Final Results and Proposed Change in Policy

RNS Number : 4443V

Edinburgh Worldwide Inv Trust PLC

13 December 2013

RNS Announcement: Preliminary Results

Edinburgh Worldwide Investment Trust plc

The following is the unaudited preliminary statement for the year to 31 October 2013 which was approved by the Board on 12 December 2013.

Summary

Over the year, the Company's net asset value per share increased by 35.6% and the share price rose by 44.4% in comparison with a rise of 21.0% in the MSCI All Countries World Index (in sterling terms).

¾ Despite the volatility of markets, a feature of many of the companies in the portfolio has been their consistently strong operational performance across different industries.

¾ Several of the portfolio's strongest performers in share price terms over the year were notable laggards in the previous one. In the last 12 months Facebook and Ctrip are up almost 140% and over 170% respectively. Portfolio turnover was 21%.

¾ At this year's Annual General Meeting, shareholder authority is being sought to broaden the Company's investment policy in order to allow the Managers to invest principally in smaller, less mature companies at the time of initial investment (typically with a market cap of less than $5bn). This would result in portfolio responsibility being passed to Douglas Brodie with John MacDougall as his deputy.

¾ Many companies remain in rude health operationally, notably those exposed to themes such as transformational technology. Being able to identify the companies best placed to take advantage of these developments, or the respective market leaders of the future, are the Managers' key focus.

¾ The net revenue return for the year was 1.68p per share, notably lower than the 2.50p in 2012. Despite this, an unchanged final dividend of 1.50p is being recommended to give a total for the year of 2.00p (2012: 2.00p).

¾ The Board has agreed in principle to appoint Baillie Gifford & Co Ltd as the Company's Alternative Investment Fund Manager.

Edinburgh Worldwide aims to achieve long term capital growth by investing in listed companies throughout the world. The Trust has total assets of £241.9 million (before deduction of loans of £29.8 million) as at 31 October 2013.

Edinburgh Worldwide is managed by Baillie Gifford & Co, the Edinburgh based fund management group with around £102 billion under management and advice as at 12 December 2013.

Past performance is not a guide to future performance.

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 http://www.edinburghworldwide.co.uk

12 December 2013

For further information please contact:

Mark Urquhart, Manager, Edinburgh Worldwide Investment Trust plc

Tel: 0131 275 2070

Anzelm Cydzik, Baillie Gifford & Co

Tel: 0131 275 3276

Roland Cross, Director, Broadgate Mainland Marketing

Tel: 0207 776 0512 or 07831 401309

Chairman's Statement

Performance

It is pleasing to note that performance has been strong over the past year. In the year to 31 October 2013, the Company's net asset value per share increased by 35.6% and the share price rose 44.4%. The MSCI All Countries World Index (in sterling terms) increased 21.0% during this period. The Company's discount narrowed over the year from 12.1% to 6.3%.

Over the ten years that Baillie Gifford & Co has been managing the Company's assets, in total return terms, net asset value per share has increased by 191%, the share price by 245% and the MSCI All Countries World Index by 132%.

Despite this performance, the Company's discount has been in double digits for most of the year. Liquidity in the Company's shares has been suboptimal in comparison to alternative offerings, with only sporadic periods of notable trading activity. Disappointingly, this has been the pattern over recent years. These points are of concern to your Board and Managers as they dissuade current and potential shareholders from investing, so we are proposing to address this.

Proposed Change to Investment Policy

The Company's investment objective is to achieve long term capital growth by investing in listed companies throughout the world. At this year's Annual General Meeting, shareholder authority is being sought to broaden the Company's investment policy.

In 2003, the Company adopted a long term concentrated approach to investment. At the time such a strategy was relatively unconventional amongst global growth sector funds. This is no longer the case and the lack of differentiation has potentially contributed to a decline in liquidity of the Company's shares and resulted in greater discount volatility, despite periods of good performance. Such factors are becoming ever more important areas for consideration by key investment trust buyers, many of which are aggregating an increasing amount of business, and also to those investors new to the investment trust sector.

Having liaised with a number of shareholders, your Board believes that, in order to address the areas of concern, a shift in emphasis should be made within the portfolio, resulting in the Company investing principally in smaller, less mature companies at the time of initial investment than at present. This approach would result in a less concentrated portfolio of holdings. Research would remain based on the same process and the objective would continue to be one of trying to achieve long term capital appreciation. Therefore, the strategy employed would be an extension of that used at present although focusing on taking a stake in companies at an earlier stage in their growth cycle.

A fuller outline of the proposal will be set out in the circular which will accompany the Annual Report. With a well resourced management team, a global perspective and clear focus, the Board is of the view that the Managers are able to identify some of the most attractive growth opportunities in such companies.

Management Fee

With effect from 1 April 2013, the annual management fee payable to Baillie Gifford & Co has been 0.95% on the first £50m of net assets and 0.65% on the remainder, with no separate secretarial or performance fee element. The simplification of the fee structure removes the volatility created by the performance fee and reduces the ongoing charges as the Company grows. Had the former fee structure been in place for the entire year, approximately a further £274,000 would have been payable to the Managers.

Gearing

The Managers invest in companies that are believed to have long term attractions, over at least five years, and the Company will therefore typically be geared to maximise potential returns. Gearing was maintained throughout the year and was 8% at the year end (2012: 17%).

The Company has a £29.8m fixed rate multi-currency loan with National Australia Bank which expires in September 2014. Borrowings are drawn in USD, EUR and GBP.

Earnings and Dividend

The net revenue return per share for the year was 1.68p, notably lower than the 2.50p in 2012, reflecting the sale of some higher yielding investments. Although the Company's objective is one of capital growth, with any income received from the underlying holdings being subsidiary to this objective, the Board is mindful of the importance some shareholders place on the dividend. The Company has revenue reserves equating to around two years' of dividend payments. Accordingly, an unchanged final dividend of 1.50p is being recommended, making the total for the year 2.00p, unchanged from last year.

The Company's registrar operates a dividend reinvestment plan which can be used to buy additional shares.

Regulation

The Alternative Investment Fund Managers Directive came into law in July 2013 although the Company has until July 2014 to comply fully with the requirements. This EU legislation is an attempt to prevent some of the issues that have occurred as a result of perceived poor oversight of the financial services industry. The legislation requires the Company to appoint a depositary as well as an Alternative Investment Fund Manager (AIFM). Following a period of discussion, the Board has agreed in principle to appoint Baillie Gifford & Co Ltd as the Company's AIFM and BNY Mellon as depositary.

Annual General Meeting

At the forthcoming Annual General Meeting the Company will again seek to renew its share buyback, issuance and treasury share powers. The Notice of the Annual General Meeting and an explanation of each resolution are set out in the separate circular which is being sent to shareholders with the Annual Report.

Mark Urquhart, the Partner at Baillie Gifford who manages the portfolio at present, as well as Douglas Brodie and John MacDougall, the proposed manager and deputy manager, will give a presentation and answer any questions. Your Board will also be available to respond to any questions that you may have.

Outlook

Developed markets on the whole have been buoyant whilst Emerging Markets have lagged. However, markets have been volatile, fuelled in part by talk of Federal Reserve tapering and debate about how robust economic growth will prove if monetary stimulus is removed. The extent of quantitative easing by Japan may counter-act this but its potential effects are unknown. China's GDP slowing to a 'mere' 7.8% has re-ignited worries about a Chinese 'hard landing' although details of economic and social reforms announced at the Communist Party's recent Third Plenum of the 18^th Party Congress has seemingly turned market sentiment bullish.

Despite the uncertain macro outlook, many companies remain in rude health operationally, notably those exposed to themes such as transformational technology. The speed of developments in robotics, 3D printing, genomics, mobile computing and the cloud has been staggering. Being able to identify the companies best placed to take advantage of these developments, or the respective market leaders of the future, are the Managers' key focus.

An overview is provided by the Managers below.

David HL Reid

Chairman

Past performance is not a guide to future performance.

Managers' Overview

Once again I would like to reiterate, as every year, that our objective in managing Edinburgh Worldwide is to run a concentrated portfolio of companies with good growth prospects for the long-term. Whilst it is pleasing that many of the businesses in the portfolio have produced strong returns over the last twelve months our focus is on returns over five years and more. It is notable that several of the strongest absolute performers over the last year were sizeable laggards in the previous period - most publicly Facebook which has risen almost 140% in the last twelve months and most spectacularly Ctrip which is up over 170% over the same period. Such are the vagaries of measurement over short periods of time...

Having managed the portfolio for ten years it feels appropriate to spend a short amount of time looking back over this period. As the Chairman has noted the ten year performance record is a good one and many of the holdings which have delivered these returns have been held for many years. However it is also very pertinent how much the world has changed in the last ten years. In 2003 when we took over the management of Edinburgh Worldwide the world was a pretty different place - stockmarkets were slowly emerging from the bursting of the TMT bubble, China's economy was gaining increasing momentum and banks were storing up a myriad of future problems. Smartphones were several years away from being invented, no-one had heard of the term 'social network' and the cost of sequencing the human gene was still prohibitive.

The technological changes over the intervening ten years in terms of the capability of devices and the speed of connection have created a plethora of investment opportunities and concomitant disruption to existing industries. Who could have predicted ten years ago that a tablet computer as thin as a pad of paper would allow one to read e-mails, browse the web, stream movies, share documents and all the other features we already take for granted? As we survey the next decade from the vantage point of 2013 the one thing we can be sure of is that there will be large unexpected changes and many investable companies which have not yet been formed. This sense of nascent opportunity is one of the reasons for the proposed change in emphasis in the investment approach described in the Chairman's Statement.

As we survey the portfolio holdings over the last year, the most pleasing feature is the consistently strong operational performance across many of the businesses in very different industries. We have seen strong results from Google where the move to mobile search is helping to accelerate its growth rates and the company is starting to monetise YouTube effectively; Illumina where the demand for genetic sequencing equipment continues to rise as more governments look to genetic solutions as a way to reduce the ever increasing healthcare burdens and Tesla where the demand for well-designed electric-powered vehicles seems to be taking off rapidly.

Portfolio turnover for the year was 21% which compares to 13% in the previous year. New holdings were purchased in ARM - a Cambridge based developer of the intellectual property which goes into myriad smartphone and tablet semiconductors; LinkedIn which we think has an excellent opportunity to disrupt the recruitment industry with its growing network of professional contacts; Lululemon which is expanding its brand of high-end sports clothing internationally; Tesla which is spectacularly disrupting the automotive market; FEI - a company which produces very powerful microscopes which we think will benefit from an increasing trend to nanotechnology; China Financial Services which has a strong position in the growing market for lending to Chinese SMEs; IP Group which provides exposure to several different UK university-led entities and Splunk which is a leader in the nascent market of data diagnostics. We also added to Google, HDFC and Aggreko during the year trying to use short-term weakness in share prices to our long-term advantage.

Sales were made of America Latina Logistica where we fear the Brazilian government's more interventionist tone means less good future returns for minority shareholders; Pactera Technologies where the pressures of rising wages in China have capped the potential growth rate of the business; Sandvik where the outlook for mining equipment demand has deteriorated and new management have underwhelmed us and FLIR where we worry about the cost of its expansion. Other sales through the year included the remaining small holding in the Brazilian miner, Vale, and small holdings in Noah and Hengdeli - two small Chinese companies where the investment case had not gone as planned. We made reductions in Apple, eBay, L'Oréal and Kering to help fund the purchases outlined above.

We believe we are experiencing a period where the ability of companies to use technology to disrupt existing business models and grow is unparalleled and the rewards in terms of profitability for those businesses which are the winners in new areas can be very large indeed. These trends are arguably even stronger in some of the smaller businesses which Edinburgh Worldwide has owned - companies such as IP Group and Tesla described above or iRobot which has experienced strong growth in domestic robots and Stratasys where the market for 3D printing continues to expand rapidly. As such, as we look forward to the next ten years it is my strong belief that investing in a more focused manner in some of these less mature businesses should prove a very rewarding long-term strategy.

Mark A. Urquhart
Baillie Gifford & Co

Portfolio performance at 31 October 2013 (unaudited)

Name	Business	Fair value 2013 £'000	% of total assets	Performance†		Fair value 2012 £'000
Name	Business	Fair value 2013 £'000	% of total assets	Absolute %	Relative %	Fair value 2012 £'000
Amazon.com	E-commerce and cloud computing	18,013	7.4	56.6	26.0	13,870
Tencent	Chinese social network	14,039	5.8	55.3	25.0	9,085
Google	Web-based search engine	12,683	5.2	52.0	22.3	7,495
Baidu	Chinese online search engine	10,955	4.5	51.3	21.7	7,240
Whole Foods Market	Organic food stores	10,351	4.3	37.1	10.3	7,746
Apple	Phones, tablets and computers	10,053	4.2	(10.1)	(27.7)	14,258
Facebook	Social networking site	9,747	4.0	138.7	92.0	4,084
Kering	Luxury brand conglomerate	9,433	3.9	34.1	7.9	8,068
Inditex	Fashion retail	9,116	3.8	31.5	5.8	7,047
Salesforce	Cloud-based software	8,881	3.7	46.6	18.0	6,059
Illumina	Gene sequencing equipment	8,797	3.6	97.3	58.7	4,577
eBay	Internet auction and payments	7,967	3.3	9.5	(11.9)	9,472
Novozymes	Enzyme manufacturer	7,104	2.9	43.8	15.7	5,762
Hermes	Luxury goods	6,307	2.6	26.4	1.7	5,044
Atlas Copco	Industrial compressors and mining equipment	5,938	2.5	16.8	(6.1)	6,129
Housing Development Finance Corporation	Indian mortgage provider	5,766	2.4	0.3	(19.3)	3,633
TripAdvisor	Travel advice website	5,689	2.4	89.5*	62.8*	-
Intuitive Surgical	Robotic surgery	5,087	2.1	(31.3)	(44.7)	7,404
Linkedin Corp	Professional networking site	5,044	2.1	93.9*	67.2*	-
FEI	Electron microscopes	4,696	1.9	18.9*	17.1*	-
Lululemon Athletica	Athletics clothing	4,059	1.7	(3.6)*	(10.6)*	-
New Oriental Education and Technology	English-language schools	3,971	1.6	58.3	27.3	2,548
L'Oreal	Personal care	3,965	1.6	37.4	10.5	3,572
Ctrip	Travel agent - China	3,964	1.6	171.9	118.7	1,456
Stratasys	3D printing	3,735	1.5	70.3	37.0	2,193
BMW	Premium car manufacturer	3,733	1.6	47.3	18.5	2,613
ARM Holdings	Semiconductor design	3,527	1.5	39.8*	11.6*	-
Aggreko	Power equipment rental	3,471	1.4	(24.0)	(38.8)	2,803
Sanrio	Hello Kitty and Mr Men franchise owner	3,359	1.4	67.8	35.0	1,654
Seattle Genetics	Biotech cancer drugs	3,256	1.4	54.0	23.9	2,115
Burberry	Luxury fashion	3,151	1.3	34.5	8.2	2,395
iRobot	Robots for domestic and military use	2,955	1.2	89.0	52.1	1,565
IP Group	UK university start-up funding	2,933	1.2	8.6*	4.1*	-
Deere	Farm and construction machinery	2,718	1.1	(2.0)	(21.1)	3,429
Belle International	Footwear - China	1,852	0.8	(22.8)	(37.9)	2,436
Tesla Motors	Premium electric vehicles	1,350	0.6	219.0*	197.1*	-
China Financial Services	SME Lending - China	1,030	0.4	33.7*	31.8*	-
Splunk	Data diagnostics	330	0.1	3.5*	4.3*	-
Total equities		229,025	94.6
Net liquid assets		12,944	5.4
Total assets at fair value (before deduction of loans)		241,969	100.0

† Absolute and relative performance has been calculated on a total return basis over the period 1 November 2012 to 31 October 2013. For investments held for part of the year the return is for the period they were held.

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.

Distribution of assets (unaudited)

		At 31 October 2013 %	At 31 October 2012 %
Equities:	USA	51.8	47.8
	China	14.7	16.3
	France	8.1	8.9
	UK	5.4	2.8
	Spain	3.8	3.8
	Denmark	2.9	3.1
	Sweden	2.5	5.1
	India	2.4	1.9
	Germany	1.6	1.4
	Japan	1.4	1.8
	Switzerland	-	0.9
	Brazil	-	3.4
	South Korea	-	1.1
Total equities		94.6	98.3
Net liquid assets		5.4	1.7
Total assets (before deduction of loans)		100.0	100.0

Income statement

	For the year ended 31 October 2013 (unaudited)			For the year ended 31 October 2012 (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	57,734	57,734	-	7,680	7,680
Currency (losses)/gains	-	(699)	(699)	-	725	725
Income (note 2)	1,987	-	1,987	2,414	-	2,414
Investment management fee	(341)	(1,024)	(1,365)	(269)	(807)	(1,076)
Other administrative expenses	(435)	-	(435)	(479)	-	(479)
Net return before finance costs and taxation	1,211	56,011	57,222	1,666	7,598	9,264
Finance costs of borrowings	(200)	(599)	(799)	(197)	(592)	(789)
Net return on ordinary activities before taxation	1,011	55,412	56,423	1,469	7,006	8,475
Tax on ordinary activities	(188)	-	(188)	(244)	-	(244)
Net return on ordinary activities after taxation	823	55,412	56,235	1,225	7,006	8,231
Net return per ordinary share (note 4)	1.68p	113.07p	114.75p	2.50p	14.30p	16.80p

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.

Balance sheet

	At 31 October 2013 (unaudited) £'000	At 31 October 2012 (audited) £'000
Fixed assets
Investments held at fair value through profit or loss	229,025	183,075

Current assets
Debtors	715	235
Cash and short term deposits	13,081	3,357
	13,796	3,592
Creditors
Amounts falling due within one year (note 5)	(30,675)	(458)
Net current assets	(16,879)	3,134
Total assets less current liabilities	212,146	186,209

Creditors
Amounts falling due after more than one year	-	(29,318)
Total net assets	212,146	156,891

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	89,678	34,266
Revenue reserve	2,618	2,775
Shareholders' funds	212,146	156,891
Net asset value per ordinary share (after deducting borrowings at fair value)	432.31p	318.93p
Net asset value per ordinary share (after deducting borrowings at par)	432.91p	320.16p
Ordinary shares in issue	49,004,319	49,004,319

Reconciliation of movements in shareholders' funds

For the year ended 31 October 2013 (unaudited)

	Called up share capital £'000	Share premium £'000	Special Reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 November 2012	2,450	82,180	35,220	34,266	2,775	156,891
Net return on ordinary activities after taxation	-	-	-	55,412	823	56,235
Dividends paid during the year (note 3)	-	-	-	-	(980)	(980)
Shareholders' funds at 31 October 2013	2,450	82,180	35,220	89,678	2,618	212,146

For the year ended 31 October 2012 (audited)

	Called up share capital £'000	Share premium £'000	Special Reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 November 2011	2,450	82,180	35,220	27,260	2,530	149,640
Net return on ordinary activities after taxation	-	-	-	7,006	1,225	8,231
Dividends paid during the year (note 3)	-	-	-	-	(980)	(980)
Shareholders' funds at 31 October 2012	2,450	82,180	35,220	34,266	2,775	156,891

Condensed cash flow statement

	For the year ended 31 October 2013 (unaudited)		For the year ended 31 October 2012 (audited)
	£'000	£'000	£'000	£'000
Net cash inflow from operating activities (note 8)		365		868
Servicing of finance
Interest paid	(801)		(787)
Net cash outflow from servicing of finance		(801)		(787)

Taxation
Overseas tax incurred	(199)		(248)

Total tax paid		(199)		(248)

Financial investment
Acquisitions of investments	(30,133)		(27,653)
Disposals of investments	41,666		22,973
Realised currency (loss)/gain	(194)		62
Net cash inflow/(outflow) from financial investment		11,339		(4,618)
Equity dividends paid (note 3)		(980)		(980)
Increase/(decrease) in cash		9,724		(5,765)

Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the period		9,724		(5,765)
Exchange movement on bank loans		(505)		663
Movement in net debt in the year		9,219		(5,102)
Net debt at 1 November		(25,961)		(20,859)
Net debt at 31 October		(16,742)		(25,961)

Notes (unaudited)

1.	The financial statements for the year to 31 October 2013 have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 31 October 2012, which are unchanged from the prior year and have been applied consistently. In accordance with the Financial Reporting Council's guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. Accordingly, the financial statements have been prepared on the going concern basis as it is the Directors' opinion that the Company will continue in operational existence for the foreseeable future. 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 and its investment manager, who are subject to the UK's regulatory environment, are also UK based.
2.	Income	2013 £'000		2012 £'000
	Income from investments	1,973		2,398
	Deposit interest	14		16
		1,987		2,414

3.	Ordinary dividends	2013	2012	2013 £'000	2012 £'000
	Amounts recognised as distributions in the period:
	Previous year's final (paid 6 February 2013)	1.50p	1.50p	735	735
	Interim (paid 18 July 2013)	0.50p	0.50p	245	245
		2.00p	2.00p	980	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 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £823,000 (2012 - £1,225,000).

Ordinary dividends	2013	2012	2013 £'000	2012 £'000
Dividends paid and payable in respect of the year:
Interim dividend per ordinary share (paid 18 July 2013)	0.50p	0.50p	245	245
Proposed final dividend per ordinary share (payable 6 February 2014)	1.50p	1.50p	735	735
	2.00p	2.00p	980	980
If approved the final dividend will be paid on 6 February 2014 to all shareholders on the register at the close of business on 10 January 2014. The ex-dividend date is 8 January 2014. 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 16 January 2014.

Net return per ordinary share

Revenue

2013 Capital

Total

Revenue

2012

Capital

Total

Net return on ordinary activities after taxation

1.68p

113.07p

114.75p

2.50p

14.30p

16.80p

Revenue return per ordinary share is based on the net return on ordinary activities after taxation of £823,000 (2012: £1,225,000) 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 £55,412,000 (2012: £7,006,000) 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.

Included in amounts due within one year is £29,823,000 (2012:£29,318,000) drawn-down under a fixed rate facility with National Australia Bank Limited for €11.4m, US$16.35m and £10.0m which expires on 30 September 2014. The drawings were as follows:

At 31 October 2013 and 31 October 2012

National Australia Bank Limited:

¾ €11,400,000 at an interest rate of 2.96% per annum.

¾ US$16,350,000 at an interest rate of 2.28% per annum.

¾ £10,000,000 at an interest rate of 2.68% per annum.

The main covenant relating to the loan facility with National Australia Bank Limited is: total borrowings shall not exceed 35% of the Company's adjusted gross assets.

The Company incurred transaction costs on purchases of £55,000 (2012 - £43,000) and on sales of £34,000 (2012 - £13,000).

At the Annual General Meeting on 31 January 2013 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 2013 or 2012. At 31 October 2013 the Company had authority to buy back 7,345,747 ordinary shares.

Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities

2013

£'000

2012

£'000

Net return before finance costs and taxation

57,222

9,264

Gains on investments

(57,734)

(7,680)

Currency losses/(gains)

699

(725)

Decrease/(increase) in accrued income

152

(8)

Increase in debtors

(43)

(14)

Increase in creditors

Net cash inflow from operating activities

365

868

9.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 October 2013. The financial information for 2012 is derived from the statutory accounts for 2012 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2012 accounts, their report was unqualified and did not contain a statement under section 495 to 497 of the Companies Act 2006. The statutory accounts for 2013 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.
10.	The Report and Accounts will be available on the Edinburgh Worldwide page of the Managers' website http://www.edinburghworldwide.co.uk on or around 23 December 2013.
11.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.