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 2024
Commenting on the outlook, Chair
Jonathan Simpson-Dent said:
"Whilst it is encouraging to see early signs of Edinburgh
Worldwide's Net Asset Value improving and its discount narrowing,
the Board is highly sensitive to the fact that maintaining a
long-term perspective can be difficult in volatile markets. After a
challenging period for shareholders, we are encouraged by a growing
conviction that market fundamentals are reasserting themselves in
support of our long-term approach."
Overview
¾ The Company offers investors the opportunity to access a
portfolio of entrepreneurial businesses that are addressing a
variety of societal and business problems, utilising innovations
and technology to address these challenges
¾ The portfolio managers' investment horizon is therefore, by
necessity, long-term by the standards of the investment management
industry and the rewards targeted could be commensurately
larger.
Summary
¾ Over the six month period, the Company's net asset value per
share* increased by 6.4% while the comparative index* increased by
15.0%. The share price* increased by 13.6%. Over the five-year
period, the Company's net asset value* per share decreased by 13.5%
while the comparative index* increased by 41.9%. The share price*
decreased by 25.9%. Invested gearing as at 30 April 2024 was
14%.
¾ The largest positive contributors to performance over the six
months were Axon Enterprises, the dominant provider of Taser
devices, body-worn cameras and digital solutions to law enforcement
agencies, and AeroVironment, the leading manufacturer of
small-scale surveillance and tactical drones for the military. The
most significant detractors to performance in the period were the
technology and grocery business Ocado, drug developer Alnylam
Pharmaceuticals and DNA sequencer Oxford Nanopore.
¾ The attractions of innovation lower down the market
capitalisation scale will not go unnoticed forever. In this regard,
we think it noteworthy that an uptick in M&A activity has
crystalised notable gains on two of the holdings in the portfolio.
Shockwave Medical accepted a recommended offer from Johnson
& Johnson at over nine times Edinburgh Worldwide's entry price,
and Hashicorp, a cloud-based software business, recently accepted
an offer from IBM at a 28% premium to the price paid twelve months
earlier.
¾ During the period, the Company bought back 4.05m shares into
treasury. As at close of business on 4 June 2024, the discount was
11.4%.
¾ The net revenue return per share was a negative 0.31p (six
months to 30 April 2023: negative 0.31p). No interim dividend is
being recommended.
¾ As at 30 April 2024 the Company's investment in unlisted
companies was 27.8% of total assets (30 April 2023:
20.9%).
* All figures are on a total return basis.
Source: 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
£708.9 million (before deduction of loans of £93.3 million) as at
30 April 2024.
Edinburgh Worldwide is managed by
Baillie Gifford, the Edinburgh based fund management group with
around £222.8 billion under management and advice as at 5 June
2024.
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.
5 June 2024
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 2024 which
was approved by the Board on 5 June 2024.
Chair's statement
My priorities in my new capacity as Chair are to ensure that we
provide visibility of both the Company's strategy and portfolio, as
well as scrutinising the portfolio managers to ensure that they
retain strong conviction, execute effectively and evolve their
approach to deliver the returns our shareholders rightly expect to
see.
As this is the first set of results in my new role, I would like to
put the Company's performance into perspective. Edinburgh Worldwide
is a unique vehicle. It offers investors the opportunity to access
a portfolio of entrepreneurial businesses that are addressing a
variety of societal and business problems, utilising innovations
and technology to address these challenges. If successful, this
blend of listed and private companies could generate outsized
returns for their backers. The portfolio managers' investment
horizon is therefore, by necessity, long-term by the standards of
the investment management industry and the rewards targeted could
be commensurately larger.
The Board is highly sensitive to the fact that maintaining a
long-term perspective can be difficult, particularly in volatile
markets which, over the past few years, have been rewarding
momentum and short-term assurance. The higher interest rate
environment has dampened valuations of many businesses in the
portfolio. This has also deterred many private companies from
coming to the public markets. At the same time, the Board and
portfolio managers are conscious that, whilst focusing on
businesses with exciting long-term potential, discipline is
maintained in the new environment by way of ongoing reassessment of
investee companies.
Whilst the last few years have been challenging for shareholders,
the Board is encouraged by a growing conviction that market
fundamentals will reassert themselves. Although we have seen some
upward movement in the Company's NAV (+6.4%) and narrowing of the
discount (from 17.4% to 11.8%) over the period, this is not yet
benefiting the share price as much as we would like.
The
recent uptick in M&A activity has, however, crystalised notable
gains on two stocks in the portfolio. In April, Shockwave Medical
accepted a recommended offer from Johnson & Johnson at over
nine times Edinburgh Worldwide's entry price, and Hashicorp, a
cloud-based software business, recently accepted an offer from IBM
at a 28% premium to the price paid twelve months earlier. Going
forward, further latent value could be recognised across the
extensive potential within Edinburgh Worldwide's unique portfolio,
including its private company holdings (27.8%
of total assets), many of which have successfully raised capital in
the period to support their growth objectives.
In addition and with a focus on rigour of execution, the portfolio
managers have exited nine investments in the period, crystallising
losses of £25m, in order to reallocate capital and rebalance the
portfolio. The portfolio managers are constantly testing the
portfolio in aggregate, its construction, the investment approach,
strategy, execution and delivery against stretching objectives,
refining the processes as required.
In the meantime, the Company is taking an active approach to
managing the discount, buying back shares while the discount is
substantial in absolute terms and relative to its peers. In the six
months to end April, the Company bought back 4.1m shares, 1% of its
issued share capital as at the start of the period, through 92
transactions for a total consideration of £5.9m. There are
currently 22.7m shares held in treasury. Invested equity gearing is
currently 14% of shareholders' funds.
During this volatile market, we are continuing to ensure that the
Board has a range of expertise investing in, and oversight of,
entrepreneurial companies. I am also committed to increasing board
engagement with shareholders as we manage through this environment
to deliver Edinburgh Worldwide's significant potential and our
long-term objectives.
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
Jonathan Simpson-Dent
Chair
5 June 2024
Interim management report
Over the six months to 30 April 2024, the Company's net asset value
per share increased by 6.4%, which compares to a rise of 15.0% in
the S&P Global Smaller Companies Index, total return in
sterling terms, over the same period. The share price over the six
months increased by 13.6% to 141.8p, representing a discount of
11.8% to the net asset value per share at 30 April 2024. This
compares to a 17.4% discount at the beginning of the
period.
The six months covered by this interim period provide some
intriguing clues and insights as to the long-term latent potential
within the Company's portfolio, yet they also remind us of some of
the current distortions in equity markets. We elaborate on this
market backdrop and the topic of delivered versus future potential
asymmetric returns, later in this report.
In the last Annual report, we discussed in depth the challenging
post-COVID investment performance that we have experienced. I refer
readers to this for a fuller explanation of how the Company is
positioned and why, despite the recent performance challenges, we
remain hugely optimistic about the potential returns that can
accrue from a collection of potentially outstanding immature,
high-growth companies, be they listed or private.
We own these companies because we think they have the potential to
radically transform their respective industries. As such we see
them building great businesses, disrupting incumbents and
generating highly asymmetric returns as that potential crystalises
into deep, scalable commercial progress. In short, we own them
based on what we think they can become, and that will often involve
them morphing to look very different from how they look
today.
Portfolio Update
The attractions of innovation lower down the market capitalisation
scale will not go unnoticed forever. In this regard, we think it
noteworthy that two of the holdings in the portfolio, Hashicorp and
Shockwave Medical, have received acquisition offers from IBM and
Johnson & Johnson respectively during the period. Hashicorp was
at a 28% premium to the price we paid twelve months earlier and
Shockwave Medical was over nine times our entry price. We would not
be surprised to see this M&A theme extend out over coming
periods given the opportunities that abound.
The largest positive contributors to performance over the six
months were Axon Enterprises, the dominant provider of Taser
devices, body-worn cameras and digital solutions to law enforcement
agencies, and AeroVironment, the leading manufacturer of
small-scale surveillance and tactical drones for the military. Both
share some common attributes that are noteworthy in the context of
this near-term contribution, alongside their longer-term
contribution that has seen them rise to the be amongst the largest
listed positions in the portfolio. They share a public sector
customer base that is increasingly embracing technology to both
drive operational and budgeting efficiency at deep scale whilst
simultaneously protecting frontline operatives - a "better and
cheaper" combination that resonates deeply currently. They are also
increasingly embracing intelligent automation into their offerings
which transports them from a nice-to-have offering into something
that embeds itself in the ecosystem (e.g the digital archiving
solutions in Axon and the autonomous flight and threat detection in
AeroVironment's drones). Lastly, they originated their propositions
to cater to a US customer base but have significant opportunities
to capitalise on their strength into the large and much underserved
international markets.
PsiQuantum announced it will start building the world's first
utility-scale quantum computer at a strategically located site near
Brisbane, Australia. Linked to this, the Australian Commonwealth
and Queensland Governments will invest almost AUD$ 1bn into
PsiQuantum through a financial package which will help underpin
PsiQuantum's plan to have the site operational before the end of
the decade. While GPU-derived AI chips might be all the rage at the
current time, we strongly suspect that developments in the quantum
computing area might represent a seismic shift in the computing
architecture and that such an event might be far closer than many
predict. We don't think it's hyperbole to suggest that PsiQuantum
can realistically become the most valuable and society- impacting
company that we own, and it illustrates the opportunities that can
be unearthed through the ability to invest in private companies. On
a related note, we were pleased to see further significant progress
at SpaceX with a third successful test launch of its
next-generation Starship rocket alongside further growth in the
constellation of Starlink satellites. Private company exposure is
currently 27.8% of total assets.
The most significant detractors to performance in the period were
Ocado, Alnylam and Oxford Nanopore. Although Ocado has made
improvements to reestablish the profitability of its UK retail
operations following a period of overcapacity, we have been
frustrated with the pace of rollout of Ocado's automated CFCs with
its international grocery partners. We have engaged extensively
with the company to better understand this dynamic and currently
view these as navigable scaling challenges, but we are watching
progress closely.
Alnylam introduced an updated statistical analysis plan for its
upcoming high-profile trial in cardiomyopathy. While an 11th-hour
trial change will always raise some eyebrows, we are comfortable
that the FDA-approved changes are focused on building a compelling
data pack to support a front- line monotherapy, while at the same
time providing evidence to support potential combination use with
Pfizer's Tafamidis drug which is expected to come off patent in
2028.
Oxford Nanopore flagged that tepid academic research budget growth,
alongside a curtailing of its UAE genome sequencing project, would
act as a drag on 2024 revenue growth. These issues as unhelpful but
transient. Ultimately, they distract from what we think is the
compelling evidence building to support its novel technology in
clinical and applied sequencing use-cases, previously off- limits
to DNA sequencing from a cost or practicality perspective. The
company has an increasing pool of industry partners and
collaborators with whom it is looking to develop new applications
eg Biomerieux in antimicrobial resistance, Lonza in quality testing
of mRNA therapeutics and Guy's & Thomas' NHS Trust to
investigate rapid identification and analysis of pathogens in
intensive care units. In time, such opportunities could support a
market opportunity far bigger for DNA analysis than that currently
represented by the conventional academic-skewed research
market.
Notable transactions undertaken in the interim period included the
new purchase of Aehr Test Systems, SkyWater Technology, Silex
Systems, RX Sight and dLocal.
Aehr Test Systems develops and sells testing equipment to the
semiconductor industry. Its unique wafer-level testing solution
enables early detection of faulty transistors and reduces the cost
and time wasted packaging these into modules. Aehr's solution is
particularly well suited to the growing silicon carbide industry,
where yields remain relatively low, and Aehr has already seen
traction with some leading players in this space.
SkyWater is a Minnesota-based semiconductor foundry specialising in
mixed-signal integrated circuits. It has developed its 'Technology
as a Service' business model to target prototyping and production
opportunities, and it specialises in projects requiring high levels
of customisation and engineering expertise to translate concepts
into physical designs. This offers advantages in terms of speed to
market, technical skills and US domestic production
capabilities.
Silex Systems is commercialising a more efficient laser-based
approach to enrich uranium fuel for nuclear reactors. Having
developed the technology for the last 20 years, in partnership with
key industry players and supported by the US government, it is well
positioned to help address a growing supply chain problem for the
sector. The company is on track to complete a scaled system
demonstration this year before breaking ground on a large
production facility in Kentucky.
RxSight is a medical technology company which has developed the
world's first adjustable intra-ocular lens. The lens allows
Ophthalmic surgeons to customise patients' visual acuity after a
cataract surgery, enabling better vision without glasses. The
distinct patient benefits and ability to achieve those without the
side effects of existing premium lenses have enabled RxSight to
reveal the latent demand beyond the premium intra-ocular lens
market.
dLocal is a payment processor company with a focus on emerging
markets, most notably Latin America. Cross-border e-commerce in
these regions is fraught with challenges - most payments are local,
credit card fraud is rampant, and the regulatory and tax landscape
is constantly evolving. dLocal solves a significant pain point for
global merchants wishing to do business in these markets.
Penetration of e-commerce across emerging markets remains low,
creating a long runway for growth.
As flagged in the Annual Report, we were seeking to better manage
smaller positioned holdings in the portfolio, balancing patience
against the need for capital for ideas already executing well.
Consequently, we exited the positions in Liverperson, Agora, Huya,
Fiverr, Monotaro, Rightmove, Victrex and Base. We also sold the
Telemedicine business Teladoc following a very disappointing growth
outlook from the management team. We added to the positions in
American Superconductor and Nanobiotix as both these exciting
companies raised additional capital to bolster their growth. We
also further added to Oxford Nanopore given the disconnect between
the long term growth potential, its strategic positioning and the
very undemanding valuation.
Reflections on Market Themes and Investment
Asymmetry
While outsized stock returns are key to our style of investing, we
believe the current stock market risks misinterpreting the dynamics
of asymmetry, principally concerning that which has been delivered
versus potential future asymmetry. If you follow stock markets,
especially the US stock market, you will have likely heard a
reference to the "Magnificent 7" (Alphabet, Amazon, Apple, Meta
Platforms, Microsoft, Nvidia and Tesla) which are all attracting
investors based on their potential to be beneficiaries from the
development of AI. To be clear, these are exceptional companies,
they have become highly dominant in their respective areas, and
several of them have arguably become the digital utilities through
which large chunks of commerce and data now flow. But early in this
millenium, many of these companies were the upstarts. They are the
ones that naysayers doubted, they were the ones pioneering new
solutions, embracing digital tools, expanding their relevance to
customers, skillfully executing yet avoiding the numerous pitfalls.
Their prize has been highly asymmetric equity returns and handsome
profits to those, such as Edinburgh Worldwide in the case of Tesla,
who owned them throughout that journey.
However, the prospect of future deeply asymmetric returns is
fundamentally different from delivered asymmetric returns. Both
should be respected but the former represents latent opportunity
whereas the latter, by its very nature, represents diminishing
opportunity and, if taken too far, can be detrimental as the
inescapable law of large numbers catches up. The adage that it's
better to travel than to arrive is critical to maximising asymmetry
- just make sure the journey is a long one. It's for this reason
that we hunt for such businesses when they are immature and below
the conventional investment radar at the outset.
Momentum, both positive and negative, tends to exert a
pendulum-like effect on equities, be it FOMO-induced or
fear-driven. Periods of momentum are unavoidable for long-term
growth investors, and many of our most successful investments will
have both benefitted and suffered from such trends for short
periods in the past. But occasionally there are periods or themes
at play in stock markets where this momentum seemingly takes on a
gravitational-like force, sucking the air out of the broader market
and blinkering investors to the broader opportunities
beyond.
While we undoubtedly see great opportunity for AI to transform huge
swaths of both business and consumer activity, it feels that stock
markets have too bluntly anointed the benefits of these deep
changes to a handful of winners - which would crudely fit with the
Magnificent 7 alongside a handful of ex-US companies involved in
aspects of semiconductor production. We see parallels to this
dislocation in the healthcare industry where the arrival of GLP-1
obesity drugs has monopolised much of the healthcare innovation
debate. We get that dominant businesses deserve their rewards - and
our experiences in owning Tesla for a decade are tantamount to this
- but we can't escape thinking that there must be easier ways to
make money in today's bifurcated stock market.
When a hot contemporary theme hits a momentum-craving, but
otherwise directionless, stock market then we believe that dangers
build. In this current atypical business cycle this dynamic seems
to be exacerbated by the Interest rate
waiting game currently being played out in financial markets where
observers and policy-setters dissect the moderating inflation
picture with a robust economic picture. We think the backdrop
discussed above has been deeply unhelpful to investors in
earlier-stage, growth-hungry companies. The combination of
condensed investor time horizons and higher interest rates,
alongside a couple of hugely dominant mega-company skewed themes,
means our preferred hunting ground hasn't had the attention it
deserves and has been arguably shunned by many.
We don't have all the answers to when these apparent dislocations
will fully correct but we sense that is starting to change. In
part, because some of the themes discussed above have likely been
pushed quite far. Simultaneously, the realisation that high
inflation isn't endemic plus a global economy that appears
resilient, despite everything that has been thrown at it over the
past 4 years, creates a solid foundation for investors to begin
projecting out over longer-term time horizons. But most
importantly, the relevance of the companies we own is increasing as
their offerings improve and resonate with customers. Not all our
holdings will emerge to be outlandishly successful, but several
have the potential to be that. When combined with the reset in
growth equity valuations lower down the market capitalisation
spectrum, this creates a highly attractive foundation for
thoughtful long-term growth investing, one that we continue to
believe looks as attractive as it has done in recent
memory.
The principal risks and uncertainties facing the Company are set
out at the end of this report.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
* Net asset value (borrowings at fair value).
Total return information sourced from LSEG/Baillie Gifford and
relevant underlying index providers.
Past performance is not a guide to future performance.
Baillie Gifford - 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 group at Baillie
Gifford, which takes advice from an independent third party
(S&P Global). The valuations group is independent from the
investment team with all voting members being from different
operational areas of the firm, and the portfolio managers only
receive final 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. During stable
market conditions, and assuming all else is equal, each investment
would be valued twice in a six month period. 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 group 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'); company
news which is identified by the valuation team or by the portfolio
managers, or meaningful 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 group 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. Continued 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 held
|
26
|
Number of revaluations
|
89
|
Percentage of portfolio revalued
up to 2 times
|
11.5%
|
Percentage of portfolio revalued
3+ times
|
88.5%
|
* Data
reflecting period 1 November 2023 to 30 April 2024 to align with
the Company's reporting period end.
Whilst pockets of heightened
volatility remain, the general improvement in market sentiment and
uptick in transactional activity, is reflected in the private
company valuations at 30 April 2024. The average movement in
company valuations and share prices across the portfolio are shown
below. The average movement in both company valuations and share
price movements have been shown below.
Valuation movement
|
£'000
|
Value of private company
investments as at 31 October 2023
|
180,057
|
Additions to existing holdings in
the period*
|
3,234
|
Investment revaluation gains in
the period
|
26,099
|
Investment revaluation losses in
the period
|
(11,840)
|
Value of private company
investments as at 30 April 2024
|
197,550
|
* The holding in C4X Discovery
voluntarily delisted.
Valuation movement
|
%
|
Average movement in investee
company securities price
|
33.7
|
Average movement in investee
company valuation
|
18.4
|
Baillie Gifford statement on
stewardship
Baillie Gifford's overarching
ethos is that we are 'Actual' investors. That means we seek to
invest for the long term. Our role as an engaged owner is core to
our mission to be effective stewards for our clients. As an active
manager, we invest in companies at different stages of their
evolution across many industries and geographies, and focus on
their unique circumstances and opportunities. Our approach favours
a small number of simple principles rather than overly prescriptive
policies. This helps shape our interactions with holdings and
ensures our investment teams have the freedom and retain the
responsibility to act in clients' best interests.
Long-term value creation
We believe that companies that are
run for the long term are more likely to be better investments over
our clients' time horizons. We encourage our holdings to be
ambitious, focusing on long-term value creation and capital
deployment for growth. We know events will not always run according
to plan. In these instances we expect management to act
deliberately and to provide appropriate transparency. We think
helping management to resist short-term demands from shareholders
often protects returns. We regard it as our responsibility to
encourage holdings away from destructive financial engineering
towards activities that create genuine value over the long run. Our
value will often be in supporting management when others
don't.
Governance fit for purpose
Corporate governance is a
combination of structures and behaviours; a careful balance between
systems, processes and people. Good governance is the essential
foundation for long-term company success. We firmly believe that
there is no single governance model that delivers the best
long-term outcomes. We therefore strive to push back against
one-dimensional global governance principles in favour of a deep
understanding of each company we invest in. We look, very simply,
for structures, people and processes which we think can maximise
the likelihood of long-term success. We expect to trust the boards
and management teams of the companies we select, but demand
accountability if that trust is broken.
Alignment in vision and practice
Alignment is at the heart of our
stewardship approach. We seek the fair and equitable treatment of
all shareholders alongside the interests of management. While
assessing alignment with management often comes down to intangible
factors and an understanding built over time, we look for clear
evidence of alignment in everything from capital allocation
decisions in moments of stress to the details of executive
remuneration plans and committed share ownership. We expect
companies to deepen alignment with us, rather than weaken it, where
the opportunity presents itself.
Sustainable business practices
A company's ability to grow and
generate value for our clients relies on a network of
interdependencies between the company and the economy, society and
environment in which it operates. We expect holdings to consider
how their actions impact and rely on these relationships. We
believe long-term success depends on maintaining a 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.
Material factors should be addressed at the board level as
appropriate
Income statement
(unaudited)
|
For the six months ended 30
April 2024
|
For the six months ended 30
April 2023
|
For the year ended 31 October
2023 (audited)
|
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
(Losses)/gains on sales of
investments
|
-
|
(31,895)
|
(31,895)
|
-
|
322
|
322
|
-
|
(28,869)
|
(28,869)
|
Movements in investment holding
gains
|
-
|
71,948
|
71,948
|
-
|
(59,741)
|
(59,741)
|
-
|
(146,056)
|
(146,056)
|
Currency gains
|
-
|
1,703
|
1,703
|
-
|
5,747
|
5,747
|
-
|
2,802
|
2,802
|
Income from investments and
interest receivable
|
678
|
-
|
678
|
612
|
-
|
612
|
1,077
|
-
|
1,077
|
Investment management fee (note
3)
|
(470)
|
(1,411)
|
(1,881)
|
(563)
|
(1,690)
|
(2,253)
|
(1,060)
|
(3,181)
|
(4,241)
|
Other administrative
expenses
|
(601)
|
-
|
(601)
|
(512)
|
-
|
(512)
|
(915)
|
-
|
(915)
|
Net return before finance costs and
taxation
|
(393)
|
40,345
|
39,952
|
(463)
|
(55,362)
|
(55,825)
|
(898)
|
(175,304)
|
(176,202)
|
Finance costs of
borrowings
|
(782)
|
(2,346)
|
(3,128)
|
(720)
|
(2,160)
|
(2,880)
|
(1,578)
|
(4,735)
|
(6,313)
|
|
|
|
|
|
|
|
|
|
|
Net return before taxation
|
(1,175)
|
37,999
|
36,824
|
(1,183)
|
(57,522)
|
(58,705)
|
(2,476)
|
(180,039)
|
(182,515)
|
Tax
|
(18)
|
-
|
(18)
|
(26)
|
-
|
(26)
|
(51)
|
-
|
(51)
|
Net return after taxation
|
(1,193)
|
37,999
|
36,806
|
(1,209)
|
(57,522)
|
(58,731)
|
(2,527)
|
(180,039)
|
(182,566)
|
Net return per ordinary share
(note 4)
|
(0.31p)
|
9.87p
|
9.56p
|
(0.31p)
|
(14.72p)
|
(15.03p)
|
(0.65p)
|
(46.21p)
|
(46.86p)
|
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
the above statements 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.
The accompanying notes below are
an integral part of the Financial Statements.
Balance sheet
(unaudited)
|
At 30
April
2024
£'000
|
At 31
October
2023
(audited)
£'000
|
Fixed assets
|
|
|
Investments held at fair value
through profit or loss (note 6)
|
704,112
|
671,300
|
Current assets
|
|
|
Debtors
|
2,220
|
324
|
Cash and cash
equivalents
|
7,804
|
19,146
|
|
10,024
|
19,470
|
Creditors
|
|
|
Amounts falling due within one
year (note 7)
|
(98,505)
|
(106,033)
|
Net current liabilities
|
(88,481)
|
(86,563)
|
Net assets
|
615,631
|
584,737
|
Capital and reserves
|
|
|
Share capital
|
4,058
|
4,058
|
Share premium account
|
499,723
|
499,723
|
Special reserve
|
35,220
|
35,220
|
Capital reserve
|
86,439
|
54,352
|
Revenue reserve
|
(9,809)
|
(8,616)
|
Shareholders' funds
|
615,631
|
584,737
|
Net asset value per ordinary share
|
160.72p
|
151.06p
|
Ordinary shares in issue (note
8)
|
383,044,237
|
387,094,641
|
Statement of changes in equity
(unaudited)
For the six months ended 30 April 2024
|
Share
capital
£'000
|
Share
premium account £'000
|
Special
reserve
£'000
|
Capital
reserve*
£'000
|
Revenue
reserve
£'000
|
Shareholders'
funds
£'000
|
Shareholders' funds at 1 November
2023
|
4,058
|
499,723
|
35,220
|
54,352
|
(8,616)
|
584,737
|
Ordinary shares bought back (note
8)
|
-
|
-
|
-
|
(5,912)
|
-
|
(5,912)
|
Net return after
taxation
|
-
|
-
|
-
|
37,999
|
(1,193)
|
36,806
|
Shareholders' funds at 30 April 2024
|
4,058
|
499,723
|
35,220
|
86,439
|
(9,809)
|
615,631
|
For the six months ended 30 April 2023
|
Share
capital
£'000
|
Share
premium account £'000
|
Special
reserve
£'000
|
Capital
reserve*
£'000
|
Revenue
reserve
£'000
|
Shareholders'
funds
£'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
|
* The Capital Reserve as at 30
April 2024 includes investment holding losses of £77,331,000 (30
April 2023 - losses of £62,965,000)
Condensed cash flow statement
(unaudited)
|
Six
months to
30
April
2024
£'000
|
Six
months to
30
April
2023
£'000
|
Cash flows from operating activities
|
|
|
Net return before
taxation
|
36,824
|
(58,705)
|
Net (gains)/losses on
investments
|
(40,053)
|
59,419
|
Currency gains
|
(1,703)
|
(5,747)
|
Finance costs of
borrowings
|
3,128
|
2,880
|
Overseas withholding tax
incurred
|
(18)
|
(21)
|
Changes in debtors and
creditors
|
(42)
|
(81)
|
Cash from operations*
|
(1,864)
|
(2,255)
|
Interest paid
|
(3,317)
|
(2,526)
|
Net cash outflow from operating activities
|
(5,181)
|
(4,781)
|
Net cash inflow from investing activities
|
8,037
|
10,582
|
Financing
|
|
|
Ordinary shares bought
back
|
(5,973)
|
(5,503)
|
Bank loans drawn down
|
180,135
|
198,589
|
Bank loans repaid
|
(188,135)
|
(200,000)
|
Net cash outflow from financing activities
|
(13,973)
|
(6,914)
|
Decrease in cash and cash equivalents
|
(11,117)
|
(1,113)
|
Exchange movements
|
(225)
|
331
|
Cash and cash equivalents at start
of period
|
18,146
|
11,131
|
Cash and cash equivalents at end of period
†
|
7,804
|
10,349
|
* Cash from operations includes
dividends received in the period of £356,000 (30 April 2023 -
£382,000).
† Cash and cash equivalents represent cash at bank and short
term money market deposits repayable on demand.
Performance of top 20 Holdings as
at 30 April 2024 (unaudited)
Name
|
Business
|
Country
|
Value
£'000
|
% of total
assets*
|
Absolute†
performance
%
|
Relative†
performance
%
|
Space Exploration
Technologies# u
|
Designs, manufactures and launches
advanced rockets and spacecraft
|
USA
|
80,096
|
11.3
|
16.1
|
0.9
|
PsiQuantum#
u
|
Developer of commercial quantum
computing
|
USA
|
36,070
|
5.1
|
17.7
|
2.4
|
Alnylam Pharmaceuticals
u
|
Drug developer focussed on
harnessing gene silencing technology
|
USA
|
35,630
|
5.0
|
(8.1)
|
(20.1)
|
AeroVironment
|
Small unmanned aircraft and
tactical missile systems
|
USA
|
26,243
|
3.7
|
35.1
|
17.4
|
Axon Enterprise
|
Law enforcement equipment and
software provider
|
USA
|
21,390
|
3.0
|
48.7
|
29.3
|
Zillow#
|
US online real estate
portal
|
USA
|
19.717
|
2.8
|
13.8
|
(1.1)
|
Exact Sciences
|
Non-invasive molecular tests for
early cancer detection
|
UK
|
18,617
|
2.6
|
(6.6)
|
(18.8)
|
Oxford Nanopore
Technologies
|
Novel DNA sequencing
technology
|
USA
|
18,534
|
2.6
|
(51.8)
|
(58.0)
|
STAAR Surgical
|
Ophthalmic implants for vision
correction
|
USA
|
18,436
|
2.6
|
6.5
|
(7.4)
|
Ocado
|
Online grocery retailer and
technology provider
|
USA
|
14,693
|
2.1
|
(24.1)
|
(34.0)
|
Schrödinger
|
Drug discovery and simulation
software
|
USA
|
13,786
|
1.9
|
7.5
|
(6.5)
|
Sprout Social
|
Cloud based software for social
media management
|
USA
|
13,213
|
1.9
|
8.9
|
(5.3)
|
JFrog
|
Software development tools and
management
|
USA
|
13,172
|
1.9
|
13.0
|
(1.8)
|
Appian
|
Enterprise software
developer
|
USA
|
12,866
|
1.8
|
71.8
|
49.4
|
PureTech Health
|
IP commercialisation focussed on
healthcare
|
USA
|
12,478
|
1.8
|
(8.1)
|
(20.0)
|
MarketAxess
|
Electronic bond trading
platform
|
USA
|
12,237
|
1.7
|
42.5
|
23.9
|
Shine Technologies (Illuminated
Holdings)# u
|
Medical radioisotope
production
|
USA
|
11,605
|
1.6
|
(14.4)
|
(25.6)
|
Upwork
|
Online freelancing and recruitment
services platform
|
USA
|
11,584
|
1.6
|
8.5
|
(5.6)
|
Snyk#
u
|
Security software
|
UK
|
11,201
|
1.6
|
43.4
|
24.7
|
Kingdee International
Software
|
Enterprise management software
provider
|
USA
|
11,195
|
1.6
|
(21.9)
|
(32.1)
|
|
|
|
412,763
|
58.2
|
|
|
* Total assets before deduction of
loans.
† Absolute and relative
performance has been calculated on a total return basis over the
period 1 November 2023 to 30 April 2024. Absolute performance is in
sterling terms; relative performance is against S&P Global
Small Cap Index (in sterling terms).
# More than one line of stock
held. Holding information represents the aggregate of all lines of
stock.
u Denotes private
company investment.
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 30 April
2024 (unaudited)
Name
|
Business
|
Country
|
Value
£'000
|
% of
total assets
|
Space Exploration Technologies
Series N Preferred u
|
Designs, manufactures and launches
advanced rockets and spacecraft
|
USA
|
45,906
|
6.5
|
Space Exploration Technologies
Series J Preferred u
|
Designs, manufactures and launches
advanced rockets and spacecraft
|
USA
|
20,824
|
3.0
|
Space Exploration Technologies
Series K Preferred u
|
Designs, manufactures and launches
advanced rockets and spacecraft
|
USA
|
9,493
|
1.3
|
Space Exploration Technologies
Class A Common u
|
Designs, manufactures and launches
advanced rockets and spacecraft
|
USA
|
2,960
|
0.4
|
Space Exploration Technologies
Class C Common u
|
Designs, manufactures and launches
advanced rockets and spacecraft
|
USA
|
913
|
0.1
|
|
|
|
80,096
|
11.3
|
PsiQuantum Series C
Preferred u
|
Developer of commercial quantum
computing
|
USA
|
21,895
|
3.1
|
PsiQuantum Series D
Preferred u
|
Developer of commercial quantum
computing
|
USA
|
14,175
|
2.0
|
|
|
|
36,070
|
5.1
|
Alnylam Pharmaceuticals
|
Drug developer focussed on
harnessing gene silencing technology
|
USA
|
35,630
|
5.0
|
AeroVironment
|
Small unmanned aircraft and
tactical missile systems
|
USA
|
26,243
|
3.7
|
Axon Enterprise
|
Law enforcement equipment and
software provider
|
USA
|
21,390
|
3.0
|
Zillow Class C
|
US online real estate
portal
|
USA
|
18,180
|
2.6
|
Zillow Class A
|
US online real estate
portal
|
USA
|
1,537
|
0.2
|
|
|
|
19,717
|
2.8
|
Exact Sciences
|
Non-invasive molecular tests for
early cancer detection
|
USA
|
18,617
|
2.6
|
Oxford Nanopore
Technologies
|
Novel DNA sequencing
technology
|
UK
|
18,534
|
2.6
|
STAAR Surgical
|
Ophthalmic implants for vision
correction
|
USA
|
18,436
|
2.6
|
Ocado
|
Online grocery retailer and
technology provider
|
UK
|
14,693
|
2.1
|
Schrödinger
|
Drug discovery and simulation
software
|
USA
|
13,786
|
1.9
|
Sprout Social
|
Cloud based software for social
media management
|
USA
|
13,213
|
1.9
|
JFrog
|
Software development tools and
management
|
Israel
|
13,172
|
1.9
|
Appian
|
Enterprise software
developer
|
USA
|
12,866
|
1.8
|
PureTech Health
|
IP commercialisation focussed on
healthcare
|
UK
|
12,478
|
1.8
|
MarketAxess
|
Electronic bond trading
platform
|
USA
|
12,237
|
1.7
|
Shine Technologies (Illuminated
Holdings) Series Con Loan Note u
|
Medical radioisotope
production
|
USA
|
799
|
0.1
|
Shine Technologies (Illuminated
Holdings) Series Conv Promissory Note u
|
Medical radioisotope
production
|
USA
|
3,195
|
0.4
|
Shine Technologies (Illuminated
Holdings) Series C-5 Preferred u
|
Medical radioisotope
production
|
USA
|
7,611
|
1.1
|
|
|
|
11,605
|
1.6
|
Upwork
|
Online freelancing and recruitment
services platform
|
USA
|
11,584
|
1.6
|
Snyk Series F Preferred
u
|
Security software
|
UK
|
7,015
|
1.0
|
Snyk Ordinary Shares
u
|
Security software
|
UK
|
4,186
|
0.6
|
|
|
|
11,201
|
1.6
|
Kingdee International
Software
|
Enterprise management software
provider
|
China
|
11,195
|
1.6
|
LiveRamp
|
Marketing technology
company
|
USA
|
10,938
|
1.5
|
Relativity Space Series D
Preferred u
|
3D printing and aerospace launch
company
|
USA
|
7,183
|
1.0
|
Relativity Space Series E
Preferred u
|
3D printing and aerospace launch
company
|
USA
|
3,704
|
0.5
|
|
|
|
10,887
|
1.5
|
American Superconductor
|
Designs and manufactures power
systems and superconducting wire
|
USA
|
9,134
|
1.3
|
Genmab
|
Antibody based drug
development
|
Denmark
|
8,880
|
1.2
|
TransMedics
|
Medical device company
|
USA
|
8,024
|
1.1
|
Progyny
|
Fertility benefits management
company
|
USA
|
7,971
|
1.1
|
Astranis Space Technologies Series
C Preferred u
|
Communication satellite
manufacturing and operation
|
USA
|
7,104
|
1.0
|
Astranis Space Technologies Series
C Prime Preferred u
|
Communication satellite
manufacturing and operation
|
USA
|
592
|
0.1
|
|
|
|
7,696
|
1.1
|
BlackLine
|
Enterprise financial software
provider
|
USA
|
7,324
|
1.0
|
Twist Bioscience
|
Biotechnology company
|
USA
|
6,807
|
1.0
|
Epic Games u
|
Video game platform and software
developer
|
USA
|
6,667
|
0.9
|
Doximity
|
Online healthcare resource and
interactive platform developer
|
USA
|
6,483
|
0.9
|
HashiCorp
|
Cloud-computing infrastructure
provider
|
USA
|
6,399
|
0.9
|
Lightning Labs Series B
Preferred u
|
Lightning software that enables
users to send and receive money
|
USA
|
6,396
|
0.9
|
Nanobiotix ADR
|
Nanomedicine company focused on
cancer radiotherapy
|
France
|
6,194
|
0.9
|
Zuora
|
Enterprise sales management
software
|
USA
|
6,153
|
0.9
|
Pacira BioSciences
|
Opioid free analgesics
developer
|
USA
|
6,087
|
0.9
|
IPG Photonics
|
High-power fibre lasers
|
USA
|
6,059
|
0.9
|
Adaptimmune
Therapeutics
|
Cell therapies for cancer
treatment
|
UK
|
5,996
|
0.8
|
Novocure
|
Manufacturer of medical devices
for cancer treatment
|
USA
|
5,864
|
0.8
|
Renishaw
|
Measurement and calibration
equipment
|
UK
|
5,838
|
0.8
|
Reaction Engines
u
|
Advanced heat exchange
company
|
UK
|
5,621
|
0.8
|
CyberArk Software
|
Cyber security solutions
provider
|
Israel
|
5,562
|
0.8
|
BillionToOne Promissory
Note u
|
Pre-natal diagnostics
|
USA
|
591
|
0.1
|
BillionToOne Series C
Preferred u
|
Pre-natal diagnostics
|
USA
|
4,726
|
0.7
|
|
|
|
5,317
|
0.8
|
Xero
|
Cloud based accounting software
for small and medium-sized enterprises
|
New Zealand
|
5,304
|
0.7
|
Echodyne Corp. Series C-1
Preferred u
|
Metamaterial radar sensors and
software
|
USA
|
5,234
|
0.7
|
ShockWave Medical
|
Medical devices
manufacturer
|
USA
|
4,916
|
0.7
|
Tandem Diabetes Care
|
Manufacturer of insulin pumps for
diabetic patients
|
USA
|
4,348
|
0.6
|
QuantumScape
|
Solid-state batteries for electric
vehicles
|
USA
|
4,337
|
0.6
|
Skywater Technology
|
US specialist semiconductor
fabrication company
|
USA
|
4,240
|
0.6
|
Genus
|
Livestock breeding and technology
services
|
UK
|
4,162
|
0.6
|
Zai Lab HK Line
|
Chinese bio-pharmaceutical
development and distribution company
|
China
|
4,062
|
0.6
|
KSQ Therapeutics Series C
Preferred u
|
Biotechnology target
identification company
|
USA
|
4,028
|
0.6
|
RXSight
|
Implantable adjustable lens
provider after cataract surgery
|
USA
|
3,960
|
0.6
|
Beam Therapeutics
|
Biotechnology company
|
USA
|
3,740
|
0.5
|
EverQuote
|
Online marketplace for buying
insurance
|
USA
|
3,724
|
0.5
|
Graphcore Series D2
Preferred u
|
Specialised processor chips for
machine learning applications
|
UK
|
2,105
|
0.3
|
Graphcore Series E
Preferred u
|
Specialised processor chips for
machine learning applications
|
UK
|
1,606
|
0.2
|
|
|
|
3,711
|
0.5
|
Silex Systems
|
Australian pioneer of laser
enrichment technology
|
Australia
|
3,699
|
0.5
|
Ambarella
|
Video compression and image
processing semiconductors
|
USA
|
3,580
|
0.5
|
PeptiDream
|
Peptide based drug discovery
platform
|
Japan
|
3,547
|
0.5
|
Chegg
|
Online educational
company
|
USA
|
3,425
|
0.5
|
Aehr Test Systems
|
Semiconductor testing systems
provider
|
USA
|
3,421
|
0.5
|
Ceres Power Holding
|
Developer of fuel cells
|
UK
|
3,360
|
0.5
|
Trupanion
|
Pet health insurance
provider
|
USA
|
3,320
|
0.5
|
DLOCAL
|
Latin American developer of cross
border payments platform
|
Brazil
|
3,200
|
0.5
|
MP Materials
|
Rare earth materials
company
|
USA
|
3,062
|
0.5
|
InfoMart
|
Online platform for restaurant
supplies
|
Japan
|
2,935
|
0.4
|
AbCellera Biologics
|
Antibody design and development
company
|
Canada
|
2,770
|
0.4
|
Quanterix
|
Ultra-sensitive protein
analysers
|
USA
|
2,699
|
0.4
|
IP Group
|
Intellectual property
commercialisation
|
UK
|
2,622
|
0.4
|
Digimarc
|
Digital watermarking technology
provider
|
USA
|
2,612
|
0.4
|
Cardlytics
|
Digital advertising
platform
|
USA
|
2,588
|
0.4
|
Codexis
|
Industrial and pharmaceutical
enzyme developer
|
USA
|
2,419
|
0.3
|
Cosmo Pharmaceuticals
|
Therapies for gastrointestinal
diseases
|
Italy
|
2,101
|
0.3
|
Sutro Biopharma
|
Biotechnology company focused on
next generation protein therapeutics
|
USA
|
2,032
|
0.3
|
Sensirion Holding
|
Manufacturer of gas and flow
sensors
|
Switzerland
|
1,863
|
0.3
|
freee K.K.
|
Cloud based accounting software
for small and medium-sized enterprises
|
Japan
|
1,861
|
0.3
|
ITM Power
|
Hydrogen energy solutions
manufacturer
|
UK
|
1,774
|
0.3
|
New Horizon Health
S
|
Cancer screening
company
|
China
|
1,694
|
0.2
|
DNA Script Series C
Preferred u
|
Synthetic DNA
fabricator
|
France
|
1,644
|
0.2
|
Avacta Group
|
Affinity based diagnostic reagents
and therapeutics
|
UK
|
1,562
|
0.2
|
C4X Discovery Holdings
u
|
Software to aid drug
design
|
UK
|
1,377
|
0.2
|
C4X Discovery Warrants
u
|
Software to aid drug
design
|
UK
|
-
|
-
|
|
|
|
1,377
|
0.2
|
Ilika
|
Discovery and development of novel
materials for mass market applications
|
UK
|
1,345
|
0.2
|
Catapult Group
International
|
Analytics and data collection
technology for sports teams and athletes
|
Australia
|
1,339
|
0.2
|
Stratasys
|
3D printer manufacturer
|
USA
|
1,121
|
0.2
|
M3
|
Online medical database
|
Japan
|
1,046
|
0.1
|
Akili Interactive
|
Digital medicine
company
|
USA
|
1,019
|
0.1
|
Spire Global
|
Satellite powered data collection
and analysis company
|
USA
|
903
|
0.1
|
Cellectis
|
Genetic engineering for cell based
therapies
|
France
|
497
|
0.1
|
Cellectis ADR
|
Genetic engineering for cell based
therapies
|
France
|
170
|
-
|
|
|
|
667
|
0.1
|
Expensify
|
Expense management
software
|
USA
|
456
|
0.1
|
NuCana SPN ADR
|
Next generation chemotherapy
developer
|
UK
|
152
|
-
|
Angelalign Technology
|
Medical devices
manufacturer
|
China
|
71
|
-
|
China Lumena New Materials
S
|
Mines, processes and manufactures
natural thenardite products
|
China
|
-
|
-
|
Chinook Therapeutics (formerly
Aduro Biotechnology) CVR Line
|
Immunotherapy drug
development
|
USA
|
-
|
-
|
4D Pharma
|
Microbiome biology
therapeutics
|
UK
|
-
|
-
|
4D Pharma Warrants
|
Microbiome biology
therapeutics
|
UK
|
-
|
-
|
|
-
|
-
|
Total equities
|
704,112
|
99.3
|
Net liquid assets
|
4,837
|
0.7
|
Total assets*
|
708,949
|
100.0
|
* Total assets before
deduction of borrowings.
u Denotes private
company investment.
S Denotes suspended security.
|
Listed equities
%
|
Unlisted securities #
%
|
Net liquid assets
%
|
Total assets
%
|
30 April
2024
|
71.5
|
27.8
|
0.7
|
100.0
|
31 October
2023
|
71.4
|
26.2
|
2.4
|
100.0
|
Figures represent percentage of
total assets.
# Includes
holdings in ordinary shares, preference
shares and promissory notes.
Distribution of total assets*
(unaudited)
Industry Analysis at 30 April
2024
|
% of
total assets*
|
Portfolio
Weightings (relative to comparative index†) %
|
Software
|
22.2
|
18.0
|
Aerospace and defence
|
20.4
|
19.0
|
Biotechnology
|
17.0
|
13.7
|
Healthcare equipment and
supplies
|
6.4
|
4.7
|
Life sciences tools and
services
|
3.9
|
3.0
|
Electrical equipment
|
3.3
|
1.1
|
Healthcare technology
|
3.2
|
2.9
|
Electronic equipment, instruments an
components
|
2.9
|
0.0
|
Real estate management and
development
|
2.8
|
0.4
|
Pharmaceuticals
|
2.8
|
1.1
|
Professional services
|
2.2
|
0.0
|
Capital markets
|
2.1
|
-0.9
|
Consumer staples distribution and
retail
|
2.1
|
0.9
|
Healthcare providers and
services
|
2.0
|
0.3
|
Semiconductors and semiconductor
equipment
|
1.6
|
-0.1
|
Machinery
|
0.7
|
-3.9
|
Automobile components
|
0.6
|
-0.8
|
Interactive media and
services
|
0.5
|
-0.2
|
Technology hardware, storage and
peripherals
|
0.5
|
-0.6
|
Diversified consumer
services
|
0.5
|
-0.2
|
Insurance
|
0.5
|
-2.4
|
IT services
|
0.4
|
-1.0
|
Metals and mining
|
0.4
|
-3.0
|
Media
|
0.3
|
-3.0
|
Net liquid assets
|
0.7
|
|
* Total assets before deduction of
borrowings.
† 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
2024
%
|
31 October
2023
%
|
North America
|
74.5
|
71.2
|
USA
|
74.1
|
70.7
|
Canada
|
0.4
|
0.5
|
Europe
|
19.2
|
19.7
|
United Kingdom
|
13.4
|
14.2
|
Eurozone
|
2.8
|
2.4
|
Developed Europe (non euro)
|
3.0
|
3.1
|
Asia
|
3.7
|
5.6
|
China
|
2.4
|
3.8
|
Japan
|
1.3
|
1.8
|
Australasia
|
1.4
|
1.1
|
Australia
|
0.7
|
1.0
|
New Zealand
|
0.7
|
0.1
|
South America
|
0.5
|
-
|
Brazil
|
0.5
|
-
|
Net Liquid Assets
|
0.7
|
2.4
|
Total Assets
|
100.0
|
100.0
|
|
|
| |
Sectoral Analysis
|
30 April
2024
%
|
31 October
2023
%
|
Healthcare
|
35.2
|
36.2
|
Industrials
|
27.3
|
24.7
|
Information Technology
|
26.4
|
24.5
|
Communication Services
|
3.7
|
3.8
|
Consumer Discretionary
|
3.2
|
4.3
|
Financials
|
3.1
|
3.3
|
Materials
|
0.4
|
4.8
|
Net Liquid Assets
|
0.7
|
2.4
|
Total Assets
|
100.0
|
100.0
|
Notes to the Financial Statements
(unaudited)
1.
The condensed Financial Statements for the six
months to 30 April 2024 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 2024 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 2023.
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. Financial
information. 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 2023 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. Investment
Management. 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 £50 million of net assets, 0.65% on the next £200 million
of net assets and 0.55% on the remaining net assets.
4. Net return per ordinary
share
|
Six months
to 30 April
2024
£'000
|
Six months
to 30 April
2023
£'000
|
Year to
31 October
2023
(audited)
£'000
|
Revenue return after
taxation
|
(1,193)
|
(1,209)
|
(2,527)
|
Capital return after
taxation
|
37,999
|
(57,522)
|
(180,039)
|
Total net return
|
36,806
|
(58,731)
|
(182,566)
|
Weighted average number of ordinary
shares in issue
|
385,075,674
|
390,711,773
|
389,617,177
|
Net return per ordinary share is
based on the above totals of revenue and capital and the weighted
average number of ordinary shares in issue (after the deduction of
shares held in treasury) issue during each period.
There are no dilutive or
potentially dilutive shares in issue.
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
As at 30 April 2024
|
Level
1
£'000
|
Level
2
£'000
|
Level
3
£'000
|
Total
£'000
|
Listed equities
|
504,868
|
-
|
-
|
504,868
|
Suspended/unlisted ordinary
shares
|
-
|
-
|
23,418
|
23,418
|
Unlisted preference
shares*
|
-
|
-
|
172,040
|
172,040
|
Unlisted promissory note
|
-
|
-
|
3,786
|
3,786
|
Total financial asset
investments
|
504,870
|
-
|
199,242
|
704,112
|
As at 31 October 2023
(audited)
|
Level
1
£'000
|
Level
2
£'000
|
Level
3
£'000
|
Total
£'000
|
Listed equities
|
491,243
|
-
|
-
|
491,243
|
Unlisted ordinary shares
|
-
|
-
|
19,450
|
19,450
|
Unlisted preference
shares*
|
-
|
-
|
156,900
|
156,900
|
Unlisted promissory note
|
-
|
-
|
3,707
|
3,707
|
Total financial asset investments
|
491,243
|
-
|
180,057
|
671,300
|
* 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
The holding in C4X Discovery
delisted in the period and the holding in New Horizon Health was
suspended. These holdings were
transferred from Level 1 to Level
3. 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 2024 creditors falling
due within one year include borrowings of £93,318,000 (31 October
2023 - £103,249,000) drawn down under a five year £100 million
multi-currency revolving credit facility with The Royal Bank of
Scotland International Limited which expires on 9 June
2026.
At 30 April 2024 the drawings were
€9,864,000, US$71,166,000 and £28,060,000 (31 October 2023 -
€10,600,000, US$77,150,000 and £30,437,000) drawn down under the
£100 million multi-currency revolving credit facility.
At 30 April 2024 there were no
drawings under the £36 million multi-currency revolving credit
facility with National Australia Bank Limited with an expiry date
of 30 September 2024 (31 October 2023 - nil).
The fair value of the bank loans at
30 April 2024 was £93,318,000 (31 October 2023 -
£103,249,000).
8. Share
Capital
|
30
April
2024
Number
|
30
April
2024
£'000
|
31
October
2023
Number
|
31
October
2023
£'000
|
Allotted, called up and fully paid
ordinary shares of 1p each
|
383,044,237
|
3,831
|
387,094,641
|
3,871
|
Treasury shares of 1p
each
|
22,709,458
|
227
|
18,569,054
|
187
|
|
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
2024, no shares were issued (in the six months to 30 April 2023 -
no shares were issued). Over the period from 30 April 2024 to 5
June 2024 the Company issued no shares.
The Company also has authority to
buy back shares. In the six months to 30 April 2024, 4,050,404
shares with a nominal value of £41,000 were bought back at a total
cost of £5,912,000 and held in treasury (in the six months to 30
April 2023 - 2,865,382 shares were bought back and held in
treasury). At 30 April 2024 the Company had authority to buy back a
further 56,495,936 ordinary shares.
Over the period from 30 April 2024
to 5 June 2024 2,455,112 shares with a nominal value of £25,000
have been bought back by the Company at a total cost of £3,568,000
and held in treasury.
9. Transaction
Costs
During the period the Company
incurred transaction costs on purchases of investments of £27,000
(30 April 2023 - £8,000; 31 October 2023 - £67,000) and transaction
costs on sales of £14,000 (30 April 2023- £3,000; 31 October 2023 -
£28,000).
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 investment strategy risk, financial risk, smaller
company risk, private company (unlisted) investments risk, discount
risk, political and associated economic financial risk, climate and
governance risk, regulatory risk, custody and depositary risk,
operational risk, leverage risk, cyber security risk and emerging
risks. An explanation of these risks and how they are managed is
set out on pages 48 to 52 of the Company's Annual Report and
Financial Statements for the year to 31 October 2023 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
2024
|
31
October 2023
|
Net asset value per ordinary share (borrowings at book
value)
|
160.72p
|
151.06p
|
Shareholders' funds (borrowings at
book value)
|
£615,631,000
|
£584,737,000
|
Add: book value of
borrowings
|
£93,318,000
|
£103,249,000
|
Less: fair value of
borrowings
|
(£93,318,000)
|
(£103,249,000)
|
Shareholders' funds (borrowings at fair
value)
|
£615,631,000
|
£584,737,000
|
Number of shares in
issue
|
389,044,2371
|
387,094,641
|
Net asset value per ordinary share (borrowings at fair
value)
|
160.72p
|
151.06p
|
At 30 April 2024 and 31 October
2023 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
2024
|
31
October 2023
|
Net Asset Value per
share
|
(a)
|
160.72p
|
151.06p
|
Share price
|
(b)
|
141.80p
|
124.80p
|
Discount ((b)-(a)) ÷ (a) expressed as a
percentage
|
(11.8%)
|
(17.4%)
|
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 as detailed on page 1.
Leverage (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.
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.
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
2024
|
31
October 2023
|
Borrowings (at book
value)
|
£93,318,000
|
£103,249,000
|
Less: cash and cash
equivalents
|
(£7,804,000)
|
(£19,146,000)
|
Less: sales for subsequent
settlement
|
(£1,742,000)
|
-
|
Add: purchases for subsequent
settlement
|
£2,538,000
|
-
|
Add: buy backs awaiting
settlement
|
£67,000
|
£128,000
|
Adjusted borrowings
|
(a)
|
£86,377,000
|
£84,231,000
|
Shareholders' funds
|
(b)
|
£615,631,000
|
£584,737,000
|
Invested gearing: (a) as a percentage of
(b)
|
14%
|
14%
|
Potential gearing is the Company's
borrowings expressed as a percentage of shareholders'
funds.
|
|
30 April
2024
|
31
October 2023
|
Borrowings (at book
value)
|
(a)
|
£93,318,000
|
£103,249,000
|
Shareholders' funds
|
(b)
|
£615,631,000
|
£584,737,000)
|
Potential gearing: (a) as a percentage of
(b)
|
|
14%
|
18%
|
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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