Annual Financial Report

RNS Number : 4268D

Edinburgh Worldwide Inv Trust PLC

02 December 2009

 



EDINBURGH WORLDWIDE INVESTMENT TRUST plc

Results for the year to 31 October 2009

Over the year the Company's share price rose by 56.6% and net asset value per share increased 49.3%.  For comparison the MSCI All Countries World Index (in sterling terms) rose by 17.3%.

	Over the six years that Baillie Gifford & Co has been managing the Company's assets, net asset value per share has increased by 57.7%, the share price by 69.2% and the MSCI All Countries World Index by 24.7%.
	The same growth stocks which fell in the panic of last September and October dragging down net asset value have been responsible for the recovery seen in the last 12 months. Portfolio turnover has been low, under 17%, and the number of equity holdings has increased by 4 to 41 as at the year end.
	The net revenue return for the year was 3.71p (2008: 3.48p) up 6.6%, mainly due to reduced borrowing costs. An unchanged final dividend of 1.50p is being recommended. In addition, a special dividend of 1.00p is being proposed bringing the total for the year to 3.00p (2008: 2.70p).
	Over the past year many companies have disappeared either through bankruptcy or been taken over whilst others have lost significant market share. Being able to identify companies that emerge as long term winners from the radical changes taking place in the global economy, such as the shift in economic power from the 'Developed' to the so-called 'Emerging' economies of the world, remains the key focus of the Managers.

Past performance is not a guide to future performance.

Edinburgh Worldwide aims to achieve long term capital growth by investing in listed companies throughout the world. The Trust has total assets of £149.3 million (before deduction of loans of £23.5 million) as at 31 October 2009.  

Edinburgh Worldwide is managed by Baillie Gifford & Co, the Edinburgh based fund management group with around £53 billion under management and advice as at 1 December 2009.

The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stockmarkets in which the Company invests and by the supply and demand for the Company's shares. Investment in investment trusts should be regarded as medium to long-term. You can find up to date performance information about Edinburgh Worldwide on the Edinburgh Worldwide page of the Managers' website at www.edinburghworldwide.co.uk

 2 December 2009

- ends -

For further information please contact:

Mark Urquhart, Manager,    

Edinburgh Worldwide Investment Trust plc                                        0131 275 2070

Anzelm Cydzik,

Baillie Gifford & Co                                                                         0131 275 3276

Roland Cross, Director,

Broadgate Marketing                                                                        020 7726 6111

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

Chairman's Statement 

Performance

It is pleasing to note that the conviction of the Managers, after a period of disappointing performance last year, has born fruit. In the financial year to 31 October 2009 net asset value per share increased by 49.3% and the share price by 56.6%. The MSCI All Countries World Index (in sterling terms) rose by 17.3% during this period. Equity gearing was maintained throughout the year and was 12.7% at the year end. More importantly, long term performance is satisfactory. Over the six years that Baillie Gifford & Co has been managing the Company's assets, net asset value per share has increased by 57.7%, the share price by 69.2% and the MSCI All Countries World Index by 24.7%.  

The Board's strategy continues to be for the Managers to select shares globally, unconstrained by the requirement to match any benchmark, with a concentrated portfolio of approximately 40 equity holdings. The portfolio is comprised of holdings that are believed to have long term attractions, typically over at least 5 years. Combined with the effects of gearing, these factors mean that there will always be periods when the portfolio under or outperforms the index significantly in any one year. Performance is therefore better gauged over longer time periods. Performance statistics produced by The Association of Investment Companies (The AIC) show that the Company is ranked 8th out of 26 in the Global Growth Sector over five years in net asset value performance. It is disappointing therefore that the Company's discount is not narrower at present, albeit having come in from 18% as at the previous financial year end. The Managers are continuing their efforts to stimulate demand from investors.

Performance Fee

Although outperforming the MSCI All Countries World Index this year, no performance fee is due to the Managers as the relative high water mark has not been reached.  

Earnings and Dividend

The net revenue return for the year was 3.71p (2008: 3.48p) up 6.6%, mainly due to reduced borrowing costs. Your Company's objective is that of generating capital growth and any income received from the underlying holdings is a by-product of this. An unchanged final dividend of 1.50p is being recommended. In addition, a special dividend of 1.00p is being proposed as the high level of current income may not recur, making the total for the year 3.00p (2008: 2.70p).

The Company's registrars operate a Dividend Reinvestment Plan which can be used to buy additional shares.  

Investment Background and Outlook

We are now more than one year on since the failure of Western banking systems due to lax regulation and grossly excessive leverage which led to the collapse of Lehman and the knock-on effects that this had firstly on credit markets, followed by international trade then on domestic economies across the globe. It is possible that this single event will be viewed by historians as the inflection point which marked the shift of economic power from the traditional Western Anglo-Saxon economies of the developed world to those of the so-called Emerging economies, such as China, Brazil and India.

The economic and financial hubris that has prevailed amongst the political and business elites of the old established order is being swept away seemingly by the realism that the global economic power base has shifted, perhaps irrevocably. While many Western nations continue to struggle out of recession, China, for example, has managed to grow GDP by 8% and Brazil has come full circle and is now lending money to the IMF! Economies that have historically relied on trade with North America and Europe are becoming dependant on trade with so-called Emerging market nations and their rapacious desire for raw materials, consumer goods and services.

The gyrations of markets, and individual companies, over the past year have been marked. Many companies have disappeared either through bankruptcy or been taken over, others have lost significant market share. However, many of those companies that have survived are emerging stronger and more profitable with a more dominant position in their respective market. Being able to identify the winners is the key focus of the Managers.  

Annual General Meeting

The Annual General Meeting of the Company will be held at Baillie Gifford's offices in Edinburgh at 12 noon on Thursday 4 February. The Company will once again be seeking to renew its share buyback and treasury share powers. Approval is also being sought to amend the Company's Articles of Association.  

Mark Urquhart, the Partner at Baillie Gifford who manages your portfolio, will make a presentation and answer any questions. Your Board will also be available to respond to any questions that you may wish to put to it. I hope that you will be able to attend.

David A Coltman

Chairman

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

The following is the unaudited preliminary statement for the year to 31 October 2009 which was approved by the Board on 1 December 2009. The Board of Edinburgh Worldwide Investment Trust plc is recommending to the Annual General Meeting of the Company to be held on 4 February 2010 the payment of a final dividend of 1.50p and a special dividend of 1.00p, making a total of 3.00p per ordinary share (2.70p last year) for the year ended 31 October 2009. 

INCOME STATEMENT

	For the year ended 31 October 2009 (unaudited)				For the year ended 31 October 2008 (audited)
	Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total £'000
Gains /(losses) on investments	-	43,445	43,445		-	(58,483)	(58,483)
Currency losses	-	(1,825)	(1,825)		-	(6,389)	(6,389)
Income (note 2)	3,088	-	3,088		3,280	-	3,280
Investment management fee	(179)	(538)	(717)		(215)	(645)	(860)
VAT recovered (note 3)	-	-	-		75	182	257
Other administrative expenses	(422)	-	(422)		(429)	-	(429)
Net return before finance costs and taxation	2,487	41,082	43,569		2,711	(65,335)	(62,624)
Finance costs of borrowings	(96)	(286)	(382)		(316)	(954)	(1,270)
Net return on ordinary activities before taxation	2,391	40,796	43,187		2,395	(66,289)	(63,894)
Tax on ordinary activities	(575)	266	(309)		(690)	513	(177)
Net return on ordinary activities after taxation	1,816	41,062	42,878		1,705	(65,776)	(64,071)
Net return per ordinary share (note 5)	3.71p	83.78p	87.49p		3.48p	(134.22p)	(130.74p)

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued during the year.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

   EDINBURGH WORLDWIDE INVESTMENT TRUST plc

BALANCE SHEET

		At 31 October 2009 (unaudited)		At 31 October 2008 (audited)
		£'000		£'000
FIXED ASSETS Investments held at fair value through profit or loss		143,655		104,302
CURRENT ASSETS
Debtors		2,988		371
Cash and short term deposits		5,042		1,449
		8,030		1,820
CREDITORS
Amounts falling due within one year (note 6)		(25,874)		(21,866)
NET CURRENT LIABILITIES		(17,844)		(20,046)
TOTAL NET ASSETS		125,811		84,256
CAPITAL AND RESERVES
Called-up share capital		2,450		2,450
Share premium		82,180		82,180
Special reserve		35,220		35,220
Capital reserve		3,122		(37,940)
Revenue reserve		2,839		2,346
SHAREHOLDERS' FUNDS		125,811		84,256
NET ASSET VALUE PER ORDINARY SHARE		256.73p		171.94p
ORDINARY SHARES IN ISSUE		49,004,319		49,004,319

DISTRIBUTION OF ASSETS

(unaudited)

		At 31 October 2009    %					At 31 October 2008 %
Equities:	Continental Europe	30.5				35.3
	North America	27.9				27.7
	Japan	3.6				8.1
	Asia Pacific	11.1				4.2
	Emerging Markets	21.9				21.4
Total equities		95.0				96.7
US$ denominated bonds		1.2				1.8
Net current assets		3.8				1.5
Total assets (before deduction of loan)		100.0				100.0

  EDINBURGH WORLDWIDE INVESTMENT TRUST plc

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 October 2009 (unaudited)

	Called-up share capital £'000	Share premium £'000	Special reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at  1 November 2008	2,450	82,180	35,220	(37,940)	2,346	84,256
Net return on ordinary activities after taxation	-	-	-	41,062	1,816	42,878
Dividends paid during the year (note 4)	-	-	-	-	(1,323)	(1,323)
Shareholders' funds at  31 October 2009	2,450	82,180	35,220	3,122	2,839	125,811

For the year ended 31 October 2008 (audited)

	Called-up share capital £'000	Share premium £'000	Special reserve £'000	Capital reserve  £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at  1 November 2007	2,450	82,180	35,220	27,836	1,621	149,307
Net return on ordinary activities after taxation	-	-	-	(65,776)	1,705	(64,071)
Dividends paid during the year (note 4)	-	-	-	-	(980)	(980)
Shareholders' funds at  31 October 2008	2,450	82,180	35,220	(37,940)	2,346	84,256

  EDINBURGH WORLDWIDE INVESTMENT TRUST plc

CASH FLOW STATEMENT
	For the year ended 31 October 2009 (unaudited)			For the year ended 31 October 2008 (audited)
	£'000	£'000			£'000	£'000
NET CASH INFLOW FROM OPERATING ACTIVITIES (note 9)		1,957				1,359
SERVICING OF FINANCE
Interest paid	(364)				(1,669)
NET CASH OUTFLOW FROM SERVICING OF FINANCE		(364)				(1,669)
TAXATION
Overseas tax incurred	(288)				(169)
TOTAL TAX PAID		(288)				(169)
FINANCIAL INVESTMENT
Acquisitions of investments	(14,517)				(47,992)
Disposals of investments	18,052				55,369
Realised currency gain	197				1,514
NET CASH INFLOW FROM FINANCIAL INVESTMENT		3,732				8,891
EQUITY DIVIDENDS PAID (note 4)		(1,323)				(980)
FINANCING
Bank loans repaid	(285,455)				(132,700)
Bank loans drawn down	285,334				122,071
NET CASH OUTFLOW FROM FINANCING		(121)				(10,629)
INCREASE/(DECREASE) IN CASH		3,593				(3,197)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash in the period		3,593				(3,197)
Net cash outflow from bank loans		121				10,629
Exchange movement on bank loans		(2,022)				(7,903)
MOVEMENT IN NET DEBT IN THE YEAR		1,692				(471)
NET DEBT AT 1 NOVEMBER		(20,151)				(19,680)
NET DEBT AT 31 OCTOBER		(18,459)				(20,151)

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

PORTFOLIO AND EQUITY PERFORMANCE at 31 October 2009 (unaudited)
Name	Business	Fair value £'000	% of total assets	Performance†		Fair value 2008 £'000
				Absolute %	Relative %
Equities
Petrobras	Oil exploration and production	10,149	6.8	76.2	45.6	6,453
Atlas Copco	Industrial compressors and    mining equipment	8,696	5.8	72.8	42.9	5,174
Amazon.com	Online retailer	8,503	5.7	103.5	68.2	4,179
Vale (or CVRD)	Mining	6,395	4.3	98.7	64.2	3,938
Banco Santander	Retail and commercial bank	5,072	3.4	77.7	46.9	2,680
Google	Web-based search engine	5,060	3.4	46.2	20.9	3,461
Sandvik	Tools and mining equipment	4,826	3.2	85.3	53.1	2,735
Gazprom	Gas exploration and production	4,823	3.2	19.2	(1.4)	4,037
BYD	Battery technology and cars	4,658	3.1	321.1*	232.1*	-
Apple	Computing and media equipment	4,414	3.0	71.7	42.0	2,576
L'Oreal	Personal care	3,622	2.4	38.3	14.3	3,491
First Solar	Designs and manufactures solar    modules	3,545	2.4	(18.0)	(32.2)	2,139
Porsche	Luxury automobiles	3,526	2.4	(9.8)	(25.4)	4,192
ABB	Power systems and automation	3,513	2.4	47.5	21.9	2,445
Nintendo	Gaming consoles and software	3,324	2.2	(15.9)	(30.5)	4,121
Straumann	Dental implants	3,304	2.2	44.3	19.3	2,329
Novozymes	Enzyme manufacturer	3,230	2.2	30.6	7.9	1,947
Deere	Farm and construction machinery	3,219	2.2	18.7	(1.9)	2,780
Vestas Windsystems	Wind turbines	2,967	2.0	71.5	41.8	1,731
Whole Foods Market	Organic food stores	2,924	2.0	193.9	142.9	1,645
China Mobile	Cellular telecommunications and    related services	2,889	1.9	10.6	(8.6)	2,700
Tencent	Internet service portal	2,885	1.9	51.4*	34.5*	-
Walgreen	Pharmacy chain	2,850	1.9	47.9	22.3	2,376
Housing Development   Finance Corporation	Indian mortgage provider	2,836	1.9	57.4	30.1	1,832
Teva Pharmaceuticals	Generic drugs manufacturer	2,761	1.8	16.5	(3.7)	2,851
PPR	Luxury brand conglomerate	2,689	1.8	79.0	48.0	1,571
VCA Antech	Animal hospitals and veterinary    diagnostics	2,605	1.7	29.0	6.6	2,021
Iron Mountain	Document management services	2,477	1.7	(1.4)	(18.5)	2,507
SAP	Business software	2,468	1.6	29.4	7.0	3,019
Itau Unibanco	Brazilian retail and commercial   bank	2,257	1.5	92.6	59.2	1,417
eBay	Internet auction	2,192	1.5	41.9	17.3	2,080
Canon	Printers, copiers and cameras	2,126	1.4	17.1	(3.2)	4,448
Monsanto	Agricultural biotechnology	2,035	1.4	(25.2)	(38.2)	2,046
New Oriental    Education and    Technology	English-language schools	2,004	1.3	36.8*	4.4*	-
Lukoil	Oil exploration and production	1,933	1.3	52.6	26.1	2,251
All America Latina    Logistica	Brazilian railways	1,658	1.1	26.8*	17.2*	-
Baidu	Chinese online search engine	1,605	1.1	(2.4)*	0.9*	-
Hermes	Luxury goods	1,595	1.1	7.3	(11.3)	1,544
Berkshire Hathaway	Insurance	1,502	1.0	(1.3)*	(25.9)*	-
Inspur International	Software and computer services	1,456	1.0	(9.4)*	(22.0)*	-
Li Ning	Chinese sportswear	1,225	0.8	-*	1.3*	-
Total Equities		141,818	95.0

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

PORTFOLIO AND EQUITY PERFORMANCE

at 31 October 2009

(unaudited) (Ctd)

Name	Business		Fair value £'000	% of total assets	Performance†		Fair value 2008 £'000
					Absolute %	Relative %
Fixed Interest
US$ denominated bond
Bay Haven C FRN 2009/10	Catastrophe bond		1,837	1.2			1,857
Total Investments			143,655	96.2
Net Liquid Assets			5,657	3.8
Total Assets at Fair Value (before deduction of loan)			149,312	100.0

†    Absolute and relative performance has been calculated on a total return basis over the period 1 November 

   2008 to 31 October 2009.    

   Absolute performance is in sterling terms; relative performance is against MSCI All Countries World Index in   

   sterling terms.

*    Figures relate to part-period returns.

Source: Baillie Gifford & Co, StatPro

Past performance is not a guide to future performance.

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

NOTES

(unaudited)

1.	The financial statements for the year to 31 October 2009 have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 31 October 2008. The Directors consider the Company's functional currency to be sterling as the Company's shareholders are predominantly based in the UK and the Company is subject to the UK's regulatory environment.
					2009					2008
					£'000					£'000
2.	Income
	Income from investments and interest receivable				3,088					3,260
	Other income				-					20
					3,088					3,280
3.	VAT Recovered
	In 2007 the European Court of Justice ruled that investment trust management fees should be exempt from VAT. HMRC accepted the Managers' repayment claims for the periods from 2003 to 2007. £257,000 of VAT together with £22,000 of interest was received by the Managers on behalf of the Company in respect of these periods and was recognised in the year to 31 October 2008.   Discussions are ongoing with Aberdeen Asset Management regarding the recovery of VAT suffered over the period to 2003. The amount and timing of any recovery remains uncertain and accordingly no amount has been provided for in the financial statements.
		2009		2008			2009 £'000						2008 £'000
4.	Ordinary dividends
	Amounts recognised as distributions in the period:
	Previous year's final (paid 2 February 2009)	1.50p		1.50p			735						735
	Previous year's special (paid 2 February 2009)	0.70p		-			343						-
	Interim (paid 23 July 2009)	0.50p		0.50p			245						245
		2.70p		2.00p			1,323						980
	We also set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 842 of the Income and Corporation Taxes Act 1988 are considered. The revenue available for distribution by way of dividend for the year is £1,816,000 (2008 - £1,705,000).

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

NOTES 

(unaudited)  (Ctd)

		2009		2008			2009 £'000		2008 £'000
4.	Ordinary dividends (Ctd)
	Dividends paid and proposed in the period:
	Interim dividend per ordinary share (paid 23 July 2009)	0.50p		0.50p			245		245
	Proposed final dividend per ordinary share (payable 9 February 2010)	1.50p		1.50p			735		735
		2.00p		2.00p			980		980
	Special dividend per ordinary share# (payable 9 February 2010)	1.00p		0.70p			490		343
		3.00p		2.70p			1470		1,323
	#  The special dividend of 1.00p is proposed as the high level of income received during the year may not recur.    If approved the final and special dividends will be paid on 9 February 2010 to all shareholders on the register at the close of business on 15 January 2010. The ex-dividend date is 13 January 2010. The registrars, Computershare Investor Services plc, offer a dividend reinvestment plan. The final date for the receipt of elections for the dividend reinvestment plan is 25 January 2010.
					2009			2008
					£'000			£'000
5.	Net return per ordinary share
	Revenue return				3.71p			3.48p
	Capital return				83.78p			(134.22p)
	Revenue return per ordinary share is based on the net return on ordinary activities after taxation of £1,816,000 (2008 - £1,705,000), and on 49,004,319 ordinary shares, being the weighted average number of ordinary shares in issue during each year.   Capital return per ordinary share is based on the net capital gain for the financial year of £41,062,000 (2008 - loss of £65,776,000), and on 49,004,319 ordinary shares, being the weighted average number of ordinary shares in issue during each year.   There are no dilutive or potentially dilutive shares in issue.
6.	Creditors include US$ 9,100,000, €7,000,000, CHF10,500,000 and ¥820,000,000 drawn down under a  1 year multi-currency facility with Lloyds TSB Scotland plc (2008 - CHF18,200,000 and ¥1,900,000,000 drawn down under a 1 year multi-currency loan facility with The Royal Bank of Scotland plc).
7.	The Company incurred transaction costs on purchases of £23,000 (2008 - £36,000) and on sales of £23,000 (2008 - £79,000).
8.	At the Annual General Meeting on 26 January 2009 the Company renewed its authority to purchase shares in the market, in respect of 7,345,747 ordinary shares (equivalent to 14.99% of its issued share capital at that date). No shares were bought back during the year to 31 October 2009 or 2008. At 31 October 2009 the Company had authority to buy back 7,345,747 ordinary shares.

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

NOTES 

(unaudited)  (Ctd)

		2009		2008
		£'000		£'000
9.	Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
	Net return on ordinary activities before finance costs and taxation	43,569		(62,624)
	(Gains)/losses on investments	(43,445)		58,483
	Currency losses	1,825		6,389
	Other non cash movements	(44)		(138)
	Decrease in accrued income	6		49
	(Increase)/decrease in debtors	(21)		35
	Increase/(decrease) in creditors	67		(835)
	Net cash inflow from operating activities	1,957		1,359
10.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 October 2009. The financial information for 2008 is derived from the statutory accounts for 2008 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2008 accounts, their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2009 are unaudited and will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
11.	The Report and Accounts will be available on the Edinburgh Worldwide page of the Managers' website www.edinburghworldwide.co.uk on or around 23 December 2009.
12.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

 

END

 

 

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