Interim Results
Mid Wynd Inter Inv Trust PLC
17 February 2004
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
Results for the six months to 31 December 2003
17 February 2004
Mid Wynd's net asset value rose by 10.3% which compares with a rise in the
Company's comparative index (FTSE World Index in sterling terms) of 9.8%.
• Increased exposure to equities, particularly Financials, at the expense of
Bonds helped relative performance over the period.
• Cumulative exposure to Japan, Asia Pacific and Other Emerging Markets
increased significantly, whilst an underweight position was maintained in
American equities. Exposure to Bonds decreased markedly further and
represents 8.4% of the overall portfolio.
• Despite a decline in first half earnings as a consequence primarily of
allocation changes the interim dividend has been maintained at 3.70p.
The objective of Mid Wynd International Investment Trust PLC is to achieve
capital and income growth by investing on a worldwide basis. The Company has
total assets of £34.4m (before deduction of bank loans).
Mid Wynd is managed by Baillie Gifford & Co., the leading independent Edinburgh
based fund management group with around £26 billion under management and advice.
- ends -
For further information please contact:
Michael MacPhee, Manager
Mid Wynd International Investment Trust PLC 0131 275 2000
Mike Lord, Director
Broadgate Marketing 020 7726 6111
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
Interim Report
Over the six months to 31 December 2003 the Trust's net asset value per share
rose 10.3% to 651.4p. This is marginally ahead of the rise in the FTSE World
Index (in sterling terms) of 9.8% and represents an improvement on the rather
disappointing period between March and June last year. The main feature of the
period is the continuing switch from bonds to equities that has been in train
since November 2002. A secondary influence has been the weakness of the US
dollar and the relative weakness of the American equity market in which we are
underweight on the basis of its generally high valuation.
Last year at this time we were witnessing a struggle between the force of policy
stimulus and the burden of high indebtedness following a period of individual
and corporate over-exuberance. This year one might be forgiven for thinking that
the battle is won - America's growth rate has recovered dramatically, Japan
seems to be growing at last and Asia, especially China, is booming. Britain
continues to grow steadily, and continental Europe is recovering slowly into the
teeth of a very strong currency. Emerging nations are enjoying rising commodity
prices, strong local currencies and, in many cases, good flows of inward
investment.
The popular word to describe this transformation is re-flation, although thus
far this has meant recovery without inflation. The absence or otherwise of
inflationary pressure is likely to be critical in determining the outlook for
equity markets over the next year or so. If interest rates stay low and growth
continues to pick up, as is widely expected, equities should do well. Companies
are lean and many have restructured. Demand is rebounding. The benefits of this
to profits should favourably surprise analysts so long as costs remain under
control. Low interest rates, low inflation and a lack of convincing alternative
investments help to underpin valuations.
As with any firm consensus, however, it is sensible to explore alternatives.
Policy incontinence to the extent being experienced in America today is
virtually unprecedented. Latin America has experimented with similar strategies
in its past in order to try to sustain a high growth rate. For what it may be
worth, the result there has mostly been high volatility, especially of
currencies, but also of the other main variables - budget deficits, trade
accounts, inflation and nominal and real interest rates. This has ultimately
produced poor growth, periods of intense capital starvation and frequent
financial crises. American policymakers are playing with fire. Support from
foreign central banks has helped to temper the fall of the dollar, however, and
the banking system is well capitalised. Nevertheless, the fear is that inflation
and rising interest rates will be the inevitable outcome of present policies and
any further loss of credibility of the dollar might engender both.
The good news is that a weak dollar is a boon to many. Emerging markets and
commodity stocks look healthy. Developed world manufacturers are faced with the
choice of dramatically increasing productivity or relocating plants to China or
India. In either case this will imply a capital spending rebound. Relocation (or
globalisation) expands trade flows, and shipping rates are rising in tandem.
Asian countries which have endured generations of saving and export stimulus can
finally enjoy higher domestic consumption. Indeed, we need them to do so. The US
trade deficit should diminish and Anglo-Saxon consumers, heavily indebted, may
look forward to the prospect of seeing their debt burdens reduced by inflation.
This second path is less obviously good for equities and would be bad for bonds
(with the exception of index-linked securities).
A third possibility is that growth stalls. Consumers become weary, monetary and
fiscal ceilings are hit and jobs remain elusive. Investment in improving
productivity thrives but volumes and revenues fail to grow. This, broadly
speaking, is the Japan of the last 15 years and would spell a very different
outcome, making for strong bond returns and seeing equities, by and large,
wither on the vine. We must hope that this third way has become less likely
whilst remaining ready to adapt should events again start to point in that
direction.
Overall, given that the first outcome is perhaps the most plausible, and the
third unlikely, we remain committed to prospects for equities with recent
investments tending to derive in areas which benefit from reflation. Whilst
valuations appear full at present, earnings progress may yet be dramatic.
Earnings for the first half have fallen to 2.96p (4.10p) per share. This
reflects a falling bond allocation and a move to lower yielding equities,
together with a rising management fee as a result of the rise in NAV. At this
stage, it looks as if earnings per share this year will fall short of the 10.60p
earned in the year to June 2003, but the Board has decided to maintain the
interim dividend, which will be paid on 7 April 2004 to shareholders on the
register on 12 March, at last year's level of 3.70p.
By order of the Board
Baillie Gifford & Co
16 February 2004
The following is an interim statement for the six months ended 31 December 2003
which has been neither reviewed nor audited by the auditors. This statement is
being printed and will be sent to all shareholders on 23 February 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.
MID WYND INTERNATIONAL 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
31 December 2003 31 December 2002 30 June 2003
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised gains/(losses)
on investments - 147 147 - (2,154) (2,154) - (2,410) (2,410)
Unrealised gains/(losses) - 2,916 2,916 - (2,402) (2,402) - 170 170
on investments
Currency gains (note 3) - 76 76 - 86 86 - 104 104
Income (note 4) 297 - 297 368 - 368 887 - 887
Investment management fee (43) (43) (86) (36) (36) (72) (75) (75) (150)
Other administrative (82) - (82) (82) - (82) (137) - (137)
expenses
Net return before finance
costs and taxation 172 3,096 3,268 250 (4,506) (4,256) 675 (2,211) (1,536)
Finance costs of (6) (6) (12) (2) (2) (4) (6) (6) (12)
borrowings
Return on ordinary
activities before taxation 166 3,090 3,256 248 (4,508) (4,260) 669 (2,217) (1,548)
Tax on ordinary (17) 9 (8) (42) 11 (31) (136) 25 (111)
activities
Return on ordinary
activities after taxation 149 3,099 3,248 206 (4,497) (4,291) 533 (2,192) (1,659)
Dividends in respect of
equity shares (186) - (186) (186) - (186) (463) - (463)
Transfer (from)/to (37) 3,099 3,062 20 (4,497) (4,477) 70 (2,192) (2,122)
reserves
Return per ordinary share
(note 5) 2.96p 61.65p 64.61p 4.10p (89.44p) (85.34p) 10.60p (43.60p) (33.00p)
Dividend per ordinary
share (note 6) 3.70p 3.70p 9.20p
* The revenue 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.
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
SUMMARISED BALANCE SHEET
at 31 December 2003
(unaudited)
31 December 2003 31 December 2002 30 June
2003
£'000 £'000 £'000
NET ASSETS
Fixed asset investments 34,247 28,764 31,123
Net liquid assets 179 349 302
Total assets (before deduction of bank loans) 34,426 29,113 31,425
Bank loans (note 2) (1,676) (1,780) (1,737)
32,750 27,333 29,688
CAPITAL AND RESERVES
Called-up share capital 1,257 1,257 1,257
Capital reserves 30,851 25,447 27,752
Revenue reserve 642 629 679
EQUITY SHAREHOLDERS' FUNDS 32,750 27,333 29,688
NET ASSET VALUE PER ORDINARY SHARE 651.4p 543.6p 590.5p
Ordinary shares in issue 5,027,766 5,027,766 5,027,766
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 December 2003 31 December 2002 30 June 2003
£'000 £'000 £'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 278 239 586
NET CASH OUTFLOW FROM SERVICING OF FINANCE (11) (7) (10)
TOTAL TAX PAID (12) - (59)
FINANCIAL INVESTMENT
Acquisitions of investments (9,548) (7,551) (12,637)
Disposals of investments 9,515 7,278 12,287
Realised currency profit/(loss) 24 5 (30)
NET CASH OUTFLOW FROM FINANCIAL INVESTMENT (9) (268) (380)
EQUITY DIVIDENDS PAID (277) (267) (453)
NET CASH OUTFLOW BEFORE FINANCING (31) (303) (316)
FINANCING
Bank loans drawn down 930 - 917
Bank loans repaid (939) - (907)
NET CASH (OUTFLOW)/INFLOW FROM FINANCING (9) - 10
DECREASE IN CASH (40) (303) (306)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET DEBT
Decrease in cash in the period (40) (303) (306)
Net cash outflow/(inflow) from bank loans 9 - (10)
Exchange movement 52 81 134
MOVEMENT IN NET DEBT IN THE PERIOD 21 (222) (182)
NET DEBT AT 1 JULY (1,336) (1,154) (1,154)
NET DEBT AT 31 DECEMBER/30 JUNE (1,315) (1,376) (1,336)
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
TWENTY LARGEST EQUITY HOLDINGS
at 31 December 2003
Name Business Market % of total
value£'000 assets
Baillie Gifford Pacific Fund Investment fund - Asia 2,064 6.0
* Golden West Financial Savings and loans 922 2.7
* Altria Group Tobacco, food and beer 723 2.1
Vodafone Group Mobile telecommunication services 693 2.0
* Omnicom Advertising agency 683 2.0
GlaxoSmithKline Pharmaceuticals 587 1.7
* Pfizer Pharmaceuticals 553 1.6
Imperial Tobacco Group Tobacco 550 1.6
* Nokia Mobile telecommunications equipment 533 1.6
* Moody's Bond rating agency 528 1.5
* Automatic Data Payroll processing 443 1.3
* Suncor Energy Oil company 421 1.2
* Wyeth Pharmaceuticals 420 1.2
+ MAC Japan Active Shareholder Shareholder activist fund 415 1.2
Fund Limited Partnership
* Sanofi-Synthelabo Pharmaceuticals 403 1.2
* Total Integrated oil 389 1.1
* L'Oreal Personal care 375 1.1
BP Integrated oil 374 1.1
* Patterson Dental Dental products and supplies 357 1.0
* Freddie Mac Mortgages 337 1.0
11,770 34.2
* primary listing outwith the UK
+ unlisted security
DISTRIBUTION OF ASSETS
at 31 December 2003
(unaudited)
31 December 2003 31 December 2002 30 June 2003
% % %
Equities: United Kingdom 16.1 16.6 16.6
Continental Europe 21.3 17.1 18.3
North America 29.6 27.3 28.0
Japan 12.2 8.4 8.8
Asia Pacific 8.6 3.6 4.7
Other Emerging Markets 3.3 2.7 2.3
Total equities 91.1 75.7 78.7
Sterling bonds 3.8 6.7 6.4
Euro bonds 4.6 16.4 13.9
Net liquid assets 0.5 1.2 1.0
Total assets (before deduction of bank 100.0 100.0 100.0
loans)
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
NOTES
1. The financial statements for the six months to 31 December 2003 have been
prepared on the basis of the accounting policies set out in the Company's
Annual Financial Statements at 30 June 2003.
The Interim Report was approved by the Board on 16 February 2004.
None of the views expressed in this document should be construed as advice
to buy or sell a particular investment.
2. A one year multi-currency loan facility has been arranged with The Bank of
New York. At 31 December 2003 there were outstanding drawings of US$3
million (31 December 2002 - Y340 million; 30 June 2003 - Y170 million
and US$ 1.45 million).
31 December 2003 31 December 2002 30 June
2003
£'000 £'000 £'000
3. Currency gains/(losses)
Realised exchange differences 84 5 62
Movement in unrealised exchange differences on yen and (8) 81 42
US$ loan
76 86 104
4. Income
Income from investments and interest receivable 297 367 883
Other income - 1 4
5. Return per ordinary share
Revenue return 149 206 533
Capital return 3,099 (4,497) (2,192)
Return per ordinary share is based on the above totals of revenue and
capital and on 5,027,766 ordinary shares, being the number of ordinary
shares in issue throughout each period.
6. The interim dividend will be paid on 7 April 2004 to shareholders on the
register at the close of business on 12 March 2004.
7. The financial information for the year ended 30 June 2003 has been
extracted from the full accounts which have been filed with the Registrar
of Companies and which contain an unqualified Auditors' Report.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 4 minutes ago Symphony Environmental Technologies
- 28 minutes ago Marston's
- 29 minutes ago British Land Company
- 1 hour ago Octopus Apollo VCT
- 1 hour ago Rockfire Resources