Interim Results

Edinburgh Worldwide Inv Trust PLC 08 June 2007 EDINBURGH WORLDWIDE INVESTMENT TRUST plc Results for the six months to 30 April 2007 Over the six month period net asset value (NAV) per share rose by 8.4%(1) while the MSCI All Countries World Index (in sterling terms) rose by 6.4%. Over the three and a half years that Baillie Gifford has been managing Edinburgh Worldwide, NAV per share has risen by 68.3%(2) and the index by 42.3%. • Equity exposure increased following market weakness in February. Additional purchases were made of Gazprom, Petrobras, Samsung, Sandvik, eBay and Pool on share price weakness. The purchases were funded with the sale of bond holdings and resulted in an increase in the level of equity gearing. • Turnover of investments remains low. The turnover of equity investments remains low at 6% on an annualised basis. The portfolio is relatively concentrated with 38 equity holdings selected on a global basis for their long term growth prospects. Holdings in Patterson Companies and Getty Images were sold and a purchase was made of Novozymes, a Danish manufacturer of enzymes. • Earnings and Dividend. Earnings per share were 1.30p (0.89p) and the interim dividend is unchanged at 0.50p. • Outlook The Managers are confident about the long term prospects for the individual stocks held. Global economic expansion may continue for a long period driven by the sustained and rapid growth of developing economies. Edinburgh Worldwide aims to achieve long term capital growth by investing in stock markets throughout the world. The Trust has total assets of £159 million (before deduction of loans of £25 million). Edinburgh Worldwide is managed by Baillie Gifford & Co, the Edinburgh based fund management group with around £53 billion under management and advice as at 7 June 2007. 1. After deducting borrowings at fair value. 2. After deducting borrowings at par. - ends - 8 June 2007 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 EDINBURGH WORLDWIDE INVESTMENT TRUST plc Interim Report Global equity markets have made steady progress over the six months from November 2006 to April 2007. Edinburgh Worldwide's net asset value, after deducting borrowings at fair value, rose by 8.4% over the period which compares to a 6.4% rise in the MSCI All Countries World Index over the same period. These increases mask a period of considerable volatility around the end of February and start of March and we used this turbulence to increase the Company's gearing. The share price over the six months rose by 3.4% to 242p representing a discount of 11.4% to the net asset value at 30 April 2007. At the beginning of the period the discount was standing at 7.2%. Whilst we are disappointed that the discount has widened over the six months, we believe that the best mechanism to narrow it in the longer-term is continued NAV outperformance and this remains the Managers' prime focus. The Directors have declared an interim dividend of 0.50p per share, unchanged from last year. The interim dividend will be paid on 5 July 2007 to shareholders on the register on 22 June 2007. The final dividend was 1.50p last year and the Directors will consider this year's payment over the remainder of the financial year. Review At almost certain risk of hyperbole, we may look back in years to come on Tuesday 27 February 2007 as something of a watershed in the history of financial markets - it was the day on which the Chinese market sneezed and Wall Street caught a cold turning the old adage of American-led world stockmarkets on its head. The sharp falls in Beijing added to anxiety over the sub-prime mortgage situation in the USA. However, the alacrity with which many market participants and commentators pointed to a turning point in sentiment was, as always, startling despite the fact that the local Chinese market is heavily dominated by local speculation and had enjoyed a spectacular run over the previous few months. The subsequent steadying of markets which has left most indices above where they started their fall arguably attests to the passage of time lending more balance to the above snap reaction. We always find it useful at times of rising fear to ask if anything fundamental has happened and our answer on this occasion is a resounding no in the case of the Chinese economy but a probable yes in terms of the severity of the impact of the US housing slowdown. It is interesting to go back to the 1950's and 1960's for some historic context - between 1950 and 1965 annual economic growth averaged 7% in Germany and 9% in Japan. We believe that there remains scope for the much more populous nations of China and India to sustain their current rates of growth for many years to come as the scope for catch-up in incomes is huge - incomes per capita are $1,500 in China and $800 in India versus $40,000 in the US. Such economic growth can often lead to local market excesses but it does also provide tremendous long-term investment potential. It increasingly appears to us that the drivers of world economic growth are moving away from the traditional drivers of the G8 economies and we may well be living through a period of economic history where the long-standing dominance of the US economy and consumer is starting to yield to a more balanced global picture. EDINBURGH WORLDWIDE INVESTMENT TRUST plc Interim Report (Ctd) Our reaction to the steep declines at the end of February was to increase our gearing. Having considered drawing down some of our revolving facility, we decided instead to sell the corporate bonds other than Bay Haven which is a special situation related to disaster reinsurance. The time to maturity on these bonds was less than eighteen months in line with our outstanding borrowings and our view is that at current valuations there is little value in corporate bonds. We invested some of the cash raised in additions to names hit by the February sell-off - Gazprom, Petrobras, Samsung, Sandvik, eBay and Pool - and a new holding in Novozymes - a Danish manufacturer of enzymes. Portfolio The portfolio has been relatively stable since October 2006 with equity turnover of 6% annualised in the six months to April 2007 well below our aim of keeping annual turnover around 20%. It remains concentrated with 38 equity holdings at the end of the period. We have continued to make some occasional additions to stocks when we feel that the market is affording us an opportunity as discussed above. Other transactions during the six month period were the sale of Patterson Companies where we think increased competition has diminished the growth opportunity and Getty Images where the price deflation evident in on-line photographic prices is overwhelming the volume growth in the use of these photographs. We also made a reduction to our holding in Hermes - the luxury goods manufacturer - after strong share price performance had led to an increased valuation. Operationally the highlights over the last six months include strong figures and cash returns from both Atlas Copco and Sandvik - both Scandinavian engineering companies - which are benefiting from precisely the economic changes described above and continued strong growth in internet retailing which has translated into very strong top and bottom line growth for Amazon and eBay. Several of our companies have been involved in corporate activity including Ericsson and Straumann. Most notable was the purchase by Whole Foods of its competitor Wild Oats - a deal which we believe meets most of the criteria one should look for in an acquisition. We continue to have confidence in the prospects for continued profit and cash-flow growth for Edinburgh Worldwide's stocks. When combined with reasonable valuations, this makes the Managers optimistic about the prospects for share price appreciation within the portfolio as reflected in the Company having 115% of equity shareholders' funds invested in equities at the 30 April 2007. We will continue to try to focus on the long-term success of our companies and use any short-term macro noise to our advantage. By order of the Board Baillie Gifford & Co 7 June 2007 EDINBURGH WORLDWIDE INVESTMENT TRUST plc The following is the interim statement for the six months ended 30 April 2007 which has been neither reviewed nor audited by the auditors. This statement is being printed and will be sent to all shareholders on 15 June 2007. 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 INCOME STATEMENT * (unaudited) for the six months ended for the six months ended for the year ended 30 April 2007 30 April 2006 31 October 2006 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Realised (losses)/gains on investments - (2,061) (2,061) - 8,901 8,901 - 13,652 13,652 Unrealised gains on investments - 11,891 11,891 - 12,450 12,450 - 2,612 2,612 Currency gains - 1,192 1,192 - 507 507 - 1,751 1,751 Income (note 2) 1,386 - 1,386 1,100 - 1,100 2,116 - 2,116 Investment management fee (123) (368) (491) (140) (421) (561) (253) (758) (1,011) Investment performance fee - (34) (34) - (234) (234) - (83) (83) Other administrative expenses (195) - (195) (203) - (203) (399) - (399) Net return before finance costs and taxation 1,068 10,620 11,688 757 21,203 21,960 1,464 17,174 18,638 Finance costs of borrowings (177) (530) (707) (195) (584) (779) (382) (1,146) (1,528) Net return on ordinary activities before taxation 891 10,090 10,981 562 20,619 21,181 1,082 16,028 17,110 Tax on ordinary (252) 177 (75) (128) 63 (65) (265) 135 (130) activities Net return on ordinary activities after taxation 639 10,267 10,906 434 20,682 21,116 817 16,163 16,980 Net return per ordinary share (note 3) 1.30p 20.95p 22.25p 0.89p 42.20p 43.09p 1.67p 32.98p 34.65p Dividends paid and proposed per ordinary share (note 4) 0.50p 0.50p 2.00p * The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above 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 (unaudited) At 30 April At 30 April At 31 October 2007 2006 2006 £'000 £'000 £'000 FIXED ASSETS Investments held at fair value 156,417 155,741 148,870 CURRENT ASSETS Debtors 586 613 1,629 Cash and short term deposits 3,266 389 3,934 3,852 1,002 5,563 CREDITORS Amounts falling due within one year (1,141) (1,008) (4,335) NET CURRENTASSETS/(LIABILITIES) 2,711 (6) 1,228 TOTAL ASSETS LESS CURRENT LIABILITIES 159,128 155,735 150,098 CREDITORS Amounts falling due after more than one year (note 5) (24,921) (27,318) (26,062) 134,207 128,417 124,036 CAPITAL AND RESERVES Called-up share capital 2,450 2,450 2,450 Share premium 82,180 82,180 82,180 Special reserve 35,220 35,220 35,220 Capital reserve - realised (36,897) (38,195) (34,132) Capital reserve - unrealised 50,036 45,586 37,004 Revenue reserve 1,218 1,176 1,314 EQUITY SHAREHOLDERS' FUNDS 134,207 128,417 124,036 NET ASSET VALUE PER ORDINARY SHARE (After deducting borrowings at fair value) (note 5) 273.16p 258.94p 252.02p NET ASSET VALUE PER ORDINARY SHARE (After deducting borrowings at par value) 273.87p 262.05p 253.11p Ordinary shares in issue (note 6) 49,004,319 49,004,319 49,004,319 EDINBURGH WORLDWIDE INVESTMENT TRUST plc RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited) For the six months ended 30 April 2007 Called-up Capital Capital Revenue Equity share Share Special reserve - reserve - reserve shareholders' capital premium reserve 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 Return on ordinary activities after taxation - - - (2,765) 13,032 639 10,906 Dividends paid during the period# - - - - - (735) (735) Shareholders' funds at 30 April 2007 2,450 82,180 35,220 (36,897) 50,036 1,218 134,207 For the six months ended 30 April 2006 Called-up Capital Capital Revenue Equity share Share Special reserve - reserve - reserve shareholders' capital premium reserve 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 Return on ordinary activities after taxation - - - 7,725 12,957 434 21,116 Dividends paid during the period# - - - - - (735) (735) Shareholders' funds at 30 April 2006 2,450 82,180 35,220 (38,195) 45,586 1,176 128,417 For the year ended 31 October 2006 Called-up Capital Capital Revenue Equity share Share Special reserve - reserve - reserve shareholders' capital premium reserve 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 Return on ordinary activities after taxation - - - 11,788 4,375 817 16,980 Dividends paid during the year# - - - - - (980) (980) Shareholders' funds at 31 October 2006 2,450 82,180 35,220 (34,132) 37,004 1,314 124,036 # See note 4. EDINBURGH WORLDWIDE INVESTMENT TRUST plc SUMMARISED CASH FLOW STATEMENT (unaudited) Six months to Six months to Year 30 April 30 April to 2007 2006 31 October 2006 £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 408 (685) (82) Net cash outflow from servicing of finance (737) (797) (1,554) Total tax paid (67) (64) (128) Net cash inflow from financial investment 463 2,365 6,373 Equity dividends paid (note 4) (735) (735) (980) (DECREASE)/INCREASE IN CASH (668) 84 3,629 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (Decrease)/increase in cash in the period (668) 84 3,629 Exchange movement on bank loan 1,141 507 1,763 MOVEMENT IN NET DEBT IN THE PERIOD 473 591 5,392 Net debt at start of the period (22,128) (27,520) (27,520) NET DEBT AT END OF THE PERIOD (21,655) (26,929) (22,128) RECONCILIATION OF NET REVENUE BEFORE FINANCE COSTS AND TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES Net revenue before finance costs and taxation 11,688 21,960 18,638 Gains on investments (9,830) (21,351) (16,264) Currency gains (1,192) (507) (1,751) Amortisation of fixed income book cost 15 45 73 Changes in debtors and creditors (273) (832) (778) NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 408 (685) (82) DISTRIBUTION OF ASSETS (unaudited) 30 April 2007 30 April 2006 31 October 2006 % % % Equities: United Kingdom 1.7 3.6 1.8 Continental Europe 29.0 19.7 24.3 North America 31.6 37.8 35.0 Japan 5.5 3.8 5.5 Asia Pacific 4.4 4.7 4.6 Emerging Markets 25.2 23.7 23.8 Total equities 97.4 93.3 95.0 Sterling bonds - 0.9 0.8 US$ bonds 0.9 4.0 2.2 Yen bonds - 1.8 1.2 Net liquid assets/(liabilities) 1.7 - 0.8 Total assets (before deduction of loan) 100.0 100.0 100.0 EDINBURGH WORLDWIDE INVESTMENT TRUST plc PORTFOLIO AND EQUITY PERFORMANCE at 30 April 2007 (unaudited) Fair value % of total Performance+ Name Business £'000 assets Absolute % Relative% Equities CVRD Iron ore mining 8,855 5.6 51.3 40.8 Atlas Copco* Industrial compressors and mining equipment 8,799 5.5 27.8 18.8 Porsche* Luxury automobiles 7,193 4.5 38.8 29.0 Moody's* Bond rating agency 6,356 4.0 (4.7) (11.4) Sandvik Engineering 6,286 4.0 54.4 43.6 Petrobras* Oil exploration and production 6,064 3.8 12.2 4.4 Canon* Printers, copiers and cameras 5,978 3.8 1.4 (5.7) SAP* Business software 5,608 3.5 (7.2) (13.7) Gazprom* Gas exploration and production 5,579 3.5 (10.8) (17.1) eBay Internet auction 5,155 3.2 0.8 (6.3) Samsung Electronics* Electronics manufacturer 4,619 2.9 (8.6) (15.0) Infosys Technologies Software company 4,229 2.7 2.0 (5.1) Teva Pharmaceuticals* Generic drugs manufacturer 4,214 2.7 11.3 3.5 Pulte Homes American house builder 4,203 2.6 (17.0) (22.8) Lukoil* Oil exploration and production 3,757 2.4 (7.2) (13.7) Housing Development Finance Corporation Mortgage bank 3,695 2.3 17.6 9.3 Amazon.com Online retailer 3,616 2.3 53.6 42.8 Banco Itau Retail and commercial bank 3,607 2.3 12.7 4.8 Straumann Dental implants 3,579 2.3 24.1 15.5 Microsoft* Software products 3,561 2.2 0.0 (7.0) VCA Antech Animal hospitals and 3,555 2.2 16.2 8.0 diagnostics Hermes* Luxury goods 3,401 2.1 27.1 18.2 Whole Foods Market Organic food chain 3,245 2.0 (29.4) (34.3) Essilor Opthalmology 3,141 2.0 9.9 2.2 Ericsson* Telecommunications equipment 3,046 1.9 (0.8) (7.8) Carnival Cruise ship operator 3,044 1.9 (3.4) (10.2) Pool Swimming pool supplies 2,995 1.9 (6.1) (12.7) Omnicom* Advertising agency 2,951 1.9 (1.2) (8.1) Yamada Denki Consumer electronics retailer 2,764 1.7 (10.2) (16.5) L'Oreal Personal care 2,705 1.7 17.9 9.7 Wolseley* Builders' merchant 2,699 1.7 (1.2) (8.1) Progressive Ohio* Auto insurance 2,541 1.6 (8.9) (15.3) Zhejiang Expressway Toll-road operator 2,431 1.5 16.1 7.9 Novozymes Enzyme manufacturer 2,370 1.5 23.0** 16.1** Iron Mountain Document management services 2,353 1.5 (7.3) (13.8) Walgreen* Pharmacy chain 2,286 1.4 (3.9) (10.6) William Wrigley* Chewing gum manufacturer 2,266 1.4 9.1 1.4 M & T Bank* Retail banking 2,171 1.4 (12.1) (18.3) Total Equities 154,917 97.4 EDINBURGH WORLDWIDE INVESTMENT TRUST plc PORTFOLIO AND EQUITY PERFORMANCE (Ctd) at 30 April 2007 (unaudited) Fair value % of total £'000 assets Name Fixed interest US$ denominated bonds Bay Haven C FRN 2009 1,500 0.9 Total fixed interest 1,500 0.9 Total Investments 156,417 98.3 Net Current Assets 2,711 1.7 Total Assets at Fair Value (before deduction of loan) 159,128 100.0 + Absolute and relative performance has been calculated over the period 1 November 2006 to 30 April 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 1. The financial statements for the six months to 30 April 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 Interim Report was approved by the Board on 7 June 2007. None of the views expressed in this document should be construed as advice to buy or sell a particular investment. 30 April 30 April 31 October 2007 2006 2006 £'000 £'000 £'000 2. Income Income from investments and interest receivable 1,386 1,100 2,116 3. Return per ordinary share Revenue return 639 434 817 Capital return 10,267 20,682 16,163 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. There are no dilutive or potentially dilutive shares in issue. Six months to Six months to Year to 30 April 30 April 31 October 2007 2006 2006 £'000 £'000 £'000 4. Dividends Amounts recognised as distributions in period: Final dividend for the year ended 31 October 2006 of 1.50p (2005 - 1.50p), paid 2 February 2007 735 735 735 Interim dividend for the year ending 31 October 2006 of 0.50p, paid 6 July 2006 - - 245 735 735 980 Interim dividend for the year ending 31 October 2007 of 0.50p (2006 - 0.50p) 245 245 245 The interim dividend was declared after the period end date and has therefore not been included as a liability in the balance sheet. It is payable on 5 July 2007 to shareholders on the register at the close of business on 22 June 2007. The ex dividend date is 20 June 2007. 5. 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. (30 April 2006 and 31 October 2006 - US$31.25 million, Y1,313.2 million and £3.8 million). The loan is due for repayment in July 2008. Net asset value per ordinary share (after deducting borrowings at fair value) was 273.16p (30 April 2006 - 258.94p and 31 October 2006 - 252.02p). The fair value of borrowings at 30 April 2007 was £25,269,000 (30 April 2006 - £28,845,000 and 31 October 2006 - £26,596,000). EDINBURGH WORLDWIDE INVESTMENT TRUST plc NOTES (Ctd) 6. 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 1 February 2007 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 2007 no ordinary shares were bought back therefore the Company's authority remains unchanged at 7,345,747 ordinary shares. 7. Transaction costs incurred on the purchase and sale of the investments are added to the purchase cost or deducted from the sale proceeds, as appropriate. During the period, transaction costs on purchases amounted to £6,000 (30 April 2006 - £32,000; 31 October 2006 - £58,000) and transaction costs on sales amounted to £6,000 (30 April 2006 - £25,000; 31 October 2006 - £36,000). 8. The financial information contained within this Interim Report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year ended 31 October 2006 has been extracted from the statutory accounts which have been filed with the Registrar of Companies and contain an unqualified Auditors' Report and do not contain a statement under sections 237 (2) or (3) of the Companies Act 1985. 9. The Interim Report will be available on the Managers' website www.bailliegifford.com on or around 16 June 2007. This information is provided by RNS The company news service from the London Stock Exchange DIID

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