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Share Name Share Symbol Market Type Share ISIN Share Description
Edinburgh Investment Trust Plc LSE:EDIN London Ordinary Share GB0003052338 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -4.00 -0.74% 534.00 534.00 536.00 540.00 534.00 540.00 53,321 09:17:05
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 59.0 53.1 27.8 19.2 920

Edinburgh Inv. Trust Half-year Report

20/11/2020 7:00am

UK Regulatory (RNS & others)


 
TIDMEDIN 
 
The Edinburgh Investment Trust plc 
 
     Half-yearly Financial Report for the six months to 30 September 2020 
 
Performance Statistics 
 
Total Return(1)(2)(3) (with dividends reinvested)                            Six Months to 
                                                                              30 September 
                                                                                      2020 
                                                                                  % change 
 
Net asset value (NAV) - debt at market value                                          +7.8 
 
Share price                                                                           +5.7 
 
FTSE All-Share Index                                                                  +7.0 
 
The Company's benchmark is the FTSE All-Share Index. 
 
Capital Return(2)                                          At 30   At 31 March      Change % 
                                                  September 2020          2020 
 
Net asset value - debt at market value                   512.83p       490.40p          +4.6 
 
Share price(1)                                            443.0p        434.0p          +2.1 
 
FTSE All-Share Index(1)                                 3,282.25      3,107.42          +5.6 
 
Discount(2)(3) - debt at market value                    (13.6)%       (11.5)% 
 
Gearing (debt at market value)(2)(3) - gross               12.7%         13.4% 
gearing 
 
- net gearing                                              12.4%          8.3% 
 
Retail Price Index(1) - annual change                       1.1%          2.6% 
 
 
 
Six months to 30 September                                  2020         2019      Change % 
Revenue Return 
 
Revenue return per ordinary share                           9.9p        17.2p         -42.4 
 
First interim dividend(4)                                  6.00p        6.40p          -6.3 
 
Notes: 
 
(1)     Source: Refinitiv. 
 
(2)     These terms are defined in the Alternative Performance Measures, 
including reconciliations in the 2020 Half-Yearly Financial Report. NAV with 
debt at market value is widely used by the investment company sector for the 
reporting of performance, premium or discount and gearing. Further details are 
provided in the Alternative Performance Measures on pages 77 to 79 of the 
Company's 2020 annual financial report. 
 
(3)     Key Performance Indicator. 
 
(4)     Dividends declared in respect of the financial year. 
 
 
Chairman's Statement 
 
Dear Shareholder 
 
I am pleased to report an encouraging start to the management of your Company 
by the new portfolio manager, James de Uphaugh, and his colleagues at Majedie. 
 
Introduction 
 
The six month period covered by this report has been one in which lives have 
been affected by the COVID-19 pandemic. Despite the many difficulties faced by 
individuals, businesses and governments, equity markets have produced a 
positive return compared with the position at the time of the Company's 
year-end in March. This is welcome after the previous sharp falls in value. At 
the time of writing, markets are again exhibiting a higher level of volatility, 
reflecting the decision of some western governments to place economies in 
various degrees of lockdown to suppress the second wave of COVID-19 pandemic. 
 
New Manager 
 
I would like to take this opportunity to remind you why my fellow Directors and 
I appointed James and his colleagues. We felt the Company would benefit from 
their pragmatic style and deep understanding of the 
 
UK equity market. Working closely with an established team of fund managers and 
analysts, James brings to our Company a flexible, total return approach to 
managing the portfolio. James invests in both 'growth' and 'income' businesses. 
He can also allocate up to 20% of assets to non-UK listed businesses. 
 
Performance 
 
The Board maintains a medium-term perspective and believes that manager skill 
should be assessed over a minimum period of three years. Majedie maintains a 
similar time horizon when assessing businesses. We are confident that this 
approach will enable us to rebuild the Company's investment track record. 
 
It is therefore encouraging to note that over the first six months of Majedie's 
tenure the Company's Net Asset Value (NAV) is ahead of the benchmark in terms 
of total return. While this is plainly a short period, it is good to have made 
a positive start. The Manager describes the performance drivers in more detail 
in his report. From the Board's perspective, we are pleased to see attractive 
total returns coming from the many different types of stock held in the 
portfolio. This reflects the well-diversified nature of the Company's assets. 
 
Over the past three years, NAV total return has been -23.5% cumulatively, with 
the Company's benchmark index returning -9.3% over the same period. Over the 
past five years, NAV total return has been -8.4% cumulatively, with the 
Company's benchmark index returning 18.6% over the same period. In all these 
cases, the NAV is stated after deducting debt at market values. 
 
Total Returns (with dividends reinvested) to 30 September 2020 
 
                                            6 mths      1yr      2yr      3yr      5yr     10yr 
 
NAV (debt at market value) (%)                 7.8    -19.1    -25.1    -23.5     -8.4     90.1 
 
Share Price (%)                                5.7    -20.8    -27.5    -26.8    -21.0     62.1 
 
FTSE All-Share Index (%)                       7.0    -16.6    -14.4     -9.3     18.6     63.9 
 
Source: Refinitiv. 
 
Capital Returns (excluding dividends paid) to 30 September 2020 
 
                                            6 mths      1yr      2yr      3yr      5yr     10yr 
 
NAV (debt at market value) (%)                 4.6    -22.9    -31.5    -32.5    -24.6     26.0 
 
Share Price (%)                                2.1    -25.0    -34.5    -36.3    -35.9      6.2 
 
FTSE All-Share Index (%)                       5.6    -19.2    -20.5    -19.0     -1.6     14.5 
 
Source: Refinitiv. 
 
Note: Majedie received portfolio from the transition managers from 27 March 
2020 
 
Shareholder Communications 
 
My fellow Directors and I are extremely conscious that we have not had the 
opportunity to meet shareholders face-to-face since the onset of the pandemic 
in March. Alas it does not look as if this situation will change soon. However, 
we recommend to you the Company's website as a means of keeping up to speed on 
developments. The site contains a range of materials on Majedie's management of 
the portfolio and on their investment views. Shareholders may sign up on the 
website to receive announcements by email. We recorded a video (which is still 
available on the website) to coincide with the Annual General Meeting in July, 
and we have today posted another video update from James de Uphaugh to the 
website to accompany these results. I hope that we can return to some form of 
in person communications before too long. In the interim, I welcome all 
comments and questions from shareholders. 
 
Dividends 
 
Shareholders may have read the update on the Board's dividend decision, which 
we published earlier this month on 3 November. We are pleased to be able to 
maintain the overall dividend for this financial year at the same level as last 
year. The Board recognises the importance of dividends to shareholders, 
especially in an uncertain environment and at a time when other sources of 
income are under pressure. We have been able to maintain the dividend by 
drawing on the Company's substantial revenue reserves. These have made up the 
shortfall in the Company's earnings, which has arisen because of the 
substantial dividend reductions across the UK market in which we invest. 
 
While we are keeping the total dividend per share unchanged for the current 
financial year, we are also re-setting the dividend for future years to a level 
that is more sustainable and offers the potential for future dividend 
progression. 
 
Even before the current economic crisis, the overall yield on the UK market had 
become increasingly dependent on a small number of businesses and sectors. The 
effect of the crisis caused by the COVID-19 pandemic, and ongoing structural 
changes to the economy, has been to further erode the income available from the 
UK equity market. While there remain elevated levels of uncertainty over the 
speed at which market earnings and dividends will recover, the Board concluded 
that the previous level of dividends is unlikely to be sustainable. The Board 
has therefore re-set the annual ordinary dividends to 24.0 pence per share, a 
level from which we believe it can grow progressively in future years. 
 
Gearing 
 
As the Manager notes in his statement, he is encouraged by the resilience of 
the businesses in the portfolio and their medium-term prospects. As such, he 
has modestly increased the level of financial gearing in the portfolio. He is 
managing a fully invested portfolio: gross gearing on 30 September was 12.7%. 
With only a modest cash position, the net gearing position was 12.4%. These two 
numbers compare with 13.4% and 8.3% respectively at the end of March. The 
Company's gearing is entirely a function of the debenture borrowings. The 
manager also has access to a bank facility of up to GBP50 million, although this 
is currently undrawn. 
 
Buybacks and Discount 
 
The Company's shares traded at an average discount of 12.5% to NAV over the 
period. The UK equity income sector, in which your Company sits, has been out 
of favour in part because of the dividend cuts instigated by a wide range of 
businesses this year. The discount of the sector as a whole has widened, and 
your Company has not been exempt from this trend. To help offset this, we 
continued to buy back shares. Over this period we bought back 1,841,000 shares 
(1.07% of the Company) which will be held in Treasury and be available for 
issuance at a premium in the future. With greater clarity now in place with the 
new dividend policy, we are encouraged that the discount has narrowed since the 
end of September. As at 17 November 2020, the last available date before 
signing this statement, the discount stood at 10.6%. 
 
OUTLOOK 
 
The portfolio contains a diversified range of businesses, both UK and non-UK 
listed, that are performing well operationally despite the evident short-term 
economic uncertainty arising from the COVID-19 pandemic. The holdings in the 
portfolio are also attractively valued. The last fortnight's news on COVID-19 
vaccine developments is plainly helpful and has boosted equity markets. A 
Brexit trade deal with the EU would also generate greater international 
interest in the UK stock market. Combined, all these features leave your 
Company well placed to generate attractive medium-term returns. 
 
Glen Suarez 
Chairman 
19 November 2020 
 
Portfolio Manager's Report 
 
How We Manage Your Company 
 
We manage the Company's assets with a stock-driven, 'total return' approach. To 
do this, we have a flexible, open-minded investment mindset when assessing 
potential investments. For example, the income paid by companies is an 
important factor, as is their potential for future growth. Although we commit 
to holding at least 80% of the value of the Company in UK-listed businesses, 
many of these are in practice international businesses. For the balance of the 
portfolio, we take our pick of the best available opportunities overseas. We 
take a medium-term time horizon, which means analysing corporate prospects in 
years, not months. All assets in the portfolio are listed except for the legacy 
holding in Eurovestech. 
 
Most of our research and analysis is of companies and their prospects. We are 
naturally alert to the changing macroeconomic backdrop - more now than ever. 
However, our edge lies primarily in understanding corporate dynamics. Our work 
takes into careful account the relevant Environmental, Social and Governance 
("ESG") factors that affect businesses. Since taking on the management of your 
Company, my colleagues and I have maintained an intense level of company 
meetings. At the height of the COVID-19 pandemic in the spring, we focused on 
liquidity and balance sheet strength. Since then, we have prioritised the 
identification of companies that can emerge from the crisis with stronger 
competitive positions. Our work has enabled us to build a picture of companies' 
likely resilience in different scenarios. 
 
In short, we have constructed a diversified portfolio that should underpin 
attractive equity returns by global standards. We have used this period to 
ensure that the portfolio is full of resilient businesses, able to withstand 
whatever events they may face. 
 
Performance 
 
While it is still early days, it is encouraging to have got off to a positive 
start. The NAV (on a total returns with dividends reinvested basis) per share 
over the six months under review has risen by 7.8%. This compares with a rise 
in the Company's benchmark, the FTSE All-Share Index, of 7.0%. 
 
In keeping with the diversified nature of the portfolio, we are pleased that 
returns have come from a range of different businesses from across the 
portfolio. The financial gearing of the portfolio, via the debenture, also made 
a modest positive contribution. Prominent positive stock contributions came 
from Dunelm (a success story in the UK retailer sphere - its share price has 
almost doubled over the period), Ashtead (the equipment rental business with 
significant exposure to the US economy) and Weir, the industrial group. Weir 
supplies a variety of services into the mining industry: its products help this 
famously energy intensive sector to operate more efficiently and therefore more 
sustainably. The portfolio also owns commodities businesses including the gold 
miners Barrick Gold and Newmont, and Anglo American. These three also made 
positive contributions. 
 
Mondi, the paper and packaging company, reported resilient results as it 
experienced strong demand from consumer goods and e-commerce companies. This is 
another company with a nice 'sustainability' angle to the investment case: it 
is working closely with its customers to help them present products in 
recyclable packaging, rather than single use plastic. It also reinstated 
dividend payments, having suspended them in the teeth of the downturn earlier 
this year. 
 
The businesses at the bottom of the performance table were, counterintuitively, 
ones that performed well operationally through the period. Tesco was the 
largest negative contributor, despite reporting strong results during the 
period, behaving responsibly during the lockdown by prioritising customers, 
suppliers and staff over profits, which in turn helped it entrench its leading 
position in the market. It remains on track to return proceeds to shareholders 
from the planned disposal of its operations in Thailand. We remain happy 
holders of Tesco. The same remains the case for BAE Systems, which is 
successfully working through its order book. It also announced the resumption 
of dividend payments. 
 
What have we been doing against this backdrop? 
 
The biggest change has been to sell out of HSBC. It faces both an uncertain 
business environment in Hong Kong as well as the city's disproportionate 
exposure to broader geopolitical pressures. 
 
HSBC also has the same economic pressures that other banks have faced, as well 
as the instruction by the UK regulator to halt dividend payments. Some of the 
proceeds have been reinvested in Standard Chartered, which we believe is better 
placed to navigate the lending opportunities in Asia. 
 
In the pharmaceutical sector, we have built up a position in Roche. It offers a 
strong pipeline in oncology, a high-quality diagnostics business, and should 
have a large net cash position by the end of the year. It also has a 3% 
dividend yield. We have sold GlaxoSmithKline. 
 
We have built up the holding in alcoholic beverages group Diageo. It owns a 
wide range of industry-leading brands including Guinness, Smirnoff and Johnnie 
Walker. Diageo successfully capitalises on the high barriers to entry and 
strong pricing power of its brands. Demand for these brands (perhaps 
unsurprisingly) has shown no sign of slowing through the COVID-19 pandemic. 
However, the mix has changed: less sold through licensed premises such as bars, 
more via supermarkets and off-licences. The hiatus in the licensed trade has, 
in our view, temporarily knocked earnings. This has in turn created a buying 
opportunity in this quality business that should in normal times grow its top 
line by 5-6% per annum. The Diageo purchase is also part of a gentle strategy 
to begin to buy some high-quality medium-term reopening plays. It has the 
balance sheet to enable it to manage the current period of economic uncertainty 
and to be in a stronger position when reopening begins. The purchase of Compass 
- the catering contractor - also fits this narrative. 
 
Our third largest purchase was RELX, the information, data analytics and 
professional publisher. The company has been on our radar for some years and 
has an excellent track record of generating returns for shareholders. The stock 
has lagged its peers on concern about the potential impact of tightening 
academic library budgets on the group's scientific, medical & technical 
division, which includes a range of flagship academic journals. The impact of 
lockdowns on its exhibitions (i.e. events) business has also weighed on the 
share price. We think the risk around library budgets is overdone given the 
fragmented nature of the group's 14,000 clients and the long-term structural 
growth trends in academic research, which has seen an enormous uptick in 
volume. RELX's data analytics businesses is valuable, and the stock appears 
attractively priced especially as quoted peers have seen a significant 
re-rating. 
 
In addition to the sales mentioned above, other significant reductions included 
Orange, the French telecoms group, and - after periods of share price strength 
- Anglo American and Barrick Gold. 
 
Dividend 
 
We are pleased that the Company has been able to support shareholders with an 
unchanged total dividend in the current financial year. The Company's strong 
revenue reserves are a competitive advantage and the Board expects to maintain 
appropriate levels to provide for future unforeseen circumstances. 
 
As we wrote in the annual report in July, the UK market has seen substantial 
dividend cuts. These have come from across the board, but much focus has 
understandably been on cuts from the oil majors (reflecting the structural 
change in this industry, as well as COVID-19 pandemic-induced declines in oil 
consumption) and from the banks (instructed to cut by the Bank of England to 
preserve balance sheet strength to handle the pandemic). 
 
While we have maintained a well-diversified portfolio through the period and 
have reduced exposure to the oil sector and banks, your Company's revenues per 
share have fallen by 42% compared with the same period last year. We expect a 
recovery in earnings from this base level and are already seeing this through 
some companies announcing dividend increases (e.g. Unilever, Barrick Gold) and 
others reinstating dividends (e.g. Direct Line Insurance, Mondi). 
 
We therefore support the decision of the Board to rebase the underlying 
dividend to 24.0p. We are confident that this is a sensible base from which it 
can grow in the years ahead. 
 
Outlook 
 
"... we now expect [UK] GDP to be around 3-4% below its pre-Covid level by the 
end of the third quarter. In other words, the economy has already recovered 
just under 90% of its earlier losses. Having fallen precipitously by 20% in the 
second quarter, we expect UK GDP to have risen by a vertiginous 20% in the 
third quarter - by some margin its largest-ever rise. Put differently, since 
May UK GDP has been rising, on average, by around 1.5% per week." 
 
Bank England Chief Economist, Andy Haldane: Avoiding Economic Anxiety, 
published 30.09.201 
 
Our investment research is balancing the optimism expressed above by Andy 
Haldane, with the ever-present threat of deteriorating economic conditions 
while the COVID-19 pandemic maintains its grip. We are firmly maintaining a 
medium-term view. As such, and despite the major risks to economies from the 
second wave that is now underway, we err on the side of optimism. We are 
expressing this through a fully invested portfolio and utilising the natural 
gearing that comes from the Company's debenture. We believe the companies in 
the portfolio remain well placed to deal with the current uncertainty. 
 
1       https://www.bankofengland.co.uk/-/media/boe/files/speech/2020/ 
avoiding-economic-anxiety-speech-by-andy-haldane.pdf?la=en&hash= 
F7DEEDE6AF9DC92AF8C893E2E428D2498D6FE5BA 
 
Despite the deteriorating COVID-19 pandemic health situation across many 
economies in October and early November, we remain of the view that progress is 
being made against the pandemic: 
 
·     As the virus has become better understood, healthcare has improved for 
those in need of medical intervention - and there is also the welcome 
development of lower fatality rates. 
 
·     Progress on vaccine development has exceeded even the most optimistic 
predictions of six months ago. To add to the extremely positive interim data 
announced in the last fortnight for the Pfizer and the Moderna vaccines, a 
number of others are now in advanced 'phase three' trials around the world. 
Large scale roll-outs of approved vaccines are likely in the first half of 
2021, allowing a big release of pent up demand as economies reopen. 
 
The portfolio remains an all-weather one. We retain a defensive hue through 
companies with higher, more durable returns such as Unilever, AstraZeneca and 
Roche. While growth across economies as a whole remains scarce, we have refined 
and expanded our own growth cohort, having taken advantage of the market 
dislocation and mispricing opportunities since March. Prominent growth names in 
the portfolio now include 3i (we are particularly excited about the potential 
of Action, its continental European discount chain) and NXP Semiconductors. We 
believe the portfolio has multiple drivers to underpin future returns, 
including growth driven by intellectual property (e.g. AstraZeneca, Qinetiq 
Group), environmental solutions (Polypipe, Mondi and Weir) and Darwinian 
winners (Marshalls and Bellway). 
 
As these examples illustrate, we are investing in a differentiated and 
diversified blend of the best of UK and overseas businesses. Many are global 
franchises with multiples angles to each investment case. 
 
UK equities have laboured under a Brexit cloud for many months, resulting in a 
significant valuation 
 
discount. A trade deal with the EU is now seemingly more likely, which would 
bring greater resolution to the whole Brexit process. There is thus scope for 
this UK valuation discount to narrow, in turn supporting UK equity returns 
relative to overseas equities. UK equities are also unfairly perceived to be 
exposed to relatively staid stocks, such as high street banks and oil 
producers. The reality - as we trust we have already illustrated above - is 
that the UK market offers globally competitive businesses at compelling 
valuations. The Company thus offers shareholders a combination of attractively 
valued, world class equities. If the UK market does not offer the best in class 
opportunities in a particular sector, we invest overseas. We are optimistic 
that the current portfolio, combined with the modest gearing also employed, 
should underpin attractive total returns - income and capital - to shareholders 
in the years ahead. 
 
James de Uphaugh 
Portfolio Manager 
 
Chris Field 
Deputy Portfolio Manager 
 
19 November 2020 
 
 
Principal Risks and Uncertainties 
 
A detailed explanation of the principal risks and uncertainties facing the 
Company can be found on pages 18 to 20 of the 2020 annual financial report, 
which is available on the Company's website at 
www.edinburghinvestmenttrust.com. 
 
Since the publication of the 2020 annual financial report and as detailed 
above, the COVID-19 pandemic continues to be a serious threat to most parts of 
the global economy and the Board has continued to monitor the situation closely 
and has been in regular contact with the Manager and the Company's other 
service providers in order to assess and mitigate the impact on the Company's 
investment objectives, investment portfolio and shareholders. Otherwise, in the 
view of the Board, these principal risks and uncertainties are substantially 
unchanged from the previous year end and are as much applicable to the 
remaining six months of the financial year, as they were to the six months 
under review. 
 
The principal risk factors relating to the Company can be summarised as 
follows: 
 
-    Market Risk - a fall in the stock market as a whole will affect the 
performance of the portfolio, as well as the performance of individual 
portfolio investments; it also includes interest rate and currency risks; 
market risk may be impacted by increased volatility during the period of 
uncertainty arising from the Brexit negotiations; 
 
-    Investment Performance Risk - this is the stock specific risk that the 
stock selection process may not achieve the Company's published objectives; 
 
-    Borrowing Risk - in addition to the debenture in issue, the Company may 
also borrow money for investment purposes. If the investments fall in value, 
the gearing will have an adverse impact on performance. If the borrowing 
facility could not be renewed, the Company might have to sell investments to 
repay this; 
 
-    Income/Dividend Risk - investment income may fail to reach the level 
required to meet the Company's income objective; 
 
-    Share Price Risk - the Company's prospects and NAV may not be fully 
reflected in the share price; 
 
-    Corporate Governance and Internal Controls Risk - the Board has delegated 
to third party service providers the management of the investment portfolio, 
depositary and custody services, registration services and accounting and 
company secretarial services and therefore relies on the service providers to 
manage the associated risks; 
 
-    Reliance on Manager and other Third Party Providers Risk - the Company has 
no employees, so is reliant upon the performance of third party service 
providers for it to function, particularly the Manager, depositary, custodian 
and registrar; 
 
-    Emerging Risks - the Company may be affected by emerging risks such as 
climate change and pandemics such as the COVID-19 pandemic. Whilst these risks 
currently exist, the extent of them is yet to fully emerge. They are regularly 
assessed by the Manager and the Board; 
 
-    Other Risks - the Company may be affected by other risks such as business, 
cyber security, strategic, policy and political risks such as Brexit, as well 
as regulatory risks (such as an adverse change in the tax treatment of 
investment companies) and the perceived impact of the Manager ceasing to be 
involved with the Company. 
 
Investments in Order of Valuation 
 
As at 30 September 2020 
 
UK Listed Ordinary Shares Unless Otherwise Stated 
 
                                                                          Value        % of 
 
Investment                          Sector                                GBP'000   Portfolio 
 
Unilever                            Food Producers                       59,804         6.0 
 
AstraZeneca                         Pharmaceuticals & Biotechnology      58,058         5.8 
 
Tesco                               Food & Drug Retailers                43,803         4.4 
 
Smith & Nephew                      Health Care Equipment &              38,581         3.9 
                                    Services 
 
Mondi                               Forestry & Paper                     38,431         3.9 
 
Anglo American                      Mining                               38,315         3.9 
 
BAE Systems                         Aerospace & Defence                  36,688         3.7 
 
Ashtead Group                       Support Services                     35,767         3.6 
 
Royal Dutch Shell - A Shares        Oil & Gas Producers                  21,492 
 
- B Shares                                                               13,625 
 
                                                                         35,117         3.5 
 
Legal & General                     Life Insurance                       29,966         3.0 
 
Top Ten Holdings                                                        414,530        41.7 
 
Direct Line Insurance               Non-Life Insurance                   29,209         2.9 
 
Rio Tinto                           Mining                               29,021         2.9 
 
Hays                                Support Services                     28,980         2.9 
 
Associated British Foods            Food Producers                       28,861         2.9 
 
Dunelm                              General Retailers                    26,839         2.7 
 
Weir                                Industrial Engineering               24,724         2.5 
 
Electrocomponents                   Support Services                     24,657         2.5 
 
Diageo                              Beverages                            21,445         2.2 
 
BP                                  Oil & Gas Producers                  21,444         2.2 
 
Newmont - US Listed                 Mining                               20,944         2.1 
 
Top Twenty Holdings                                                     670,654        67.5 
 
NatWest                             Banks                                18,577         1.9 
 
Wm Morrison Supermarkets            Food & Drug Retailers                17,809         1.8 
 
Barrick Gold - US Listed            Mining                               17,295         1.7 
 
Standard Chartered                  Banks                                17,030         1.7 
 
Koninklijke KPN - Dutch Listed      Fixed Line Telecommunications        16,616         1.7 
 
Vodafone                            Mobile Telecommunications            16,441         1.6 
 
Lloyds Bank                         Banks                                16,087         1.6 
 
Marshalls                           Construction & Materials             14,705         1.5 
 
Bellway                             Household Goods & Home               14,488         1.5 
                                    Construction 
 
Barclays                            Banks                                14,395         1.4 
 
Top Thirty Holdings                                                     834,097        83.9 
 
Qinetiq Group                       Aerospace & Defence                  12,611         1.3 
 
WPP                                 Media                                12,403         1.3 
 
Roche - Swiss Listed                Pharmaceuticals & Biotechnology      12,350         1.2 
 
RELX                                Media                                11,877         1.2 
 
NXP Semiconductors - Dutch Listed   Technology Hardware & Equipment      11,350         1.1 
 
3i                                  Financial Services                   11,260         1.1 
 
Daily Mail & General Trust          Media                                11,243         1.1 
 
Reckitt Benckiser                   Household Goods & Home               10,441         1.1 
                                    Construction 
 
Convatec                            Health Care Equipment &               9,850         1.0 
                                    Services 
 
Hargreaves Lansdown                 Financial Services                    9,578         1.0 
 
Top Forty Holdings                                                      947,060        95.3 
 
 
 
                                                                          Value        % of 
 
Investment                          Sector                                GBP'000   Portfolio 
 
Serco                               Support Services                      9,538         1.0 
 
Polypipe                            Construction & Materials              8,985         0.9 
 
Compass                             Food-Catering                         8,267         0.8 
 
Greggs                              Food & Drug Retailers                 6,464         0.6 
 
CLS                                 Real Estate Investment &              6,150         0.6 
                                    Services 
 
Marks & Spencer                     General Retailers                     4,599         0.5 
 
Raven Property - Preference shares  Real Estate Investment &              2,844         0.3 
                                    Services 
 
EurovestechUQ                       Financial Services                      154           - 
 
Total Holdings 48 (31 March 2020:                                       994,061       100.0 
44) 
 
UQ Unquoted investment. 
 
Going Concern 
 
These financial statements have been prepared on a going concern basis. The 
Directors consider this is the appropriate basis as the Company has adequate 
resources to continue in operational existence for the foreseeable future being 
at least 12 months after the date of approval of these half-yearly financial 
statements. In considering this, the Directors have reviewed the Company's 
investment objective and capital structure generally and also in light of the 
COVID-19 pandemic. The Directors took into account the diversified portfolio of 
readily realisable securities which can be used to meet funding commitments, 
and the ability of the Company to meet all its liabilities and ongoing expenses 
from its assets and revenue. The Directors also considered the revenue 
forecasts for the forthcoming year and future dividend payments and accumulated 
revenue reserves in concluding that the going concern basis is appropriate. 
 
Related Party Transactions 
 
Under UK Generally Accepted Accounting Practice (UK Accounting Standards and 
applicable law) and in accordance with the definition provided by Listing Rule 
11.1.4, the Company has identified the Directors as related parties. No other 
related parties have been identified. No transactions with related parties have 
taken place which have materially affected the financial position or the 
performance of the Company. 
 
Statement of Directors' Responsibilities 
 
The Directors are responsible for preparing the half-yearly financial report 
using accounting policies consistent with applicable law and UK Accounting 
Standards. 
 
The Directors confirm that to the best of their knowledge: 
 
-    the condensed set of financial statements has been prepared in accordance 
with the FRS 104 Interim Financial Reporting; and 
 
-    the interim management report includes a fair review of the information 
required by Disclosure Guidance and Transparency Rules (DTR): 
 
(a)  DTR 4.2.7R, being an indication of important events that have occurred 
during the first six months of the financial year and their impact on the 
condensed set of financial statements; and a description of the principal risks 
and uncertainties for the remaining six months of the year; and 
 
(b)  DTR 4.2.8R, being related party transactions that have taken place in the 
first six months of the current financial year and that have materially 
affected the financial position or performance of the Company during that 
period; and any changes in the related party transactions described in the last 
annual report that could do so. 
 
The half-yearly financial report has not been audited or reviewed by the 
Company's auditor. 
 
Signed on behalf of the Board of Directors 
 
Glen Suarez 
Chairman 
19 November 2020 
 
 
Condensed Income Statement 
 
                                 Six Months to 30 September 2020   Six Months to 30 September 2019 
                                           (Unaudited)                       (Unaudited) 
 
                                   Revenue    Capital       Total    Revenue    Capital       Total 
 
                                     GBP'000      GBP'000       GBP'000      GBP'000      GBP'000       GBP'000 
 
Gains/(losses) on investments            -     49,309      49,309          -   (81,584)    (81,584) 
held at fair value 
 
(Losses)/gains on foreign                -       (58)        (58)          -          5           5 
exchange 
 
Income - note 2                     19,547          -      19,547     36,568        590      37,158 
 
                                    19,547     49,251      68,798     36,568   (80,989)    (44,421) 
 
Investment management fee - note     (380)      (886)     (1,266)      (938)    (2,188)     (3,126) 
3 
 
Other expenses                       (435)        (6)       (441)      (569)          -       (569) 
 
Return/(loss) before finance        18,732     48,359      67,091     35,061   (83,177)    (48,116) 
costs and taxation 
 
Finance costs - note 3             (1,233)    (2,879)     (4,112)    (1,255)    (2,931)     (4,186) 
 
Return/(loss) on ordinary           17,499     45,480      62,979     33,806   (86,108)    (52,302) 
activities before taxation 
 
Taxation - note 4                    (260)          -       (260)      (630)          -       (630) 
 
Return/(loss) on ordinary           17,239     45,480      62,719     33,176   (86,108)    (52,932) 
activities after taxation for 
the financial period 
 
Return/(loss) per ordinary 
share: 
 
Basic                                 9.9p      26.1p       36.0p      17.2p    (44.6)p     (27.4)p 
 
Weighted average number of                            174,247,673                       193,015,167 
ordinary shares in issue during 
the period 
 
The total column of this statement represents the Company's income statement, 
prepared in accordance with UK Accounting Standards. The return/(loss) on 
ordinary activities after taxation for the financial period is the total 
comprehensive income/(expense) and therefore no additional statement of other 
comprehensive income/(expense) 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 period. 
 
 
Condensed Statement of Changes in Equity 
 
                                                            Capital 
 
                                         Share     Share Redemption   Capital   Revenue 
 
                                       Capital   Premium    Reserve   Reserve   Reserve     Total 
 
                                         GBP'000     GBP'000      GBP'000     GBP'000     GBP'000     GBP'000 
 
For the six months ended 30 
September 2020 (Unaudited) 
 
At 31 March 2020                        48,917    10,394     24,676   706,726    81,771   872,484 
 
Return on ordinary activities                -         -          -    45,480    17,239    62,719 
 
Dividends paid - note 5                      -         -          -         -  (27,672)  (27,672) 
 
Shares bought back and held in               -         -          -   (8,431)         -   (8,431) 
treasury 
 
At 30 September 2020                    48,917    10,394     24,676   743,775    71,338   899,100 
 
For the six months ended 30 
September 2019 (Unaudited) 
 
At 31 March 2019                        48,917    10,394     24,676 1,215,237    83,213 1,382,437 
 
(Loss)/return on ordinary activities         -         -          -  (86,108)    33,176  (52,932) 
 
Dividends paid - note 5                      -         -          -         -  (30,246)  (30,246) 
 
Shares bought back and held in               -         -          -  (60,980)         -  (60,980) 
treasury 
 
At 30 September 2019                    48,917    10,394     24,676 1,068,149    86,143 1,238,279 
 
 
Condensed Balance Sheet 
 
                                                                     At           At 
 
                                                           30 September     31 March 
 
                                                                   2020         2020 
 
                                                            (unaudited)    (audited) 
 
                                                                  GBP'000        GBP'000 
 
Fixed assets 
 
Investments held at fair value through profit or loss -         994,061      922,433 
note 7 
 
Current assets 
 
Amounts due from brokers                                          1,896        3,217 
 
Tax recoverable                                                   2,786        2,621 
 
Prepayments and accrued income                                      929        1,561 
 
Cash and cash equivalents                                         2,034       43,958 
 
                                                                  7,645       51,357 
 
Creditors: amounts falling due within one year 
 
Amounts due to brokers                                          (1,978)        (996) 
 
Share buybacks awaiting settlement                                (435)         (68) 
 
Accruals                                                          (687)        (870) 
 
                                                                (3,100)      (1,934) 
 
Net current assets                                                4,545       49,423 
 
Total assets less current liabilities                           998,606      971,856 
 
Creditors: amounts falling due after more than one year 
 
7.75% Debenture Stock 30 Sep 2022                              (99,506)     (99,372) 
 
Net assets                                                      899,100      872,484 
 
Capital and reserves 
 
Share capital - note 6                                           48,917       48,917 
 
Share premium                                                    10,394       10,394 
 
Capital redemption reserve                                       24,676       24,676 
 
Capital reserve                                                 743,775      706,726 
 
Revenue reserve                                                  71,338       81,771 
 
Total Shareholders' funds                                       899,100      872,484 
 
Net asset value per ordinary share - note 8 
 
Basic - debt at par value                                       519.90p      499.11p 
 
            - debt at market value                              512.83p      490.40p 
 
Number of 25p ordinary shares in issue at the period end -  172,841,929  174,682,929 
note 6 
 
 
Notes to the Condensed Financial Statements 
 
1. Accounting Policies 
 
The condensed financial statements have been prepared in accordance with 
applicable United Kingdom Accounting Standards and applicable law (UK Generally 
Accepted Accounting Practice), including FRS 102 The Financial Reporting 
Standard applicable in the UK and Republic of Ireland, FRS 104 Interim 
Financial Reporting and the Statement of Recommended Practice Financial 
Statements of Investment Trust Companies and Venture Capital Trusts, issued by 
the Association of Investment Companies in October 2019. The financial 
statements are issued on a going concern basis. 
 
The accounting policies applied to these condensed financial statements are 
consistent with those applied in the financial statements for the year ended 31 
March 2020. 
 
2. Income 
 
                                                                       Six Months to 
 
                                                                       30 September 
 
                                                                         2020        2019 
 
                                                                  (Unaudited) (Unaudited) 
 
                                                                        GBP'000       GBP'000 
 
Income from investments: 
 
UK dividends   - ordinary                                              15,378      28,209 
 
               - special                                                1,717         534 
 
Overseas       - ordinary                                               2,438       6,195 
dividends 
 
               - special                                                    -         475 
 
UK unfranked investment income                                              -       1,154 
 
                                                                       19,533      36,567 
 
Other income: 
 
Deposit interest                                                            3           1 
 
Money market deposit                                                       11           - 
 
Total income                                                           19,547      36,568 
 
No special dividends have been recognised in capital during the period (2019: GBP 
590,000). 
 
3. Management Fee and Finance Costs 
 
The management fee arrangements are as reported in the 2020 annual financial 
report, being 0.04000% on the first GBP500 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 GBP500m and 0.465% on the remainder). The management fee and finance costs 
are allocated 30% to revenue and 70% to capital. The Manager waived its fee for 
the first three months of its appointment. 
 
4. Tax 
 
Owing to the Company's status as an investment company no tax liability arises 
on capital gains. The tax charge represents withholding tax suffered on 
overseas income. A deferred tax asset is not recognised in respect of surplus 
management expenses since the Directors believe that there will be no taxable 
profits in the future against which these can be offset. 
 
5. Dividends Paid on Ordinary Shares 
 
                                                           Six Months to 30 September 
 
                                                            2020                2019 
 
                                                         (Unaudited)         (Unaudited) 
 
                                                         pence     GBP'000     pence     GBP'000 
 
Third interim                                             6.40    11,180      6.25    12,218 
 
Final                                                     9.45    16,492      9.25    18,028 
 
Total                                                    15.85    27,672     15.50    30,246 
 
The first interim dividend of 6.00p per ordinary share for the year ended 31 
March 2021 (2020: 6.40p) will be paid on 27 November 2020 to shareholders on 
the register on 13 November 2020. 
 
6. Share Capital, Including Movements 
 
Share capital represents the total number of shares in issue, including 
treasury shares. 
 
                                                           Six Months        Year to 
                                                                   to 
 
                                                         30 September       31 March 
                                                                 2020           2020 
 
                                                          (Unaudited)      (Audited) 
 
                                                                GBP'000          GBP'000 
 
Ordinary shares of 25p each                                    43,211         43,671 
 
Treasury shares of 25p each                                     5,706          5,246 
 
                                                               48,917         48,917 
 
                                                           Six Months        Year to 
                                                                   to 
 
                                                         30 September       31 March 
                                                                 2020           2020 
 
                                                          (Unaudited)      (Audited) 
 
Number of ordinary shares in issue: 
 
Brought forward                                           174,682,929    195,481,734 
 
Shares bought back into treasury                          (1,841,000)   (20,798,805) 
 
Carried forward                                           172,841,929    174,682,929 
 
Number of treasury shares held: 
 
Brought forward                                            20,983,805        185,000 
 
Shares bought back into treasury                            1,841,000     20,798,805 
 
Carried forward                                            22,824,805     20,983,805 
 
Total ordinary shares                                     195,666,734    195,666,734 
 
Subsequent to the period end 659,000 ordinary shares were bought back at an 
average price of 455.98p. 
 
7. Classification under Fair Value Hierarchy 
 
All except one of the Company's portfolio of investments are in the Level 1 
category as defined in FRS 102. The three levels are set out as follows: 
 
Level 1 -    The unadjusted quoted price in an active market for identical 
assets 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. 
 
The fair value hierarchy analysis for investments held at fair value at the 
period end is as follows: 
 
                                                               30 September   31 March 
                                                                       2020       2020 
 
                                                                (Unaudited)  (Audited) 
 
                                                                      GBP'000      GBP'000 
 
Financial assets designated at fair value through profit or 
loss: 
 
Level 1                                                             993,907    922,279 
 
Level 3                                                                 154        154 
 
Total for financial assets                                          994,061    922,433 
 
The level 3 investment consists of one holding in Eurovestech of GBP154,000 (31 
March 2020: GBP154,000). The holding in Eurovestech did not change during the 
reporting period. 
 
8. Net Asset Value (NAV) Per Ordinary Share 
 
(a) NAV - debt at par value 
 
The shareholders' funds in the balance sheet are accounted for in accordance 
with accounting standards; however, this does not reflect the rights of 
shareholders on a return of assets under the Articles of Association. These 
rights are reflected in the net assets with debt at par value and the 
corresponding NAV per share. A reconciliation between the two sets of figures 
follows: 
 
                                                           30 September    31 March 
                                                                   2020        2020 
 
                                                            (Unaudited)   (Audited) 
 
                                                              Pence per   Pence per 
                                                                  share       share 
 
Shareholders' funds                                              520.19      499.47 
 
Less: unamortised discount and expenses arising from             (0.29)      (0.36) 
debenture issue 
 
NAV - debt at par                                                519.90      499.11 
 
NAV - debt at par GBP'000                                         898,606     871,856 
 
(b) NAV - debt at market value 
 
The market value of the debenture stock is determined by reference to the daily 
closing price, and is subject to review against various data providers to 
ensure consistency between data providers and against the reference gilt. 
 
The NAV per share adjusted to include the debenture stock at market value 
rather than at par is as follows: 
 
                                                               30 September     31 March 
                                                                       2020         2020 
 
                                                                (Unaudited)    (Audited) 
 
                                                                  Pence per    Pence per 
                                                                      share        share 
 
NAV - debt at par                                                    519.90       499.11 
 
Debenture    - debt at par                                            57.85        57.25 
stock 
 
             - debt at market value                                 (64.92)      (65.96) 
 
NAV - debt at market value                                           512.83       490.40 
 
NAV - debt at market value GBP'000                                    886,390      856,647 
 
Debenture Stock at market value GBP'000                               112,216      115,209 
 
9. Investment Trust Status 
 
It is the intention of the Directors to conduct the affairs of the Company so 
that it continues to satisfy the conditions for approval as an investment trust 
company within the meaning of section 1159 of the Corporation Tax Act 2010. 
 
10. Status of Half-Yearly Financial Report 
 
The financial information contained within the financial statements in this 
half-yearly financial report does not constitute statutory accounts within the 
meaning of section 434 of the Companies Act 2006. The financial information for 
the half years ended 30 September 2020 and 30 September 2019 has not been 
audited. The figures and financial information for the year ended 31 March 2020 
are extracted and abridged from the latest audited accounts and do not 
constitute the statutory accounts for that year. Those accounts have been 
delivered to the Registrar of Companies and included the Independent Auditor's 
Report which was unqualified and did not contain a statement under section 498 
of the Companies Act 2006. 
 
By order of the Board 
 
PraxisIFM Fund Services (UK) Limited 
 
Company Secretary 
 
19 November 2020 
 
Enquiries 
 
Edinburgh Investment Trust plc 
Glen Suarez (Chairman)                                 via Montfort below 
 
Majedie Asset Management Limited 
James Mowat                                                    + 44 20 7618 
3900 
Harry Steel 
 
Investec Bank plc 
Tom Skinner                                                       + 44 20 7597 
4000 
 
Montfort Communications 
Nick Bastin +44 7931 500066 
Shireen Farhana+44 7757 299250 
Miles McKechnie+44 7788 546279 
 
About The Edinburgh Investment Trust plc 
Founded over 130 years ago, The Edinburgh Investment Trust plc is listed on the 
London Stock Exchange and is included in the FTSE 250 index. It invests 
primarily in a portfolio of UK listed shares and has net assets of 
approximately GBP0.9 billion. The Company's twin investment objectives for the 
long term are to outperform the FTSE All-Share Index on a Net Asset Value (NAV) 
basis and to produce dividend growth in excess of the rate of UK inflation. 
Majedie Asset Management became the Company's AIFM with effect from 4 March 
2020. 
 
About Majedie Asset Management 
Established in 2002, Majedie is an independent, specialist investment boutique. 
It actively manages equities for institutional investors, wealth managers and 
endowments across a range of UK, US and Global strategies. Its assets under 
management were GBP8bn at the 30 September 2020. It has a team of 21 fund 
managers and analysts, out of a total of 60 employees. 
 
 
 
END 
 

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