Half Yearly Report

RNS Number : 1029J

Edinburgh Worldwide Inv Trust PLC

09 June 2014

 



RNS Announcement

Edinburgh Worldwide Investment Trust plc

Results for the six months to 30 April 2014

Since 1 February 2014, the Company has been invested in a diversified portfolio of companies which individually offer significant long term growth potential and typically have a market capitalisation of less than $5bn at the time of initial investment.

Over the six month period the Company's net asset value per share† decreased by 12.8% while the comparative index* decreased by 3.1%. The share price fell by 11.1%.

¾ The absolute and relative performance of the portfolio over the 6 months was influenced heavily by price falls towards the end of the period. The Managers have reviewed the composition and overall positioning of the portfolio and in aggregate are satisfied that the respective investment hypotheses for the companies held remain intact and the sell off in the more technology-orientated areas of the market has resulted in increased long term investment opportunities

¾ The current environment is unprecedented with regard to innovation and the ever increasing role played by technology in both building new businesses and disrupting incumbents.  It is the nimble, more innovative smaller businesses that are best positioned to prosper in this more dynamic world.

¾ Although the focus at time of initial investment has shifted, the emphasis on strong growth and the global holistic approach to stock picking continues.  10 of the 38 holdings held at the start of the period were retained as part of the broadened investment approach and now account for nearly 20% of the portfolio's assets. 

¾ Revenue losses per share were 0.05p (six months to 30 April 2013: gains of 0.86p) and the interim dividend is unchanged at 0.50p.  Due to the decline in expected earnings for the year the amount of any final dividend will be kept under review.

¾ The investment philosophy remains index agnostic and focussed on long term capital growth so there will be periods when performance differs notably from the comparative index.

†  Cum income with debt at fair value.

*Changed from MSCI All Countries World Index (in sterling terms) on 1 February 2014 to S&P Citigroup Global Small Cap Index (in sterling terms).  Data has been chain-linked to form a single index.

Past performance is not a guide to future performance.

Edinburgh Worldwide aims to achieve long term capital growth by investing primarily in listed companies throughout the world. The Company has total assets of £213.8 million (before deduction of loans of £29.0 million) as at 30 April 2014.

Edinburgh Worldwide is managed by Baillie Gifford & Co, the Edinburgh based fund management group with around £107 billion under management and advice as at 6 June 2014.

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

6 June 2014

For further information please contact:

Anzelm Cydzik, Baillie Gifford & Co

Tel: [phone]

Roland Cross, Director, Broadgate Mainland

Tel: [phone]

The following is the unaudited Half-Yearly Financial Report for the six months to 30 April 2014.

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 Half-Yearly 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, their impact on the financial statements and a description of principal risks and uncertainties for the remaining six months of the year); and

C. the Half-Yearly Financial 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

David HL Reid

Chairman

6 June 2014

Half-yearly management report

Investment Managers' Review

Following shareholder approval at the Company's recent Annual General Meeting the portfolio has been realigned and is now invested in a broader portfolio of companies at an earlier stage of their development. Since 1 February 2014, the Company has been invested in a diversified portfolio of companies which individually offer significant long term growth potential and typically have a market capitalisation of less than $5bn at the time of initial investment.

The changes occurred midway through the 6 months to the end of April 2014. Over this period, the Company's net asset value per share fell by 12.8%, which compares to a 3.1% fall in the comparative index over the same period. The share price over the six months declined by 11.1% to 360p and ended the period at a 4.5% discount to the Company's net asset value, narrower than the 6.3% discount at the start of the period. The absolute and relative performance of the portfolio over the 6 months was influenced heavily by price falls towards the end of the period, brought about by a largely indiscriminate sell-off in technology and biotech stocks, an area of the market to which the portfolio is exposed. The sell-off was mainly sentiment-led, possibly reflecting some profit taking in areas of the market that had performed well over the past year and likely exacerbated by fund flows.  Whilst it is disappointing to be behind the comparative index over this short period, our investment philosophy remains index agnostic and long term, typically with at least a 5 year horizon and often longer, so there will be periods when performance differs notably from the comparative index.

Investment Philosophy

Most small businesses are destined to stay small given their limited scope for both structural growth and meaningful differentiation. Such businesses constitute the bulk of the smaller companies' universe yet are of no appeal to us. However, what is intriguing about the smaller companies' universe is that it contains a subset of immature but potentially high growth companies. By identifying attractive growth companies earlier we seek to benefit from growth at an earlier stage in a company's lifecycle and retain ownership of successful companies as they grow and thrive; we see our role as investing in what are potentially the larger companies of the future as opposed to the smaller companies of today.

In refocusing the Company's remit towards the opportunity initially offered by smaller companies, we are looking to concentrate on the part of the market where we believe our analytical effort and the pursuit of genuinely transformational growth can be better exploited.   Although the focus at time of initial investment has shifted towards younger, more immature companies, the emphasis on strong growth and the global philosophy that has served the Company well over recent years is retained; in this regard it is notable that 10 of the 38 holdings held at the start of the period were retained, which now make up nearly 20% of the portfolio.

It is important to remember that big successful ideas typically start out as small, tentative and unproven. Early iterations are easy to dismiss as unworkable but experimentation with, and evolution of, an initially raw concept can, over time, yield huge commercial relevance. Our philosophy involves weighing up what is proven and tangible alongside what has promise and long term potential. Integral to this approach is recognising the role of innovation in business development; it provides the fuel for business creation, growth and long term competitive differentiation. Consequently, identifying companies that value innovation, having both a cultural acceptance of it and a means to develop commercial opportunities around it, is fundamental to our investment approach.

The current 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's the nimble, more innovative smaller businesses that are best positioned to prosper; they lack the bureaucracy of larger incumbents while the technology toolkit now at their disposal has radically changed the trajectory and magnitude of growth that a small business can achieve.  Innovation is at its most powerful when it creates novel platforms with wide ranging relevance. While technology platforms can come in many forms they appeal because validation of the initial platform can create emerging winners with a very large and highly scalable opportunity.  We would highlight the holding in the biotechnology company Alnylam as a case in point. Here is a company which is pioneering the development of highly specific gene suppression technology which, given the modular nature of its drug platform, can be customised to treat a wide range of genetically-linked disorders.  Another example would be Ocado, which is at the forefront of using automation and digitisation to create a globally-relevant platform for online grocery. All too frequently we believe the market underestimates the long term relevance of platform-based companies at it tends to obsess about their immediate relevance and near-term financial characteristics.

Growth companies, especially those which are young and hard to model, are difficult businesses to value. The wide range of potential outcomes and profitability that is heavily skewed to future years is a combination of uncertainties that many investors struggle with. We do not have all the answers but by approaching the challenge with a genuine long term perspective, accepting a degree of uncertainty, backing robust innovation and entrepreneurial management, we believe we are well positioned to identify the smaller businesses most likely to shape the world in which we live.

Dividend

The Company's objective remains that of generating capital growth and any income received from the underlying holdings is a by-product of this. The revenue loss per share for the period was 0.05p which compares to a revenue gain of 0.86p for the corresponding period last year reflecting the lower yield on the underlying portfolio. The Directors have declared an unchanged interim dividend 0.50p per share; however, due to the decline in earnings, the amount of any final dividend will be kept under review.

Portfolio Activity

Transactions in the period were dominated by the reorganisation of the portfolio which was substantially completed by 31 January 2014. As mentioned, 10 of the stocks held at the start of the period were retained as part of the broadened investment approach. The retained stocks were Tesla, LinkedIn, TripAdvisor, Splunk, Stratasys, Seattle Genetics, FEI, IP Group, iRobot and China Financial Services.   In light of recent performance, we have reviewed the composition and overall positioning of the portfolio and in aggregate are satisfied that the respective investment hypotheses remain intact and that the seemingly indiscriminate sell off in the more technology-orientated areas of the market has resulted in increased long term investment opportunities.  Consequently, we remain geared, with gearing at the end of April standing at 12% compared to 8% six months earlier.

Scottish Independence

The Board is very aware of the issues arising out of the referendum on Scottish Independence on 18 September 2014 and is monitoring developments. The Board understands that in the event of a 'Yes' vote there will be a transitional period in excess of 12 months during which the Board will assess the situation and take any appropriate action.

Baillie Gifford & Co

6 June 2014

Past performance is not a guide to future performance.

Income statement (unaudited)

	For the six months ended 30 April 2014			For the six months ended 30 April 2013			For the year ended 31 October 2013
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on sales of investments	-	103,222	103,222	-	1,120	1,120	-	4,036	4,036
Movements in investment holding (losses)/ gains	-	(129,385)	(129,385)	-	18,952	18,952	-	53,698	53,698
Currency gains/(losses)	-	396	396	-	(732)	(732)	-	(699)	(699)
Income from investments and interest receivable	522	-	522	1,024	-	1,024	1,987	-	1,987
Investment management fee (note 3)	(181)	(543)	(724)	(156)	(469)	(625)	(341)	(1,024)	(1,365)
Other administrative expenses	(217)	-	(217)	(231)	-	(231)	(435)	-	(435)
Net return before finance costs and taxation	124	(26,310)	(26,186)	637	18,871	19,508	1,211	56,011	57,222
Finance costs of borrowings	(96)	(289)	(385)	(99)	(297)	(396)	(200)	(599)	(799)
Net return on ordinary activities before taxation	28	(26,599)	(26,571)	538	18,574	19,112	1,011	55,412	56,423
Tax on ordinary activities	(52)	-	(52)	(114)	-	(114)	(188)	-	(188)
Net return on ordinary activities after taxation	(24)	(26,599)	(26,623)	424	18,574	18,998	823	55,412	56,235
Net return per ordinary share (note 4)	(0.05p)	(54.28p)	(54.33p)	0.86p	37.90p	38.76p	1.68p	113.07p	114.75p
Dividends paid and proposed per ordinary share (note 5)	0.50p			0.50p			2.00p

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in 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 (unaudited)

	At 30 April 2014 £'000	At 30 April 2013 £'000	At 31 October 2013 £'000
Fixed assets
Investments held at fair value through profit or loss	207,699	199,931	229,025
Current assets
Debtors	162	622	715
Cash and short term deposits	6,422	4,984	13,081
	6,584	5,606	13,796
Creditors
Amounts falling due within one year (note 6)	(29,495)	(222)	(30,675)
Net current (liabilities)/assets	(22,911)	5,384	(16,879)
Total assets less current liabilities	184,788	205,315	212,146
Creditors
Amounts falling due after more than one year (note 6)	-	(30,161)	-
Total net assets	184,788	175,154	212,146
Capital and reserves
Called up share capital	2,450	2,450	2,450
Share premium	82,180	82,180	82,180
Special reserve	35,220	35,220	35,220
Capital reserve	63,079	52,840	89,678
Revenue reserve	1,859	2,464	2,618
Shareholders' funds	184,788	175,154	212,146
Net asset value per ordinary share (after deducting borrowings at fair value) (note 6)	376.8p	356.4p	432.3p
Net asset value per ordinary share (after deducting borrowings at par)	377.1p	357.4p	432.9p
Ordinary shares in issue (note 7)	49,004,319	49,004,319	49,004,319

Reconciliation of movements in shareholders' funds (unaudited)

For the six months ended 30 April 2014

	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	-	-	-	(26,599)	(24)	(26,623)
Dividends paid during the period (note 5)	-	-	-	-	(735)	(735)
Shareholders' funds at 30 April 2014	2,450	82,180	35,220	63,079	1,859	184,788

For the six months ended 30 April 2013

	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	-	-	-	18,574	424	18,998
Dividends paid during the period (note 5)	-	-	-	-	(735)	(735)
Shareholders' funds at 30 April 2013	2,450	82,180	35,220	52,840	2,464	175,154

For the year ended 31 October 2013

	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 30 April 2014 includes investment holding losses of £16,387,000 (30 April 2013 - gains of £78,253,000 and 31 October 2013 - gains of £112,998,000).

Condensed cash flow statement (unaudited)

	Six months to 30 April 2014 £'000	Six months to  30 April 2013 £'000	Year to 31 October 2013 £'000
Net cash (outflow)/inflow from operating activities	(518)	(264)	365
Net cash outflow from servicing of finance	(389)	(394)	(801)
Total tax paid	(51)	(110)	(199)
Net cash (outflow)/inflow from financial investment	(4,966)	3,130	11,339
Equity dividends paid (note 5)	(735)	(735)	(980)
(Decrease)/increase in cash	(6,659)	1,627	9,724
Reconciliation of net cash (outflow)/inflow to movement in net debt
(Decrease)/increase in cash in the period	(6,659)	1,627	9,724
Exchange movement on bank loans	779	(843)	(505)
Movement in net debt in the period	(5,880)	784	9,219
Net debt at start of the period	(16,742)	(25,961)	(25,961)
Net debt at end of the period	(22,622)	(25,177)	(16,742)
Reconciliation of net return before finance costs and taxation to net cash (outflow)/inflow from operating activities
Net return before finance costs and taxation	(26,186)	19,508	57,222
Losses/(gains) on investments	26,163	(20,072)	(57,734)
Currency (gains)/losses	(396)	732	699
Changes in debtors and creditors	(99)	(432)	178
Net cash (outflow)/inflow from operating activities	(518)	(264)	365

Portfolio and equity performance at 30 April 2014 (unaudited)

Name	Business	Value £'000	% of total assets	Performance†
				Absolute %	Relative %
IP Group	Intellectual property commercialisation	7,249	3.4	27.5*	27.2
Zillow	US online real estate portal	5,848	2.8	29.8	27.8
Stratasys	3D printer manufacturer	5,828	2.7	(18.3)*	(18.5)
Tesla Motors	Electric cars	5,526	2.6	24.2*	23.9
Ocado	Online food retailer	5,359	2.6	(34.1)	(35.1)
TripAdvisor	Online travel review platform	5,284	2.5	(7.1)*	(7.3)
Marketaxess	Electronic bond trading platform	5,266	2.5	(14.3)	(15.6)
Alnylam Pharmaceuticals	RNA interference based biotechnology	5,124	2.5	(42.7)	(43.6)
Dexcom	Real time blood glucose monitoring	3,919	1.8	(13.1)	(14.4)
Xaar	Ink jet printing technology	3,896	1.8	(27.3)	(28.4)
Dialog Semiconductor	Analogue chips for mobile phones	3,896	1.8	19.2	17.4
Xero	Cloud-based accounting software	3,857	1.8	(23.0)	(24.2)
Novadaq Technologies	Medical systems for intra-surgical imaging	3,783	1.8	(26.9)	(28.0)
IPG Photonics	Produces high-power fibre lasers and   amplifiers	3,741	1.7	(14.3)	(15.6)
Seek	Online recruitment portal	3,670	1.7	38.9	36.7
ASOS	Online fashion retailer	3,631	1.7	(28.8)	(29.9)
IMAX	Film and cinema equipment	3,624	1.7	(7.5)	(8.9)
Opentable	Online restaurant booking platform	3,556	1.7	(16.8)	(18.1)
Aerovironment	Small unmanned aircraft systems	3,438	1.6	14.9	13.2
iRobot	Robot manufacturer	3,383	1.6	(5.9)*	(6.1)
Linkedin	Professional networking site	3,297	1.5	(34.7)*	(34.9)
Morphosys	Antibody development company	3,235	1.5	(7.1)	(8.5)
Seattle Genetics	Antibody conjugates based biotechnology	3,088	1.4	(5.2)*	(5.5)
FEI	Electron microscopes	3,046	1.4	(14.7)*	(14.9)
Financial Engines	Investment advisory firm	3,013	1.4	(23.8)	(22.1)
Imagination Technologies	Graphics semiconductor designer	2,982	1.4	4.8	3.2
Wirecard	Internet payment and processing services	2,981	1.4	(5.4)	(6.8)
Oxford Instruments	Advanced instrumentation equipment	2,877	1.3	(24.0)	(25.2)
Genomic Health	Genomic-based diagnostic tests for cancer	2,877	1.3	(17.3)	(18.5)
Temenos	Banking software	2,781	1.3	1.5	0.0
Autonavi	Manufactures map software and products	2,616	1.2	41.8	39.7
Nanoco	Quantum dot manufacturer	2,575	1.2	(15.8)	(16.5)
Renishaw	Measurement and calibration equipment	2,556	1.2	(1.8)	(3.2)
Splunk	Data diagnostics	2,504	1.2	(17.3)*	(17.5)
Victrex	High-performance thermo-plastics	2,366	1.1	5.8	4.3
Bitauto	Chinese automotive website	2,342	1.1	12.1	10.5
Digital Garage	Internet business incubator	2,331	1.1	(48.2)	(49.1)
Next	Provides online property information	2,304	1.1	(14.4)	(15.8)
M3	Online medical database	2,276	1.1	(10.9)	(12.3)
Genus	Animal breeding services	2,234	1.0	(31.3)	(32.4)
Stamps.com	Website for postage services	2,200	1.0	(12.1)	(13.4)
Faro Technologies	Designs and develops measurement devices	2,194	1.0	(25.3)	(26.5)
Rightmove	UK online property portal	2,169	1.0	(4.1)	(5.5)
Angie's List	Household services review website	2,144	1.0	(32.3)	(33.3)
Galapagos	Drug discovery company	2,143	1.0	(11.6)	(12.9)
AKR Corporindo	Distributes chemical products	2,126	1.0	9.6	9.7
Xing	Professional networking	2,124	1.0	12.3	10.7
EPAM Systems	Outsourced software and services	2,111	1.0	(26.3)	(27.5)
Yoox	Online luxury fashion retailer	1,977	0.9	(10.6)	(12.1)
CTS Eventim	Event ticketing and promotion	1,903	0.9	16.0	14.3
AAC Technologies	Miniature acoustic components	1,829	0.9	24.7	22.7
Acacia Research	Patent licenser	1,826	0.9	15.1	13.4
MonotaRO	Distributor of business supplies	1,758	0.8	(8.3)	(9.8)
Start Today	Internet fashion retailer	1,729	0.8	(9.1)	(10.6)
Teradyne	Semiconductor testing equipment	1,569	0.7	(9.8)	(11.1)
Xeros	Commercial laundry manufacturer	1,564	0.7	(16.9)	(14.3)
Makemytrip	Indian travel website	1,556	0.7	(3.2)	(4.6)
Cosmo Pharmaceuticals	Therapies for gastrointestinal diseases	1,550	0.7	27.9	29.0
Abcam	Scientific reagent supplier	1,536	0.7	(24.2)	(25.3)
Barco	Designs and develops visualisation solutions	1,470	0.7	(2.9)	(4.5)
SDL	Language translation services	1,454	0.7	(14.2)	(15.5)
EXA	Simulation software and services	1,392	0.7	(19.9)	(21.1)
Perform	Commercialises online sports rights	1,381	0.6	(8.3)	(9.6)
Horizon Discovery	Customised cell lines to aid drug discovery	1,350	0.6	2.8	5.2
Zumtobel	Lighting company	1,282	0.6	1.3	(0.3)
Power Integrations	Analogue integrated circuits	1,170	0.5	(22.3)	(23.5)
Genomma Lab	Distributes over-the-counter drugs and     personal care products	1,170	0.5	(4.8)	(5.0)
4D Pharma	Biotechnology company	1,138	0.5	80.0	77.7
Thin Film Electronics	Develops printed, rewritable memory media	1,133	0.5	(15.2)	(16.6)
Suss Microtec	Fabrication and inspection equipment	1,120	0.5	0.7	(0.8)
Sarine Technologies	Systems for diamond grading and cutting	1,117	0.5	42.6	40.3
Intralinks	Secure collaboration tools	1,054	0.5	(20.4)	(21.6)
Retroscreen Virology	Outsourced pre-clinical analytical services	978	0.5	(1.0)	(3.4)
China Financial Services	SME lending in China	950	0.5	(6.3)*	(6.5)
Ricardo	Automotive engineer	927	0.5	3.6	2.1
Medgenics	Therapeutic protein delivery technology	866	0.4	(4.2)	(5.6)
Westport Innovations	Natural gas engines technology	849	0.4	(23.4)	(21.9)
Basware	Software solutions for financial transactions	838	0.4	17.6	15.8
Tissue Regenix	Regenerative medical devices company	799	0.4	22.0	20.1
Oisix	Organic food website	727	0.3	(52.8)	(53.6)
Noah	Distributes wealth management products in   China	716	0.3	(7.7)	(9.1)
Summit Corporation	Drug discovery and development company	697	0.3	(1.3)	(1.0)
Velocys	Gas to liquid technology	652	0.3	10.0	8.3
Just Dial	Offers a search engine to users throughout   India	643	0.3	(13.9)	(14.6)
Cellectis	Biotech focused on genetic engineering	541	0.3	45.6	43.2
GI Dynamics	Develops and markets medical devices	385	0.2	(33.5)	(34.5)
Applied Graphene Materials	Manufactures graphene nanoplatelets	382	0.2	19.5	18.4
Kingdee	Enterprise management software	351	0.2	(21.9)	(23.2)
Total equities		207,699	97.1
Net liquid assets		6,132	2.9
Total assets at fair value (before deduction of loans)		213,831	100.0

†      Absolute and relative performance has been calculated on a total return basis over the period 1 November 2013 to 30 April 2014. 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 six months to 30 April 2014.  All other investments were purchased following the portfolio re-organisation and their performance figures are part-period returns.

Source: Baillie Gifford & Co, StatPro.

Past performance is not a guide to future performance.

Distribution of total assets* (unaudited)

	Industry Analysis	30 April 2014 %		Portfolio Weightings (relative to comparative index†) at 30 April 2014 %
Equities:	Internet Software and Services	10.9		9.5
	Internet and Catalogue Retail	9.5		8.9
	Biotechnology	9.0		6.9
	Electronic Equipment, Instrument and Supplies	8.2		5.8
	Software	7.5		4.9
	Semiconductors and Semiconductor Equipment	6.1		3.6
	Media	5.3		2.7
	Capital Markets	5.1		2.3
	Computers and Peripherals	5.0		4.4
	Health Care Equipment and Supplies	3.8		2.0
	IT Services	3.5		1.5
	Professional Services	3.1		1.7
	Automobiles	2.6		2.3
	Diversified Financial Holdings	2.5		1.4
	Pharmaceuticals	2.3		0.7
	Life Sciences Tools and Services	2.3		1.5
	Trading Companies and Distributors	1.8		0.1
	Aerospace and Defence	1.6		0.3
	Household Durables	1.6		(0.6)
	Chemicals	1.3		(2.2)
	Health Care Technology	1.1		0.8
	Machinery	0.9		(3.9)
	Commercial Services and Supplies	0.7		(1.5)
	Electrical Equipment	0.6		(0.7)
	Consumer Finance	0.5		-
	Energy Equipment and Services	0.3		(1.5)
	Net Liquid Assets	2.9		-
Total assets		100.00
* Total net assets before deduction of bank loans
† S&P Citigroup Global Small Cap Index. Weightings exclude industries where the Company has no exposure.

Geographical Analysis		30 April 2014 %		31 October 2013 %
Australasia		3.7		-
	Australia	1.9	-
	New Zealand	1.8	-
North America		43.8		51.8
	USA	42.1	51.8
	Canada	1.7	-
South America		0.5	-
	Mexico	0.5	-
Europe		37.2	24.3
	United Kingdom	23.7	5.4
	Eurozone	11.0	13.5
	Developed Europe (non euro)	2.5	5.4
Asia		11.9	18.5
	Japan	5.2	1.4
	China	3.3	14.7
	India	1.0	2.4
	Indonesia	1.0	-
	Hong Kong	0.9	-
	Singapore	0.5	-
Net Liquid Assets		2.9		5.4
Total Assets		100.0		100.0

	Sectoral Analysis	30 April 2014 %		31 October 2013 %
Equities:
	Consumer Discretionary	19.0		31.9
	Consumer Staples	-		6.3
	Energy	0.3		-
	Financials	8.0		3.6
	Health Care	18.5		10.0
	Industrials	8.7		5.0
	Information Technology	41.2		37.8
	Materials	1.4		-
	Net Liquid Assets	2.9		5.4
Total Assets		100.0		100.0

Notes to the condensed financial statements (unaudited)

1.	The condensed financial statements have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 October 2013 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 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.
2.	The financial information contained within this Half-Yearly Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 31 October 2013 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors' Report on those accounts was not qualified and did not contain a statement under sections 498(2) or (3) of the Companies Act 2006.
3.	Baillie Gifford & Co are appointed as Managers and Secretaries. The management agreement is terminable on not less than three months' notice. With effect from 1 April 2013 the annual management fee became 0.95% on the first £50m of net assets and 0.65% on the remaining net assets, calculated quarterly. The fee previously 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.
4.	Net return per ordinary share	Six months to 30 April 2014 £'000	Six months to 30 April 2013 £'000	Year to 31 October 2013 £'000
	Revenue return on ordinary activities after taxation	(24)	424	823
	Capital return on ordinary activities after taxation	(26,599)	18,574	55,412
	Total return	(26,623)	18,998	56,235
	Net return per ordinary share is based on the above totals of revenue and capital and on 49,004,319 ordinary shares, being the number of ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue.

Notes to the condensed financial statements (unaudited) (ctd)

5.	Dividends Amounts recognised as distributions in the period:	Six months to 30 April 2014 £'000	Six months to 30 April 2013 £'000	Year to 31 October 2013 £'000
	Previous year's final dividend of 1.50p (2012 - 1.50p), paid 6 February 2014	735	735	735
	Interim dividend for the year ended 31 October 2013 paid 18 July 2013	-	-	245
		735	735	980
	Paid and proposed in respect of the financial period:
	Interim dividend for the year ending 31 October 2014 of 0.50p (2013 - 0.50p)	245	245	245
	Final dividend (31 October 2013 - 1.50p)	-	-	735
		245	245	980
	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 17 July 2014 to shareholders on the register at the close of business on 20 June 2014. The ex-dividend date is 18 June 2014. The registrars offer a dividend reinvestment plan. The final date for the receipt of elections for the dividend reinvestment plan is 26 June 2014.
6.	Creditors include borrowings of £29,044,000 (30 April 2013 - £30,161,000; 31 October 2013 - £29,823,000) drawn down under a three year fixed rate loan facility expiring on 30 September 2014 in loans of €11.4m, US$16.35m and £10.0m (30 April 2013 - same; 31 October 2013 - same). The fair value of the bank loans at 30 April 2014 was £29,179,000 (30 April 2013 - £30,647,000; 31 October 2013 - £30,117,000).
7.	The Company has authority to buy back its ordinary shares. In the six months to 30 April 2014 no ordinary shares were bought back therefore the Company's authority remains unchanged at 7,345,747 ordinary shares.
8.	During the period the Company incurred transaction costs on purchases of investments of £351,000 (30 April 2013 - £27,000; 31 October 2013 - £55,000) and transaction costs on sales of £118,000 (30 April 2013 - £21,000; 31 October 2013 - £34,000).
9.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

Notes to the condensed financial statements (unaudited) (ctd)

10.	Principal Risks and Uncertainties The principal risks facing the Company relate to the Company's investment activities. These risks are market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. An explanation of these risks and how they are managed is contained in note 19 of the Company's Annual Report and Financial Statements for the year to 31 October 2013. The principal risks and uncertainties have not changed since the publication of the Annual Report which can be obtained free of charge from Baillie Gifford & Co: www.bailliegifford.com‡ and is available on the Edinburgh Worldwide page of the Managers' website: www.edinburghworldwide.co.uk‡. Other risks facing the Company include the following:
	¾  Regulatory Risk - the loss of investment trust status or a breach of the UKLA Listing Rules could have adverse financial consequences and cause reputational damage;
	¾  Operational/Financial Risk - failure of service providers' accounting systems could lead to inaccurate reporting or financial loss;
	¾  Discount Volatility - the risk that the discount can widen;
	¾  Gearing Risk - the use of borrowing can magnify the impact of falling markets;
	¾  Political Risk - the Scottish Referendum vote introduces elements of political uncertainty which may have practical consequences. Further information can be found on page 7 of the Annual Report.
11.	The Half-Yearly Financial Report will be available on www.edinburghworldwide.co.uk‡ and will be posted to shareholders on or around 16 June 2014.

‡      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.

- Ends -

 

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