Final Results

RNS Number : 5757Z

Edinburgh Worldwide Inv Trust PLC

12 December 2014

 



RNS Announcement: Preliminary Results

Edinburgh Worldwide Investment Trust plc

The following is the unaudited preliminary statement for the year to 31 October 2014 which was approved by the Board on 11 December 2014.

¾  Following shareholder approval in January 2014, the Company's investment policy was broadened to that of investing in smaller, less mature companies. Over the year the Company's net asset value per share declined by 2.7% and the share price by 4.9%.  The comparative index* increased by 1.1% in sterling terms during this period.  Over the nine months since reorganisation of the portfolio, the Company's net asset value per share declined by 3.7% and the share price by 4.9%.  The comparative index increased by 4.8% in sterling terms during this period.

¾  Although the reorganised portfolio initially performed well, absolute and relative performance were impacted negatively during March and April due to a seemingly indiscriminate sell-off in technology and biotech stocks, an area of the market to which the portfolio is exposed.

¾  Successful smaller companies create their own long term opportunities and these are only very marginally influenced by the prevailing economic conditions over the investment cycle.  Fundamentals will ultimately prevail.  Nonetheless short term macro developments do influence investor sentiment and impact trading conditions for businesses.

¾  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.

¾  The net revenue return for the year was 0.14p per share, notably lower than the 1.68p in 2013.  Despite this, an unchanged final dividend of 1.50p is being recommended, funded from the revenue reserve, to give a total for the year of 2.00p (2013: 2.00p). As the Company's objective is capital growth, it is not intended to draw on the revenue reserve in future years and any dividend will be paid as a final dividend.

* MSCI All Countries World Index (in sterling terms) until 31 January 2014, thereafter, the S&P Citigroup Global Small Cap Index (in sterling terms).  The index data has been chain linked to form one comparative index figure.

Summary

Edinburgh Worldwide aims to achieve long term capital growth by investing in listed companies throughout the world. The Trust has total assets of £237million (before deduction of loans of £31million) as at 31 October 2014.

Edinburgh Worldwide is managed by Baillie Gifford & Co, the Edinburgh based fund management group with over £110 billion under management and advice as at 11 December 2014.

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

12 December 2014

For further information please contact:

Anzelm Cydzik, Baillie Gifford & Co

Tel: [phone]

Roland Cross, Director, Broadgate Mainland

Tel: [phone]

Chairman's Statement

Investment Policy

Following shareholder approval at the Company's Annual General Meeting in January 2014, the Company's investment policy was broadened to that of investing principally in smaller, less mature companies at the time of initial investment (96.7% of shareholders voted in favour of this).  As of 1 February 2014 the portfolio had been largely reorganised to reflect this.  This has resulted in a broader portfolio with 92 stocks held at the year end compared to 38 last year and the portfolio management responsibility being passed onto Douglas Brodie.

Investment Performance

In the year to 31 October 2014, the Company's net asset value per share decreased by 2.7% and the share price by 4.9%.  The comparative index* increased by 1.1% in sterling terms during this period.  At 31 October 2014 the discount was 8.5% compared to 6.3% at the previous year end, however over the year to 31 October 2014 the discount averaged 5.5% compared to 11.4% over the previous year.

Although the reorganised portfolio initially performed well, absolute and relative performance were impacted negatively during March and April due to a seemingly indiscriminate sell-off in technology and biotech stocks, an area of the market to which the portfolio is exposed.  This resulted in the Company underperforming its comparative index in the first half of the financial year.  Performance over the second half has been better, with the Company's net asset value increasing 11.6% and the comparative index 4.3%, although this has not been sufficient to result in positive relative and absolute returns for the year.

This is naturally a frustrating outcome, nonetheless, the Board and Managers are convinced of the long term merits of the investment approach employed.  Research continues to be focussed on selecting growth companies and portfolio construction is based on the merits of individual companies, rather than any sector or geographic asset allocation, in order to pursue long term capital appreciation.  The strategy employed is an extension of that used previously and, although focusing on taking a stake in companies at an earlier stage in their growth cycle, the companies are expected to be held for the long term, and as their businesses develop and mature they should become much larger.

Over the nine months since reorganisation of the portfolio, the Company's net asset value per share decreased by 3.7% and the share price by 4.9%.  The comparative index increased by 4.8% in sterling terms during this period.  Over the eleven years that Baillie Gifford has been managing the Company's assets, in total return terms, net asset value per share has increased by 185%, the share price by 230% and the comparative index by 140%.

Gearing

The Managers invest in companies that are believed to have long term attractions and the Company will therefore typically be geared to maximise potential returns.  Gearing was maintained throughout the year and was 10% of shareholders' funds at the year end (2013: 8%).

The Company's three year fixed rate multi-currency loan from National Australia Bank Limited of £10.0 million, €11.4 million and US$16.35 million matured in September 2014.  It was replaced with a five year fixed rate multi-currency loan from National Australia Bank Limited of £7.5 million, €9.4 million and US$25.6 million.

Earnings and Dividend

The Company's objective is that of generating capital growth.  Any income received from the underlying holdings is a by-product of this.  It was highlighted in the half-year report that, due to a lower yield on the underlying portfolio, earnings for the year were expected to be lower than in previous years.

The net revenue return per share for the year was 0.14p, notably lower than the 1.68p in 2013.  An unchanged final dividend of 1.50p per share is being recommended, making a total of 2.00p for the year.  The shortfall against the revenue return will be met from the revenue reserve which has been accumulated over the years.  As the Company's objective is capital growth, it is not intended to draw on the revenue reserve in future years and any dividend will be paid as a final dividend.

Alternative Investment Fund Managers Directive ('AIFMD')

In order to comply with the AIFMD, the Company has appointed Baillie Gifford & Co Limited as its Alternative Investment Fund Manager ('AIFM') with effect from 1 July 2014.  Baillie Gifford & Co Limited was also appointed Company Secretaries with effect from 1 July. The AIFM has delegated portfolio management to Baillie Gifford & Co; therefore the Company's portfolio continues to be managed by Baillie Gifford & Co.  The management fee and notice periods are unchanged under these new arrangements.

The Company appointed BNY Mellon Trust & Depositary (UK) Limited as its Depositary as of 1 July 2014.  The Depositary has delegated the provision of custody services to The Bank of New York Mellon SA/NV.

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 29 January 2015.  The Company will again seek 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.

Outlook

Successful smaller companies create their own long term opportunities and these are only very marginally influenced by the prevailing economic conditions over the investment cycle.  Fundamentals will ultimately prevail.  Nonetheless short term macro developments do influence investor sentiment and impact trading conditions for businesses.  This in turn results in periods of notable market volatility.  Your Company is not immune from this and will at times have volatile performance and perform differently to the comparative index.

Although the US Federal Reserve has concluded its bond purchasing programme, the Bank of Japan has announced an additional ¥10tr in monetary easing and the Japanese Government Pension Investment Fund has announced its intention to increase its holding in domestic equities from 12% to 25%.  Elsewhere, Europe continues to be stubbornly unresponsive to stimulus measures, the UK is performing better than many predicted while China's economic growth remains somewhat subdued in comparison to recent years as it moves from an export to consumption led economy.  All these factors have and will continue to fuel market volatility.

The current global business environment is unprecedented with regard to innovation and the ever increasing role played by technology in both building new businesses and disrupting incumbents.  In this more dynamic world, it is the nimble, more innovative smaller businesses that are best positioned to prosper as they lack the bureaucracy of larger incumbents while the technology at their disposal has radically changed both the trajectory and magnitude of growth that a small business can achieve.  Assessing what is proven and tangible alongside what has promise and long term potential is vital.  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 on pages 9 and 10 of the Annual Report and Financial Statements.

David HL Reid

Chairman

11 December 2014

* MSCI All Countries World Index (in sterling terms) until 31 January 2014, thereafter the S&P Citigroup Global Small Cap Index (in sterling terms).  The index data has been chain linked to form one comparative index figure.

Past performance is not a guide to future performance.

Managers' Overview

In bringing Edinburgh Worldwide towards the opportunity in smaller, less mature companies, we believe that we are focusing on the part of the market where analytical focus and the pursuit of genuinely transformational growth can be better exploited. While the initial focus is now more explicitly on younger, more immature companies, we are looking to retain the strong growth philosophy that served Edinburgh Worldwide well over the past decade. By identifying attractive opportunities earlier we seek to benefit from growth at an earlier stage in a company's lifecycle and retain ownership of successful businesses as they grow and thrive, as such we ultimately see our role as investing in what are potentially the larger companies of the future.

We seek to understand the factors that differentiate a company and how it might evolve into the opportunity ahead of it; it is a fundamental approach that requires patience and an acceptance that success (or indeed failure) of a company is more often determined by the individual company's actions rather than what is happening with the economy at large. At times, such an approach is likely to be out of kilter with the myopic gyrations and sentiment-led exaggerations of stock markets. The near-term uncertainty arising from the ending of quantitative easing in the US and a tepid near term global economic outlook has painted an unhelpful backdrop for share prices of many smaller companies, especially those that are (in our opinion) sensibly investing at the expense of near-term profitability. Whilst frustrating, we believe such oscillations are part of modern investing and believe they should be viewed as creating opportunities for those with longer time horizons.

With the Company moving to its broadened remit on 1 February 2014, the year to end of October captures an initial 3 months of the historic portfolio. On account of the intra-period change in remit and move to a more diversified list of holdings we find it difficult to generalise with regard to the operating performance of the companies held, hence have limited commentary on specific stocks to where we think progress has been particularly noteworthy.

Tesla was amongst ten stocks that were retained in the portfolio over the full financial year. The company continues to make significant progress at scaling its production capabilities which, in combination with an expansion of the product range and a sizable investment in battery technology, gives us mounting confidence that it can further reinforce its position as an innovative disruptor in the global automotive industry.

During the past year the Company benefitted from encouraging developments at several of its healthcare companies. Newly listed 4D Pharma, a UK based biotechnology company developing natural bacteria-derived therapeutics, made good progress in bringing its products towards the clinic and we are excited about the numerous potential applications and comparative simplicity of the approach. Alnylam, a Boston-based biotechnology company developing therapeutic gene silencing technology, published encouraging trial data highlighting the clinical benefit of its innovative approach. With Alnylam's modular drug development platform now being used to address multiple areas of high or unmet medical need we believe the company can pioneer a new wave of highly efficient and targeted therapies. Illumina, the San Diego based manufacturer of DNA sequencing machines benefitted from ongoing robust adoption of sequencing in both the healthcare and research setting. This was stimulated in part by new products that further lower the cost of sequencing a human genome. We expect DNA sequencing to play an important role in healthcare over the coming decades but with the emergence of competing technologies, and arguably the bigger challenge being how best to make use of all the genetic information rather than sequencing per se, we elected to sell the holding in Illumina.

We have frequently observed that online aggregators can make for very attractive investment prospects given their scalability and network effects that they can build. In this regard we would highlight Bitauto and Zillow. Bitauto is a leading provider of internet content and marketing services for China's fast-growing automotive industry. The company is benefitting as more automotive advertising moves online and has significant potential in catering to the early stage second hand car market. Zillow, the leading online real estate portal in the US, announced the acquisition of its smaller peer Trulia. The combined entity will have a dominant position as the portal favoured by both house buyers and real estate agents and is well positioned to capture a significantly higher share of agent advertising spend in future years. Two holdings were taken over in the period; Opentable, an online restaurant booking network was acquired by Priceline and AutoNavi, a Chinese mapping company was acquired by Alibaba.

Disappointingly several of the Company's holdings suffered share price falls during the sell-off in growth and technology shares that occurred in March and April; this included online grocer Ocado and cloud-based accounting software company, Xero. In the case of two UK holdings, Xaar and ASOS, these falls were exacerbated by disappointing near-term trading, a clear reminder that young innovative businesses rarely grow in a smooth linear fashion. With regard to all four of these underperforming companies we have reassessed the investment case and have decided to retain the holding.

Trading in the period was dominated by the reorganisation following the Annual General Meeting. Subsequent to this the Company acquired positions in a number of new holdings including Financial Engines, an investment advisor focused on providing highly scalable advice on US 401k retirement plans, and Foundation Medicine, a diagnostics company that is commercialising a comprehensive genetic test that maps the molecular changes that occur in cancer and uses this to guide patient specific treatments. The Company's holding in the US home services review network, Angie's List, was sold following disappointing results that raised questions as to how much value tradesmen derive from the network.

While cognisant of economic uncertainties, we continue to believe that there is a broader structural theme at work that is ultimately more relevant to long term bottom-up investors; that theme relates to innovation and the ever increasing role played by technology in building and growing businesses.

Income statement

	For the year ended 31 October 2014 (unaudited)			For the year ended 31 October 2013 (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
(Losses)/gains on investments	-	(3,952)	(3,952)	-	57,734	57,734
Currency gains/(losses)	-	749	749	-	(699)	(699)
Income (note 2)	1,186	-	1,186	1,987	-	1,987
Investment management fee	(362)	(1,085)	(1,447)	(341)	(1,024)	(1,365)
Other administrative expenses	(428)	-	(428)	(435)	-	(435)
Net return before finance costs and taxation	396	(4,288)	(3,892)	1,211	56,011	57,222
Finance costs of borrowings	(195)	(584)	(779)	(200)	(599)	(799)
Net return on ordinary activities before taxation	201	(4,872)	(4,671)	1,011	55,412	56,423
Tax on ordinary activities	(133)	-	(133)	(188)	-	(188)
Net return on ordinary activities after taxation	68	(4,872)	(4,804)	823	55,412	56,235
Net return per ordinary share (note 4)	0.14p	(9.94p)	(9.80p)	1.68p	113.07p	114.75p

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 2014 (unaudited) £'000	At 31 October 2013 (audited) £'000
Fixed assets
Investments held at fair value through profit or loss	227,012	229,025
Current assets
Debtors	130	715
Cash and short term deposits	10,595	13,081
	10,725	13,796
Creditors
Amounts falling due within one year (note 6)	(513)	(30,675)
Net current assets/(liabilities)	10,212	(16,879)
Total assets less current liabilities	237,224	212,146
Creditors
Amounts falling due after more than one year (note 6)	(30,862)	-
Net assets	206,362	212,146
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	84,806	89,678
Revenue reserve	1,706	2,618
Shareholders' funds	206,362	212,146
Net asset value per ordinary share (after deducting borrowings at fair value)	420.58p	432.31p
Net asset value per ordinary share (after deducting borrowings at par)	421.11p	432.91p
Ordinary shares in issue	49,004,319	49,004,319

Reconciliation of movements in shareholders' funds

For the year ended 31 October 2014 (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 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

For the year ended 31 October 2013 (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 2012	2,450	82,180	35,220	34,266	2,775	156,891
Net return on ordinary activities after taxation	-	-	-	55,412	823	56,235
Dividends paid during the year (note 5)	-	-	-	-	(980)	(980)
Shareholders' funds at 31 October 2013	2,450	82,180	35,220	89,678	2,618	212,146

*  The capital reserve as at 31 October 2014 includes investment holdings gains of £4,008,000 (2013 - gains of £112,998,000).

Condensed cash flow statement

	For the year ended 31 October 2014 (unaudited)		For the year ended 31 October 2013 (audited)
	£'000	£'000	£'000	£'000
Net cash (outflow)/inflow from operating activities (note 9)		(700)		365
Servicing of finance
Interest paid	(773)		(801)
Net cash outflow from servicing of finance		(773)		(801)
Taxation
Overseas tax incurred	(133)		(199)
Total tax paid		(133)		(199)
Financial investment
Acquisitions of investments	(220,402)		(30,133)
Disposals of investments	218,714		41,666
Realised currency (loss)/gain	156		(194)
Net cash (outflow)/inflow from financial investment		(1,532)		11,339
Equity dividends paid (note 5)		(980)		(980)
Net cash inflow before use of financing
Financing
Bank loan repaid	(28,971)		-
Bank loan drawn down	30,603		-
Net cash inflow from financing		1,632		-
(Decrease)/increase in cash		(2,486)		9,724
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period		(2,486)		9,724
Increase in bank loan		(1,632)		-
Exchange movement on bank loans		593		(505)
Movement in net debt in the year		(3,525)		9,219
Net debt at 1 November		(16,742)		(25,961)
Net debt at 31 October		(20,267)		(16,742)

Portfolio performance at 31 October 2014 (unaudited)

Name	Business	Fair value 2014 £'000	% of total assets	Performance†		Fair value 2013 £'000
				Absolute %	Relative %
Alnylam Pharmaceuticals	Therapeutic gene silencing	10,121	4.3	13.2	5.8	-
IP Group	Intellectual property commercialisation	8,631	3.6	53.4*	45.2*	2,933
Stratasys	3D printer manufacturer	7,641	3.2	7.1*	1.4*	3,735
Tesla Motors	Electric cars	6,784	2.9	52.4*	44.3*	1,350
MarketAxess	Electronic bond trading platform	6,673	2.8	9.0	1.9	-
Zillow	US online real estate portal	6,172	2.6	37.0	28.1	-
TripAdvisor	Online travel review platform	6,123	2.6	7.6*	1.9*	5,689
LinkedIn	Professional networking site	5,190	2.2	2.8*	(2.7)*	5,044
Dexcom	Real time blood glucose monitoring	4,887	2.1	26.9	18.6	-
IPG Photonics	Produces high-power fibre lasers and   amplifiers	4,485	1.9	2.8	(3.9)	-
IMAX	Film and cinema equipment	4,392	1.8	12.2	4.9	-
Genomic Health	Genomic-based clinical diagnostic tests     for cancer	4,207	1.8	20.9	13.0	-
Novadaq Technologies	Medical systems for intra-surgical   imagining	3,978	1.7	(23.0)	(28.1)	-
Ocado	Online food retailer	3,965	1.7	(51.2)	(54.4)	-
4D Pharma	Bacteria derived novel therapeutics	3,900	1.6	285.8	261.4	-
iRobot	Domestic and military robots	3,810	1.6	5.9*	0.3*	2,955
Morphosys	Therapeutic antibodies	3,796	1.6	8.7	1.6	-
Dialog Semiconductor	Analogue chips for mobile phones	3,791	1.6	71.8	60.6	-
Seek	Online recruitment portal	3,642	1.5	39.2	29.9	-
Financial Engines	Investment advisory firm	3,612	1.5	(27.3)	(29.5)	-
Bitauto	Chinese automotive website	3,474	1.5	176.4	158.4	-
EPAM Systems	Outsourced software and services	3,420	1.4	19.2	11.4	-
Aerovironment	Small unmanned aircraft systems	3,292	1.4	10.0	2.9	-
Faro Technologies	Designs and develops measurement   devices	3,252	1.4	10.6	3.4	-
Splunk	Data diagnostics	3,199	1.3	5.7*	0.1*	330
Seattle Genetics	Antibody conjugates based biotechnology	3,106	1.3	(4.7)*	(9.8)*	3,256
Nanoco	Quantum dot manufacturer	2,999	1.3	(1.9)	(7.7)	-
Imagination Technologies	Graphics semiconductor designer	2,888	1.2	1.6	(5.0)	-
M3	Online medical database	2,876	1.2	12.6	5.1	-
Temenos	Banking software	2,860	1.2	5.6	(1.3)	-
Genus	Animal breeding services	2,721	1.1	(16.3)	(21.8)	-
Wirecard	Internet payment and processing services	2,684	1.1	(14.5)	(20.1)	-
Renishaw	Measurement and calibration equipment	2,500	1.1	(2.1)	(8.5)	-
Cosmo Pharmaceuticals	Therapies for gastrointestinal diseases	2,498	1.1	57.1	50.4	-
Acacia Research	Patent licenser	2,498	1.1	38.0	29.0	-
Stamps.com	Website for postage services	2,474	1.0	(1.4)	(7.8)	-
Oxford Instruments	Produces advanced instrumentation   equipment	2,408	1.0	(35.8)	(40.0)	-
MonatoRO	Online business supplies	2,370	1.0	23.9	15.7	-
MakeMyTrip	Online travel services	2,336	1.0	45.3	35.8	-
FEI	Electron microscopes	2,302	1.0	(4.0)*	(9.1)*	4,696
ASOS	Online fashion retailer	2,258	0.9	(55.8)	(58.7)	-
AKR Corporindo	Distributes chemical products	2,221	0.9	15.5	9.6	-
Digital Garage	Internet business incubator	2,177	0.9	(51.5)	(54.7)	-
Victrex	High-performance thermo-plastics	2,153	0.9	(3.0)	(9.4)	-
AAC Technologies	Miniature acoustic components	2,085	0.9	44.5	35.0	-
Xeros	Commercial laundry manufacturer	1,947	0.8	5.3	3.0	-
Rightmove	UK online property portal	1,899	0.8	(14.8)	(20.4)	-
SDL	Language translation services	1,882	0.8	12.0	4.7	-
Start Today	Internet fashion retailer	1,849	0.8	(2.3)	(8.8)	-
Xing	Professional networking	1,844	0.8	2.0	(4.6)	-
Xero	Cloud-based accounting software	1,843	0.8	(63.1)	(65.6)	-
Teradyne	Semiconductor testing equipment   manufacturer	1,725	0.7	(0.3)	(6.8)	-
Retroscreen Virology	Outsourced pre-clinical analytical services	1,710	0.7	2.2	(5.3)	-
Senomyx	Developer of additives to amplify certain   flavours in foods	1,708	0.7	(0.5)	(3.0)	-
Perform	Commercialises online sports rights	1,666	0.7	11.1	3.9	-
CTS Eventim	Event ticketing and promotion	1,657	0.7	2.7	(4.0)	-
Foundation Medicine	Develops cancer diagnostic technology	1,618	0.7	21.8	17.0	-
Xaar	Ink jet printing technology	1,594	0.7	(74.2)	(75.9)	-
Basware	Software solutions for financial   transactions	1,558	0.7	31.1	22.6	-
Abcam	Scientific reagent supplier	1,551	0.7	(23.2)	(28.2)	-
Barco	Designs and develops visualisation   solutions	1,543	0.6	3.9	(3.0)	-
Next	Provides online property information	1,540	0.6	(42.8)	(46.6)	-
Galapagos	Developer of novel model of action   therapeutics	1,459	0.6	(39.8)	(43.7)	-
Exa	Simulation software and services	1,333	0.6	(21.0)	(26.1)	-
Power Integrations	Analogue integrated circuits	1,318	0.5	(12.3)	(18.0)	-
Sarine Technologies	Systems for diamond grading and cutting	1,239	0.5	61.2	50.6	-
Intelligent Energy Holding	Developer of modular fuel cells	1,234	0.5	(38.2)	(38.7)	-
Genomma Lab	Distributes over-the-counter drugs and   personal care products	1,228	0.5	(0.0)	(5.3)	-
Zumtobel	Commercial lighting	1,144	0.5	(8.5)	(14.6)	-
Horizon Discovery	Customised cell lines to aid drug discovery	1,140	0.5	(14.2)	(16.7)	-
Yoox	Online luxury fashion retailer	1,073	0.5	(51.4)	(54.6)	-
Intralinks	Secure collaboration tools	1,051	0.4	(20.7)	(25.8)	-
Cellectis	Biotech focused on genetic engineering	1,045	0.4	180.2	161.6	-
Noah	Distributes wealth management products   in China	922	0.4	18.7	10.9	-
Ricardo	Automotive engineer	902	0.4	2.7	(4.0)	-
Thin Film Electronics	Develops printed, rewritable memory   media	895	0.4	(32.8)	(37.3)	-
Just Dial	Offers a search engine to users throughout   India	849	0.4	13.8	7.0	-
Ceres Power Holding	Developer of fuel cell	821	0.3	(7.9)	(10.1)	-
Velocys	Gas to liquid technology	752	0.3	26.9	18.6	-
Suss Microtec	Fabrication and inspection equipment	724	0.3	(35.4)	(39.6)	-
Oisix	Organic food website	724	0.3	(53.0)	(56.1)	-
China Financial Services	SME lending in China	716	0.3	(28.7)*	(32.5)*	1,030
Avacta Group	Analytical reagents and instrumentation	682	0.3	(30.5)	(34.5)	-
Medgenics	Therapeutic protein delivery technology	674	0.3	(25.2)	(30.1)	-
Tissue Regenix	Regenerative medical devices	657	0.3	2.3	(4.5)	-
C4X Discovery Holdings	Rational drug design and optimisation	651	0.3	(0.0)	(6.0)	-
Summit Corporation	Drug discovery and development	533	0.2	(24.2)	(27.8)	-
Westport Innovations	Natural gas engine technology	418	0.2	(62.0)	(63.2)	-
Kingdee	Enterprise management software	408	0.2	(9.4)	(15.4)	-
Applied Graphene Materials	Manufactures grapheme nanoplatelets	228	0.1	(27.4)	(31.7)	-
GI Dynamics	Develops and markets medical devices	207	0.1	(64.1)	(66.5)	-
China Lumena New Materials	Mines, processes and manufactures   natural thenardite products	-	-	(100.0)	(100.0)	-
Total equities		227,012	95.7
Net liquid assets		10,212	4.3
Total assets at fair value#		237,224	100.0

†      Absolute and relative performance has been calculated on a total return basis over the period 1 November 2013 to 31 October 2014 (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 Citigroup Global Small Cap Index (in sterling terms).

*     Investments marked with an asterisk were held at 31 October 2013; the performance for these investments is for the year to 31 October 2014. All other investments were purchased following the portfolio re-organisation and their performance figures are part-period returns.

#    Before deductions of loan

Source: Baillie Gifford/StatPro.

Distribution of total assets* by Industry (Unaudited)

	Industry Analysis	31 October 2014 %		Portfolio Weightings (relative to comparative index†) at 31 October 2014 %
Equities:	Biotechnology	11.5		9.0
	Internet Software and Services	8.9		7.3
	Electronic Equipment, Instrument and Components	7.9		5.3
	Internet and Catalogue Retail	7.8		7.2
	Semiconductors and Semiconductor Equipment	5.6		3.5
	Software	5.6		2.9
	Capital Markets	5.5		2.7
	Media	4.6		1.9
	Computers and Peripherals	4.3		3.7
	Health Care Equipment and Supplies	4.2		2.2
	IT Services	3.4		1.5
	Pharmaceuticals	3.2		1.7
	Life Sciences Tools and Services	3.0		2.2
	Professional Services	3.0		1.8
	Automobiles	2.9		2.7
	Diversified Financial Services	2.8		1.7
	Trading Companies and Distributors	1.9		0.5
	Chemicals	1.7		(1.6)
	Household Durables	1.6		(0.6)
	Machinery	1.5		(3.0)
	Health Care Technology	1.5		1.2
	Aerospace and Defence	1.4		0.1
	Electrical Equipment	1.3		0.2
	Energy Equipment and Services	0.3		(1.2)
	Consumer Finance	0.3		(0.3)
	Net Liquid Assets	4.3
Total assets		100.0
* Total net assets before deduction of bank loan
† S&P Citigroup Global Small Cap Index. Weightings exclude industries where the Company has no exposure.

Distribution of total assets (unaudited)

				At 31 October 2014 %	At 31 October 2013 %
North America				47.0	51.8
		USA		45.2	51.8
		Canada		1.8	-
South America				0.5	-
	Mexico			0.5	-
Europe				34.9	24.3
	United Kingdom			22.8	5.4
	Eurozone			9.4	13.5
	Developed Europe (non euro)			2.7	5.4
Asia				10.9	18.5
	Japan			4.8	1.4
	China			2.4	14.7
	Hong Kong			0.9	-
	India			1.4	2.4
	Indonesia			0.9	-
	Singapore			0.5	-
Australasia				2.4	-
	Australia			1.6	-
	New Zealand			0.8	-
Total equities				95.7	94.6
Net liquid assets				4.3	5.4
Total assets (before deduction of loan)				100.0	100.0

Notes (unaudited)

1.	The financial statements for the year to 31 October 2014 have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 31 October 2013, 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 19 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.
2.	Income		2014 £'000	2013 £'000
	Income from investments		1,176	1,973
	Deposit interest		10	14
			1,186	1,987
3.		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 quarterly. Prior to 1 April 2013 the fee was 0.8% per annum of the market value of the Company's shares, calculated quarterly, plus a performance fee. No performance fee was payable for the period to 31 March 2013 and none is payable under the new arrangements. Until 31 March 2013, the Company paid a secretarial fee to Baillie Gifford which was adjusted annually in line with the Retail Price Index. The secretarial fee for the five months to 31 March 2013 was £34,000 and there is no secretarial fee under the new arrangements .
4.	Net return per ordinary share Revenue 2014 Capital Total Revenue 2013 Capital Total Net return on ordinary activities after     taxation 0.14p (9.94p) (9.80p) 1.68p 113.07p 114.75p
	Revenue return per ordinary share is based on the net return on ordinary activities after taxation of £68,000 (2013: £823,000) 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 loss for the financial year of £4,872,000 (2013 - net capital gain of £55,412,000) 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.

5.	Ordinary dividends		2014		2013			2014 £'000			2013 £'000
	Amounts recognised as distributions in the period:
	Previous year's final (paid 6 February 2014)		1.50p		1.50p			735			735
	Interim (paid 17 July 2014)		0.50p		0.50p			245			245
			2.00p		2.00p			980			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. The revenue available for distribution by way of dividend for the year is £68,000 (2013 - £823,000)
		Dividends paid and payable in respect of the year:
		Interim dividend per ordinary share (paid 17July 2014)		0.50p			0.50p		245			245
		Proposed final dividend per ordinary share (payable 5 February 2015)		1.50p			1.50p		735			735
				2.00p			2.00p		980			980
		If approved, the recommended final dividend will be paid on 5 February 2015 to shareholders on the register at the close of business on 9 January 2015.  The ex-dividend date is 8 January 2015. The registrars, Computershare Investor Services plc, offer a dividend reinvestment plan. The final date for the receipt of elections for the dividend reinvestment plan is 15 January 2015.
6.		At 31 October 2013 creditors included borrowings of £29,823,000 drawn down under a three year fixed rate loan facility with National Australia Bank Limited which expired on 30 September 2014. The loan was drawn down consisted of €11.4m, US$16.35m and £10.0m at that date. The facility was replaced with a five year fixed rate facility with National Australia Bank Limited which has drawings of drawn down €9.4m, US$25.6m and £7.5m which expires on 30 September 2019. The fair value of borrowings at 31 October 2014 was £31,120,000 (2013 - £30,117,000). Net asset value per share (after deducting borrowings at fair value) was 420.58p (2013 - 432.31p).
7.		The Company incurred transaction costs on purchases of £358,000 (2013 - £55,000) and on sales of £122,000 (2013 - £34,000).
8.		At the Annual General Meeting on 27 January 2014 the Company renewed its authority to purchase shares in the market, in respect of 7,345,747 ordinary shares (equivalent to 14.99% of its issued share capital at that date). No shares were bought back during the year to 31 October 2014 or 2013. At 31 October 2014 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)/inflow from operating activities				2014 £'000				2013 £'000
		Net return before finance costs and taxation				(3,892)				57,222
		Losses/(gains) on investments				3,952				(57,734)
		Currency(gains)/losses				(749)				699
		(Increase)/decrease in accrued income				(16)				152
		Decrease/(increase) in debtors				23				(43)
		(Decrease)/increase in creditors				(18)				69
		Net cash (outflow)/inflow from operating activities				(700)				365
10.		The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 October 2014. The financial information for 2012 is derived from the statutory accounts for 2013 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2013 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 2014 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 22 December 2014.
12.		None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the

Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

END

 

 

FR QKDDDFBDDDBD