Final Results
Edinburgh Worldwide Inv Trust PLC
11 December 2007
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
Results for the year to 31 October 2007
During the year the net asset value per share rose for the fifth successive year
increasing by 20.4%. By comparison the benchmark, the MSCI All Countries World
Index, rose by 11.9% (in sterling terms).
• Over the four complete years that Baillie Gifford has been managing the
Company, net asset value per share has risen from 163p to 305p, an 87%
increase, or an average compound annual return of 17%. By way of
comparison the benchmark rose by 50% or 11% per annum on average.
• Over the year the share price rose by 14.4%, over four years it has risen
by 105%.
• Edinburgh Worldwide continues to be run as a concentrated portfolio of
companies with good growth prospects for the long-term. Turnover of
investments in the period remained low at 15.4%.
Over the last twelve months performance was helped by having little direct
exposure to the Western financial sector while rises in share prices in
companies where there is exposure to the infrastructure build across a host
of populous nations contributed to performance.
• Due to some dividend growth earnings per share were higher at 2.63p
(1.67p). As long term capital growth is paramount, the Board is
recommending an unchanged final dividend of 1.50p giving an unchanged total
of 2.00p.
• The Managers continue to identify companies that they believe are capable
of returning strong growth in earnings in their respective fields.
Past performance is no guarantee of 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 £174
million (before deduction of loans of £24 million).
Edinburgh Worldwide is managed by Baillie Gifford & Co, the Edinburgh based fund
management group with around £55 billion under management and advice as at 10
December 2007.
11 December 2007
- ends -
For further information please contact:
Mark Urquhart, Manager,
Edinburgh Worldwide Investment Trust plc 0131 275 2070
Robert O'Riordan, Marketing Manager,
Baillie Gifford & Co 07730 412007
Roland Cross, Director,
Broadgate Marketing 020 7726 6111
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
Chairman's Statement
During the year the net asset value per share rose for the fifth successive year
increasing by 20.4%. By comparison the benchmark, the MSCI All Countries World
Index, rose by 11.9% (in sterling terms).
Performance
It is the strategy of the Company to take a long term and patient approach to
investment with an anticipated holding period of at least five years for each
investment. Consequently a fair measure of performance is a three to five year
rolling period. Over the four complete years that Baillie Gifford has been
managing the Company, net asset value per share has risen from 163p to 305p, an
87% increase, or an average compound annual return of 17%. By way of comparison
the benchmark rose by 50% or 11% per annum on average.
This is satisfactory but should be viewed against a perspective of relatively
benign stockmarket and economic conditions over much of the period. It is,
however, inevitable that there will be periods when the Company's portfolio
underperforms the index. This is because the selection of the forty or so shares
held do not match the index's composition and shape. That said, the Board
believe that the long term approach taken by the Managers whereby a limited
number of shares from around the world are assessed and selected on the basis of
their individual merits should, over time, provide superior returns to the
index.
It is disappointing that the shares stand on a wider discount at the end of the
year than they did at the start reflecting share price performance which lagged
that of the net asset value. During the year net asset value rose by 20.4% and
the share price rose by 14.4%. This is due to a number of factors some of which
apply across most global investment trusts. The Managers have been given a clear
brief by the Board to boost the marketing of the Company in a concerted effort
with the Company's broker, Cazenove, so that the level of discount becomes a
more accurate reflection of the Company's current record and potential after
four years under the current Managers.
The Managers earned a performance fee again this year. Details of the fee
arrangement are shown in the Annual Report.
Earnings and Dividend
Due to some dividend growth earnings per share this year were higher at 2.63p
(1.67p last year and 2.26p the year before). As long term capital growth is
paramount, the Board is recommending an unchanged final dividend of 1.50p giving
an unchanged total of 2.00p. The surplus of 0.63p will be added to the Revenue
Reserve which will then stand at 1.81p per share. The level of earnings from the
portfolio is likely to continue to fluctuate as shares are chosen purely for
their growth potential with no account being taken of their income generation
capability. A reasonable revenue reserve is, therefore, prudent accounting.
VAT
During the year the European Court of Justice ruled that investment trust
management fees should be exempt from VAT, bringing them in line with open ended
funds. HM Revenue and Customs now accept this decision so the Company will be
able to recover some of the VAT suffered on management fees in the past. The
terms of, and procedure for, reclaim are still to be clarified so the amount of
the refund is still uncertain, however it will not be material. Consequently no
provision has been made for any refund in this set of financial statements.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
Chairman's Statement (Ctd)
Investment Background and Outlook
Investment markets while up over the period, were marked by increasing
nervousness and volatility. There are fears that the US and other economies may
slow down or tip into recession due to the unfolding credit crunch. In global
terms, this has to be balanced by the high rate of growth and demand from the
several large, populous and rapidly growing countries in emerging markets,
notably Brazil, China and India. Against a backdrop that is more uncertain than
for a long time, the Managers have continued to identify what they assess to be
companies that are capable of returning strong growth in earnings in their
respective fields. The Managers have provided a thought provoking Overview and
also a detailed account of a number of the individual investments in the Annual
Report. I recommend both to you.
The Board
Robert Douglas Miller has decided to retire from the Board. I am deeply
appreciative of his valuable contribution over many years and the Board wish him
well in his retirement. This year we welcomed Jake Leslie Melville to your
Board; along with his relative youth and enthusiasm, Jake also brings to the
Board very relevant business experience, particularly in the energy sector.
AGM
The Annual General Meeting of the Company will be held at Baillie Gifford's
offices in Edinburgh at noon on 7 February 2008. I hope that you will be able to
come. Mark Urquhart, the partner at Baillie Gifford who manages your portfolio,
will make a presentation and answer any questions. The Directors too, of course,
are always pleased to meet shareholders as well as potential shareholders.
Change of Registrar
During the year Computershare Investor Services PLC was appointed as Registrar.
Details of the services they offer and how to contact them can be found in the
section 'Further Shareholder Information' in the Annual Report.
David A Coltman
Chairman
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
The following is the unaudited preliminary statement for the year to 31 October
2007 which was approved by the Board on 10 December 2007. The Board of Edinburgh
Worldwide Investment Trust plc is recommending to the Annual General Meeting of
the Company to be held on 7 February 2008 the payment of a final dividend of
1.50p (1.50p last year) per ordinary share making 2.00p (2.00p last year) for
the year ended 31 October 2007.
INCOME STATEMENT
For the year ended For the year ended
31 October 2007 31 October 2006
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 25,424 25,424 - 16,264 16,264
Currency gains - 1,732 1,732 - 1,751 1,751
Income (note 2) 2,827 - 2,827 2,116 - 2,116
Investment management fee (note
3)
(252) (1,479) (1,731) (253) (841) (1,094)
Other administrative expenses (415) - (415) (399) - (399)
Net return before finance costs
and taxation
2,160 25,677 27,837 1,464 17,174 18,638
Finance costs of borrowings (352) (1,057) (1,409) (382) (1,146) (1,528)
Net return on ordinary
activities before taxation
1,808 24,620 26,428 1,082 16,028 17,110
Tax on ordinary activities (521) 344 (177) (265) 135 (130)
Net return on ordinary
activities after taxation
1,287 24,964 26,251 817 16,163 16,980
Net return per ordinary share
(note 5)
2.63p 50.94p 53.57p 1.67p 32.98p 34.65p
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.
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 2007 At 31 October 2006
(unaudited) (audited)
£'000 £'000
FIXED ASSETS
Investments held at fair value through profit or loss 170,032 148,870
CURRENT ASSETS
Debtors 1,067 1,629
Cash and short term deposits 4,646 3,934
5,713 5,563
CREDITORS
Amounts falling due within one year (note 6) (26,438) (4,335)
NET CURRENT (LIABILITIES)/ASSETS (20,725) 1,228
TOTAL ASSETS LESS CURRENT LIABILITIES 149,307 150,098
CREDITORS
Amounts falling due after more than one year (note 6) - (26,062)
149,307 124,036
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 - realised (35,187) (34,132)
Capital reserve - unrealised 63,023 37,004
Revenue reserve 1,621 1,314
EQUITY SHAREHOLDERS' FUNDS 149,307 124,036
NET ASSET VALUE PER ORDINARY SHARE 304.68p 253.11p
ORDINARY SHARES IN ISSUE 49,004,319 49,004,319
DISTRIBUTION OF ASSETS
(unaudited)
At 31 October 2007 At 31 October 2006
% %
Equities: United Kingdom 1.1 1.8
Continental Europe 30.2 24.3
North America 26.2 35.0
Japan 2.9 5.5
Asia Pacific 6.0 4.6
Emerging Markets 30.7 23.8
Total equities 97.1 95.0
Sterling denominated bonds - 0.8
US$ denominated bonds 0.8 2.2
Yen denominated bonds - 1.2
Net current assets 2.1 0.8
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 2007 (unaudited)
Called-up Share Special Capital Capital Revenue Equity
share premium reserve reserve - reserve - reserve shareholders'
capital realised unrealised funds
£'000 £'000 £'000
£'000 £'000 £'000 £'000
Shareholders' funds at
1 November 2006
2,450 82,180 35,220 (34,132) 37,004 1,314 124,036
Net return on ordinary
activities after
taxation - - - (1,055) 26,019 1,287 26,251
Dividends paid during
the year (note 4)
- - - - - (980) (980)
Shareholders' funds at
31 October 2007
2,450 82,180 35,220 (35,187) 63,023 1,621 149,307
For the year ended 31 October 2006 (audited)
Called-up Share Special Capital Capital Revenue Equity
share premium reserve reserve - reserve - reserve shareholders'
capital realised unrealised funds
£'000 £'000 £'000
£'000 £'000 £'000 £'000
Shareholders' funds at
1 November 2005
2,450 82,180 35,220 (45,920) 32,629 1,477 108,036
Net return on ordinary
activities after
taxation - - - 11,788 4,375 817 16,980
Dividends paid during
the year (note 4)
- - - - - (980) (980)
Shareholders' funds at
31 October 2006
2,450 82,180 35,220 (34,132) 37,004 1,314 124,036
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
SUMMARISED CASH FLOW STATEMENT
For the year ended For the year ended
31 October 2007 31 October 2006
(unaudited) (audited)
£'000 £'000 £'000 £'000
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES (note 8) 1,319 (82)
SERVICING OF FINANCE
Interest paid (1,439) (1,554)
NET CASH OUTFLOW FROM SERVICING OF FINANCE (1,439) (1,554)
TAXATION
Overseas tax incurred (175) (128)
TOTAL TAX PAID (175) (128)
FINANCIAL INVESTMENT
Acquisitions of investments (22,536) (35,655)
Disposals of investments 24,527 42,040
Realised currency loss (4) (12)
NET CASH INFLOW FROM FINANCIAL INVESTMENT 1,987 6,373
EQUITY DIVIDENDS PAID (note 4) (980) (980)
INCREASE IN CASH 712 3,629
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase in cash in the period 712 3,629
Exchange movement on bank loans 1,736 1,763
MOVEMENT IN NET DEBT IN THE YEAR 2,448 5,392
NET DEBT AT 1 NOVEMBER (22,128) (27,520)
NET DEBT AT 31 OCTOBER (19,680) (22,128)
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
PORTFOLIO AND EQUITY PERFORMANCE
at 31 October 2007
(unaudited)
Fair value % of Performance+ Fair value
total 2006
£'000 assets £'000
Name Business Absolute Relative
% %
Equities
CVRD Mining 13,146 7.6 171.4 136.9 5,895
Petrobras* Oil exploration and production 11,013 6.3 107.3 81.0 5,337
Porsche* Luxury automobiles 9,739 5.6 110.7 83.9 5,230
Atlas Copco* Industrial compressors and
mining equipment 7,340 4.2 25.1 9.2 7,009
Gazprom* Gas exploration and production 6,707 3.9 7.3 (6.4) 5,874
Sandvik Tools and mining equipment 6,636 3.8 48.6 29.7 3,942
SAP* Business software 6,014 3.5 0.8 (12.0) 5,501
eBay Internet auction 5,275 3.0 3.2 (9.9) 4,437
HDFC Mortgage provider 5,092 2.9 100.0 74.6 3,414
Canon* Printers, copiers and cameras 5,082 2.9 (13.3) (24.3) 5,939
Amazon.com Online retailer 5,060 2.9 114.9 87.6 2,354
Teva Pharmaceuticals* Generic drugs manufacturer 4,661 2.7 23.6 7.9 3,805
Banco Itau Retail and commercial bank 4,634 2.7 61.6 41.1 3,251
Samsung Electronics* Electronics manufacturer 4,401 2.5 (12.9) (24.0) 4,815
Lukoil* Oil exploration and production 4,213 2.4 4.9 (8.4) 4,065
Zhejiang Expressway Toll-road operator 4,056 2.3 100.9 75.4 2,089
Moody's* Bond rating agency 4,049 2.3 (39.2) (46.9) 6,684
VCA Antech Animal hospitals and veterinary
diagnostics 3,993 2.3 30.6 14.0 3,056
Infosys Technologies Software outsourcer 3,827 2.2 (7.1) (18.9) 4,147
Whole Foods Market Organic food chain 3,302 1.9 (27.5) (36.7) 2,874
Straumann Dental implants 3,261 1.9 13.5 (0.9) 2,903
Essilor Lenses for spectacles 3,185 1.8 12.6 (1.7) 2,860
Hermes* Luxury goods 2,970 1.7 12.0 (2.2) 3,532
Vestas Windsystems Wind turbines 2,948 1.7 22.8** 18.2** -
Ericsson* Telecommunications equipment 2,898 1.7 (26.3) (35.7) 3,121
Carnival Cruise ship operator 2,875 1.7 (7.7) (19.5) 3,186
L'Oreal Personal care 2,841 1.6 25.2 9.3 2,295
Iron Mountain Document management services 2,785 1.6 10.3 (3.7) 2,539
Omnicom* Advertising agency 2,766 1.6 (6.9) (18.7) 2,995
Deere Farm and construction machinery 2,673 1.6 26.7** 22.6** -
Genentech Biotech drugs manufacturer 2,497 1.4 (9.2)** (11.0)** -
Novozymes Enzyme manufacturer 2,350 1.4 22.0** 8.1 ** -
William Wrigley* Chewing gum manufacturer 2,282 1.3 10.9 (3.2) 2,095
Q-cells Solar energy production 2,239 1.3 68.4** 63.5** -
Pulte Homes American housebuilder 2,226 1.3 (55.8) (61.4) 5,069
IOI Palm oil producer and refiner 2,046 1.2 28.4** 23.9** -
Walgreen* Pharmacy chain 1,989 1.2 (16.1) (26.8) 2,384
Progressive Ohio* Auto insurance 1,961 1.1 (23.9) (33.6) 2,789
Wolseley* Builders' merchant 1,856 1.1 (30.5) (39.3) 2,755
Pool Swimming pool supplies 1,700 1.0 (46.6) (53.4) 2,822
168,588 97.1
Fixed Interest
US$ denominated bonds
Bay Haven CFRN 2009/10 1,444 0.8
Total Fixed Interest 1,444 0.8
Total Investments 170,032 97.9
Net Liquid Assets 3,601 2.1
Total Assets at Fair Value (before deduction of loan) 173,633 100.0
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
PORTFOLIO AND EQUITY PERFORMANCE
at 31 October 2007
(unaudited) (Ctd)
+ Absolute and relative performance has been calculated on a total return
basis over the period 1 November 2006 to 31 October 2007.
Absolute performance is in sterling terms; relative performance is against
MSCI All Countries World Index in sterling terms.
* Held since November 2003 when Baillie Gifford & Co were appointed as
Investment Managers and Secretaries to the Company.
** Figures relate to part-period returns.
Source: Baillie Gifford & Co, StatPro
Past performance is no guarantee of future performance.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
NOTES
(unaudited)
1. The financial statements for the year to 31 October 2007 have been
prepared on the basis of the accounting policies set out in the Company's
Annual Financial Statements at 31 October 2006.
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.
2007 2006
£'000 £'000
2. Income
Income from investments and interest receivable 2,674 2,090
Other income 153 26
2,827 2,116
2007 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
3. Investment Management Fee
Investment management fee 244 731 975 233 699 932
Investment performance fee - 723 723 - 79 79
Unrecovered VAT thereon 8 25 33 20 63 83
252 1,479 1,731 253 841 1,094
2007 2006 2007 2006
£'000 £'000
4. Ordinary dividends
Amounts recognised as distributions
in the period:
Previous year's final (paid 2
February 2007) 1.50p 1.50p 735 735
Interim (paid 3 July 2007) 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 842 of the Income and Corporation Taxes Act 1988 are considered.
The revenue available for distribution by way of dividend for the year is
£1,287,000 (2006 - £817,000).
2007 2006 2007 2006
£'000 £'000
Dividends paid and proposed in the
period:
Interim dividend per ordinary share
(paid 3 July 2007) 0.50p 0.50p 245 245
Proposed final dividend per
ordinary share (payable 11 February 1.50p 1.50p 735 735
2008) 2.00p 2.00p 980 980
If approved the final dividend will be paid on 11 February 2008 to all
shareholders on the register at the close of business on 18 January 2008.
The ex-dividend date is 16 January 2008.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
NOTES
(unaudited) (Ctd)
2007 2006
£'000 £'000
5. Net return per ordinary share
Revenue return 2.63p 1.67p
Capital return 50.94p 32.98p
Revenue return per ordinary share is based on the net revenue on ordinary
activities after taxation of £1,287,000 (2006 - £817,000), and on
49,004,319 ordinary shares, being the 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 £24,964,000 (2006 - £16,163,000), and on 49,004,319
ordinary shares, being the number of ordinary shares in issue during each
year.
6. 6 The loan includes US$31,250,000, Y1,313,200,000 and £3,800,000 drawn down
under a multi-currency loan facility with ING Bank N.V.
(2006 - US$31,250,000, Y1,313,200,000 and £3,800,000). The loan is due
for repayment in July 2008.
7. 7 At the Annual General Meeting on 1 February 2007 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 2007 or
2006 At 31 October 2007 the Company had authority to buy back 7,345,747
ordinary shares.
2007 2006
£'000 £'000
8. Reconciliation of net return before finance costs and
taxation to net cash inflow/(outflow) from operating
activities
Net return on ordinary activities before finance costs
and taxation
27,837 18,638
Gains on investments - securities (25,424) (16,264)
Currency gains (1,732) (1,751)
Changes to debtors and creditors 623 (778)
Amortisation of fixed income book cost 15 73
Net cash inflow/(outflow) from operating activities 1,319 (82)
9. The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 October 2007. The financial
information for 2006 is derived from the statutory accounts for 2006
which have been delivered to the Registrar of Companies. The Auditors
have reported on the 2006 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 2007 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 Managers' website
www.edinburghworldwide.co.uk on or around 20 December 2007.
11. None of the views expressed in this document should be construed as
advice to buy or sell a particular investment.
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