The Edinburgh Investment Trust Plc Annual Financial Report 2022 - Flipbook - Page 17
THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 15
The Board also regularly reviews the performance of the Company
in relation to the 22 investment trusts in the UK Equity Income
sector (including the Company). As at 31 March 2022 the
Company was ranked 5th by NAV performance in this sector over
one year, 17th over three years and 19th over five years (source:
Morningstar).
OUTLOOK, INCLUDING THE FUTURE OF THE COMPANY
The main trends and factors likely to affect the future
development, performance and position of the Company’s
business can be found in the Portfolio Manager’s Report. Details
of the principal risks affecting the Company can be found on
pages 19 to 21.
FINANCIAL POSITION AND BORROWINGS
Performance Attribution – analyses the performance of the
Company relative to its benchmark index. The Analysis of
Relative Performance seeks to estimate the quantum of relative
performance that is attributable to each of the factors set out
in this table. The table is intended to be indicative rather than
precise; the accuracy of each estimate is determined by a variety
of factors such as the volatility of investment returns over the
year and intra-month, and the timing of income receipts and
expenditure payments.
Relative performance – represents the arithmetic difference
between the NAV and benchmark returns.
Portfolio total return – represents the return of the holdings
in the portfolio including transaction costs, cash and income
received, but excluding expenses incurred by the Company.
The Company’s balance sheet on page 55 shows the assets and
liabilities at the year end. Borrowings at the year end comprised
the £100 million 7 ¾% debenture which matures in 2022, £20m
of Unsecured Senior Loan Notes and £nil (2021: £nil) drawn
down on the Company’s £25 million bank revolving credit facility
(2021: £50 million). Details of this bank facility are contained in
note 11.
Net gearing effect – measures the impact of the debenture
stock, bank facility and cash on the Company’s relative
performance. This will be positive if the portfolio has positive
capital performance, total return is positive and negative if capital
performance total return is negative.
PERFORMANCE ATTRIBUTION
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.
for year ended
31 March 2022
%
Total Return Basis(1)
NAV (debt at market value)
14.1
Less: Benchmark
13.0
Relative performance
1.1
Analysis of Relative Performance
Portfolio total return
13.9
Less: Benchmark total return(1)
13.0
Portfolio outperformance
0.9
Borrowings:
Net gearing effect
Interest
Market value movement
0.8
-0.7
0.7
Management fee
-0.4
Other expenses
-0.1
Tax
-0.1
Share buybacks
0.0
Total
1.1
(1)
Source: Refinitiv.
Interest – the debenture stock and bank facility interest paid has a
negative impact on performance.
Management fee – the base fee reduces the Company’s net
assets and decreases returns.
Other expenses and tax – reduce the level of assets and therefore
result in a negative effect on relative performance.
Share buybacks – measures the effect of ordinary shares bought
back at a discount to net asset value on the Company’s relative
performance.