Interim Results
Edinburgh Worldwide Inv Trust PLC
11 June 2004
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
Results for the six months to 30 April 2004
Under the first six months of Baillie Gifford & Co's management, net asset value
per share rose by 2.2% while the share price rose by 9.6%. The portfolio is not
run on an indexed basis, but for comparative purposes the benchmark MSCI All
Countries World Index (in sterling terms) rose by 3.0% over the same period.
• Portfolio re-organisation. The portfolio was re-organised by Baillie
Gifford & Co in the first week of November. Only five stocks were retained
and the exercise was carried out at a cost of 0.06% of the value
of the underlying securities traded.
• Concentrated equity portfolio and long term global view. The equity
portfolio was built by looking at the attractions of individual companies
on a worldwide basis with a disregard to index weightings. It is
run in a concentrated manner (at the end of April 2004 there were 44 equity
holdings) with the Managers seeking long term growth opportunities.
• Equity portfolio. Themes within the portfolio include:
• a preference for emerging market oil stocks with reserves rather than
those from the developed markets;
• the inclusion of a large holding in a generic pharmaceutical
manufacturing company (Teva of Israel) but no interests in the major
pharmaceutical companies;
• the presence of a number high-end branded goods companies.
• Prospects and gearing. The Managers are optimistic about the prospects for
share price appreciation within the portfolio. They anticipate that
companies in the portfolio can continue to grow cash flows and earnings
over the next five years. This is reflected in the Company having 120.2% of
equity shareholders' funds invested in equities at 30 April 2004.
Potential gearing is 134.5% of shareholders' funds and cash not invested in
equities is held in corporate bonds with similar characteristics to the
outstanding loans.
Edinburgh Worldwide aims to achieve long term capital growth by investing in
stock markets throughout the world. The Trust has total assets of £110 million
(before deduction of loans of £28 million).
Edinburgh Worldwide is managed by Baillie Gifford & Co., the Edinburgh based
fund management group with over £28 billion under management and advice.
11 June 2004
- 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
Mike Lord, Director,
Broadgate Marketing 020 7726 6111
Baillie Gifford & Co. is authorised and regulated by the Financial Services
Authority.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
Interim Report
Global equity markets have made modest progress over the last six months
although this masks some wide swings in sentiment and share prices over the
period. The net asset value rose by 2.2% over the period which compares to a
3.0% rise in the MSCI All Countries World Index (in sterling terms) over the
same period.
Whilst past performance is no guide to the future, the share price rose by 9.6%
to 143p representing a discount of 14.1% to the net asset value at 30 April
2004. At the beginning of the period the discount was standing at 19.8%. The
Directors have declared an interim dividend of 0.50p per share, unchanged from
last year. The interim dividend will be paid on 8 July 2004 to shareholders on
the register on 25 June 2004. The final dividend was partially paid out of
reserves last year and given the shifts in the portfolio described below, the
Directors will consider this year's payment over the remainder of the financial
year.
Portfolio
The portfolio was re-organised in the first week of November after the change of
investment manager to Baillie Gifford & Co. The re-organisation saw only five
stocks retained from the previous equity portfolio and was completed at a cost
of £107,000 which represented 0.06% of the value of the securities traded.
Excluding the reorganisation, turnover in the six months in the equity portfolio
was below 20% on an annualised basis.
The portfolio is now being run in a concentrated manner with the Managers
seeking long-term growth opportunities regardless of where the company is
listed. The portfolio is built by looking at the attractions of individual
companies rather than working backwards from index weightings and this has led
to a large shift in the shape of the portfolio - broadly away from North America
and towards Emerging Markets where 11.9% of assets were invested at the end of
April. This reflects a combination of growth prospects and valuations of
individual companies.
Themes within the portfolio include a preference for emerging over developed oil
stocks with reserves in the former valued at a fraction of the latter and no
major pharmaceutical companies because of worries over drug pricing and
budgetary constraints but a sizeable holding in a generic pharmaceutical
manufacturer. The Trust also owns a number of high-end branded goods companies
which the Managers believe are well placed to exploit strong demand growth in
both developed and emerging economies.
The number of equity holdings at the end of April stood at 44. Whilst such
concentration will lead to volatility of short-term returns, the Board endorses
the Managers' belief that long-term returns should be enhanced by identifying
businesses which ought to be able to deliver good operational results over many
years. At present, the stocks within the portfolio continue to provide such
results and to sell on reasonable valuations.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
Interim Report (Ctd)
With prospects for continued profit growth both in developed and, especially
emerging economies, the Managers are optimistic about the prospects for share
price appreciation within the portfolio as reflected in the Company having
120.2% of equity shareholders' funds invested in equities at 30 April 2004. The
total potential gearing is 134.5% and the cash not in equities has been invested
in various corporate bonds with similar characteristics to the Company's
outstanding loans.
Outlook
Profit growth has been very strong in the last six months reflecting strong
economic activity in the US, a reasonable performance in Europe and continued
growth in Asia fuelled by China combined with a continued focus on cost control.
In this context the moves in global stock markets have been surprisingly modest
with markets worried at what happens next in the twin engines of global growth -
the US and China.
It is inevitable that US interest rates will rise from their current low levels
and it is also highly probable that the Chinese economy will slow somewhat from
its breakneck speed of growth in the second half of this year. Whilst these
short-term factors have impaired market sentiment, they are largely irrelevant
to the long-run prospects of the companies in the portfolio unless interest
rates go far higher than anticipated or China stops growing entirely.
In this context, the Managers' focus remains on the companies. For example, the
holdings in China comprise a toll road operator which should continue to see
very strong traffic growth based on an increase in the number of vehicles and an
oil exploration company which continues to find new reserves in an industry
which is struggling to replace its existing oil. The Managers believe that the
companies elsewhere in the portfolio can continue to grow cashflows and earnings
over the next five to ten years independently of what happens to short-term
interest rates.
By Order of the Board
Baillie Gifford & Co.
11 June 2004
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
The following is the interim statement for the six months ended 30 April 2004
which has been neither reviewed nor audited by the auditors. This statement is
being printed and will be sent to all shareholders on 23 June 2004. Copies will
be available for inspection at the Registered Office of the Company or may be
obtained on request from the Managers and Secretaries after that date.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
for the six months ended for the six months ended for the year ended
30 April 2004 30 April 2003 31 October 2003
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised losses on - (2,301) (2,301) - (13,430) (13,430) - (12,585) (12,585)
investments
Unrealised gains on - 4,247 4,247 - 11,844 11,844 - 21,232 21,232
investments
Currency gains/(losses) - 270 270 - 36 36 - (1,497) (1,497)
Income (note 4) 1,120 - 1,120 1,132 - 1,132 2,251 - 2,251
Investment management fee (76) (229) (305) (79) (237) (316) (161) (482) (643)
Other administrative (211) - (211) (175) - (175) (424) - (424)
expenses
Net return before finance
costs and taxation 833 1,987 2,820 878 (1,787) (909) 1,666 6,668 8,334
Finance costs of (190) (570) (760) (214) (639) (853) (416) (1,242) (1,658)
borrowings
Return on ordinary
activities before
taxation 643 1,417 2,060 664 (2,426) (1,762) 1,250 5,426 6,676
Tax on ordinary (116) 72 (44) (128) 24 (104) (243) 60 (183)
activities
Return on ordinary
activities after taxation 527 1,489 2,016 536 (2,402) (1,866) 1,007 5,486 6,493
Dividends in respect of
equity shares (245) - (245) (245) - (245) (1,078) - (1,078)
Transfer to/(from) 282 1,489 1,771 291 (2,402) (2,111) (71) 5,486 5,415
reserves
Return per ordinary share
(note 5) 1.07p 3.04p 4.11p 1.09p (4.90p) (3.81p) 2.06p 11.19p 13.25p
Dividend per ordinary
share (note 6) 0.50p 0.50p 2.20p
* The revenue 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.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
SUMMARISED BALANCE SHEET
at 30 April 2004
(unaudited)
30 April 30 April 31 October
2004 2003 2003
£'000 £'000 £'000
NET ASSETS
Fixed asset investments 109,309 82,133 85,298
Net liquid assets 347 20,336 23,710
Total assets (before deduction of loan) 109,656 102,469 109,008
Loan (note 2) (28,132) (30,242) (29,255)
81,524 72,227 79,753
CAPITAL AND RESERVES
Called-up share capital 2,450 2,450 2,450
Capital reserves 77,966 68,589 76,477
Revenue reserve 1,108 1,188 826
EQUITY SHAREHOLDERS' FUNDS 81,524 72,227 79,753
NET ASSET VALUE PER ORDINARY SHARE 166.4p 147.4p 162.7p
Ordinary shares in issue (note 3) 49,004,319 49,004,319 49,004,319
DISTRIBUTION OF ASSETS
at 30 April 2004
(unaudited)
30 April 30 April 31 October
2004 2003 2003
% % %
Equities: United Kingdom 14.8 11.7 12.8
Continental Europe 20.5 15.6 13.8
North America 28.7 41.2 36.5
Japan 6.4 5.7 7.5
Asia Pacific 7.0 6.0 7.6
Other Emerging Markets 11.9 - -
Total equities 89.3 80.2 78.2
Sterling denominated bonds 1.3 - -
US$ denominated bonds 6.3 - -
Yen denominated bonds 2.8 - -
Net liquid assets 0.3 19.8 21.8
Total assets (before deduction of loan) 100.0 100.0 100.0
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
30 April 30 April 31 October
2004 2003 2003
£'000 £'000 £'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 348 498 1,200
NET CASH OUTFLOW FROM SERVICING OF FINANCE (785) (863) (1,687)
TOTAL TAX PAID (47) (96) (176)
FINANCIAL INVESTMENT
Acquisitions of investments (113,407) (22,448) (55,196)
Disposals of investments 91,342 29,979 64,716
Realised currency (loss)/profit (40) 37 -
NET CASH (OUTFLOW)/INFLOW FROM FINANCIAL (22,105) 7,568 9,520
INVESTMENT
EQUITY DIVIDENDS PAID (833) (833) (1,078)
NET CASH INFLOW BEFORE USE OF LIQUID RESOURCES (23,422) 6,274 7,779
NET CASH INFLOW/(OUTFLOW) FROM USE OF LIQUID
RESOURCES 21,409 (6,631) (12,671)
DECREASE IN CASH (2,013) (357) (4,892)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET
DEBT
Decrease in cash in the period (2,013) (357) (4,892)
(Decrease)/increase in short term investments (21,409) 6,631 12,671
Exchange movement 270 384 (126)
MOVEMENT IN NET DEBT IN THE PERIOD (23,152) 6,658 7,653
NET DEBT AT 1 NOVEMBER (4,353) (12,006) (12,006)
NET DEBT AT 30 APRIL/31 OCTOBER (27,505) (5,348) (4,353)
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
PORTFOLIO AND EQUITY PERFORMANCE
at 30 April 2004
(unaudited)
Market % of total Performance+
value assets
£'000
Name Business Absolute Relative
Imperial Tobacco Tobacco 4,072 3.7 28.4 26.8
Golden West Financial Savings and loans bank 4,053 3.7 (2.7) (4.0)
Moody's Bond rating agency 3,882 3.5 5.2 3.9
Samsung Electronics Electronics manufacturer 3,790 3.5 11.2 9.8
Vodafone Mobile telecommunication services 3,551 3.2 11.8 10.4
Canon Copiers and cameras 2,959 2.7 (1.3) (2.6)
Atlas Copco Engineering 2,911 2.6 (4.2) (5.5)
Progressive Ohio Non-prime insurance 2,719 2.5 9.8 8.4
Gazprom Gas producer 2,718 2.5 9.5 8.2
Microsoft PC software 2,709 2.5 (5.1) (6.3)
Wal-Mart Discount retailer 2,625 2.4 (8.0) (9.2)
Lukoil Integrated oil company 2,561 2.3 15.1 13.7
BMW Automobiles 2,530 2.3 (2.0) (3.2)
Porsche Automobiles 2,516 2.3 17.0 15.6
Teva Pharmaceuticals Generic drugs manufacturer 2,476 2.3 0.7 (0.6)
SAP Business software 2,416 2.2 (2.2) (3.4)
Ericsson Telecommunications equipment 2,401 2.2 53.9 51.9
Mitsui Sumitomo Non-life insurance 2,177 2.0 5.3 3.9
William Wrigley Chewing gum manufacturer 2,143 1.9 4.7 3.4
M &T Bank Banking 2,099 1.9 (16.5) (17.5)
Wellpoint Managed care operator 1,974 1.8 19.3 17.8
Zhejiang Expressway Toll road operator 1,967 1.8 (7.6) (8.8)
Arisawa Manufacturing Electronic materials 1,948 1.8 17.5 16.1
McCarthy & Stone Retirement home builder 1,948 1.8 15.3 13.9
Omnicom Advertising agency 1,931 1.8 (5.7) (6.9)
CNOOC Oil and gas exploration 1,883 1.7 (16.0) (17.1)
Petrobras Integrated oil company 1,869 1.7 14.3 12.9
Wolseley Building materials 1,841 1.7 13.8 12.3
TopDanmark Insurance 1,837 1.7 14.6 13.1
Jardine Lloyd Thompson Insurance broker 1,809 1.6 (11.5) (12.6)
Hermes Luxury goods 1,774 1.6 6.5 5.1
Norilsk Nickel Mining 1,768 1.6 (0.3) (1.5)
L'Oreal Personal care products 1,667 1.5 (3.6) (4.8)
Banco Popular Espanol Commercial bank 1,661 1.5 3.4 2.1
CVRD Mining 1,631 1.5 (8.5) (9.7)
Mahawk Industries Carpet wholesaler 1,622 1.5 (1.5) (2.8)
BHP Billiton Diversified resources 1,545 1.4 (5.1) (6.3)
Walgreen Pharmacy chain 1,530 1.4 (7.8) (9.0)
Taylor Nelson Sofres Market research services 1,482 1.3 (9.1) (10.2)
H & R Block Tax and mortgage services 1,467 1.3 (10.4) (11.6)
Nokia Mobile telecommunications equipment 1,428 1.3 (22.3) (23.3)
ABB Electrical and power equipment 1,394 1.3 14.3 12.8
Carnival Cruise ship operator 1,384 1.3 16.0 14.6
Tiffany Jeweller 1,290 1.2 (22.3) (23.3)
Total Equity Investments 97,958 89.3
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
PORTFOLIO AND EQUITY PERFORMANCE (Ctd)
at 30 April 2004
(unaudited)
Market % of total Performance+
value assets
£'000
Name Business Absolute Relative
Total Equity Investments (brought forward) 97,958 89.3
Fixed Interest
Sterling denominated bonds 1,421 1.3
US$ denominated bonds 6,836 6.3
Yen denominated bonds 3,094 2.8
Total Fixed Interest 11,351 10.4
Total Investments 109,309 99.7
Net Liquid Assets 347 0.3
Total Assets at Market Value (before deduction of loan) 109,656 100.0
+The portfolio was reorganised on 3 November 2003. Absolute and relative
performance has been calculated over the period from 4 November 2003 to 30
April 2004. Absolute performance is in sterling terms; relative performance is
against MSCI All Countries World Index in sterling terms (source: Thomson
Financial Datastream).
Past performance is no guarantee of future performance.
EDINBURGH WORLDWIDE INVESTMENT TRUST plc
NOTES
1. The financial statements for the six months to 30 April 2004 have been prepared on the basis of the
accounting policies set out in the Company's Annual Financial Statements at 31 October 2003.
The Interim Report was approved by the Board on 11 June 2004.
None of the views expressed in this document should be construed as advice to buy or sell a
particular investment.
2. The loan includes US$31.25 million, Y1,313.2 million and £3.8 million drawn down under a
multi-currency loan facility with ING Bank N.V. (31 October 2003 and 30 April 2003 - US$31.25
million, Y1,313.2 million and £3.8 million). The loan is due for repayment in July 2008.
3. On 29 January 1999 authority was first granted to the Company to buy back its ordinary shares
(equivalent to 14.99% of its issued share capital at that date). The authority has been renewed at
each subsequent AGM and was last renewed at the AGM on 2 February 2004 in respect of 7,345,747
ordinary shares (equivalent to 14.99% of its issued share capital at that date). In the six months
to 30 April 2004 no ordinary shares were bought back therefore the Company's authority remains
unchanged at 7,345,747 ordinary shares.
30 April 30 April 31 October
2004 2003 2003
£'000 £'000 £'000
4. Income
Income from investments and interest receivable 1,120 1,132 2,251
5. Return per ordinary share
Revenue return 527 536 1,007
Capital return 1,489 (2,402) 5,486
Return per ordinary share is based on the above totals of revenue and capital and on 49,004,319
ordinary shares, being the number of ordinary shares in issue during each period.
6. The interim dividend will be paid on 8 July 2004 to all shareholders on the register at the close of
business on 25 June 2004. The ex dividend date is 23 June 2004.
7. The financial information for the year ended 31 October 2003 has been extracted from the statutory
accounts which have been filed with the Registrar of Companies and which contain an unqualified
Auditors' Report.
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