Edinburgh Worldwide Preliminary Results

RNS Number : 7284I

Edinburgh Worldwide Inv Trust PLC

11 December 2015

RNS Announcement: Preliminary Results

Edinburgh Worldwide Investment Trust plc

The following is the unaudited preliminary statement for the year to 31 October 2015 which was approved by the Board on 10 December 2015.

¾ Over the year to 31 October 2015, the Company's net asset value per share, cum income with debt at fair value, increased by 10.0% and the share price by 13.8%. The comparative index, the S&P Global Small Cap Index*, increased by 3.5% in sterling terms.

¾ Revenue losses per share were 0.18p (2014: surplus of 0.14p) so no final dividend is being paid. The Company's objective remains that of generating capital growth. Should the level of underlying income increase in future years, the Board will seek to distribute the minimum permissible to maintain investment trust status.

¾ A number of the Company's holdings contributed to the positive performance, notably: 4D Pharma, a UK based biotechnology company developing natural bacteria-derived therapeutics; Marketaxess, a US based electronic bond trading platform; and, Galapagos, a Belgian clinical stage biotechnology company. Stratasys, a US listed 3D printer manufacturer, was the notable detractor to performance.

¾ As at the year end, the Company held two unlisted equity investments, Souq Group and Oxford Nanopore Technologies, accounting for 1.7% of total assets.

* formerly named S&P Citigroup Global Small Cap Index

Summary

Edinburgh Worldwide aims to achieve long term capital growth by investing in listed companies throughout the world. The Trust has total assets of £258.2million (before deduction of loans of £30.8million) as at 31 October 2015.

Edinburgh Worldwide is managed by Baillie Gifford & Co Limited, the Edinburgh based fund management group with around £120 billion under management and advice as at 10 December 2015.

Past performance is not a guide to 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. Investment in investment trusts should be regarded as medium to long-term. You can find up to date performance information about Edinburgh Worldwide on the Edinburgh Worldwide page of the Managers' website at http://www.edinburghworldwide.co.uk‡

‡ Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

11 December 2015

For further information please contact:

Anzelm Cydzik, Baillie Gifford & Co

Tel: 0131 275 3276

Roland Cross, Director, Four Broadgate

Tel: 0203 697 4200 or 07831 401309

Chairman's Statement

Performance

This was the Company's first full financial year since shareholders approved a broadening of the investment policy at the January 2014 Annual General Meeting. It is therefore pleasing to note that in the year to 31 October 2015 the Company's net asset value outperformed its comparative index by 6.5 percentage points. The Company's net asset value per share, when calculated at fair value, increased by 10.0% and the share price by 13.8%. The comparative index, the S&P Global Small Cap Index, increased by 3.5% in sterling terms during this period. Over the course of the year the discount to net assets at fair value averaged 7.3% and stood at 5.3% as at 31 October 2015.

The Company's financial year can be split into two distinct halves, with the first showing notable strength in returns followed by a second half where the Company retraced some absolute but not relative performance. Following the summer highs achieved by many indices, the reported slowdown of the Chinese economy appeared to catch many investors unaware. The subsequent Chinese devaluation of the currency led to broader concerns over the state of the global economy and growth in general, resulting in what appeared to be investor panic, with global equities seemingly sold indiscriminately due to broader concerns over global growth. Given this backdrop, the Company's results for the full year are encouraging and the Board and Managers remain convinced of the long term merits of the investment approach employed; equities are selected on their respective merits and periods of market volatility provide opportunities for long term discerning investors to invest in growth companies at attractive valuations. Greater detail on the performance of the underlying holdings in the portfolio can be found within the Managers' Review.

It should be noted that due to the nature of the investment process and focus on smaller companies at time of initial investment, the portfolio's lack of correlation to a benchmark, in accordance with the Company's policy, and the deployment of gearing, there will be periods when the portfolio underperforms its comparative index. However, such periods should be put into context against the longer period that Baillie Gifford has been managing the assets; over the past twelve years net asset value per share has increased by 219%, the share price by 276% and the comparative index by 153%*.

Unlisted Investments

At the Company's 2014 Annual General Meeting, shareholders granted the Company authority to invest up to 5% of total assets in unlisted equity investments in aggregate at time of acquisition. At its year end, the Company held two unlisted equity investments, Souq Group and Oxford Nanopore Technologies, accounting for 1.7% of total assets. The ability to invest in unlisted equities through a closed ended vehicle is one of the notable benefits of the investment trust structure and a differentiating factor versus open ended peers. The Board and Managers are excited by the business models of these two investments and their potential as long term investments within the portfolio. Further information on them and the Managers' strategy towards investing in unlisted equities are outlined in the Managers' Review.

Borrowings

The Managers invest in companies that are believed to have long term attractions and the Company will therefore typically be geared to equities to maximise potential returns. Equity gearing was maintained throughout the year and stood at 10% at the financial year end (2014 - 10%).

The Company has a five year fixed rate multi-currency loan from National Australia Bank Limited, expiring in September 2019. At present, drawings are €9.4 million, US$25.6 million and £7.5 million.

Earnings and Dividend

The Company's objective is that of generating capital growth. Consequently, the Managers do not invest in companies based on the level of income they may pay out as dividends.

As highlighted in my statement last year, the Board does not intend to draw on the Company's revenue reserve to pay or maintain dividends. This year the net revenue return per share was a deficit of 0.18p (2014: surplus of 0.14p), so the Board is recommending that no final dividend be paid. Should the level of underlying income increase in future years, the Board will seek to distribute the minimum permissible to maintain investment trust status by way of a final dividend.

The Board

I intend to stand down as Chairman and retire from the Board in a year's time, at the conclusion of the Company's 2017 Annual General Meeting. It is intended that Mr Henry Strutt will replace me as Chairman. The process for identifying a new Board member has commenced and the Board intends that a new Director will have been identified and appointed by this time next year. The appointment would then fall to be ratified by shareholders at the Company's 2017 Annual General Meeting.

Investment Outlook

The economic backdrop is one of uncertainty and polarisation between economies that are growing and those that are struggling to do so. The US Federal Reserve is seemingly close to raising rates for the first time since 2006 and there is some speculation that the Bank of England would be the next major central bank to follow suit. In contrast, it is more likely that rates will be coming down in Europe. Elsewhere, China's economy is slowing as it continues its shift to an innovation rather than investment led model with the focus on domestic consumption rather than exports. This mixed global picture is causing some investor schizophrenia, resulting in periods of notable market volatility from which very few companies are sheltered.

Immature, innovative, fast-growing businesses are not immune from exhibiting price volatility. However, the Board and Managers believe that business fundamentals ultimately prevail over the investment cycle. Successful smaller companies create and exploit their own long term opportunities despite the economic conditions at any given time. As mentioned last year, being able to identify the companies that value innovation, which have both a cultural acceptance of it and a means to develop commercial opportunities around it, is key to unearthing the market leaders of the future and is a key focus for the Managers.

An overview is provided by the Managers in the Managers' Review.

Annual General Meeting

The Annual General Meeting of the Company will be held at Baillie Gifford's offices in Edinburgh at 12 noon on Thursday 28 January 2016. The Company will once again be seeking to renew its share buyback, issuance and treasury share powers. Further information on these resolutions can be found on page 19 of the Annual Report and Financial Statements.

Douglas Brodie and John MacDougall, the portfolio's Manager and Deputy Manager, will give a presentation and answer any questions. The Board will also be available to respond to any questions that you may have. I hope that you will be able to attend.

David HL Reid

Chairman

10 December 2015

* MSCI All Countries World Index (in sterling terms) until 31 January 2014, thereafter the S&P Global Small Cap Index (in sterling terms). The index data has been chain linked to form one comparative index figure. Figures are total return with net asset value at par.

Past performance is not a guide to future performance.

Managers' Review

We are approaching the second anniversary of re-focusing Edinburgh Worldwide to the opportunity in innovative smaller companies. At the time we emphasised that our approach of identifying attractive growth companies earlier in their lifecycle, retaining ownership of successful companies as they grow and thrive, was one that required patience and a long term stance. Hence it should come as no surprise that 23 of the current 25 largest holdings, in aggregate comprising just over half the assets, have been held since then.

Our rationale for targeting innovative smaller companies stems from our belief that such companies are playing an increasingly important role in shaping the world in which we live, either through disruption of incumbent businesses or creation of entirely new markets. We sense that the competitive playing field between small and large companies across many industries is becoming much more balanced with technology being the great leveller. Whilst technology is available for businesses to utilise, it's often the innovative, more nimble smaller businesses that are best positioned to exploit it; they tend to lack the bureaucracy and fixed mindset that often prevails in large businesses and they possess the incentive and drive to do things differently. Technology, in all its different guises, not only creates much of the opportunity for innovation, it also is having radical effects on the rate at which businesses can scale and globalise; digitisation bypasses much of the requirement for costly infrastructure and distribution, a trend that is seen in industries as diverse as retail, finance, transportation and healthcare. For those companies prepared to experiment and think big we believe the opportunity is as great as it has ever been.

While stock markets agonise over the (inevitable) ending of quantative easing and timing of interest rate rises we think there is a danger that such myopic approaches are in danger of overlooking the bigger, much more structural theme; that of a deepening and broadening out of technology across all areas of business and our lives. These developments create a backdrop of immense opportunity and will drive a new age of innovation, business creation and disruption over the coming decades. The impacts of this will be profound; many industries will be forced into periods of accelerated evolution, incumbents will face severe challenges and new champions will be created. It's a backdrop that excites us and one which we believe to be well suited to our approach.

The underlying progress and application of technology observed thus far owes a huge debt to the silicon wafer and advances in computer processing power. Increasingly though we think such progress will synergise with advances in areas such as material sciences, sensors, robotics and our growing understanding of biology. It's the latter of these areas that intrigues us the most, not least because of the size of the opportunity in medicine but also we sense that the traditional serendipitous drug discovery approach is set to be replaced by one which emphasises rationally designed, highly targeted therapies that are much better at treating the root cause of a disease. The rise in the share prices of many biotechnology companies over the past three or so years has led some to speculate that a biotech bubble is forming. We find such generalisations difficult and often dangerous where the commonality between individual companies is often no higher than an index-centric sector definition. We concede that markets are beginning to recognise that healthcare innovation is accelerating but much of the biotech sectors rerating thus far relates to investors rediscovering a sector that, until comparatively recently, was viewed very unfavourably (all the inherent risk of drug discovery and development but without the diversification of a large pharmaceutical company). Advances in areas such as gene editing, DNA sequencing and protein engineering have created a readily accessible toolkit for scientists to experiment and explore. These tools, when used in conjunction with our increased molecular and cellular understanding of disease, create a wealth of new therapeutic opportunities and they are helping to lay the foundations of a healthcare revolution. Importantly, while the requirement for clinical trials will always mean that bringing a drug to market is a long cycle activity, the use of more rational, science-led approaches potentially has favourable effects on the risk-reward characteristics of drug development. Those companies that are successful at R&D will ultimately build out significant "biological real-estate"; a land grab phase that we think has interesting parallels with early years of the internet (e.g. desire to be the dominant gene editing company versus the battle to be the dominant search engine). The Trust invests in many healthcare companies which we believe are building out highly relevant, potentially transformational, biological real-estate; we would highlight holdings in Alnylam (gene silencing), Cellectis (gene editing for cancer therapy), 4D Pharma (microbiome-based therapies) and Dexcom (real time blood glucose monitoring for diabetics).

Within the 12 months under review the healthcare holdings contributed strongly to performance. Encouraging clinical trial data was well received for two of our European biotechnology companies, Galapagos and Genmab. With regard to Genmab we are pleased to note that, post the Trust's year end, the company has received approval for its first-to- market antibody treatment for multiple myeloma. Whilst still early stage, we are highly encouraged by the progress made by the French biotechnology company Cellectis. The company has a well differentiated offering in the field of cell-based cancer treatment which feeds heavily off its world-leading expertise in gene editing. We would also highlight the progress made by 4D Pharma at identifying, and bringing towards the clinic, novel bacteria with a range of potential therapeutic applications. To our minds the notion that naturally occurring, gut based bacteria play an important role in health is intriguing and is a proposition where the supportive scientific evidence is rapidly building.

Outside of the Trust's healthcare holdings we would also highlight a very strong contribution from MarketAxess, the US based electronic bond trading platform. The combination of increasing regulatory pressure and a desire to access liquidity will continue to push bond investors towards the MarketAxess platform and, in time, we think the company can broaden out geographically and into alternative investment instruments. On a less encouraging note, and as highlighted in the interim report, Stratasys reduced its shorter term earnings guidance as an increased level of investment in the business has coincided with weak demand for 3D printers. We are closely watching how the industry develops and our belief is that structural growth will prevail given the extent to which automation and additive manufacturing techniques are likely to transform how many products are made.

We acquired a number of new holdings in the period including positions in two unlisted companies, Oxford Nanopore Technologies and Souq. At the 2014 Annual General Meeting, shareholders granted the Company authority to invest up to 5% of total assets in unlisted equity investments in aggregate at time of acquisition. Our rationale for seeking this flexibility related to our observation that a number of companies with the attributes we seek were coming to equity markets at a later stage in their development than might have historically been the case. Oxford Nanopore is developing a novel system for direct and exquisitely sensitive electronic analysis of single molecules in real time. It's a business we have got to know over a number of years on account of it being one of the larger companies to emerge from IP Group, the intellectual property commercialisation business held by the Trust. We are excited by the progress Oxford Nanopore has made at applying its technology in the area of DNA sequencing where we feel the inherent advantages of their approach begin to open up sequencing to a much larger market opportunity than is currently the case. Souq operates Souq.com, an online market place that is one of the most popular websites in the Middle East. We are attracted to the broad e-commerce opportunity that Souq offers driven in part by the favourable wealth and population demographics within its key markets.

Within the listed area we would also highlight new holdings in Grubhub, an online food ordering and delivery service for take-away restaurants in the US, Puretech, a healthcare-focused holding company with strong links to many leading academics and an interesting portfolio of young high potential businesses, and Wayfair, a homeware and furniture focused e-commerce company.

Income statement

	For the year ended 31 October 2015 (unaudited)			For the year ended 31 October 2014 (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains/(losses) on investments	-	23,245	23,245	-	(3,952)	(3,952)
Currency gains	-	479	479	-	749	749
Income (note 2)	1,106	-	1,106	1,186	-	1,186
Investment management fee	(415)	(1,245)	(1,660)	(362)	(1,085)	(1,447)
Other administrative expenses	(498)	-	(498)	(428)	-	(428)
Net return before finance costs and taxation	193	22,479	22,672	396	(4,288)	(3,892)
Finance costs of borrowings	(220)	(660)	(880)	(195)	(584)	(779)
Net return on ordinary activities before taxation	(27)	21,819	21,792	201	(4,872)	(4,671)
Tax on ordinary activities	(63)	-	(63)	(133)	-	(133)
Net return on ordinary activities after taxation	(90)	21,819	21,729	68	(4,872)	(4,804)
Net return per ordinary share (note 4)	(0.18p)	44.52p	44.34p	0.14p	(9.94p)	(9.80p)

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.

Balance sheet

	At 31 October 2015 (unaudited) £'000	At 31 October 2014 (audited) £'000
Fixed assets
Investments held at fair value through profit or loss	250,178	227,012

Current assets
Debtors	5,801	130
Cash and short term deposits	2,734	10,595
	8,535	10,725
Creditors
Amounts falling due within one year	(558)	(513)
Net current assets	7,977	10,212
Total assets less current liabilities	258,155	237,224

Creditors
Amounts falling due after more than one year	(30,799)	(30,862)
Net assets	227,356	206,362

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	106,625	84,806
Revenue reserve	881	1,706
Shareholders' funds	227,356	206,362
Net asset value per ordinary share (after deducting borrowings at fair value)	462.74p	420.58p
Net asset value per ordinary share (after deducting borrowings at par)	463.95p	421.11p
Ordinary shares in issue	49,004,319	49,004,319

Reconciliation of movements in shareholders' funds

For the year ended 31 October 2015 (unaudited)

	Called up share capital £'000	Share premium £'000	Special reserve £'000	Capital* reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 November 2014	2,450	82,180	35,220	84,806	1,706	206,362
Net return on ordinary activities after taxation	-	-	-	21,819	(90)	21,729
Dividends paid during the year (note 5)	-	-	-	-	(735)	(735)
Shareholders' funds at 31 October 2015	2,450	82,180	35,220	106,625	881	227,356

For the year ended 31 October 2014 (audited)

	Called up share capital £'000	Share premium £'000	Special reserve £'000	Capital* reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 November 2013	2,450	82,180	35,220	89,678	2,618	212,146
Net return on ordinary activities after taxation	-	-	-	(4,872)	68	(4,804)
Dividends paid during the year (note 5)	-	-	-	-	(980)	(980)
Shareholders' funds at 31 October 2014	2,450	82,180	35,220	84,806	1,706	206,362

* The capital reserve as at 31 October 2015 includes investment holdings gains of £18,934,000 (2014 - gains of £4,008,000).

Condensed cash flow statement

	For the year ended 31 October 2015 (unaudited)		For the year ended 31 October 2014 (audited)
	£'000	£'000	£'000	£'000
Net cash outflow from operating activities (note 9)		(974)		(700)
Servicing of finance
Interest paid	(879)		(773)
Net cash outflow from servicing of finance		(879)		(773)
Taxation
Overseas tax incurred	(66)		(133)
Total tax paid		(66)		(133)
Financial investment
Acquisitions of investments	(38,913)		(220,402)
Disposals of investments	33,290		218,714
Realised currency gain	416		156
Net cash outflow from financial investment		(5,207)		(1,532)
Equity dividends paid (note 5)		(735)		(980)
Net cash outflow before use of financing		(7,861)		(4,118)
Financing
Bank loan repaid	-		(28,971)
Bank loan drawn down	-		30,603
Net cash inflow from financing		-		1,632
Decrease in cash		(7,861)		(2,486)

Reconciliation of net cash flow to movement in net debt
Decrease in cash in the period		(7,861)		(2,486)
Increase in bank loan		-		(1,632)
Exchange movement on bank loan		63		593
Movement in net debt in the year		(7,798)		(3,525)
Net debt at 1 November of the previous calendar year		(20,267)		(16,742)
Net debt at 31 October		(28,065)		(20,267)

Portfolio performance at 31 October 2015 (unaudited)

Name	Business	Fair value 2015 £'000	% of total assets	Performance†		Fair value 2014 £'000
Name	Business	Fair value 2015 £'000	% of total assets	Absolute %	Relative %	Fair value 2014 £'000
IP Group	Intellectual property commercialisation	11,698	4.5	15.8	9.8	8,631
MarketAxess	Electronic bond trading platform	10,905	4.2	63.6	55.2	6,673
Alnylam Pharmaceuticals	Therapeutic gene silencing	9,723	3.8	(4.0)	(8.9)	10,121
4D Pharma	Bacteria derived novel therapeutics	8,039	3.1	135.2	123.1	3,900
Ocado	Online food retailer	6,764	2.6	51.4	43.6	3,965
Tesla Motors	Electric cars	6,017	2.3	(11.3)	(15.9)	6,784
TripAdvisor	Online travel review platform	5,994	2.3	(2.1)	(7.1)	6,123
EPAM Systems	Outsourced software and services	5,740	2.2	67.8	59.2	3,420
Stamps.com	Website for postage services	5,251	2.0	112.3	101.4	2,474
IPG Photonics	High-power fibre lasers	5,231	2.0	16.6	10.6	4,485
MonotaRO	Online business supplies	4,945	1.9	109.5	98.8	2,370
LinkedIn	Professional networking site	4,568	1.8	9.0	3.4	5,190
Temenos	Banking software	3,990	1.6	41.0	33.8	2,860
Financial Engines	Investment advisory firm	3,956	1.5	(15.7)	(20.0)	3,612
Dexcom	Real time blood glucose monitoring	3,932	1.5	91.7	81.9	4,887
Xeros Technology Group	Commercial laundry manufacturer	3,580	1.4	95.1	85.1	1,947
M3	Online medical database	3,541	1.4	23.5	17.1	2,876
Novadaq Technologies	Medical systems for intra-surgical imaging	3,449	1.3	(13.5)	(17.9)	3,978
Imagination Technologies	Graphics semiconductor designer	3,363	1.3	16.4	10.4	2,888
Next	Provides online property information	3,361	1.3	182.5	168.0	1,540
Cosmo Pharmaceuticals	Therapies for gastrointestinal diseases	3,325	1.3	1.3	(3.9)	2,498
Zillow Class C	US online real estate portal	3,258	1.3	12.8*	15.8*	-
Genus	Animal breeding services	3,206	1.2	19.5	13.4	2,721
Wirecard	Internet payment and processing services	3,157	1.2	50.7	43.0	2,684
Start Today	Internet fashion retailer	3,048	1.2	66.4	57.9	1,849
Seattle Genetics	Antibody conjugates based biotechnology	3,047	1.2	17.2	11.2	3,106
Oxford Nanopore Technologies ‡	Novel DNA sequencing technology	3,000	1.2	0.0*	2.8*	-
Xaar	Ink jet printing technology	2,915	1.1	87.3	77.7	1,594
Splunk	Data diagnostics	2,817	1.1	(12.0)	(16.5)	3,199
ASOS	Online fashion retailer	2,772	1.1	22.8	16.5	2,258
Genmab	Therapeutic antibody company	2,695	1.1	126.7*	113.7*	-
Renishaw	Measurement and calibration equipment	2,654	1.0	8.6	3.0	2,500
Rightmove	UK online property portal	2,647	1.0	82.9	73.5	1,899
Dialog Semiconductor	Analogue chips for mobile phones	2,572	1.0	12.4	6.6	3,791
Aerovironment	Small unmanned aircraft systems	2,566	1.0	(22.0)	(26.0)	3,292
Morphosys	Therapeutic antibodies	2,566	1.0	(32.1)	(35.6)	3,796
Xing	Professional networking	2,554	1.0	94.6	84.6	1,844
Puretech Health	IP commercialisation focused on healthcare	2,543	1.0	(3.3)*	0.8*	-
Galapagos	Clinical stage biotechnology company	2,430	0.9	247.4	229.6	1,459
SEEK	Online recruitment portal	2,369	0.9	(33.2)	(36.7)	3,642
Victrex	High-performance thermo-plastics	2,351	0.9	14.4	8.5	2,153
iRobot	Domestic and military robots	2,344	0.9	(12.7)	(17.2)	3,810
Abcam	Scientific reagent supplier	2,336	0.9	53.2	45.3	1,551
Wayfair	Online furniture and homeware retailer	2,335	0.9	0.2*	(6.5)*	-
AAC Technologies	Miniature acoustic components	2,296	0.9	12.6	6.8	2,085
Cellectis	Biotech focused on genetic engineering	2,231	0.9	113.8	102.9	1,045
Avacta Group	Analytical reagents and instrumentation	2,173	0.8	81.8	72.5	682
National Instruments Corp	Instrumentation equipment used in research and testing	2,157	0.8	2.4*	9.5*	-
Yoox Net-A-Porter	Online luxury fashion retailer	2,056	0.8	91.3	81.5	1,073
Kingdee International Software	Enterprise management software	2,041	0.8	32.2	25.4	408

Portfolio performance at 31 October 2015 (unaudited) (Ctd)

Name	Business	Fair value 2015 £'000	% of total assets	Performance†		Fair value 2014 £'000
Name	Business	Fair value 2015 £'000	% of total assets	Absolute %	Relative %	Fair value 2014 £'000
Faro Technologies	Designs and develops measurement devices	2,028	0.8	(37.5)	(40.7)	3,252
Teradyne	Semiconductor testing equipment manufacturer	1,895	0.7	11.1	5.4	1,725
Stratasys	3D printer manufacturer	1,892	0.7	(78.0)	(79.2)	7,641
SDL	Language translation services	1,858	0.7	(0.9)	(6.0)	1,882
Digital Garage	Internet business incubator	1,833	0.7	28.2	21.6	2,177
Zillow Class A	US online real estate portal	1,809	0.7	(13.7)	(18.1)	6,172
Basware	Software solutions for financial transactions	1,800	0.7	(13.8)	(18.2)	1,558
hVIVO (formerly Retroscreen Virology)	Outsourced pre-clinical analytical services	1,717	0.7	2.1	(3.1)	1,710
Tissue Regenix	Regenerative medical devices	1,672	0.7	(20.3)	(24.4)	657
Xero	Cloud-based accounting software	1,659	0.6	(9.1)	(13.8)	1,843
Infomart Corp	Internet platform for restaurant supplies	1,652	0.6	4.1*	10.8*	-
Noah	Distributes wealth management products in China	1,632	0.6	77.0	67.9	922
Zumtobel	Commercial lighting	1,546	0.6	35.3	28.3	1,144
Foundation Medicine	Develops cancer diagnostic technology	1,449	0.6	(10.3)	(14.9)	1,618
Barco	Designs and develops visualisation solutions	1,432	0.6	(5.0)	(9.9)	1,543
Nanoco	Quantum dot manufacturer	1,372	0.5	(57.8)	(60.0)	2,999
Power Integrations	Analogue integrated circuits	1,372	0.5	5.0	(0.4)	1,318
BitAuto	Chinese automotive website	1,371	0.5	(60.5)	(62.6)	3,474
Peptidream	Drug discovery platform	1,353	0.5	8.9*	6.8*	-
Exa	Simulation software and services	1,351	0.5	(1.3)	(6.4)	1,333
Bioamber	Bioengineering Co	1,339	0.5	(17.8)*	(12.3)*	-
Evola Holdings	Yeast-based industrial biotechnology	1,324	0.5	(17.7)*	(11.5)*	-
Horizon Discovery	Customised cell lines to aid drug discovery	1,313	0.5	(15.9)	(20.3)	1,140
Souq Group ‡	Middle East e-commerce website	1,295	0.5	(1.3)*	4.9*	-
Ricardo	Automotive engineer	1,242	0.5	39.8	32.6	902
Oxford Instruments	Produces advanced instrumentation equipment	1,159	0.5	(50.9)	(53.4)	2,408
Ilika	Discovery and development of materials for mass market applications	1,155	0.5	(2.0)*	1.2*	-
Fusionex	Software for data analytics	1,123	0.4	15.4*	15.3*	-
Senomyx	Developer of additives to amplify certain flavours in foods	1,104	0.4	(35.3)	(38.6)	1,708
Suss Microtec	Fabrication and inspection equipment	984	0.4	34.0	27.1	724
Medgenics	Therapeutic protein delivery technology	970	0.4	40.8	33.5	674
Nanocarrier	Drug delivery technology	969	0.4	(21.7)*	(23.2)*	-
Acacia Research	Patent licenser	958	0.4	(60.5)	(62.5)	2,498
GrubHub	Online and mobile platform for restaurant pick-up and delivery orders	931	0.4	(25.1)*	(22.8)*	-
China Financial Services	Small and medium-sized enterprise lending in China	907	0.4	30.4	23.7	716
Ceres Power Holding	Developer of fuel cell	821	0.3	2.2	(3.0)	821
Oisix	Organic food website	765	0.3	5.6	0.1	724
MakeMyTrip	Online travel services	763	0.3	(45.1)	(47.9)	2,336
Thin Film Electronics	Develops printed, rewritable memory media	711	0.3	(20.5)	(24.6)	895
Digimarc	Digital watermarking technology	675	0.3	(31.6)*	(36.2)*	-
Ensogo	South East Asian e-commerce	647	0.3	(52.5)*	(50.3)*	-
Codexis	Manufacturer of custom industrial enzymes	627	0.3	0.4*	3.0*	-
Sarine Technologies	Systems for diamond grading and cutting	613	0.2	(49.0)	(51.7)	1,239

Portfolio performance at 31 October 2015 (unaudited) (Ctd)

Name	Business	Fair value 2015 £'000	% of total assets	Performance†		Fair value 2014 £'000
Name	Business	Fair value 2015 £'000	% of total assets	Absolute %	Relative %	Fair value 2014 £'000
Intelligent Energy Holding	Developer of modular fuel cells	589	0.2	(52.5)	(54.9)	1,234
Summit Therapeutics	Drug discover and development	521	0.2	(1.1)	(6.2)	533
Foamix Pharmaceuticals	Drug reformation technology	513	0.2	(37.6)*	(34.9)*	-
C4X Discovery Holdings	Rational drug design and optimisation	465	0.2	(29.0)	(32.6)	651
Velocys	Gas to liquid technology	267	0.1	(64.5)	(66.3)	752
Applied Graphene Materials	Manufactures grapheme nanoplatelets	208	0.1	(8.0)	(12.7)	228
GI Dynamics	Develops and markets medical devices	19	0.0	(90.7)	(91.2)	207
China Lumena New Materials	Mines, processes and manufactures natural thenardite products	0	0.0	(100.0)	(100.5)	0
Total equities		250,178	96.9
Net liquid assets		7,977	3.1
Total assets at fair value#		258,155	100.0

† Absolute and relative performance has been calculated on a total return basis over the period 1 November 2014 to 31 October 2015 (performance figures for investments bought during the period are part-period returns - see note below). Absolute performance is in sterling terms; relative performance is against S&P Global Small Cap Index (in sterling terms).

* Figures relate to part-period returns where equity has been purchased during the period.

# Before deductions of loan.

‡ Denotes unlisted security.

Source: Baillie Gifford/StatPro.

Past performance is not a guide to future performance.

Distribution of total assets* by Industry (unaudited)

		Industry Analysis 31 October 2015 % of total assets*	Portfolio Weightings (relative to comparative index†) at 31 October 2015 % points overweight/(underweight)
Equities:	Biotechnology	13.8	11.0
	Internet and Catalogue Retail	9.7	9.2
	Internet Software and Services	8.3	6.5
	Software	6.7	3.6
	Capital Markets	6.7	3.8
	Electronic Equipment, Instruments and Components	6.6	3.8
	Pharmaceuticals	4.6	3.0
	Semiconductors and Semiconductor Equipment	4.5	2.5
	Diversified Financial Services	4.2	3.1
	IT Services	4.2	1.7
	Health Care Equipment and Supplies	3.7	1.4
	Life Sciences Tools and Services	3.2	2.4
	Chemicals	2.7	(0.5)
	Automobiles	2.3	2.2
	Media	2.3	(0.4)
	Professional Services	2.2	1.0
	Computers and Peripherals	2.1	1.6
	Trading Companies and Distributors	1.9	0.6
	Machinery	1.6	(2.3)
	Health Care Technology	1.6	1.2
	Electrical Equipment	1.1	0.1
	Aerospace and Defence	1.0	(0.2)
	Household Durables	0.9	(0.8)
	Speciality Retail	0.5	(2.1)
	Consumer Finance	0.4	(0.2)
	Energy Equipment and Services	0.1	(1.1)
	Net Liquid Assets	3.1
Total assets*		100.0
* Total assets before deduction of bank loan.
† S&P Global Small Cap Index (in sterling terms). Weightings exclude industries where the Company has no exposure.

Distribution of total assets (unaudited)

Geographical Analysis		31 October 2015 %	31 October 2014 %
North America		39.3	47.0
	USA	39.3	45.2
	Canada	-	1.8

South America		-	0.5
	Mexico	-	0.5
Europe		43.3	34.9
	United Kingdom	29.2	22.8
	Eurozone	10.4	9.4
	Developed Europe (non euro)	3.7	2.7
Africa and Middle East		0.5	-
	U.A.E	0.5	-
Asia		12.0	10.9
	Japan	8.3	4.8
	China	2.3	2.4
	Hong Kong	0.9	0.9
	India	0.3	1.4
	Indonesia	-	0.9
	Singapore	0.2	0.5
Australasia		1.8	2.4
	Australia	1.2	1.6
	New Zealand	0.6	0.8
Total equities		96.9	95.7
Net liquid assets		3.1	4.3
Total assets*		100.0	100.0

Sectoral Analysis	31 October 2015 %	31 October 2014 %
Consumer Discretionary	15.8	16.9
Energy	0.1	0.3
Financials	11.2	8.6
Health Care	27.0	23.4
Industrials	7.9	9.1
Information Technology	32.2	35.7
Materials	2.7	1.7
Net Liquid Assets	3.1	4.3
Total assets*	100.0	100.0

* Total assets before deduction of loans

Notes (unaudited)

The Financial Statements for the year to 31 October 2015 have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 31 October 2014, which are unchanged from the prior year and have been applied consistently.

In accordance with the Financial Reporting Council's guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's principal risks are market related and include market risk, liquidity risk and credit risk. An explanation of these risks and how they are managed is contained in note 20 of the Annual Report and Financial Statements.

The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis.

Accordingly, the Financial Statements have been prepared on the going concern basis as it is the Directors' opinion that the Company will continue in operational existence for the foreseeable future.

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 and its investment manager, who are subject to the UK's regulatory environment, are also UK based.

Income

2015

£'000

2014

£'000

Income from investments

1,105

1,176

Deposit interest

1,106

1,186

Baillie Gifford & Co Limited are appointed as Managers and Secretaries. The annual management fee is 0.95% on the first £50m of net assets and 0.65% on the remaining net assets, calculated and paid quarterly.

Net return per ordinary share

Revenue

2015 Capital

Total

Revenue

2014

Capital

Total

Net return on ordinary activities after taxation

(0.18p)

44.52p

44.34p

0.14p

(9.94p)

(9.80p)

Revenue return per ordinary share is based on the revenue loss on ordinary activities after taxation of £90,000 (2014: - net revenue gain of £68,000) and on 49,004,319 ordinary shares, being the weighted average 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 £21,819,000 (2014 - net capital loss of £4,872,000) and on 49,004,319 ordinary shares, being the weighted average number of ordinary shares in issue during each year.

There are no dilutive or potentially dilutive shares in issue.

Ordinary dividends

2015

2014

2015

£'000

2014

£'000

Amounts recognised as distributions in the year:

Previous year's final (paid 5 February 2015)

1.50p

735

Interim

0.50p

245

1.50p

2.00p

735

980

Also set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. There is no revenue available for distribution by way of dividend for the year (2015 - revenue loss of £90,000; 2014 - reserve gain £68,000)

Dividends paid and payable in respect of the year:

Interim dividend per ordinary share

Nil

0.50p

Nil

245

Proposed final dividend per ordinary share

Nil

1.50p

Nil

735

2.00p

980

Notes (unaudited) (Ctd)

6.	The five year fixed rate facility with National Australia Bank Limited of €9.4m, US$25.6m and £7.5m, expires on 30 September 2019. The drawings were as follows: At 31 October 2015 and 31 October 2014 National Australia Bank Limited: €9,400,000 at an interest rate of 1,59% per annum US$25,600,000 at an interest rate of 3.14% per annum £7,500,000 at an interest rate of 3.12% per annum The main covenants relating to the loan facility with National Australia Bank Limited are: total borrowings shall not exceed 35% of the Company's adjusted gross assets and the minimum adjusted gross assets shall be £110m. The fair value of borrowings at 31 October 2015 was £31,394,000 (2014 - £31,120,000). Net asset value per share (after deducting borrowings at fair value) was 462.74p (2014 - 420.58p).
7.	The Company incurred transaction costs on purchases of £29,000 (2014 - £358,000) and on sales of £22,000 (2014 - £122,000).
8.	At the Annual General Meeting on 29 January 2015 the Company renewed its authority to purchase shares in the market, in respect of 7,345,747 ordinary shares (equivalent to approximately 14.99% of its issued share capital at that date). No shares were bought back during the years to 31 October 2015 or 2014. At 31 October 2015 the Company had authority to buy back 7,345,747 ordinary shares.
9.	Reconciliation of net return before finance costs and taxation to net cash outflow from operating activities	2015 £'000	2014 £'000
	Net return before finance costs and taxation	22,672	(3,892)
	(Gains)/losses on investments	(23,245)	3,952
	Currency gains	(479)	(749)
	Decrease/(increase) in accrued income	13	(16)
	Decrease in debtors	21	23
	Increase/(decrease) in creditors	44	(18)
	Net cash outflow from operating activities	(974)	(700)
10.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 October 2015. The financial information for 2014 is derived from the statutory accounts for 2014 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2014 accounts, their report was unqualified and did not contain a statement under section 495 to 497 of the Companies Act 2006. The statutory accounts for 2015 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.
11.	The Report and Accounts will be available on the Edinburgh Worldwide page of the Managers' website http://www.edinburghworldwide.co.uk † on or around 21 December 2015.