Interim Results

RNS Number : 6082W

Edinburgh Worldwide Inv Trust PLC

13 June 2008

 



EDINBURGH WORLDWIDE INVESTMENT TRUST plc

Results for the six months to 30 April 2008

Over the six month period the Company's net asset value (NAV) per share declined by 2.0% while the MSCI All Countries World Index (in sterling terms) decreased by 6.0%. The share price declined by 0.7%.

In the four and a half years that Baillie Gifford has been managing the Company's assets, NAV per share has risen 83.4% and the share price has increased 103.8%. The index has risen 40.8%. 

	The so-called 'credit-crunch' has impacted global markets and effected share prices of many companies far removed from the epicentre of the financial crisis.
	The Managers have been using the opportunity created by the disconnect between share prices and fundamentals to buy six new holdings (ABB, China Mobile, First Solar, Google, Nintendo and UBS) as well as adding to existing ones. In the period, Infosys Technologies, Moody's, Omnicom, Progressive, Pulte Homes and Wolseley were sold and turnover was 31% on an annualised basis.
	Earnings per share were 2.01p (1.30p) and the interim dividend is unchanged at 0.50p.
	The Board and Managers are of the view that the present financial climate and the sustained and rapid growth of developing economies is creating interesting long-term investment opportunities.

Edinburgh Worldwide aims to achieve long term capital growth by investing in listed companies throughout the world. The Trust has total assets of £172 million (before deduction of loans of £26 million).  

Edinburgh Worldwide is managed by Baillie Gifford & Co, the Edinburgh based fund management group with over £54 billion under management and advice as at 12 June 2008. 

   - ends -         13 June 2008

For further information please contact:

Mark Urquhart, Manager,    

Edinburgh Worldwide Investment Trust plc    0131 275 2070

Anzelm Cydzik

Baillie Gifford & Co                                       0131 275 2000

Roland Cross, Director,

Broadgate Marketing                                     020 7726 6111

The following is the unaudited Half-Yearly Financial Report for the six months 

to 30 April 2008

EDINBURGH WORLDWIDE INVESTMENT TRUST PLC

Half-Yearly Financial Report 30 April 2008

Responsibility Statement

We confirm that to the best of our knowledge:

a)      the condensed set of financial statements has been prepared in accordance with the Accounting Standards Board’s statement “Half-Yearly Financial Reports”;

b)      the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c)      the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

David A Coltman

Chairman

12 June 2008

  EDINBURGH WORLDWIDE INVESTMENT TRUST plc

Interim Management Report

Global equity markets have been volatile over the six months from November 2007 to April 2008. Edinburgh Worldwide's net asset value fell by 2.0% over the period which compares to a 6.0% decline in the MSCI All Countries World Index (in sterling terms) over the same period. These decreases mask a period of sharp decline until the end of February and some recovery since March and, as ever, we have tried to profit from such turbulence when trading. The share price over the six months fell by 0.7% to 266p representing a discount of 10.9% to the net asset value at 30 April 2008 which compares to a discount of 12.1% at the beginning of the period. 

The Directors have declared an interim dividend of 0.50p per share, unchanged from last year. The interim dividend will be paid on 10 July 2008 to shareholders on the register on 27 June 2008. The final dividend was 1.50p last year and the Directors will consider this year's payment over the remainder of the financial year. 

Two of the fundaments of the philosophy with which we manage the Company are an explicit focus on long term investing - defined as five years and more - and a complete disregard for the index when constructing our portfolio. Both of these beliefs have been strengthened by events of the last six months. At the time of writing, collective balance sheet write-offs by financial institutions are nearing the US$400bn level, with American and European banks almost equally culpable of the mismanagement of shareholders' funds on an unprecedented scale. 

In the summer of 2007, the financial sector represented around a quarter of many stockmarkets and many market participants viewed the riskless state as being close to this weighting. The subsequent revelations of classic herd-like behaviour in a plethora of new financial products has brought this weight tumbling down illustrating, as so often has been proven the case in stockmarket history, that risk can reside in the index itself. We continue to prefer our Brazilian and Indian retail banks to their Anglo-Saxon counterparts although we have taken a small holding in UBS amidst the turmoil on the view that the wealth management business is being undervalued from a long term perspective - few other banks have such a business to fall back upon. 

There has been considerable action regarding balance sheet rebuilding and policy response particularly in the US where the Fed is less fettered by an inflationary brief than the Bank of England or ECB. Around US$275bn of new capital has been raised or is in the process of being raised at the time of writing. Sovereign wealth funds from the Middle East and Asia have been notable providers of new capital to shore up battered balance sheets in a graphic illustration of the shift in global financial power and deeply discounted rights issues are competing for investors' attention. 

As ever, at such volatile times, it is instructive to try to step back and focus on fundamentals. It is fairly clear that the economies most closely associated with the explosion of credit growth - the US, UK, Spain, Ireland and Australia - are now being hardest hit with real economic effects stemming from the tightening of credit standards e.g. the number of mortgage products available in the UK has more than halved in the past six months and house prices are falling in most of the countries listed above. We are seeing a string of profit warnings in domestic-orientated companies in these markets and whilst share prices are reacting, we feel little desire to get involved at this stage. We currently have no holdings in the UK and very little exposure 

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

Interim Management Report (Ctd)

to the domestic economies of the other worst-hit countries as we think the correction of previous excesses could be an elongated process. 

Meanwhile back in the 'real' world, China's GDP continues to grow above 10% and India has recently announced a US$500bn infrastructure spending programme over the next few years and we think economic decoupling is a reality rather than a theory. Interestingly, share prices in many of these markets far from the epicentre of the financial crisis have been hit where operationally the businesses are showing no sign of stress and we have therefore been somewhat more active than usual in transactions over the last six months with turnover of 31% on an annualised basis. 

We try to use such disconnects between share prices and fundamentals to our advantage. New holdings over the last six months range from China Mobile, which is adding around 7 million customers a month, to ABB, where South Africa is just the latest example of the need for electricity transmission investment; from Nintendo, where the Wii games console continues to astound with its sales figures and applications, to First Solar, which is getting ever closer to the holy grail of solar power namely grid price parity. All of these companies suffered large share price falls in the first few months of this year and we have used these to take new holdings for the Trust. Funding has come from the combination of a reduction to CVRD and complete sales of Omnicom, Progressive and Moody's. 

The net effect of these transactions has seen gearing move a little from 112% to 113% over the six months. We continue to monitor whether the ongoing volatility of share prices is throwing up interesting long-term opportunities but do not foresee any radical changes in the shape of the portfolio which continues to try to find the best growth companies wherever in the world they reside. 

Risks and Uncertainties

The Company's main risk is investment risk. It is to be expected that some or all of the investments we make will not deliver the returns we anticipate. This expectation cannot, however, be transformed into a numerical value of use to investors. Events during the last year have demonstrated the folly of relying on mathematical models to quantify and control investment risk. At their heart lie the assumptions that past performance is a good indicator of the future and that it is possible to quantify all of the factors likely to have a significant effect on the future value of investments. Neither of these assumptions seems reasonable. Shareholders should be aware that unexpected things do happen and that these can have significant effects on the value of various investments. The risk of permanent loss of capital can be mitigated by prudent diversification but it cannot be eliminated altogether. Other risk factors that can be identified are detailed in note 10.

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

INCOME STATEMENT 

(unaudited)

	for the six months ended 30 April 2008					for the six months ended 30 April 2007					for the year ended 31 October 2007
	Revenue £'000	Capital £'000		Total £'000		Revenue £'000	Capital £'000	Total £'000		Revenue £'000		Capital £'000	Total £'000
Realised gains/(losses) on investments	-	460		460		-	(2,061)	(2,061)		-		1,141	1,141
Fair value movements on investments	-	(1,670)		(1,670)		-	11,891	11,891		-		24,283	24,283
Currency (losses)/gains	-	(1,187)		(1,187)		-	1,192	1,192		-		1,732	1,732
Income from investments and interest receivable	1,914	-		1,914		1,386	-	1,386		2,827		-	2,827
Investment management fee	(123)	(370)		(493)		(123)	(368)	(491)		(252)		(756)	(1,008)
Investment performance fee	-	(217)		(217)		-	(34)	(34)		-		(723)	(723)
Other administrative expenses	(218)	-		(218)		(195)	-	(195)		(415)		-	(415)
Net return before finance costs and taxation	1,573	(2,984)		(1,411)		1,068	10,620	11,688		2,160		25,677	27,837
Finance costs of borrowings	(188)	(564)		(752)		(177)	(530)	(707)		(352)		(1,057)	(1,409)
Net return on ordinary activities before taxation	1,385	(3,548)		(2,163)		891	10,090	10,981		1,808		24,620	26,428
Tax on ordinary activities	(398)	283		(115)		(252)	177	(75)		(521)		344	(177)
Net return on ordinary activities after taxation	987	(3,265)		(2,278)		639	10,267	10,906		1,287		24,964	26,251
Net return per ordinary share (note 4)	2.01p		(6.66p)	(4.65p)		1.30p	20.95p	22.25p		2.63p		50.94p	53.57p
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 the above statement derive from continuing operations.

  A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

BALANCE SHEET

 (unaudited)

	At 30 April  2008		At 30 April  2007		At 31 October 2007
	£'000		£'000		£'000
FIXED ASSETS
Investments held at fair value through profit or loss	166,656		156,417		170,032
CURRENT ASSETS
Debtors	947		586		1,067
Cash and short term deposits	5,605		3,266		4,646
	6,552		3,852		5,713
CREDITORS
Amounts falling due within one year (note 6)	(26,914)		(1,141)		(26,438)
NET CURRENT(LIABILITIES)/ASSETS	(20,362)		2,711		(20,725)
TOTAL ASSETS LESS CURRENT LIABILITIES	146,294		159,128		149,307
CREDITORS
Amounts falling due after more than one year (note 6)	-		(24,921)		-
	146,294		134,207		149,307
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 - realised	21,841		(36,897)		(35,187)
Capital reserve - unrealised	2,730		50,036		63,023
Revenue reserve	1,873		1,218		1,621
EQUITY SHAREHOLDERS' FUNDS	146,294		134,207		149,307
NET ASSET VALUE PER ORDINARY SHARE  (After deducting borrowings at fair value) (note 6)	298.53p		273.16p		304.68p
NET ASSET VALUE PER ORDINARY SHARE  (After deducting borrowings at par)	298.53p		273.87p		304.68p
Ordinary shares in issue (note 7)	49,004,319		49,004,319		49,004,319

  EDINBURGH WORLDWIDE INVESTMENT TRUST plc

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 

(unaudited)

For the six months ended 30 April 2008

	Called-up share capital £'000	Share premium £'000	Special  reserve £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Equity shareholders' funds £'000
Shareholders' funds at  1 November 2007	2,450	82,180	35,220	(35,187)	63,023	1,621	149,307
Transfer between reserves*	-	-	-	58,697	(58,697)	-	-
Net return on ordinary activities after taxation	-	-	-	(1,669)	(1,596)	987	(2,278)
Dividends paid during the period#	-	-	-	-	-	(735)	(735)
Shareholders' funds at 30 April 2008	2,450	82,180	35,220	21,841	2,730	1,873	146,294

• With effect from 1 October 2007, changes in fair value of investments which are readily convertible to cash, without accepting adverse terms, at the balance sheet date are included in realised, rather than unrealised, capital reserves. The balances on both reserves at 1 October 2007 have been amended by a reserve transfer to reflect this change.

For the six months ended 30 April 2007

	Called-up share capital £'000	Share premium £'000	Special  reserve £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Equity shareholders' funds £'000
Shareholders' funds at  1 November 2006	2,450	82,180	35,220	(34,132)	37,004	1,314	124,036
Net return on ordinary activities after taxation	-	-	-	(2,765)	13,032	639	10,906
Dividends paid during the period#	-	-	-	-	-	(735)	(735)
Shareholders' funds at 30 April 2007	2,450	82,180	35,220	(36,897)	50,036	1,218	134,207

For the year ended 31 October 2007

	Called-up share capital £'000	Share premium £'000	Special  reserve £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Equity shareholders' funds £'000
Shareholders' funds at  1 November 2006	2,450	82,180	35,220	(34,132)	37,004	1,314	124,036
Net return on ordinary activities after taxation	-	-	-	(1,055)	26,019	1,287	26,251
Dividends paid during the year#	-	-	-	-	-	(980)	(980)
Shareholders' funds at 31 October 2007	2,450	82,180	35,220	(35,187)	63,023	1,621	149,307

#  See note 5.

  EDINBURGH WORLDWIDE INVESTMENT TRUST plc

CONDENSED CASH FLOW STATEMENT (unaudited)
	Six months  to 30 April 2008 £'000		Six months  to 30 April 2007 £'000		Year  to 31 October 2007 £'000
Net cash (outflow)/inflow from operating activities	(43)		408		1,319
Net cash outflow from servicing of finance	(738)		(737)		(1,439)
Total tax paid	(91)		(67)		(175)
Net cash inflow from financial investment	2,566		463		1,987
Equity dividends paid (note 5)	(735)		(735)		(980)
INCREASE/(DECREASE) IN CASH	959		(668)		712
RECONCILIATION OF NET CASH INFLOW/ (OUTFLOW) TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash in the period	959		(668)		712
Exchange movement on bank loan	(1,596)		1,141		1,736
MOVEMENT IN NET DEBT IN THE PERIOD	(637)		473		2,448
Net debt at start of the period	(19,680)		(22,128)		(22,128)
NET DEBT AT END OF THE PERIOD	(20,317)		(21,655)		(19,680)
RECONCILIATION OF NET REVENUE BEFORE FINANCE COSTS AND TAXATION TO NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
Net revenue before finance costs and taxation	(1,411)		11,688		27,837
Losses/(gains) on investments - securities	1,210		(9,830)		(25,424)
Currency losses/(gains)	1,187		(1,192)		(1,732)
Amortisation of fixed income book cost	-		15		15
Changes in debtors and creditors	(1,029)		(273)		623
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES	(43)		408		1,319

DISTRIBUTION OF ASSETS

(unaudited)

		30 April 2008    %		30 April 2007    %		31 October 2007    %
Equities:	United Kingdom	-		1.7		1.1
	Continental Europe	32.9		29.0		30.2
	North America	22.7		31.6		26.2
	Japan	5.3		5.5		2.9
	Asia Pacific	7.8		4.4		6.0
	Emerging Markets	27.2		25.2		30.7
Total equities		95.9		97.4		97.1
US$ denominated bonds		0.9		0.9		0.8
Net liquid assets		3.2		1.7		2.1
Total assets (before deduction of loan)		100.0		100.0		100.0

   EDINBURGH WORLDWIDE INVESTMENT TRUST plc

PORTFOLIO AND EQUITY PERFORMANCE at 30 April 2008 (unaudited)
Name	Business	Fair value £'000	% of total assets	Performance†
				Absolute %	Relative%
Equities
Petrobras*	Oil exploration and production	13,747	8.0	33.9	40.6
CVRD (or Vale)	Mining	8,739	5.1	6.8	12.2
Atlas Copco*	Industrial compressors and mining    equipment	8,420	4.9	4.0	9.2
Gazprom*	Gas exploration and production	7,521	4.4	12.8	18.5
Porsche*	Luxury automobiles	7,102	4.1	(26.2)	(22.5)
Sandvik	Tools and mining equipment	6,544	3.8	(11.0)	(6.5)
Canon*	Printers, copiers and cameras	5,317	3.1	5.9	11.2
eBay	Internet auction	4,800	2.8	(9.1)	(4.5)
Amazon.com	Online retailer	4,684	2.7	(7.5)	(2.8)
Banco Itau	Brazilian bank	4,548	2.6	4.8	10.1
Lukoil*	Oil exploration and production	4,370	2.5	4.6	9.8
China Mobile	Mobile telecommunications	4,328	2.5	10.6**	5.7**
HDFC	Indian mortgage provider	4,212	2.4	3.1	8.3
Nintendo	Games consoles and software	3,862	2.2	9.7**	4.9**
Samsung Electronics*	Electronics manufacturer	3,834	2.2	23.2	29.4
Vestas Windsystems	Wind turbines	3,787	2.2	28.7	35.2
ABB	Power equipment and industrial control	3,751	2.2	21.9**	10.2**
Teva Pharmaceuticals*	Generic drugs manufacturer	3,716	2.2	12.2	17.8
SAP*	Business software	3,520	2.0	(2.2)	2.7
Q-Cells	Solar energy production	3,328	1.9	(3.5)	1.3
Straumann	Dental implants	3,282	1.9	1.3	6.4
Whole Foods Market	Organic stores	3,263	1.9	(30.5)	(27.0)
Essilor	Lenses for spectacles	3,260	1.9	2.5	7.7
Hermès*	Luxury goods	3,204	1.9	7.8	13.3
UBS	Wealth management and banking	3,145	1.8	(17.9)**	(18.6)**
Zhejiang Expressway	Chinese toll-road operator	3,127	1.8	(20.1)	(16.0)
Google	Online search engine	3,092	1.8	(10.9)**	(9.3)**
Deere	Farm and construction machinery	3,043	1.8	14.4	20.2
William Wrigley*	Chewing gum manufacturer	2,957	1.7	30.6	37.2
VCA Antech	Animal hospitals and veterinary    diagnostics	2,944	1.7	(26.3)	(22.6)
L'Oréal	Personal care	2,696	1.6	(3.6)	1.3
Walgreen*	Pharmacy chain	2,650	1.5	(7.6)	(3.0)
Ericsson*	Telecommunications equipment	2,594	1.5	(7.0)	(2.3)
First Solar	Thin-film solar technology	2,576	1.5	49.1**	38.0**
Carnival	Cruise ship operator	2,520	1.5	(9.8)	(5.2)
Genentech	Biotech drugs manufacturer	2,410	1.4	(3.5)	1.4
Iron Mountain	Document management services	2,323	1.4	(17.0)	(12.9)
IOI	Palm oil producer and refiner	2,205	1.3	7.9	13.3
Novozymes	Enzyme manufacturer	2,071	1.2	(11.1)	(6.7)
Pool	Swimming pool supplies	1,649	1.0	(1.9)	3.0
Total Equities		165,141	95.9

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

PORTFOLIO AND EQUITY PERFORMANCE (Ctd) at 30 April 2008 (unaudited)
Name		Fair value £'000	% of total assets
Fixed interest
US$ denominated bonds
Bay Haven C FRN 2009/10		1,515	0.9
Total fixed interest		1,515	0.9
Total Investments		166,656	96.8
Net Current Assets		5,560	3.2
Total Assets at Fair Value (before deduction of loan)		172,216	100.0

†      Absolute and relative performance has been calculated on a total return basis over the period 1 November 2007 to 30 April 2008. Absolute performance is in sterling terms; relative performance is against MSCI All Countries World Index (in sterling terms).

*    Held since November 2003 when Baillie Gifford & Co were appointed as Investment Managers and

      Secretaries to the Company.

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

Source: Baillie Gifford & Co, StatPro

Past performance is no guarantee of future performance.

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

 

1.	The condensed set of financial statements have been prepared on the basis of the same accounting policies as set out in the Company’s Annual Financial Statements at 31 October 2007 and in accordance with the ASB’s Statement ‘Half-Yearly Financial Reports’ and have not been audited or reviewed by the Auditors pursuant to the Auditing Practices Board Guidance on ‘Review of Interim Financial Information’.
2.	The financial information contained within this half-yearly financial report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year ended 31 October 2007 has been extracted from the statutory accounts which have been filed with the Registrar of Companies and contain an unqualified Auditors’ Report and do not contain statements under the section 237(2) or (3) of the Companies Act 1985.
3.	Baillie Gifford & Co’s annual remuneration is 0.8% of the market value of the Company’ shares, calculated and payable on a quarterly basis. There is also a performance-related management fee which is calculated and paid annually in arrears. The fee is based on any out-performance of the net asset value per share by comparison to the MSCI All Countries World Index and is calculated as a percentage of the market value of the Company. The fee is paid at 5% of the outperformance between zero and 2%, and 10% of the out-performance thereafter. A relative high water mark with neither cap nor collar will apply. A performance fee could be payable in periods when the net asset value falls by a lesser rate than the benchmark.
			Six months to 30 April  2008			Six months to 30 April  2007					Year to 31 October 2007
			£’000			£’000					£’000
4.	Net return per ordinary share
	Revenue return on ordinary activities after taxation		987			639					1,287
	Capital return on ordinary activities after taxation		(3,265)			10,267					24,964
	Total return		(2,278)			10,906					26,251
	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.
5.	Dividends
	Amounts recognised as distributions in period:
	Final dividend for the year ended 31 October 2007 of 1.50p (2006 – 1.50p), paid 11 February 2008	735					735			735
	Interim dividend for the year ending 31 October 2007 of 0.50p, paid 3 July 2007	-					-			245
		735					735			980
	Interim dividend for the year ending 31 October 2008 of 0.50p (2007 – 0.50p)	245					245			245
	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 10 July 2008 to shareholders on the register at the close of business on 27 June 2008. The ex dividend date is 25 June 2008.

EDINBURGH WORLDWIDE INVESTMENT TRUST plc

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Ctd)

 

6.	The loan includes US$31.25 million, ¥1,313.2 million and £3.8 million drawn down under a multi-currency loan facility with ING Bank N.V. (30 April 2007 and 31 October 2007 – US$31.25 million, ¥1,313.2 million and £3.8 million). The loan is due for repayment in July 2008.   Net asset value per ordinary share (after deducting borrowings at fair value) was 298.53p (30 April 2007 – 273.16p and 31 October 2007 – 304.68p). The fair value of borrowings at 30 April 2008 was £25,922,000 (30 April 2007 - £25,269,000 and 31 October 2007 - £24,326,000).
7.	The Company has authority to buy back its ordinary shares. In the six months to 30 April 2008 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 £20,000 (30 April 2007 - £6,000; 31 October 2007 - £21,000) and transaction costs on sales of £43,000 (30 April 2007 - £6,000; 31 October 2007 - £18,000).
9.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
10.	Risks and uncertainties The principal risks and uncertainties facing the Company are detailed in the Interim Management Report. Other risks facing the Company include the following: currency risk (investments are subject to movements in exchange rates); gearing risk (the use of borrowing can magnify the impact of falling markets); the risk that the discount can widen; and regulatory risk (that the loss of investment trust status or a breach of the UKLA Listing Rules could have adverse financial consequences and cause reputational damage). These risks are monitored and assessed by the Managers and reported on regularly to the Board and the Audit Committee.
11.	VAT In June 2007 the European Court of Justice ruled that investment trust management fees should be exempt from VAT and this decision has now been accepted by HM Revenue and Customs. The result of this decision is that future management fees will not be subject to VAT and the Company will be able to recover some of the VAT incurred on past management fees. A number of procedural matters remain to be resolved however before certainty is reached in respect of the amount of VAT that will be repaid. Consequently, no amounts have been recognised as an asset within these Accounts. The amount recoverable however will not be material and for the period that Baillie Gifford have been Managers, the amount is not expected to be more than 0.1% of shareholders’ funds.
12.	The Half-Yearly Financial Report will be available on the Managers’ website www.bailliegifford.com on or around 21 June 2008.

 

 

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IR ILFIERAIFLIT