Annual Financial Report

RNS Number : 5722M

Mid Wynd Inter Inv Trust PLC

27 August 2013

 



MID WYND INTERNATIONAL INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT      

Copies of the Annual Report and Financial Statements for the year ended 30 June 2013 have been submitted electronically to the National Storage Mechanism and will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM

The Annual Report and Financial Statements for the year ended 30 June 2013 including the Notice of Annual General Meeting is also available on Mid Wynd's page of the Baillie Gifford website at:

www.midwynd.co.uk

The unedited full text of those parts of the Annual Report and Financial Statements for the year ended 30 June 2013 which require to be published by DTR 4.1 is set out on the following pages.

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.

Baillie Gifford & Co

Company Secretaries

27 August 2013

CHAIRMAN'S STATEMENT

Performance

The year to 30 June 2013 was a disappointing one for Mid Wynd despite shareholders' funds at 30 June 2013 being at a record year end high. Net Asset Value (NAV) per share increased by 10.1% and the share price by 11.2% while the FTSE World Index rose by 18.9% in sterling terms. Following 2011/12, when markets fell modestly as did the Company's net asset value, we have encountered a different challenge in 2012/13: a year when markets rose significantly but the Company's position was designed more to insure against their falling. This held us back particularly in the first half of our year when Mr Draghi's statement that the ECB would do 'whatever it takes' to maintain order in the Eurozone and related actions added to the significant stimulus provided by the Federal Reserve in America. Now that similar stimulatory measures have been announced in Japan under Prime Minister Abe, developed world central banks are effectively easing monetary conditions in a concerted way that has not previously been attempted. As Dallas Fed Governor Richard Fisher has said in relation to quantitative easing, these are 'uncharted waters'.

Asset prices have responded vigorously. Animal spirits have been lifted, primarily in stock markets but to some extent also in the real world. Yields on bonds and cash have declined even further from already exceptionally low levels and a global hunt for yield has had a major influence both on and within equity markets. The progress of economies and corporate profits has been buoyed by central bank action without, as yet, any adverse consequences for the rate of inflation. The question of the long term effect of market-distorting actions sits alongside the equally important issues of how long current exceptional policies will last and how they will eventually end.

The Company's derivatives-based insurance policy against falling markets materially affected performance in the six months to December 2012 and unfortunately this coincided with a lacklustre spell for stock-picking; in the six months to December 2012 the NAV per share fell by 0.5% while the FTSE World Index rose by 5.1%. In the second half of the year, after the derivatives policy was discontinued in early December 2012, equity market exposure has been allowed to run at around the level of shareholders' funds and our relative returns have been less bad; in the six months to end June 2013 NAV per share rose by 10.6% while the Index increase was 13.1%. However, although we have had some notable individual successes, as highlighted in the Managers' Portfolio Review, we still lagged the Index and the overall outcome for the year, as noted above, was disappointing. Mid Wynd makes no attempt to mimic any indices. A geographically diverse portfolio has served us well in most conditions over the years, though badly over the last two years when the largest index constituent, the US stock market, has consistently outpaced everything else and again now comprises well over half of globally quoted equities by market capitalisation.

Earnings and dividend

The revenue return of 3.1p represents a recovery in earnings compared to the previous year and current earnings forecast for this year suggest a further significant increase. A final dividend of 2.1p will be recommended making a full year total of 3.4p. The portfolio combines a substantial cohort of young, fast growing companies with significant opportunities to deploy their cash generation internally with those which are thriving but have better scope to pay out earnings as dividends. In the latter camp, among newer holdings, fall Sarin Technologies, a Singapore based diamond cutting technology company, Eastern Tobacco, the unloved Egyptian tobacco monopoly and Ulker Biskuvi Sanayi, a Turkish confectionery business. East African Breweries has become quite a large holding and offers a healthy dividend yield. Our companies have in many cases significantly increased pay-outs. Seadrill is a case in point, as is Fuchs Petrolub, and Kone has again paid out a special dividend. Marine Harvest, previously a large dividend payer, has just announced a return to regular quarterly dividends. There is also a new holding in short dated dollar bonds issued by Avangardco, a highly profitable and well capitalised egg producer, which partly offsets the reduction in income resulting from the sale of the soon to mature high yielding hurricane bond issued by Everglades Re.

Share buy backs and issuance

Mid Wynd is distinctive in providing liquidity by offering routine buy backs or issuance either side of a 2% band relative to NAV. Some buy backs have occurred over the course of the year since this policy was instigated, although for much of the time our shares have traded at a modest premium to NAV. The Board hopes that this mechanism will come to be appreciated by the market as a way of ensuring that sizeable buyers and sellers can be accommodated in a manner that would not otherwise occur.

AGM

The AGM is to be held in Baillie Gifford's office in Edinburgh on 7 October 2013 at midday. Our Manager, Michael MacPhee, will make a short presentation and the Directors hope that you might be able to attend.

Outlook

Equities are an investment in human ingenuity. Companies are living organisms that adapt to survive and thrive. These attributes make equities superior ways of preserving and enhancing savings over time and differentiate them from the great majority of competing investment opportunities. Arguably these qualities are most valuable in times of uncertainty and change and during a period when ingenuity appears to be both in the ascendancy and often available in the stock market.

At the heart of today's economic uncertainty lies debt. Debt is only a problem when perceptions make it one and behaviour alters accordingly. Levels of developed world debts are excessive and constrictive when viewed through this prism. Those afflicted include governments, banking systems (worse in Europe than elsewhere) and individuals. The quandary with regard to individuals is nuanced. Part of it is that promises relating to future welfare seem unlikely to be met. Living standards are falling in many places and inequality of living standards within our societies has become extreme to a degree that potentially poses a challenge to the fabric of our way of life. Taxation is likely to rise to meet this challenge. Companies are in a relatively strong position. Governments are torn between trying to tax them more while still competing to win their favours and the jobs they generate.

If these arguments are structural and long term in nature it is because it is difficult to offer insights into the shorter term. Fears persist that central banks have moved beyond the business of providing liquidity towards that of turning water into wine. We cannot envisage what sort of hangover, if any, this may ultimately leave. Answers to questions about quantitative easing remain for the moment elusive and tentative. That they are important is not in doubt as recent ructions following discussions of Fed 'tapering' or the possible reduction of support measures demonstrate. The direction of travel for developed economies appears to be positive at the margin, though the developing world is slowing down. The world of currencies has been febrile. Should overall stability persist for a while longer we may see the one large group, companies, with the potential to make a difference start to do so. Will companies become more optimistic? Money is cheap and their free cash flows are plentiful. They are searching for reasons to invest more. Typically, such a search eventually results in action.

Mid Wynd's success over time has come from picking good stocks. The Managers' Portfolio Review focuses on our larger holdings for this reason and provides no shortage of reasons to be hopeful that the future will bring us more of what we have enjoyed in the past - worthwhile real returns achieved in a way that bears little resemblance to any index.

Richard RJ Burns

16 August 2013

Past performance is not a guide to future performance.

MANAGERS' PORTFOLIO REVIEW

The Portfolio

Seven of this year's top ten holdings were among the largest holdings last year too. The new arrivals in the list are Sky Deutschland, Visa and East African Breweries, while reductions were made to Odontoprev, The Biotech Growth Trust and Marine Harvest, and they have dropped out. The latter two produced strong performance prior to being trimmed while we reduced Odontoprev because we were becoming concerned about the quality of revenue growth and the prospect of increasingly challenging short term trading conditions. Complete sales from within last year's top twenty holdings include MMX Mineracao e Metalicos royalty bonds - Eike Batista's Brazilian empire is in a parlous condition and risk is rising accordingly - and Yoox.com. Yoox is a business we still like but where we disagreed strongly with the remuneration committee's decision to award the CEO a further large tranche of options.

Ten Largest Holdings

IP Group

IP Group has unrivalled access to the best ideas emanating from a growing range of the UK's best universities. It adds value by helping develop ideas into companies and often into large, successful enterprises. Help takes the form of funding, people, collaboration and at times ultimately listing. Many interesting businesses have started life with IP Group. Mid Wynd separately owns shares in Retroscreen Virology and Tissue Regenix, two such companies that are in the process of being spun out and have been listed. While IP Group stands at a premium to its net asset value, this is a backward-looking measure in most instances and fails to reflect the very significant progress being made by a number of its investments.

Reinet Investments

Reinet is a holding company spun out of Richemont roughly 5 years ago. Our principal fellow shareholders are members of the Rupert family. Johann Rupert, through BAT and Richemont and their predecessor companies, has consistently done very well for his minority shareholders over the years. Reinet's principal holding is in BAT shares. The yield to Reinet shareholders, who buy BAT shares effectively at a 30% discount, exceeds 6%, which is worthwhile in these times of historically low yields on almost all classes of investments. The cash flows from BAT are not paid out to Reinet shareholders, however, but rather re-invested in various ways, mostly in private equity type propositions. While Reinet does not, therefore, contribute to our Company's revenue stream, it should continue to make worthwhile contributions to total returns.

Kone

This Finnish elevator company has continued to build on its success of recent years. Rapid growth in orders speaks well for future revenues. Margins may have further to rise and returns and cash flow generation are admirable. Bolt on acquisitions, primarily in the maintenance business, boost revenue growth and frequently fit well into Kone's pre-existing maintenance network. There are few quoted businesses with these qualities and Kone has proved its worth over the decade since it was spun out, during all of which time Mid Wynd has owned the shares.

Level E Maya Fund

We are now 3 years into this investment, where we seeded a new fund in return for an option to own a share of the fund's management company should things go well for the fund and thus its manager. Disappointingly, there is little positive or new to report on the performance of either the fund or the management company. Over the three years, and in part due to teething troubles of different kinds, we have lost close to one fifth of our initial investment. More troubling is that for all the various market conditions that have prevailed during this period, we have yet to meet one that has allowed the investment strategy to make strong absolute returns. The investment results have, nevertheless, delivered low volatility largely uncorrelated to stock markets. This was always an experiment with relatively controlled downside risk and high upside potential. At this stage the former looks more likely than the latter.

Schindler

The investment case for Schindler is similar to that for Kone. This is another family influenced company run for the long term and operating in an attractive industry. Schindler has perhaps been more cautious in growing its new installation business in Asia, which has been the source of most incremental good news in the industry. Elevator operating margins are also somewhat behind those of Kone. Both companies have a long way to go to hit the sort of operating margins achieved by Otis, the global industry leader owned by United Technologies, the US conglomerate.

Ocean Wilsons

Brazil has endured some setbacks over the past year. Lower commodity prices are amongst them. The currency has been correspondingly weak. However, Wilson Sons has fared relatively well through its various maritime businesses during this period, though it has been affected by weak currency translation effects, and is investing in order to fare even better in future. The company's South Eastern and North Eastern ports are well placed to continue to benefit from the exports that Brazil has to offer the world, volumes of which are unlikely to be materially affected. Coastal trade has enormous scope to continue to grow over time, which will prove beneficial to the towage business. The offshore oil and gas business, too, seems likely to provide great opportunities for the platform supply vessel operation. Ocean Wilsons, the holding company with majority ownership in Wilson Sons, stands at a 30% discount to net asset value.

Sky Deutschland

For the first time, Sky has been able to win exclusive rights to live Bundesliga football for an extended period. This, together with many other enhancements to the offering, and multiple deals to sell the service over other German viewing platforms, provides the opportunity to make substantial progress in subscriber growth and also in monthly revenues per user. Both metrics are very low relative to their potential. We bought a small initial holding based on this hypothesis and added to it subsequently as we have seen a steady stream of evidence suggesting things are evolving well.

Visa

Electronic payments are taking market share away from cash over time. Rapid growth of both internet and mobile internet usage is catalysing this process. Multiple new forms of 'e payment' systems are contributing to these changes. The position of Visa within this eco-system is very strong. For example, a high percentage of PayPal payments are ultimately made through Visa. It would seem that Visa stands to gain from change rather than to become a casualty of it. The rating of the shares would not seem to indicate that others agree.

Fuchs Petrolub

Fuchs has a very strong business within the field of speciality lubricants. These play an increasingly important and valuable role to many end clients, especially those in the automotive industry where engine technologies are changing rapidly. Fuchs is a family controlled business with a long record of successfully meeting its customers' needs and generating a healthy, growing stream of profits for its shareholders in the process. We anticipate there will be many more good years ahead. We believe the market has under-estimated both growth rates and margins for the business possibly because there are relatively few comparators in what is globally still a fairly fragmented and disparate area of activity.

East African Breweries

Kenya and its immediately surrounding region enjoy excellent demographics and are seeing high levels of capital and infrastructure investment that are likely to result in healthy productivity growth over time and thus worthwhile improvements in living standards. These provide the opportunity for beer and spirits consumption to rise and for pricing power and mix improvements within this to be meaningful. East African Breweries is investing significantly to increase its capacity in the region, particularly in Uganda, South Sudan and Tanzania. Under the guidance of majority owner, Diageo, we have high hopes both that the company's optimism will prove well founded and that minority shareholders will be rewarded accordingly.

Contributors to Performance

The Chairman's Statement discusses the portfolio insurance strategy which detracted significantly from investment results in the first half of the Company's year. Markets are said to climb a wall of worry. We were worried and markets climbed. We believe that a diverse portfolio of individual and typically idiosyncratic stock-picks offers the best chance of delivering worthwhile real returns over time and in so doing beating stock market indices. We shall endeavour to avoid making the same mistake again.

The most notable thematic influence over the period under review has been disappointment emanating from our oil and gas exploration and development companies. Last year was a bad year to be a cash hungry proposition asking for more money, added to which operational news on both oil and gas and gold stocks was nearly universally bad. The most valuable thing one can do with mistakes is to learn from them, and we hope it may be of comfort that while the Company remains invested in a number of young and rapidly growing companies, these are nearly all now defined by an uncertainty relating only to the speed of that growth and the degree of future profitability rather than whether they can fund that growth internally.

A second broader factor has been the weakening of prospects for holdings exposed to Brazil where our response was, in retrospect, too slow. Companies affected by this include direct Brazilian holdings Santos, Odontoprev and MercadoLibre and the now sold Cetip, TOTVS and MMX Mineracao e Metalicos royalty bonds. Indirect exposures include Ocean Wilsons and Edenred. Domestic conditions in Brazil may deteriorate further currently as interest rates rise, but the strong likelihood is that the long term strengths will reassert themselves in due course. Our desire to persist with our holdings is driven by an unusual combination of exceptional companies and some exceptional opportunities they face. Summing our reduced continued direct and indirect exposure to Brazil gives a figure of around 5% of gross assets.

Separately, IP Group detracted from one year performance. While much has gone very well for the group over the past twelve months, as our spun out holding in IP Group investment Retroscreen Virology demonstrates (on the positive contributors page), a combination of delays with its commercial product launch and a news blackout tied to litigation now successfully concluded has held up developments at Oxford Nanopore. We are hopeful that Nanopore, a meaningful but by no means dominant part of IP Group's value, will soon update the market on progress and remove the information void that has led to volatility in IP Group's stock.

Successes, by contrast, were rather more typical of our idiosyncratic, stock-picking history. Kone has been a strong contributor regularly for many years and continues to be so, as does its peer Schindler. Marine Harvest benefits from the operational, capital allocation and people-related skills that John Fredriksen's companies typically exhibit. ASOS continues to drive home its expanding advantage in online fashion for twenty-somethings and to seize market share from typical High Street stores across a growing range of geographies. Seattle Genetics, Sky Deutschland, Alnylam Pharmaceuticals, Angie's List, Zillow, Retroscreen Virology and Nanoco are all examples of rapidly evolving younger companies that have proved themselves and are in the process of transitioning, we believe, to high returns, rapid growth and cash generation.

 

THIRTY LARGEST HOLDINGS at 30 June 2013
Name	Region		Business	2013			2012
				Value £'000	% of total assets		Value £'000
IP Group		United Kingdom	Commercialisation of   intellectual property	4,101	5.7	3,791
Reinet Investments SCA		Continental Europe	Investment holding company	2,709	3.8	1,929
Kone		Continental Europe	Elevators	2,281	3.2	1,680
Level E Maya Fund		United Kingdom	Artificial intelligence based   algorithmic trading	2,061	2.9	2,129
Schindler		Continental Europe	Elevators	2,058	2.9	999
Ocean Wilsons		United Kingdom	Tugboats, platform supply   vessels and container   handling - Brazil	1,824	2.5	1,344
Sky Deutschland		Continental Europe	German pay TV provider	1,770	2.5	-
Visa		North America	Payments network	1,654	2.3	-
Fuchs Petrolub		Continental Europe	Speciality lubricant   manufacture	1,545	2.2	1,030
East African Breweries		Emerging Markets	East African brewer	1,415	2.0	-
Seadrill		Continental Europe	Deep water oil rigs	1,332	1.9	541
Priceline.com		North America	Online travel/hotel   reservation service	1,193	1.7	623
Naspers		Emerging Markets	Media company	1,189	1.6	846
Nanoco		United Kingdom	Quantum dot manufacture,   second generation LEDs	1,165	1.6	691
Better Capital		United Kingdom	Fund investing in distressed   businesses	1,088	1.5	1,114
Ulker Biskuvi Sanayi		Emerging Markets	Food manufacturer - Turkey and surrounding region	1,077	1.5	-
ASOS.com		United Kingdom	Online fashion retailer	1,059	1.5	761
Odontoprev		Emerging Markets	Dental health services -   Brazil	1,055	1.5	2,127
Reynolds Group 9.5%  2017		Fixed Interest	Food and beverage      packaging and storage   company bond	1,043	1.4	903
BIM Birlesik Magazalar		Emerging Markets	Discount food stores -   Turkey	1,037	1.4	1,193
Genus		United Kingdom	Livestock farming products	939	1.3	602
IMAX		North America	Media technology company	926	1.3	-
Tripadvisor		North America	Travel website	923	1.3	655
Seek		Asia Pacific   including Japan	Online employment agency	910	1.3	684
The Biotech Growth  Trust		United Kingdom	Biotechnology investment   trust	881	1.2	1,064
Zillow		North America	Internet based property site -   US	851	1.2	-
Zodiac Aerospace		Continental Europe	Aerospace and defence parts	839	1.2	-
M3		Asia Pacific   including Japan	Medical-related internet   services	834	1.2	572
Santos Brasil  Participacoes		Emerging Markets	Container handling and   logistics services - Brazil	829	1.2	921
Doric Nimrod Air Two		United Kingdom	Fund to acquire, lease and   sell A380 aircraft	828	1.1	792
				41,416	57.9	26,991

DISTRIBUTION OF ASSETS

			30 June 2013 %		30 June 2012 %
Equities:	United Kingdom		26.7		28.6
	Continental Europe		24.8		19.0
	North America		23.0		20.6
	Asia Pacific including Japan		6.9		5.5
	Emerging Markets		14.5		18.9
Total Equities			95.9		92.6
Fixed interest			3.7		5.0
Net liquid assets			0.4		2.4
Total assets (before deduction of bank loans)			100.0		100.0

RELATED PARTY TRANSACTIONS

The Directors' fees for the year are detailed in the Directors' Remuneration Report on page 26 in the Annual Report and Financial Statements.

No Director has a contract of service with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006.

MANAGEMENT FEE ARRANGEMENTS

Baillie Gifford & Co are employed by the Company as Managers and Secretaries under a management agreement which is terminable on not less than one year's notice, or on shorter notice in certain circumstances. The fee in respect of each quarter is 0.125% of the net assets of the Company attributable to its shareholders on the last day of that quarter. The management fee is levied on all assets, including, if applicable, holdings in collective investment schemes (OEICs) managed by Baillie Gifford & Co, however, the OEICs' share classes held by the Company do not incur management fees.  The details of the management fee are as follows:

	2013 £'000		2012 £'000
Investment management fee	322		302
	322		302

PRINCIPAL RISKS AND UNCERTAINTIES

As an Investment Trust, the Company invests in equities and makes other investments so as to meet its investment objective of achieving capital and income growth by investing on a worldwide basis. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests.

These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board monitors closely the Company's exposures to these risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise the short term volatility.

The Company may enter into derivative transactions as explained in the Investment Policy on page 19 of the Annual Report and Financial Statements. In the period under review the Company purchased and sold equity index options and equity index futures. There were no derivative financial instruments open at the balance sheet date (those open at 30 June 2012 are shown below).

The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period.

Market Risk

The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks and the Company's Investment Managers both assess the exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the investment portfolio on an ongoing basis. Details of the Company's investment portfolio are shown in note 9 and on pages 15 to 18 in the Annual Report and Financial Statements.

(i) Currency Risk

Certain of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling value of those items.

The Investment Managers monitor the Company's exposure to foreign currencies and report to the Board on a regular basis. The Investment Managers assess the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the rates of exchange to which the Company's assets, liabilities, income and expenses are exposed. However, the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company's valuation than a simple translation of the currency in which the company is quoted.

Foreign currency borrowings can limit the Company's exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments.

Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown overleaf. The main changes to net currency exposure during the year are as follows: exposure to the Euro increased, reflecting purchases of a euro denominated bond, equity investments and market movements; exposure to the Swiss franc with additions to equity investments and market movements; exposure to the Kenyan shilling through the purchase of an equity investment and exposure to the Brazilian real decreased through the sale of the Brazilian equities. Explanations of changes in asset allocation can be found in the Chairman's Statement and Managers' Portfolio Review.

At 30 June 2013	Investments £'000		Cash and deposits £'000		Bank loans £'000		Other debtors and creditors* £'000		Net exposure £'000
US dollar	17,765		1,169		-		(712)		18,222
Euro	12,499		9		(2,571)		31		9,968
Swiss franc	3,041		-		-		-		3,041
Norwegian krone	2,398		-		-		-		2,398
Japanese yen	2,288		-		-		4		2,292
Turkish lira	2,114		-		-		-		2,114
Brazilian real	1,884		-		-		2		1,886
Kenyan shilling	1,415		-		-		-		1,415
Danish krone	1,264		-		-		-		1,264
South African rand	1,189		-		-		-		1,189
Other overseas currencies	5,782		-		-		-		5,782
Total exposure to currency risk	51,639		1,178		(2,571)		(675)		49,571
Sterling	19,931		25		(2,500)		(240)		17,216
	71,570		1,203		(5,071)		(915)		66,787

*          Includes net non-monetary assets of £8,000.

At 30 June 2012	Investments £'000		Cash and deposits £'000		Bank loans £'000		Other debtors and creditors* £'000		Net exposure £'000
US dollar	15,730		1,401		-		246		17,377
Euro	8,185		(107)		(2,427)		172		5,823
Swiss franc	1,671		-		-		-		1,671
Norwegian krone	1,841		-		-		-		1,841
Japanese yen	2,973		-		-		11		2,984
Turkish lira	1,193		-		-		-		1,193
Brazilian real	5,487		-		-		-		5,487
Kenyan shilling	-		-		-		-		-
Danish krone	1,133		-		-		-		1,133
South African rand	1,754		-		-		-		1,754
Other overseas currencies	4,597		-		-		15		4,612
Total exposure to currency risk	44,564		1,294		(2,427)		444		43,875
Sterling	20,603		(55)		(2,500)		(87)		17,961
	65,167		1,239		(4,927)		357		61,836

* Includes net non-monetary assets of £9,000.

Currency Risk Sensitivity

At 30 June 2013, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total net assets and total return on ordinary activities would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect on the financial statement amounts. The analysis is performed on the same basis for 2012.

	2013 £'000		2012 £'000
US dollar	911		869
Euro	498		291
Swiss franc	152		84
Norwegian krone	120		92
Japanese yen	115		149
Turkish lira	106		60
Brazilian real	94		274
Kenyan shilling	71		-
Danish krone	63		57
South African rand	60		88
Other overseas currencies	289		230
	2,479		2,194

(ii) Interest Rate Risk

Interest rate movements may affect directly:

• the fair value of the investments in fixed interest rate securities;

• the level of income receivable on cash deposits;

• the fair value of the Company's fixed-rate borrowings; and

• the interest payable on any variable rate borrowings which the Company may take out.

Interest rate movements may also impact upon the market value of the Company's investments outwith fixed income securities. The effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company's equity.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering borrowing agreements.

The Board reviews on a regular basis the amount of investments in cash and fixed income securities and the income receivable on cash deposits, floating rate notes and other similar investments.

The Company finances part of its activities through borrowings at approved levels. The amount of such borrowings and the approved levels are monitored and reviewed regularly by the Board. Movements in interest rates, to the extent that they affect the market value of the Company's fixed rate borrowings, may also affect the amount by which the Company's share price is at a discount or a premium to the net asset value.

The interest rate risk profile of the Company's financial assets and liabilities at 30 June is shown below.

Financial assets	2013			2012
	Fair value £'000	Weighted average interest rate	Weighted average period until maturity	Fair value £'000	Weighted average interest rate	Weighted average period until maturity
Fixed rate:
US dollar bonds	1,037	10.4%	8 years	1,067*	4.9%	8 years
Euro bonds	1,099	9.3%	4 years	986	9.1%	5 years
Floating rate:
US dollar bonds (interest rate linked to reinsurance rate)	-	-	-	684	13.6%	4 years
Euro bonds (interest rate linked to Euro LIBOR)	304	8.4%	2 years	287	8.7%	3 years
Fixed interest collective investment schemes:
Athena Debt Opportunities Fund	-	-	-	746	2.5%	25 years
K1 Life Settlements 0%	220	-	n/a	215	-	n/a

*Includes convertible treated as equity

The cash deposits generally comprise call deposits or short term money market deposits with original maturities of less than three months, which are repayable on demand. The benchmark rate which determines the interest payments received on cash balances is the bank base rate.

Financial Liabilities

The interest rate risk profile of the Company's bank loans and the maturity profile of the undiscounted future cash flows in respect of the Company's contractual financial liabilities at 30 June are shown below.

Interest Rate Risk Profile	2013 £'000	2012 £'000
Fixed rate - Sterling denominated	2,500	2,500
Fixed rate - Euro denominated	2,571	2,427
	5,071	4,927

Maturity Profile	2013 Within 1 year £'000	2013 Between 1 and 5 years £'000	2013 More than 5 years £'000	2012 Within 1 year £'000	2012 Between 1 and 5 years £'000	2012 More than 5 years £'000
Repayment of loans	-	5,071	-	-	4,927	-
Interest on loans	130	87	-	126	212	-
	130	5,158	-	126	5,139	-

Interest Rate Risk Sensitivity

An increase of 100 basis points in bond yields as at 30 June 2013 would have decreased total net assets and total return on ordinary activities by £122,000 (2012 - £83,000). A decrease of 100 basis points would have had an equal but opposite effect.

An increase of 100 basis points in bond yields as at 30 June 2013 would have decreased the net asset value per share (with borrowings at fair value) by 0.15p (2012 - increased by 0.16p). A decrease of 100 basis points would have had an equal but opposite effect.

(iii) Other Price Risk

Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company's net assets.

The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Managers. The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company's objectives and investment policies. The portfolio does not seek to reproduce the index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge from the short term fluctuations of the comparative index.

Other Price Risk Sensitivity

Fixed asset investments are valued at bid prices which equate to their fair value. A full list of the Company's investments is given on pages 15 to 18 of the Annual Report and Financial Statements. In addition, an analysis of the investment portfolio by geographical split (shown above), and broad industrial or commercial sector and a list of the 30 largest investments by their aggregate market value (shown above) is given on pages 10 and 11 of the Annual Report and Financial Statements details of derivative financial instruments open at 30 June 2012 are shown below.

After deducting borrowings 102.0% (2012 - 100.0%) of the Company's net assets are invested in quoted equities.

The Company had no equity derivative instruments at 30 June 2013. At 30 June 2012 the sensitivity of the Company's equity investments to general movements in equity markets was adjusted by the use of the equity derivative instruments detailed below, with the purchase of equity index call options increasing it and the sale of equity index futures decreasing it. After taking into account the impact of the equity index options and equity index futures open at the balance sheet date, a 3% increase in quoted equity valuations at 30 June 2012 would have increased total assets and total return on ordinary activities by £1,637,000. A decrease of 3% would have had an equal but opposite effect.

Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is not significant as the majority of the Company's assets are investments in quoted securities that are readily realisable. The Board monitors the exposure to any one holding.

The Company has the power to take out borrowings, which give it access to additional funding when required. The Company's borrowing facilities are detailed below.

			2013 £'000	2012 £'000
Bank loans			5,071	4,927

Borrowing Facilities

Two three-year, fixed rate loan facilities, maturing 20 February 2015, have been arranged with Scotiabank Europe PLC.

At 30 June 2013 and 30 June 2012 drawings were as follows:

Scotiabank Europe - £2.5 million at an interest rate of 2.6530% per annum

- €3 million at an interest rate of 2.4780% per annum

The main covenants relating to the loans are:

(i)   Total borrowings shall not exceed 33.33% of the Company's investment portfolio.

(ii)  The Company's minimum net asset value shall be £32 million.

Credit Risk

This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. This risk is managed as follows:

·    Where the Investment Managers make an investment in a bond or other security with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question.

·    The Board regularly receives information from the Investment Managers on the credit ratings of those bonds and other securities in which the Company has invested.

·    The Company's listed investments are held on its behalf by The Bank of New York Mellon, the Company's custodian. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed. The Investment Managers monitor the Company's risk by reviewing the custodian's internal control reports and reporting their findings to the Board.

·    Investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Investment Managers. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed.

·    Transactions involving derivatives, and other arrangements wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject to rigorous assessment by the Investment Managers of the creditworthiness of that counterparty.

·    Cash is only held at banks that are regularly reviewed by the Managers.

Credit Risk Exposure

The exposure to credit risk at 30 June was:

	2013 £'000	2012 £'000
Fixed interest investments	2,660	3,356
Cash and deposits	1,203	1,239
Debtors and prepayments	76	985
	3,939	5,580

None of the Company's financial assets are past due or impaired.

Fair Value of Financial Assets and Financial Liabilities

The Directors are of the opinion that the financial assets and liabilities of the Company are stated at fair value in the balance sheet with the exception of long term borrowings which are stated in accordance with FRS 26. Short term borrowings have a fair value equal to par.

	2013	2013		2012	2012
	Book £'000	Fair £'000		Book £'000	Fair £'000
Fixed rate sterling loan	2,500	2,530		2,500	2,553
Fixed rate euro loan	2,571	2,606		2,427	2,476
Total long term borrowings	5,071	5,136		4,927	5,029

Gains and Losses on Purchased Options

The Company had no purchased options at 30 June 2013. The following purchased options were in position at 30 June 2012:

At 30 June 2012	Number of contracts	Strike price	Expiration date	Potential exposure	Premium paid	Fair value
Description				£'000	£'000	£'000
FTSE 100 call	80	5,500	21/12/12	2,286	291	233
Eurostoxx 50 call	200	2,500	21/12/12	898	295	74
S&P 500 call	50	1,225	21/12/12	2,684	259	505
				5,868	845	812

Gains and (Losses) on Equity Index Futures Sales

The Company had no equity index futures at 30 June 2013.The following equity index futures sales were in position at 30 June 2012:

At 30 June 2012	Expiration date	Notional amount	Position	Counterparty	Fair value
Description					£'000
FTSE 100 Sept 2012	21/9/12	(£4,304,200)	Sale	UBS	(114)
Eurostoxx 50 Sept 2012	21/9/12	(€4,275,000)	Sale	UBS	(188)
S&P 500 Sept 2012	21/9/12	(US$6,486,975)	Sale	UBS	(147)
					(449)

Gains and losses on hedges

At 30 June 2013 and 30 June 2012 there were no unrecognised gains/losses on hedges.

Currency gains/losses are taken to the capital reserve and are not reflected in the revenue account unless they are of a revenue nature.

Capital Management

The capital of the Company is its share capital and reserves as set out in notes 13 and 14 in the Annual Report and Financial Statements together with its borrowings (see note 12 in the Annual Report and Financial Statements). The objective of the Company is to achieve capital and income growth by investing on a worldwide basis. The Company's investment policy is set out on page 19 in the Annual Report. In pursuit of the Company's objective, the Board has a responsibility for ensuring the Company's ability to continue as a going concern and details of the related risks and how they are managed are set out above. The Company has the ability to issue and buy back its shares and changes to the share capital during the year are set out in notes 13 and 15 in the Annual Report and Financial Statements. The Company does not have any externally imposed capital requirements other than the covenants on its loans which are: (i) Total borrowings shall not exceed 33.33% of the Company's investment portfolio; and (ii) The Company's minimum net asset value shall be £32 million.

Investments

At 30 June 2013	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Securities
Listed equities	66,087	2,061	-	68,148
Listed equity index options	-	-	-	-
Listed convertible securities	56	-	-	56
Listed debt securities	2,080	-	524	2,604
Unlisted equities quoted on an   investment exchange	-	322	-	322
Unlisted equities	-	-	440	440
Total financial asset investments	68,223	2,383	964	71,570

At 30 June 2012	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Securities
Listed equities	57,843	2,129	-	59,972
Listed equity index options	812	-	-	812
Listed convertible securities	712	-	-	712
Listed debt securities	1,341	684	1,248	3,273
Unlisted equities quoted on an   investment exchange	-	-	-	-
Unlisted equities	-	-	398	398
Total financial asset investments	60,708	2,813	1,646	65,167

Investments in securities are financial assets designated at fair value through profit or loss on initial recognition. In accordance with Financial Reporting Standard 29 'Financial Instruments: Disclosures', the above table provides an analysis of these investments based on the fair value hierarchy described below which reflects the reliability and significance of the information used to measure their fair value.

Fair Value Hierarchy

The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows:

Level 1 - investments with quoted prices in an active market;

Level 2 - investments whose fair value is based directly on observable current market prices or is indirectly being derived from market prices; and

Level 3 - investments whose fair value is determined using a valuation technique based on assumptions that are not supported by observable current market prices or are not based on observable market data.

Other Risks

Other risks faced by the Company include the following:

Regulatory Risk - failure to comply with applicable legal and regulatory requirements could lead to suspension of the Company's Stock Exchange Listing, financial penalties or a qualified audit report. Breach of section 1158 of the Corporation Tax Act 2010 could lead to the Company being subject to tax on capital gains.

The Managers monitor compliance with the provisions of section 1158. Baillie Gifford's Business Risk & Internal Audit and Regulatory Risk Departments provide regular reports to the Audit Committee on Baillie Gifford's monitoring programmes.

Major regulatory change could impose disproportionate compliance burdens on the Company. In such circumstances representation is made to ensure that the special circumstances of investment trusts are recognised.

Operational/Financial Risk - failure of the Managers' accounting systems or those of other third party service providers could lead to an inability to provide accurate reporting and monitoring or a misappropriation of assets. The Managers have a comprehensive business continuity plan which facilitates continued operation of the business in the event of a service disruption or major disaster. The Board reviews the Managers' Report on Internal Controls and the reports by other key third party providers are reviewed by the Managers on behalf of the Board.

Premium/Discount Volatility - the premium/discount at which the Company's shares trade can change. The Board monitors the level of premium/discount and the Company has authority to issue or buy back its own shares. The Company's intention is to limit the discount to a maximum of 2% in normal circumstances.

Gearing Risk - the Company may borrow money for investment purposes. If the investments fall in value, any borrowings will magnify the extent of this loss. If borrowing facilities are not renewed, the Company may have to sell investments to repay borrowings.

All borrowings require the prior approval of the Board and gearing levels are discussed by the Board and Managers at every meeting. The majority of the Company's investments are in listed securities that are readily realisable.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements respectively; and

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors have delegated responsibility to the Managers for the maintenance and integrity of the Company's page of the Managers' website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed within the Directors and Management section of the Annual Report and Financial Statements confirm that, to the best of their knowledge:

•     the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

•     the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

By order of the Board

Richard R J Burns

Chairman

16 August 2013

INCOME STATEMENT

	For the year ended 30 June 2013				For the year ended 30 June 2012
	Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total £'000
Gains/(losses) on investments	-	7,725	7,725		-	(5,604)	(5,604)
(Losses)/gains on futures contracts	-	(1,058)	(1,058)		-	614	614
Currency losses	-	(172)	(172)		-	(346)	(346)
Income (note 2)	1,347	-	1,347		1,259	-	1,259
Investment management fee	(161)	(161)	(322)		(151)	(151)	(302)
Other administrative expenses	(246)	-	(246)		(233)	-	(233)
Net return before finance costs and taxation	940	6,334	7,274		875	(5,487)	(4,612)
Finance costs of borrowings	(64)	(64)	(128)		(63)	(63)	(126)
Net return on ordinary activities before taxation	876	6,270	7,146		812	(5,550)	(4,738)
Tax on ordinary activities	(45)	-	(45)		(32)	-	(32)
Net return on ordinary activities after taxation	831	6,270	7,101		780	(5,550)	(4,770)
Net return per ordinary share (note 3)	3.11p	23.43p	26.54p		2.93p	(20.88p)	(17.95p)

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. No operations were acquired or discontinued during the year.

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

As at 30 June 2013 £'000		As at 30 June 2012 £'000
Fixed Assets
Investments held at fair value through profit or loss	71,570		65,167
Current Assets
Debtors	76		985
Cash and deposits	1,203		1,239
	1,279		2,224
Creditors Amounts falling due within one year	(991)		(628)
Net current assets	288		1,596
Total assets less current liabilities	71,858		66,763
Creditors Amounts falling due after more than one year (note 5)	(5,071)		(4,927)
Total net assets	66,787		61,836
Capital and reserves
Called up share capital	1,343		1,343
Capital redemption reserve	16		16
Share premium	4,983		4,983
Capital reserve	59,010		54,004
Revenue reserve	1,435		1,490
Shareholders' funds	66,787		61,836
Net asset value per ordinary share (after deducting borrowings at fair value)	253.1p		229.8p
Net asset value per ordinary share (after deducting borrowings at par)	253.3p		230.2p

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 30 June 2013

	Share capital £'000	Capital redemption reserve £'000	Share premium £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 July 2012	1,343	16	4,983	54,004	1,490	61,836
Net return on ordinary activities after taxation	-	-	-	6,270	831	(7,101)
Shares bought back (note 6)	-	-	-	(1,264)	-	(1,264)
Shares issued (note 6)	-	-	-	-	-	-
Dividends paid during the year (note 4)	-	-	-	-	(886)	(886)
Shareholders' funds at 30 June 2013	1,343	16	4,983	59,010	1,435	66,787

For the year ended 30 June 2012

	Share capital £'000	Capital redemption reserve £'000	Share premium £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 July 2011	1,318	16	3,818	59,554	1,583	66,289
Net return on ordinary activities after taxation	-	-	-	(5,550)	780	(4,770)
Shares bought back (note 6)	-	-	-	-	-	-
Shares issued (note 6)	25	-	1,165	-	-	1,190
Dividends paid during the year (note 4)	-	-	-	-	(873)	(873)
Shareholders' funds at 30 June 2012	1,343	16	4,983	54,004	1,490	61,836

 

*Capital reserve balance as at 30 June 2013 included investment holding gains of £18,829,000 (30 June 2012: gains of £11,594,000).

CASH FLOW STATEMENT
	For the year ended 30 June 2013			For the year ended 30 June 2012
	£'000	£'000		£'000	£'000
Net cash inflow from operating activities (note 8)		744			691
Servicing of finance
Interest costs paid	(129)			(129)
Net cash outflow from servicing of finance		(129)			(129)
Financial investment
Acquisitions of investments	(24,073)			(29,882)
Disposals of investments	26,243			29,608
Futures	(643)			200
Realised currency loss	(28)			(457)
Net cash inflow/(outflow) from financial investment		1,499			(531)
Equity dividends paid (note 4)		(886)			(873)
Net cash inflow/(outflow) before financing		1,228			(842)
Financing
Shares issued	-			1,190
Shares purchased for cancellation	(1,264)			-
Bank loans repaid	-			(5,465)
Bank loans drawn down	-			4,997
Net cash (outflow)/inflow from financing		(1,264)			722
Decrease in cash		(36)			(120)
Reconciliation of net cash flow to movement in net debt
Decrease in cash in the year		(36)			(120)
Net cash outflow from bank loans		-			468
Exchange movement on bank loans		(144)			111
Movement in net debt in the year		(180)			459
Net debt at 1 July		(3,688)			(4,147)
Net debt at 30 June		(3,868)			(3,688)

NOTES

1.	The financial statements for the year to 30 June 2013 have been prepared on the basis of the accounting policies set out in the Company's Annual Report and Financial Statements at 30 June 2012, which are unchanged from the prior year and have been applied consistently. The Company's assets, the majority of which are investments in listed securities which are readily realisable, exceed its liabilities significantly. The Board approves borrowing limits and reviews regularly the amount of any borrowings and compliance with borrowing covenants. 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 is subject to the UK's regulatory environment.
				2013 £'000					2012 £'000
2. 2	Income
	Income from investments and interest receivable			1,347					1,258
	Other income			-					1
				1,347					1,259
				2013 £'000					2012 £'000
3.	Net return per ordinary share
	Revenue return			3.11p					2.93p
	Capital return			23.43p					(20.88p)
	Total return			26.54p					(17.95p)
	Revenue return per ordinary share is based on the net revenue on ordinary activities after taxation of £831,000 (2012 - £780,000) and on 26,754,925 (2012 - 26,577,628) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. Capital return per ordinary share is based on the net capital gain for the financial year of £6,270,000 (2012 - net capital loss of £5,550,000) and on 26,754,925 (2012 - 26,577,628) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. There are no dilutive or potentially dilutive shares in issue.
			2013			2012		2013 £'000		2012 £'000
4.		Ordinary Dividends
		Amounts recognised as distributions in the year:
		Previous year's final (paid 12 October 2012)	2.00p			2.00p		537		527
		Interim (paid 4 April 2013)	1.30p			1.30p		349		346
			3.30p			3.30p		886		873

4.	Ordinary Dividends (Ctd)
	We also set out below the total dividends paid and payable 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 £831,000 (2012 - £780,000).
			2013			2012			2013 £'000			2012 £'000
	Dividends paid and payable in respect of the year:
	Interim dividend per ordinary share (paid 4 April 2013)		1.30p			1.30p			349			346
	Proposed final dividend per ordinary share (payable 11 October 2013)		2.10p			2.00p			554			537
			3.40p			3.30p			903			883
	The final dividend was declared after the year end date and has therefore not been included as a liability in the balance sheet. If approved the final dividend will be paid on 11 October 2013 to all shareholders on the register at the close of business on 6 September 2013. The ex-dividend date is 4 September 2013. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for receipt of elections for this dividend is 20 September 2013.
5.	Two three-year, fixed rate loan facilities, maturing 20 February 2015, have been arranged with Scotiabank Europe PLC. At 30 June 2013 and 30 June 2012 drawings were as follows: Scotiabank Europe  ·     £2.5 million at an interest rate of 2.6530% per annum ·     €3 million at an interest rate of 2.4780% per annum The fair value of borrowings at 30 June 2013 was £5,136,000 (2012 - £5,029,000).
6.	Called up share capital		2013 Number		2013 £'000		2012 Number					2012 £'000
	Allotted, called up and fully paid ordinary shares of 5p each		26,363,830		1,318		26,863,830					1,343
	Treasury shares of 5p each		500,000		25		-					-
	Total		26,863,830		1,343		26,863,830					1,343
	The Company's authority permits it to hold shares bought back 'in treasury'. Such treasury shares may be subsequently either sold for cash (at, or at a premium to, net asset value per ordinary share) or cancelled. In the year to 30 June 2013 a total of 500,000 ordinary shares with a nominal value of £25,000 were bought back at a total cost of £1,264,000 and held in treasury. (No shares were bought back in the year to 30 June 2012). At 30 June 2013 the Company had authority to buy back a further 3,526,888 ordinary shares. Under the provisions of the Company's Articles the share buy-backs were funded from the capital reserve. In the year to 30 June 2013 the Company did not allot any ordinary shares (2012 - allotted 500,000 ordinary shares with a nominal value of £25,000 for consideration of £1,190,000). At 30 June 2013 the Company had authority to allot 2,686,383 ordinary shares without application of pre-emption rights in accordance with the authorities granted at the AGM in October 2012.
7.	Transaction costs incurred on the purchase and sale of the investments are added to the purchase cost or deducted from the sale proceeds, as appropriate. During the year, transaction costs on purchases amounted to £60,000 (2012 - £38,000) and transaction costs on sales amounted to £85,000 (2012 - £30,000), making a total of £145,000 (2012 - £68,000).
8.	Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities					2013 £'000					2012 £'000
	Net return before finance costs and taxation					7,274					(4,612)
	(Gains)/losses on investments					(7,725)					5,604
	(Losses)/gains on futures contracts					1,058					(614)
	Currency losses					172					346
	Amortisation of fixed interest book cost					(39)					(25)
	Decrease in accrued income					30					46
	Decrease/(increase) in debtors					8					(4)
	Increase/(decrease) in creditors					14					(10)
	Overseas tax suffered					(48)					(40)
	Net cash inflow from operating activities					744					691
10.	The Annual Report and Financial Statements including the Notice of Annual General Meeting will be available on the Company's page of the Managers' website www.midwynd.co.uk‡  on or around 27 August 2013.
11.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 June 2013.  The financial information for 2012 is derived from the financial statements for 2012 which have been delivered to the Registrar of Companies.  The Auditors have reported on the 2012 and 2013 accounts; their reports for both years were unqualified and did not contain a statement under sections 495 to 497 of the Companies Act 2006. The statutory accounts for 2013 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
	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 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 -

 

END

 

 

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