Interim Results
Mid Wynd Inter Inv Trust PLC
05 February 2008
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
Results for the six months to 31 December 2007
In the six months to 31 December 2007 Mid Wynd's net asset value rose by 4.6%*
which compares with a rise of 1.0% for the FTSE World Index in sterling terms.
The share price increased by 0.3%
• Exposure to emerging markets and companies in the oil services sector
helped performance over the period.
• The revenue account benefited from a rising cash allocation and investments
in high yielding bonds. Revenue earnings for the half year rose 44.3% to
5.28 pence per share (3.66 pence per share in equivalent period 2006).
• The Board has increased the interim dividend to 5.50 pence (31 December
2006 - 4.50 pence).
• Uncertainties surround the availability of credit and the scale and
duration of American economic slowdown. However, despite pressures on
profits this year, reasonable valuations, modest Western wage increases and
strong demand from the industrialising world may be offsetting influences.
* after deducting borrowings at fair value
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 £55.2m (before deduction of the bank loan of £2.7m) as at 31
December 2007.
Mid Wynd is managed by Baillie Gifford & Co, the Edinburgh based fund management
group with around £53 billion under management and advice as at 4 February 2008.
Past performance is no guarantee of 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.
You can find up to date performance information about Mid Wynd at
www.midwynd.co.uk
4 February 2008
- ends -
For further information please contact:
Michael MacPhee, Manager
Mid Wynd International Investment Trust PLC 0131 275 2000
Roland Cross, Director,
Broadgate Marketing 020 7726 6111
The following is the unaudited Half-Yearly Financial Report for the six months
to 31 December 2007
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
Half-Yearly Financial Report 31 December 2007
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared in
accordance with the Accounting Standards Board's statement 'Half-Yearly
Financial Reports';
b) the Interim Management Report includes a fair review of the information
required by Disclosure and Transparency Rules 4.2.7R (indication of important
events during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
c) the Interim Management Report includes a fair review of the information
required by Disclosure and Transparency Rules 4.2.8R (disclosure of related
party transactions and changes therein).
By order of the Board
PMS Barron
Chairman
4 February 2008
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
Interim Management Report
Investment Commentary
The last six months have been a fascinating and volatile period, with huge
divergence in the performance of geographies, sectors, currencies and asset
classes. In particular, there has been a savage fall in the share prices of
banks, property related companies and consumption sensitive stocks in developed
markets, though this has been offset by strongly positive returns from energy
and mining related stocks.
A prolonged period of easy liquidity and low borrowing costs has come to an
abrupt end, triggered by the U.S. sub-prime mortgage crisis and by fears over
high levels of debt in the developed world supported by assets, mainly houses,
the value of which is no longer appreciating. This has been exacerbated by
unprecedented complexity and misguided incentives. Elaborate on and off balance
sheet structures and the proliferation of derivative instruments designed to
support them have led to opacity, loss of trust and the unintended consequence
of an unholy mess that will take some time to resolve.
It is remarkable that equity markets have held up so well overall against such
events. Modest wage increases, robust profits, continued strong demand from the
industrialising world and beneficiaries of prolonged under-investment such as
mining and energy related companies are the main factors responsible. While the
profits cycle is now very mature and it is not impossible that underlying
corporate profits may fall this year in some markets, it seems more than likely
that the remaining three benign factors may persist. The primary uncertainties
appear to be whether, to what extent and for how long America's slowdown
degenerates into recession and whether the inflationary consequences of high
developing world growth and high oil, food and other commodity prices turn out
to be worse than presently seems likely.
Mid Wynd's NAV has risen by 4.6% over the first half of our financial year.
Changes to the portfolio over the period have been consistent with the opinions
expressed above. Consumer and financial holdings in America and the UK are much
reduced and the bias towards oil services has been reinforced. Exposure to
markets formerly known as emerging has increased, in many cases happily as a
consequence of rising share prices. By comparison, the FTSE World index has
risen 1.0% (in sterling terms) over the same period.
Revenue
The revenue account has again thrived and the yield on the portfolio has grown
healthily. This is less, lately, from rising dividends than from a rising cash
allocation and a few investments in high yielding bonds. Mid Wynd has attempted
to benefit from the distress in those markets in instances that appear to offer
very attractive returns relative to the underlying risks involved. Earnings for
the half year rose 44.3% to 5.28p; a full year outcome of over 14.00p is
forecast. Mindful of the approaching maturity of our Ford and Bay Haven bonds,
the Board has nevertheless decided upon an increased interim dividend of 5.50p
(31 December 2006 - 4.50p) payable on 7 April to shareholders on the register on
14 March.
VAT
During the period the European Court of Justice ruled that investment trust
management fees should be exempt from VAT, bringing them into 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.
Interim Management Report (Ctd)
Risks and uncertainties
The Company's main risk is investment risk. Within that the principal risk is of
a permanent loss of capital rather than the inevitable fluctuation of markets or
divergence from index performance. Risk is inherently difficult to predict and
calculate and such numerical assessment as has so far been invented offers a
very poor guide. The past is seldom a useful window to the future and backward
looking number-based calibrations and control mechanisms are thereby condemned
to fail, often significantly and dangerously. Diversification and experience
provide our best tools for mitigating the risk of permanent loss of capital,
though it cannot be eliminated entirely. Other risk factors that can be
identified are detailed in note 11.
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
INCOME STATEMENT
(unaudited)
For the six months ended For the six months ended For the year ended
31 December 2007 31 December 2006 30 June 2007
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised gains on - 1,885 1,885 - 3,531 3,531 - 4,991 4,991
investments
Unrealised gains/(losses)
on investments - 867 867 - (1,523) (1,523) - (32) (32)
Currency (losses)/gains - (233) (233) - 68 68 - 175 175
Income from investments
and interest receivable 467 - 467 351 - 351 1,105 - 1,105
Other income 4 - 4 4 - 4 8 - 8
Investment management fee (67) (67) (134) (63) (63) (126) (131) (131) (262)
Other administrative (82) - (82) (75) - (75) (139) - (139)
expenses
Net return before finance
costs and taxation 322 2,452 2,774 217 2,013 2,230 843 5,003 5,846
Finance costs of (13) (13) (26) (12) (12) (24) (24) (24) (48)
borrowings
Net return on ordinary
activities before
taxation 309 2,439 2,748 205 2,001 2,206 819 4,979 5,798
Tax on ordinary (43) 16 (27) (21) - (21) (170) 48 (122)
activities
Net return on ordinary
activities after taxation 266 2,455 2,721 184 2,001 2,185 649 5,027 5,676
Net return per ordinary
share 5.28p 48.83p 54.11p 3.66p 39.81p 43.47p 12.93p 99.98p 112.91p
(note 4)
Note:
Dividends paid and
proposed per ordinary
share (note 5) 5.50p 4.50p 12.00p
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.
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
BALANCE SHEET
(unaudited)
31 December 2007 31 December 2006 30 June
2007
£'000 £'000 £'000
FIXED ASSETS
Investments 49,849 47,907 52,480
CURRENT ASSETS
Debtors 160 136 675
Cash and short term deposits 5,372 515 142
5,532 651 817
CREDITORS
Amounts falling due within one year
Bank loans (note 6) - (1,533) -
Other creditors (166) (116) (703)
(166) (1,649) (703)
NET CURRENT ASSETS/(LIABILITIES) 5,366 (998) 114
TOTAL ASSETS LESS CURRENT LIABILITIES
55,215 46,909 52,594
CREDITORS
Amounts falling due after more than one year
Bank loans (note 6) (2,698) - (2,422)
(2,698) - (2,422)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation (5) (6) (4)
52,512 46,903 50,168
CAPITAL AND RESERVES
Called-up share capital 1,257 1,257 1,257
Share premium 20 20 20
Capital reserve - realised 38,755 35,378 36,890
Capital reserve - unrealised 11,508 9,404 10,918
Revenue reserve 972 844 1,083
EQUITY SHAREHOLDERS' FUNDS 52,512 46,903 50,168
NET ASSET VALUE PER ORDINARY SHARE (after
deducting borrowings at fair value) (note 7) 1044.5p 932.9p 998.9p
NET ASSET VALUE PER ORDINARY SHARE (after
deducting borrowings at par) 1044.4p 932.9p 997.8p
Ordinary shares in issue (note 8) 5,027,766 5,027,766 5,027,766
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited)
For the six months ended 31 December 2007
Capital Capital Total
reserve - reserve - shareholders'
Share Share realised unrealised Revenue funds
capital premium reserve
£'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at 1 July 2007 1,257 20 36,890 10,918 1,083 50,168
Net return on ordinary activities
after taxation - - 1,865 590 266 2,721
Dividends paid during the period# - - - - (377) (377)
Shareholders' funds at 31 December
2007 1,257 20 38,755 11,508 972 52,512
For the six months ended 31 December 2006
Capital Capital Total
reserve - reserve - shareholders'
Share Share realised unrealised Revenue funds
capital premium reserve
£'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at 1 July 2006 1,257 20 31,943 10,838 992 45,050
Net return on ordinary activities
after taxation - - 3,435 (1,434) 184 2,185
Dividends paid during the period# - - - - (332) (332)
Shareholders' funds at 31 December
2006 1,257 20 35,378 9,404 844 46,903
For the year ended 30 June 2007
Capital Capital Total
reserve - reserve - shareholders'
Share Share realised unrealised Revenue funds
capital premium reserve
£'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at 1 July 2006 1,257 20 31,943 10,838 992 45,050
Net return on ordinary activities
after taxation - - 4,947 80 649 5,676
Dividends paid during the year# - - - - (558) (558)
Shareholders' funds at 30 June 2007 1,257 20 36,890 10,918 1,083 50,168
# See note 5.
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
CONDENSED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 December 2007 31 December 2006 30 June 2007
£'000 £'000 £'000
Net cash inflow from operating activities 246 174 626
Net cash outflow from servicing of finance (25) (24) (59)
Total tax paid - - (24)
Net cash inflow/(outflow) from financial 5,341 (1,398) (2,940)
investment
Equity dividends paid (note 5) (377) (332) (558)
Net cash inflow/(outflow) before use of liquid 5,185 (1,580) (2,955)
resources and financing
Liquid Resources
Increase in short term deposits (2,617) - -
Net cash outflow from use of liquid resources (2,617) - -
Financing
Net cash inflow from bank loans - - 1,002
Net cash inflow from financing - - 1,002
Increase/(decrease) in cash 2,568 (1,580) (1,953)
Reconciliation of net cash flow to movement in
net funds/(debt)
Increase/(decrease) in cash in the period 2,568 (1,580) (1,953)
Increase in short term deposits 2,617 - -
Increase in bank loans - - (1,002)
Exchange movement on short term deposits and (231) 89 202
bank loans
Movement in net funds/(debt) in the period 4,954 (1,491) (2,753)
Net (debt)/funds at start of the period (2,280) 473 473
Net funds/(debt) at end of the period 2,674 (1,018) (2,280)
Reconciliation of net return before finance
costs and taxation to net cash inflow from
operating activities
Net return before finance costs and taxation 2,774 2,230 5,846
Net gains on investments (2,752) (2,008) (4,959)
Currency losses/(gains) 233 (68) (175)
Amortisation of fixed income book cost (23) (21) (44)
Changes in debtors and creditors 41 72 41
Overseas tax (19) (18) (71)
Income tax (8) (13) (12)
Net cash inflow from operating activities 246 174 626
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
THIRTY LARGEST EQUITY HOLDINGS (unaudited)
at 31 December 2007
Name Region Business Value % of
£'000 total
assets*
Baillie Gifford Developed Asia Pacific Investment Fund 3,582 6.5
Asia Pacific Fund
Schlumberger North America Oil services 1,530 2.8
Seadrill Continental Europe Oil services 1,107 2.0
Vodafone United Kingdom Mobile telecommunications operator 943 1.7
Atlas Copco Continental Europe Engineering 908 1.6
Kone Continental Europe Elevators 879 1.6
Essilor Continental Europe Ophthalmology 831 1.5
Royal Bank of Scotland United Kingdom Banking 780 1.4
Nestle Continental Europe Food products 772 1.4
Petrobras Emerging Markets Integrated oil 764 1.4
Microsoft North America Software and computer technology 728 1.3
Deutsche Boerse Continental Europe Stock and derivatives exchange 705 1.3
Wellpoint North America Health insurer 699 1.3
Celesio Continental Europe Drug wholesaler and retailer 698 1.3
Diamond Offshore Drilling North America Oil drilling 689 1.2
Ultra Petroleum North America Gas exploration and production 676 1.2
Cameron International North America Oil equipment and services 666 1.2
GBL Continental Europe Investment company 647 1.2
Pepsico North America Soft drink and food 633 1.1
L'Oreal Continental Europe Personal care 589 1.1
Wood Group United Kingdom Oil services 588 1.1
GlaxoSmithKline United Kingdom Pharmaceuticals 586 1.1
BG Group United Kingdom Oil exploration and production 585 1.1
Aker Kvaerner Continental Europe Energy equipment and services 584 1.1
Samsung Corporation Emerging Markets Construction and holding company 575 1.0
Reliance Industries Emerging Markets Petrochemicals 570 1.0
Walgreen North America Pharmacy chain 528 1.0
Heineken Continental Europe Brewer 518 0.9
Cairn Energy United Kingdom Oil exploration and production 512 0.9
Investor Continental Europe Investment company 511 0.9
24,383 44.2
*Total assets before deduction of bank loan
DISTRIBUTION OF TOTAL ASSETS
at 31 December 2007
(unaudited)
31 December 2007 31 December 2006 30 June 2007
% % %
Equities: United Kingdom 14.2 17.9 17.3
Continental Europe 28.6 29.5 29.7
North America 17.9 24.8 25.5
Japan 5.3 9.4 8.9
Asia Pacific 6.5 6.2 6.5
Emerging Markets 11.7 6.1 6.5
Total equities 84.2 93.9 94.4
Bonds 6.1 5.0 5.4
Net liquid assets 9.7 1.1 0.2
Total assets (before deduction of bank 100.0 100.0 100.0
loans)
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited)
1. The condensed set of financial statements have been prepared on the basis of the same accounting policies
as set out in the Company's Annual Financial Statements at 30 June 2007 and in accordance with the ASB's
Statement 'Half-Yearly Financial Reports' and have not been audited or reviewed by the Auditors pursuant
to the Auditing Practices Board Guidance on 'Review of Interim Financial Information.'
The financial information contained within this half-yearly financial report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the
year ended 30 June 2007 has been extracted from the statutory accounts which have been filed with the
2. Registrar of Companies. The Auditors' Report on those accounts was not qualified and did not contain
statements under the section 237(2) or (3) of the Companies Act 1985.
The management agreement is terminable on not less than 12 months' notice, or on shorter notice in
certain circumstances. The fee in respect of each quarter is 0.125% of the net assets of the Company
attributable to its shareholders on the last day of that quarter.
3.
Six months to Six months to Year to
31 December 2007 31 December 2006 30 June
2007
£'000 £'000 £'000
4. Net return per ordinary share
Revenue return on ordinary activities after taxation 266 184 649
Capital return on ordinary activities after taxation 2,455 2,001 5,027
Total return 2,721 2,185 5,676
Net return per ordinary share is based on the above totals of revenue and capital and on 5,027,766
ordinary shares, being the weighted average number of ordinary shares in issue during each period.
Six months to Six months to Year to
31 December 2007 31 December 2006 30 June
2007
£'000 £'000 £'000
5. Dividends
Amounts recognised as distributions in the period:
Previous year's final dividend of 7.50p (2006 - 6.60p),
paid 5 October 2007 377 332 332
Interim dividend for the year ending 30 June 2007 of
4.50p paid 10 April 2007 - - 226
377 332 558
MID WYND INTERNATIONAL INVESTMENT TRUST PLC
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited)
Six months to Six months to Year to
31 December 2007 31 December 2006 30 June
2007
£'000 £'000 £'000
5. Dividends (cont.)
Dividends paid and proposed in the period:
Interim dividend for the year ending 30 June 2008 of
5.50p (2007 - 4.50p) 277 226 226
Final dividend for the year ended 30 June 2007 - - 377
277 226 603
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 7 April 2008 to shareholders on the register at the
close of business on 14 March 2008. The ex dividend date is 12 March 2008.
6. The bank loan falling due within one year at 31 December 2006 comprises a US$3 million loan.
The bank loan falling due in more than one year comprises a Y600 million loan drawn down under a US$5
million facility expiring on 27 February 2012 (31 December 2006 - nil; 30 June 2007 - Y600 million).
7. The fair value of the bank loan at 31 December 2007 was £2,695,000 (31 December 2006 - £1,533,000; 30
June 2007 - £2,368,000).
8. At 31 December 2007 the Company had authority to buy back 753,662 of its own shares. No shares were
bought back during the period under review.
9. 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 £13,000 (31 December 2006 - £8,000; 30 June 2007 - £24,000) and transaction costs on sales
amounted to £12,000 (31 December 2006 - £4,000; 30 June 2007 - £12,000).
10. None of the views expressed in this document should be construed as advice to buy or sell a particular
investment.
11. Risks and uncertainties
The principal risks and uncertainties facing the Company are detailed in the Interim Management Report.
Other risks facing the Company include the following; currency risk (investments are subject to movements
in exchange rates), gearing risk (the use of borrowing can magnify the impact of falling markets), the
risk that the discount can widen and regulatory risk (that the loss of investment trust status or a
breach of the UKLA Listing Rules could have adverse financial consequences and cause reputational
damage). These risks are monitored and assessed by the Managers and reported on regularly to the Board
and the Audit Committee.
12. The half-yearly financial report is available on www.midwynd.co.uk and will be posted to shareholders on
or around 11 February 2008.
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