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Edinburgh Worldwide (EWI)

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Friday 14 December, 2018

Edinburgh Worldwide

Final Results

RNS Number : 4531K
Edinburgh Worldwide Inv Trust PLC
14 December 2018
 

 

RNS Announcement: Preliminary Results

 

Edinburgh Worldwide Investment Trust plc

Legal Entity Identifier: 213800JUA8RKIDDLH380

Regulated Information Classification: Additional regulated information required to be disclosed under the laws of a Member State of the European Union.

 

The following is the preliminary statement for the year to 31 October 2018 which was approved by the Board on 13 December 2018.

¾  Over the year to 31 October 2018, the Company's net asset value per share, cum income with debt at fair value, increased by 14.9% and the share price by 19.0%. The comparative index, the S&P Global Small Cap Index* total return, increased by 0.1% in sterling terms.

¾  No final dividend is being paid. The Company's objective remains that of generating capital growth. Should the level of underlying income increase in future years, the Board will seek to distribute the minimum permissible to maintain investment trust status.

¾  A number of the Company's holdings contributed to the positive performance, notably: Ocado, an online grocery company, Wayfair, a US online furniture and homeware retailer, and STAAR Surgical, a US developer and manufacturer of visual implants.

¾  As at the year end, the Company held five unlisted investments accounting for 3.2% of total assets (2017 - 2.1% of total assets in three holdings). As part of the business of the Company's AGM, the Board is seeking shareholder approval to increase the permissible limit in unlisted investments, from 5% of total assets at the time of initial investment at present, to 15%.

¾  The Board is seeking shareholder approval at the Company's AGM to subdivide each existing ordinary share of 5p nominal value into five ordinary shares of 1p nominal value.

 

Summary

 

Edinburgh Worldwide aims to achieve long term capital growth by investing in listed companies throughout the world. The Trust has total assets of £521.1 million (before deduction of loans of £48.6 million) as at 31 October 2018.

Edinburgh Worldwide is managed by Baillie Gifford & Co Limited, the Edinburgh based fund management group with around £180 billion under management and advice as at 13 December 2018.

 

Past performance is not a guide to future performance.

The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stockmarkets in which the Company invests and by the supply and demand for the Company's shares. Investment in investment trusts should be regarded as medium to long-term. You can find up to date performance information about Edinburgh Worldwide on the Edinburgh Worldwide page of the Managers' website at http://www.edinburghworldwide.co.uk

*    See disclaimer at the end of this announcement.

‡    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.

 

14 December 2018

For further information please contact:

Anzelm Cydzik, Baillie Gifford & Co                        Roland Cross, Director, Four Broadgate

Tel: 0131 275 2000                                                     Tel: 020 3697 4200 or 07831 40130

 

Chairman's Statement

 

Performance

In the year to 31 October 2018, the Company's net asset value ('NAV') per share, when calculated by deducting borrowings at fair value, increased by 14.9% and the share price by 19.0%, both in total return terms. The comparative index, the S&P Global Small Cap Index* total return, increased by 0.1% in sterling terms during this period. Over the course of the financial year the share price averaged a 1.2% premium to net assets, with borrowings deducted at fair value. Portfolio turnover was 12.6% compared to 13.2% in 2017 and the ongoing charges have reduced to 0.81% from 0.87%.

The good relative and absolute performance was driven by a number of holdings, most notably Ocado, an online grocery company, Wayfair, a US online furniture and homeware retailer, and STAAR Surgical, a US developer and manufacturer of visual implants. On balance, the fundamental performance of the holdings in the portfolio continues to progress as hoped. Greater detail on this can be found within the Managers' Review below.

 

Share Buybacks, Treasury and Issuance

The Company will once again be seeking to renew its share buyback, issuance and treasury share authorities. The buyback facility is sought to allow the Company to buy back its own shares when the discount is substantial in absolute terms and relative to its peers. Issuance, either from treasury or of new shares, will only be undertaken at a premium to the prevailing cum income NAV, with debt calculated at par, in order to satisfy natural market demand. This would enhance the NAV per share for existing shareholders as well as dilute ongoing costs and help with the trading liquidity of the shares of the Company.

Over the course of the last financial year, the Company has been able to issue over 8.2 million new shares at a premium to its NAV, raising net proceeds of £71.3 million and increasing the NAV per share by 0.34%. This equates to 16.8% of the issued share capital at the start of the year. This, along with good investment performance and the benefits of a tiered management fee, has contributed to the reduction in the Company's ongoing charges for the year.

 

Unlisted Investments and Investment Policy

At present, the Company is permitted to invest up to 5% of total assets in unlisted equity investments, in aggregate, at time of acquisition. As part of the business of the Company's Annual General Meeting, the Board is seeking shareholder approval to increase the permissible limit to 15% of total assets at the time of initial investment

As at the Company's year end, the portfolio weighting in unlisted investments stood at 3.2% of total assets, invested in five holdings (2017 - 2.1% of total assets in three holdings). There were three new unlisted purchases during the year: Reaction Engines, a UK company that designs and manufactures very advanced heat exchangers; Akili Interactive Labs, a US company utilising technology for healthcare; and KSQ Therapeutics, a US preclinical-stage biotechnology company focusing on oncology and immuno-oncology product development. Unity Biotechnology, which was bought in October 2016, listed on Nasdaq in May this year.

Your portfolio managers remain alert to further special and high potential opportunities not widely accessible through public markets. Although they still have 1.8 percentage points of headroom to invest in unlisted investments, at points over 2018 they have had concerns that the 5% limit could curtail investments in potentially very exciting opportunities.

In 2014, the Company broadened its investment policy to allow a greater level of investment in companies at a much earlier point in their growth cycle. As part of this, the amount permissible to be invested in unlisted investments was increased from 1% to 5% of total assets, at time of initial investment. Since then, Baillie Gifford has established a dedicated investment team focused on analysing and investing in unlisted investments and currently has £1.5 billion invested in 48 private holdings across 10 countries to varying extents. In addition, Luke Ward, one of Edinburgh Worldwide's two deputy portfolio managers has been spending an increasing amount of time analysing unlisted opportunities alongside other colleagues at Baillie Gifford, specifically those companies that fit Edinburgh Worldwide's policy and objective.

Considering the increasing quantum of interesting unlisted investment opportunities emerging that fit the portfolio managers' criteria for investment, namely investing in immature but innovative businesses that are best positioned and able to prosper in a rapidly technologically evolving world and that will typically, although not necessarily, have a market valuation of less than US$5billion at time of initial investment, the Board is seeking shareholder approval to increase the permissible limit in unlisted investments to 15% of total assets at the time of initial investment.

 

Sub Division of Ordinary Shares of 5p Nominal Value ('share split')

Over the 12 months to 31 October 2018, the Company's share price has risen from 690.50p to 822.00p and at points to over 1000.00p. Over recent years, the Board has observed a marked shift in the composition of the Company's share register; the majority of investors now represent, or are, individuals investing on an advised or direct basis, particularly through investment platforms, on a regular basis. One of the disadvantages of a high share price is that regular savers, who often make small monthly share purchases, may find that a considerable proportion of their monthly payment remains uninvested. In addition, a higher share price results in a wider bid/offer spread at which shares can be bought and sold. Reducing the share price, through increasing the number of shares in issue by way of a share split, and reducing the amount of uninvested cash from regular savers, should help improve trading liquidity to the benefit of all. Consequently, the Board is seeking shareholder approval to subdivide each existing ordinary share of 5p nominal value into five ordinary shares (of 1p nominal value). If approved, the number of shares held by each investor will increase five fold and the share price will reduce to one fifth of its prior amount, resulting in no change to the aggregate value of the holding. For shareholders who hold their shares in certificated form, new share certificates will be issued and the old certificates will become invalid. Further details of the proposed share split are set out on page 22 of the Annual Report and Financial Statements.

 

Borrowings

The extent and range of equity gearing is discussed by the Board and Managers at each Board meeting. Both parties agree that the Company should typically be geared to equities to maximise potential returns, with the current aspirational parameters set at +5% to +15%. Over the year, the invested equity gearing ranged between 1.3% and 8.9%, and stood at 5.3% at the financial year end (2017 - 8.6%). Despite undertaking a new £25 million borrowing facility during the year, the level of equity gearing has tended to be at the lower end of the spectrum due largely to the rate of asset appreciation and amount of stock issuance.

Currently, the Company has a five year fixed rate multi-currency loan from National Australia Bank Limited, expiring in September 2019, with drawings of €9.4 million, US$25.6 million and £7.5 million, with a weighted average interest rate of 2.8%. In addition, the Company has a further £25 million five year revolving multi-currency facility with National Australia Bank Limited, expiring in June 2023. At present, drawings under this facility are €2.1 million, US$9.9 million and £3.1 million, with an average interest rate of 3.4%.

 

Earnings and Dividend

The Company's objective is to generate capital growth and investors should not expect any income from this investment. This year the net revenue return per share was a negative 0.95p (2017 - positive 0.30p due largely to a one-off refund of French withholding tax and associated interest). As the revenue account for 2018 is running at a deficit, the Board is recommending that no final dividend be paid. Should the level of underlying income increase in future years, the Board will seek to distribute the minimum permissible to maintain investment trust status by way of a final dividend.

 

Increase in Ceiling on Directors' Fees

The Company's Articles of Association provides that the aggregate remuneration paid to the Directors shall not exceed £150,000 per annum, or such larger amount agreed by the Company by ordinary resolution. Based on the level of aggregate remuneration expected to be paid for the financial year ending 31 October 2019 (£130,500 - being £34,500 for the Chairman, £23,000 for each Director and an additional £4,000 for the Chairman of the Audit and Management Engagement Committee), should the Board wish to appoint a new Director the aggregate fees would likely exceed the current authorised limit. Accordingly, it is proposed that, pursuant to Resolution 6, as set out in the Notice of Annual General Meeting, the maximum aggregate amount of fees payable to the Directors be increased to £200,000 per annum in aggregate.

 

Investment Outlook

As stated last year, the ability to identify the companies that value innovation and have the capability to develop commercial opportunities around it, is key to unearthing the market leaders of the future and is a key focus for the managers. Such companies can be expected to thrive regardless of the underlying economic conditions. Nonetheless, the actions of investors often exhibit indiscriminate tendencies and immature growth companies can undergo notable price volatility. The structure of investment trusts permits their managers and discerning long term investors to take positions for the long term when the tide of money or sentiment depresses valuations. Rather than focus on macro economic developments, your managers will therefore continue to focus their efforts on picking growth companies that create and exploit investment opportunities and which exhibit excellent long term growth prospects and the potential for positive long term returns.

An overview of the portfolio is provided by the Managers below.

 

Annual General Meeting

The Annual General Meeting of the Company will be held at Baillie Gifford's offices in Edinburgh at 12 noon on Wednesday 23 January 2019. Further information on this and all the resolutions can be found on pages 53 and 54 of the Annual Report and Financial Statements. The Directors consider that all resolutions put to shareholders are in their and the Company's best interests as a whole and recommend that shareholders vote in their favour.

Douglas Brodie, the portfolio's lead manager, and Svetlana Viteva and Luke Ward, joint deputy portfolio managers, will give a prescntation and take questions. The Board will also be available to respond to any questions that you may have. I hope that you will be able to attend.

 

 

 

 

 

Henry CT Strutt

Chairman

13 December 2018

 

 

 

 

For a definition of terms see Glossary of Terms, note 10.

*See disclaimer at the end of this announcement

Past performance is not a guide to future performance.
 

Managers' Review

 

For most of the Company's financial year to end of October 2018, equity markets were in robust form. As highlighted in the Interim Report, our sense was that investors were behaving broadly rationally, driven largely by fundamentals and with a reasonable ability to tolerate the inevitable 'noise' of macro events. It is the nature of modern equity markets that such periods will only ever be transient, hence the return of volatility and pangs of cyclically-driven anxiety in more recent months have not overly surprised us. Against this changing backdrop, the portfolio continued to perform well over the past year and, in aggregate, we continue to be very pleased with the operational performance of the holdings in the portfolio and in many cases we sense that it will continue to build at a very significant rate. Given the network effects and platform-based nature of many of these businesses, we believe that this positions them very well for the future. Our long-term growth-led investment style means we feel comparatively, yet comfortably, disconnected from the plethora of shorter-term factors that are currently combining to rebase markets downwards. Moreover, periodic market angst and the indiscriminate way in which this often manifests itself can frequently yield interesting investment opportunities for patient stock-picking investors. 

We had previously flagged the heightened level of corporate activity across the portfolio. Over the course of the past year four of the Company's holdings were acquired: the online fashion retailer YOOX Net-a-Porter was bought by Richemont; software company MuleSoft was taken over by Salesforce; genetic testing company Foundation Medicine was sold to Roche; and investment advisor Financial Engines was an acquisition for a private equity company. While the contribution from these acquired businesses was positive, it was comparatively modest for overall relative performance over the year; most of the performance can be attributed to stocks which we continue to own and are increasingly enthused by. In seeking to identify up-and-coming, innovative companies we recognise that some will inevitably carve out a commercial proposition and uniqueness that make them attractive to potential acquirers. It is typically an outcome that we do not actively favour. Rather, we prefer our most innovative holdings to remain independent as we believe this often maximises the likelihood of a business really succeeding and ultimately increasing the long-term returns that can be achieved.

The most significant contribution to performance over the year was Ocado, the online grocery company, where the announcement of several licensing deals with large incumbents around the world endorsed our view that it has the most compelling solution for selling online grocery at scale. The most notable of these licensing deals is with Kroger, the second largest grocer in the US. This could see up to 20 Ocado-powered warehouses built in the US over the coming years. It is a transformational event for Ocado and a clear endorsement of how forward-thinking supermarkets are approaching the changes in consumer habits. Another of our e-commerce companies, Wayfair, also produced strong returns over the 12 months. Wayfair's expertise in merchandising furniture and home furnishings presents challenges that are different to the grocery offering of Ocado, yet both companies are pioneers of a digital offering into their respective end markets. Whilst pleased with their progress thus far, what strikes us most is just how early these vast end markets are in their transition to online, and how their offerings are rapidly evolving to be ultimately better for consumers, not merely an alternative. STAAR Surgical and Teladoc, both relatively recent purchases in the healthcare area, yielded very strong returns. STAAR Surgical, a developer of vision correcting implantable lenses, benefited from strong growth of its offering in Asia plus the removal of regulatory hurdles. This now opens the vast potential within the US market. We see a great opportunity for the business both to take share from laser-based vision correction and to expand the market for vision correction to those with more pronounced short-sightedness. Teladoc is emerging as the dominant company in the nascent telemedicine industry. The use of digital technologies to guide both patients and doctors outside of conventional GP and hospital settings is an area that offers huge cost and efficiency gains for consumers, employers and payers. We think that, in broadening its offering from simple GP consultations towards chronic conditions, mental health and expert consultations, Teladoc is building a compellingly deep and sophisticated offering that could evolve to become the initial point of contact through which an individual will engage with the health system. 

Negative contributors to performance over the past year included several long-standing holdings. In many cases, this follows the stocks having been exceptionally strong performers in the previous year. We would highlight the drug development company Alnylam Pharmaceuticals, the financial market place LendingTree and fibre-laser manufacturer IPG Photonics. In all cases the weakness has been prompted by near-term, largely cyclical concerns which we believe ignore the longer-term potential of these businesses. With regard to Alnylam and LendingTree, we used the weakness to add to the positions.

 

Portfolio Update

We acquired a number of new holdings over the year. The purchases of BlackLine, Jianpu Technology, resTORbio and Reaction Engines were discussed in the Interim Report. New purchases in the second half of the year included the following:

Evolent Health is a US-based company which aims to change the way healthcare in the US is delivered. Hospitals and physician groups in the US are facing structural challenges driven by the growing pressure on the budgets for federal programmes such as Medicare and Medicaid. Other factors include an ongoing reduction in reimbursement rates and a push towards payment based on patients' outcomes rather than the number of procedures performed by the hospital. Evolent Health consults with hospitals and physician groups and sells them software to help them move away from a fee-for-service reimbursement model. The transition to value-based healthcare is still in its early days and the opportunity for Evolent Health ought to be very large. With a growing number of hospitals using its software, the company is developing a valuable data advantage and helping hospitals improve their productivity further as well as enabling them to take on insurance-style risk.

CyberArk Software is an Israeli cybersecurity company focused on protection for privileged accounts (powerful internal accounts that are managed by IT administrators or senior employees). These accounts are critical because they are the gate to sensitive information within an organisation, such as customers' credit cards, patients' medical records or employees' personal details. In layman's terms, what CyberArk does is to put the passwords associated with those accounts into a safe, monitor them and block the access if it suspects malicious behaviour. This is referred to as privileged account management (PAM), an area where CyberArk is recognised as the pioneer and market leader. As approximately 80% of security breaches involve compromised privileged accounts, we see significant scope for the company to grow industry penetration from its current low base.

Rubius Therapeutics is a biotechnology company that is seeking to use edited red blood cells to deliver therapeutic proteins. This is achieved by harvesting progenitor blood cells which are edited using techniques similar to gene therapy. Red blood cells have a number of advantages as delivery mechanisms; they have a long (but not indefinite) lifespan, are not attacked by the immune system, can be easily delivered through transfusion and offer the ability to create an 'off the shelf' product using Type 'O' cells. Rubius will shortly be entering clinical trials but has compelling pre-clinical data showing the approach could work in a wide range of disease settings ranging from genetic enzyme deficiency to autoimmunity.

Yext is a New York based software company. It helps businesses manage and synchronise digital information (from basics like opening hours to more frequently updated features like menus, in-store sale campaigns and special events) across a large and growing network of services such as Facebook, Siri, Google Maps, WeChat and others. Yext began through building a rational, up-to-date database focused on local content for small businesses. The value proposition of this was simple; small businesses could be in charge of their own information and therefore they could ensure consistency of that information across multiple different search or aggregation sites. Ongoing changes in how people search (i.e. more Alexa/Siri interfaces, more natural query and some dominant content aggregators) has pushed the topic of corporate 'knowledge management' much higher up the agenda. No longer is this simply about helping small businesses. Rather, the real growth is in helping bigger companies present an up-to-date view of their business, both internally and externally. The changing emphasis of the Yext offering from 'local' to 'fundamental' massively increases the addressable market and ultimately broadens the relevance of what it offers.

We increased the portfolio's unlisted exposure through initiating holdings in two private US companies, Akili Interactive Labs and KSQ Therapeutics. Akili Interactive Labs designs video games incorporating embedded therapeutic algorithms to both treat and monitor a range of neurological conditions. It is a business we have followed for several years and owned indirectly on account of it being one of the larger healthcare businesses within PureTech Health, the London-listed healthcare incubator, which is an existing holding for Edinburgh Worldwide. Akili recently demonstrated the clinical significance of its iPad-based therapeutic game, EVO, in a pivotal trial for ADHD, an achievement which we think makes it a real stand out in the emerging area of digital medicine. With growing evidence that game-based stimuli can drive long-term cognitive benefit, we are intrigued by the possibility of Akili taking its technology into many additional areas of neurological therapy. KSQ Therapeutics has found a way to identify and validate novel drug targets at scale using a rational platform-based approach. Initially their efforts are focused on cancer, but over the longer term the powerful platform could be pointed towards several other diseases. The company uses CRISPR technology to selectively cut (and hence destroy) specific genes within cells. Once the library of knocked-out cells has been produced, the individual clones can be extensively studied in a variety of in vitro and in vivo experiments with the goal of finding cells in which the destruction of a particular gene has yielded a profound impact on a disease. KSQ already has a range of targets which seem to show enhanced migration to, and significant reductions in, tumour volume relative to existing leading-edge immuno-oncology drugs.

The investments in Akili and KSQ are indicative of the interesting dynamic opportunities we are seeing in the unlisted area. Their addition to the portfolio results in there now being five unlisted holdings, 3.2% of total assets at the year end, each representing an exciting investment opportunity that is innovating in areas that are difficult to access through listed businesses alone. As detailed in the Chairman's Statement, we see increasing opportunities in the unlisted area and we are building up resource accordingly.

 

 

 

 

Income statement

 

 

For the year ended

31 October 2018

For the year ended

31 October 2017

 

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Gains on investments

51,630 

51,630 

85,581 

85,581 

Currency gains

175 

175 

824 

824 

Income (note 2)

1,270 

1,270 

1,268

1,268 

Investment management fee

(694)

(2,082)

(2,776)

(535)

(1,606)

(2,141)

Other administrative expenses

(737)

(737)

(513)

(513)

Net return before finance costs and taxation

(161)

49,723 

49,562 

220 

84,799 

85,019 

Finance costs of borrowings

(282)

(846)

(1,128)

(250)

(749)

(999)

Net return on ordinary activities before taxation

(443)

48,877 

48,434 

(30)

84,050 

84,020 

Tax on ordinary activities

(54)

(54)

179 

28 

207 

Net return on ordinary activities after taxation

(497)

48,877 

48,380 

149 

84,078  

84,227 

Net return per ordinary share (note 4)

(0.95p)

93.39p

92.44p

0.30p

171.58p

171.88p

 

The total column of this Statement represents the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return on ordinary activities after taxation is both the profit and comprehensive income for the year.

 

 

Balance sheet

 

 

 

At 31 October 2018

£'000

At 31 October 2017

£'000

Fixed assets

 

 

Investments held at fair value through profit or loss

498,326 

383,846 

Current assets

 

 

Debtors

147 

102 

Cash and cash equivalents

23,607 

4,686 

 

23,754 

4,788 

Creditors

 

 

Amounts falling due within one year (note 6)

(49,606)

(771)

Net current (liabilities)/assets

(25,852)

4,017 

Total assets less current liabilities

472,474

 387,863 

Creditors

 

 

Amounts falling due after more than one year (note 6)

(35,024)

Net assets

472,474 

352,839 

 

 

 

Capital and reserves

 

 

Share capital

2,861 

2,450 

Share premium account

153,024 

82,180 

Special reserve

35,220 

35,220 

Capital reserve

280,897 

232,020 

Revenue reserve

472 

969 

Shareholders' funds

472,474 

352,839 

Net asset value per ordinary share

(after deducting borrowings at fair value) (note 6)

 

825.72p

718.89p

Net asset value per ordinary share

(after deducting borrowings at par)

 

825.79p

720.02p

Ordinary shares in issue (note 8)

57,214,739

49,004,319

 

 

 

Statement of changes in equity

 

For the year ended 31 October 2018

 

Share

 capital

£'000

Share premium

account

£'000

Special reserve

£'000

Capital*
reserve

£'000

Revenue reserve

£'000

Shareholders'
funds

£'000

Shareholders' funds at 1 November 2017

2,450

82,180

35,220

232,020

969 

352,839

Ordinary shares issued (note 8)

411

70,844

-

-

71,255

Net return on ordinary activities after

 taxation

-

-

-

48,877

(497)

48,380

Shareholders' funds at 31 October 2018

2,861

153,024

35,220

280,897

472 

472,474

 

 

For the year ended 31 October 2017

 

 

Share

 capital

£'000

Share premium account

£'000

Special reserve

£'000

Capital* reserve

£'000

Revenue reserve

£'000

Shareholders'
funds

£'000

Shareholders' funds at 1 November 2016

 

2,450

82,180

35,220

147,942

820

268,612

Ordinary shares issued

 

-

-

-

-

-

-

Net return on ordinary activities after

 taxation

 

-

-

-

84,078

149

84,227

Shareholders' funds at 31 October 2017

 

2,450

82,180

35,220

232,020

969

352,839

 

*  The capital reserve balance as at 31 October 2018 includes investment holdings gains on fixed asset investments of £21,569,000 (2017 - gains of £71,923,000).

 

 

 

Cash flow statement

 

 

For the year ended

 31 October 2018

For the year ended

 31 October 2017

 

£'000

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

Net return on ordinary activities before taxation

 

48,434 

 

84,020 

Net gains on investments

 

(51,630)

 

(85,581)

Currency gains

 

(175)

 

(824)

Finance costs of borrowings

 

1,128 

 

999 

Overseas tax (incurred)/repaid

 

(52)

 

207 

Changes in debtors and creditors

 

116 

 

148 

Cash from operations*

 

(2,179)

 

(1,031)

Interest paid

 

(1,083)

 

(1,001)

 

(3,262)

 

(2,032)

Cash flows from investing activities

 

 

 

 

Acquisitions of investments

(118,338)

 

(50,072)

 

Disposal of investments

55,488 

 

44,606 

 

 

(62,850)

 

(5,466)

Cash flows from financing activities

 

 

 

 

Shares issued

71,255 

 

 

Borrowings drawn down

25,057 

 

 

Borrowings repaid

(12,564)

 

 

 

83,748 

 

Increase/(decrease) in cash and cash equivalents

 

17,636 

 

(7,498)

Exchange movements

 

1,285 

 

(1,060)

Cash and cash equivalents at 1 November

 

4,686 

 

13,244 

Cash and cash equivalents at 31 October

 

23,607 

 

4,686 

 

 

 

 

 

*  Cash from operations includes dividends received of £1,086,000 (2017 - £1,159,000) and interest received of £184,000 (2017 - £102,000)

 

 

Twenty Largest Holdings and Twelve Month Performance at 31 October 2018

 

 

 

 

Name

 

 

Business

 

 

Country

Fair Value

2018

£'000

% of

total

assets*

Absolute performance

%

Relative performance

%

Ocado

Online grocery company

UK

18,588

3.5

197.7 

197.2 

MarketAxess

Electronic bond trading platform

USA

18,355

3.5

26.2 

26.0 

Wayfair

Online furniture and homeware

  retailer

 

USA

 

17,989

 

3.4

 

64.1 

 

63.9 

Alnylam   

  Pharmaceuticals

 

Therapeutic gene silencing

 

USA

 

17,909

 

3.4

 

(31.5)

 

(31.6)

LendingTree

Online loan marketplace

USA

15,991

3.1

(21.9)

(22.0)

AeroVironment

Small unmanned aircraft systems

USA

15,529

3.0

83.0 

82.7 

Chegg

Online educational company

USA

12,383

2.4

83.3 

83.0 

Tesla, Inc

Electric cars, autonomous driving  

  and solar energy

 

USA

 

11,853

 

2.3

 

5.7 

 

5.6 

STAAR Surgical

Develops and manufactures high

  margin visual implants

 

USA

 

11,303

 

2.2

 

214.3 

 

213.8 

Exact Sciences

Provides non-invasive molecular

  tests for early cancer detection

 

USA

 

10,767

 

2.1

 

33.8 

 

33.6 

Novocure

Manufacturer of medical devices  

  for cancer treatment

 

USA

 

10,179

 

2.0

 

60.1 

 

59.8 

Grubhub

Online and mobile platform for

  restaurant pick-up and delivery

  orders

 

 

USA

 

 

10,163

 

 

2.0

 

 

58.0 

 

 

57.7 

Temenos Group

Banking software

Switzerland

9,850

1.9

24.4 

24.2 

Zillow Class C

US online real estate portal

USA

9,709

1.9

1.1 

1.0 

Teladoc

Telemedicine services provider

USA

9,391

1.8

117.1 

116.8 

iRobot

Domestic and military robots

USA

8,854

1.7

36.5 

36.3 

Puretech Health

IP commercialisation focused on

  health care

 

UK

 

8,401

 

1.6

 

34.3 

 

34.1 

Pacira Pharmaceuticals

Development, commercialisation

  and manufacturing of proprietary

  pharmaceutical products

 

 

USA

 

 

7,890

 

 

1.5

 

 

58.2 

 

 

58.0 

IPG Photonics

High-power fibre lasers

USA

7,696

1.5

(34.9)

(35.0)

Dexcom

Real time blood glucose

  monitoring

 

USA

 

7,576

 

1.5

 

206.8 

 

206.4 

 

 

 

240,376

46.3

 

 

 

*     Total assets less current liabilities before the deduction of borrowings.

     Absolute and relative performance has been calculated on a total return basis over the period 1 November 2017 to 31 October 2018. Absolute performance is in sterling terms; relative performance is against S&P Global Small Cap Index (in sterling terms).

 

Source: Baillie Gifford/StatPro and relevant underlying index providers. See disclaimer at the end of this announcement.

Past performance is not a guide to future performance.

 

 

 

 

List of Investments as at 31 October 2018

 

 

 

 

Name

 

 

Business

 

 

Country

Fair Value

2018

£'000

% of

total

assets

Fair Value

2017

£'000

Ocado

Online grocery company

UK

18,588

3.5

5,676

MarketAxess

Electronic bond trading platform

USA

18,355

3.5

21,640

Wayfair

Online furniture and homeware retailer

USA

17,989

3.4

8,964

Alnylam Pharmaceuticals

Therapeutic gene silencing

USA

17,909

3.4

22,449

LendingTree

Online loan marketplace

USA

15,991

3.1

17,178

AeroVironment

Small unmanned aircraft systems

USA

15,529

3.0

6,774

Chegg

Online educational company

USA

12,383

2.4

3,899

Tesla, Inc

Electric cars, autonomous driving and

  solar energy

 

USA

 

11,853

 

2.3

 

11,209

STAAR Surgical

Develops and manufactures high margin

  visual implants

 

USA

 

11,303

 

2.2

 

3,142

Exact Sciences

Provides non-invasive molecular tests for

  early cancer detection

 

USA

 

10,767

 

2.1

 

4,552

Novocure

Manufacturer of medical devices for

  cancer treatment

 

USA

 

10,179

 

2.0

 

4,136

Grubhub

Online and mobile platform for restaurant 

  pick-up and delivery orders

 

USA

 

10,163

 

2.0

 

6,432

Temenos Group

Banking software

Switzerland

9,850

1.9

7,955

Zillow Class C

US online real estate portal

USA

9,709

1.9

5,646

Teladoc

Telemedicine services provider

USA

9,391

1.8

2,912

iRobot

Domestic and military robots

USA

8,854

1.7

9,244

Puretech Health

IP commercialisation focused on health

  care

 

UK

 

8,401

 

1.6

 

4,154

Pacira Pharmaceuticals

Development, commercialisation and 

  manufacturing of proprietary

  pharmaceutical products

 

 

USA

 

 

7,890

 

 

1.5

 

 

2,414

IPG Photonics

High-power fibre lasers

USA

7,696

1.5

14,208

Dexcom

Real time blood glucose monitoring

USA

7,576

1.5

2,470

Baozun SPN ADR

Chinese e-commerce solution provider

China

7,568

1.5

4,569

Codexis

Manufacturer of custom industrial

  enzymes

 

USA

 

7,302

 

1.4

 

2,295

InfoMart Corp

Internet platform for restaurant supplies

Japan

6,306

1.2

4,388

Benefitfocus

Cloud-based benefits software provider

USA

6,280

1.2

1,947

Galapagos

Clinical stage biotechnology company

Belgium

6,208

1.2

5,640

Tandem Diabetes Care

Manufacturer of pumps for diabetic

  patients

 

USA

 

6,165

 

1.2

 

-

MonotaRO

Online business supplies

Japan

6,012

1.2

3,586

Renishaw

Measurement and calibration equipment

UK

5,905

1.1

6,963

IP Group

Intellectual property commercialisation

UK

5,846

1.1

8,079

Xero

Could-based accounting software

New Zealand

5,801

1.1

4,255

Splunk

Data diagnostics

USA

5,773

1.1

2,913

Genmab

Therapeutic antibody company

Denmark

5,274

1.0

3,636

Evolent Health

Healthcare company which helps

  hospitals move to value-based

  healthcare

 

 

USA

 

 

5,097

 

 

1.0

 

 

-

BlackLine

Enterprise software developer

USA

5,046

1.0

-

Oxford Nanopore

  Technologies

 

Novel DNA sequencing technology

 

UK

 

4,982

 

0.9

 

4,176

AxoGen Inc

A regenerative medicine company for

  peripheral nerve repair

 

USA

 

4,944

 

0.9

 

-

Peptidream

Drug discovery platform

Japan

4,925

0.9

2,998

Genus

Animal breeding services

UK

4,874

0.9

5,180

Kingdee International

  Software

 

Enterprise management software

 

China

 

4,871

 

0.9

 

3,081

Cellectis

Biotech focused on genetic engineering

France

4,723

0.9

4,942

Morphosys

Therapeutic antibodies

Germany

4,656

0.9

4,180

List of Investments as at 31 October 2018

 

 

 

 

Name

 

 

Business

 

 

Country

Fair Value

2018

£'000

% of

total

assets

Fair Value

2017

£'000

NuCana SPN ADR

An oncology-focused biotechnology

  company

 

UK

 

4,603

 

0.9

 

2,156

ASOS

Online fashion retailer

UK

4,522

0.9

3,874

CyberArk Software

Cyber security solutions provider

Israel

4,299

0.8

-

Penumbra

Manufacturer of novel blood clot

  extraction technology

 

USA

 

4,290

 

0.8

 

2,130

Faro Technologies

Designs and develops measurement

  devices

 

USA

 

4,263

 

0.8

 

4,204

National Instruments Corp

Instrumentation equipment used in

  research and testing

 

USA

 

4,192

 

0.8

 

3,706

ResTORbio

Clinical stage biopharmaceutical

  company

 

USA

 

4,132

 

0.8

 

-

Yext

Digital knowledge manager

USA

4,024

0.8

-

Akili Interactive Labs

Digital medicine company

USA

3,913

0.8

-

KSQ Therapeutics

Biotechnology target identification

  company

 

USA

 

3,913

 

0.8

 

-

Digital Garage

Internet business incubator

Japan

3,851

0.7

2,902

Jianpu Technology ADR

Chinese consumer finance marketplace

China

3,757

0.7

-

Seattle Genetics

Antibody conjugates based

  biotechnology

 

USA

 

3,756

 

0.7

 

3,947

Trupanion

Pet health insurance provider

USA

3,656

0.7

3,923

ZOZO (formerly Start  

  Today)

 

Internet fashion retailer

Japan

3,630

0.7

5,083

M3

Online medical database

Japan

3,530

0.7

3,131

Adatimmune Therapeutics

  ADR

Clinical stage biopharmaceutical

  company

 

UK

 

3,400

 

0.7

 

2,186

Victrex

High-performance thermo-plastics

UK

3,370

0.6

3,048

Cosmo Pharmaceuticals

Therapies for gastrointestinal diseases

Italy

3,289

0.6

3,643

SEEK

Online recruitment portal

Australia

3,232

0.6

3,461

Rightmove

UK online property portal

UK

3,119

0.6

2,865

Mindbody CL

Business management software for the

  wellness sector

 

USA

 

3,031

 

0.6

 

2,308

Unity Biotechnology Inc

Biotechnology company seeking to

  develop anti ageing therapies

 

USA

 

2,950

 

0.6

 

1,506

Zillow Class A

US online real estate portal

USA

2,869

0.6

2,825

Ceres Power Holding

Developer of fuel cells

UK

2,729

0.5

1,995

Ambarella

Video compression and image

  processing semiconductors

 

USA

 

2,654

 

0.5

 

3,124

Uxin ADR

E-commerce services provider

China

2,404

0.5

-

Spire Global

Manufacturer and operator of

  nanosatellites for data collection

 

USA

 

2,241

 

0.4

 

2,259

Dialog Semiconductor

Analogue chips for mobile phones

Germany

2,204

0.4

3,992

SDL

Language translation services

UK

2,196

0.4

2,591

Stratasys

3D printer manufacturer

USA

2,156

0.4

2,451

Sensirion Holding AG

Manufacturer of gas and flow sensors

Switzerland

2,154

0.4

-

Oxford Instruments

Produces advanced instrumentation

  equipment

 

UK

 

2,098

 

0.4

 

2,121

Horizon Discovery

Customised cell lines to aid drug

  discovery

 

UK

 

1,975

 

0.4

 

2,596

Suess Microtec

Fabrication and inspection equipment

Germany

1,960

0.4

2,875

Aduro Biotechnology

Immunotherapy services provider

USA

1,938

0.3

1,302

Digimarc

Digital watermarking technology

USA

1,597

0.3

2,188

CEVA

Licenses DSP-based platforms

  applications to the semiconductor

  industry

 

 

USA

 

 

1,591

 

 

0.3

 

 

2,998

Ellie Mae

Provides technology solutions to

  automate mortgage origination process

 

USA

 

1,555

 

0.3

 

2,032

 

List of Investments as at 31 October 2018

 

 

 

 

Name

 

 

Business

 

 

Country

Fair Value

2018

£'000

% of

total

assets

Fair Value

2017

£'000

 

 

 

 

 

 

4D Pharma

Bacteria derived novel therapeutics

UK

1,526

0.3

3,748

Reaction Engines Limited

Advanced heat exchange company

UK

1,500

0.3

-

Rubius Therapeutics

Developer of novel therapies using 

  engineered red blood cells

 

USA

 

1,406

 

0.3

 

-

Tissue Regenix

Regenerative medical devices

UK

1,344

0.2

1,430

Basware

Software solutions for financial

  transactions

 

Finland

 

1,203

 

0.2

 

2,477

Nanoco

Quantum dot manufacturer

UK

1,194

0.2

732

C4X Discovery Holdings

Rational drug design and optimisation

UK

1,144

0.2

851

Catapult Group

  International

Sports analytics focused on optimising

  athlete performance

 

Australia

 

1,027

 

0.2

 

1,961

Ricardo

Automotive engineer

UK

969

0.2

1,123

China Financial Services

Small and medium-sized enterprises

  lending in China

 

China

 

955

 

0.2

 

1,276

Avacta Group

Analytical reagents and instrumentation

UK

892

0.2

1,087

Xeros Technology Group

Polymer technology company with   

  laundry and textile applications

 

UK

 

860

 

0.2

 

3,733

Xaar

Ink jet printing technology

UK

838

0.2

2,794

Zumtobel

Commercial lighting

Austria

738

0.1

1,350

Acacia Research

Patent licenser

USA

569

0.1

745

Ilika

Discovery and development of materials

  for mass market applications

 

UK

 

500

 

0.1

 

466

Foamix Pharmaceuticals

Drug reformulation technology

Israel

379

0.1

510

hVIVO (formerly  

  Retroscreen Virology)

Outsourced pre-clinical analytical

  services

 

UK

 

300

 

0.1

 

400

Applied Graphene

  Materials

Manufactures graphene nanoplatelets

UK

261

0.1

242

Sarine Technologies

Systems for diamond grading and

  cutting

 

Singapore

 

257

 

0.0

 

462

Summit Therapeutics

Drug discovery and development

UK

255

0.0

1,065

Thin Film Electronics

Develops printed, rewritable memory

  media

 

Norway

 

200

 

0.0

 

519

Velocycs

Gas to liquid technology

UK

18

0.0

162

GI Dynamics

Develops and markets medical devices

Australia

14

0.0

34

China Lumena New

  Materials

Mines, processes and manufactures

  natural thenardite products

 

China

 

0

 

0.0

 

0

Ensogo

South East Asian e-commerce

Australia

0

0.0

0

Total equities

 

 

498,326

95.6

 

Net current assets

 

 

22,776

4.4

 

Total assets at fair value*

 

 

521,102

100.0

 

 

 

 

 

 

 

 

                   

*     Total assets less current liabilities before deduction of borrowings.

‡    Denotes unlisted security.

 

 

 

Distribution of total assets* by industry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industry Analysis

31 October 2018

% of total assets*

 

Portfolio Weightings

(relative to comparative index†)

at 31 October 2018

% points overweight/(underweight)

Equities:

Biotechnology

15.2

 

12.1 

 

Software

12.2

 

8.5 

 

Internet and Direct Marketing Retail

11.1

 

10.4 

 

Health Care Equipment and Supplies

8.8

 

6.2 

 

Electronic Equipment, Instruments and Components

5.2

 

2.5 

 

Capital Markets

4.6

 

2.1 

 

Health Care Technology

4.5

 

4.0 

 

Life Sciences Tools and Services

4.4

 

3.4 

 

Pharmaceuticals

3.9

 

2.0 

 

Aerospace and Defence

3.3

 

2.0 

 

Interactive Media and Services

3.1

 

2.2 

 

Thrifts and Mortgage Finance

3.1

 

2.3 

 

Diversified Consumer Services

2.4

 

1.4 

 

Automobiles

2.3

 

2.2 

 

Semiconductors and Semiconductor Equipment

1.8

 

(0.2)

 

Household Durables

1.7

 

0.2 

 

Trading Companies and Distributors

1.2

 

(0.4)

 

Professional Services

1.0

 

(0.5)

 

Internet and Catalogue Retail

0.9

 

0.9 

 

Consumer Finance

0.9

 

0.2 

 

Chemicals

0.7

 

(2.3)

 

Insurance

0.7

 

(2.4)

 

IT Services

0.7

 

(1.7)

 

Technology Hardware, Storage and Peripherals

0.6

 

0.1 

 

Electrical Equipment

0.6

 

(0.3)

 

Internet Software and Services

0.5

 

0.5 

 

Machinery

0.2

 

(4.5)

 

Energy Equipment and Services

0.0

 

(1.4)

 

Net Current Assets

4.4

 

 

Total assets*

100.0

 

 

* Total assets less current liabilities before deduction of borrowings.

 

 

 

S&P Global Small Cap Index (in sterling terms). Weightings exclude industries where the Company has no exposure.

 

See disclaimer at the end of this announcement.

 

 

 

 

Distribution of total assets

 

Geographical Analysis

 

 

31 October 2018

%

31 October 2017

%

North America

 

58.7

54.9

 

 

USA

58.7

54.9

 

Europe

 

25.8

32.6

 

 

United Kingdom

16.9

20.3

 

 

Eurozone

4.7

9.1

 

 

Developed Europe (non euro)

4.2

3.2

 

Asia

 

9.2

9.0

 

 

Japan

5.4

6.6

 

 

China

3.8

2.3

 

 

Singapore

-

0.1

 

Australasia

 

1.9

2.5

 

 

Australia

0.8

1.4

 

 

New Zealand

1.1

1.1

 

Total equities

95.6

99.0

 

Net current assets

4.4

1.0

 

Total assets*

100.0

100.0

 

 

Sectoral Analysis

 

 

31 October 2018

%

 

31 October 2017

%

 

Consumer Discretionary

 

18.4

 

17.2

 

Financials

 

9.3

 

14.7

 

Health Care

 

36.8

 

29.6

 

Industrials

 

6.3

 

6.0

 

Information Technology

 

21.0

 

29.9

 

Materials

 

0.7

 

0.9

 

Telecommunication Services

 

3.1

 

0.7

 

Net Current Assets

 

4.4

 

1.0

 

Total assets*

 

100.0

 

100.0

 

 * Total assets less current liabilities before deduction of borrowings

 

 

 

 

Notes

 

1.    

The financial statements for the year to 31 October 2018 have been prepared in accordance with FRS102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' The accounting policies adopted are consistent with those of the previous financial year.

In accordance with the Financial Reporting Council's guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. An explanation of the Company's principal risks and how they are managed is set out on pages 8 and 9 and contained in note 17 to the Annual Report Financial Statements.

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

Accordingly, the Financial Statements have been prepared on the going concern basis as it is the Directors' opinion, having assessed the principal risks and other matters set out in the Viability Statement on page 9 of the Annual Report and Financial Statements, that the Company will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements.

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.

2.    

Income

2018

£'000

2017

£'000

Income from investments

1,086

1,166

Deposit interest

184

102

 

1,270

1,268

3.

The Company has appointed Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Manager (AIFM) and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. The Management Agreement can be terminated on three months' notice.

The annual management fee is 0.95% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remaining net assets. Management fees are calculated and payable quarterly.

 

4.

 

Net return per ordinary share

 

Revenue

2018

 Capital

 

Total

 

Revenue

2017

Capital

 

Total

Net return on ordinary activities after     taxation

(0.95p)

93.39p

92.44p

0.30p

171.58p

171.88p

 

 

Revenue return per ordinary share is based on the net revenue loss on ordinary activities after taxation of £497,000 (2017 - net revenue profit of £149,000) and on 52,335,270 (2017 - 49,004,319) ordinary shares, being the weighted average number of ordinary shares in issue during each year.

 

Capital return per ordinary share is based on the net capital gain for the financial year of £48,877,000 (2017 - net capital gain of £84,078,000) and on 52,335,270 (2017 - 49,004,319) ordinary shares, being the weighted average number of ordinary shares in issue during each year.

 

There are no dilutive or potentially dilutive shares in issue.

5.         There are no dividends paid and proposed in respect of the financial year. There is no revenue available for distribution by way of dividend for the year (2018 - revenue loss of £497,000; 2017 - revenue profit of £149,000) which is the basis on which the requirements of section 1158 of the Corporation Tax Act are considered.

6.         The Company has a five year fixed rate facility with National Australia Bank Limited which expires on 30 September 2019 and a five year £25 million revolving credit facility with National Australia Bank Limited which expires on 29 June 2023. At 31 October 2018 the drawings were €9,400,000, US$25,600,000 and £7,500,000 under the fixed rate facility and €2,128,263, US$9,895,500 and £3,125,000 under the floating rate facility (31 October 2017 - €9,400,000, US$25,600,000 and £7,500,000 under the fixed rate facility, which was included in 'Creditors: amounts falling due in more than one year).

 

The fair value of the bank loans at 31 October 2018 was £48,669,000 (31 October 2017 - £35,574,000).

Notes (Ctd)

 

7.

The Company incurred transaction costs on purchases of £44,000
(2017 - £23,000) and on sales of £25,000 (2017 - £23,000).

8.

At the Annual General Meeting on 24 January 2018 the Company renewed its authority to purchase shares in the market, in respect of 7,345,747 ordinary shares (equivalent to approximately 14.99% of its issued share capital at that date). No shares were bought back during the years to 31 October 2018 or 2017. At 31 October 2018 the Company had authority to buy back 7,345,747 ordinary shares.

The Company also has authority to allot shares under section 551 of the Companies Act 2006. The Board has authorised use of this authority to issue new shares at a premium to net asset value in order to enhance the net asset value per share for existing shareholders and improve the liquidity of the Company's shares. In the year to 31 October 2018 the Company issued a total of 8,210,420 shares on a non pre-emptive basis (nominal value £411,000, representing 16.8% of the issued share capital at 31 October 2017) at a premium to net asset value (on the basis of debt valued at par value) raising net proceeds of £71,255,000 (2017 - Nil).

9.

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 October 2018. The financial information for 2018 is derived from the statutory accounts for 2018 which will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The financial information for 2017 is derived from the statutory accounts for 2017 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2018 accounts, their report was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

10.

Glossary of Terms

 

Total Assets

 

The total value of assets held less all liabilities other than liabilities in the form of borrowings.

 

Net Asset Value

 

Also described as shareholders' funds, Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue.

 

Net Asset Value (Borrowings at Fair Value)#

 

Borrowings are valued at an estimate of their market worth. The value of the borrowings at book and fair value are set out on page 52 of the Annual Report and Financial Statements.

 

Net Asset Value (Borrowings at Par Value)#

 

Borrowings are valued at their nominal par value. The value of the borrowings at book and fair value are set out on page 52 of the Annual Report and Financial Statements.

 

Net Liquid Assets

Net liquid assets comprise current assets less current liabilities, excluding borrowings.

 

Discount/Premium#

 

As stock markets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.

 

Total Return

 

The
total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

 

Ongoing Charges

 

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value (with debt at fair value).

 

 

 

 

 

 

Notes (Ctd)

 

Glossary of Terms (Continued)

 

Gearing

 

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

 

Gearing is the Company's borrowings at par less cash and cash equivalents expressed as a percentage of shareholders' funds.

 

Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

 

Leverage

 

For the purposes of the Alternative Investment Fund Managers Directive, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

 

Active Share#

 

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

 

Compound Annual Return

 

The compound annual return converts the return over a period of longer than one year to a constant annual rate of return applied to the compound value at the start of each year.

 

Unlisted Company

 

An unlisted company means a company whose shares are not available to the general public for trading and not listed on a stock exchange.

 

# Alternative performance measure which is considered to be a known industry metric.

 

11.

The Annual Report and Financial Statements will be available on the Edinburgh Worldwide page of the Managers' website http://www.edinburghworldwide.co.uk† on or around 18 December 2018.

 

 

 

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

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

 

 

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No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

 

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indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgments, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

 

S&P Index Data

The S&P Global Small Cap Index ('Index') is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates ('SPDJI'). Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC, a division of S&P Global ('S&P'); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ('Dow Jones'). Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.

 

 

- Ends -

 


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