TIDMEWI
RNS Number : 0227C
Edinburgh Worldwide Inv Trust PLC
08 June 2023
RNS Announcement
Edinburgh Worldwide Investment Trust plc
Legal Entity Identifier: 213800JUA8RKIDDLH380
Regulated Information Classification: Interim Financial
Report
Results for the six months to 30 April 2023
The Company is invested in a diversified portfolio of companies
which individually offer significant long term growth potential and
typically have a market capitalisation of less than US$5bn at the
time of initial investment.
3/4 Over the six month period, the Company's net asset value per
share decreased by 7.5% while the comparative index(*) decreased by
1.5%. The share price fell by 13.6%. Over the five year period, the
Company's net asset value per share increased by 21.8% while the
comparative index* increased by 33.8%. The share price decreased by
4.8%. Invested gearing as at 30 April 2023 was 12.4%.
3/4 The market environment remains largely as it was six months
earlier: a dynamic post-pandemic adjustment period where companies
and stock markets are navigating inflationary and geopolitical
challenges. This is sculpting a new investment environment. One
where capital is less freely available, the hurdle rate for returns
is higher and the tolerance of uncertainty is markedly lower.
3/4 The notable contributors to absolute returns over the period
was led by Exact Sciences, a developer of non-invasive molecular
tests for early cancer detection. Alnylam Pharmaceuticals, a
developer of drugs focused on harnessing gene silencing technology,
was the largest detractor to absolute returns. 44 names in the
portfolio generated positive absolute returns in sterling terms
over the six months. Eight stocks fell more than 50%.
3/4 During the period, the Company bought back for treasury
2,865,382 shares. 16,334,054 shares were held in treasury as at 30
April 2023. As at close of business on 6 June 2023, the discount
was 18.8%.
3/4 The net revenue return per share was a negative 0.31p (six
months to 30 April 2022: negative 0.23p). No interim dividend is
being recommended.
3/4 As at 30 April 2023 the Company's investment in unlisted
companies was 20.9% of total assets (30 April 2022: 19.3%).
3/4 The Board and Managers remain confident that the holdings in
the portfolio represent a collection of some of the most exciting
and transformational long-term investment opportunities
available.
* Source: Baillie Gifford/Refinitiv and relevant underlying
index providers. See disclaimer at the end of this
announcement.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Edinburgh Worldwide aims to achieve long term capital growth by
investing primarily in listed companies throughout the world. The
Company has total assets of GBP808.8 million (before deduction of
loans of GBP97million) as at 30 April 2023.
Edinburgh Worldwide is managed by Baillie Gifford, the Edinburgh
based fund management group with around GBP233 billion under
management and advice as at 7 June 2023.
Edinburgh Worldwide Investment Trust plc is a listed UK company.
The value of its shares and any income from them can fall as well
as rise and investors may not get back the amount invested. This is
because the share price is determined by the changing conditions in
the relevant stock markets 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. The
Company's risk could be increased by its investment in unlisted
investments. These assets may be more difficult to buy or sell, so
changes in their prices may be greater. The Company is listed on
the London Stock Exchange and is not authorised or regulated by the
Financial Conduct Authority. You can find up to date performance
information about Edinburgh Worldwide on the Edinburgh Worldwide
page of the Managers' website at edinburghworldwide.co.uk ++
++ 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.
7 June 2023
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co
Tel 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 020 3103 9553 or 07872 495 396
The following is the unaudited Interim Financial Report for the
six months to 30 April 2023 which was approved by the Board on 7
June 2023.
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of Financial Statements has been prepared
in accordance with FRS 104 'Interim Financial Reporting';
b) the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.7R (indication of important events during the first six months,
their impact on the Financial Statements and a description of the
principal risks and uncertainties for the remaining six months of
the year); and
c) the Interim Financial Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.8R (disclosure of related party transactions and changes
therein).
On behalf of the Board
Henry CT Strutt
Chairman
7 June 2023
Interim Management Report
Over the six months to 30 April 2023, the Company's net asset
value per share* decreased by 7.5%, which compares to a fall of
1.5% in the S&P Global Smaller Companies Index, total return in
sterling terms, over the same period. The share price over the six
months fell by 13.6% to 149.20p representing a discount of 18.4% to
the net asset value at 30 April 2023. This compares to a 12.7%
discount at the beginning of the period. The Company buys back its
own shares when the discount is substantial in absolute terms and
relative to its peers; 2,865,382 shares were bought back in the
period and are held in treasury.
Over the five-year period to 30 April 2023, the Company's net
asset value per share* increased by 21.8% while the comparative
index increased by 33.8%. The share price decreased by 4.8% over
this period.
The market environment remains largely as discussed in the 2022
Annual Report: a dynamic post-pandemic adjustment period where
companies and stock markets are navigating inflationary and
geopolitical challenges. This is sculpting a new investment
environment. One where capital is less freely available, the hurdle
rate for returns is higher and the tolerance of uncertainty is
markedly lower. The immediate manifestation of this is a shortening
of the time horizons of many investors, lulling them into a mindset
where the near-term resiliency of what they invest in is paramount
and the future is approached with a large dose of pessimism.
We are unashamedly long-term investors with our analytical radar
tuned towards high-potential early-stage growth opportunities. The
current myopic environment described above is not conducive to our
approach. We are accustomed to having a time horizon and investment
style that can be out of sync with broader equity markets. In many
ways, this seems an unavoidable aspect of contemporary equity
investing. As bruising as this can feel in the near term, it
ultimately creates the opportunity. It shapes the returns available
to those willing to postulate how industries might evolve and
actively seek out those companies driving that change.
For such companies, it's the fundamental path of progress that
ultimately matters most not the prevailing stock market narrative.
That progress naturally takes time to manifest but we remain
confident that the holdings in the portfolio represent a collection
of some of the most exciting and transformational long-term
investment opportunities available.
Some Reflections on Growth and Technology
We have frequently noted how innovation and the application of
technology is a structural force that largely sits outside of
conventional business cyclicality. But recent headlines on
technology sector job losses and retrenchment indicate that many
tech-led companies have not been immune from current pressures. In
some cases, the reasons for this cyclicality directly relate to end
product demand, but in many other areas we suspect it represents a
period of adaption to a new normal that we would ultimately expect
to see replicated more broadly across the economy.
That 'new normal' will likely favour efficiency in pursuing
business growth. In an era of zero-cost money, a surplus of labour
and an economic tailwind, the issue of productivity was primarily
addressed indirectly through the expansionary pursuit of scale:
grow bigger and operational leverage would ultimately drive
productivity. Direct investments in productivity tools to drive
unit economic efficiencies were generally less popular as they were
less likely to yield near-term expansionary growth. Furthermore,
they often carried a risk of disrupting an organisation as old
processes and workflows are ripped and replaced.
We sense that the broad premise of technology adaptation sitting
outside of conventional cyclicality still holds. But we would
concede that the dynamics of growth and business scaling are
adapting to the higher direct costs of expansion (e.g. higher
borrowing costs and wage inflation). Technology companies are among
the first to adjust to this, mainly because they were also the ones
at the forefront of pursuing expansionary- based scale.
We should not confuse this as being the end of a technology
cycle, far from it. As the focus shifts from the pursuit of scale
towards tools of efficiency, we think companies that offer or
exploit deep productivity- enhancing solutions will come to the
fore. You might argue that this has long been the case (e.g. the
rise of software tools since the 80s) but productivity growth in
most major developed market economies has been lacklustre for
several decades (1) . With looming huge improvements in intelligent
automation as discussed below, the prospects for meaningful
productivity gains look much brighter and we see the role of
automation shifting from the current model of assisting humans with
mundane tasks towards more value-added assistance or task
displacement.
You will have likely heard about some of the recent advances in
AI, particularly in the field of generative AI and local language
models through tools such as ChatGPT. While AI and machine learning
have been in their ascendency in recent years, their relevance has
primarily centred upon narrow probabilistic prediction - with the
accuracy of that prediction being most influenced by the intrinsic
data quality and manual labelling of data used to train a specific
algorithm.
Generative AI is focused on building novel content like art, an
essay, or lines of code. When challenged, a sophisticated
generative AI engine will draw upon the vast breadth of data it has
been exposed to, generate an approximate answer and then seek to
refine this through critical challenge. Such an iterative process
distances generative AI from the narrower predictive AI on several
fronts. Strikingly, it can make linkages between discrete
observations and deal with areas of ambiguity in what it observes.
Moreover, by mimicking mechanisms of natural conscious learning and
seeking resolution not statistical perfection, generative AI
outputs instinctively feel much more human-like, and it has proven
itself to be especially adept at mastering language and
dialogue.
At its core, generative AI advances are about delivering
context-relevant, digestible outputs that seek to answer real-world
queries. Its power can be pointed in many directions, whether
creating novel digital content at a hitherto unimaginable scale or
as a user-friendly distiller of complexity. The former could see it
garner a role in the production of software code or in-silico
screening of vast libraries of compounds for use in areas such as
drug discovery or battery technology. The latter uniquely positions
it to offer a scalable user interface that could ultimately perform
various functions such as knowledge search or fully automated
customer service. This is fundamentally different from most current
technology interfaces which are about delivering blunt and narrow
approximations.
What are the implications of all this? Our initial sense is that
these impressive but still nascent advances will lay new
foundations for how individuals and businesses engage with
technology. Much like the arrival of the internet 30 years ago, we
see generative AI as a horizontal technology tool that optically
lowers the entry barriers within a range of verticals/industries.
Traditionally, such a dynamic would be expected to favour nimble
disruptors and disadvantage stale incumbents. Yet to borrow further
from the experience of internet-based digitisation, while barriers
to entry were initially lowered, we suspect that barriers to scale
are likely to prove to be much harder to break down and will likely
be better determinants when filtering winners from losers within
this technology evolution.
While a clear advantage of generative AI is the ability to train
it on vast broad data sources, real-world commercial use cases of
this technology will likely have a requirement for domain-relevant
digital data with which to hone the algorithms. This proprietary
data likely exists within businesses that currently cater to their
respective end markets. Furthermore, many incumbents (or at least
those that remain/have emerged over the past few decades) are
digital native businesses - they are unlikely to be refuseniks when
experimenting with what AI offers. Taken together our initial view
is that for digitally savvy, forward-thinking businesses we suspect
that generative AI is more opportunity than a threat. For such
companies, this opportunity should be about making deeper
engagements with their customers and better leveraging the assets
they already have with the prize being to better their offering,
take share, and drive deep productivity savings. Given the
importance of this topic, we expect it to be a recurring theme in
our dialogue with holdings over the coming year.
Portfolio Update
Novocure disclosed encouraging clinical trial results for its
tumour-treating technology in lung cancer patients. Most
relevantly, Novocure's device appears to be synergistic with immune
checkpoint-blocking antibodies, a class of drugs that have emerged
as the primary therapeutic backbone in numerous cancer treatment
regimes. Exact Sciences received a boost when an aspiring
competitor in the colon cancer screening area revealed the
underwhelming performance of its blood-based test. This was further
bolstered through encouraging progress from Exact in bringing
forward its profitability and targets.
As at 30 April 2023 the Company's investment in unlisted
companies was 20.9% of total assets and the names held were
unchanged versus 31 October 2022. The end of the period saw both of
the portfolio's rocket companies begin test-flight campaigns on the
next generation of launch vehicles. SpaceX debuted its massive
Starship stack and Relativity Space its entirely 3D-printed
Terran-1 rocket. Both are following a rapidly iterative and
intentionally destructive development process in order to deliver
significant cost and capability improvements in the years ahead.
More recently, Astranis, the next-generation satellite company, has
launched its first MicroGEO platform into orbit over Alaska where
it will triple the available satellite bandwidth.
We remain broadly happy with how the portfolio companies are
navigating the current environment and have invested gearing of
12%. However, we have seen a handful of holdings experience large
negative price moves following company-specific challenges.
Trupanion's profitability has been hit as high levels of inflation
in veterinary bills have been hard to pass on via insurance premium
increases. Chegg's growth has been impacted by two years of
pandemic-impacted enrolment in the US college system. While we
expect this to ultimately wash through, the picture has been
further complicated by some college students experimenting with
generative AI tools for homework and coursework. Kroger, Ocado's
grocery partner in the US, announced that it is not planning to
open any additional Ocado-powered facilities in 2023 as it digests
the lessons from its initial warehouse deployments. With Kroger
currently engaged in a proposed merger with its competitor
Alberstons (a move that will give it a meaningful expansion in its
store base and national presence) we suspect commitments to
additional facilities will be pushed back until after the merger
completes.
We took a holding in Hashicorp, a provider of cloud
infrastructure automation and management tools. It designs
cloud-agnostic products which span the entire spectrum of cloud
infrastructure automation - from infrastructure provisioning to
networking, security, and application deployment - and make it easy
for companies to build in the cloud in a standardised and efficient
manner. It benefits from powerful secular trends, such as the
continued digital transformations of IT systems across industries
and the shift to a hybrid or a multi-cloud environment which are
inherently complex processes.
We added to the holdings in Novocure, Schrödinger, Progyny and
Appian as we felt the stock market was failing to keep pace with
the strategic progress these companies are demonstrating. We exited
four positions during the interim period including Galapagos,
Morphosys, Temenos and Oxford Instruments.
(1) Since 2005, US labour productivity has grown at a modest
1.4% per annum. In 2022 it dipped to -1.3%, its weakest since
1974.
* Net asset value after deducting borrowings at fair value.
Source: Baillie Gifford, Refinitive and relevant underlying
index providers. See disclaimer at the end of this
announcement.
The principal risks and uncertainties facing the Company are set
out below.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures.
Total return information sourced from Refinitiv/Baillie Gifford
and relevant underlying index providers.
Past performance is not a guide to future performance.
Valuing Private Companies
We aim to hold our private company investments at 'fair value'
i.e., the price that would be paid in an open-market transaction.
Valuations are adjusted both during regular valuation cycles and on
an ad hoc basis in response to 'trigger events'. Our valuation
process ensures that private companies are valued in both a fair
and timely manner.
The valuation process is overseen by a valuations committee at
Baillie Gifford which takes advice from an independent third party
(S&P Global). The portfolio managers feed into the process, but
the valuations committee owns the process and the portfolio
managers only receive final valuation notifications once they have
been applied.
We revalue the private holdings on a three-month rolling cycle,
with one-third of the holdings reassessed each month. For
investment trusts, the prices are also reviewed twice per year by
the respective investment trust boards and are subject to the
scrutiny of external auditors in the annual audit process.
Beyond the regular cycle, the valuations committee also monitors
the portfolio for certain 'trigger events'. These may include:
changes in fundamentals; a takeover approach; an intention to carry
out an Initial Public Offering 'IPO'; or changes to the valuation
of comparable public companies. Any ad hoc change to the fair
valuation of any holding is implemented swiftly and reflected in
the next published net asset value. There is no delay.
The valuations committee also monitors relevant market indices
on a weekly basis and updates valuations in a manner consistent
with our external valuer's (S&P Global) most recent valuation
report where appropriate. When market volatility is particularly
pronounced the team undertakes these checks daily.
Recent market volatility has meant that recent pricing has moved
much more frequently than would have been the case with the
quarterly valuations cycle.
Edinburgh Worldwide Investment Trust*
------------------------------------------------- -----
Instruments valued 25
Quantum of individual (lines of stock) reviewed 65
Quantum of revaluations post review 51
Percentage of portfolio revalued 2+ times 100%
Percentage of portfolio revalued 3+ times 52%
------------------------------------------------- -----
* Data reflecting period 1 November 2022 to 30 April 2023 to
align with the Company's reporting period end.
A handful of companies have raised capital at an increased
valuation, reflecting exceptional performance. The average movement
in both valuation and share price for those which have decreased in
value is shown below.
Average Average
Movement Movement
in Investee in Investee
Company Company
Valuation Share Price
-------------------- ------------- -------------
Instruments valued 1.9% (1.4%)
-------------------- ------------- -------------
Data reflecting period 1 November 2022 - 30 April 2023 to align
with the Trust's half-year reporting period.
Share prices have decreased more than headline valuations which
have increased slightly on average, which is partially a result of
holding classes of stock with less preferential liquidation rights
and therefore less downside protection.
The share price movement reflects a probability weighted average
of both the regular valuation, which would be realised in an IPO,
and the downside protected valuation, which would normally be
triggered in the event of a corporate sale or liquidation.
The following chart quantifies the movements over the period
influencing the fair value of the private company investments at 30
April 2023.
Baillie Gifford Statement on Stewardship
Reclaiming Activism for Long-Term Investors
Baillie Gifford's over-arching ethos is that we are 'actual'
investors. We have a responsibility to behave as supportive and
constructively engaged long-term investors. We invest in companies
at different stages in their evolution, across vastly different
industries and geographies and we celebrate their uniqueness.
Consequently, we are wary of prescriptive policies and rules,
believing that these often run counter to thoughtful and beneficial
corporate stewardship. Our approach favours a small number of
simple principles which help shape our interactions with
companies.
Our Stewardship Principles
Prioritisation of Long-Term Value Creation
We encourage company management and their boards to be ambitious
and focus their investments on long-term value creation. We
understand that it is easy for businesses to be influenced by
short-sighted demands for profit maximisation but believe these
often lead to sub-optimal long-term outcomes. We regard it as our
responsibility to steer businesses away from destructive financial
engineering towards activities that create genuine economic value
over the long run. We are happy that our value will often be in
supporting management when others do not.
A Constructive and Purposeful Board
We believe that boards play a key role in supporting corporate
success and representing the interests of minority shareholders.
There is no fixed formula, but it is our expectation that boards
have the resources, cognitive diversity and information they need
to fulfil these responsibilities. We believe that a board works
best when there is strong independent representation able to
assist, advise and constructively test the thinking of
management.
Long-Term Focused Remuneration with Stretching Targets
We look for remuneration policies that are simple, transparent
and reward superior strategic and operational endeavour. We believe
incentive schemes can be important in driving behaviour, and we
encourage policies which create alignment with genuine long-term
shareholders. We are accepting of significant pay-outs to
executives if these are commensurate with outstanding long-run
value creation, but plans should not reward mediocre outcomes. We
think that performance hurdles should be skewed towards long-term
results and that remuneration plans should be subject to
shareholder approval.
Fair Treatment of Stakeholders
We believe it is in the long-term interests of all enterprises
to maintain strong relationships with all stakeholders - employees,
customers, suppliers, regulators and the communities they exist
within. We do not believe in one-size-fits all policies and
recognise that operating policies, governance and ownership
structures may need to vary according to circumstance. Nonetheless,
we believe the principles of fairness, transparency and respect
should be prioritised at all times.
Sustainable Business Practices
We believe an entity's long-term success is dependent on
maintaining its social licence to operate and look for holdings to
work within the spirit and not just the letter of the laws and
regulations that govern them. We expect all holdings to consider
how their actions impact society, both directly and indirectly, and
encourage the development of thoughtful environmental practices and
'net-zero' aligned climate strategies as a matter of priority.
Climate change, environmental impact, social inclusion, tax and
fair treatment of employees should be addressed at board level,
with appropriately stretching policies and targets focused on the
relevant material dimensions. Boards and senior management should
understand, regularly review and disclose information relevant to
such targets publicly, alongside plans for ongoing improvement.
Income Statement (unaudited)
For the six months ended For the six months ended For the year ended 31 October
30 April 2023 30 April 2022 2022 (audited)
--------------------- ---------------------------- ------------------------------ ---------------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
Gains on sales of
investments - 322 322 - 42,613 42,613 - 66,140 66,140
Movements in
investment holding
gains - (59,741) (59,741) - (494,803) (494,803) - (594,419) (594,419)
Currency
gains/(losses) - 5,747 5,747 - (2,230) (2,230) - (6,070) (6,070)
Income from
investments and
interest receivable 612 - 612 490 - 490 986 - 986
Investment management
fee
(note 3) (563) (1,690) (2,253) (685) (2,054) (2,739) (1,277) (3,830) (5,107)
Other administrative
expenses (512) - (512) (521) - (521) (953) - (953)
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
Net return before
finance
costs and taxation (463) (55,362) (55,825) (716) (456,474) (457,190) (1,244) (538,179) (539,423)
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
Finance costs of
borrowings (720) (2,160) (2,880) (221) (662) (883) (675) (2,026) (2,701)
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
Net return before
taxation (1,183) (57,522) (58,705) (937) (457,136) (458,073) (1,919) (540,205) (542,124)
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
Tax (26) - (26) (23) - (23) (57) - (57)
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
Net return after
taxation (1,209) (57,522) (58,731) (960) (457,136) (458,096) (1,976) (540,205) (542,181)
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
Net return per
ordinary share
(note 4) (0.31p) (14.72p) (15.03p) (0.23p) (112.80p) (113.03p) (0.49p) (134.82p) (135.31p)
--------------------- -------- -------- -------- -------- --------- --------- --------- ---------- ----------
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 after taxation is both the profit and comprehensive income
for the period.
Balance Sheet (unaudited)
At 30 April At 31 October
2023 2022
(audited)
GBP'000 GBP'000
--------------------------------------- ----------- -------------
Fixed assets
Investments held at fair value through
profit or loss (note 6) 802,024 872,804
--------------------------------------- ----------- -------------
Current assets
Debtors 7,983 4,882
Cash and cash equivalents 10,349 11,131
--------------------------------------- ----------- -------------
18,332 16,013
--------------------------------------- ----------- -------------
Creditors
Amounts falling due within one year
(note 7) (108,591) (113,251)
--------------------------------------- ----------- -------------
Net current liabilities (90,259) (97,238)
--------------------------------------- ----------- -------------
Net assets 711,765 775,566
--------------------------------------- ----------- -------------
Capital and reserves
Share capital 4,058 4,058
Share premium account 499,723 499,723
Special reserve 35,220 35,220
Capital reserve 180,062 242,654
Revenue reserve (7,298) (6,089)
--------------------------------------- ----------- -------------
Shareholders' funds 711,765 775,566
--------------------------------------- ----------- -------------
Net asset value per ordinary share 182.78p 197.70p
--------------------------------------- ----------- -------------
Ordinary shares in issue (note 8) 389,419,641 392,285,023
--------------------------------------- ----------- -------------
Statement of Changes in Equity (unaudited)
For the six months ended 30 April 2023
Share
Share premium Special Capital Revenue Shareholders'
capital account reserve reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------- -------- -------------
Shareholders' funds at
1 November 2022 4,058 499,723 35,220 242,654 (6,089) 775,566
Ordinary shares bought
back (note 8) - - - (5,070) - (5,070)
Net return after taxation - - - (57,522) (1,209) (58,731)
-------------------------- -------- -------- -------- --------- -------- -------------
Shareholders' funds at
30 April 2023 4,058 499,723 35,220 180,062 (7,298) 711,765
-------------------------- -------- -------- -------- --------- -------- -------------
For the six months ended 30 April 2022
Share
Share premium Special Capital Revenue Shareholders'
capital account reserve reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------- -------- -------------
Shareholders' funds at
1 November 2021 4,052 497,999 35,220 808,197 (4,113) 1,341,355
Ordinary shares bought
back (note 8) 6 1,724 - (7,487) - (5,757)
Net return after taxation - - - (457,136) (960) (458,096)
-------------------------- -------- -------- -------- --------- -------- -------------
Shareholders' funds at
30 April 2022 4,058 499,723 35,220 343,574 (5,073) 877,502
-------------------------- -------- -------- -------- --------- -------- -------------
* The Capital Reserve as at 30 April 2023 includes investment
holding losses of GBP62,965,000 (30 April 2022 - gains of
GBP96,393,000)
Condensed Cash Flow Statement (unaudited)
Six months Six months
to to
30 April 30 April
2023 2022
GBP'000 GBP'000
-------------------------------------- ---------- ----------
Cash flows from operating activities
Net return before taxation (58,705) (458,073)
Net losses on investments 59,419 452,190
Currency (gains)/losses (5,747) 2,230
Finance costs of borrowings 2,880 883
Overseas withholding tax incurred (21) (20)
Changes in debtors and creditors (81) (589)
-------------------------------------- ---------- ----------
Cash from operations * (2,255) (3,379)
Interest paid (2,526) (827)
-------------------------------------- ---------- ----------
Net cash outflow from operating
activities (4,781) (4,206)
-------------------------------------- ---------- ----------
Net cash inflow/(outflow)from
investing activities 10,582 (18,380)
-------------------------------------- ---------- ----------
Financing
Ordinary shares bought back (5,503) (5,108)
Bank loans drawn down 198,589 135,346
Bank loans repaid (200,000) (135,346)
-------------------------------------- ---------- ----------
Net cash outflow from financing
activities (6,914) (5,108)
-------------------------------------- ---------- ----------
Decrease in cash and cash equivalents (1,113) (27,694)
Exchange movements 331 1,301
Cash and cash equivalents at
start of period 11,131 33,127
-------------------------------------- ---------- ----------
Cash and cash equivalents at
end of period 10,349 6,734
-------------------------------------- ---------- ----------
* Cash from operations includes dividends received in the period
of GBP382,000 (30 April 2022 - GBP503,000).
Cash and cash equivalents represent cash at bank and short term
money market deposits repayable on demand.
Performance of the Top 20 Holdings as at 30 April 2023
(unaudited)
Performance
Name Business Value Absolute Relative
Country GBP'000 % of total assets* % %
Designs, manufactures and
Space Exploration launches advanced rockets
Technologies (u) # and spacecraft USA 63,341 7.8 30.0 32.0
Drug developer focused on
harnessing gene silencing
Alylam Pharmaceuticals technology USA 57,250 7.1 49.2 51.5
Developer of commercial
PsiQuantum (u) # quantum computing USA 28,939 3.5 (26.2) (23.6)
Ophthalmic implants for
STAAR Surgical vision correction USA 28,218 3.5 23.3 25.1
Electronic bond trading
MarketAxess platform USA 26,775 3.3 21.6 23.4
Non-invasive molecular tests
Exact Sciences for early cancer detection USA 26,427 3.3 15.6 17.4
Manufacturer of medical
devices for cancer
Novocure treatment USA 25,554 3.2 (14.1) (12.8)
Zillow# US online real estate portal USA 23,305 2.9 19.8 23.0
Online grocery retailer and
Ocado technology provider UK 22,370 2.8 (44.6) (43.8)
Law enforcement equipment
Axon Enterprises and software provider USA 22,177 2.7 87.6 90.4
Antibody based drug
Genmab development Denmark 18,068 2.2 15.8 17.5
Small unmanned aircraft and
AeroVironment tactical missile systems USA 17,654 2.2 25.2 27.1
Oxford Nanopore Technologies Novel DNA sequencing
(p) technology UK 15,276 1.9 (25.1) (24.0)
Drug discovery ad simulation
Schrödinger software USA 12,640 1.6 18.7 20.5
Kingdee International Enterprise management
Software software provider China 12,409 1.5 (26.6) (25.5)
IP commercialisation focused
PureTech Health on healthcare UK 12,074 1.5 21.4 23.2
Chegg Online educational company USA 11,884 1.4 (27.4) (26.3)
Shine Technologies
(Illuminated Holdings) (u) Medical radioisotope
(#) production USA 11,404 1.4 (14.1) (13.3)
Enterprise financial
BlackLine software provider USA 10,584 1.3 (17.1) (15.9)
Opioid free analgesics
Pacira BioSciences developer USA 10,464 1.3 (39.2) (38.3)
456,813 56.5
================================================================== ======== ================== ======== ========
* Total assets before deduction of loans.
Absolute and relative performance has been calculated on a total
return basis over the period 1 November 2022 to 30 April 2023.
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. Denotes private
company (unlisted) security.
(u) Denotes private company (unlisted) security
# More than one line of stock held. Holding information
represents the aggregate of all lines of stock.
Past performance is not a guide to future performance.
List of Investments as at 30 April 2023 (unaudited)
Name Business Country Value % of total assets
------------------------------------ ----------------------------------- ------------ ------- -----------------
Space Exploration Technologies Designs, manufactures and launches
Series N Preferred (u) advanced rockets and spacecraft USA 36,303 4.5
Space Exploration Technologies Designs, manufactures and launches
Series J Preferred (u) advanced rockets and spacecraft USA 16,468 2.0
Space Exploration Technologies Designs, manufactures and launches
Series K Preferred (u) advanced rockets and spacecraft USA 7,507 0.9
Space Exploration Technologies Class Designs, manufactures and launches
A Common (u) advanced rockets and spacecraft USA 2,341 0.3
Space Exploration Technologies Class Designs, manufactures and launches
C Common (u) advanced rockets and spacecraft USA 722 0.1
------- -----------------
63,341 7.8
Drug developer focused on
harnessing gene silencing
Alnylam Pharmaceuticals technology USA 57,250 7.1
Developer of commercial quantum
PsiQuantum Series C Preferred (u) computing USA 16,391 2.0
Developer of commercial quantum
PsiQuantum Series D Preferred (u) computing USA 12,548 1.5
------- -----------------
28,939 3.5
Ophthalmic implants for vision
STAAR Surgical correction USA 28,218 3.5
MarketAxess Electronic bond trading platform USA 26,775 3.3
Non-invasive molecular tests for
Exact Sciences early cancer detection USA 26,427 3.3
Manufacturer of medical devices for
Novocure cancer treatment USA 25,554 3.2
Zillow Class C US online real estate portal USA 20,215 2.5
Zillow Class A US online real estate portal USA 3,090 0.4
23,305 2.9
Online grocery retailer and
Ocado technology provider UK 22,370 2.8
Law enforcement equipment and
Axon Enterprise software provider USA 22,177 2.7
Genmab Antibody based drug development Denmark 18,068 2.2
Small unmanned aircraft and
AeroVironment tactical missile systems USA 17,654 2.2
Oxford Nanopore Technologies Novel DNA sequencing technology UK 15,276 1.9
Drug discovery and simulation
Schrödinger software USA 12,640 1.6
Enterprise management software
Kingdee International Software provider China 12,409 1.5
IP commercialisation focused on
PureTech Health healthcare UK 12,074 1.5
Chegg Online educational company USA 11,884 1.4
Shine Technologies (Illuminated
Holdings) Series C-5 Preferred (u) Medical radioisotope production USA 10,608 1.3
Shine Technologies (Illuminated
Holdings) Series D-1 Preferred (u) Medical radioisotope production USA 796 0.1
------- -----------------
11,404 1.4
Enterprise financial software
BlackLine provider USA 10,584 1.3
Pacira BioSciences Opioid free analgesics developer USA 10,464 1.3
Astranis SpaceTechnologies Series C Communication satellite
Preferred (u) manufacturing and operation USA 9,547 1.2
Astranis Space Technologies Series C Communication satellite
Preferred (u) manufacturing and operation USA 796 0.1
------- -----------------
10,343 1.3
Online freelancing and recruitment
Upwork services platform USA 9,928 1.2
Cloud based software for social
Sprout Social media management USA 9,624 1.2
Freelance services marketplace for
Fiverr businesses Israel 9,399 1.2
ShockWave Medical Medical devices manufacturer USA 9,357 1.2
Appian Enterprise software developer USA 9,170 1.1
Chinese bio-pharmaceutical
development and distribution
Zai Lab HK Line company China 8,515 1.1
Reaction Engines (u) Advanced heat exchange company UK 8,351 1.0
IPG Photonics High-power fibre lasers USA 8,260 1.0
Fertility benefits management
Progyny company USA 8,234 1.0
Relativity Space Series D Preferred 3D printing and aerospace launch
(u) company USA 5,093 0.6
Relativity Space Series E Preferred 3D printing and aerospace launch
(u) company USA 3,066 0.4
------- -----------------
8,159 1.0
Cloud based accounting software for
Xero small and medium-sized enterprises New Zealand 8,087 1.0
Video game platform and software
Epic Games (u) developer USA 7,411 0.9
Adaptimmune Therapeutics ADR Cell therapies for cancer treatment UK 7,138 0.9
Online healthcare resource and
interactive
Doximity platform developer USA 7,036 0.9
TransMedics Medical device company USA 6,714 0.8
Ceres Power Holding Developer of fuel cells UK 6,600 0.8
Echodyne Corp. Series C-1 Preferred Metamaterial radar sensors and
(u) software USA 6,103 0.8
Snyk Series F Preferred (u) Security software UK 4,005 0.5
Snyk Ordinary Shares (u) Security software UK 2,390 0.3
------- -----------------
6,395 0.8
Teladoc Telemedicine services provider USA 6,274 0.8
Livestock breeding and technology
Genus services UK 6,238 0.8
Affinity based diagnostic reagents
Avacta Group and therapeutics UK 6,218 0.8
LiveRamp Marketing technology company USA 6,200 0.8
Software development tools and
JFrog management Israel 6,108 0.8
CyberArk Software Cyber security solutions provider Israel 5,707 0.7
Lightning Labs Series B Preferred Lightning software that enables
(u) users to send and receive money USA 5,458 0.7
Cloud-computing infrastructure
HashiCorp provider USA 5,273 0.7
Trupanion Pet health insurance provider USA 5,162 0.6
Solid-state batteries for electric
QuantumScape vehicles USA 5,086 0.6
Measurement and calibration
Renishaw equipment UK 5,070 0.6
Industrial and pharmaceutical
Codexis enzyme developer USA 4,980 0.6
Antibody design and development
AbCellera Biologics company Canada 4,956 0.6
Manufacturer of gas and flow
Sensirion Holding sensors Switzerland 4,874 0.6
Enterprise sales management
Zuora software USA 4,837 0.6
Video compression and image
Ambarella processing semiconductors USA 4,812 0.6
Manufacturer of insulin pumps for
Tandem Diabetes Care diabetic patients USA 4,671 0.6
BillionToOne Series C Preferred (u) Pre-natal diagnostics USA 4,125 0.5
BillionToOne Promissory Note (u) Pre-natal diagnostics USA 398 0.0
------- -----------------
4,523 0.5
M3 Online medical database Japan 4,403 0.5
Rightmove UK online property portal UK 3,962 0.5
Splunk Data diagnostics USA 3,769 0.5
MonotaRO Online business supplies Japan 3,765 0.5
Peptide based drug discovery
PeptiDream platform Japan 3,696 0.5
DNA Script Series C Preferred (u) Synthetic DNA fabricator France 3,392 0.4
Critical event management software
Everbridge provider USA 3,103 0.4
Intellectual property
IP Group commercialisation UK 3,076 0.4
KSQ Therapeutics Series C Preferred Biotechnology target identification
(u) company USA 3,072 0.4
Cloud based accounting software for
freee K.K. small and medium-sized enterprises Japan 2,967 0.4
Beam Therapeutics Biotechnology company USA 2,843 0.3
Akili Interactive Digital medicine company USA 2,827 0.3
Hydrogen energy solutions
ITM Power manufacturer UK 2,724 0.3
Twist Bioscience Biotechnology company USA 2,708 0.3
Online platform for restaurant
InfoMart supplies Japan 2,634 0.3
Biotechnology company focused on
next generation protein
Sutro Biopharma therapeutics USA 2,538 0.3
Designs and manufactures power
American Superconductor systems and superconducting wire USA 2,462 0.3
LendingTree Online consumer finance marketplace USA 2,217 0.3
Discovery and development of novel
materials for mass market
Ilika applications UK 2,179 0.3
Expensify Expense management software USA 2,160 0.3
Victrex High-performance thermo-plastics UK 2,130 0.3
Quanterix Ultra-sensitive protein analysers USA 2,107 0.3
Digital watermarking technology
Digimarc provider USA 2,097 0.3
Specialised processor chips for
Graphcore Series D2 Preferred (u) machine learning applications UK 1,518 0.2
Specialised processor chips for
Graphcore Series E Preferred (u) machine learning applications UK 484 0.1
------- -----------------
2,002 0.3
New Horizon Health Cancer screening company China 1,996 0.2
Chinook Therapeutics Immunotherapy drug development USA 1,861 0.2
Chinook Therapeutics CVR Line Immunotherapy drug development USA 0 0.0
1,861 0.2
Stratasys 3D printer manufacturer USA 1,652 0.2
Therapies for gastrointestinal
Cosmo Pharmaceuticals diseases Italy 1,608 0.2
Rational drug design and
C4X Discovery Holdings optimisation UK 1,607 0.2
C4X Discovery Warrants Software to aid drug design UK - 0.0
1,607 0.2
Huya ADR A live game streaming platform China 1,606 0.2
Cloud based virtual banking
Q2 Holdings solutions provider USA 1,599 0.2
Licenses IP to the semiconductor
CEVA industry USA 1,516 0.2
Cardlytics Digital advertising platform USA 1,366 0.1
Online marketplace for buying
EverQuote insurance USA 1,280 0.1
Online furniture and homeware
Wayfair retailer USA 1,119 0.1
Commerce platform for small and
BASE medium-sized enterprises Japan 1,117 0.1
Cloud-based healthcare software
Tabula Rasa HealthCare developer USA 1,027 0.1
Messaging tools for business and
LivePerson customer interactions USA 909 0.1
Nanomedicine company focused on
Nanobiotix ADR cancer radiotherapy France 896 0.1
Next generation chemotherapy
NuCana SPN ADR developer UK 828 0.1
Analytics and data collection
technology for sports teams and
Catapult Group International athletes Australia 741 0.1
Voice and video platform technology
Agora ADR provider China 680 0.1
Genetic engineering for cell based
Cellectis therapies France 367 0.1
Genetic engineering for cell based
Cellectis ADR therapies France 127 <0.1
------- -----------------
494 0.1
Satellite powered data collection
Spire Global and analysis company USA 478 0.1
Biotechnology company focused on
Adicet Bio (formerly resTORbio) age related disorders USA 409 0.1
Biotechnology tools focused on cell
Phenomex characterisation USA 230 <0.1
Angelalign Technology Medical devices manufacturer China 88 <0.1
4D Pharma Microbiome biology therapeutics UK 0 0.0
4D Pharma Warrants Microbiome biology therapeutics UK 0 0.0
------- -----------------
0 0.0
Mines, processes and manufactures
China Lumena New Materials (S) natural thenardite products China 0 0.0
------------------------------------ ----------------------------------- ------------- ------- -----------------
Total investments 802,024 99.2
---------------------------------------------------------------------------------------- ------- -----------------
Net liquid assets 6,741 0.8
---------------------------------------------------------------------------------------- ------- -----------------
Total assets 808,765 100.0
---------------------------------------------------------------------------------------- ------- -----------------
* Total assets before deduction of loans.
(u) Denotes unlisted security.
(P) Denotes security where majority of holding was previously
held in the portfolio as an unlisted security.
(S) Denotes suspended security.
Listed equities Unlisted Net liquid Total assets
% securities assets %
# %
%
---------------- -------------------------- --------------- -------------- --------------------
30 April 2023 78.3 20.9 0.8 100.0
---------------- -------------------------- --------------- -------------- --------------------
31 October 2022 79.2 20.1 0.7 100.0
---------------- -------------------------- --------------- -------------- --------------------
Figures represent percentage of total assets.
# Includes holdings in ordinary shares and preference
shares.
Distribution of Total Assets* (unaudited)
Portfolio Weightings (relative to comparative
Industry Analysis at 30 April 2023 % of total assets * index ) %
------------------------------------------------ ------------------- -----------------------------------------------
Biotechnology 20.4 16.8
Aerospace and Defence 14.6 13.3
Software 14.0 9.9
Healthcare Equipment and Supplies 9.1 6.8
Healthcare Technology 4.2 3.9
Technology Hardware, Storage and Peripherals 4.0 3.4
Capital Markets 3.7 0.8
Life Sciences Tools and Services 3.6 2.6
Electronic Equipment, Instruments and Components 3.1 0.6
Electrical Equipment 3.0 1.4
Pharmaceuticals 2.9 1.0
Real Estate Management and Development 2.8 1.1
Professional Services 2.7 0.7
Food and Staples Retailing 2.7 1.5
Healthcare Providers and Services 1.8 -0.2
Diversified Consumer Services 1.3 0.6
Semiconductors and Semiconductor Equipment 0.8 -1.8
Interactive Media and Services 0.6 0.0
Auto Components 0.5 -0.9
Insurance 0.5 -2.3
Trading Companies and Distributors 0.5 -1.0
Consumer Finance 0.3 -0.4
Chemicals 0.3 -3.0
Entertainment 0.2 -0.6
Specialty Retail 0.2 -2.3
Media 0.2 -1.3
IT Services 0.1 -1.2
Net Liquid Assets 0.8 0.8
* Total assets before deduction of loans.
S&P Global Small Cap Index. Weightings exclude industries
where the Company has no exposure. See disclaimer at the end of
this announcement.
Geographical Analysis 30 April 2023 31 October
2022
% %
---------------------------------------- -------------- -----------
North America 72.1 71.7
USA 71.5 70.6
Canada 0.6 1.1
----------------------- ------------------------------- -----------
Europe 20.6 21.5
United Kingdom 14.3 13.5
Eurozone 3.0 1.8
Developed Europe (non
euro) 3.3 6.2
----------------------- ------------------------------- -----------
Asia 5.4 5.0
Japan 3.1 2.3
China 2.3 2.7
----------------------- ------------------------------- -----------
Australasia 1.1 1.1
Australia 0.1 0.1
New Zealand 1.0 1.0
----------------------- ------------------------------- -----------
Net Liquid Assets 0.8 0.7
---------------------------------------- -------------- -----------
Total Assets 100.0 100.0
---------------------------------------- -------------- -----------
Sectoral Analysis 30 April 2023 31 October 2022
% %
----------------------- ------------- ---------------
Communication Services 3.8 2.9
Consumer Discretionary 4.9 6.3
Financials 4.6 4.3
Healthcare 42.2 43.2
Industrials 21.0 17.7
Information Technology 22.4 24.7
Materials 0.3 0.2
----------------------- ------------- ---------------
Net Liquid Assets 0.8 0.7
----------------------- ------------- ---------------
Total Assets 100.0 100.0
----------------------- ------------- ---------------
Notes to the Financial Statements (unaudited)
1. The condensed Financial Statements for the six months to 30
April 2023 comprise the statements set out above together with the
related notes below. They have been prepared in accordance with FRS
104 'Interim Financial Reporting' and the AIC's Statement of
Recommended Practice issued in October 2019 and updated in July
2022 with consequential amendments. They have not been audited or
reviewed by the Auditor pursuant to the Auditing Practices Board
Guidance on 'Review of Interim Financial Information'. The
Financial Statements for the six months to 30 April 2023 have been
prepared on the basis of the same accounting policies as set out in
the Company's Annual Report and Financial Statements at 31 October
2022.
Going Concern
The Directors have considered the nature of the Company's
principal risks and uncertainties, as set out on the inside front
cover. In addition, the Company's investment objective and policy,
assets and liabilities, and projected income and expenditure,
together with the dividend policy have been taken into
consideration and it is the Directors' opinion that the Company has
adequate resources to continue in operational existence for the
foreseeable future. The Board has, in particular, considered the
ongoing impact of geopolitical and macroeconomic challenges. 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. The Company has continued to comply with
the investment trust status requirements of section 1158 of the
Corporation Tax Act 2010 and the Investment Trust (Approved
Company) (Tax) Regulations 2011. Accordingly, the Directors
consider it appropriate to adopt the going concern basis of
accounting in preparing these Financial Statements and confirm that
they are not aware of any material uncertainties which may affect
the Company's ability to continue to do so over a period of at
least twelve months from the date of approval of these Financial
Statements.
2. The financial information contained within this Interim
Financial Report does not constitute statutory accounts as defined
in sections 434 to 436 of the Companies Act 2006. The financial
information for the year ended 31 October 2022 has been extracted
from the statutory accounts which have been filed with the
Registrar of Companies. The Auditor's Report on those accounts was
not qualified, did not include a reference to any matters to which
the Auditor drew attention by way of emphasis without qualifying
the report, and did not contain a statement under sections 498(2)
or (3) of the Companies Act 2006.
3. Baillie Gifford & Co Limited, a wholly owned subsidiary
of Baillie Gifford & Co, has been appointed by the Company as
its Alternative Investment Fund Manager and Company Secretary. The
investment management function has been delegated to Baillie
Gifford & Co. Dealing activity and transaction reporting have
been further sub-delegated to Baillie Gifford Overseas Limited and
Baillie Gifford Asia (Hong Kong) Limited. The management agreement
is terminable on not less than three months' notice. The annual
management fee is 0.75% on the first GBP50 million of net assets,
0.65% on the next GBP200 million of net assets and 0.55% on the
remaining net assets.
4. Net return per ordinary share
Six months Six months Year to
to 30 April to 30 April 31 October
2023 2022 2022
(audited)
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ -----------
Net return per ordinary share
Revenue return after taxation (1,209) (960) (1,976)
Capital return after taxation (57,522) (457,136) (540,205)
------------------------------------ ------------ ------------ -----------
Total net return (58,731) (458,096) (542,181)
------------------------------------ ------------ ------------ -----------
Weighted average number of ordinary
shares in issue 390,711,773 405,267,892 400,679,723
------------------------------------ ------------ ------------ -----------
5. Dividend
No interim dividend has been declared.
6. Fair Value Hierarchy
The Company's investments are financial assets held at fair
value through profit or loss. The fair value hierarchy used to
analyse the basis on which the fair values of financial instruments
held at fair value through the profit or loss account are measured
is described below. Fair value measurements are categorised on the
basis of the lowest (that is the least reliable or least
independently observable) level input that is significant to the
fair value measurement.
Level 1 - using unadjusted quoted prices for identical
instruments in an active market;
Level 2 - using inputs, other than quoted prices included within
Level 1, that are directly or indirectly observable (based on
market data); and
Level 3 - using inputs that are unobservable (for which market
data is unavailable).
An analysis of the Company's financial assets based on the fair
value hierarchy described above is shown below.
Investments held at fair value through profit or loss
Level Level Level
1 2 3 Total
As at 30 April 2023 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- --------
Listed equities 633,131 - - 633,131
Unlisted ordinary
shares - - 21,215 21,215
Unlisted preference
shares* - - 147,280 147,280
Unlisted promissory
note - - 398 398
---------------------- -------- -------- -------- --------
Total financial asset
investments 633,131 - 168,893 802,024
---------------------- -------- -------- -------- --------
Level Level Level
As at 31 October 1 2 3 Total
2022 (audited) GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- -------- -------- --------
Listed equities 696,135 - - 696,135
Unlisted ordinary
shares - - 22,456 22,456
Unlisted preference
shares* - - 153,779 153,779
Unlisted promissory
note - - 434 434
-------------------- -------- -------- -------- --------
Total financial
asset investments 696,135 - 176,669 872,804
-------------------- -------- -------- -------- --------
* The investments in preference shares are not classified as
equity holdings as they include liquidation preference rights that
determine the repayment (or multiple thereof) of the original
investment in the event for a liquidation event such as a
take-over
There have been no transfers between levels of the fair value
hierarchy during the period. The fair value of listed investments
is either bid price or, depending on the convention of the exchange
on which the investment is listed, last traded price. Listed
investments are categorised as Level 1 if they are valued using
unadjusted quoted prices for identical instruments in an active
market and as Level 2 if they do not meet all these criteria but
are, nonetheless, valued using market data. Unlisted investments
are valued at fair value by the Directors following a detailed
review and appropriate challenge of the valuations proposed by the
Managers. The Managers' unlisted investment policy applies
methodologies consistent with the International Private Equity and
Venture Capital Valuation guidelines ('IPEV'). The principal
methodologies can be categorised as follows: (a) market approach
(price of recent investment, multiples, industry valuation
benchmarks and available market prices); (b) income approach
(discounted cash flows); and (c) replacement cost approach (net
assets). The Company's holdings in unlisted investments are
categorised as Level 3 as unobservable data is a significant input
to their fair value measurements.
7. Bank Loans
At 30 April 2023 creditors falling due within one year include
borrowings of GBP97,000,000 (31 October 2022 - GBP103,827,000)
drawn down under a five year GBP100 million multi-currency
revolving credit facility with The Royal Bank of Scotland
International Limited which expires on 9 June 2026.
At 30 April 2023 the drawings were EUR10,600,000, US$77,150,000
and GBP26,308,000 (31 October 2022 - EUR10,600,000, US$77,150,000
and GBP27,720,000) drawn down under the GBP100 million
multi-currency revolving credit facility.
At 30 April 2023 there were no drawings under the GBP25 million
or GBP36 million multi-currency revolving credit facilities with
National Australia Bank Limited with expiry dates of 29 June 2023
and 30 September 2024 respectively (31 October 2022 - nil).
The fair value of the bank loans at 30 April 2023 was
GBP97,000,000 (31 October 2022 - GBP103,827,000).
8. Share Capital
30 April 30 April 31 October 31 October
2023 2023 2022 2022
Number GBP'000 Number GBP'000
------------------------ ----------- -------- ----------- ----------
Allotted, called up and
fully paid ordinary
shares of 1p each 389,419,641 3,894 392,285,023 3,923
Treasury shares of 1p
each 16,334,054 164 13,468,672 135
------------------------ ----------- -------- ----------- ----------
405,753,695 4,058 405,753,695 4,058
------------------------ ----------- -------- ----------- ----------
The Company 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 six months to 30 April 2023, no shares were issued (in the six
months to 30 April 2022 - 550,000 shares with a nominal value of
GBP6,000, representing 0.1% of the issued share capital at 31
October 2021 raising net proceeds of GBP1,730,000).
Over the period from 30 April 2023 to 6 June 2023 the Company
issued no further shares.
The Company also has authority to buy back shares. In the six
months to 30 April 2023, 2,865,382 shares with a nominal value of
GBP29,000 were bought back at a total cost of GBP5,070,000 and held
in treasury (in the six months to 30 April 2022- 3,525,695 shares
were bought back and held in treasury). At 30 April 2023 the
Company had authority to buy back a further 58,628,524 ordinary
shares.
Over the period from 30 April 2023 to 6 June 2023, no further
shares have been bought back by the Company.
9. Transaction Costs
During the period the Company incurred transaction costs on
purchases of investments of GBP8,000 (30 April 2022 - GBP29,000; 31
October 2022 - GBP155,000) and transaction costs on sales of
GBP3,000 (30 April 2022- GBP4,000; 31 October 2022 -
GBP25,000).
10. Related Party Transactions
There have been no transactions with related parties during the
first six months of the current financial year that have materially
affected the financial position or the performance of the Company
during that period and there have been no changes in the related
party transactions described in the last Annual Report and
Financial Statements that could have had such an effect on the
Company during that period.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
Principal Risks and Uncertainties
The principal risks facing the Company are financial risk,
investment strategy risk, climate and governance risk, discount
risk, regulatory risk, custody and depositary risk, small company
risk, private company (unlisted) investments risk, operational
risk, leverage risk, political and associated economic risk, cyber
security risk and emerging risks. An explanation of these risks and
how they are managed is set out on pages 9 and 10 of the Company's
Annual Report and Financial Statements for the year to 31 October
2022 which is available on the Company's website:
edinburghworldwide.co.uk. The principal risks and uncertainties
have not changed since the date of the Annual Report.
Glossary of Terms and Alternative Performance Measures
('APM')
An alternative performance measure is a financial measure of
historical or future financial performance, financial position, or
cash flows, other than a financial measure defined or specified in
the applicable financial reporting framework.
Total Assets
This is the Company's definition of Adjusted Total Assets, being
the total value of assets held less all liabilities (other than
liabilities in the form of borrowings).
Net Asset Value ('NAV')
Also described as shareholders' funds, net asset value is the
value of total assets less liabilities (including borrowings). Net
asset value can be calculated on the basis of borrowings stated at
book value and fair value. An explanation of each basis is provided
below. The net asset value per share is calculated by dividing this
amount by the number of ordinary shares in issue excluding any
shares held in treasury.
Net Asset Value (Borrowings at Book Value)
Borrowings are valued at nominal book value (book cost).
Net Asset Value (Borrowings at Fair Value) (APM)
Borrowings are valued at an estimate of their market worth.
Net Asset Value (Reconciliation of NAV at Book Value to NAV at
Fair Value)
30 April 2023 31 October 2022
=================================== ============== ================
Net Asset Value per ordinary share
(borrowings at book value) 182.78p 197.70p
----------------------------------- -------------- ----------------
Shareholders' funds (borrowings at GBP711,765,000 GBP755,566,000
book value)
Add: book value of borrowings GBP97,000,000 GBP103,827,000
Less: fair value of borrowings GBP97,000,000 (GBP103,827,000)
----------------------------------- -------------- ----------------
Shareholders' funds (borrowings at GBP711,765,000 GBP775,566,000
fair value)
----------------------------------- -------------- ----------------
Number of shares in issue 389,419,641 392,285,023
----------------------------------- -------------- ----------------
Net Asset Value per ordinary share
(borrowings at fair value) 182.78p 197.70p
----------------------------------- -------------- ----------------
Net Asset Value (Reconciliation of NAV at Book Value to NAV at
Fair Value)
At 30 April 2023 and 31 October 2022 all borrowings are in the
form of short term floating rate borrowings and their fair value is
considered equal to their book value, hence there is no difference
in the net asset value at book value and fair value.
Net Liquid Assets
Net liquid assets comprise current assets less current
liabilities, excluding borrowings.
Discount/Premium (APM)
As stockmarkets and share prices vary, an investment trust's
share price is rarely the same as its net asset value. When the
share price is lower than the net asset value 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 net asset value per share
and is usually expressed as a percentage of the net asset value per
share. If the share price is higher than the net asset value per
share, this situation is called a premium.
30 April 31 October
2023 2022
--------------------------------- -------- ----------
Net Asset Value per share (a) 182.78p 197.70p
Share price (b) 149.20p 172.60p
--------------------------- ---- -------- ----------
Discount ((b)-(a)) ÷ (a) (18.4%) (12.7%)
--------------------------------- -------- ----------
Total Return (APM)
The total return is the return to shareholders after reinvesting
the dividend on the date that the share price goes ex-dividend. The
Company does not pay a dividend, therefore, the one year total
returns for the share price and NAV per share at book and fair
value are the same as the percentage movements in the share price
and NAV per share at book and fair value.
Ongoing Charges (APM)
The total recurring expenses (excluding the Company's cost of
dealing in investments and borrowing costs) incurred by the Company
as a percentage of the average net asset value (with debt at fair
value). The ongoing charges are calculated on the basis prescribed
by the Association of Investment Companies.
Gearing (APM)
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.
Invested gearing is the Company's borrowings at book value less
cash and cash equivalents (as adjusted for investment and share buy
back/issuance transactions awaiting settlement) expressed as a
percentage of shareholders' funds.
30 April 31 October
2023 2022
-------------------------------------------- --------------- ---------------
Borrowings (at book value) GBP97,000,000 GBP103,827,000
Less: cash and cash equivalents (GBP10,349,000) (GBP11,131,000)
Less: sales for subsequent settlement (GBP7,627,000) (GBP4,598,000)
Add: purchases for subsequent settlement GBP8,971,000 GBP6,719,000
Add: buy backs awaiting settlement - GBP433,000
-------------------------------------------- --------------- ---------------
Adjusted borrowings (a) GBP87,995,000 GBP95,250,000
------------------------------------ ------ --------------- ---------------
Shareholders' funds (b) GBP711,765,000 GBP775,566,000
------------------------------------ ------ --------------- ---------------
Invested gearing: (a) as a percentage
of (b) 12% 12%
-------------------------------------------- --------------- ---------------
Potential gearing is the Company's borrowings expressed as a
percentage of shareholders' funds.
30 April 2023 31 October 2022
--------------------------------------- ---- -------------- ---------------
Borrowings (at book value) (a) GBP97,000,000 GBP103,827,000
Shareholders' funds (b) GBP711,765,000 (GBP11,131,000)
--------------------------------------- ---- -------------- ---------------
Potential gearing: (a) as a percentage
of (b) 14% 13%
--------------------------------------------- -------------- ---------------
Leverage (APM)
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 (APM)
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.
Treasury Shares
The Company has the authority to make market purchases of its
ordinary shares for retention as treasury shares for future
reissue, resale, transfer, or for cancellation. Treasury shares do
not receive distributions and the Company is not entitled to
exercise the voting rights attaching to them.
Private (Unlisted) Company
An unlisted or private company means a company whose shares are
not available to the general public for trading and are not listed
on a stock exchange.
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Sustainable Finance Disclosure Regulation ('SFDR')
The EU Sustainable Finance Disclosure Regulation ('SFDR') does
not have a direct impact in the UK due to Brexit, however, it
applies to third-country products marketed in the EU. As Edinburgh
Worldwide Investment Trust plc is marketed in the EU by the AIFM,
Baillie Gifford & Co Limited, via the National Private
Placement Regime ('NPPR') the following disclosures have been
provided to comply with the high-level requirements of SFDR.
The AIFM has adopted Baillie Gifford & Co's Governance and
Sustainable Principles and Guidelines as its policy on integration
of sustainability risks in investment decisions.
Baillie Gifford & Co's approach to investment is based on
identifying and holding high quality growth businesses that enjoy
sustainable competitive advantages in their marketplace. To do this
it looks beyond current financial performance, undertaking
proprietary research to build up an in-depth knowledge of an
individual company and a view on its long-term prospects. This
includes the consideration of sustainability factors
(environmental, social and/or governance matters) which it believes
will positively or negatively influence the financial returns of an
investment.
More detail on the Investment Manager's approach to
sustainability can be found in the Governance and Sustainability
Principles and Guidelines document, available publicly on the
Baillie Gifford website bailliegifford.com/literature-library/
corporate-governance/our-stewardship-
approach-esg-principles-and-guidelines-2023/.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework or
criteria for environmentally sustainable economic activities in
respect of six environmental objectives. It builds on the
disclosure requirements under SFDR by introducing additional
disclosure obligations in respect of AIFs that invest in an
economic activity that contributes to an environmental
objective.
The Company does not commit to make sustainable investments as
defined under SFDR. As such, the underlying investments do not take
into account the EU criteria for environmentally sustainable
economic activities
- Ends -
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END
IR BDLLBXQLLBBV
(END) Dow Jones Newswires
June 08, 2023 02:00 ET (06:00 GMT)
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