administrative, registration, depositary, The Board seeks to manage these risks in a number of ways: custodial and banking services, and the failure of information – The Company Secretary reviews the performance and technology systems used by third-party service providers. the service organisation control reports of third-party These risk areas could lead to the loss or impairment of the service providers and reports to the Board on an annual Company’s assets, inadequate returns to shareholders and basis at the Audit Committee meeting. loss of investment trust status. Consequently, in respect of these activities, the Company is dependent on Liontrust’s – The Board reviews the performance of the Manager at control systems and those of its administrator, depositary, every Board meeting and otherwise as appropriate. The custodian and registrar. Board has the power to replace the Manager and reviews the management contract formally once a year. An annual review of the control environments of all service providers is carried out by the Company Secretary who – The day-to-day management of the portfolio is the provides an assessment of these risks and the operation of responsibility of the named Portfolio Managers. the controls for consideration by the Audit Committee and is formally reported to and considered by the Board. – The risk that the Portfolio Manager might be incapacitated or otherwise unavailable is mitigated by the fact that he Investment trust status is assessed by the Manager, works within, and is supported by, the wider Liontrust reviewed at every Board meeting and confirmed by the team. Moreover, Emily Barnard, as Deputy Portfolio Audit Committee and HMRC annually. Taxation matters are Manager, works closely with Imran on a daily basis and dealt with by independent accountants, with oversight from would be able to manage the portfolio if Imran Sattar was theBoard. unable to do so for any reason. RELIANCE ON THE MANAGER AND OTHER THIRD- – The Board has set guidelines within which the Portfolio PARTY PROVIDERS RISK Managers are permitted wide discretion. Any proposed The Company is reliant upon the performance of third-party variation outside these guidelines is referred to the Board service providers for its executive function and other service and compliance with the guidelines and the guidelines provisions. The Company’s most significant contract is with themselves are reviewed at every Board meeting. Liontrust Fund Partners LLP who have been appointed as the Company’s AIFM. The Company has other contractual arrangements with third parties to act as administrator, company secretary, registrar, depositary and broker. The Company’s operational structure means that all cyber risk (information and physical security) arises at its third-party service providers, including fraud, sabotage or crime against the Company. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to pursue successfully its investment policy and expose the Company to risk of loss or to reputationalrisk. THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 23 PHYSICAL AND TRANSITIONAL CLIMATE CHANGE The Board ensures that satisfactory assurances are received Globally, climate change effects are already emerging in the from the service providers. The Manager’s compliance form of changing weather patterns. Extreme weather events officers produce regular reports for review by the Company’s could potentially impair the operations of individual investee Audit Committee. companies, potential investee companies, their supply Additionally, the depositary monitors stock, cash, borrowings chains and their customers. Legislative changes are driving and investment restrictions throughout the year. The an economic adjustment towards a low-carbon economy. depositary reports formally once a year and also has access There are considerable risks to the value, business model and to the Company Chair and the Audit Committee Chair if operations of investee and potential investee companies due needed during the year. to stranded assets and how investors, financial regulators and policymakers respond to climate concerns. The Portfolio Please see Note 16 on page 71 to read more about risk Managers take such risks into account, along with the management and financial instruments. downside risk to any company – whether in the form of its business prospects, market valuation or sustainability of EMERGING RISKS dividends – that is perceived to be making a detrimental The Board has put in place robust procedures to assist with contribution to climate change. The Company invests in identifying emerging risks that arise from existing risks or a broad portfolio of businesses with operations spread from new situations. Failure to identify emerging risks may geographically, which should limit the impact of location- cause reactive rather proactive actions. The experience and specific weather events. knowledge of the Board is invaluable in consideration of emerging risks, as are updates and advice received from the Climate change related risks are regularly monitored by the Board’s key service providers such as the Company’s Manager, Manager and reviewed by the Board as required, together Broker, Company Secretary and Auditors. The Association of with any new guidance. Investment Companies (‘AIC’) also provides regular updates and draws members’ attention to forthcoming industry and/ OTHER RISKS or regulatory issues. The Company is subject to laws and regulations by virtue of its status as an investment trust and is required to comply There are currently a growing number of risks as a result of with certain regulatory requirements that are applicable to emerging geopolitical factors that may translate into greater listed closed-ended investment companies. The Company stock market risk, as well as heightened macro-economic is subject to the continuing obligations imposed by the UK changes in inflation, interest rates, currencies and energy Listing Authority on all companies whose shares are listed on costs, the ever-evolving global regulatory and trade the Official List. environments and a risk of re-emergence of a global pandemic. The Manager reviews compliance with investment trust tax conditions and other financial and regulatory requirements Geopolitical factors include the continuation of conflict in on a daily basis with any issues being immediately brought Ukraine and the Middle East and also US trade policy under to the attention of the Board. the second Trump administration. Whilst these risks currently exist, their extent and long-term impact are yet to emerge but The Company may be exposed to other business, strategic they are regularly assessed by the Manager and the Board. and political risks in the future, as well as regulatory risks These emerging risks are kept under review and mitigating (such as an adverse change in the tax treatment of investment actions are discussed and documented. This ensures that the companies), credit, liquidity and concentration risks. The Board can react ahead of any risk materialising, therefore risk control summary report allows the Board to consider all minimising risk exposure. these risks, the measures in place to control them and the possibility of any other risks that could arise. 24 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC ## VIABILITY STATEMENT The Directors’ view of the Company’s viability has not In taking account of these factors and on reviews conducted changed since last year. The Company, as an investment trust, as part of the detailed internal controls and risk management is a collective investment vehicle rather than a commercial processes set out above, the Directors have undertaken business venture and is designed and managed for long-term a reverse stress test seeking to identify the financial investment. The Company’s investment objective clearly sets circumstances that might result in the Company becoming this out. ‘Long-term’ for this purpose is considered by the unviable. This concluded that the viability of the Company Directors to be at least five years, a timeframe in which the would be challenged if the value of Total Shareholders’ Funds accuracy of estimates and assumptions is deemed to be were to fall permanently by approximately 80% from the reasonable. The Company’s viability has thus been assessed level at the year end, a fall that the Board considers to be over that period. Five years is considered a reasonable time highly unlikely having noted that since the inception of the frame for a forecast, however, the life of the Company is not Company’s FTSE All-Share Index Total Return benchmark in intended to be limited to that or any other period. December 1985, the largest fall over any calendar year has been 29.9%, the largest fall over any rolling five year period There are no current plans to amend the investment strategy, was 28.8% and the largest fall since launch was 42.9% (all which has delivered long-term good investment performance based on benchmark calendar month end values). above or in line with benchmark for shareholders and, the Directors believe, should continue to do so. The investment Based on the above, and assuming there is no adverse strategy and its associated risks are kept under constant change to the regulatory environment and tax treatment of review by the Board. UK investment trusts to the extent that would challenge the viability of the UK investment trust industry as a whole, the In assessing the viability of the Company under various Directors have a reasonable expectation that the Company scenarios, the Directors undertook a robust assessment of will be able to continue in operation and meet its liabilities as the risks to which it is exposed, as set out on pages 20 to 23 they fall due over the five-year period of assessment. 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 Managers; 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 pages 42 and 43; 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. THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 25 ## SECTION 172 STATEMENT, COMPANY ## SUSTAINABILITY AND STAKEHOLDERS BOARD RESPONSIBILITIES ENGAGEMENT WITH SHAREHOLDERS The responsibilities of the Board include setting the Company’s Shareholder relations are given high priority by both the strategic aims, providing the leadership to put them into Board and the Manager, and the Board welcomes feedback effect, supervising the Manager and reporting to shareholders from shareholders throughout the year. The prime medium on their stewardship. The Board is ultimately responsible by which the Company communicates with shareholders is for the direction, management, performance and long-term through the half-yearly and annual financial reports, which sustainable success of the Company. aim to provide shareholders with a full understanding of the Company’s activities and results. This information is The Board sets the Company’s strategy and objectives, taking supplemented by the daily publication of the Net Asset into account the interests of all its stakeholders. However, Value, monthly factsheets as well as dividend and other the Company has no employees and no customers in the announcements. traditional sense. Consistent with the Company’s nature as an investment trust, the Board’s principal concern has been, and Feedback from shareholders forms part of the discussion continues to be, the interests of the Company’s shareholders at all Board meetings and at the Board’s annual strategy taken as a whole. meeting which involves consideration of how the Company is meeting shareholder expectations. In October 2024, COMPANY SUSTAINABILITY AND STAKEHOLDERS Imran Sattar and Emily Barnard spoke at the Company’s A good understanding of the Company’s stakeholders enables annual retail shareholder event in London. The Company has the Board to consider the potential impact of strategic decisions also participated in various marketing initiatives, including on each stakeholder group during the decision-making podcasts, videos, a publication reviewing the Company’s last process. By considering the Company’s purpose, vision and five years, and attendance at a range of events including the values, together with its strategic priorities, the Board aims for AJ Bell investment trust conference in London. The Company its decisions to be fair and take account of the interests of the has also been involved in a range of publications in the year key stakeholder groups. As an externally managed investment to date, including the Financial Times, Sunday Times and company, the Company does not have any employees. The Daily Mail, and Money Makers podcast. Board considers its main stakeholders to be its shareholders, service providers and investee companies. Shareholders can also visit the Company’s website www.edinburgh-investment-trust.co.uk in order to access SECTION 172 STATEMENT copies of the annual and half-yearly financial reports, Section 172 of the Companies Act 2006 requires the Board to pre-investment information, Key Information Documents act in the way that it considers would most likely promote the (KIDs), proxy voting results, factsheets and stock exchange success of the Company for the benefit of all stakeholders, announcements. The Company’s website also hosts videos taking into consideration the interests of stakeholders in their and other applicable written materials by the Manager to decision-making and to share how they have discharged this enhance the information available. Shareholders can send duty. During the year under review, the Board believes that their questions using a dedicated section of the Company’s it has acted in good faith and discharged its duties under website. Section 172 of the Companies Act 2006. The fulfilment of this duty not only helps the Company achieve its investment Typically, at each AGM, a presentation is made by the Portfolio objective but ensures decisions are made in a responsible Managers following the formal business of the meeting and and sustainable way for shareholders. shareholders have the opportunity to attend, vote and most importantly to communicate directly with the Portfolio The following section includes examples of how the Managers and Board. Presentations to both institutional Company’s stakeholders were considered during the key shareholders and analysts also follow the publication of the Board decisions. Key Board decisions include payment of annual results. The Company held a physical AGM on 17 July dividends, liquidity management via share issuance and share 2024, with voting on a show of hands. Shareholders also had buybacks, marketing, performance evaluation, negotiation the opportunity to join the meeting virtually via a live weblink on debt and re-appointment of the Manager and other key using their smartphone, tablet or computer, with the option service providers, ESG integration into investment decisions to submit questions to the meeting in real time. In addition to and Board succession planning. the AGM and presentations, the Board and Portfolio Managers hosted a presentation to retail investors in central London in October 2024. The Chair uses these events to lead the 26 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC SECTION 172 STATEMENT, COMPANY SUSTAINABILITY AND STAKEHOLDERS / CONTINUED Company’s engagement with its retail shareholders. Please Imran Sattar and Emily Barnard took on these new roles see page 78 for the notice of the 2025 Annual General Meeting on 6 February 2024, following the retirement of James de and page 84 for details of the 2025 shareholder event. Uphaugh, after 36 years in the industry. Regular dialogue is maintained between the Board and ENGAGEMENT WITH SERVICE PROVIDERS Portfolio Managers with a wide range of shareholders As an externally managed investment trust, the Company throughout the year to discuss aspects of investment conducts all its business through its key service providers. performance, governance and strategy and to listen to The Board believes that maintaining a collaborative shareholder views in order to help develop an understanding relationship with each of the Company’s service providers of their issues and concerns. All meetings between the is essential to the Board’s decision-making and the ongoing Portfolio Managers and shareholders are reported to the success of the Company. At least annually the Board reviews Board and the directors receive regular updates on the the performance and services of its key service providers shareholder register and trading activity. including the Manager and receives and considers their internal control reports on a quarterly basis covering their There is an additional clear channel of communication operations, policies and control environments. between the Board and the Company’s shareholders via the Company Secretary. The Company Secretary passes to The Board reviews the quarterly reports of the service the Chair all correspondence addressed to the Board of the providers and whether the services meet the requirements Company. of the Company, represent value for money and are therefore in the best interests of shareholders. The Board treats all The strategy of the Company is reviewed regularly and service providers fairly, to maintain a reputation as a trusted, formally by the Board on an annual basis. At the strategy fair and reliable partner. The Board and/or delegates of the day on 9 October 2024 the Board discussed industry and Board engage with key providers on a periodic basis through sector trends, growth opportunities, share buybacks, the service review meetings or, by invitation, attendance at Board Company’s investment objective, marketing and dividends. or committee meetings. Such engagement gives opportunity Whilst feedback from shareholders is sought regularly, to both parties to discuss any challenges being experienced shareholders’ feedback provided by the Company’s Broker and potential solutions thereon, and to identify planned and Manager is a major consideration at this meeting. developments at the Company or the service provider. We aim to pay promptly and if in dispute, to engage openly to ENGAGEMENT WITH THE MANAGER resolve matters in a timely manner. The Board maintains a constructive and collaborative working relationship with the Portfolio Managers, encouraging open The Board continues to ensure that service providers are as discussion. The Board has regular dialogue with and receives prepared as possible for all such eventualities which could reports from the Portfolio Manager on the portfolio of disrupt the performance of their respective functions. investments, including performance against set objectives and risk management. The Portfolio Managers and Deputy ENGAGEMENT WITH INVESTEE COMPANIES Portfolio Manager normally attend each Board meeting to The Portfolio Managers are long-term investors and typically provide updates and answer questions from the Board. The develop strong relationships with both investee and potential Chair also regularly meets with Liontrust executive directors. investee companies. Both the Board and the Portfolio The Board has also discussed the AIFM’s responsibility under Managers believe that engagement with investee companies the FCA Consumer Duty with the Manager and received is positive, beneficial and welcomed. comfort as to how those responsibilities will be met. Voting is a key activity in the dialogue with investee The Board agreed a lower management fee scale from companies and these decisions are reported to the Board on 1April2024, further supporting the role of the Company as a a quarterly basis. natural home for long-term equity investors. The Board supports the Portfolio Managers’ approach to The Portfolio Manager with individual responsibility for ESG in the context of its management of the portfolio, as the day-to-day management of the portfolio is Imran discussed below. Sattar and the Deputy Portfolio Manager is Emily Barnard. THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 27 ENVIRONMENTAL SOCIAL AND GOVERNANCE frequently include issues related to global warming, including (“ESG”) MATTERS those focused on transitional risks, legislation risks, and/or As an investment company with no employees, property physical risks. The Manager is a signatory to the Principles or activities outside investment, environmental policy has of Responsible Investment (‘PRI’) and the Company’s limited application. Nevertheless, the Board is committed to assets form part of its commitment to the Net Zero Asset taking a responsible approach to ESG matters. The Company’s Managers Initiative. Further information is available at compliance with the AIC Corporate Governance Code is www.liontrust.co.uk and through the investment company detailed in the Corporate Governance Statement on page 34, ESG disclosures at www.theaic.co.uk. which demonstrates the Company’s own responsibilities on The Board recognises that the most material way in which matters such as governance. the Company can have an impact is through responsible In respect of the Company’s investments, the Portfolio ownership of its investments. The Manager discusses below Managers and the other members of the investment team how it engages with the management of investee companies integrate ESG risks and opportunities (including climate to encourage that high standards of ESG practice are change related risks) as part of a material assessment adopted. undertaken for all holdings. Consistent with the Portfolio The Company made no political donations during the year Managers’ investment approach, this analysis is undertaken in review. on a bottom-up, stock basis. The risks and opportunities that each holding faces over a three-to-five-year period are Please see the table below for a reference to where information then identified and prioritised. Many of these issues can be can be found of how the Company’s key stakeholders were sub-categorised as “E”, “S” and “G” issues. The issues that are considered during key Board decisions: identified as the key ones are at the forefront of engagement discussions on holdings with the investee companies. These Section 172 statement area Reference The likely consequences of any See Chair’s Statement, The Portfolio Managers’ Report, Core Investment Beliefs decision in the long-term and Business Review, Going Concern and Viability Statements and Stakeholder Engagement section below. The interests of the Company’s As a closed-ended investment company, the Company has no employees. employees Stewardship section refers to how the Company assesses its impact on social issues. The need to foster the As a closed-ended investment company, the Company has no customers in the Company’s business relationships traditional sense. See Stakeholder Engagement section below Principal Risks and with suppliers, customers and Uncertainties and Stewardship section on how the Company assesses its impact on others and engages with its key stakeholders. The impact of the Company’s See Principal Risks and Uncertainties, Stewardship section and ESG matters disclosure operations on the community below on how the Company assesses its impact on the community and environment and environment of its investee companies. The desirability of the Company See Stakeholder Engagement section, Anti-Bribery and Corruption and Modern maintaining a reputation for high Slavery disclosures. standards of business conduct The need to act fairly as between See Stakeholder Engagement section and Corporate Governance Report. members of the Company 28 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC SECTION 172 STATEMENT, COMPANY SUSTAINABILITY AND STAKEHOLDERS / CONTINUED | STEWARDSHIP CODE AND EXERCISE OF VOTING | | | Number of | | Number voted | | --- | --- | --- | --- | --- | --- | | POWERS | Proposal Category | Proposals Voted | | with Management | | | The Board considers that the Company has a responsibility | Audit related 99 99 | | | | | | as a shareholder to ensure that high ESG standards are | Capitalisation 202 202 | | | | | | maintained in the companies in which it invests. One of the | Company Articles 2 2 | | | | | | principal means of putting shareholder responsibility into | Compensation 88 82 | | | | | | practice is through the exercise of voting rights. The Company | Corporate | | | | | 1 1 aims to provide investment specific active stewardship and Governance the Company’s voting rights are exercised on an informed Director Election 488 488 and independent basis. The Manager has adopted a clear and Director Related 4 4 considered policy towards its stewardship responsibility on Environmental 5 3 behalf of the Company. The Manager takes steps to satisfy Miscellaneous 8 8 itself about the extent to which investee companies protect Routine business 93 93 shareholder value and comply with local recommendations Social 34 32 and practices, such as the UK Corporate Governance Code. Strategic 1 1 The Manager’s approach to corporate governance and the UK Transactions Stewardship Code can be found on the Manager’s website at Takeover related 43 43 www.liontrust.co.uk together with a copy of the Manager’s TOTAL 1,068 1,058 Stewardship Policy and the Manager’s global proxy voting policy. The Portfolio Managers’ policy is to invest in well-managed companies. We therefore expect few contentious votes, but Members of the Managers’ investment team are responsible in any given twelve month period there will be a handful. for overseeing all aspects of the Stewardship process, Toillustrate: including voting on all resolutions at all Annual General Meetings and Extraordinary General Meetings in the UK The Portfolio Managers voted in favour of the Remuneration and overseas. The Portfolio Managers assess corporate Policy of Sage Group, the UK-based software company that governance, remuneration policies and, if deemed necessary, provides accounting, HR and payroll technology for small and will challenge management where it is felt that the best mid-sized businesses. This is a global company, 80% of their interests of shareholders are not being met. revenues are outside the UK, competing against international players such as Intuit in the US. While proxy advisor ISS The Board reviews the Portfolio Managers’ voting record raised concerns about the overall size of the pay package, at each meeting. The table below demonstrates how the we believe Sage must offer a competitive remuneration Portfolio Managers voted during the year in review. The structure to attract and retain high-calibre talent. In our view, Portfolio Managers voted at all meetings, except for an this is necessary to support the company’s continued growth unlisted legacy holding in Raven Property. and ensure it remains a leading player in its markets. The Portfolio Managers voted against the proposed remuneration policy and proposed new LTIP (long-term incentive plan) for Ashtead, the North America focused equipment rental business. We judged the quantum of the proposals to be incommensurate with the current performance and outlook for the business. We exited the position during the year. 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. THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 29 MODERN SLAVERY DISCLOSURE CONCLUSION The Company aims to adopt the highest standards of conduct The Directors believe that they have fulfilled their duties under and is committed to integrating responsible business practices s172 of the Companies Act 2006 in their deliberations on all throughout its operations. The prevention of modern slavery matters. The Board takes into account the interests of all the is an important part of corporate good governance. Company’s key stakeholders, as outlined above, in its decision- making which reflects the Board’s belief that the long-term The Company is an investment vehicle and does not provide sustainable success of the Company is linked directly to its goods or services in the normal course of its business or have key stakeholders. The work of the Board and its Committees is customers or employees. Accordingly, the Directors consider described in the Governance Report on page 33. that the Company is not required to make any slavery or | human trafficking statement under the Modern Slavery | This Strategic Report was approved by the Board on | | --- | --- | | Act2015. | 20 May 2025. | | ANTI-BRIBERY AND CORRUPTION | Signed by order of the Board of Directors | It is the Company’s policy to conduct its business in an honest NSM FUNDS (UK) LIMITED and ethical manner. The Company takes a zero-tolerance COMPANY SECRETARY approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all its business 20 MAY 2025 dealings and relationships wherever it operates. The Company’s policy and the procedures that implement it are designed to support that commitment and the appropriate training has been undertaken by the Board and key service providers. The Company also has policies, procedures and controls in place to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 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. 30 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC ## GOVERNANCE THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 31 ## THE DIRECTORS ## All Directors are non-executive and considered independent. The Directors ## of the Company who were in office during the year and up to the date of ## signing the financial statements were: | ELISABETH STHEEMAN | AIDAN LISSER | ANNABEL TAGOE-BANNERMAN | | --- | --- | --- | | Chair of the Board | Senior Independent Director | Non-Executive Director | | Date of appointment: | Date of appointment: | Date of appointment: | | 23 May 2019, became Chair on | 27 May 2022, became SID on | 7 February 2023 | | 21 July 2022 | 19 July 2023 | | | Committees: | | Committees: | | Committees: | | | --- | --- | --- | --- | --- | --- | | M | Management Engagement | M | Management Engagement | M | Management Engagement | | N | Nomination Chair | N | Nomination | N | Nomination | | A | Audit | A | Audit | A | Audit | | Elisabeth is currently an independent | | Aidan is the Chair of JPMorgan | | Annabel has considerable experience in | | | member of the board of US REIT W.P. | | Emerging Markets Investment Trust | | senior roles within quoted UK operating | | | Carey Inc, M&G plc and Deloitte LLP | | plc and a non-executive director | | companies within the retail, leisure, | | | and an External Member of the Audit | | of Henderson International Income | | food and beverage sectors. Annabel is | | | and Risk Committee of The Asian | | Trust plc. He was formerly chief | | currently Group General Counsel and | | | Infrastructure Investment Bank. She is | | marketing officer and subsequently | | Company Secretary of Bakkavor Group | | | also Vice President of the Council of the | | head of strategy for Investec Wealth | | plc, the FTSE 250 listed producer | | | German British Chamber of Industry | | & Investment and a board member | | of freshly prepared food, where she | | | and Commerce. Previously, she was | | of Chapter Zero UK, an organisation | | also chairs the Diversity & Inclusion | | | an External member of the Financial | | to assist non-executive directors with | | Forum. She was previously at Britvic | | | Policy Committee and Financial Market | | the impact of climate change. Before | | plc and formerly General Counsel and | | | Infrastructure Board and a senior | | this he held senior marketing roles | | a member of the Executive Committee | | | advisor to the Bank of England’s | | at Allianz Global Investors, Standard | | of Ladbrokes plc. Prior to this Annabel | | | Prudential Regulation Authority. She | | Chartered Bank and Unilever. | | trained and practised as a solicitor | | | was also a member of the Supervisory | | | | at SJ Berwin LLP (now King & Wood | | | Board of Aareal Bank AG, Alstria AG | | | | Mallesons). | | and a member of Council of the London School of Economics. 32 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC THE DIRECTORS / CONTINUED | PATRICK EDWARDSON | STEVE BALDWIN | | --- | --- | | Non-Executive Director | Non-Executive Director | | Date of appointment: | Date of appointment: | | 11 February 2021 | 10 September 2018 | | Committees: | | Committees: | | | --- | --- | --- | --- | | M | Management Engagement Chair | M | Management Engagement | | N | Nomination | N | Nomination | | A | Audit | A | Audit Chair | | Patrick joined Baillie Gifford in 1993 | | Steve is a Chartered Accountant. Heis | | | and became a partner in 2005. In a | | currently Chairman of TruFin plc, | | | wide-ranging investment career, he | | a non-executive director at Plus500 | | managed bond, equity and multi-asset Ltd and a Trustee at Howard de Walden portfolios, was manager of the Scottish Estates Limited. He was formerly a American Investment Company plc non-executive director of Elegant between 2004 and 2014 and led Hotels Group plc and Panmure Gordon Baillie Gifford’s multi-asset investment & Co plc. He was the Head of European team until his retirement in 2020. Equity Capital Markets and Corporate He is currently managing director of | Atheian Ltd, a family investment office, | Broking at Macquarie Capital until | | --- | --- | | and of CMH Hope Limited, a property | February 2015. Prior to this Steve was | | investment company, a non-executive | a Director at JPMorgan Cazenove for | | director of another investment trust | ten years and was a Vice President | | (North American Income Trust plc) and | of Corporate Finance at UBS from | also a non-executive director at Tillit, 1995-1998. the retail investment platform. THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 33 ## 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 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 Aidan Lisser, three 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 Board 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 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. Management Engagement Remuneration Committee Audit Committee Committee Nomination 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: Key responsibilities: Key responsibilities: Key responsibilities: – to oversee the control – to review regularly the – to review regularly – to set the remuneration environment and financial management contract and the Board’s structure, policy of the Company. reporting; the performance of the composition and – to make a recommendation Manager. performance; for the appointment of the – to make recommendations auditor; and for any changes or new – to review the performance appointments; and of other service providers, - to set the culture and including the auditor. values of the Company. 34 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC ## CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MARCH 2025 This Corporate Governance statement forms part of the The UK Code includes provisions relating to: Directors’ Report. – the role of the chief executive; The Board is accountable to shareholders for the governance – executive directors’ remuneration; and of the Company’s affairs and is committed to maintaining – the internal audit function. the highest standard of corporate governance for the long- term sustainable success of the Company, generating value For reasons set out in the AIC Code, the Board considers for shareholders, other stakeholders and contributing to the these provisions not relevant to the position of the Company, wider society through investing in its portfolio companies. being an externally managed investment company with no executive Directors, employees, or internal operations. It In this statement, the Company reports on its compliance further considers an internal audit function unnecessary as with the AIC Corporate Governance Code published in the relevant issues are addressed through the Manager’s February 2019 (the “AIC Code”), sets out how the Board own control environment which itself is subject to routine and its committees have operated during the past year and external independent review. The Company has therefore not describes how the Board exercises effective stewardship over reported further in respect of these provisions. the Company’s activities in the interests of shareholders and other stakeholders of the Company. The AIC Code addresses Provision 37 states that the Board should establish a all the principles set out in the UK Corporate Governance Code remuneration committee of independent non-executive (the “UK Code”), as well as setting out additional provisions directors with a minimum membership of three, or in the on issues that are of specific relevance to the Company as case of smaller companies, two. The Board has resolved an investment trust. The Board’s focus over the next year will that a remuneration committee is not appropriate for a be on the implementation of the newly introduced 2024 AIC company of this size and nature. Remuneration is therefore Corporate Governance Code (the “2024 Code”) as we look regarded as part of the Board’s responsibilities to be to enhance our readiness, and longer-term for the effective addressed regularly. The Board as a whole, comprising of date of Provision 29 of the 2024 Code. independent non-executive directors, performs the function of the remuneration committee with the key responsibility The Board is confident that it is has properly undertaken its to set the remuneration policy of the Company. Please see duties to shareholders and other stakeholders, and taken a Directors’ Report on page 33 for the Board’s responsibilities. long-term approach to the management of the Company. Information on how the Company has applied the principles STATEMENT OF COMPLIANCE WITH THE AIC CODE of the AIC Code is provided in the Governance Section, The Board has considered the principles and including the Directors’ Report as follows: recommendations of the AIC Code and considers that reporting against the principles and recommendations of – the composition and operation of the Board and its the AIC Code (which incorporates the UK Code), will provide committees are summarised on page 33 and page 35 in better information to shareholders. The Financial Reporting respect of the Audit Committee; Council (the “FRC”) has endorsed the AIC Code. The terms of – the Company’s approach to internal control and risk the FRC’s endorsement mean that AIC members who report management is summarised on page 22; against the AIC Code meet fully their obligations under the – the contractual arrangements with, and assessment of, UK Code and the related disclosure requirements contained the Manager are summarised on page 43; in the UK Listing Rules of the FCA. A copy of the AIC Code can be obtained via the AIC’s website at www.theaic.co.uk. – the Company’s capital structure and voting rights are A copy of the UK Code can be obtained at www.frc.org.uk. summarised on page 43; The Board recognises the importance of a strong corporate – the substantial shareholders in the Company are listed on governance culture and has established a framework for page 44; corporate governance which it considers to be appropriate to the business of the Company. The Board considers that – the rules concerning the appointment and replacement it has managed its affairs in compliance with the AIC Code of directors are contained in the Company’s Articles of and the relevant provisions of the UK Code throughout the Association and are discussed on page 40. There are year ended 31 March 2025, except where it has concluded no agreements between the Company and its Directors that adherence or compliance with any particular principle concerning compensation for loss of office; or recommendation of either of the Codes would not have – the annual powers to issue or buy back the Company’s been appropriate to the Company’s circumstances. Similar to shares are explained in the notice of AGM on page 78; and the UK Code, the AIC Code specifies a “comply or explain” – any amendments to the Company’s Articles of Association basis and the Board’s report under this section explains any require a resolution to be passed by shareholders. deviation from its recommendations. By order of the Board NSM FUNDS (UK) LIMITED COMPANY SECRETARY 20 MAY 2025 THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 35 ## AUDIT COMMITTEE REPORT FOR THE YEAR ENDED 31 MARCH 2025 COMMITTEE COMPOSITION AND ROLE – developing and implementing policy on the engagement The Audit Committee comprises all the Directors and the of the external auditor to supply non-audit services; and Committee has written terms of reference which clearly – considering annually whether there is a need for the define its objective, authority, composition, roles, duties and Company to have its own internal audit function. responsibilities, including reporting. The terms of reference were reviewed during the year, to ensure good practice AUDIT COMMITTEE ACTIVITIES and compliance with the AIC Code. They can be inspected The Committee meets formally at least three times a year to at the registered office of the Company or viewed on the review the internal financial and non-financial controls and Company’s website. the contents of the half-yearly and annual financial reports, including accounting policies and financial judgements. In AUDIT COMMITTEE RESPONSIBILITIES addition, the Committee reviews the auditor’s independence, The responsibilities of the Audit Committee include: objectivity and effectiveness, the quality of the services – consideration of the integrity of the annual and half- provided to the Company and, together with the Manager, yearly financial reports prepared by the Manager, the reviews the Company’s compliance with financial reporting appropriateness of the accounting policies applied and and regulatory requirements as well as risk management any financial judgements and key assumptions, together processes. Representatives of the Manager’s Compliance with ensuring compliance with relevant statutory and Department attend at least two meetings each year. listing requirements; Representatives of the auditor attend the Committee meetings at which the draft half-yearly and annual financial – at the Board’s request, advising it on whether the reports are reviewed and are given the opportunity to speak Committee believes the annual financial report taken as a to Committee members in the absence of representatives of whole is fair, balanced and understandable and provides the Manager. the necessary information for shareholders to assess the Company’s position and performance, business model The external audit programme and timetable are drawn up and strategy; and agreed with the auditors in advance of the end of the financial year and matters for audit focus are discussed and – evaluation of the effectiveness of the internal control agreed. The auditors ensure that these matters are given systems and risk management systems, including reports particular attention during the audit process and reports received on the operational controls of the Company’s on them, and other matters as required, in its report to the service providers and the Manager’s whistleblowing Committee. In addition, the Committee reviews any material arrangements; issues raised by the auditors. There have been no such – consideration of the scope of work undertaken by the issues raised during the year. The auditor’s report, together Manager’s compliance department, monitoring and with reports from the Manager, the Manager’s Compliance reviewing the effectiveness of the Manager’s and the Department and the depositary, form the basis of the Company’s procedures for detecting fraud; Committee’s consideration and discussions with the various parties and any recommendations to the Board, including – management of the relationship with the external the Committee’s recommendation to sign the 2025 financial auditors, including evaluation of their reports and the statements. 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; 36 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC # AUDIT COMMITTEE REPORT / CONTINUED # **ACCOUNTING MATTERS AND SIGNIFICANT AREAS** For the year-end, the following accounting matters were identified for specific consideration by the Committee: | Significant areas | How they were 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 in accordance with the facts and circumstances of the payment by the underlying company and the allocation of material special dividends is also reviewed by the auditors. | | 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 2025. | These matters were discussed with the Manager and the auditors in pre-year-end audit planning and were satisfactorily addressed through consideration of reports provided by, and discussed with, the Manager and the auditors 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 2025 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 AUDITORS, INCLUDING NON-AUDIT SERVICES** The Committee evaluated the performance and effectiveness of the external auditors 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 auditors. 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 auditors 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 auditors 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 £53,235 (2024: £50,700) and the non-audit fee was £nil (2024: £nil), see Note 4 on page 66. 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. # **AUDITORS** PwC were appointed as the Company's Auditors at the AGM on 25 July 2019 and were re-appointed on 17 July 2024. 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 2025 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 20 to 23. 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 THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 37 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. INDEPENDENCE The Chair of the Company was a member of the Audit Committee during the year in review. The Board and the Audit Committee believe that this was appropriate as the Chair has recent and relevant financial experience and remains independent. 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 41. Signed on behalf of the Board of Directors STEVE BALDWIN CHAIR OF THE AUDIT COMMITTEE 20 MAY 2025 38 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC ## DIRECTORS' REPORT ### 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 34 is included in this Directors' Report by reference. ### THE BOARD At the year end the Board comprised five independent non-executive Directors. The Company's Corporate Governance Framework is set out on page 33. 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 Aidan Lisser who was appointed to the role on 19 July 2023. ### 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 FTSE Women Leaders review 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. To this end, achieving a diversity of perspectives and backgrounds on the Board will be a key consideration in any future Director search process. The Board encourages any recruitment agencies it engages to find a diverse range of candidates that meet the criteria agreed for each appointment and, from the shortlist, aims to ensure that a diverse range of candidates is brought forward for interview. The Board gives due regard to the diversity targets in the FCA UK Listing Rules, and does not discriminate unfairly on the grounds of gender, ethnicity, age, sexual orientation, disability or socio-economic background when considering the appointment of new directors. Candidates' educational and professional backgrounds, their cognitive and personal strengths, are considered against the specification prepared for each appointment. The Board comprises five non-executive directors of which, at present, two are female. Summary biographical details of the Directors are set out on pages 31 and 32. ### IMPLEMENTATION OF THE BOARD'S DIVERSITY POLICY The Board reports against the targets set out in the FCA's UK Listing Rules. These require that at least 40% of individuals on the Board are women, at least one individual on the Board is from a minority ethnic background, and at least one of the senior Board positions of Chair, SID, CEO and CFO is held by a woman. At 31 March 2025, and at the date this Annual Report was signed, the Board comprised five non-executive Directors. All three of the targets are met because there are two women on the Board (40%), one Director is ethnically diverse and at least one of the senior Board positions is held by a woman. The following information has been provided by each Director. As the Company has no employees, no information is included for executive management. The Board has resolved that the Company's year-end date be the most appropriate date for disclosure purposes. There have been no changes since 31 March 2025. | | Number of board members | Percentage of the board | Number of senior positions on the board (SID and Chair)* | | --- | --- | --- | --- | | Men | 3 | 60% | 1 | | Women | 2 | 40% | 1 | | Not specified/prefer not to say | - | - | - | THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 39 persons associated with it from engaging in bribery. It has Number a zero tolerance approach towards the criminal facilitation of senior of tax evasion. In addition, the Directors are responsible for positions ensuring that their policies and operations are in the interest Number Percentage on the of board of the board (SID of all of the Company’s shareholders and that the interests members board and Chair)* of creditors and suppliers to the Company are properly considered. White British or other White The Board has established a schedule of matters reserved 4 80% 2 (including minority for its consideration, which clearly define the Directors’ white groups) responsibilities. The main responsibilities include: Mixed Multiple – – – – setting long-term strategy; Ethnic Groups Asian/Asian British – – – – setting the Company’s objectives, policies and standards; Black/African/ – ensuring that the Company’s obligations to shareholders Caribbean/Black 1 20% – and others are understood and met; British – selecting an appropriate Manager; Other ethnic group, – – – including Arab – approving accounting policies and dividend policy; Not specified/ – determining dividends payable; – – – prefer not to say – managing the capital structure; * The Company considers the positions of the Chair and Senior Independent Director (SID) to be senior positions of the Board. – reviewing investment performance; – assessing risk; The Listing Rules require an explanation of the Company’s approach to collecting the data used for the purposes of – approving borrowing; making the disclosures. The Company Secretary circulated – and reviewing, and, if agreed, approving recommendations the above tables to each director to complete individually made by the Board’s committees. and collated the responses for inclusion in the annual financial report. The schedule of matters reserved for the Board will be available for inspection at the AGM and is otherwise The Company has met the targets on board diversity as available at the registered office of the Company and on the required by the Listing Rules as at 31 March 2025. Company’s website. BOARD RESPONSIBILITIES The Board ensures that shareholders are provided with The Board has overall responsibility for the Company’s affairs. sufficient information in order to understand the risk-reward The Directors are equally responsible under the Companies balance to which they are exposed by holding their shares, Act 2006 for promoting the success of the Company and through the portfolio details given in the half-yearly and for the proper conduct of the Company’s affairs taking into annual financial reports, factsheets and daily NAV disclosures. consideration: The Board meets at least five times each year. Additional – the likely consequences of any decision in the long-term; meetings are arranged as necessary. Regular contact – the need to foster business relationships with its Manager, is maintained by the Manager with the Board between other service providers and advisors; formal meetings. The Directors also meet separately for private discussions, when required. Board meetings follow – the impact of the Company’s operations on the a formal agenda, which includes a review of the investment community and the environment; portfolio with a report from the Portfolio Managers on – the desirability of the Company maintaining a reputation the current investment position and outlook, strategic for high standards of business conduct; and direction, performance against stock market indices and the Company’s peer group, asset allocation, gearing policy, – the need to act fairly between shareholders of the cash management, revenue forecasts for the financial year, Company. investment policy guidelines, marketing and shareholder This is reported in the Section 172 Statement in the Strategic relations, corporate governance, regulatory changes and Report on page 27. The Board is committed to the prevention industry and other issues. of corruption in the conduct of the Company’s affairs and, To enable the Directors of the Board to fulfil their roles, the taking account of the nature of the Company’s business and Manager and Company Secretary ensure that all Directors operations, has put in place procedures for and on behalf of have timely access to all relevant management, financial the Company that the Board considers adequate to prevent 40 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC DIRECTORS’ REPORT / CONTINUED and regulatory information. All directors have access to the scrutinised both the Manager’s fee rate and all admin fees advice of the Company Secretary, who is responsible for in comparison with similar income-generating UK equity advising the Board on all governance matters. products, in both the closed and open-ended sectors. A detailed analysis of the Manager’s fee was performed during There is an agreed procedure for the Directors in undertaking the year and following successful discussions with Liontrust their duties to take legal advice at the Company’s expense up to the Board agreed a new lower fee scale. an initial cost of £10,000, having first consulted with the Chair. This year sees the introduction of the Financial Conduct Finally, the Board as a whole undertakes the responsibilities Authority’s Consumer Duty regulation, which seeks to improve which would otherwise be assumed by a remuneration the quality of products and services to retail investors. Whilst committee, determining the Company’s remuneration policy. the Company is not directly within the scope of the regulation, The Board takes into account all factors which are deemed the Manager is through its roles as AIFM and distributor. The necessary in order to ensure that members of the Board are Committee has routinely liaised with the Manager during the provided with appropriate compensation and are, in a fair and year on its preparedness and developments with regards to responsible manner, rewarded for their individual contributions consumer outcomes that cover products and services, price to the success of the Company. The remuneration of Directors and value, consumer understanding, and consumer support, is reviewed periodically and reported on in more detail in the and will continue to do so into the future. Directors’ Remuneration Report. The Nomination Committee AUDIT INFORMATION All Directors are members of the Nomination Committee The Directors confirm that, so far as they are aware, there which is chaired by Elisabeth Stheeman. The Committee is no relevant audit information of which the Company’s meets at least annually to review the composition of the auditor is unaware and each Director has taken steps Board and its committees and evaluate whether they have the that he or she ought to have taken as a director to make appropriate balance of skills, experience, independence, and himself/herself aware of any relevant audit information knowledge of the Company and make recommendations to and to establish that the Company’s auditors are aware of the Board for the re-election of directors at AGMs. Additional that information. This confirmation is given and should be meetings are arranged as necessary. interpreted in accordance with the provisions of section 418 of the Companies Act 2006. The Committee is also responsible for succession planning and identifying and nominating to the Board suitable THE COMMITTEES candidates, taking into consideration the balance of skills, The Board has three committees: the Audit Committee, the knowledge, experience and independence of the Board and Management Engagement Committee, and the Nomination having regard for the benefits of diversity and the ability of Committee. Each committee has written terms of reference, any new director to devote sufficient time to the Company to which clearly define each committee’s responsibilities carry out his or her duties effectively. See pages 38 and 39 and duties. The terms of reference of each committee are for Board’s statement on ethnic and gender diversity. available for inspection at the AGM, at the registered office of No Director has a contract of employment with the Company. the Company and also available on the Company’s website. Directors’ terms and conditions of appointment are set out The Audit Committee in letters of appointment which are available for inspection The composition and activities of the Audit Committee are at the registered office of the Company and will also be available at the AGM. A Director can be removed from office summarised in the Audit Committee Report on page 35, without notice or compensation upon being served with a which is included in this Directors’ Report by reference. written notice signed by all the other Directors. The Management Engagement Committee APPOINTMENT, RE-ELECTION AND TENURE The Management Engagement Committee comprises New Directors are appointed by the Board following all directors and is chaired by Patrick Edwardson. The recommendation by the Nomination Committee. The Articles Committee meets at least annually to review the investment of Association require that a Director shall be subject to management agreement and to review the services provided election at the first AGM after their appointment and re- by the Manager and other key service providers. Additional election at least every three years thereafter. However, in meetings are arranged as necessary. accordance with the UK Code of Corporate Governance, the The Committee carries out a thorough review of the Board has resolved that all Directors shall stand for annual performance of the Manager including key metrics such as re-election at the AGM. overall investment performance, investment process, risk On being appointed to the Board, Directors are fully briefed management, individual stock performance, team resources, as to their responsibilities and are continually updated notice period, the Manager’s fees level, marketing strategy throughout their term in office on industry and regulatory and relative fees. matters. The Company Secretary and the Board have During the year the Committee met twice to review and formulated a programme of induction training for newly consider the performance and continued appointment of the appointed Directors. They have also put arrangements in Manager and other key service providers. The Committee place to address ongoing training requirements of Directors THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 41 which include briefings from the Company Secretary and planning, and engagement with the Manager. The review the Company’s auditors which ensure that Directors are well was positive, and no critical issues were identified. The briefed on new legislation and the changing risk environment. recommendations from the report were agreed by the Board. Key priorities identified for the year ahead include executing The Board has noted the implication of the provisions in the the agreed marketing strategy, discount management, ESG UK Corporate Governance Code that non-executive directors matters and broadening relationships with the Portfolio who have served for more than nine years should be presumed Manager’s wider team. not to be independent. The AIC does not believe that this presumption is appropriate for investment companies and In addition to a self-assessment, the Chair conducted in therefore does not recommend that long-serving directors person or telephone meetings with each Director individually be prevented from forming part of the independent majority to discuss their performance and development needs. of an investment trust board. It is the Board’s policy that The Chair evaluated the skills and performance of each all Directors, including the Chair, shall normally have tenure Director and concluded to take appropriate action when limited to nine years from their first appointment to the development needs arise and that each Director is making a Board, except that the Board may determine otherwise if it is positive contribution. The review of the Chair’s performance considered that the continued participation on the Board of was conducted by the Board and led by the SID, who relayed an individual Director, or the Chair, is in the best interests of very positive feedback to the Chair privately and shared a the Company and its shareholders. This is also subject to the summary with the Board. Director’s re-election annually by shareholders. The Board The Board, through the work of the Nomination Committee, considers that this policy encourages regular refreshment has determined that each Director standing for re-election and is conducive to fostering diversity. continues to offer relevant experience, effectively contributes BOARD, COMMITTEE AND DIRECTORS’ to the operation of the Board and has demonstrated independent views on a range of subjects. The Committee is PERFORMANCE APPRAISAL satisfied that the structure, size, mix of skills and operation The Directors recognise the importance of the AIC Code’s of the Board continue to be effective and relevant for the recommendation in respect of evaluating the performance Company. 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, its Committees For the year ended 31 March 2025 an internal review of and individual Directors, with a further external evaluation to the Board, its Committees and individual Directors was be conducted for the year ending 31 March 2026. conducted. The process involved the use of online evaluation forms to assess the balance of skills, experience, knowledge, ATTENDANCE AT BOARD AND COMMITTEE independence and effectiveness of the Directors. In carrying MEETINGS out these evaluations, each Director is assessed on their The table below sets out the number of scheduled Directors’ relevant experience, their strengths and weaknesses in relation meetings held during the year and the number of meetings to the overall requirements of the Board and their commitment attended by each Director. In addition, Directors attended a to the Company in terms of time by regular attendance and number of ad hoc meetings and calls during the year. participation at Board meetings. The process is constructed to assess the contribution of individual Directors to the overall The number of scheduled meetings held during the year to operation of the Board and its Committees. 31 March 2025 and the attendance of individual Directors are shown in the table below: As part of the evaluation, key enablers of Board and Committee performance were reviewed, with a particular focus on the Company’s strategic priorities, succession Management Audit Engagement Nomination Board Committee Committee Committee Number of meetings 5 3 2 2 (total possible/individual attendance) Elisabeth Stheeman 5 3 2 2 Steve Baldwin 5 3 2 2 Patrick Edwardson 5 3 2 2 Aidan Lisser 5 3 2 2 Annabel Tagoe-Bannerman 5 3 2 2 42 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC DIRECTORS’ REPORT / CONTINUED During the year in review, the individual Directors attended of internal controls and for monitoring its effectiveness. 100% of possible meetings of the Board and Committees. The Company’s system of internal controls is designed to manage rather than eliminate risk of failure to achieve the DIRECTORS Company’s investment objective and/or adhere to the Directors’ Interests in Shares Company’s investment policy and/or investment limits. The Directors’ interests in the ordinary share capital of the This system can therefore provide only reasonable and not Company are disclosed in the Directors’ Remuneration absolute assurance against material misstatement or loss. Report on page 50. The Board has undertaken a review of the aspects covered by the guidance and has identified risk management controls in Disclosable Interests the key areas of business objectives, accounting, compliance, No Director was a party to, or had any interests in, any operations and secretarial as being matters of particular contract or arrangement with the Company at any time importance upon which it requires reports. during the year or at the year end. The Board believes that the existing arrangements, set out Directors’ Indemnities and Insurance below, represent an appropriate framework to meet the The Company maintains Directors’ and Officers’ liability internal control requirements. By these procedures the insurance which provides appropriate cover for any legal action Directors have kept under review the effectiveness of the brought against its Directors. In addition, individual deeds of internal control system throughout the year and up to the indemnity have been executed on behalf of the Company date of this report. for each of the Directors under the Company’s Articles of Association. Subject to the provisions of UK legislation, these The Company’s internal controls and risk management deeds provide that the Directors may be indemnified out of systems have been reviewed with the Manager against risk the assets of the Company in respect of liabilities they may parameters approved by the Board. The Board reviews a risk sustain or incur in connection with their appointment. control summary at its quarterly Board meetings and an annual formal review of the risk procedures and controls in place at CONFLICTS OF INTEREST the Manager and other key service providers is performed. A Director must avoid a situation where he or she has, or can The Audit Committee reviews and makes recommendations have, a direct or indirect interest that conflicts, or has the to the Board, at least annually, the effectiveness of the potential to conflict with the Company’s interests. The Articles Company’s system of internal controls, including financial, of Association of the Company give the Directors authority to operational and compliance and risk management systems. authorise potential conflicts of interest and there are safeguards The Board confirms that necessary actions would be taken to which apply when Directors decide whether to do so. First, only remedy any significant failings or weaknesses identified from Directors who have no interest in the matter being considered their review and that no significant failings or weaknesses are able to take the relevant decision, and second, in taking the occurred throughout the year ended 31 March 2025 and up decision the Directors must act in a way they consider, in good to the date of this annual financial report. faith, will be most likely to promote the Company’s success. The Directors can impose limits or conditions when giving The Board reviews financial reports and performance against authorisation if they think this is appropriate. forecasts, relevant stock market criteria and the Company’s peer group. In addition, the Manager and custodian maintain The Directors have declared any potential conflicts of their own systems of internal controls and risk management interest to the Company. The register of potential conflicts and the Board and Audit Committee receive regular reports of interests is kept at the registered office of the Company. from the Compliance Department of the Manager. Formal It is reviewed regularly by the Board and Directors know reports are also produced annually on the internal controls to advise the Company Secretary as soon as they become and procedures in place for the operation of secretarial, aware of any potential conflicts of interest. administrative, custodial, investment management and STREAMLINED ENERGY & CARBON REPORTING accounting activities. ‘SECR’ GOING CONCERN The Company’s disclosure with respect to SECR reporting is The financial statements have been prepared on a going given in the Strategic Report on page 42. concern basis. The Directors consider this is the appropriate PROPOSED DIVIDENDS basis as they have a reasonable expectation that the The Directors propose payment of a final dividend to Company has adequate resources to continue in operational shareholders, the details of this are given on page 16 of the existence for the foreseeable future, being taken as at Strategic Report. least twelve months after the signing of the balance sheet, for the same reasons as set out in the Viability Statement INTERNAL CONTROLS AND RISK MANAGEMENT on page 24. In considering this, the Directors took into The AIC Code requires the Board to oversee the effectiveness account both ongoing expenses and any obligations under of the Company’s system of internal controls. The Board the Company’s borrowing (Unsecured Senior Loan Notes). assumes its ultimate responsibility for the Company’s system THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 43 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 2025, the Company held £7.2m (2024: £36.3m) in cash and cash equivalents and £1,230.9m (2024: £1,206.6m) in quoted investments. The Company's audited net assets as at 31 March 2025 were £1,125.9m (2024: £1,135.0m). In anticipation of potential market volatility, the Manager has performed stress tests on the Company's portfolio of investments under various scenarios. Separately, the Board remains comfortable with the liquidity of the portfolio. It is estimated that some 99% by value of the quoted investments held at the year-end could be realised in thirty working days under normal market conditions. The Board also considered the Company's obligations with respect to the Company's borrowing. The Company has issued £120m of Unsecured Senior Loan Notes with a weighted average cost of 2.44% of which £20m was drawn in October 2021 and £100m in September 2022. These notes, which are long-term in nature, do not require repayment until 2037, 2047, 2051 and 2057 as detailed in Note 12. A requirement of this borrowing is that the Net Assets of the Company must remain not less than £300m. The Board, which routinely monitors borrowing restrictions, does not anticipate difficulties in meeting this. The Company has no other borrowing. The total ongoing charges (excluding taxation, non-recurring legal and professional fees and finance costs) for the year ended 31 March 2025 were £5.9 million (2024: £6.2 million) or 0.51% of Net Assets (2024: 0.53%). ## THE MANAGER The Alternative Investment Fund Manager is Liontrust Fund Partners LLP, with responsibility for the day-to-day investment management activities of the Company delegated to Liontrust Investment Partners LLP. Liontrust Fund Partners LLP was appointed the Manager on 1 April 2022, following completion of the acquisition of Majedie by Liontrust Asset Management Plc. ## Investment Management Agreement ('IMA') The Manager provides investment and administration services to the Company under an investment management agreement dated 21 May 2024, which replaced the original agreement dated 3 March 2020. The agreement is terminable by either party by giving not less than three months' notice in writing. From 1 April 2024, the monthly management fee has been calculated on 0.03750% per month on the first £500 million, falling to 0.03333% on the next £500 million and 0.02917% on the remainder of the market capitalisation of the Company's ordinary shares at each month end and paid monthly in arrears (equivalent to an annualised fee of 0.45% on the first £500m, 0.40% on the next £500m and 0.35% on the remainder). There is no performance fee. Prior to 1 April 2024, the monthly management fee was calculated on 0.04000% on the first £500 million and 0.03875% on the remainder of the market capitalisation of the Company's ordinary shares at each month end and paid monthly in arrears (equivalent to an annualised fee of 0.480% on the first £500m and 0.465% on the remainder). ## 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 NSM Funds (UK) Limited were appointed as the Company Secretary of the Company on 1 March 2024. The Board has continuous direct access to the advice and services of the corporate Company Secretary, who are responsible for ensuring that the Board and Committee procedures are followed, and that applicable rules and regulations are complied with. The Company Secretary provides full company secretarial services to the Company, ensuring that the Company complies with all legal, regulatory and corporate governance requirements and officiating at Board meetings and shareholders' meetings. The Company Secretary is also responsible to the Board for ensuring timely delivery of information and reports and that the statutory obligations of the Company are met. Finally, the Company Secretary is responsible for advising the Board through the Chair on all governance matters. ## SHARE CAPITAL ### Capital Structure At the year end, the Company's allotted and fully paid share capital consisted of 195,666,734 ordinary shares of 25p each, of which 51,345,709 shares were held in treasury. To enable the Board to take action to deal with any significant overhang or shortage of shares in the market, it seeks approval from shareholders every year to buy back and sell shares. No shares were issued in the year. During the year 7,170,500 ordinary shares were repurchased for holding in treasury at an average price of 747.03p per share (including costs). Since the year end up until 19 May 2025, being the latest practicable date before the printing of this report, 125,000 ordinary shares have been bought back for holding in treasury. 44 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC # DIRECTORS' REPORT / CONTINUED # **SUBSTANTIAL HOLDINGS IN THE COMPANY** The Company has received notifications, or has otherwise been made aware, in accordance with the FCA's Disclosure Guidance and Transparency Rule 5 of the following interests (% as at the date of notification). | | Shares | % of Voting rights | | --- | --- | --- | | Rathbones Investment Management | 11,163,371 | 7.7 | The Company relies on investors complying with these regulations and certain investors may be exempted. As such, this table should not be relied on as an exhaustive list of shareholders holding above 5% of the Company's voting rights. In addition to the above disclosure, as at 31 March 2025 the Company was aware of the following substantial interests in the voting rights of the Company: | | Shares | % of Voting rights | | --- | --- | --- | | Charles Stanley & Co. Limited | 6,354,106 | 4.4 | | City of London Investment Management | 5,229,015 | 3.6 | | Evelyn Partners | 4,715,396 | 3.3 | # **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 pages 43 and 45. # **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 22 July 2025 at 11:00 a.m. The notice of the AGM and related notes are included on pages 78 to 83. 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 to approve the Directors' Remuneration Policy as set out on page 47. Resolution 3 is for members to approve the Annual Statement and Report on Remuneration for the year ended 31 March 2025. Resolution 4 is to declare a final dividend for the year. Resolutions 5 to 9 are to re-elect the Directors. Biographies of the Directors can be found on pages 31 and 32. All 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, 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 Chair and non-executive director and was also a member of the Association of Investment Companies' Marketing 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 10 and 11 are to re-appoint PricewaterhouseCoopers LLP as auditors and to authorise the Audit Committee to determine their remuneration. THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 45 Special Business (ii) the higher of the price of the last independent trade in the Resolution 12 Change of Investment Objective and Policy is shares and the highest then current independent bid for an Ordinary Resolution which seeks to amend the Company’s the shares on the London Stock Exchange. The minimum investment objective and policy in order to simplify the price which may be paid will be 25p per share, this being wording and to clarify (in the investment objective) the the nominal value of a share. In making purchases, the nature of the shareholder returns targeted by the Company. Company will deal only with member firms of the London The full text of the proposed amendments may be found in Stock Exchange. the appendix to the notice of the AGM on pages 82 and 83 The Company will finance the purchase of ordinary shares by while further information on the reasons for the proposed using its existing cash balance or borrowing facilities or by amendments may be found in the Business Review section selling securities in the Company’s portfolio. on page 15. The proposed amendments have been approved by the FCA and also require shareholder approval. It is The Directors hold repurchased shares in treasury with a intended that Resolution 12 will be put to shareholders at the view to possible resale. forthcoming AGM for their approval. Special Resolution 16: Notice Period for General Meetings. Resolution 13: Authority to Allot Shares is an Ordinary The Shareholder Rights Directive increased the notice period Resolution seeking renewal of the current authority for for general meetings of companies to 21 days unless certain the Directors to allot up to 10% of the issued ordinary conditions are met in which case it may be 14 days’ notice. share capital, this being an aggregate nominal amount of A shareholders’ resolution is required to ensure that the £4,891,668 as at 19 May 2025, (being the last practicable day Company’s general meetings (other than Annual General prior to the publication of this Notice). Meetings) may be held on 14 days’ notice. Accordingly, Special Resolution 14: Authority to Allot Shares is a Special Special Resolution 16 will propose that the period of notice Resolution which seeks renewal of the current authority to for general meetings of the Company (other than AGMs) allot equity securities pursuant to a rights issue or to issue shall not be less than 14 days’ notice. It is intended that up to 10% of the issued ordinary share capital otherwise than this flexibility will be used only where the Board believes it in connection with a rights issue, dis-applying pre-emption is in the best interests of shareholders as a whole, and an rights. This will allow shares to be issued to new shareholders, explanation will be provided. within the prescribed limits, without having to be offered to The Directors have carefully considered all the resolutions existing shareholders first, thus broadening the shareholder proposed in the Notice of the AGM and, in their opinion, base of the Company. The Directors will not dilute the consider them all to be in the best interests of shareholders interests of existing shareholders by using the authority to as a whole. The Directors therefore recommend that issue shares at a price which is less than the Net Asset Value shareholders vote in favour of each resolution as they intend (calculated with debt at fair value) of the existing shares in to do in respect of their own beneficial holdings. issue at that time. These authorities will expire at the next AGM of the Company or fifteen months after the passing of By order of the Board the resolutions, whichever is the earlier. Special Resolution 15: Authority to Buy Back Shares. NSM FUNDS (UK) LIMITED This resolution seeks to renew the Directors’ authority to purchase up to 14.99% of the Company’s issued share capital, COMPANY SECRETARY / 20 MAY 2025 this being 29,330,443 ordinary shares as at 19 May 2025, (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 46 / 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 The Directors are responsible for the maintenance and financial report and financial statements in accordance with integrity of the corporate and financial information included applicable law and regulations. on the Company’s website, which is maintained by the Company’s Manager. Legislation in the UK governing the Company law requires the Directors to prepare financial preparation and dissemination of financial statements may statements for each financial year. Under that law they are differ from legislation in other jurisdictions. required to prepare the financial statements in accordance with UK accounting standards, including FRS 102 The RESPONSIBILITY STATEMENT OF THE DIRECTORS Financial Reporting Standard applicable in the UK and IN RESPECT OF THE ANNUAL FINANCIAL REPORT Republic of Ireland. We confirm that to the best of our knowledge: Under company law the Directors must not approve the – the financial statements, prepared in accordance with the financial statements unless they are satisfied that they give a applicable set of accounting standards, give a true and true and fair view of the state of affairs of the Company and fair view of the assets, liabilities, financial position and of its profit or loss for that period. profit or loss of the Company; and In preparing these financial statements, the Directors are – the Strategic Report includes a fair review of the required to: development and performance of the business and the position of the Company, together with a description of – select suitable accounting policies and then apply them the principal risks and uncertainties that it faces. consistently; We consider the annual financial report, taken as a whole, – make judgements and estimates that are reasonable and is fair, balanced and understandable and provides the prudent; information necessary for shareholders to assess the – state whether applicable UK accounting standards Company’s position and performance, business model and have been followed, subject to any material departures strategy. disclosed and explained in the financial statements; In the case of each Director in office at the date the Directors’ – assess the Company’s ability to continue as a going report is approved: concern, disclosing, as applicable, matters related to – so far as the Director is aware, there is no relevant going concern; and audit information of which the Company’s Auditors are – use the going concern basis of accounting unless they unaware; and either intend to liquidate the Company or to cease – they have taken all the steps that they ought to have operations, or have no realistic alternative but to do so. taken as a Director in order to make themselves aware of The Directors are responsible for keeping adequate any relevant audit information and to establish that the accounting records that are sufficient to show and explain Company’s Auditors are aware of that information. the Company’s transactions and disclose with reasonable Signed on behalf of the Board of Directors 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. ELISABETH STHEEMAN They are responsible for such internal controls as they determine are necessary to enable the preparation of CHAIR financial statements that are free from material misstatement, 20 May 2025 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 EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 47 # DIRECTORS' REMUNERATION REPORT FOR THE YEAR ENDED 31 MARCH 2025 This report has been prepared under the requirements of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The Company's auditors are 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 52 to 58. ## 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 will be put before shareholders for approval at the AGM on 22 July 2025. 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 Consumer Price Index and be sufficient to 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 of 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 2025, fees paid to the Directors per annum were: | Role | Current fee from 1 April 2024 | Percentage increase during the year* % | | --- | --- | --- | | Chair | 47,100 | 0% | | Senior Independent Director | 33,700 | 0% | | Audit Committee Chair | 37,500 | 0% | | Director | 30,500 | 0% | * Directors last received a fee increase for the year ended 31 March 2023. The Board carried out a review of Directors' annual fees during the year with regard to the latest inflation rates, measured by the increase in the Consumer Price Index, and taking into account peer group comparisons by sector and market capitalisation. Following this review, it was agreed that annual fees would be increased by 5% (rounded up to the next £500), effective 1 April 2025. The Board believes that the level of increase and resulting fees appropriately reflects prevailing market rates for an investment trust of the Company's size, the increasing complexity of regulation and resulting time spent by the Directors on Company matters, and will also enable the Company to attract appropriately experienced additional Directors in the future. Due to the size and nature of the Company, it was not deemed necessary to use a remuneration consultant although the Board did review independent peer group information on Directors' fees and took this into account in its deliberations. 48 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC DIRECTORS’ REMUNERATION REPORT / CONTINUED REMUNERATION FOR THE YEAR ENDED 31 MARCH 2025 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 2025. This index is the benchmark adopted by the Company for comparison purposes. Total Returns Over Ten Years Rebased to 100 at 31 March 2015 Share price Net Asset Value - debt at fair value FTSE All-Share Index 200 150 100 50 202520242015 2016 2017 2018 2019 2020 2021 2022 2023 Source: LSEG Data & Analytics. 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: Year ended 31 March 2025 Year ended 31 March 2024 | | | Taxable | | | | | | Taxable | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | (1) | | | | | | (1) | | | | Fees | | Benefits | | Total | | Fees | | Benefits | | Total | | | | £ | | £ | | £ | | £ | | £ | | £ | Elisabeth Stheeman 47,100 562 47,662 47,100 1,448 48,548 Steve Baldwin 37,500 406 37,906 37,500 240 37,740 Patrick Edwardson 30,500 2,574 33,074 30,500 1,039 31,539 Aidan Lisser 33,700 320 34,020 32,867 740 33,607 Annabel Tagoe-Bannerman 30,500 592 31,092 30,500 255 30,755 Vicky Hastings (retired 19 July 2023) – – – 9,493 – 9,493 Total 179,300 4,454 183,754 187,960 3,722 191,682 (1) Taxable benefits relate to grossed up costs of travel. 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 Board’s duties. THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 49 The single total figure of remuneration for each Director is detailed below, with year on year changes since year ended 31 March 2022. | | | | | | 2025 | | | | | 2024 | | | | | 2023 | | | | | 2022 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Fees | | Benefits | | | Fees | | Benefits | | | Fees | | Benefits | | | Fees | | Benefits | | | | Non–executive directors | | | £ | | | £ | | £ | | | £ | | £ | | | £ | | £ | | | £ | | Elisabeth Stheeman | Total 47,100 562 47,100 1,448 40,063 901 27,167 228 | | | | | | | | | | | | | | | | | | | | | (Chair from 21 July 2022) % change -% (158)% 18% 60% 47% 295% 9% -% Steve Baldwin Total 37,500 406 37,500 240 35,000 785 31,720 0 % change -% (41)% 7% (69)% 10% -% 27% -% Patrick Edwardson Total 30,500 2,574 30,500 1,039 28,500 1,620 27,167 1,226 % change -% 60% 7% (35)% 5% 32% 673% -% Aidan Lisser (appointed 27 May 2022) Total 33,700 320 32,867 740 24,140 741 – – % change 2% (131)% 36% 0% –% –% –% –% Annabel Tagoe- Bannerman (appointed Total 30,500 592 30,500 255 4,421 – – – 7February 2023) % change –% 57% 590% -% -% -% -% -% Former Directors Vicky Hastings Total – 9,493 – 31,500 465 30,667 320 (retired 17 July 2023) % change –% –% (70)% –% 3% 45% (8)% –% Glen Suarez Total – – – – 14,307 6,819 44,000 4,887 (retired 21July 2022) % change -% –% -% -% (67)% 40% 0% -% Gordon McQueen Total – – – – – – 10,239 289 (retired 22 July 2021) % change -% -% –% –% -% -% (67)% -% Maxwell Ward Total – – – – – – 8,222 0 (retired 22 July 2021) % change -% -% -% –% –% –% (67)% –% Total 179,300 5,734 187,960 3,722 177,931 11,331 179,182 6,950 Total % change 5% 16% 5% (204)% (1)% 63% (4)% -% 50 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC # DIRECTORS' REMUNERATION REPORT / CONTINUED # **DIRECTORS' SHAREHOLDINGS AND SHARE INTERESTS (AUDITED)** Save as stated below, no Director had any interests, beneficial or otherwise, in the ordinary shares of the Company during the year. No changes to these holdings have been notified since the year end. 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 2025 | 31 March 2024 | | --- | --- | --- | | Elisabeth Stheeman | 16,883 | 14,163 | | Steve Baldwin | - | - | | Patrick Edwardson^{1} | 60,000 | 60,000 | | Aidan Lisser | 6,180 | 5,440 | | Annabel Tagoe-Bannerman | 2,047 | 732 | $^{1}$ Patrick Edwardson's holding includes 13,000 shares which are being held by a connected person. # **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 2025 and the prior year: | | 2025 £'000 | 2024 £'000 | Change £'000 | | --- | --- | --- | --- | | Aggregate Directors' Remuneration | 182* | 168 | 14 | | Aggregate Shareholder Distributions | 41,810 | 41,797 | 13 | * This is different from the remuneration table on page 47 by £4,000 (2024: £20,000) due to (under)/over accruals brought forward. # **VOTING AT LAST ANNUAL GENERAL MEETING** At the Annual General Meeting of the Company held on 17 July 2024, a resolution approving the Chair's Annual Statement and Report on Remuneration was passed. The votes cast (including votes cast at the Chair's discretion) were as follows. | | Number of Votes For | % | Number of Votes Against | % | Number of Votes Withheld | | --- | --- | --- | --- | --- | --- | | Annual Statement and Report on Remuneration | 40,371,342 | 99.65% | 142,691 | 0.35% | 153,244 | # **APPROVAL** This Directors' Remuneration Report was approved by the Board of Directors on 20 May 2025. # **ELISABETH STHEEMAN** CHAIR 20 May 2025 Signed on behalf of the Board of Directors THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 51 ## FINANCIAL REVIEW 52 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC ## INDEPENDENT AUDITORS’ 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 2025 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 2025; 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 Edinburgh Investment Trust plc (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 The Bank of New York Mellon (International) Limited (the “Administrator” and the “Custodian”) and NSM Funds (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: £11,256,940 (2024: £11,350,470) based on 1% of Net Assets. • Performance materiality: £8,442,705 (2024: £8,512,853). THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 53 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. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. 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 We tested the valuation of all of the quoted equity investments Refer to the Audit Committee Report, Accounting as at 31 March 2025 by agreeing the valuation to independent policies (C (v)) and Notes to the Financial Statements third-party sources; and (Note 9). We tested the existence of all of the quoted equity investments The investment portfolio as at 31 March 2025 comprised as at 31 March 2025 by agreeing investment holdings to an quoted equity investments (level 1) valued at £1,231m. independent custodian confirmation. We focused on the valuation and existence of listed No material misstatements were identified from this testing. investments because investments represent the principal element of the net asset value of the Company. Accuracy, completeness and occurrence of income We assessed the accounting policy for income recognition for Refer to the Report of the Audit Committee, Accounting compliance with accounting standards and the AIC SORP and policies (F) and Notes to the Financial Statements performed testing to check that income had been accounted (Note2). for in accordance with the stated accounting policy. We found that the accounting policies implemented were in accordance The Company has reported revenue of £41m (2024: with accounting standards and the AIC SORP, and that income £42m). from investments has been accounted for in accordance with the During the year, the Company received special stated accounting policy. dividends amounting to £2.5m of which £1.8m was We tested accuracy by selecting a sample of dividend receipts classified as revenue (2024: £ 2.4m of which £0.162m and agreeing the dividend rates to independent market data. was classified as revenue). To test for completeness, we tested, for a sample of investment We focused on the accuracy, completeness and holdings in the portfolio, that all dividends declared in the market occurrence of investment income as incomplete or had been recorded. inaccurate income could have a material impact on the Company’s net asset value. We tested occurrence by testing that a sample of dividends recorded in the year had been declared in the market. We also focused on the accounting policy for investment income recognition and the presentation We also tested the allocation and presentation of dividend of investment income in the Income Statement for income between the revenue and capital return columns of the compliance with the requirements of The Association Income Statement in line with the requirements set out in the of Investment Companies Statement of Recommended AIC SORP by determining reasons behind dividend distributions. Practice (the “AIC SORP”), as incorrect application For special dividends, we assessed the appropriateness of the could indicate a misstatement in income recognition. classification of special dividends as revenue or capital with reference to publicly available information. No material misstatements were identified from this testing. 54 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC INDEPENDENT AUDITORS’ 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 Portfolio Managers to understand the extent of the potential impact of climate change risk on the Company’s financial statements. The Directors and Portfolio Managers 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 Portfolio Managers’ 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 £11,256,940 (2024: £11,350,470). How we determined it 1% of Net Assets. Rationale for benchmark applied We believe that net assets is the primary measure used by the shareholders in assessing the performance of the entity, and is a generally accepted auditing benchmark. This benchmark provides an appropriate and consistent year on year basis for our audit. 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% (2024: 75%) of overall materiality, amounting to £8,442,705 (2024: £8,512,853) 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 £562,847 (2024: £567,524) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 55 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, including rising inflation and the wider macroeconomic uncertainty; • 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 severe but plausible downside scenario in the market’s 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. From our work on the corporate governance statement described below, 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 2025 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. 56 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC INDEPENDENT AUDITORS’ REPORT / CONTINUED 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. CORPORATE GOVERNANCE STATEMENT As explained in the Corporate Governance Statement, the Directors have chosen to demonstrate how the Company has met its obligations under the UK Corporate Governance Code (‘the Code’) by reporting under the 2019 Association of Investment Companies’ Code of Corporate Governance (‘the AIC Code’). As such, we refer to the AIC code where we report the matters required under ISAs (UK) in respect of 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 Code specified by the Listing Rules 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 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 / 57 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 requirements of 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 “Administrator” 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 Administrator 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. 58 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC INDEPENDENT AUDITORS’ REPORT / CONTINUED 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 members on 25 July 2019 to audit the financial statements for the year ended 31 March 2020 and subsequent financial periods. The period of total uninterrupted engagement is 6 years, covering the years ended 31 March 2020 to 31 March 2025. Lauren Cooper (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 20 May 2025 THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 59 ## INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH | | | | 2025 | | | | 2024 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | Capital | Total | Revenue | | Capital | Total | | Notes | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Gains on investments held at fair 9(b) – 53,697 53,697 – 99,095 99,095 value Gains/(losses) on foreign – 22 22 – (41) (41) exchange Income 2 40,666 – 40,666 42,095 – 42,095 Investment management fee 3 (1,385) (3,231) (4,616) (1,493) (3,483) (4,976) Other expenses 4 (1,274) (19) (1,293) (1,179) (14) (1,193) Net return before finance costs 38,007 50,469 88,476 39,423 95,557 134,980 and taxation Finance costs 5 (884) (2,066) (2,950) (888) (2,071) (2,959) Return on ordinary activities 37,123 48,403 85,526 38,535 93,486 132,021 before taxation Tax on ordinary activities 6 (78) – (78) (316) – (316) Return on ordinary activities after taxation for the financial 37,045 48,403 85,448 38,219 93,486 131,705 year Return per ordinary share: Basic and diluted 7 25.02p 32.70p 57.72p 23.93p 58.55p 82.48p The total column of this statement represents the Company’s profit and loss account, prepared in accordance with UK Accounting Standards. The return after taxation is the total comprehensive income and therefore no additional statement of comprehensive income is presented. The supplementary revenue and capital columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the year. The accompanying notes are an integral part of these financial statements. 60 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC ## BALANCE SHEET AT 31 MARCH 2025 2024 Notes £’000 £’000 Non current assets Investments held at fair value 9(a) 1,230,888 1,206,563 Current assets Debtors 10 8,518 19,878 Cash and cash equivalents 7,233 36,314 Total assets 1,246,639 1,262,755 Non current liabilities Unsecured Senior Loan Notes 12 (120,000) (120,000) Current liabilities Other payables 11 (693) (7,708) Total assets less current liabilities 1,245,946 1,255,047 Total liabilities (120,693) (127,708) Net assets 1,125,946 1,135,047 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 | 14 999,335 1,004,498 | | Revenue reserve | 14 42,624 46,562 | Total equity 1,125,946 1,135,047 Net asset value per ordinary share: Basic and diluted - debt at par value 15 780.17p 749.25p Basic and diluted - debt at fair value 15 817.16p 779.97p The financial statements on pages 59 to 76 were approved and authorised for issue by the Board of Directors on 20 May 2025. ELISABETH STHEEMAN CHAIR Signed on behalf of the Board of Directors Company Number SC001836 The accompanying notes are an integral part of these financial statements. THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 61 ## STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH Capital | | Share | | Share | Redemption | | Capital | | Revenue | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | 1 | | | 1 | | | | Capital | Premium | | | Reserve | Reserve | | Reserve | | | Total | | Notes | £’000 | | £’000 | | £’000 | £’000 | | | £’000 | | £’000 | At 1 April 2023 48,917 10,394 24,676 1,003,989 51,368 1,139,344 Return on ordinary activities – – – 93,486 38,219 131,705 Dividends paid 8 – – – – (43,025) (43,025) Shares bought back and held 2 13 – – – (92,977) – (92,977) in treasury At 31 March 2024 48,917 10,394 24,676 1,004,498 46,562 1,135,047 Return on ordinary activities – – – 48,403 37,045 85,448 Dividends paid 8 – – – – (40,983) (40,983) Shares bought back into 2 13 – – – (53,566) – (53,566) treasury At 31 March 2025 48,917 10,394 24,676 999,335 42,624 1,125,946 1 The revenue reserve and certain amounts of the capital reserve are distributable by way of dividend. 2 Shares bought back and held in treasury includes transaction costs. The accompanying notes are an integral part of these financial statements. 62 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC ## CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2025 2024 Notes £’000 £’000 Cash flow from operating activities Net return before finance costs and taxation 88,476 134,980 Tax on overseas income 6 (78) (316) Adjustments for: | Purchase of investments | | (559,942) (329,331) | | | --- | --- | --- | --- | | Sale of investments | 593,166 444,660 | | | | Gains on investments held at fair value | | (53,697) (99,095) | | | Decrease in debtors | | | 1,594 2,280 | | Decrease in creditors | (3) (2,211) | | | | Net cash inflow from operating activities | 69,516 150,967 | | | Cash flow from financing activities | Interest paid on overdraft | | | (7) (9) | | --- | --- | --- | --- | | Interest paid on Unsecured Senior Loan Notes | | (2,943) (2,093) | | | Shares bought back and held in treasury | | (54,664) (91,888) | | | Dividends paid | 8 (40,983) (43,025) | | | Net cash outflow from financing activities (98,597) (137,015) Net (decrease)/increase in cash and cash equivalents (29,081) 13,952 Cash and cash equivalents at the start of the year 36,314 22,362 Cash and cash equivalents at the end of the year 7,233 36,314 Reconciliation of cash and cash equivalents to the Balance Sheet is as follows: Cash held at custodian 1,068 2,768 Goldman Sachs Liquidity Reserve International Fund - Money Market Fund 6,165 33,546 Cash and cash equivalents 7,233 36,314 Cash flow from operating activities includes: | Dividends received | | | | | 39,922 43,681 | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Interest received | | | | | 9 11 | | | | | | | At 1 April | | | | | Non-cash | | At 31 March | | | | | 2024 | Cash flow | | | movement | | | 2025 | | | | £’000 | | £’000 | | | £’000 | | £’000 | Reconciliation of net debt: Cash and cash equivalents 36,314 (29,081) – 7,233 Unsecured Senior Loan Notes (120,000) – – (120,000) Total (83,686) (29,081) – (112,767) The accompanying notes are an integral part of these financial statements. THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 63 ## NOTES TO THE FINANCIAL STATEMENTS 1. PRINCIPAL ACCOUNTING POLICIES Accounting policies describe the Company’s approach to recognising and measuring transactions during the year and the position of the Company at the year end. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied during the year and the preceding year. A. Basis of Preparation Accounting Standards Applied The financial statements have been prepared in accordance with the Companies Act 2006, applicable United Kingdom Accounting Standards and applicable law (UK Generally Accepted Accounting Practice (UK GAAP)) including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and with the Statement of Recommended Practice Financial Statements of Investment Trust Companies and Venture Capital Trusts, issued by the Association of Investment Companies (SORP) in April 2021 (as amended in July 2022). The financial statements are issued on a going concern basis. Details of the Directors’ assessment of the going concern status of the Company, which considered the adequacy of the Company’s resources are given on pages 42 and 43. 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. 64 / 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. THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 65 Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements. Deferred taxation assets are recognised where, in the opinion of the Directors, it is more likely than not that these amounts will be realised in future periods. A deferred tax asset is only recognised in respect of surplus management expenses, losses on loan relationships and eligible unrelieved foreign tax to the extent that it is probable that the Company will be able to recover them from future taxable revenue. I. Dividends payable Dividends are not recognised in the financial statements unless there is an obligation to pay at the balance sheet date. Proposed dividends are recognised in the year in which they are paid to shareholders. J. Critical accounting estimates and judgements No critical accounting judgements or estimates were made during the year. K. Accounting for reserves The share premium comprises the net proceeds received by the Company following the issue of shares, after deduction of the nominal amount of 25 pence and any applicable issue costs. The capital redemption reserve maintains the equity share capital of the Company and arose from the nominal value of any shares bought back and cancelled; both are non-distributable. The capital reserve includes the investment holding gains/(losses), being the difference between cost and market value at the balance sheet date. It also includes cumulative realised gains/(losses) and costs related to share buybacks. Capital investment gains and losses are shown in note 9(b) and form part of the capital reserve. The revenue reserve shows the net revenue retained after payment of any dividends. The revenue reserve and certain amounts of the capital reserve are distributable by way of dividend. L. Shares repurchased and held in treasury The cost of repurchasing ordinary shares (for cancellation or to hold in treasury) including the related stamp duty and transaction cost is charged to the capital reserve and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. Where shares are cancelled (or are subsequently cancelled having previously been held in treasury), the nominal value of those shares is transferred out of Called up share capital and into the Capital redemption reserve. Should shares held in treasury be reissued, the sales proceeds will be treated as a realised capital profit up to the amount of the purchase price of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase price will be transferred to Share premium. 2. INCOME This note shows the income generated from the portfolio (investment assets) of the Company and income received from any other source. 2025 2024 £’000 £’000 Income from investments: | UK dividends | 34,929 35,857 | | | --- | --- | --- | | UK special dividends | 2,526 2,095 | | | Overseas dividends | 1,222 2,789 | | | Overseas special dividends | | – 318 | Interest from money market funds 1,980 1,025 40,657 42,084 Other income: Deposit interest 9 11 9 11 Total income 40,666 42,095 Special dividends of £702,000 were recognised as capital during the year (2024: £2,251,000). 66 / 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. | | 2025 | | | 2024 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Investment management fee | 1,385 | 3,231 | 4,616 | 1,493 | 3,483 | 4,976 | Details of the investment management and secretarial agreement is disclosed on page 43 in the Directors' Report. At 31 March 2025, investment management fees of £374,000 (2024: £411,000) were accrued. # **4. OTHER EXPENSES** The other expenses$^{(1)}$ of the Company are presented below, those paid to the Directors and the auditors are separately identified. | | 2025 | | | 2024 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **Other expenses** | 1,274 | 19 | 1,293 | 1,179 | 14 | 1,193 | | Other expenses include the following: | | | | | | | | Directors' remuneration^{(2)} | 182 | - | 182 | 168 | - | 168 | | Auditors' fees^{(3)}: | | | | | | | | - for audit of the Company's annual financial statements | 53 | - | 53 | 51 | - | 51 | The maximum Directors' fees authorised by the Articles of Association are £250,000 per annum. I. Other expenses include: - £14,000 (2024: £300) of employer's National Insurance payable on Directors' remuneration. As at 31 March 2025, the amounts outstanding on Directors' remuneration and employer's National Insurance was £52,000 (2024: £nil); and - custodian transaction charges of £19,000 (2024: £14,000). These are charged to capital. II. There were five directors during the year and the Directors' Remuneration Report on page 47 provides further information on Directors' fees. III. Auditors' fees include expenses but exclude VAT. # **5. FINANCE COSTS** Finance costs arise on any borrowing facilities the Company has used. Borrowing facilities are the £120m notes (2024: £120m notes). Please see Note 12 for additional details of the terms. | | 2025 | | | 2024 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Interest payable on borrowings repayable not by instalment: | | | | | | | | - Interest on overdraft facility | 2 | 5 | 7 | 3 | 6 | 9 | | - Unsecured Senior Loan Notes repayable after 5 years | 882 | 2,061 | 2,943 | 885 | 2,065 | 2,950 | | | 884 | 2,066 | 2,950 | 888 | 2,071 | 2,959 | THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 67 6. TAXATION As an investment trust the Company pays no tax on capital gains. As the Company invests principally in UK equities, it has little overseas tax and the overseas tax charge is the result of withholding tax deducted at source. This note also clarifies the basis for the Company having no deferred tax asset or liability. (a) Tax charge 2025 2024 £’000 £’000 Overseas taxation 78 316 (b) Reconciliation of tax charge | | 2025 | 2024 | | --- | --- | --- | | | £’000 | £’000 | | Return before taxation | 85,526 132,021 | | Theoretical tax at the current UK Corporation Tax rate of 25% (2024: 25%) 21,382 33,005 Effects of: | – Non-taxable UK dividends | (8,439) (8,929) | | | | --- | --- | --- | --- | | – Non-taxable UK special dividends | | (632) (603) | | | – Non-taxable overseas dividends | | (310) (706) | | | – Non-taxable gains on investments | (13,424) (24,773) | | | | – Non-taxable (gains)/losses on foreign exchange | | | (6) 10 | | – Excess of allowable expenses over taxable income | | 1,424 1,993 | | | – Disallowable expenses | | | 5 3 | – Overseas taxation 78 316 Tax charge for the year 78 316 (c) Deferred tax Owing to the Company’s status as an investment company, and the Directors’ intention that it continues to meet the conditions required to maintain that approval in the foreseeable future, no deferred tax has been provided on any capital gains and losses arising on the revaluation or disposal of investments. (d) Factors that may affect future tax changes The Company has cumulative excess management expenses of £516,349,000 (2024: £510,654,000) that are available to offset future taxable revenue. A deferred tax asset of £129,087,000 (2024: £127,664,000) at 25% (2024: 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 the deferred tax assets can be offset. 7. RETURN PER ORDINARY SHARE Return per share is the amount of gain generated for the financial year divided by the weighted average number of ordinary shares in issue. The basic revenue, capital and total return per ordinary share is based on each of the returns/loss after taxation and on 148,041,467 (2024: 159,690,463) ordinary shares, being the weighted average number of ordinary shares in issue throughout the year. 68 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC NOTES TO THE FINANCIAL STATEMENTS / CONTINUED 8. DIVIDENDS ON ORDINARY SHARES Dividends represent the distribution of income to shareholders. The Company pays four dividends a year – three interim and one final dividend. 2025 2024 pence £’000 pence £’000 Dividends paid and recognised in the year: | – third interim paid in respect of previous year | 6.90 10,429 6.70 11,050 | | --- | --- | | – final paid in respect of previous year | 6.90 10,390 6.70 11,036 | | – first interim paid | 6.90 10,153 6.70 10,622 | – second interim paid 6.90 10,011 6.70 10,317 27.60 40,983 26.80 43,025 2025 2024 pence £’000 pence £’000 Dividends payable in respect of the year: | – first interim | 6.90 10,153 6.70 10,622 | | --- | --- | | – second interim | 6.90 10,011 6.70 10,317 | | – third interim | 7.50 10,823 6.90 10,429 | – proposed final 7.50 10,823 6.90 10,429 28.80 41,810 27.20 41,797 The proposed final dividend is subject to approval by ordinary shareholders at the AGM. 9. INVESTMENTS HELD AT FAIR VALUE The portfolio comprises investments which are principally listed on a regulated stock exchange or traded on AIM. A very small proportion of investments are valued by the Directors as they are unlisted. Gains or losses are either: – realised, usually arising when investments are sold; or – unrealised, being the difference from cost on those investments still held at the year end. (a) Analysis of investments by listing status 2025 2024 £’000 £’000 Investments listed on a recognised investment exchange 1,230,888 1,206,563 THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 69 (b) Analysis of investment gains: | | | 2025 | 2024 | | --- | --- | --- | --- | | | | £’000 | £’000 | | Opening book cost | 976,923 1,040,163 | | | | Opening investment holding gains | 229,640 186,486 | | | | Opening fair value | 1,206,563 1,226,649 | | | Movements in year: | Purchases at cost | 554,028 335,245 | | --- | --- | | Sales – proceeds | (583,400) (454,426) | | Gains on investments in the year | 53,697 99,095 | Closing fair value 1,230,888 1,206,563 | Closing book cost | 1,097,403 976,923 | | --- | --- | | Closing investment holding gains | 133,485 229,640 | | Closing fair value | 1,230,888 1,206,563 | The Company received £583,400,000 (2024: £454,426,000) from investments sold in the year. The book cost of these investments when they were purchased was £433,548,000 (2024: £398,434,000) realising a gain of £149,852,000 (2024: £55,992,000). 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 £2,748,000 (2024: £1,642,000) on purchases and £272,000 (2024: £222,000) 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. | | 2025 | | 2024 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Amounts due from brokers | | – 9,766 | | | Overseas withholding tax recoverable | 1,409 2,229 | | | | Income tax recoverable | | 56 28 | | Prepayments and accrued income 7,053 7,855 8,518 19,878 11. OTHER PAYABLES Creditors are amounts which must be paid by the Company and are split between those payable within 12 months of the balance sheet date and those payable after that time. The main creditors have historically been the long-term debt and bank borrowings. The other creditors include any amounts due to brokers for the purchase of investments, amounts owing on share buybacks awaiting settlement or amounts owed to suppliers (accruals) such as the Manager and auditors. | | 2025 | | 2024 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Amounts due to brokers | | – 5,914 | | | Share buybacks awaiting settlement | | – 1,098 | | Accruals and deferred income 693 696 693 7,708 70 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC # NOTES TO THE FINANCIAL STATEMENTS / CONTINUED # **12. UNSECURED SENIOR LOAN NOTES** These creditors are amounts that must be paid, as shown by note 11, but are due more than one year after the balance sheet date. | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Unsecured Senior Loan Notes – 2.26% interest rate, maturity 30 September 2037 | 35,000 | 35,000 | | Unsecured Senior Loan Notes – 2.49% interest rate, maturity 30 September 2047 | 35,000 | 35,000 | | Unsecured Senior Loan Notes – 2.53% interest rate, maturity 30 September 2051 | 20,000 | 20,000 | | Unsecured Senior Loan Notes – 2.53% interest rate, maturity 30 September 2057 | 30,000 | 30,000 | | | 120,000 | 120,000 | The Unsecured Senior Loan Notes comprise four separate notes. As shown above, each has a fixed interest rate and contracted maturity date when the par value must be repaid. Interest is payable on a semi-annual basis, with equal amounts payable on each of 31 March and 30 September each year. These notes require the net tangible assets of the Company to remain not less than £300m and net borrowings to remain less than 35% of net assets. This requirement was met throughout the year. # **13. CALLED UP SHARE CAPITAL** Share capital represents the total number of shares in issue, including treasury shares. | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Share capital: | | | | Ordinary shares of 25 pence each | 36,080 | 37,873 | | Treasury shares of 25 pence each | 12,837 | 11,044 | | | 48,917 | 48,917 | | | 2025 | 2024 | | --- | --- | --- | | Number of ordinary shares in issue: | | | | Brought forward | 151,491,525 | 165,476,525 | | Shares bought back and held in treasury | (7,170,500) | (13,985,000) | | Carried forward | 144,321,025 | 151,491,525 | | Number of shares held in treasury: | | | | Brought forward | 44,175,209 | 30,190,209 | | Shares bought back into treasury | 7,170,500 | 13,985,000 | | Carried forward | 51,345,709 | 44,175,209 | | **Total ordinary shares** | **195,666,734** | **195,666,734** | During the year the Company bought back into treasury 7,170,500 (2024: 13,985,000) ordinary shares at an average price of 747.03p (2024: 664.84p) (including costs). Since the year end to 19 May 2025 (being the last practicable day prior to the publication of this report), 125,000 shares have been bought back into treasury. Note 1L on page 65 explains the policy on the transaction costs related to the shares repurchased and held in treasury. The Directors' Report on pages 43 and 44 sets out the Company's share capital structure, restrictions and voting rights. THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 71 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. 2025 2024 | | | NAV | Shareholders’ | | | NAV | Shareholders’ | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | per share | | | funds | per share | | | funds | | | | pence | | £’000 | | pence | | £’000 | | Shareholders’ funds | | 780.17 1,125,946 749.25 1,135,047 | | | | | | | NAV – debt at par 780.17 1,125,946 749.25 1,135,047 A reconciliation showing the NAV per share and Shareholders’ funds using debt at fair value is shown in the Alternative Performance Measures on pages 87 and 88. 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 page 18) and Unsecured Senior Loan Notes 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. 72 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC # NOTES TO THE FINANCIAL STATEMENTS / CONTINUED # **Risk Management Policies and Procedures** The Directors have delegated to the Manager the responsibility for the day-to-day investment activities and management of gearing of the Company as more fully described in the Directors' Report. The Company invests in equities and other investments for the long-term so as to fulfil its investment policy (incorporating the Company's investment objective). In pursuing its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company's net assets or a reduction of the profits available for dividends. The associated risk management policies are summarised below and have remained substantially unchanged for the two years under review. # **16.1 Market Risk** The Company's Manager assesses the Company's exposure when making each investment decision, and monitors the overall level of market risk for the whole of the investment portfolio on an ongoing basis. The Board has meetings in each calendar quarter to assess risk and review investment performance, as disclosed in the Board Responsibilities on page 39. Any borrowing to gear the investment portfolio is used to enhance returns but also increases the Company's exposure to market risk and volatility. The Company has the ability to gear using its £120 million Unsecured Senior Loan Notes. # **16.1.1 Currency risk** The majority of the Company's assets and liabilities are denominated in sterling. There is some exposure to US dollar, Swiss franc and the Euro. # **16.1.2 Inflation risk** The Company has no assets or liabilities that have direct inflation link properties. # **Management of the currency risk** The Manager monitors the Company's direct exposure to foreign currencies on a daily basis and reports to the Board on a regular basis. Forward currency contracts can be used to reduce the Company's exposure to foreign currencies arising naturally from the Manager's choice of securities. All contracts are limited to currencies and amounts commensurate with the assets denominated in currencies. No Forward currency contracts were used during the year (2024: none). Income denominated in foreign currencies is converted to sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt. The Company may invest up to 20% of the portfolio in securities listed on non-UK stock exchanges. At the year end holdings of non-UK securities total £76.1 million (2024: £74.3 million) representing 6.2% (2024: 6.2%) 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. | Currency exposure | 2025 | | | | 2024 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | USD £'000 | DKK £'000 | CHF £'000 | EUR £'000 | USD £'000 | DKK £'000 | CHF £'000 | EUR £'000 | | Foreign currency exposure on net monetary items | 869 | 38 | 988 | 384 | 2,730 | 38 | 2,183 | 584 | | Investments at fair value through profit or loss that are equities | 55,389 | - | - | 20,701 | 40,666 | - | 21,373 | 12,254 | | **Total net foreign currency exposure** | **56,258** | **38** | **988** | **21,085** | **43,396** | **38** | **23,556** | **12,838** | 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 2.1% (2024: 1.7%) against the US dollar, 1.2% (2024: 1.4%) for the Swiss franc, 1.2% (2024: 1.0%) for the Euro, and for the Danish Krone, 1.2% (2024: 1.0%) during the year, the capital return and net assets of the Company would have increased for all currency exposures by £1.4 million (2024: £1.2 million). Conversely, if sterling had strengthened to the same THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 73 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 (2024: £120 million). The Unsecured Senior Loan Notes have a fixed interest rate which only exposes the Company to changes in market value in the event that the debt is repaid before maturity. Specifics of the Unsecured Senior Loan Notes are shown in Note 12. The details of their fair value and the affect on net asset value within the Net Asset Value (NAV) – Debt at Fair Value reconciliation within the Alternative Performance Measures on page 88. The Company held no fixed income securities during the year (2024: no fixed income securities). As at 31 March 2025 no government bonds (2024: none) were recognised as a Cash and Cash Equivalent on the Balance Sheet. Interest rate exposure At 31 March the exposure of financial assets and financial liabilities to interest rate risk is shown by reference to: – floating interest rates (giving cash flow interest rate risk) – when the interest rate is due to be re-set; and – fixed interest rates (giving fair value interest rate risk) – when the financial instrument is due for repayment. 2025 2024 | | Between | | | | | | Between | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | one | After | | | | | one | After | | | Within | and five | | | five | | Within | and five | | | five | | | one year | | years | | years | Total | one year | | years | | years | Total | | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | £’000 | £’000 | Exposure to floating interest rates: Cash and cash equivalents 7,233 – – 7,233 36,314 – – 36,314 Unsecured Senior Loan Notes – – (120,000) (120,000) – – (120,000) (120,000) debt at par value Total exposure to interest 7,233 – (120,000) (112,767) 36,314 – (120,000) (83,686) rates 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 £123.1 million (2024: £120.7 million). Conversely, if the value of the portfolio rose by 10%, the profit after tax and the net assets of the Company would increase by the same amounts. 74 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC NOTES TO THE FINANCIAL STATEMENTS / CONTINUED 16.2 Liquidity risk Liquidity risk is minimised as the majority of the Company’s investments constitute a diversified portfolio of readily realisable securities which can be sold to meet funding commitments as necessary. Liquidity risk exposure The contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be required, are as follows: More than three months | | Three | | but less | | More than | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | months | | | than | | | one | | | | or less | | one year | | | | year | Total | | 2025 | £’000 | | | £’000 | | £’000 | | £’000 | | Unsecured Senior Loan Notes – debt at par value | | – – 120,000 120,000 | | | | | | | | Interest on Unsecured Senior Loan Notes | | – 2,928 64,645 67,573 | | | | | | | | Accruals and deferred income | 693 – – 693 | | | | | | | | 693 2,928 184,645 188,266 More than three months | | Three | | but less | | More than | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | months | | | than | | | one | | | | or less | | one year | | | | year | Total | | 2024 | £’000 | | | £’000 | | £’000 | | £’000 | | Unsecured Senior Loan Notes – debt at par value | | – – 120,000 120,000 | | | | | | | | Interest on Unsecured Senior Loan Notes | | – 2,928 67,573 70,501 | | | | | | | | Amounts due to brokers | 5,914 – – 5,914 | | | | | | | | | Share buybacks awaiting settlement | 1,098 – – 1,098 | | | | | | | | | Accruals and deferred income | 696 – – 696 | | | | | | | | 7,708 2,928 187,573 198,209 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 64. 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. THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 75 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 and cash). 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. 2025 Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 Financial assets designated at fair value through profit or loss: Quoted investments: Equities and preference shares 1,230,888 – – 1,230,888 Total for financial assets 1,230,888 – – 1,230,888 2024 Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 Financial assets designated at fair value through profit or loss: Quoted Investments: Equities 1,206,563 – – 1,206,563 Total for financial assets 1,206,563 – – 1,206,563 The book cost and fair value of Unsecured Senior Loan Notes, are as follows: 2025 2024 | | | Book | Fair | Book | | Fair | | --- | --- | --- | --- | --- | --- | --- | | | | Value | Value | Value | Value | | | | | £’000 | £’000 | £’000 | £’000 | | | Unsecured Senior Loan Notes | 120,000 66,611 120,000 73,461 | | | | | | 120,000 66,611 120,000 73,461 Incorporating the fair value of the Unsecured Senior Loan Notes, results in the increase of the net asset value per ordinary share to 817.16p (2024: 779.97p). 76 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC # NOTES TO THE FINANCIAL STATEMENTS / CONTINUED # **18. CAPITAL MANAGEMENT** The Company's total capital employed at 31 March 2025 was £1,245,946,000 (2024: £1,255,047,000) comprising borrowings of £120,000,000 (2024: £120,000,000) and equity share capital and other reserves of £1,125,946,000 (2024: £1,135,047,000). The Company's total capital employed is managed to achieve the Company's objective and investment policy as set out on page 15, 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 5.0% (2024: 3.1%) 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 20 to 23. 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 buyback 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. 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 2025 (2024: 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 47 to 50 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 43, and in note 3. # **21. POST BALANCE SHEET EVENTS** There are no significant events after the end of the reporting period requiring disclosure. THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 77 ## OTHER INFORMATION ## FOR SHAREHOLDERS 78 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC # NOTICE OF ANNUAL GENERAL MEETING 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 fifth Annual General Meeting of The Edinburgh Investment Trust plc will be held at The Balmoral Hotel, Edinburgh, EH2 2EQ, at 11:00 a.m. on 22 July 2025. The 2025 AGM will be held in person and voting will be by way of a poll. 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 2025 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 2025 AGM virtually, please visit www.edinburgh-investment-trust.co.uk from your device. The recording of the 2025 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 22 July 2025 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 MUFG Corporate Markets 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 or Proximity, can be found in the Notes to the Notice of AGM on pages 80 and 81. 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 2025; 2. To approve the Remuneration Policy for the year ended 31 March 2025; 3. To approve the Annual Statement and Report on Remuneration for the year ended 31 March 2025; 4. To declare a final dividend on the ordinary shares; 5. To re-elect Steven Baldwin as a Director of the Company; 6. To re-elect Elisabeth Stheeman as a Director of the Company; 7. To re-elect Patrick Edwardson as a Director of the Company; 8. To re-elect Aidan Lisser as a Director of the Company; 9. To re-elect Annabel Tagoe-Bannerman as a Director of the Company; 10. To re-appoint PricewaterhouseCoopers LLP as auditors of the Company; and 11. 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 resolutions 12 and 13 will be proposed as Ordinary Resolutions and resolutions 14 to 16 as Special Resolutions: 12. To approve and adopt the proposed investment objective and policy set out in the appendix to this notice on pages 82 and 83, a copy of which has been produced to the meeting and signed by the Chairman for the purposes of identification, as the investment policy of the Company to the exclusion of the existing investment policy of the Company. 13. 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 19 May 2025, such authority to expire at the conclusion of the next Annual General Meeting of the Company or the date fifteen months after the passing THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 79 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. 14. That: subject to the passing of resolution number 13 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 19 May 2025. 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. 15. 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 19 May 2025); - (b) the minimum price which may be paid for a Share shall be 25p; - (c) the maximum price which may be paid for a Share must 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. 16. 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 44 and 45. 80 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC NOTICE OF ANNUAL GENERAL MEETING / CONTINUED Notes properly authenticated in accordance with Euroclear UK & International Limited’s specifications and must 1. The 2025 AGM will be held in person and voting will be contain the information required for such instructions, as by way of a poll, however, shareholders may follow the described in the CREST Manual. The message, regardless proceedings virtually using a smartphone, tablet or computer. of whether it relates to the appointment of a proxy or to Shareholders should continue to monitor the Company’s an amendment to the instruction given to a previously website at www.edinburgh-investment-trust.co.uk and our appointed proxy must, in order to be valid, be transmitted announcements for any updates in relation to the meeting. so as to be received by the issuer’s agent (ID RA10) by the 2. A member entitled to attend and vote at the AGM is latest time(s) for receipt of proxy appointments specified entitled to appoint one or more proxies to attend, speak in this document. For this purpose, the time of receipt and vote in his stead. A proxy need not be a member will be taken to be the time (as determined by the time of the Company. In order to be valid an appointment of stamp applied to the message by the CREST Applications proxy must be returned by one of the following methods: Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed – via MUFG Corporate Markets website by CREST. After this time any changes of instructions to https://uk.investorcentre.mpms.mufg.com/Login/Login; proxies through CREST should be communicated to the or appointee through other means. – in hard copy form by post, by courier or by hand to The Company may treat as invalid a CREST Proxy the Company’s Registrars, MUFG Corporate Markets, Instruction in the circumstances set out in Regulation PXS 1, Central Square, 29, Wellington Street, Leeds, 35(5)(a) of the Uncertificated Securities Regulations LS1 4DL; or 2001. CREST members and, where applicable, their – in the case of CREST members, by utilising the CREST CREST sponsors or voting service provider(s) should electronic proxy appointment service in accordance note that Euroclear UK & International Limited does with the procedures set out below and in each case, not make available special procedures in CREST for to be received by the Company not less than 48 hours any particular messages. Normal system timings and before the time of the meeting. Any amended proxy limitations will therefore apply in relation to the input appointment must be received by this time. of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take or, if the CREST If you are an institutional investor you may be able to member is a CREST personal member or sponsored appoint a proxy electronically via the Proxymity platform, member or has appointed a voting service provider(s), a process which has been agreed by the Company and to procure that his CREST sponsor or voting service approved by the Registrar. For further information provider(s) take(s), such action as shall be necessary to regarding Proxymity, please go to www.proxymity.io. Your ensure that a message is transmitted by means of the proxy must be lodged by 11:00 a.m. on 18 July 2025 in CREST system by any particular time. In this connection, order to be considered valid or, if the meeting is adjourned, CREST members and, where applicable, their CREST by the time which is 48 hours before the time of the sponsors or voting service providers are referred, in adjourned meeting. Before you can appoint a proxy via particular, to those sections of the CREST Manual this process, you will need to have agreed to Proxymity’s concerning practical limitations of the CREST system associated terms and conditions. It is important that you and timings. The CREST Manual can be reviewed at read these carefully as you will be bound by them and they www.euroclear.com. will govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity platform 4. A form of proxy is enclosed. may be revoked completely by sending an authenticated To be effective, the form of proxy, duly completed message via the platform instructing the removal of your and executed, together with any power of attorney or proxy vote. other authority under which it is signed (or a notarially 3. CREST members who wish to appoint a proxy by certified copy thereof) must be lodged at the office of utilising the CREST electronic proxy appointment service the Company’s Registrars, MUFG Corporate Markets, PXS may do so by utilising the procedures described in the 1, Central Square, 29, Wellington Street, Leeds, LS1 4DL CREST Manual. CREST Personal Members or other by no later than 11:00 a.m. on 18 July 2025. CREST sponsored members, and those CREST members 5. A person entered on the Register of Members at close who have appointed a voting service provider(s), of business on 18 July 2025 (a ‘member’) is entitled to should refer to their CREST sponsor or voting service vote at the Meeting pursuant to Regulation 41 of the provider(s) who will be able to take the appropriate Uncertificated Securities Regulations 2001. Any changes action on their behalf. In order for a proxy appointment to the Register of Members after such time and date shall made by means of CREST to be valid, the appropriate be disregarded in determining the rights of any person CREST message (a ‘CREST Proxy Instruction’) must be to vote at the Meeting. If the Meeting is adjourned, THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 81 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. 6. The Terms of Reference of the Audit, Management Engagement and Nomination 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 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 19 May 2025 (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. 51,470,709 ordinary shares held in treasury, therefore, the total voting rights in the Company as at that date are 144,196,025. 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 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 2024; or (ii) any circumstance connected with auditors of the Company appointed for the financial year beginning on 1 April 2024 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. 82 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC NOTICE OF ANNUAL GENERAL MEETING / CONTINUED | APPENDIX TO NOTICE OF ANNUAL GENERAL | | Revised Investment Objective and Policy to be | | --- | --- | --- | | MEETING | | approved by Shareholders at the Annual General | | Current Investment Objective and Policy | | Meeting on 22 July 2025 | | Please see below the full text of the current investment | | Please see below the full text of the proposed investment | | objective and policy. | | objective and policy. | | INVESTMENT OBJECTIVE AND POLICY | | INVESTMENT OBJECTIVE AND POLICY | | Investment Objective | | Investment Objective | | The Company invests primarily in UK securities with the | | The Company aims to exceed the total return on the FTSE | | long-term objective of achieving: | | All-Share Index and grow its dividend faster than UK inflation. | | 1. an increase of the Net Asset Value per share in excess of | | This objective will be assessed over the long term and | | | the growth in the FTSE All-Share Index; and | performance against the FTSE All-Share Index will be | measured on a NAV total return basis. 2. growth in dividends per share in excess of the rate of UKinflation. Investment Policy The Company invests primarily in the shares of companies Investment Policy quoted on a recognised stock exchange in the UK. Securities The Company will generally invest in companies quoted on of companies quoted on a recognised stock exchange a recognised stock exchange in the UK. The Company may outside of the UK may also be held but will not exceed 20% also invest up to 20% of the market value of the Company’s of the market value of the investment portfolio, measured at investment portfolio, measured at the time of any acquisition, 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 The portfolio is selected by the Portfolio Manager, and of its assessment of the fundamental value available in monitored carefully by the Board, on the basis of the Portfolio individual securities. Whilst the Company’s overall exposure Manager’s assessment of the fundamental value available in to individual securities is monitored carefully by the Board, individual securities, whilst giving due regard to sector and the portfolio is not primarily structured on the basis of industry weightings and to broader economic and market industry weightings. No acquisition may be made which conditions. Companies are chosen by the Portfolio Manager would result in a holding being greater than 10% of the on the basis of their individual business strengths, growth market value of the Company’s investment portfolio, nor will and income characteristics and valuation, and not according the Company invest more than 15% of the market value of to specific rules of asset allocation. its investment portfolio in any other UK-listed investment Borrowings may be used to provide gearing to the equity trusts or investment companies. Further, the Company may portfolio of up to 25% of net assets. not hold more than 5% of the issued share capital (or voting shares) of any one company. Investment in convertibles is Investment decisions are restricted by the following: subject to normal security limits. Should these or any other – No acquisition may be made which would result in a limit be exceeded by subsequent market movement, each holding being greater than 10% of the market value of the resulting position is specifically reviewed by the Board. The investment portfolio; Company may borrow money to provide gearing to the equity portfolio of up to 25% of net assets. – The Company will not invest more than 15% of its total assets in the shares of other UK-listed investment trusts Use of derivative instruments is monitored carefully by the or investment companies; Board and permitted within the following constraints: the writing of covered calls against securities which in aggregate – The Company will not hold more than 5% of the issued amount to no more than 10% of the value of the portfolio, and share capital (or voting shares) of any one company. 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. THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 83 In addition, the Company may: – invest in convertibles (securities which are typically expected to convert into shares on a recognised stock exchange) subject to no acquisition or conversion resulting in a holding breaching the limits in this investment policy; – use derivative instruments, monitored carefully by the Board and subject to constraints, including the writing of covered calls against securities (which in aggregate amount to no more than 10% of the value of the investment portfolio) and the investment in FTSE 100 futures (subject to the value of such positions, if exercised, not exceeding 15% of the value of the investment 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 should not exceed 25% of the value of the investment portfolio at any time; – hedge exposure to changes in foreign currency rates in respect of its overseas investments. 84 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC ## SHAREHOLDER INFORMATION HOW TO INVEST IN THE EDINBURGH INVESTMENT ANNOUNCEMENTS TRUST PLC (THE COMPANY) Annual financial report May The Company’s shares are quoted on the London Stock Half-yearly financial report November Exchange. There are a variety of ways by which investors can buy the shares. Shares may be purchased through LONDON RETAIL SHAREHOLDER EVENT discretionary wealth managers, banks, independent The Company invites shareholders to a retail presentation financial advisors and via a large number of execution-only by the Portfolio Managers, Imran Sattar and Emily Barnard, trading platforms. The Manager’s website contains a list and to meet with the Directors. The event will be held on of some of the larger dealing platforms as well as a link to 8October 2025 at 11am. unbiased.co.uk, for those seeking financial advice, and to the Please note this is a non-voting meeting. AIC’s website at www.theaic.co.uk for detailed information on investment companies. DIVIDEND PAYABLE TIMETABLE 1st interim November SHARE PRICE 2nd interim February The price of your ordinary shares can be found in the Financial Times, Daily Telegraph, The Scotsman and The Times. 3rd interim May Final July In addition, share price information can be found at the London Stock Exchange website using the EDIN ticker code, on the ANNUAL GENERAL MEETING website of most share dealing platforms and on the Company’s July own website www.edinburgh-investment-trust.co.uk. YEAR END NAV PUBLICATION 31 March The NAV of the Company’s ordinary shares is calculated by the Manager on a daily basis and is notified to the Stock LOCATION OF AGM Exchange on the next business day. It is published daily in The one hundred and thirty fifth Annual General Meeting of the newspapers detailed above. the Company will be held at The Balmoral Hotel, Edinburgh, EH2 2EQ on 22 July 2025 at 11:00 am. COMPANY’S WEBSITE Information relating to the Company including investment UK GENERAL DATA PROTECTION REGULATION objective, supporting philosophy and investment (UKGDPR) performance along with news, opinions, disclosures, results UK GDPR is a positive step towards individuals knowing and key information documents can be found on the how their personal data is used and also having more Company’s website www.edinburgh-investment-trust.co.uk. control over how it is used. The Company has a privacy notice which sets out what personal data is collected, and The contents of websites referred to in this document, how and why it is used. The latest privacy notice can be or accessible from links within those websites, are not found at www.edinburgh-investment-trust.co.uk under the incorporated in to, nor do they form part of this annual ‘Other Documents’ section, or a copy can be obtained from financial report. the Company Secretary whose correspondence address is FINANCIAL CALENDAR shown on the next page. In addition, the Company publishes information according to the following calendar: THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 85 ## ADVISORS AND PRINCIPAL ## SERVICE PROVIDERS | REGISTERED OFFICE | BANKER | | --- | --- | | First Floor | The Bank of New York Mellon | | 9 Haymarket Square | 160 Queen Victoria Street | | Edinburgh EH3 8RY | London EC4V 4LA | | COMPANY NUMBER | CORPORATE BROKER | | Registered in Scotland. | Investec Bank plc | | Number: SC1836 | 30 Gresham Street | London EC2V 7QP ALTERNATIVE INVESTMENT FUND MANAGER | (MANAGER) | REGISTRAR | | --- | --- | | Liontrust Fund Partners LLP | MUFG Corporate Markets | | 2 Savoy Court | Central Square | | London WC2R 0EZ | 29 Wellington Street | | 020 7412 1700 | Leeds | LS1 4DL COMPANY SECRETARY | NSM Funds (UK) Limited | If you hold your shares direct and not through a Savings | | --- | --- | | 4th Floor 46-48 James Street | Scheme or ISA and have queries relating to your shareholding, | | London W1U 1EZ | you should contact the Registrars on: | 0203 697 5772 0371 664 0300 THE ASSOCIATION OF INVESTMENT COMPANIES Calls are charged at the standard geographic rate and will The Company is a member of the Association of Investment vary by provider. Companies. Contact details are as follows: 020 7282 5555 From outside the UK: +44 (0) 371 664 0300. Calls from Email: enquiries@theaic.co.uk / Website: www.theaic.co.uk outside the United Kingdom will be charged at the applicable international rate. Lines are open from 9:00 am to 5:30 pm, LEGAL ADVISOR Monday to Friday (excluding UK Public Holidays). Dentons UK and Middle East LLP First Floor Shareholders can also access their holding details via MUFG 9 Haymarket Square Corporate Markets’ website: Edinburgh https://uk.investorcentre.mpms.mufg.com/Login/Login EH3 8RY MUFG Corporate Markets provide an on-line and telephone INDEPENDENT AUDITORS share dealing service to existing shareholders who are not PricewaterhouseCoopers LLP seeking advice on buying or selling. This service is available 7 More London Riverside at https://dealing.cm.mpms.mufg.com or London SE1 2RT 0371 664 0445. DEPOSITARY AND CUSTODIAN The Bank of New York Mellon (International) Limited Calls are charged at the standard geographic rate and will 160 Queen Victoria Street vary by provider. London EC4V 4LA From outside the UK: +44 (0) 371 664 0445. Calls from outside the UK will be charged at the applicable international rate. Lines are open from 8:00 am to 4:30 pm, Monday to Friday (excluding UK Public Holidays). 86 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC # GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES 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 2025 and 31 March 2024. 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 annual 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 88) 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 | | 2025 | 2024 | | --- | --- | --- | --- | --- | | Share price | 2 | a | 740.00p | 690.00p | | Net asset value per share - debt at market value (note 15) | 71 | b | 817.16p | 779.97p | | **Discount** | c = (a-b)/b | | (9.4)% | (11.5)% | ## DIVIDEND YIELD The annual dividend payable expressed as a percentage of the year end share price. | | Page | | 2025 | 2024 | | --- | --- | --- | --- | --- | | Dividends per share payable in respect of the year (note 8) | 68 | a | 28.80p | 27.20p | | Share price | 2 | b | 740.00p | 690.00p | | **Dividend yield** | c = a/b | | 3.9% | 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: THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 87 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. | | | | 2025 | 2024 | | --- | --- | --- | --- | --- | | | Page | | £’000 | £’000 | | Unsecured Senior Loan Notes – debt at fair value | | 75 a 66,611 73,461 | | | Gross borrowings 66,611 73,461 Net asset value – debt at fair value APM 88 b 1,179,335 1,181,586 Gross gearing c = a/b 5.6% 6.2% 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. | | | | 2025 | 2024 | | --- | --- | --- | --- | --- | | | Page | | £’000 | £’000 | | Unsecured Senior Loan Notes – debt at fair value | | 75 66,611 73,461 | | | Less: cash and cash equivalents 60 (7,233) (36,314) Net borrowings a 59,378 37,147 Net asset value – debt at fair value APM 88 b 1,179,335 1,181,586 Net gearing c = a/b 5.0% 3.1% 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 60. 88 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES / CONTINUED 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 net asset value per share adjusted to include the Unsecured Senior Loan Notes at fair value rather than at par is as follows: | | | NAV | | | | NAV | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | per share | | Shareholders’ | | per share | | Shareholders’ | | | | | pence | | funds | | pence | | funds | | | | 2025 | | £’000 | | 2024 | | £’000 | | NAV - debt at par | | 780.17 1,125,946 749.25 1,135,047 | | | | | | | Unsecured Senior Loan Notes 83.15 120,000 79.21 120,000 - debt at fair value (46.16) (66,611) (48.49) (73,461) NAV - debt at fair value 817.16 1,179,335 779.97 1,181,586 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 average daily net asset value reported in the year. | | | 2025 | 2024 | | --- | --- | --- | --- | | | Page | £’000 | £’000 | | Investment management fee | 59 4,616 4,976 | | | Other expenses 59 1,293 1,193 Total recurring expenses a 5,909 6,169 Average daily net assets b 1,169,201 1,163,962 Ongoing charges ratio c = a/b 0.51% 0.53% 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 LSEG Data & Analytics 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. 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. THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 89 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. | | | Net Asset | | Share | | --- | --- | --- | --- | --- | | 2025 Page | | | Value | Price | | As at 31 March 2025 | 60 817.16p 740.00p | | | | As at 31 March 2024 60 779.97p 690.00p Change in year a 4.8% 7.2% (1) Impact of dividend reinvestments b 3.5% 4.1% Total return for the year c = a+b 8.3% 11.3% | | | Net Asset | | Share | | --- | --- | --- | --- | --- | | 2024 Page | | | Value | Price | | As at 31 March 2024 | 60 779.97p 690.00p | | | | As at 31 March 2023 60 713.75p 660.00p Change in year a 9.3% 4.5% (1) Impact of dividend reinvestments b 4.1% 4.4% Total return for the year c = a+b 13.4% 8.9% (1) Total dividends paid during the year of 27.60p (2024: 26.80p) reinvested at the NAV or share price on the ex-dividend date. Share price increases subsequent to the reinvestment date consequently further increase the returns, or vice versa if the NAV or share price falls. COMPANY NAME The Edinburgh Investment Trust plc is registered at Companies House as The Edinburgh Investment Trust Public Limited Company. 90 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC # 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. The Company has appointed Liontrust Fund Partners LLP (Liontrust) as AIFM. 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. 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 86 to 89) 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 109% for gross and 109% for commitment (2024: 105% gross and 109% 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 85); and - the AIFM remuneration paid for the year to 31 March 2025 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 2025: - Aggregate total remuneration paid by the Manager to its staff (employees and members). - Aggregate total remuneration paid by the Manager to all relevant code staff. THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 91 Total Remuneration Headcount (£’000) 1 Manager UK Staff of which 94 11,664 Fixed Remuneration 94 9,339 Variable Remuneration 94 2,325 AIFM Remuneration Code Staff of which 2 Senior Management 2 82 Other control functions: Other code staff/risk takers 4 1,275 1 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. 2 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 members. Compliance is monitored throughout the vesting benefits such as pension contributions) and variable pay period by the Committee. (annual performance based or linked directly to investment These remuneration policies apply also to other entities in management revenues). Annual incentives are designed the Liontrust Group to which investment management of to reward performance in line with the business strategy, the Company has been delegated, and those delegates are objectives, values and long term interests of the AIFM subject to contractual arrangements to ensure that policies and Liontrust Asset Management PLC (LAM) Group. The which are regarded as equivalent are applied. annual incentive earned by an individual is dependent on the achievement of financial and non-financial objectives, The Board adopts, and reviews annually, the general including adherence to effective risk management practices. principles of the applicable remuneration policies, and The AIFM provides long-term incentives which are designed the implementation of the remuneration policies is, at to link reward with long-term success and recognise the least annually, subject to central and independent internal responsibility participants have in driving future success and review by the Committee for compliance with policies and delivering value. Long-term incentive awards are conditional procedures. on the satisfaction of corporate performance measures. The SCOPE OF THE POLICY structure of remuneration packages is such that the fixed The AIFM is subject to the requirements of the AIFM element is sufficiently large to enable a flexible incentive Remuneration Code (SYSC 19B) (the “Code”). The policy to be operated. requirements of the Code are applicable to the remuneration Staff are eligible for an annual incentive based on their arrangements of individuals who fall within the definition of individual performance, and depending on their role, the Code staff under the Code and this policy sets out the basis performance of their business unit and/or the group. These on which the rules contained within the Code will be applied incentives are managed within a strict risk framework, and to Code Staff. The Committee itself sets the remuneration the Directors of LAM retain ultimate discretion to reduce and has oversight if remuneration arrangements for all annual incentive outcomes where appropriate. other Code Staff together with such other senior employees as the Committee may determine from time to time. The The AIFM actively manages risks associated with delivering Committee also reviews the remuneration arrangements of and measuring performance. All our activities are carefully other employees and the operation of the incentive plans to managed within our risk appetite, and individual incentive ensure that remuneration arrangements have regard to pay outcomes are reviewed and may be reduced in light of any and employment conditions. However, decisions on individual associated risk management issues. remuneration arrangements are made by management in the The Liontrust Group operates a Remuneration Committee area, with oversight by the Human Resources Director. No (the “Committee”). The Committee reports to the Board. The hedging or other mitigation arrangements may be entered Committee reviews risk and compliance issues in relation into by employees as that would undermine risk alignment to the vesting of deferred awards for all employees and effects. The paper stock used in this report is manufactured at a mill that is FSC accredited. The manufacture of the paper in this report has been Carbon Balanced. The print factory is FSC accredited and has the Environmental ISO 14001 accreditation. Vegetable based inks were used in the printing process. CBP029867 THE EDINBURGH INVESTMENT TRUST PLC ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MARCH 2025 Edinburgh Investment Trust plc First Floor 9 Haymarket Square Edinburgh EH3 8RY Telephone +44 (0)20 7412 1700 MANAGED BY Email LionTA@liontrust.co.uk ### edinburgh-investment-trust.co.uk