Annual Report and
Financial Statements
Edinburgh
Worldwide
Investment
Trust plc
31 October 2023
Notes
None of the views expressed in this document
should be construed as advice to buy or sell a
particular investment.
Investment trusts are UK public listed companies
and as such comply with the requirements of the
Financial Conduct Authority. They are not authorised
or regulated by the Financial Conduct Authority.
Edinburgh Worldwide Investment Trust plc currently
conducts its affairs, and intends to continue to
conduct its affairs, so that the Company’s ordinary
shares can qualify to be considered as a mainstream
investment product and can be recommended by
Independent Financial Advisers to ordinary retail
investors in accordance with the rules of the
Financial Conduct Authority in relation to
non-mainstream investment products.
This document is important and requires your
immediate attention.
Investor disclosure document
The UK Alternative Investment Fund Managers
Regulations requires certain information to be
made available to investors prior to their making an
investment in the Company. The Company’s Investor
Disclosure Document is available for viewing at
edinburghworldwide.co.uk.
If you reside in the UK and are in any doubt as to
the action you should take, you should consult your
stockbroker, bank manager, solicitor, accountant
or other independent financial adviser authorised
under the Financial Services and Markets Act 2000
immediately. If you are outside the UK, you should
consult an appropriately authorised financial adviser.
If you have sold or otherwise transferred all of your
ordinary shares in Edinburgh Worldwide Investment
Trust plc, please forward this document, together
with any accompanying documents, but not your
personalised Form of Proxy or Form of Direction,
as soon as possible to the purchaser or transferee,
or to the stockbroker, bank or other agent through
whom the sale or transfer was or is being effected
for delivery to the purchaser or transferee.
01
Edinburgh Worldwide Investment Trust plc
Introduction
An introduction to Edinburgh Worldwide Investment Trust plc 02
Strategic report
One year summary 06
Chair’s statement 09
Managers’ review 14
Baillie Gifford – valuing private companies 19
Review of investments 20
Twenty largest holdings and twelve month performance 24
List of investments 25
Distribution of total assets 30
Distribution of total assets by industry 31
Five year summary 32
Ten year record 34
Baillie Gifford statement on stewardship 36
Environmental, social and governance engagement 38
Baillie Gifford proxy voting 42
Business review 44
Governance report
Directors and fund managers 59
Directors’ report 65
Corporate governance report 70
Audit and management engagement committee report 77
Directors’ remuneration report 80
Statement of Directors’ responsibilities 84
Financial report
Independent auditor’s report 87
Income statement 94
Balance sheet 95
Statement of changes in equity 96
Cash flow statement 97
Notes to the Financial Statements 98
Shareholder information
Notice of Annual General Meeting 118
Further shareholder information 123
Third party data provider disclaimer 124
Communicating with shareholders 126
Sustainable Finance Disclosure Regulation 128
Glossary of terms and Alternative Performance Measures 130
Company information 133
Contents
Introduction
Annual Report and Financial Statements 2023
02
An introduction to
Edinburgh Worldwide
Investment Trust plc
Unearthing the next generation of great growth businesses
Edinburgh Worldwide
aims for capital growth
from a global portfolio
of initially immature
entrepreneurial
companies, typically with
a market capitalisation of
less than US$5bn at the
time of initial investment,
which are believed to
offer long-term growth
potential.
The opportunity
Edinburgh Worldwide captures initially immature
investment opportunities created by the
long-running super-cycle of technological change.
We are in the middle of a period of profound
change, with previously established behaviours
and norms being disrupted by new technologies.
This is facilitated by decades-long exponential
trends in cost reduction and capabilities of key
foundational technologies, such as processing
power, genomic sequencing and battery storage,
coming together to expand the frontiers of
innovation. This pace of change looks set to
accelerate, with explosions in areas such as
data collection, connected internet devices
and renewable energy ushering in a new societal
paradigm. We’re entering a decade likely
characterised by space exploration, artificial
intelligence, 3D printers and a biological revolution,
which will reframe what we thought possible.
Smaller, progressive companies stand to benefit
from this relative to large, static competitors.
Unencumbered by ‘the innovator’s dilemma’,
requirements to protect existing franchises,
or internal competing priorities, immature businesses
can design models and propositions from the ground
up to best utilise new technologies. Meanwhile,
established technologies such as the internet,
cloud computing, and digital networks mean
smaller businesses can now reach more customers
or operationally scale at an unprecedented rate,
removing some historical advantages of larger
competitors. Smaller companies can now have
genuinely global ambitions and seek to disrupt
the largest end markets.
As demonstrated by the last three years,
the market’s attention to this may wax and
wane. However, this is a hugely vibrant
opportunity set, propelled by restless
human ingenuity and entrepreneurialism.
Edinburgh Worldwide Investment Trust plc
03
Philosophy
Rare companies
Edinburgh Worldwide operates within an enormous
investible universe, and the Managers’ best estimates
place this in the tens of thousands. Most of these,
however, are unremarkable businesses without
the disruptive potential sought by the Managers
on shareholders’ behalf. The portfolio is designed
to contain a special few early-stage, immature
businesses with the potential to disrupt large end
markets through the creative use of innovation
to facilitate propositions that are both better, and
cheaper, than the status quo. The Managers have
identified four traits as indicators of a company’s
ability to do this:
• problem-solving – innovating to solve significant
problems and to reshape their industry;
• emerging edge – early signs of a competitive
advantage that may compound over time;
• management – skilled individuals with a clear
strategy for growth; and
• scalability – a business model which facilitates
marginal returns becoming more attractive.
Qualitative assessment against these traits is
crucial to manager’s ongoing idea generation
and investment decision-making.
Long-term horizon
The Managers observe markets as fundamentally
ill-suited to evaluating this type of mould-breaking
business. The companies they seek are attempting
radical change, a process which takes many years
and where progress is rarely linear. To appreciate
this and what such businesses could ultimately
become, a long-term horizon and patience
are prerequisites. Hence, they are tasked with
assessing companies on a five-year-plus horizon on
shareholders’ behalf. Markets, however, generally
operate on a much shorter view. This is observable
when the release of news, which has little influence
on the likelihood of a company’s sustained long-term
success, results in pronounced price movements.
The Board backs the Managers to maintain
holdings through periods of price volatility, provided
operational metrics remain in line with the Managers’
expectations; tolerance of drawdowns has been an
important feature for some of the most successful
portfolio holdings.
The Board and Managers believe that the
discrepancy between Edinburgh Worldwide’s
investment horizon and that of the market is a
crucial source of edge and how the Managers can
generate attractive long-term investment returns.
Harnessing asymmetry
The portfolio attempts to harness the asymmetry
inherent to equity markets – losses being capped
at the amount invested, with returns potentially
limitless – to deliver overall portfolio returns.
The Managers acknowledge that they will not
be successful with all individual investments but
this risk tolerance is necessary to identify special
businesses early in their lifecycle. Once identified,
the intention is to hold businesses for the long term,
allowing them to contribute an outsized proportion
of overall portfolio returns. Essentially, it is not
about being right with the median investment
but about ‘how right’ the Managers are with the
top-performing holdings. This pattern is observable
with past holdings such as Tesla and Dexcom.
There are holdings with similar potential currently
within the portfolio and the Board is excited for the
prospects of the Managers identifying more in time
on behalf of the Company’s shareholders.
Annual Report and Financial Statements 2023
04
This Strategic report, which
includes pages 06 to 57
and incorporates the Chair’s
statement, has been prepared in
accordance with the Companies
Act 2006.
Strategic
report
Strategic report
Annual Report and Financial Statements 2023
06
31 October
2023
31 October
2022 % change
Total assets
(before deduction of borrowings)
£688.0m £879.4m
Borrowings £103.3m £103.8m
Shareholders’ funds £584.7m £775.6m
Net asset value per ordinary share
(borrowings at book value)
151.06p 197.70p (23.6)
Share price 124.80p 172.60p (27.7)
S&P Global Small Cap Index
total return (in sterling terms)
‡
(4.3)
Dividends paid and proposed
per ordinary share
Nil Nil
Revenue earnings per ordinary share (0.65p) (0.49p) (32.7)
Ongoing charges
#
0.70% 0.63%
Discount
(borrowings at discount value)
#
(17.4%) (12.7%)
Active share
#
99% 99%
Year to 31 October 2023 2023 2022 2022
Year’s high and low High Low High Low
Share price 191.00p 122.40p 335.00p 160.40p
Net asset value
(after deducting borrowings
at book value)
223.44p 150.42p 338.36p 188.29p
Premium/(discount) (borrowings
at book value)#
(5.9%) (23.4%) 5.5% (20.1%)
The following information
illustrates how Edinburgh
Worldwide has performed over
the year to 31 October 2023.
* For a definition of terms used see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
†
The comparative index is the S&P Global Small Cap Index total return (in sterling terms).
#
Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
‡
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 124.
Past performance is not a guide to future performance.
One year
summary
*
07
Edinburgh Worldwide Investment Trust plc
Year to 31 October 2023 2022
Net return per ordinary share
Revenue (0.65p) (0.49p)
Capital (46.21p) (134.80p)
Total (46.86p) (135.31p)
*
S&P Global Small Cap Index total return (in sterling terms).
†
Alternative Performance Measure, see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
‡
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 124.
Past performance is not a guide to future performance.
NAV, share price and comparative index total return
(figures rebased to 100 at 31 October 2022)
(Discount)/premium to Net Asset Value
(figures plotted on a monthly basis)
O
AS
2023
O
2022
NDJFMAMJJ
●
Share price
total return
†
● NAV
total return
†
●
Comparative index*
total return
†
60
80
100
120
60%
120%
100%
80%
OSA
2023
O
2022
NDJFMAMJ J
● (Discount)/premium (after deducting borrowings
at book value) plotted as at month end dates
†
● Average discount
(24%)
(20%)
(4%)
(8%)
(12%)
(16%)
Performance since broadening
of investment policy
31 October
2023
31 January
2014
‡
% change
capital
% change
total
return
117 months from 31 January 2014
Net asset value per ordinary share
(after deducting borrowings at fair value)
†
151.06p 87.34p 72.9 74.2
Net asset value per ordinary share
(after deducting borrowings at book value)
151.06p 87.43p 72.8 74.1
Share price 124.80p 81.00p 54.1 54.8
Comparative Index (in sterling terms)*
‡
84.6 123.0
Annual Report and Financial Statements 2023
08
09
Edinburgh Worldwide Investment Trust plc
Chair’s
statement
Henry Strutt
Chair
Appointed to the
Board in 2011, and
as Chair in 2017
Our mission
The Company’s mission is to invest in innovative
businesses that are developing next generation
products and services. We are living through a
period of unprecedented scientific innovation and
technological change. Edinburgh Worldwide (‘EWIT’)
is designed to provide investors, who are otherwise
unable to access this dynamic asset class, a way
to participate in the exciting developments we are
seeing across a whole range of foundational
technologies from biotechnology and gene
sequencing, through aeronautics and space
technology, automation and artificial intelligence
to semi-conductors, data processing and energy
transformation and storage. The flexibility of the
investment trust structure allows us to hold for the
long-term and where necessary make follow-on
investment in these growing companies as they
look for additional finance to achieve their potential,
without having to raise additional funds from our
investors.
We have always believed that in order to take
full advantage of these opportunities and access
the potential for the outsized returns these could
generate, requires a five year investment horizon,
and in many cases up to 10 years. To judge
performance on anything less than that, risks
undermining the long-term potential that the
Company has been established to access on behalf
of its shareholders.
This however has presented us with a significant
challenge over the last two years in a world where
investors are under pressure to focus on quarterly
or even daily fluctuations in valuation. Inevitably,
even in the most favourable of market conditions,
short-term or even medium-term volatility will often
be at variance with the realisation of the long-term
potential of the portfolio.
Strategic report
Annual Report and Financial Statements 2023
10
Market conditions of late have been anything but
favourable – to put it mildly. The confluence of the
pandemic and its overhang, geopolitical tension, the
resurgence of inflation after decades of dormancy,
and consequently aggressive central bank responses
have all conspired to drastically shorten investors’
time horizons and increase risk aversive behaviour.
These have in turn hit valuations of growth
companies particularly hard, with a consequent
knock-on effect on performances across the piece,
with portfolios such as EWIT’s being badly affected.
Performance review
In the year to 31 October 2023, the Company’s
net asset value (‘NAV’) per share, when calculated
by deducting borrowings at fair value, decreased
by 23.6% and the share price by 27.7%. The
comparative index, the S&P Global Small Cap
Index
*
total return, decreased by 4.3% in sterling
terms during this period. The Company’s share price
discount to NAV ranged between 6% and 23%,
averaging 17%, and ended the period at a 17.4%
discount.
While this is not significantly out of line with the
investment trust sector as a whole, where weighted
average discounts of the AIC Global and AIC Global
Smaller Companies sectors ended the period at
13.1% and 17.3% respectively, we recognise that
is little comfort to our investors, when one takes
into account the fact that the negative absolute
returns of the past two financial years have erased
the positive relative and much of the absolute
returns that had been achieved since the broadening
of the Company’s investment remit approved by
shareholders at the 27 January 2014 Annual General
Meeting (‘AGM’). Portfolio turnover over the year
was 7.1% compared to 10.8% for the Company’s
financial year to 31 October 2022. Management fees
and other expenses were down 14.9% in absolute
terms compared with a year earlier, although as
a percentage of average shareholders’ funds, the
ongoing charges represented 0.70% for the year
versus 0.63% a year earlier, reflecting the fall in
NAV over the year.
The Board’s response
Faced with this exceedingly difficult situation,
as an independent Board, we have undertaken a
thorough review challenging the Manager on the
approach, philosophy and processes. One option
would have been to recast the Company’s objectives
and portfolio in order to bring performance closer
to that of the Index. However, we feel that would
be doing a disservice to the long-term objectives of
our investors and risk replicating many other readily
available portfolios with greater short-term certainty
but lacking the outstanding long-term potential of
the current portfolio. It would eliminate that which is
unique and irreplicable in the Company’s approach,
and at a time when the current sources of market
dislocation have yet to fully wash through.
The portfolio is invested for the most part in
companies with solid finances and good economics
as well as outstanding future potential. The majority
have been performing well operationally and have
strong cash positions which means that they are
* 9 months to 31 October 2014. The current broadened mandate was approved by shareholders at the 27 January 2014 AGM, so the table above shows
the current portfolio managers’ track record managing Edinburgh Worldwide’s portfolio.
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
Past performance is not a guide to future performance.
20232015 2018 2020 2022
2014*
20172016 2019 2021
● Share price total return
Source:
LSEG and underlying data providers. See disclaimer on page 124.
All figures are to
tal return (see Glossary of terms and Alternative Performance Measures on pages 130 to 132).
●
NAV total return
●
S&P Global Small Cap Index total return (in sterling terms)
Years to 31 October
(60%)
(40%)
80%
60%
0%
(20%)
20%
40%
Share price, NAV and comparative index total return
11
Edinburgh Worldwide Investment Trust plc
* Source: LSEG and relevant underlying index providers. See disclaimer on page 124.
For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 130 to132.
Past performance is not a guide to future performance.
able to self-fund without recourse to outside sources
of additional capital. We continue to encourage
the portfolio managers to focus on smaller
entrepreneurial companies, as we believe these are
better able to deploy the best in human ingenuity
and imagination to embrace disruptive technologies
and processes at scale than larger companies who
are inevitably hidebound by legacy practices and
business models and layers of bureaucracy and
hierarchy.
Nevertheless, the portfolio managers, under close
scrutiny of the Board, have identified potential
improvements to both processes and tactics which
should improve the balance of the portfolio. These
include being more rigorous in recognising stocks
that have had a good run and taking profits where
appropriate, and being more ruthless in addressing
issues in the tail of the portfolio where the portfolio
managers may have tended in the past to err on the
side of patience.
Unlisted investments
Many promising businesses that we wish the
portfolio managers to invest in are at a relatively
early stage in their development and, while already
able to access external funding, have not yet
seen the need to access public markets. As at the
Company’s year end, the portfolio weighting in
private companies stood at 26.2% of total assets,
invested in fourteen companies (2022 – 20.1%
of total assets in fourteen companies) including
companies such as SpaceX and PsIQuantum. This
percentage is currently now at 25.8%. The Company
currently has shareholder authority to make
investments into unlisted investments of up to 25%
of total assets, measured at the time of investment.
When above this figure, the investments continue
to be held, but new positions or additions cannot be
made. No new private company investments were
made during the year although follow-on investments
were made in SHINE Technologies and Astranis
Space Technologies.
Understandably, following the extreme volatility in
public market valuations, the valuation of private
companies has been under particular scrutiny by
the broader investor community and the Board of
EWIT. Whilst not surprising, it should be noted that
Baillie Gifford supported by the Board, has always
taken a pro-active approach to private company
valuations. Whilst there is always going to be an
unavoidable element of subjectivity, the Board is
firmly of the view that Baillie Gifford’s approach to
valuing private companies is proactive and timely,
ensuring that the Company’s daily published NAV
is a genuine reflection of the current value of the
full portfolio – listed and unlisted. For example,
over the year to 31 October 2023, for the fourteen
private companies held in the portfolio, their ongoing
monitoring led to 130 revaluations in the period and
resulted in a 1.1% average decrease in share price
across the private companies held. As noted in the
Directors’ biographies on pages 59 to 62, the Board
and Company also benefit from the expertise of
the Directors when scrutinising and valuing private
company investments. Additional scrutiny is also
undertaken by Ernst & Young LLP, the Company’s
auditors.
The Board and Managers remain of the view that
private companies continue to be a fundamental
element in achieving the Company’s objective and,
as highlighted in prior years, the Board will keep
the matter of the weighting to unlisted investments
under review. Details on the valuation process and
quantum of valuations of the portfolio’s private
company holdings undertaken, over the course
of the financial year, can be found on page 16,
immediately after the Managers’ Review; I encourage
readers to note this.
Issuance, share buybacks and treasury
Despite strong demand for EWIT shares in recent
years, no shares were issued in the last financial
year. Given the discount to NAV and the Board’s
continued conviction in its portfolio and approach,
the Company undertook 76 buybacks, buying back
5,190,382 shares to be held in treasury at a cost of
£8.26 million. This resulted in the Company’s issued
share capital reducing by 1.3%. Buybacks were
undertaken over the course of the year but paused
for a period following the collapse of Silicon Valley
Bank in the United States. Since the Company’s
year-end, a further 1,710,933 shares have been
bought back for Treasury at a cost of £2.49 million.
Strategic report
Annual Report and Financial Statements 2023
12
The Company will once again be seeking to renew
its share issuance, buyback and treasury share
authorities. Issuance, either from treasury or of new
shares, will only be undertaken at a premium to the
prevailing NAV, with debt calculated at either par
or fair (depending on which results in the higher
hurdle), in order to satisfy natural market demand.
The buyback facility is sought to allow the Company
to buy back its own shares when the discount is
substantial in absolute terms and relative to its
peers. The Board is also mindful of the interests of
longer-term ongoing shareholders as well as market
liquidity and sentiment. Whilst not determining or
prohibiting factors, the Board is also mindful of and
continuously monitors the level of private company
exposure and invested gearing.
Borrowings
At present, the Company has a five-year £100 million
multi-currency revolving credit facility which expires
in June 2026. In addition, a five-year £36 million
multi-currency revolving credit facility which expires
in September 2024. A £25 million multi-currency
revolving credit facility expired during the year and
was not replaced. The extent and range of equity
gearing is discussed by the Board and Managers
at each Board meeting. Both parties agree that the
Company should typically be geared to equities
to maximise potential returns, with the current
aspirational parameters set at +5% to +15% of
shareholders’ funds. Over the year, the invested
equity gearing ranged between +9.7% and +16.1%
and stood at +14.1% of shareholders’ funds at the
financial year end (2022 – +12.3%). Invested equity
gearing is currently 12.6% of shareholders’ funds.
Earnings and dividend
The Company’s objective is to achieve long term
capital growth and investors should not expect
income from this investment. This year the net
revenue return per share was a negative 0.65p
per share (2022 – negative 0.49p per share) and
therefore no final dividend is being recommended
by the Board. Should the level of underlying income
increase in future years, the Board will seek to
distribute to shareholders the minimum permissible
to maintain investment trust status by way of a final
dividend.
Board composition
Following a period of notable Board refreshment that
has resulted in the appointment of four new Directors
with relevant skills, since the start of 2020, I will be
standing down from the Board at the conclusion
of this year’s AGM taking place on 5 March 2024.
Mr Jonathan Simpson-Dent, a seasoned private
equity investor with extensive experience of chairing
company boards, and who has been a member of the
Board for 4 years, will assume the Chair at this point.
Ongoing Board refreshment is a healthy exercise and
will be one of the areas of focus under the direction of
the new Chair.
Ms Helen James will be standing down as the
Company’s Senior Independent Director at the
conclusion of the forthcoming Annual General
Meeting and will not be standing for re-election
to the Board in 2025. It is intended that Ms Jane
McCracken, who has enjoyed a successful career
as an entrepreneur, advisor and investor in venture
capital backed high growth technology and
healthcare businesses in the UK and US, will replace
her as Senior Independent Director.
The timeline below shows the date of appointment
of the current Board.
Helen James
December 2010
Henry Strutt
November 2011
Jonathan Simpson-Dent
Caroline Roxburgh
February 2020
Mungo Wilson
December 2016
Mary Gunn
March 2023
Jane McCracken
November 2022
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
13
Edinburgh Worldwide Investment Trust plc
Annual General Meeting
The Company’s next Annual General Meeting (‘AGM’)
will be held in person at Baillie Gifford’s offices in
Edinburgh at 12 noon on Tuesday 5 March 2024. The
portfolio managers will be presenting, and I and the
Board look forward to seeing as many of those of you
as possible who are able to attend either in person
or by remote video link. Details of how shareholders
can watch this year’s AGM online can be found in the
Notice of Annual General Meeting on page 118.
Further information, including the proposed
resolutions and information on the deadlines for
submitting votes by proxy should you not be able
to attend, can be found on pages 118 to 122.
Shareholders who hold shares in their own name
on the main register will be provided with a Form
of Proxy. For shareholders who held shares through
the former abrdn Investment Trust Share Plans,
Individual Savings Account and Investment Plan
for Children, and whose accounts have moved
to Interactive Investor, voting should now be
undertaken in line with the terms and conditions
of your new account provider.
If you hold shares through a share platform or
other nominee, the Board would encourage you
to contact these organisations directly as soon
as possible to arrange for you to submit votes in
advance of the AGM. Alternatively, The Association
of Investment Companies’ (‘AIC’) website
theaic.co.uk/how-to-vote-your-shares has information
on how to vote your shares if you hold them via one
of the major platforms. The following link will also
take you through to the AIC website where there is
information on how your platform can help you attend
the AGM in person theaic.co.uk/aic/ready-to-invest/
shareholder-voting/attending-an-agm.
Outlook
Our mission is to provide our investors with the
opportunity to participate in an extraordinary wave
of scientific and technological innovation and
identify businesses that are not only at the forefront
of that wave but have the entrepreneurial skills
and scalability to translate innovation into outsized
financial returns. We recognise that this requires
a patient conviction and a readiness to accept
short-term volatility in return for exceptional reward
in the long term.
The Board and Managers continue to believe that
the EWIT portfolio consists of companies with good
economic foundations as well as excellent future
potential. Moreover, there are increasing signs
that we are at the top of the interest rate cycle and
the reduction in risk appetite that we have seen
recently is starting to unwind. While we cannot be
complacent or assume that recovery in valuations
will be a straightforward or immediate process, we
see early signs of improvement.
While we cannot predict how long the current market
conditions will prevail, we remain convinced that
focusing on the fundamental strengths and potential
of the portfolio will ultimately prevail, and that a
return to more normalised monetary conditions after
decades of cheap money will, with time, reward
those who focus on genuine value rather than
chasing the latest short-term trends.
Henry CT Strutt
Chair
25 January 2024
Strategic report
Annual Report and Financial Statements 2023
14
Managers’ review
Douglas Brodie
Portfolio Manager
Svetlana Viteva
Deputy Portfolio
Manager
Luke Ward
Deputy Portfolio
Manager
When we conceived the investment philosophy
that sits behind Edinburgh Worldwide Investment
Trust (EWIT), we knew that our distinct growth
style wouldn’t succeed in all market conditions.
Nevertheless, the past three years have been
especially unpredictable and disappointing.
EWIT strives to understand how the world is
evolving, and which companies are best positioned
to benefit. That demands we look forward, remain
obsessed with the drivers of change and seek ideas
that can convert the possible into tangible long-term
commercial success. Bruising though recent years
have been, we believe that the lowering of growth
equity valuations for smaller capitalised firms is a
highly attractive foundation for thoughtful long-term
growth investing.
To us, the prospect of robust returns is more
attractive than at any time in recent memory.
The case for looking forward
Stock markets rise and fall but the benefits of
innovation accrue all around us. The opportunity
for innovation and tech-led progress is stronger
than ever. On many frontiers, entrepreneurs and
innovative companies are creating products and
services that will transform societal expectations.
These frontiers stretch from healthcare to
communications to computing and automation.
Much of this change is unaffected by the negative
influence of equity markets and the tighter funding
environment. It’s driven instead by structural shifts
and new combinations of technologies already
underway. We expect many of these advances to
appear within 5–10 years, but we’re equally excited
about possibilities beyond this timeframe.
15
Edinburgh Worldwide Investment Trust plc
Many of the companies with the greatest potential
to deliver change are ones the market is shunning.
They’re seen as reckless pre-profitable companies,
early in their lifecycle with the temerity to believe
that things can be different from how they’ve always
been. With the market reflexively punishing such
companies and aggressively discounting their
potential, those of us who believe in progress,
long-term relevance and human ingenuity have
become the contrarians.
Nevertheless, observing markets over many decades
suggests that such myopia risks missing out on where
the long-term returns will ultimately come from.
Be assured that the steady progress of human
ingenuity is very much alive and well. Stock markets
might not reflect this, but there are good reasons to
be bullish about how underlying change will coalesce
with future equity returns. We have every confidence
that the portfolio can meaningfully outperform over
the coming five years. In recognition of this, we have
been increasing our personal holdings in the Trust.
Portfolio update
We remain confident about the portfolio’s current
positioning, our long-term philosophy and our
companies’ ability to weather challenging times.
Nevertheless, tough periods such as the last few
years demand reflection: What could we have done
better? What have we missed? What parts of our
process and decision-making could be more robust?
Working with colleagues in Baillie Gifford’s
in-house Investment Risk team we’ve analysed the
long-run performance of the portfolio and examined
whether the relative sizes of groups of holdings have
impeded overall results. This process suggested two
areas we could improve:
• Reassessment of the risk-reward balance in larger
holdings that have already made good returns.
• Better management of smaller positioned holdings
that demands we balance patience against the
need for capital for ideas already executing well.
Making such tweaks won’t perfect the portfolio but
should increase the robustness of our process and
better protect against future underperformance.
In the last EWIT Interim report, we suggested that
the era of abundance and ‘free money’ was making
way for an era that rewarded better productivity
and business efficiency, taking account of the
pressures on businesses and the potential of high-
quality automation enabled by AI and developments
in software. Six months on, we are even more
convinced about the effect of these tools on the
portfolio in the coming years.
We’re already seeing benefits in companies that
have used the recent downturn to get leaner and
fitter while still staying true to their long-term growth
potential. We now have a better sense of how AI
might influence our holdings and open a new world
of efficiency. From generating new content to
creating more engaging and human-like customer
interfaces, the technology will make many tasks
quicker and easier. As these tools are so widely
available, we increasingly think of them as essential
to a business’s fundamental ability to compete.
Strategic report
Annual Report and Financial Statements 2023
16
In several portfolio companies, new AI capabilities
are driving opportunity. For example:
• CyberArk: the increased ability for AI to
impersonate humans is driving up corporate
spending on cybersecurity around user
identification.
• Axon: can now use AI to generate transcripts and
police case reports based on bodycam data.
• Upwork: the freelance marketplace has become
the go-to venue for accessing AI talent and sees
significant scope to package AI tools for its base
of freelancers across numerous areas.
• Chegg: the online tutoring company has pivoted
to AI, offering much higher personalisation and
content efficiency savings.
Our most challenging investment over the year
has been in Novocure, and in aggregate the
portfolio’s exposure to healthcare related names
has impacted performance. We have long seen a role
for Novocure’s novel tumour-treating technology to
expand beyond glioblastoma, a rare aggressive form
of brain cancer. While its attempts to prove this
technology in the treatment of late-stage ovarian
cancer patients were unsuccessful, the clinical
data in its pivotal trial in lung cancer was very
encouraging.
As detailed in the Interim Report, the data suggests
that the treatment works well when used with
cancer-fighting antibodies that have become the
backbone therapy in many types of cancer. Further
evidence is needed to establish the significance of
this development, but we remain enthused about
Novocure’s long-term opportunity. The recent
derating of its shares was driven by the setback in
the path to commercialising its lung cancer therapy,
without the market appreciating the long-term
importance of the technology.
Despite the challenging market environment,
several of our smaller holdings performed well
both commercially and in share price performance.
Demand for American Superconductor’s resilient
power systems grew strongly throughout 2023 as its
industrial and utility customers continue to grapple
with stabilising grid connections at greater scale and
an increasing mix of renewable generation sources.
Another anti-cancer pioneer, Nanobiotix, the
developer of radio-enhancing products to boost
radiotherapy, announced a partnership and licensing
deal with J&J for its main therapy, for head and neck
cancers, currently in late-stage clinical development.
We added to the Nanobiotix holding as it raised
equity to accelerate development.
With a streamlined product portfolio and a revamped
go-to-market approach, Digimarc has seen growing
success in the adoption of its product digitisation
technology. There has been particularly strong
demand for its products in the retail sector as well as
in recycling, where it holds the promise of disrupting
how sorting and recycling of plastic waste is done.
We acquired a new position in MP Materials, an
American miner of the rare earths neodymium and
praseodymium, which are used in high-strength
magnets for electric vehicles and wind turbines, as
well as a range of consumer, industrial and military
applications. These minerals could become much
more valuable as green technologies are rolled out
at scale, and the concentration of supply in China
means that customers could pay a premium for
those from a more geopolitically secure part of the
world. We’re also encouraged by MP’s efforts to
refine the minerals and make magnets itself. This
should allow it to capture substantially more value
than as raw material miners.
Most of the activity in the portfolio involved exiting
companies where the investment case was not
progressing as hoped, and ‘top-slicing’ or partly
selling off holdings in companies where we felt the
market was catching up on our view. We deployed
the resulting funds into other holdings where we felt
the market was not yet reflecting improvements in
growth and profitability.
Companies we’ve sold include Everbridge,
LendingTree, Splunk, Ceva, Adicet, PhenomeX,
Wayfair and Q2. We also sold Chinook Therapeutics
and Tabula Rasa as both received takeover
approaches (from Novartis and private equity
respectively). Notable reductions included Exact
Sciences, Blackline, Axon, Shockwave and
CyberArk. Notable additions were made to our
holdings in Oxford Nanopore, Sprout Social,
LiveRamp, Beam Therapeutics and Kingdee.
17
Edinburgh Worldwide Investment Trust plc
Some wider reflections on recent
performance
We have previously referred to the Company’s
portfolio of holdings as being in the eye of the
storm regarding recent stock market angst. Our
bias towards smaller, earlier-stage problem-solving
companies is deliberate but has proven to be deeply
counter to the market sentiment that has persisted
in the aftermath of the COVID-19 pandemic. Where
we believe our holdings offer long-term relevance
and transformational potential, the market has
demanded near-term predictability. Where we expect
our holdings to invest in and build their scale and
edge, the market has craved companies that are
delivering cash returns now. Where we feel optimistic
about innovation and future technological change,
the market seems skittish and skewed to a cynical
“believe it when I see it” mentality.
At the centre of this storm is the topic of time
horizons, the key variable that all investors must
factor in, but also the one where the differences
in approach are the widest. We view EWIT’s stock
investing time horizon as being one that dovetails
with its investments. We seek to identify special
innovative companies early and retain them as they
grow and thrive. It’s a strategy that at its core is about
special companies being built with the implicit belief
that this should translate into special investment
opportunities given time. To us, a 5–10 year time
frame is the minimum over which we base our
decisions, and in many cases, we think the rewards
of business building accrue over decades.
The dominant narrative in equity markets in the
post-COVID era has been the headwind of inflation
and the efforts of Central Banks to control it
through higher interest rates. As company-focused
investors who observe long term change across
many industries, we are often perplexed by the
broader financial market’s obsession with interest
rates and their flow through into discount rates used
to value equity cashflows. While central bank rates
impact the discount rates used in valuation models,
these moves have been within historical norms and
need some added context. Moreover, history shows
that small companies can still perform well in rising
interest rate environments.
Small caps can perform with rising rates
US Federal Funds Effective Rate
20221982 1987 1992 1997 2002 2007 2012 2017
●
Federal funds interest rate
Source:
Board of governors of the federal reserve systerm (US).
0%
4%
16%
12 34
56
12%
8%
Russell 2000 index return following Fed Fund
Rate Increase
Hike date
3 months
after
%
12 months
after
%
18 months
after
%
36 months
after
%
1 01/02/83 n/a 26.9 5.20 49.22
2 01/10/86 1.75 29.02 7.47 40.02
3 04/02/94 (2.54) (2.69) 16.85 47.57
4 30/06/99 (6.32) 14.32 7.06 1.71
5 30/06/04 (2.86) 9.45 15.88 48.00
6 15/12/15 (5.36) 22.63 17.55 9.14
Averages (3.07) 16.62 11.76 32.61
The key skill in high-growth, long-term investing
is understanding how a company’s cash flow is
likely to evolve over time, rather than precisely
estimating discount rates used in valuation models.
For earlier-stage companies, this means considering
a range of possible cash flow scenarios and the
probabilities of each.
The discount rate is just one input among many in
the process of valuation. Its importance tends to
be dwarfed by assumptions about long-term cash
flow growth rates. For Alnylam, it’s about assessing
the total market for gene silencing therapies. For
SpaceX, it’s appreciating potential demand curves
for lower cost space cargo and global satellite
internet through Starlink.
Strategic report
Annual Report and Financial Statements 2023
18
Put plainly, where our top performers are concerned,
huge commercial success over decades matters
far more than academic valuation debates at any
single moment. Our lived experience with our most
successful investments shows most returns come
from business growth, rather than from a re-rating
of valuation multiples. Even drastic compression
of multiples is unlikely to outweigh growth on the
scale we envisage.
So EWIT remains focused on long-term
opportunities, not short-term market obsessions.
We believe the problem-solvers we invest in can
transform industries over five-to-ten-year-plus time
horizons. Their immense commercial potential is far
more important than how we react to passing panics
over interest rates.
The key question is whether higher interest rates
fundamentally change the long-term growth
trajectories and cash flow potential for our holdings.
To answer that, we have thoroughly analysed the
portfolio’s resilience considering both financial
strength and stage of business development.
Overall, we believe the portfolio is well-positioned
across the spectrum: from profitable companies
generating cash flows today to earlier-stage
innovators with strong balance sheets that can
fund a path to profitability over the next two to
three years. The market is ignoring this financial
sustainability factor, indiscriminately punishing any
company that’s not profitable now, regardless of
capital resources or future prospects.
Our job at EWIT is to focus on secular technological
shifts where growth opportunities seem undiminished
or even accelerating – despite macro conditions.
Conversely, we limit cyclical exposures tied closely
to commodity industries or big-ticket capital
spending. While interest rates directly impact some
holdings like Zillow or IPG Photonics, their structural
advantages provide resilience.
So if rates alone don’t explain recent headwinds,
what does? We believe the extreme confluence
of pandemic, war, inflation and resulting policy
responses has taken its toll on investor psychology
and time horizons. The ability to earn reasonable
cash yields with less risk has pulled focus to the
near term.
This manifests in a bifurcated view of growth
stocks. Linear, predictable growth stories such as
Axon and CyberArk are rewarded. But longer-term
opportunities dependent on strategic progress such
as Ocado, Novocure and Oxford Nanopore get little
credit despite their huge potential.
While we recognise it’s highly subjective, we sense
that the tipping point between willing-to-extrapolation
and unwilling-to-postulate is around 18–24 months.
We take comfort from the observation that holdings
that have made material progress and boosted their
near-term commercial traction have been rewarded.
The price appreciation of Digimarc, and Exact
Sciences over the past year are strong examples
of this. Although an exaggerated focus on the
short-term currently blinkers the market, it’s far
from blind to progress, as evidenced.
Healing from the barrage of exogenous shocks
rather than rate changes per se will likely
restore longer-term thinking and risk appetites.
Encouragingly, some clouds over financial markets
already appear to be clearing.
19
Edinburgh Worldwide Investment Trust plc
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 investment 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 four times in a
twelve-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 team 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 team 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* %
Percentage of portfolio valued up to 5 times 35
Percentage of portfolio valued up to 6 times 73
Percentage of portfolio valued 6+ times 27
* Data reflecting period 1 November 2022 to 31 October 2023 to align with
the Company’s reporting period end.
In the year to 31 October 2023, the performance of
the private company portfolio has been relatively flat
on average, with a number of companies capitalising
on their successes and issuing new equity. 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 2022
176,669
Additions to existing holdings in the period 4,095
Investment revaluation gains in the period 16,286
Investment revaluation losses in the period (16,993)
Value of private company investments
as at 31 October 2023
180,057
Valuation movement %
Average movement in investee company securities price (1.1)
Average movement in investee company valuation (1.5)
Baillie Gifford – valuing
private companies
Strategic report
Annual Report and Financial Statements 2023
20
Review of
investments
A review of the Company’s
ten largest investments as
at 31 October 2023.
Space Exploration
Technologies
An aerospace and space
transportation company that
manufactures advanced rockets,
like the Falcon 9, and satellites,
like Starlink, that provides global
broadband services. We’re excited
by its pursuit of reduced launch
costs, thus opening avenues
for growth, such as tourism and
transportation. A clear segment
leader, it looks positioned to
capture an attractive share of
the growing space industry, while
Starlink may become the first
globally relevant utility.
Alnylam Pharmaceuticals
A biotechnology company with a
dominant position in therapeutic
gene silencing. Alnylam’s drugs are
designed to specifically bind and
destroy the mRNA of a targeted
gene, preventing it from making
its protein product. This adaptable
and repeatable process can be
applied to any gene, representing
a singularly powerful drug
development platform. Alnylam
is now increasingly targeting larger
disease populations, such as
haemophilia, alzheimer’s, diabetes,
hypertension and chronic heart
failure.
Geography USA
Valuation at
31 October 2023
£41,793,000
% of total assets 6.1%
Valuation at
31 October 2022
£67,286,000
% of total assets 7.7%
Net purchases/(sales)
in the year
(£5,676,000)
Geography USA
Valuation at
31 October 2023
£69,018,000
% of total assets 10.0%
Valuation at
31 October 2022
£62,861,000
% of total assets 7.2%
Net purchases/(sales)
in the year
Nil
© Science Photo Library/Alamy Stock Photo.© SpaceX.
Denotes private company investment.
21
Edinburgh Worldwide Investment Trust plc
Exact Sciences
A molecular diagnostic business
focused on cancer. Its main
product, Cologuard (a stool-based
test), is the US market-leading
non-invasive test for colorectal
cancer. The company has
ambitions beyond colon cancer
screening. It is pursuing a
‘pan-cancer continuum of
care’ strategy to develop and
commercialise tests across many
solid tumour cancers, from early
detection to post-treatment
monitoring. Success in these
would represent a rough doubling
in addressable markets.
PsiQuantum
A technology business building
the world’s first commercially
viable quantum computer. We
appreciate that its photonics-based
approach enables manufacturing
in a conventional silicon chip
foundry. Although at an early
stage, if successful, it unlocks
a new paradigm in computing
and allows previously intractable
problems to be tackled. Examples
include the simulation of materials
at the atomic level, a new
encryption standard, or complex
financial modelling.
Ocado
A grocery and technology
business which has pioneered the
use of highly automated fulfilment
for online grocery. This results
in retailer productivity gains,
improving margins in a sector
where efficiency is paramount.
Given the enduring structural
trend towards more grocery
shopping happening online and
Ocado’s strong competitive
position (bolstered by coming
next-generation technology),
we envisage substantial further
growth prospects from deepening
existing client relationships and
identifying new ones.
Geography UK
Valuation at
31 October 2023
£20,598,000
% of total assets 3.0%
Valuation at
31 October 2022
£20,917,000
% of total assets 2.4%
Net purchases/(sales)
in the year
Nil
Geography USA
Valuation at
31 October 2023
£19,935,000
% of total assets 2.9%
Valuation at
31 October 2022
£15,663,000
% of total assets 1.8%
Net purchases/(sales)
in the year
(£8,653,000)
Geography USA
Valuation at
31 October 2023
£30,802,000
% of total assets 4.5%
Valuation at
31 October 2022
£27,682,000
% of total assets 3.2%
Net purchases/(sales)
in the year
Nil
© Ocado. © Exact Sciences
Strategic report
Annual Report and Financial Statements 2023
22
© Oxford Nanopore.© AeroVironment.
AeroVironment
A robotics and defence business,
it manufactures small Unmanned
Aircraft Systems (UAS) used
by US military forces and allies,
to establish intelligence and
reconnaissance superiority.
We foresee UASs increasing
their share of military budgets.
AeroVironment is a segment
leader, its product edge cemented
by years of accumulated
knowledge and protected by
numerous patents. Its relationship,
and trusted supplier status, with
the US Federal Government are
additional advantages.
Oxford Nanopore
Technologies
A genetic sequencing business,
commercialising a sensitive
molecular sensor that can
‘read’ long strands of DNA.
Researchers are currently using
this to reveal unique scientific
insights and develop genomic-
related applications and clinical
diagnostics. ONT is differentiated
due to its pioneering of a low-
cost, decentralised model which
seeks to democratise DNA
sequencing. This could be pivotal
in transitioning the technology into
daily applications, significantly
increasing the addressable market.
Zillow
The dominant online portal
for US real estate, connecting
agents with purchasers and
sellers. Zillow’s reach at the
initial stages of property search
is enormous, and an entrenched
source of edge. It’s now focussing
on increasing the proportion of
transactions it directly engages in
by concentrating on the highest-
performing agents and introducing
additional value-added services.
We think this can meaningfully
increase revenue, which the
market under-appreciates.
Geography USA
Valuation at
31 October 2023
£18,771,000
% of total assets 2.7%
Valuation at
31 October 2022
£18,070,000
% of total assets 2.1%
Net purchases/(sales)
in the year
(£1,389,000)
Geography UK
Valuation at
31 October 2023
£18,801,000
% of total assets 2.7%
Valuation at
31 October 2022
£17,295,000
% of total assets 2.0%
Net purchases/(sales)
in the year
£5,869,000
Geography USA
Valuation at
31 October 2023
£19,460,000
% of total assets 2.8%
Valuation at
31 October 2022
£17,521,000
% of total assets 2.0%
Net purchases/(sales)
in the year
(£1,370,000)
23
Edinburgh Worldwide Investment Trust plc
STAAR Surgical
Designs and manufactures
Implantable Collamer Lenses
(‘ICL’) that are surgically placed
in the eye to correct refractive
eyesight errors. This approach
has fundamental advantages over
today’s prevailing laser treatment:
it is reversible, accessible to a
broader population, and has a
better safety profile. Now launched
in three continents, a vast
addressable market is available,
and we’re confident STAAR can
increase its penetration over the
coming years.
MarketAxess
Operates a global, all-to-all,
electronic trading platform where
institutional market participants
can buy and sell fixed-income
securities. The opportunity for
growth is significant as electronic
trading penetration, in fixed-
income securities, remains low,
and the bond market is expected
to experience growth in issuance.
MarketAxess seeks to increase
platform volumes by developing
customer numbers and utilising
algorithmic automation to unlock
larger value orders, historically a
hard-to-unlock area.
Geography USA
Valuation at
31 October 2023
£17,239,000
% of total assets 2.5%
Valuation at
31 October 2022
£23,688,000
% of total assets 2.7%
Net purchases/(sales)
in the year
(£3,141,000)
Geography USA
Valuation at
31 October 2023
£17,348,000
% of total assets 2.5%
Valuation at
31 October 2022
£30,984,000
% of total assets 3.5%
Net purchases/(sales)
in the year
Nil
Strategic report
Annual Report and Financial Statements 2023
24
Twenty largest holdings and
twelve month performance
Year to 31 October 2023
Name
Business
Country
Fair value
2023
£’000
% of
total
assets *
Absolute
†
performance
%
Relative
†
performance
%
Space Exploration
Technologies
#
Designs, manufactures and launches
advanced rockets and spacecraft
USA 69,018 10.0 9.8 14.7
Alnylam Pharmaceuticals Drug developer focussed on harnessing
gene silencing technology
USA 41,793 6.1 (30.5) (27.4)
PsiQuantum
#
Developer of commercial quantum
computing
USA 30,802 4.5 11.8 16.8
Ocado Online grocery retailer and technology
provider
UK 20,598 3.0 (1.5) 2.9
Exact Sciences Non-invasive molecular tests for early
cancer detection
USA 19,935 2.9 68.2 75.7
AeroVironment Small unmanned aircraft and tactical
missile systems
USA 19,460 2.8 18.9 24.2
Oxford Nanopore
Technologies
Novel DNA sequencing technology UK 18,801 2.7 (21.6) (18.2)
Zillow
#
US online real estate portal USA 18,771 2.7 11.3 16.2
STAAR Surgical Ophthalmic implants for vision correction USA 17,348 2.5 (44.0) (41.5)
MarketAxess Electronic bond trading platform USA 17,239 2.5 (16.2) (12.5)
Axon Enterprise Law enforcement equipment and
software provider
USA 17,223 2.5 33.5 39.4
Kingdee International
Software
Enterprise management software
provider
China 14,309 2.1 (23.4) (20.0)
Shine Technologies
(Illuminated Holdings)
#
Medical radioisotope production USA 14,029 2.0 (10.2) (6.2)
Appian Enterprise software developer USA 14,004 2.0 (23.7) (20.3)
Relativity Space
#
3D printing and aerospace launch
company
USA 12,858 1.9 56.0 62.9
Schrödinger Drug discovery and simulation software USA 12,656 1.8 (14.4) (10.6)
Sprout Social Cloud based software for social media
management
USA 11,692 1.7 (32.1) (29.1)
Upwork Online freelancing and recruitment
services platform
USA 11,241 1.7 (26.3) (23.0)
Astranis Space
Technologies
#
Communication satellite manufacturing
and operation
USA 10,713 1.5 2.7 7. 2
LiveRamp Marketing technology company USA 9,722 1.4 42.8 49.1
402,212 58.3
*
Total assets comprises all assets held less all liabilities other than liabilities in the form of borrowings.
†
Absolute and relative performance has been calculated on a total return basis over the period 1 November 2022 to 31 October 2023.
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 both lines of stock.
Denotes private company investment.
Source: Baillie Gifford/StatPro and relevant underlying index providers. See disclaimer on page 124.
Past performance is not a guide to future performance.
25
Edinburgh Worldwide Investment Trust plc
List of investments
as at 31 October 2023
Name
Business
Country
Fair value
2023
£’000
% of
total
assets
Fair value
2022
£’000
Space Exploration
Technologies
Series N Preferred
Designs, manufactures and launches
advanced rockets and spacecraft
USA 39,556 5.7 36,028
Space Exploration
Technologies
Series J Preferred
Designs, manufactures and launches
advanced rockets and spacecraft
USA 17,944 2.6 16,343
Space Exploration
Technologies
Series K Preferred
Designs, manufactures and launches
advanced rockets and spacecraft
USA 8,180 1.2 7,450
Space Exploration
Technologies
Class A Common
Designs, manufactures and launches
advanced rockets and spacecraft
USA 2,551 0.4 2,323
Space Exploration
Technologies
Class C Common
Designs, manufactures and launches
advanced rockets and spacecraft
USA 787 0.1 717
69,018 10.0 62,861
Alnylam
Pharmaceuticals
Drug developer focussed on harnessing
gene silencing technology
USA 41,793 6.1 67,286
PsiQuantum
Series C Preferred
Developer of commercial quantum
computing
USA 17,618 2.6 14,860
PsiQuantum
Series D Preferred
Developer of commercial quantum
computing
USA 13,184 1.9 12,822
30,802 4.5 27,682
Ocado Online grocery retailer and
technology provider
UK 20,598 3.0 20,917
Exact Sciences Non-invasive molecular tests for early
cancer detection
USA 19,935 2.9 15,663
AeroVironment Small unmanned aircraft and tactical
missile systems
USA 19,460 2.8 17,521
Oxford Nanopore
Technologies
Novel DNA sequencing technology UK 18,801 2.7 17,295
Zillow Class C US online real estate portal USA 17,429 2.5 15,632
Zillow Class A US online real estate portal USA 1,342 0.2 2,438
18,771 2.7 18,070
STAAR Surgical Ophthalmic implants for vision
correction
USA 17,348 2.5 30,984
MarketAxess Electronic bond trading platform USA 17,239 2.5 23,688
Axon Enterprise Law enforcement equipment and
software provider
USA 17,223 2.5 16,712
Strategic report
Annual Report and Financial Statements 2023
26
Name
Business
Country
Fair value
2023
£’000
% of
total
assets
Fair value
2022
£’000
Kingdee International
Software
Enterprise management
software provider
China 14,309 2.1 14,450
Shine Technologies
(Illuminated Holdings) Series
Convertible Loan Note
Medical radioisotope production USA 824 0.1 –
Shine Technologies
(Illuminated Holdings) Series
Convertible Promissory Note
Medical radioisotope production USA 3,295 0.5 –
Shine Technologies
(Illuminated Holdings)
Series C-5 Preferred
Medical radioisotope production USA 9,910 1.4 11,581
Shine Technologies
(Illuminated Holdings)
Series D-1 Preferred
Medical radioisotope production USA 0 0.0 869
14,029 2.0 12,450
Appian Enterprise software developer USA 14,004 2.0 12,247
Relativity Space
Series D Preferred
3D printing and aerospace
launch company
USA 8,753 1.3 5,193
Relativity Space
Series E Preferred
3D printing and aerospace
launch company
USA 4,105 0.6 3,178
12,858 1.9 8,371
Schrödinger Drug discovery and simulation software USA 12,656 1.8 8,793
Sprout Social Cloud based software for social
media management
USA 11,692 1.7 12,883
Upwork Online freelancing and recruitment
services platform
USA 11,241 1.7 15,249
Astranis Space Technologies
Series C Preferred
Communication satellite
manufacturing and operation
USA 9,889 1.4 9,638
Astranis Space Technologies
Series C Prime Preferred
Communication satellite
manufacturing and operation
USA 824 0.1 –
10,713 1.5 9,638
LiveRamp Marketing technology company USA 9,722 1.4 4,706
Genmab Antibody based drug development Denmark 9,197 1.3 18,474
PureTech Health IP commercialisation focused
on healthcare
UK 8,758 1.3 11,601
Progyny Fertility benefits management company USA 7,914 1.2 8,418
Snyk Series F Preferred
Security software UK 4,892 0.7 4,394
Snyk Ordinary Shares
Security software UK 2,919 0.5 1,989
7,811 1.2 6,383
Reaction Engines
Advanced heat exchange company UK 7,737 1.1 7,000
JFrog Software development tools
and management
Israel 7,664 1.2 9,128
BlackLine Enterprise financial software provider USA 6,957 1.0 13,625
Xero Cloud based accounting software for
small and medium-sized enterprises
New
Zealand
6,837 1.0 9,080
Pacira BioSciences Opioid free analgesics developer USA 6,759 1.0 14,419
Novocure Manufacturer of medical devices
for cancer treatment
USA 6,575 1.0 26,862
27
Edinburgh Worldwide Investment Trust plc
Name
Business
Country
Fair value
2023
£’000
% of
total
assets
Fair value
2022
£’000
Zai Lab HK Line Chinese bio-pharmaceutical
development and distribution company
China 6,448 0.9 6,131
IPG Photonics High-power fibre lasers USA 6,384 0.9 6,719
Avacta Group Affinity based diagnostic reagents
and therapeutics
UK 6,290 0.9 7,100
Lightning Labs
Series B Preferred
Lightning software that enables
users to send and receive money
USA 5,803 0.8 5,972
Fiverr Freelance services marketplace
for businesses
Israel 5,646 0.8 8,693
Doximity Online healthcare resource and
interactive platform developer
USA 5,624 0.8 5,534
ShockWave Medical Medical devices manufacturer USA 5,491 0.8 13,638
Epic Games
Video game platform and software
developer
USA 5,456 0.8 10,427
Echodyne Corp.
Series C-1 Preferred
Metamaterial radar sensors
and software
USA 5,303 0.8 6,676
CyberArk Software Cyber security solutions provider Israel 5,152 0.7 9,242
Chegg Online educational company USA 5,151 0.7 15,587
Genus Livestock breeding and technology
services
UK 4,960 0.7 5,931
Zuora Enterprise sales management software USA 4,765 0.7 5,219
Renishaw Measurement and calibration
equipment
UK 4,324 0.6 4,926
QuantumScape Solid-state batteries for electric
vehicles
USA 4,310 0.6 6,608
BillionToOne
Series C Preferred
Pre-natal diagnostics USA 3,788 0.6 3,706
BillionToOne
Promissory Note
Pre-natal diagnostics USA 412 0.1 434,273
4,200 0.7 437,979
Nanobiotix ADR Nanomedicine company focused
on cancer radiotherapy
France 4,182 0.6 1,846
Teladoc Telemedicine services provider USA 4,054 0.6 7,647
HashiCorp Cloud-computing infrastructure
provider
USA 4,008 0.6 –
American Superconductor Designs and manufactures power
systems and superconducting wire
USA 3,962 0.6 3,002
Beam Therapeutics Biotechnology company USA 3,849 0.6 4,459
Quanterix Ultra-sensitive protein analysers USA 3,751 0.5 2,014
Ceres Power Holding Developer of fuel cells UK 3,740 0.5 6,192
Ambarella Video compression and image
processing semiconductors
USA 3,618 0.5 4,637
Twist Bioscience Biotechnology company USA 3,543 0.5 7,770
Digimarc Digital watermarking technology
provider
USA 3,307 0.5 2,186
TransMedics Medical device company USA 3,293 0.5 2,438
MP Materials Rare earth materials company USA 3,236 0.5 –
Strategic report
Annual Report and Financial Statements 2023
28
Name
Business
Country
Fair value
2023
£’000
% of
total
assets
Fair value
2022
£’000
Trupanion Pet health insurance provider USA 3,136 0.5 8,102
New Horizon Health Cancer screening company China 3,123 0.5 1,365
AbCellera Biologics Antibody design and development
company
Canada 3,101 0.5 9,438
KSQ Therapeutics
Series C Preferred
Biotechnology target identification
company
USA 3,072 0.5 4,151
InfoMart Online platform for restaurant supplies Japan 3,020 0.5 4,387
Adaptimmune Therapeutics Cell therapies for cancer treatment UK 2,835 0.4 5,770
Sensirion Holding Manufacturer of gas and flow sensors Switzerland 2,768 0.4 4,463
Cardlytics Digital advertising platform USA 2,699 0.4 2,167
IP Group Intellectual property commercialisation UK 2,395 0.3 3,229
ITM Power Hydrogen energy solutions
manufacturer
UK 2,248 0.3 2,880
M3 Online medical database Japan 2,212 0.3 7,274
Tandem Diabetes Care Manufacturer of insulin pumps
for diabetic patients
USA 2,112 0.4 7,236
MonotaRO Online business supplies Japan 2,055 0.3 4,169
PeptiDream Peptide based drug discovery platform Japan 2,052 0.4 1,829
Rightmove UK online property portal UK 2,032 0.3 3,393
DNA Script
Series C Preferred
Synthetic DNA fabricator France 2,031 0.3 5,536
freee K.K. Cloud based accounting software for
small and medium-sized enterprises
Japan 1,778 0.3 2,231
Victrex High-performance thermo-plastics UK 1,751 0.3 2,101
Sutro Biopharma Biotechnology company focused on
next generation protein therapeutics
USA 1,701 0.2 4,779
EverQuote Commerce platform for small and
medium-sized enterprises
USA 1,632 0.2 1,221
C4X Discovery Holdings Rational drug design and optimisation UK 1,607 0.2 2,273
C4X Discovery Warrants Rational drug design and optimisation UK 0 0.0 –
1,607 0.2 2,273
Huya ADR A live game streaming platform China 1,592 0.2 993
Codexis Industrial and pharmaceutical enzyme
developer
USA 1,415 0.2 7,820
Ilika Discovery and development of novel
materials for mass market applications
UK 1,391 0.2 2,318
Graphcore
Series D2 Preferred
Specialised processor chips for
machine learning applications
UK 930 0.1 3,945
Graphcore
Series E Preferred
Specialised processor chips for
machine learning applications
UK 296 0.0 1,437
1,226 0.1 5,382
Stratasys 3D printer manufacturer USA 1,211 0.2 1,817
Cosmo Pharmaceuticals Therapies for gastrointestinal diseases Italy 1,044 0.2 1,688
Akili Interactive Digital medicine company USA 1,012 0.1 6,561
BASE Commerce platform for small
and medium-sized enterprises
Japan 889 0.1 1,087
29
Edinburgh Worldwide Investment Trust plc
Name
Business
Country
Fair value
2023
£’000
% of
total
assets
Fair value
2022
£’000
Catapult Group International Analytics and data collection
technology for sports teams
and athletes
Australia 848 0.1 823
Expensify Expense management software USA 787 0.1 4,077
Agora ADR Voice and video platform technology
provider
China 618 0.1 616
LivePerson Messaging tools for business and
customer interactions
USA 539 0.1 2,274
NuCana SPN ADR Next generation chemotherapy
developer
UK 470 0.1 1,065
Spire Global Satellite powered data collection
and analysis company
USA 320 0.0 1,083
Cellectis Genetic engineering for cell based
therapies
France 189 0.0 523
Cellectis ADR Genetic engineering for cell based
therapies
France 68 ≤0.1 0
257 0.0 523
Angelalign Technology Medical devices manufacturer China 50 ≤0.1 67
Chinook Therapeutics
(formerly Aduro
Biotechnology) CVR Line
Immunotherapy drug development USA 0 0.0 0
4D Pharma Microbiome biology therapeutics UK 0 0.0 0
4D Pharma Warrants Microbiome biology therapeutics UK 0 0.0 0
0 0.0 0
China Lumena New Materials
– Suspended
Mines, processes and manufactures
natural thenardite products
China 0 0.0 0
Total equities 671,300 97.6 872,804
Net liquid assets 16,686 2.4 6,589
Total assets* 687,986 100.0 879,393
*
Total assets comprises all assets held less all liabilities in the form of borrowings.
Denotes private company investment.
Listed
equities
%
Unlisted
securities
#
%
Net liquid
assets
%
Total
assets
%
31 October 2023 71.4 26.2 2.4 100.0
31 October 2022 79.2 20.1 0.7 100.0
Figures represent percentage of total assets.
#
Includes holdings in preference shares, ordinary shares and convertible promissory notes.
Strategic report
Annual Report and Financial Statements 2023
30
Geographical 2023
Sectoral 2023
3
4
5
2
6
8
1
1
2
3
5
Geographical
2023
%
2022
%
1 North America
71.2 71.7
USA
70.7 70.6
Canada
0.5 1.1
2 Europe
19.7 21.5
United Kingdom
14.2 13.5
Eurozone
2.4 1.8
Developed Europe
(non euro)
3.1 6.2
3 Asia
5.6 5.0
China
3.8 2.3
Japan
1.8 2.7
4 Australasia
1.1 1.1
New Zealand
1.0 0.1
Australia
0.1 1.0
5 Net liquid assets
2.4 0.7
Sectoral
2023
%
2022
%
1 Healthcare
36.2 43.2
2 Industrials
24.7 17.7
3 Information technology
24.5 24.7
4 Consumer discretionary
4.3 6.3
5
Communication
services
3.8 2.9
6 Financials
3.3 4.3
7 Materials
0.8 0.2
8 Net liquid assets
2.4 0.7
Distribution
of total assets
31
Edinburgh Worldwide Investment Trust plc
Distribution of total
assets
*
by industry
At 31 October 2023
Industry analysis Portfolio weightings
(relative to comparative index
†
)
*
Total assets comprises all assets held less all liabilities other than liabilities in the form of borrowings.
†
S&P Global Small Cap Index (in sterling terms). Weightings exclude industries where the Company has no exposure.
See disclaimer on page 124.
●
% of total assets
● % points overweight ●
% points underweight
18.4%
17.7%
16.3%
5.2%
4.8%
4.1%
3.6%
3.6%
3.1%
3.0%
2.9%
2.8%
2.8%
2.7%
2.4%
0.7%
0.6%
0.5%
0.5%
0.5%
0.5%
0.4%
0.3%
0.3%
0.2%
0.1%
16.9%
14.6%
16.6%
3.3%
-0.4%
-2.3%
3.3%
3.4%
0.7%
1.4%
0.6%
-0.1%
0.1%
1.0%
0.3%
0.0%
-0.9%
2.5%
-0.2%
-2.8%
-2.0%
-1.0%
-3.0%
-1.2%
-0.5%
-1.4%
2.4%
Net liquid assets
IT services
Entertainment
Trading companies and distributors
Chemicals
Semiconductors and
semiconductor equipment
Metals and mining
Interactive media and services
Insurance
Auto components
Diversified consumer services
Healthcare providers and services
Real estate management
and development
Electronic equipment, instruments
and components
Capital markets
Professional services
Food and staples retailing
Electrical equipment
Pharmaceuticals
Healthcare technology
Life sciences tools and services
Technology hardware, storage
and peripherals
Healthcare equipment and supplie
s
Software
Biotechnology
Aerospace and defence
Media
Strategic report
Annual Report and Financial Statements 2023
32
* The comparative index is the S&P Global Small Cap Index total return (in sterling terms).
†
Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
#
See disclaimer on page 124.
Past performance is not a guide to future performance.
Five year
summary
Five year total return performance
†
share price, net asset value and index*
(figures rebased to 100 at 31 October 2018)
20232018 2019 2020 2021 2022
Cumulative to 31 October
● NAV (after deducting
borrowings at fair value)
total return
†
● Share price
total return
†
● Comparative index*
total return
†
Source: LSEG and relevant underlying index providers
#
.
60
260
180
220
140
100
The following charts indicate
how Edinburgh Worldwide
has performed relative to its
comparative index
*
and the
relationship between share
price and net asset value
over the five year period to
31 October 2023.
(Discount)/premium to net asset value
(plotted on a monthly basis)
20232018 2019 2020 2021 2022
Years to 31 October
● Edinburgh Worldwide (discount)/premium
(after deducting borrowings at market value)
†
Source: Baillie Gifford/LSEG.
The (discount)/premium is the difference between Edinburgh Worldwide’s
quoted share price and its underlying net asset value (after deducting
borrowings at fair value).
(30%)
(20%)
10%
0%
(10%)
33
Edinburgh Worldwide Investment Trust plc
20232019 2020 2021 2022
Years to 31 October
● NAV (after deducting borrowings at
fair value) total return relative to the
comparative index
†
● Share price total return
†
Source: Baillie Gifford/LSEG and relevant underlying index providers
#
.
(60%)
(40%)
80%
60%
40%
20%
0%
(20%)
Relative annual net asset value and share price
total returns
†
(relative to the comparative index total return)
†
Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
#
See disclaimer on page 124.
Past performance is not a guide to future performance.
Annual net asset value and share price
total returns
†
2023
2019
2020 2021 2022
Years to 31 October
● NAV (after deducting borrowings
at fair value) total return
†
● Share price total return
†
Source: Baillie Gifford/LSEG.
(60%)
80%
60%
40%
20%
0%
(40%)
(20%)
Strategic report
Annual Report and Financial Statements 2023
34
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
†
The calculation of earnings per ordinary share is based on the revenue from ordinary activities after taxation and the weighted average number
of ordinary shares (excluding treasury shares) (see note 07 on page 103).
Past performance is not a guide to future performance.
Capital
At
31 October
Total
assets *
£’000
Borrowings
£’000
Shareholders’
funds *
£’000
NAV per
share (fair) *
p
NAV
per share
(book) *
p
Share
price
p
Premium/
(discount)
(fair) *
%
Premium/
(discount)
(book) *
%
2013 241,969 (29,823) 212,146 86.46 86.58 81.00 (6.3) (6.4)
2014 237,224 (30,862) 206,362 84.12 84.22 77.00 (8.5) (8.6)
2015 258,155 (30,799) 227,356 92.55 92.79 87.60 (5.3) (5.6)
2016 305,520 (36,908) 268,612 109.23 109.63 96.60 (11.6) (11.9)
2017 387,863 (35,024) 352,839 143.78 144.00 138.10 (3.9) (4.1)
2018 521,102 (48,628) 472,474 165.14 165.16 164.40 (0.5) (0.5)
2019 585,314 (48,596) 536,718 177.37 177.37 175.40 (1.1) (1.1)
2020 1,040,462 (48,728) 991,734 279.90 279.90 287.50 2.7 2.7
2021 1,407,507 (66,153) 1,341,355 331.03 331.03 319.50 (3.5) (3.5)
2022 879,393 (103,827) 775,566 197.70 197.70 172.60 (12.7) (12.7)
2023 687,986 (103,249) 584,737 151.06 151.06 124.80 (17.4) (17.4)
Revenue Gearing ratios
Year to
31 October
Income
£’000
Net return
after tax
£’000
Revenue
earnings per
ordinary
share
†
p
Dividend paid
and proposed
per ordinary
share (net)
p
Ongoing
charges *
%
Gearing *
%
Potential
gearing *
%
2013 1,987 823 0.34 0.40 0.99 8 14
2014 1,186 68 0.03 0.40 0.92 10 15
2015 1,106 (90) (0.04) Nil 0.93 10 14
2016 1,178 (61) (0.02) Nil 0.92 9 14
2017 1,268 149 0.06 Nil 0.87 9 10
2018 1,270 (497) (0.19) Nil 0.81 5 10
2019 1,229 (684) (0.23) Nil 0.75 7 9
2020 773 (1,479) (0.46) Nil 0.72 1 5
2021 827 (2,422) (0.62) Nil 0.66 2 5
2022 986 (1,976) (0.49) Nil 0.63 12 13
2023 1,077 (2,527) (0.65) Nil 0.70 14 18
Ten year
record
35
Edinburgh Worldwide Investment Trust plc
Cumulative performance (taking 2013 as 100)
At
31 October
Net asset
value per
share
(fair) *
Net asset
value total
return
(fair) *
Comparative
index
†#
Comparative
index total
return *
#
Share
price
Share
price total
return *
†
Retail
price
index
†
2013 100 100 100 100 100 100 100
2014 97 98 101 103 95 96 102
2015 107 108 105 109 108 109 103
2016 126 127 135 143 119 120 105
2017 166 168 153 165 170 172 109
2018 191 193 150 166 203 205 113
2019 205 207 158 177 217 218 115
2020 324 326 156 178 355 358 117
2021 383 386 208 242 394 398 124
2022 229 230 190 226 213 215 141
2023 175 176 178 216 154 155 150
Compound annual returns (%)
5 year (1.8%) (1.8%) 3.4% 5.5% (5.4%) (5.4%) 5.8%
10 year 5.7% 5.8% 5.9% 8.0% 4.9% 4.5% 4.1%
Ten year total return performance
*
Cumulative to 31 October
2023
2013 2015 2018 2020 20222014 20172016 2019 2021
● Share price total return
Source: LSEG and underlying data providers. See disclaimer on page 124.
All figures are total return (see Glossary of terms and Alternative Performance Measures on pages 130 to 132).
●
NAV total return
●
S&P Global Small Cap Index total return (in sterling terms)
0
500
200
100
300
400
* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
†
Source: LSEG and relevant underlying index providers. See disclaimer on page 124.
#
MSCI All Countries World Index (in sterling terms) until 31 January 2014, thereafter the S&P Global Small Cap Index (in sterling terms). The index data
has been chain linked to form one comparative index figure.
All per share figures have been restated for the five for one share split on 28 January 2019.
Past performance is not a guide to future performance.
Strategic report
Annual Report and Financial Statements 2023
36
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.
37
Edinburgh Worldwide Investment Trust plc
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.
Strategic report
Annual Report and Financial Statements 2023
38
Environmental, social and
governance engagement
The Company has given discretionary voting powers
to Baillie Gifford. The Managers vote against
resolutions they consider may damage shareholders’
rights or economic interests and report their actions
to the Board.
The Company believes that it is in the shareholders’
interests to consider environmental, social and
governance (‘ESG’) factors when selecting and
retaining investments and has asked the Managers
to take these issues into account. The Managers
do not exclude companies from their investment
universe purely on the grounds of ESG factors
but adopt a positive engagement approach
whereby matters are discussed with management
with the aim of improving the relevant policies and
management systems and enabling the Managers
to consider how ESG factors could impact
long-term investment returns. The Managers’
Statement of Compliance with the UK Stewardship
Code can be found on the Managers’ website:
bailliegifford.com. The Managers’ policy has been
reviewed and endorsed by the Board. The Managers,
Baillie Gifford & Co, are signatories to the United
Nations Principles for Responsible Investment.
By engaging with companies, the Managers seeks
to build constructive relationships with them, to
better inform our investment activities and, where
necessary, effect change within our holdings,
ultimately with the goal of achieving better returns
for our shareholders. The table on page 39 shows
the companies the Managers engaged with during
the 12 months to 31 October 2023. The three
examples on pages 40 and 41 demonstrate our
stewardship approach through constructive ongoing
engagement.
39
Edinburgh Worldwide Investment Trust plc
Engagements during the year to 31 October 2023 Environmental Social Governance
AbCellera Biologics
Adaptimmune Therapeutics
Alnylam Pharmaceuticals
C4X Discovery
Cellectis
Ceres Power Holding
Chegg
Exact Sciences
Fiverr
Ilika
IPG Photonics
ITM Power
Jfrog
Kingdee International Software
M3
MarketAxess
MP Materials
NuCana
Pacira BioSciences
Schrödinger
STAAR Surgical
TransMedics
Twist Bioscience
Xero
Zai Lab HK Line
Zuora
Strategic report
Annual Report and Financial Statements 2023
40
TransMedics
TransMedics is a commercial-stage medical
technology company that transforms organ
transplant therapy for end-stage organ failure
patients. We engaged twice with the business
in the first quarter of 2023.
Before the 2023 AGM, we contacted the company
for additional information regarding non-executive
director pay and to understand the rationale for a
time-based long-term incentive plan. In addition, we
noted concerns with the short-term vesting schedule
within the long-term incentive plan, where options
begin vesting one month following the grant. We
encouraged lengthening the vesting period.
Later, we had a video call with Jim Tobin, board
chair, Stephen Gordon, CFO, and Susan Goodman,
Vice President of HR, as part of the company’s
corporate governance roadshow. We saw this
as an opportunity to understand better how the
company thinks about executive and non-executive
compensation and provide feedback on where we
believe the approach could be improved to align with
what we consider best practice.
During the call, they explained that the company is
transitioning from a developmental to a commercial
phase. With that transition, they believe the corporate
governance and compensation approach will have
to evolve. We have observed similar evolutions with
other initially immature businesses in which we have
invested. They appeared receptive to our feedback
and open to continuing discussions to collaborate on
certain governance matters.
Kingdee International Software
Kingdee is a Chinese Enterprise Resource Planning
software business that has historically predominantly
served the growing small and medium business
(SMB) segment. We engaged with the company in
early 2023 to establish an initial ESG connection
and better understand its policies in this area.
We met with the person in charge of corporate
ESG execution and were pleased by this initial
introduction. The conversation increased our
conviction that Kingdee has a good approach to
ESG management, for example, implementing solid
data privacy risk mitigation measures. Also, we
learnt more about the company’s outlook for cloud
services in China. Management believes that the
government will increase the stringency of regulation
to encourage enterprises to upload more data to the
cloud. Utilising cloud storage for business-critical
data will become a habit for Chinese companies.
This should translate into a meaningful opportunity
for Kingdee. With a solid data security framework
and client-oriented service teams, Kingdee is
confident in its ability to execute against this.
Overall, learning about the potential opportunity
ahead of Kingdee was positive. Meanwhile, we look
forward to continuing the conversation, deepening
our understanding and possibly influencing the
business’s ESG policies.
41
Edinburgh Worldwide Investment Trust plc
ITM Power
ITM Power designs manufactures and sells polymer-
electrolyte membrane (PEM) electrolysers used to
create green hydrogen for energy production.
We met with the company in late 2022 to discuss
proposed changes to its long-term incentive plan.
This was prompted by a letter from the remuneration
committee chairwoman regarding proposed
changes and a request for feedback. We wanted
to understand the reason for the proposed changes
in metrics weightings and encourage improvements
to the ESG component.
During the call, Katherine Roe, the remuneration
committee chair, and Martin Green, the audit
committee chair, explained that the change was due
to an evolution of pay and a recognition that share
price alone is not an accurate reflection of corporate
performance. To reflect an increased focus on
revenue growth, which historically Management
has been unable to drive as quickly as hoped, it has
increased the weighting on revenue and removed the
gross margin metric. We raised whether removing
profitability (e.g. gross margin) was correct, given
that profitability should remain a long-term focus.
We also discussed the introduction of an ESG
performance metric into the long-term incentive plan.
Management is proposing a target of achieving an
MSCI ESG rating of AAA. ITM has been AA-rated for
the last two years, so we queried the stretch of this
target. We also questioned the reason for selecting
a third-party rating provider as the measure of good
ESG performance. They explained that this was
chosen to allow for an ‘objective’ and quantifiable
metric. We encouraged them to move away from
third-party rating service providers, consider how
ITM can make a difference, and then think about
setting meaningful, quantifiable targets relevant
to their business and broader ESG strategy.
The discussion was informative in our understanding
of the long-term incentive plan and the rationale for
changes. We hope our feedback has been taken on
board and hope to continue the dialogue.
Strategic report
Annual Report and Financial Statements 2023
42
Baillie Gifford
proxy voting
We believe that ‘active ownership’ of our clients’
holdings is as important as selecting the right
investments in the first instance. These guidelines
are aligned with our stewardship principles and
describe our approach to proxy voting and company
engagement, the key levers of active ownership,
often described as ‘stewardship’.
While these guidelines are intended to provide an
insight into how we approach voting on our clients’
behalf, it is important to note that we assess every
company individually. In voting, we will always
evaluate proposals on a case-by-case basis, based
on what we believe to be in the best long-term
interests of our clients, rather than rigidly applying
a policy.
A broad cross section of our investment staff
are involved in our ongoing work on stewardship.
In the same way that our investment approach is
based around empowered and independent teams,
our voting and engagement is led by the individual
investment teams. In keeping with our decentralised
and autonomous culture, our investment teams will,
on occasion, elect to vote differently on the same
general meeting resolutions. Where this happens,
we report accordingly in the proxy voting disclosure
on our website. We also have clear processes in
place to identify, prevent and manage potential
proxy voting related conflicts of interest to ensure
that in all cases the firm acts in the clients’ best
interest. Baillie Gifford’s firm-wide conflict of
interest disclosure is available on our website.
Prior to taking any voting action, we usually address
specific ESG concerns by engaging directly with the
company, using voting as an escalation mechanism
if we have not seen sufficient progress.
Company meeting record
Voting distribution
Number of meetings voted
with management
73
Number of meetings with at least
one against, withhold or abstain
27
Number of votes for 95
Number of votes against 4
Number of votes abstain/withhold 1
43
Edinburgh Worldwide Investment Trust plc
Strategic report
Annual Report and Financial Statements 2023
44
Business model
Business and status
Edinburgh Worldwide Investment Trust plc (‘the
Company’) is a public company limited by shares
and incorporated in Scotland. The Company is an
investment company within the meaning of section
833 of the Companies Act 2006 and carries on
business as an investment trust. Investment trusts
are UK public listed companies and their shares are
traded on the London Stock Exchange. They invest
in a portfolio of assets in order to spread risk. The
Company has a fixed share capital although, subject
to shareholder approval sought annually, it may
purchase its own shares or issue shares. The price
of the Company’s shares is determined, like other
listed shares, by supply and demand.
The Company has been approved as an investment
trust by HM Revenue & Customs subject to
the Company continuing to meet the eligibility
conditions. The Directors are of the opinion that the
Company has continued to conduct its affairs so as
to enable it to comply with the ongoing requirements
of section 1158 of the Corporation Tax Act 2010 and
the Investment Trust (Approved Company) (Tax)
Regulations 2011.
The Company is an Alternative Investment Fund for
the purposes of the UK Alternative Investment Fund
Managers Regulations.
Business review
Purpose
The Edinburgh Worldwide Investment Trust aims for
long term capital growth from a global portfolio of
initially immature entrepreneurial companies, typically
with a market capitalisation or valuation of less than
US$5 billion at time of initial investment, which are
believed to offer long term growth potential.
Objective and policy
Edinburgh Worldwide’s investment objective is the
achievement of long term capital growth by investing
primarily in listed companies throughout the world.
While the policy is global investment, the approach
adopted is to construct a portfolio through the
identification of individual companies which offer
long term growth potential, normally over at least a
five year horizon and which typically have a market
capitalisation of less than US$5 billion at the time of
initial investment. The portfolio is actively managed
and does not seek to track the comparative index
hence a degree of volatility against the index is
inevitable.
In constructing the equity portfolio a spread of risk
is achieved by diversifying the portfolio through
investment in:
• 75 to 125 companies;
• a minimum of 6 countries; and
• a minimum of 15 industries.
45
Edinburgh Worldwide Investment Trust plc
On acquisition, no holding shall exceed 5% of total
assets and no more than 15% of the Company’s
total assets will be invested in other listed investment
companies. No more than 10% of the Company’s
total assets will be invested in other pooled vehicles,
such as open ended funds.
Unlisted investments may be held. On acquisition
of any unlisted investment, the Company’s aggregate
holding in unlisted investments shall not exceed
25% of total assets. From time to time, fixed interest
holdings or non equity investments, may be held on
an opportunistic basis.
Derivative instruments are not normally used but,
in certain circumstances and with the prior approval
of the Board, their use may be considered either as
a hedge or to exploit an investment opportunity.
The Company recognises the long term advantages
of gearing and would seek to have a maximum
gearing level of 30% of shareholders’ funds in the
absence of exceptional market conditions.
Borrowings are invested when it is considered that
investment grounds merit the Company taking a
geared position. Gearing levels, and the extent of
gearing, are discussed by the Board and Managers
at every Board Meeting.
Culture and values
In the context of an externally managed investment
company with no employees, culture and values
are expressed by the Company’s Directors and the
service providers with whom shareholders and other
stakeholders interact, and through the relationships
between the Board and those service providers,
including the Managers. As noted in more detail in
the section 172 statement on pages 54 to 56 the
Board seeks to engage with its Managers and other
service providers in a collaborative and collegiate
manner, to provide clear and timely communication
to the market and shareholders and to maintain the
highest standards of business conduct.
Borrowings
At 31 October 2023, the Company had a five year
£100 million multi-currency revolving credit facility
with The Royal Bank of Scotland International Limited
with an expiry date of 9 June 2026 and a five year
£36 million multi-currency revolving credit facility with
National Australia Bank Limited with an expiry date
of 30 September 2024. At 31 October 2023 the
drawings were £30,437,000, US$77,150,000 and
€10,600,000 under the £100 million multi-currency
revolving credit facility. At 31 October 2022 the
drawings were £27,720,000, US$77,150,000 and
€10,600,000 under the £100 million multi-currency
revolving credit facility. There were no drawings
under the £36 million multi-currency revolving credit
facility at 31 October 2023 or 31 October 2022
(see note 10 on page 107 for the sterling equivalent
at each year end).
Strategic report
Annual Report and Financial Statements 2023
46
The Board uses key performance
indicators (KPIs) to measure
the progress and performance
of the Company over time when
discharging its duties as set out
on page 70. These KPIs are
established industry measures.
Share price, net asset value
and comparative index
†
total
returns
*
The total return is the return to
shareholders after reinvesting the
net dividend on the date that the
share price goes ex-dividend.
-40
0
40
80
120
● Net asset
value total
return*
● Share
price total
return*
● Comparative index
total return*
†
1 year 5 years 10 years
%
Share price premium/(discount)
*
As stock markets and share prices
vary, an investment trust’s share price
is rarely the same as its net asset value
(NAV). When the share price is lower
than the NAV per share it is said to be
trading at a discount. If the share price
is higher than the NAV per share, this
situation is called a premium.
● Average (discount)/premium*
of NAV to share price
over stated period to
31 October 2023
1 year 5 years10 years
%
-20
-15
-10
-5
0
Ongoing charges
*
Ongoing charges are 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 daily average
net asset value.
● Ongoing charges*
2013
2023
%
0.4
0.6
0.8
1.2
1.0
Key performance indicators
The Board also has regard to the total return of the Company’s principal comparative index (S&P Global Small
Cap Index total return (in sterling terms)) and considers the performance of comparable companies. Across
these measures, the Board looks for relative outperformance over the long term, while remaining mindful that
the nature of the investment policy and the growth characteristics of the portfolio investments may entail
periods of underperformance over the short and medium term.
*
Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 130 to 132.
†
MSCI All Countries World Index (in sterling terms) until 31 January 2014, thereafter the S&P Global Small Cap total return
(in sterling terms).
Past performance is not a guide to future performance.
47
Edinburgh Worldwide Investment Trust plc
Viability statement
In accordance with provision 31 of the UK Corporate
Governance Code, that the Directors assess the
prospects of the Company over a defined period, the
Directors have elected to do so over a period of five
years. The Directors continue to believe this period
to be appropriate as it is reflective of the longer term
investment strategy of the Company, and to be a
period during which, in the absence of any adverse
change to the regulatory environment and to the
favourable tax treatment afforded to UK investment
trusts, they do not expect there to be any significant
change to the current principal and emerging
risks facing the Company nor to the adequacy of
the mitigating controls in place. Furthermore, the
Directors do not reasonably envisage any change
in strategy or objectives or any events that would
prevent the Company from continuing to operate
over that period.
In considering the viability of the Company, the
Directors have conducted a robust assessment
of each of the Company’s principal and emerging
risks and uncertainties as detailed on pages 47
to 52 and in particular the impact of market risk
where a significant fall in the global equity markets
would adversely impact the value of the Company’s
investment portfolio. The Directors have also
considered the Company’s leverage and liquidity
in the context of the unsecured multi-currency
revolving credit facilities which are due to expire
in September 2024 and June 2026, the income
and expenditure projections and the fact that the
Company’s investments comprise mainly readily
realisable quoted equity securities which can be sold
to meet funding requirements if necessary. Specific
leverage and liquidity stress testing was conducted
during the year, including consideration of the risk
of further market volatility resulting from increasing
geopolitical tensions. The stress testing did not
indicate any matters of concern. The Company’s
primary third party suppliers, including its Managers
and Secretaries, Custodian and Depositary,
Registrar, Auditor and Broker, are not experiencing
significant operational difficulties affecting their
respective services to the Company. In addition, all
of the key operations required by the Company are
outsourced to third party service providers and it
is reasonably considered that alternative providers
could be engaged, at relatively short notice where
necessary.
Based on the Company’s processes for monitoring
operating costs, share price discount/premium,
the Managers’ compliance with the investment
objective, asset allocation, the portfolio risk profile,
leverage, counterparty exposure, liquidity risk,
financial controls and the continuing support of
shareholders, the Directors have concluded that
there is a reasonable expectation that the Company
will be able to continue in operation and meet its
liabilities as they fall due over the next five years
as a minimum.
Principal and emerging risks
As explained on page 74 here is an ongoing process
for identifying, evaluating and managing the risks
faced by the Company on a regular basis. The
Directors have carried out a robust assessment
of the principal and emerging risks facing the
Company, including those that would threaten its
business model, future performance, regulatory
compliance, solvency or liquidity. There have been
some changes to the principal risks during the
year reflecting the volatility of markets, economic
conditions and heightened geopolitical tensions
which have increased risk levels in some key areas.
A description of these risks and how they are being
managed or mitigated is set out on pages 48 to 52.
Strategic report
Annual Report and Financial Statements 2023
48
Investment and strategic risks
Investment
strategy risk
What is the risk?
Pursuing an investment
strategy to fulfil the
Company’s objective which
the market perceives
to be unattractive or
inappropriate, or the
ineffective implementation of
an attractive or appropriate
strategy, may lead to reduced
returns for shareholders
and, as a result, a decreased
demand for the Company’s
shares. This may lead to the
Company’s shares trading at
a widening discount to their
net asset value.
How is it managed?
To mitigate this risk, the Board
regularly reviews and monitors
the Company’s objective and
investment policy and strategy,
the investment portfolio
and its absolute and relative
performance, the level of
discount/premium to net asset
value at which the shares trade
and movements in the share
register and raises any matters
of concern with the Managers.
Current assessment of risk
This risk is increasing as the
market’s appetite for growth
stocks, typically held by the
Company, has decreased
during the recent period of
heightened macroeconomic
and geopolitical concern.
Financial
risk
What is the risk?
The Company’s assets
are listed and unlisted
securities and its principal
and emerging financial risks
therefore include market risk
(comprising currency risk,
interest rate risk and other
price risk), liquidity risk and
credit risk. An explanation
of those risks and how they
are managed is contained
in note 17 to the Financial
Statements on pages 110
to 116.
How is it managed?
The Board has, in particular,
considered the impact of
heightened market volatility
during recent months due to
macroeconomic factors such
as higher inflation and interest
rates and geopolitical concerns.
In order to oversee this risk,
the Board considers at each
meeting various metrics
including the composition and
diversification of the portfolio
by geographies, sectors and
capitalisation along with sales
and purchases of investments.
Individual investments are
discussed with the portfolio
manager together with general
views on the various investment
markets and sectors. A strategy
meeting is held annually.
Current assessment of risk
This risk is increasing due to
increased market volatility
as a result of heightened
macroeconomic and
geopolitical concerns.
Smaller
company
risk
What is the risk?
The Company has
investments in smaller,
immature companies which
are generally considered
higher risk as changes in their
share prices may be greater
and the shares may be harder
to sell. Smaller, immature
companies may do less well
in periods of unfavourable
economic conditions.
How is it managed?
To mitigate this risk, the Board
reviews the investment portfolio
at each meeting and discusses
the merits and characteristics
of individual investments with
the Managers. A spread of risk
is achieved by holding stocks
classified across at least fifteen
industries and six countries.
Current assessment of risk
Due to increased market
volatility resulting from
macroeconomic factors, share
prices may be subject to greater
volatility. Smaller companies
have been more significantly
affected by macro economic
factors and market sentiment.
Decreasing RiskIncreasing Risk No Change
49
Edinburgh Worldwide Investment Trust plc
Private
company
(unlisted)
investments
risk
What is the risk?
The Company’s risk is
increased by its investment
in private company securities.
These investments may be
more difficult to buy or sell,
assessment of their value
is more subjective than
for investments listed on a
recognised stock exchange
and their valuations may be
perceived to be more volatile
or out of date.
How is it managed?
To mitigate this risk, the Board
considers the private company
securities in the context of the
overall investment strategy and
provides guidance to the
Managers on the maximum
exposure to unlisted
investments. Valuations of
private companies are carried
out on a frequent basis by
the manager and updated
regularly for identified changes
in operational developments
or recent transactions in
shares. The Board reviews the
valuations in detail which are
carried out by a third party
valuation specialist, subject to
the Managers’ private company
valuation specialist input and
is also subject to external audit
scrutiny annually.
Current assessment of risk
Private company investment
valuation risk increases in
volatile markets and the
more difficult fundraising
environment and IPO conditions
increase overall investment
risk conditions for private
companies.
Discount
risk
What is the risk?
The discount/premium at
which the Company’s shares
trade relative to its net asset
value can change. The risk of
a widening discount is that
it may undermine investor
confidence in the Company.
How is it managed?
The Board monitors the level
of discount/premium at which
the shares trade and the
Company has authority to buy
back its existing shares or issue
shares (including authority to
sell shares held in treasury),
when deemed by the Board to
be in the best interests of the
Company and its shareholders.
Current assessment of risk
The Company’s discount
widened during the year. The
Company has been buying back
shares for treasury throughout
the financial year 2023.
Political and
associated
economic
financial risk
What is the risk?
The Board is of the view that
political change in areas in
which the Company invests
or may invest may have
practical consequences
for the Company.
How is it managed?
Political developments
are closely monitored
and considered by the
Board. It monitors portfolio
diversification by investee
companies’ primary location
and considers the potential for
negative impacts arising from
military action, trade barriers or
other political factors.
Current assessment of risk
This risk is increasing as
governments and consumers
around the world continue to
assess the impact of heightened
geopolitical tensions and
conflicts as well as volatile
macroeconomic economic
conditions.
Decreasing RiskIncreasing Risk No Change
Strategic report
Annual Report and Financial Statements 2023
50
Climate and
governance
risk
What is the risk?
Perceived problems on
environmental, social and
governance (‘ESG’) matters
in an investee company
could lead to that company’s
shares being less attractive to
investors, adversely affecting
its share price. In addition
to potential valuation issues
arising from any direct impact
of the failure to address
the ESG weakness on the
operations or management
of the investee company
(for example in the event
of an industrial accident or
spillage). Repeated failure
by the Managers to identify
ESG weaknesses in investee
companies could lead to the
Company’s own shares being
less attractive to investors,
adversely affecting its own
share price.
How is it managed?
This is mitigated by the
Managers’ strong ESG
stewardship and engagement
policies integrated into the
investment process which
includes the risk inherent in
climate change (see page 57),
and discussed regularly by
the Board with the Managers.
Further details of the Managers’
approach are set out on pages
36 and 37 and also on the
Managers’ website
bailliegifford.com/esg.
The Directors have considered
the impact of climate change on
the Financial Statements of the
Company and this is included
in note 1a to the Financial
Statements on page 98.
Current assessment of risk
The Investment Manager
continues to employ strong ESG
stewardship and engagement
policies.
Regulatory
risk
What is the risk?
Failure to comply with
applicable legal and
regulatory requirements
such as the tax rules for
investment trust companies,
the FCA Listing Rules and
the Companies Act could
lead to suspension of the
Company’s Stock Exchange
listing, financial penalties, a
qualified audit report or the
Company being subject to tax
on capital gains. Changes to
the regulatory environment
could negatively impact the
Company.
How is it managed?
To mitigate this risk, Baillie
Gifford’s Business Risk,
Internal Audit and Compliance
Departments provide regular
reports to the Audit and
Management Engagement
Committee on Baillie Gifford’s
monitoring programmes. Major
regulatory change could impose
disproportionate compliance
burdens on the Company.
In such circumstances
representation is made
to ensure that the special
circumstances of investment
trusts are recognised.
Shareholder documents and
announcements, including the
Company’s published Interim
and Annual Report and
Financial Statements, are
subject to stringent review
processes, and procedures are
in place to ensure adherence to
the Transparency Directive with
reference to inside information.
Current assessment of risk
All control procedures are
working effectively. There have
been no material regulatory
changes that have impacted the
Company during the year.
Decreasing RiskIncreasing Risk No Change
51
Edinburgh Worldwide Investment Trust plc
Custody and
depositary
risk
What is the risk?
Safe custody of the
Company’s assets may be
compromised through control
failures by the Depositary,
including breaches of cyber
security.
How is it managed?
To mitigate this risk, the Audit
and Management Engagement
Committee receives six monthly
reports from the depositary
confirming safe custody of the
Company’s assets held by the
custodian. Cash and portfolio
holdings are independently
reconciled to the custodian’s
records by the Managers who
also agree uncertificated
unlisted portfolio holdings to
confirmations from investee
companies. In addition, the
existence of assets is subject
to annual external audit and
the custodian’s assured internal
controls reports are reviewed
by Baillie Gifford’s business
risk department and a summary
of the key points is reported
to the Audit and Management
Engagement Committee and
any concerns investigated.
Current assessment of risk
All control procedures are
working effectively.
Operational
risk
What is the risk?
Failure of Baillie Gifford’s
systems or those of other
third party service providers
could lead to an inability to
provide accurate reporting
and monitoring or a
misappropriation of assets.
How is it managed?
To mitigate this risk,
Baillie Gifford has a
comprehensive business
continuity plan which facilitates
continued operation of the
business in the event of a
service disruption or major
disaster. The Audit and
Management Engagement
Committee reviews
Baillie Gifford’s Report on
Internal Controls and the
reports by other key third party
providers are reviewed by
Baillie Gifford on behalf of the
Board and a summary of the key
points is reported to the Audit
and Management Engagement
Committee and any concerns
investigated. The other key third
party service providers have
not experienced significant
operational difficulties affecting
their respective services to the
Company.
Current assessment of risk
All control procedures are
working effectively.
Decreasing RiskIncreasing Risk No Change
Strategic report
Annual Report and Financial Statements 2023
52
Leverage
risk
What is the risk?
The Company may borrow
money for investment
purposes (sometimes known
as ‘gearing’ or ‘leverage’).
If the investments fall in
value, any borrowings will
magnify the impact of this
loss. If borrowing facilities are
not renewed, the Company
may have to sell investments
to repay borrowings.
How is it managed?
To mitigate this risk, all
borrowings require the prior
approval of the Board and
leverage levels are discussed
by the Board and Managers
at every meeting. Covenant
levels are monitored regularly.
Details of the Company’s
current borrowing facilities and
drawings can be found in note
10 on page 107. The majority
of the Company’s investments
are in quoted securities that
are readily realisable. Further
information on leverage can
be found on page 116 and in
the Glossary of terms and
Alternative Performance
Measures on pages 130 to 132.
Current assessment of risk
No significant change in risk
level. The Company continues
to deploy gearing and has two
revolving credit facility loans
in place which expire in 2024
and 2026.
Cyber
security risk
What is the risk?
A cyber-attack on
Baillie Gifford’s network or
that of a third party service
provider could impact the
confidentiality, integrity
or availability of data and
systems.
How is it managed?
To mitigate this risk, the Audit
and Management Engagement
Committee review Reports on
Internal Controls published
by Baillie Gifford and other
third party service providers.
Baillie Gifford’s Business Risk
Department report to the Audit
and Management Engagement
Committee on the effectiveness
of information security controls
in place at Baillie Gifford and its
business continuity framework.
Cyber security due diligence
is performed by Baillie Gifford
on third party service providers
which includes a review of crisis
management and business
continuity frameworks.
Current assessment of risk
This risk is seen as increasing
due to recent indications that
the continuation of geopolitical
tensions could lead to cyber
attacks. Emerging technologies,
including AI, could potentially
increase information security
risks. In addition, service
providers operate a hybrid
approach of remote and office
working, thereby increasing the
potential of a cyber security
threat.
Emerging
risks
As explained on page 74 the Board has regular discussions on principal risks and uncertainties,
including any risks which are not an immediate threat but could arise in the longer term.
Decreasing RiskIncreasing Risk No Change
53
Edinburgh Worldwide Investment Trust plc
Strategic report
Annual Report and Financial Statements 2023
54
Promoting the success of the Company
(section 172 statement)
Under section 172 of the Companies Act 2006,
the directors of a company must act in the way
they consider, in good faith, would be most likely
to promote the success of the company for the
benefit of its members as a whole, and in doing
so have regard (amongst other matters and to the
extent applicable) to: a) the likely consequences
of any decision in the long term, b) the interests
of the company’s employees, c) the need to
foster the company’s business relationships with
suppliers, customers and others, d) the impact of
the company’s operations on the community and
the environment, e) the desirability of the company
maintaining a reputation for high standards of
business conduct, and f) the need to act fairly as
between members of the company.
In this context, having regard to the Company being
an externally-managed investment company with
no employees, the Board considers the Company’s
key stakeholders to be: its existing and potential new
shareholders; its externally-appointed Managers
and Secretaries (Baillie Gifford); other professional
service providers (corporate broker, registrar, auditor
and depositary); lenders; wider society and the
environment.
The Board considers that the interests of the
Company’s key stakeholders are aligned, in terms
of wishing to see the Company deliver sustainable
long-term growth, in line with the Company’s
stated objective and strategy, and meet the highest
standards of legal, regulatory, and commercial
conduct, with the differences between stakeholders
being merely a matter of emphasis on those
elements.
The Board’s methods for assessing the Company’s
progress in the context of its stakeholders’ interests
are set out below.
Stakeholder Why we engage How we engage and what we do
Shareholders Shareholders are, collectively, the
Company’s owners: providing them with a
return for their investment in accordance
with the Company’s investment policy and
objective is the reason for its existence.
The Board places great importance on communication with
shareholders. The Annual General Meeting provides the key
forum for the Board and Managers to present to shareholders
on the Company’s performance, future plans and prospects.
It also allows shareholders the opportunity to meet with the
Board and Managers and raise questions and concerns. The
Chair is available to meet with shareholders as appropriate.
The Managers meet regularly with shareholders and their
representatives, reporting their views back to the Board.
Directors also attend certain shareholder presentations, in order
to gauge shareholder sentiment first hand. Shareholders may
also communicate with members of the Board at any time by
writing to them at the Company’s registered office or to the
Company’s broker. These communication opportunities help
inform the Board when considering how best to promote the
success of the Company for the benefit of all shareholders over
the long term.
Baillie Gifford –
Managers and
Secretaries
The Company’s Board has delegated the
management of the Company’s portfolio,
and the administration of the Company’s
operations including fulfilment of regulatory
and taxation reporting requirements, to
Baillie Gifford. Baillie Gifford is therefore
responsible for the substantial activities of
the Company and has the most immediate
influence on its conduct towards the other
stakeholders, subject to the oversight and
strategic direction provided by the Board.
The Board seeks to engage with its Managers and Secretaries,
and other service providers, in a collaborative and collegiate
manner, encouraging open and constructive discussion and
debate, while also ensuring that appropriate and regular
challenge is brought and evaluation conducted. This approach
aims to enhance service levels and strengthen relationships with
the Company’s providers, with a view to ensuring the interests
of the Company’s shareholders are best served by keeping cost
levels proportionate and competitive, and by maintaining the
highest standards of business conduct.
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Edinburgh Worldwide Investment Trust plc
Stakeholder Why we engage How we engage and what we do
Portfolio
companies
As all of the Company’s operations are
conducted by third party professional
providers, it is the companies held in its
investment portfolio which have the primary
real-world impact in terms of social and
environmental change, both positively
and negatively, as well as generating,
through their commercial success, the
investment growth sought by the Company’s
shareholders. The investee companies
have an interest in understanding their
shareholders’ investment rationale in
order to assure themselves that long-term
business strategies will be supported.
The Board is cognisant of the need to consider the impact of
the Company’s investment strategy and policy on wider society
and the environment. The Board considers that its oversight
of environmental, social and governance (‘ESG’) matters is
an important part of its responsibility to all stakeholders. The
Board’s review of the Managers includes an assessment of
their ESG approach and its application in making investment
decisions. The Board regularly reviews Governance Engagement
reports, which document the Managers’ interactions with
investee companies on ESG matters (see pages 38 to 41).
Brokers The Company’s brokers provide an interface
between the Company’s Board and its
institutional shareholders.
The Company’s brokers regularly attend Board meetings, and
provide reports to those meetings, in order to keep the Board
apprised of shareholder and wider market sentiment regarding
the Company. They also arrange forums for shareholders to
meet the Chair, or other Directors, outwith the normal general
meeting cycle.
Registrars The Company’s registrars provide an
interface with those shareholders who hold
the Company’s shares directly.
The Company Secretaries liaise with the registrars to ensure the
frequency and accuracy of communications to shareholders is
appropriate, and monitor shareholder correspondence to ensure
that the level of service provided by the registrars is acceptable.
The Manager’s risk function reviews the registrars’ internal
controls report and reports on the outcome of this review to the
Audit and Management Engagement Committee.
Auditor The Company’s Auditor has a responsibility
to provide an opinion on whether the
Company’s financial statements as a whole
are free from material misstatement, as set
out in more detail in the Auditor’s Report to
the Members on pages 87 to 93.
The Company’s Auditor meets with the Audit and Management
Engagement Committee, in the absence of the Managers where
deemed necessary, and the Managers undertake to provide
all information requested by the Auditor in connection with
the Company’s annual audit promptly and to ensure that it is
complete and accurate in all respects.
Depositary and
Custodian
The depositary and custodian are
responsible for the safekeeping of the
Company’s financial instruments, as set
out in more detail on page 66.
The Depositary, the Board and Managers seek to engage with
the depositary and custodian in a collaborative and collegiate
manner, encouraging open and constructive discussion and
debate, while also ensuring that appropriate and regular
challenge is brought and evaluation conducted. This approach
aims to enhance service levels and strengthen relationships with
the Company’s providers, with a view to ensuring the interests
of the Company’s shareholders are best served by keeping cost
levels proportionate and competitive, and by maintaining the
highest standards of business conduct.
Lenders Lenders such as holders of debt instruments
(debentures, bonds and private placement
loan notes) and banks providing fixed
or revolving credit facilities provide the
Company’s gearing and have an interest in
the Company’s ongoing financial health and
viability.
The Company’s legal advisers review all legal agreements in
connection with the Company’s debt arrangements and advise
the Board on the appropriateness of the terms and covenants
therein. The Managers and Secretaries ensure that the
frequency and accuracy of reporting on, for example, covenant
certification, is appropriate and that correspondence from the
lenders receives a prompt response.
AIC/industry peers The Association of Investment Companies
(‘AIC’) and the Company’s investment
trust industry peers have an interest in the
Company’s conduct and performance, as
adverse market sentiment towards one
investment trust can affect attitudes towards
the wider industry.
The Company is a member of the AIC, and the Directors and/
or the Managers and Secretaries (as appropriate) participate in
technical reviews, requests for feedback on proposed legislation
or regulatory developments, corporate governance discussions
and/or training.
Strategic report
Annual Report and Financial Statements 2023
56
Stakeholder Why we engage How we engage and what we do
Investment
platforms
Investment platforms provide an interface
with shareholders who invest in the
Company indirectly.
The Managers liaise with the various investment platforms on
strategies for improving communications with the Company’s
shareholders who hold their shares via these platforms. An
annual timetable of key dates is published on the Company’s
website, for the ease of reference of such shareholders.
Wider society and
the environment
No entity, corporate or otherwise, can
exist without having an influence on the
society in which it operates or utilising the
planet’s resources. Through its third-party
relationships, as noted above, the Company
seeks to be a positive influence and, in
circumstances where that is not possible,
to mitigate its negative impacts insofar as
is possible.
The Board and Managers’ interactions with the various
stakeholders as noted above form the principal forms of
direct engagement with wider society and in respect of the
environment (commercial, financial, and in terms of planetary
health and resources).
The Board recognises the importance of maintaining
the interests of the Company and its stakeholders
in aggregate, firmly front of mind in its key decision
making and Baillie Gifford & Co Limited, the
Company Secretaries are at all times available to
the Board to ensure that suitable consideration is
given to the range of factors to which the Directors
should have regard. In addition to ensuring that the
Company’s stated investment objective was being
pursued, key decisions and actions during the year
which required the Directors to have regard to
applicable section 172 factors included:
• as part of ongoing Board succession and
refreshment, Ms Jane McCracken and Dr Mary
Gunn were appointed to the Board on 1 November
2022 and 1 March 2023 respectively. These
appointments are consistent with the AIC Corporate
Governance Code principle that ‘a successful
company is led by an effective board, whose role
is to promote the long-term sustainable success of
the company, generating value for shareholders and
contributing to wider society’;
• the purchase of 5,190,382 of the Company’s own
shares into treasury at a discount to net asset
value, for subsequent reissue, in order to ensure
the Company’s shareholders found liquidity for
their shares when natural market demand was
insufficient, and on terms that enhance net asset
value for remaining shareholders; and
• between 1 November 2023 and 23 January
2024, the purchase of 1,960,933 shares, at a
discount, enhancing net asset value for continuing
shareholders.
Employees, human rights and community
issues
The Board recognises the requirement to provide
information about employees, human rights
and community issues. As the Company has no
employees, all its Directors are non-executive
and all its functions are outsourced, there are no
disclosures to be made in respect of employees,
human rights and community issues.
Gender representation
At 31 October 2023, the Board comprises seven
Directors, three male and four female. The Board’s
policy on diversity is set out on page 73.
Environmental, social and governance policy
Details of the Company’s policy on socially
responsible investment can be found under Corporate
Governance and Stewardship on page 76 with
more details of the Managers’ approach to socially
responsible investment set out under the
Baillie Gifford statement on stewardship set
out on pages 36 and 37.
The Company considers that it does not fall within
the scope of the Modern Slavery Act 2015 and it is
not, therefore, obliged to make a slavery and human
trafficking statement. In any event, the Company
considers its supply chains to be of low risk as its
suppliers are typically professional advisers.
A statement by the Managers under the Act has
been published on the Managers’ website at
bailliegifford.com.
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Edinburgh Worldwide Investment Trust plc
Climate change
The Board recognises that climate change poses
a serious threat to our environment, our society and
to economies and companies around the globe.
Addressing the underlying causes is likely to result
in companies that are high emitters of carbon facing
greater societal and regulatory scrutiny and higher
costs to account for the true environmental impact
of their activities. The Managers published the
Company’s first TCFD Report as of December 2022
which is available on the Company’s website at
edinburghworldwide.co.uk. This report is a means by
which the portfolio’s carbon footprint and exposure to
climate risk are measured and reported. Companies
disclosing their emissions and communicating
emissions plans will be a helpful place from which
to begin more useful discussions with management
teams, industry experts and regulators. Although this
can direct our efforts, the Managers believe that
carbon footprint metrics in isolation are unhelpful
and must be considered in the relevant context.
More significant is the Managers pursuit of long term
growth opportunities typically involves investment in
entrepreneurial, disruptive and technology-driven
businesses. These companies are often capital-light
with a low carbon footprint. More information on
climate change is available on the Company’s
website at edinburghworldwide.co.uk.
An external provider was engaged to map the carbon
intensity of Edinburgh Worldwide’s portfolio which
is estimated to be 97.8% lower than the index
(S&P Global Small Cap Index) and is based on the
68.4% of the value of the Company’s portfolio
which reports on carbon emissions and other carbon
related characteristics.
The Managers, Baillie Gifford & Co, are signatories
to the United Nations Principles for Responsible
Investment and the Carbon Disclosure Project
and are also members of the Asian Corporate
Governance Association and International Corporate
Governance Network.
Future developments of the Company
The outlook for the Company for the next 12 months
is set out in the Chair’s statement on page 13 and
the Managers’ review on page 18.
The Strategic report which includes pages 06 to 57
was approved by the Board of Directors and signed
on its behalf on 25 January 2024.
Henry CT Strutt
Chair
Governance
report
This Governance report, which includes
pages 59 to 85 outlines the Board’s
approach to the governance of your
Company. We believe that good governance
builds better outcomes and we are
committed to high standards of corporate
governance and transparency.
59
Edinburgh Worldwide Investment Trust plc
Directors and
fund managers
Henry Strutt
Chair
Appointed 2011
Henry Strutt was appointed Chair on 24 January
2017. He qualified as a Chartered Accountant in 1979,
following which he spent over twenty years with the
Robert Fleming Group, seventeen of which were in the
Far East, specialising in fund management, corporate
finance, and broking divisions. Currently, he is the Chair
of Taylor Maritime Investments and a non-executive
Director of New Waves Solutions Limited.
Relevant skills and experience – Henry has significant
experience in investment banking, fund management
and financial advisory sectors which provides a
strong basis for assessing, and where appropriate
challenging, the Manager, on the Company’s
performance, and in leading the Board in strategic
discussions.
Directors
Helen James
Director
Appointed 2010
Helen James is the Senior Independent Director.
She is Group Chief Operating Officer at Brunswick
Group and previously CEO of Investis Digital, a
leading digital corporate communications company.
She was also previously Head of Pan-European
Equity Sales at Paribas, having started her career
at HSBC James Capel as an investment analyst.
Relevant skills and experience – Helen has extensive
boardroom, investor and corporate communications
experience which serves as a foundation for
effective shareholder management, reputation
management, investor relations and board
effectiveness.
Governance report
Annual Report and Financial Statements 2023
60
Caroline Roxburgh
Audit and
Management
Engagement
Committee Chair
Appointed 2020
Caroline Roxburgh was appointed Chair of the
Audit and Management Engagement Committee on
2 February 2022. She is a Chartered Accountant
and was a partner at PricewaterhouseCoopers LLP
until 2016. She is the senior independent director
and chair of the audit committee of Montanaro
European Smaller Companies Trust plc. She is also a
non-executive director and is chair of the audit and
risk committees of Edinburgh International Festival
Society, The Royal Conservatoire of Scotland and
VisitScotland.
Relevant skills and experience – Caroline’s extensive
background as a senior Board advisor, Assurance
Partner, and Chartered Accountant brings valuable
expertise in business, finance, governance, and
risk management to the Board. This enables her
to effectively assess the Company’s viability, lead
discussions on the risk management framework and
risk appetite, contribute to the development of the
Company’s strategy and to chair the Company’s
Audit and Management Engagement Committee.
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Edinburgh Worldwide Investment Trust plc
Mary Gunn
Director
Appointed 2023
Mary Gunn is a scientist, lawyer and a C-level
executive in life science companies, including
previously at Pfizer, Crucell, ICON Plc, and Health
Decisions. She also served on the boards and
advisories of Brown University, University of
Edinburgh, Welwaze Medical, Modelis, Topia,
Lumiio, and SpotArt Foundation. She is currently
an Independent Director of Burst Diagnostics and
the President of RemRem LLC, a value creation
advisory for investors, banks, and entrepreneurs
in clinical research and life science.
Relevant skills and experience – Mary has vast
experience in drug and business development and
has acted in an advisory capacity for private equity
transactions/due diligence. Mary’s invaluable
pharmaceutical sector insights help the Board
to make informed decisions.
Jane McCracken
Director
Appointed 2022
Jane McCracken has spent her career working with
high growth technology businesses based in the USA
and UK as an entrepreneur, equity investor, board
member and advisor. Her experience covers a variety
of areas including enterprise software, e-commerce,
fintech, digital health and clinical research. Most
recently, she served as a Research Faculty member
and Entrepreneur-in-Residence at the Georgia
Institute of Technology in Atlanta, Georgia, USA and
currently is the Chief Growth Officer for Corps Team
LLC. She is also a non-executive director of Radyus
Research LLC.
Relevant skills and experience – Jane specialises in
scaling up venture-backed and public companies in
healthcare technology, software, and e-commerce
providing industry insights to the Board to help make
informed decisions.
Governance report
Annual Report and Financial Statements 2023
62
All Directors are members of the Audit and Management Engagement
Committee and the Nomination Committee.
Jonathan
Simpson-Dent
Director
Appointed 2020
Jonathan Simpson-Dent has spent the majority of
his career running entrepreneurial Private Equity
and listed mid-cap international growth businesses
across multiple sectors. He currently chairs three
Private Equity portfolio companies: Danx Carousel
Group, Andwis Group and Easby Group. He has also
previously worked at PricewaterhouseCoopers LLP,
McKinsey & Company and PepsiCo. He is a Fellow
of the Institute of Chartered Accountants.
Relevant skills and experience – Jonathan’s extensive
experience in privately financed ventures with a strong
focus on valuation coupled with his expertise in risk
management frameworks enables him to provide a
valuable contribution to the Board when assessing,
monitoring and valuing the Company’s private
company investments. In addition, his experience of
corporate governance and chairing boards has helped
to plan and support a smooth succession.
Mungo Wilson is Associate Professor of Finance
at Saïd Business School, University of Oxford and
a former solicitor. He is also an associate member
of the Oxford Man Institute of Quantitative Finance.
He is a non-executive director of Neo Risk Reap
Asia Equity Fund Limited, Embedded Insurance Inc.,
and Carbon Insurance Inc.
Relevant skills and experience – Mungo has
extensive experience in asset pricing, credit ratings
and mutual funds which is invaluable when
conducting rigorous investment analysis and
investment performance evaluations of the
Company.
Mungo Wilson
Director
Appointed 2016
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Edinburgh Worldwide Investment Trust plc
Douglas joined Baillie Gifford in 2001 and became
a partner in 2015. He is head of the Discovery
Team and has led the strategy since its inception.
He graduated BSc in Molecular Biology and
Biochemistry from the University of Durham in 1997
and attained a DPhil in Molecular Immunology from
the University of Oxford in 2001.
Svetlana joined Baillie Gifford in 2012. She is
an investment manager in the Discovery Team.
She is the lead manager for US Discovery Strategy.
She graduated BA in Economics and BA in Business
Administration from the American University in
Bulgaria in 2008, MSc in Investment Analysis in
2009 and PhD in Accounting and Finance in 2012,
both from the University of Stirling. She is a CFA
Charterholder.
Luke joined Baillie Gifford in 2012. He is an
investment manager in the Discovery Team.
Luke is also an investment analyst for the Private
Companies Team. He graduated MEng (Hons) in
Mechanical Engineering from the University of
Edinburgh in 2012.
Portfolio Managers
Kate Fox
Investment Manager
Appointed 2021
Douglas Brodie
Portfolio Manager
Svetlana Viteva
Deputy Portfolio
Manager
Luke Ward
Deputy Portfolio
Manager
Annual Report and Financial Statements 2023
64
65
Edinburgh Worldwide Investment Trust plc
The Directors present their
report together with the Financial
Statements of the Company for
the year to 31 October 2023.
Directors’ report
Corporate governance
The Corporate governance report is set out on pages
70 to 76 and forms part of this report.
Managers and Company Secretaries
Baillie Gifford is one of the largest investment trust
managers in the UK and currently manages twelve
investment trusts. Baillie Gifford also manages a listed
investment company and open ended investment
companies, together with investment portfolios on
behalf of pension funds, charities and other institutional
clients, both in the UK and overseas. Funds under the
management or advice of Baillie Gifford totalled over
£220.4 billion at 23 January 2024. Based in Edinburgh,
it is one of the leading privately owned investment
management firms in the UK, with 57 partners and a
staff of around 1,800.
Baillie Gifford & Co Limited, a wholly owned subsidiary
of Baillie Gifford & Co, has been appointed as the
Company’s Alternative Investment Fund Manager
(‘AIFM’) and Company Secretaries. Baillie Gifford & Co
Limited has delegated portfolio management services
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.
Baillie Gifford & Co is an investment management
firm formed in 1927 out of the legal firm
Baillie Gifford, WS, which had been involved in
investment management since 1908. Baillie Gifford
& Co Limited and Baillie Gifford & Co are both
authorised and regulated by the Financial Conduct
Authority.
The Investment Management Agreement between the
AIFM and the Company sets out the matters over which
the Managers have authority in accordance with the
policies and directions of, and subject to restrictions
imposed by, the Board. The Investment Management
Agreement is terminable on not less than three months’
notice. Compensation fees would only be payable
in respect of the notice period if termination by the
Company were to occur within a shorter notice period.
Governance report
Annual Report and Financial Statements 2023
66
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. Management fees are calculated and
payable quarterly. The Board is of the view that
calculating the fee with reference to performance
would be unlikely to exert a positive influence on
performance.
The Board considers the Company’s investment
management and secretarial arrangements on a
continuing basis and a formal review is conducted by
the Audit and Management Engagement Committee
annually. The Committee considered the following
topics amongst others in its review:
• investment process;
• investment performance;
• the quality of the personnel assigned to handle
the Company’s affairs;
• developments at the Managers, including staff
turnover;
• the administrative services provided by the
Secretaries;
• share price and discount; and
• charges and fees.
Following the most recent review the Audit and
Management Engagement Committee concluded
that the continuing appointment of Baillie Gifford
& Co Limited as AIFM and Secretaries, the delegation
of the investment management services to Baillie
Gifford & Co and the further sub-delegation of
dealing activity and transaction reporting to Baillie
Gifford Overseas Limited and Baillie Gifford Asia
(Hong Kong) Limited, on the terms agreed, is in the
interests of the Company and the shareholders as a
whole. This was subsequently approved by the Board.
Depositary
In accordance with the Alternative Investment
Fund Managers Directive, the AIFM must appoint a
Depositary to the Company. The Bank of New York
Mellon (International) Limited has been appointed
as the Company’s Depository.
The Depositary’s responsibilities include cash
monitoring, safe keeping of the Company’s financial
instruments, verifying ownership and maintaining
a record of other assets and monitoring the
Company’s compliance with investment limits and
leverage requirements. The custody function is
also undertaken by The Bank of New York Mellon
(International) Limited (the ‘Custodian’).
Directors
Information about the Directors including their
relevant experience can be found on pages 59 to 62.
All of the Directors are retiring at the Annual General
Meeting and, with the exception of Henry Strutt
who will be standing down from the Board at the
conclusion of the Annual General Meeting, all other
Directors are offering themselves for re-election.
Following formal performance evaluation, the Board
concluded that the performance of each of the
Directors continues to be effective and that
they remain committed to the Company. Their
contribution to the Board is greatly valued and the
Board recommends their re-election to shareholders.
The Board also considers that Henry Strutt and
Helen James remain independent having served
on the Board for more than nine years, as explained
on page 72.
Directors’ indemnity and insurance
The Company has entered into qualifying third party
deeds of indemnity in favour of each of its Directors.
The deeds, which were in force during the year to
31 October 2023 and up to the date of approval of
this report, cover any liabilities that may arise to a
third party, other than the Company, for negligence,
default or breach of trust or duty. The Directors
are not indemnified in respect of liabilities to the
Company, any regulatory or criminal fines, any costs
incurred in connection with criminal proceedings in
which the Director is convicted or civil proceedings
brought by the Company in which judgement is given
against him/her. In addition, the indemnity does not
apply to any liability to the extent that it is recovered
from another person.
The Company maintains Directors’ and Officers’
liability insurance.
Conflicts of interest
Each Director submits a list of potential conflicts of
interest to the Nomination Committee on an annual
basis. The Committee considers these carefully,
taking into account the circumstances surrounding
them and makes a recommendation to the Board
on whether or not the potential conflicts should be
authorised. Board authorisation is for a period of
one year.
Having considered the lists of potential conflicts
there were no situations which gave rise to a direct
or indirect interest of a Director which conflicted
with the interests of the Company.
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Edinburgh Worldwide Investment Trust plc
Dividends
The Company’s objective is that of generating
capital growth. Consequently, the Managers do not
invest in companies based on the level of income
they may payout as dividends.
As highlighted previously, the Board does not intend
to draw on the Company’s revenue reserve to pay or
maintain dividends. This year the net revenue return
per share was a deficit of £2,527,000. There is no
requirement under section 1158 of the Corporation
Tax Act 2010 to pay a dividend as the net revenue
return is below the level which would trigger the
requirement to pay a dividend hence the Board is
recommending that no final dividend be paid. Should
the level of underlying income increase in future
years, the Board will seek to distribute the minimum
permissible to maintain investment trust status by
way of a final dividend.
Share capital
Capital structure
The Company’s capital structure (excluding
treasury shares) as at 31 October 2023 consists of
387,094,641 ordinary shares of 1p each (2022 –
392,285,023 ordinary shares of 1p each), see
note 11. There are no restrictions concerning the
holding or transfer of the Company’s ordinary shares
and there are no special rights attached to any of
the shares.
Following a five for one share split on 28 January
2019, each ordinary share of 5p was replaced with
five new ordinary shares of 1p each.
Dividends
The ordinary shares carry a right to receive
dividends. Interim dividends are determined by the
Directors, whereas any proposed final dividend is
subject to shareholder approval.
Capital entitlement
On a winding up, after meeting the liabilities of the
Company, the surplus assets will be paid to ordinary
shareholders in proportion to their shareholdings.
Voting
Each ordinary shareholder present in person or by
proxy is entitled to one vote on a show of hands and,
on a poll, to one vote for every share held.
Major interests disclosed in the Company’s shares
Name
Ordinary 1p
shares held
at 31 October
2023
% of
issue
Saba Capital Management L.P. (indirect) 41,843,575 9.8
Saba Capital Management L.P. (direct) 626,524 0.2
JP Morgan Securities plc (direct) 19,718,124 5.1
In the period from 31 October 2023 to 23 January
2024, the Company was notified that Saba Capital
Management L.P. held 42,470,099 shares (626,524
direct and 41,843,575 indirect) (11.0% of shares in
issue as at 23 January 2024). Jefferies Financial
Group Inc held 19,057,534 shares (498,323
direct and 18,559,211 indirect) (4.90% of shares
in issue as at 23 January 2024). The JP Morgan
Securities plc holding had fallen below the minimum
notification threshold. There have been no other
changes to the major interests in the Company’s
shares intimated up to 23 January 2024.
Analysis of shareholders at 31 October
2023
Number of
shares held
2023
%
2022
Number of
shares held
2022
%
Institutions 34,365,190 8.9 41,260,591 10.5
Intermediaries 294,104,419 76.0 328,816,335 83.8
Individuals 14,434,384 3.7 15,099,313 3.9
Marketmakers 44,190,648 11.4 7,108,784 1.8
387,094,641 100.0 392,285,023 100.0
Annual General Meeting
The details of the next AGM, including the proposed
resolutions and information on the deadlines for
proxy appointments, can be found on pages 118
to 122. Shareholders who hold shares in their
own name on the main register will be provided
with a Form of Proxy. If you hold shares through a
share platform or other nominee, the Board would
encourage you to contact these organisations
directly as soon as possible to arrange for you to
vote at the AGM. The resolutions relating to the
renewal of the Directors’ authorities to issue and buy
back shares are explained in more detail below.
Issuance of shares
At the last Annual General Meeting, the Directors
were granted shareholders’ approval for a general
authority to issue shares, up to £1,290,529.81,
being approximately 33% of the nominal value of
the Company’s issued ordinary share capital as at
19 January 2023, and also an authority to issue
Governance report
Annual Report and Financial Statements 2023
68
shares or sell shares held in treasury for cash
on a non pre-emptive basis, up to £391,069.64,
representing approximately 10% of the nominal
value of the issued share capital of the Company
as at 19 January 2023 (without first offering such
shares to existing shareholders pro-rata to their
existing holdings).
During the year to 31 October 2023 no shares were
issued by the Company.
Resolution 11 in the Notice of Annual General
Meeting seeks a general authority for the Directors
to issue ordinary shares up to an aggregate nominal
amount of £1,270,941.24. This amount represents
approximately 33% of the Company’s total ordinary
share capital in issue at 23 January 2024, being the
latest practicable date prior to the publication of this
document, and meets institutional guidelines. No
issue of ordinary shares will be made pursuant to the
authorisation in Resolution 11 which would effectively
alter the control of the Company without the prior
approval of shareholders in general meeting.
Resolution 12, which is being proposed as a special
resolution, seeks to renew the Directors’ authority
to allot equity securities, or sell treasury shares, for
cash without having to offer such shares to existing
shareholders pro-rata to their existing holdings,
up to a total nominal amount of £385,133.71,
representing approximately 10% of the Company’s
total issued ordinary share capital as at 23 January
2024, being the latest practicable date prior to
publication of this document.
The Directors consider that the authorities proposed
to be granted by Resolutions 11 and 12 continue
to be advantageous when the Company’s shares
trade at a premium to net asset value and the level
of natural liquidity in the market is unable to meet
demand. The Directors do not intend to use this
authority to sell or issue ordinary shares on a non
pre-emptive basis at a discount to net asset value.
While the level of the authority being sought
is greater than the 5% recommended by the
Pre-Emption Group in their Statement of Principles
on disapplying pre-emption rights, it is specifically
recognised in the Statement of Principles that,
where an investment trust is seeking authority to
issue shares at a premium to the underlying net
asset value per share, this should not normally
raise concerns and the Directors consider the
greater flexibility provided by this authority to
be justified in the circumstances.
The authorities sought in Resolutions 11 and 12 will
continue until the conclusion of the Annual General
Meeting to be held in 2025 or on the expiry of 15
months from the passing of the resolutions, if earlier.
Such authorities will only be used to issue shares or
sell shares from treasury at a premium to net asset
value and only when the Directors believe that it
would be in the best interests of the Company to do
so. The Directors believe that the ability to buy-back
shares at a discount and re-sell them or issue new
shares at a premium are useful tools in smoothing
supply and demand.
20,619,987 shares were held in treasury as at
23 January 2024.
Market purchases of shares by the Company
At the last Annual General Meeting the Company
was granted authority to purchase up to 58,803,524
ordinary shares (equivalent to approximately 14.99%
of the ordinary shares in issue (excluding treasury
shares) as at 19 January 2023). This authority
expires at the forthcoming Annual General Meeting.
5,190,382 shares were bought back during the year
under review and 18,659,054 shares are held in
treasury. Between 1 November 2023 and 23 January
2024 a further 1,960,933 shares were bought back.
Share buy-backs may be made principally:
i. to enhance net asset value for continuing
shareholders by purchasing shares at a discount
to the prevailing net asset value; and
ii. to address any imbalance between the supply of
and the demand for the Company’s shares that
results in a discount of the quoted market price
to the published net asset value per share.
The Company may hold bought back shares in
treasury and then:
i. sell such shares (or any of them) for cash (or its
equivalent under the Companies Act 2006); or
ii. cancel the shares (or any of them).
Shares will only be re-sold from treasury at a
premium to net asset value per ordinary share.
Treasury shares do not receive distributions and the
Company is not entitled to exercise voting rights
attaching to them.
The Directors are seeking shareholders’ approval at
the Annual General Meeting to renew the authority
to purchase up to 57,731,542 ordinary shares in
issue (excluding treasury shares) as at 23 January
2024, being the latest practicable date prior to
the publication of this document (or, if less, the
number representing approximately 14.99% of
the Company’s ordinary shares in issue (excluding
treasury shares) at the date of passing of the
resolution, such authority to expire at the Annual
General Meeting of the Company to be held in 2025.
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Edinburgh Worldwide Investment Trust plc
In accordance with the Listing Rules, the maximum
price (excluding expenses) that may be paid on the
exercise of the authority must not exceed the higher
of:
i. 5% above the average closing price on the
London Stock Exchange of an ordinary share over
the five business days immediately preceding the
date of purchase; and
ii. an amount equal to the higher of the price of
the last independent trade of an Ordinary Share
and the highest current independent bid for an
Ordinary Share on the trading venue where the
purchase is carried out.
The minimum price (exclusive of expenses) that
may be paid will be the nominal value of an ordinary
share. Purchases of shares will be made within
guidelines established, from time to time, by the
Board. Your attention is drawn to Resolution 13 in
the Notice of Annual General Meeting.
Recommendation
The Directors consider each resolution being
proposed at the Annual General Meeting to be in the
best interests of the Company and its shareholders
as a whole and they unanimously recommend that
all shareholders vote in favour of them, as they
intend to do where possible in respect of their own
beneficial shareholdings.
Financial instruments
The Company’s financial instruments comprise
its investment portfolio, cash balances, bank
borrowings and debtors and creditors that arise
directly from its operations such as sales and
purchases awaiting settlement and accrued income.
The financial risk management objectives and
policies arising from its financial instruments and
the exposure of the Company to risk are disclosed
in note 17 to the Financial Statements.
Articles of Association
The Company’s Articles of Association may only be
amended by special resolution at a general meeting
of shareholders.
Disclosure of information to Auditor
The Directors confirm that so far as each of
the Directors is aware there is no relevant audit
information of which the Company’s Auditor is
unaware and the Directors have taken all the steps
that they ought to have taken as Directors in order
to make themselves aware of any relevant audit
information and to establish that the Company’s
Auditor is aware of that information.
Independent Auditor
The Auditor, Ernst & Young LLP, is willing to
continue in office and in accordance with section
489 and section 491(1) of the Companies Act
2006, resolutions concerning Ernst & Young LLP’s
reappointment and remuneration will be submitted
to the Annual General Meeting.
Post Balance Sheet events
The Directors confirm that there have been no post
Balance Sheet events which require adjustment of,
or disclosure in, the Financial Statements or notes
thereto up to 23 January 2024.
Greenhouse Gas Emissions and Streamlined
Energy and Carbon Report (‘SECR’)
All of the Company’s activities are outsourced
to third parties. The Company therefore has no
greenhouse gas emissions to report from its
operations, nor does it have responsibility for any
other emissions producing sources under the
Companies Act 2006 (Strategic report and Directors’
reports) Regulations 2013. For the same reasons
as set out above, the Company is a low energy user
under the SECR regulations and has no energy and
carbon information to disclose.
Bribery Act
The Company has a zero tolerance policy towards
bribery and is committed to carrying out business
fairly, honestly and openly. The Managers also adopt
a zero tolerance approach and have policies and
procedures in place to prevent bribery.
Criminal Finances Act 2017
The Company has a commitment to zero tolerance
towards the criminal facilitation of tax evasion.
On behalf of the Board
Henry CT Strutt
Chair
25 January 2024
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Annual Report and Financial Statements 2023
70
Compliance
The FRC has confirmed that AIC member companies
who report against the AIC Code will be meeting
their obligations in relation to the UK Code.
The Board confirms that the Company has complied
throughout the year under review with the relevant
provisions of the Code and the recommendations of
the AIC Code with the exception that the Company
does not have a separate internal audit function
as explained on page 78. Given that the Company
is an externally managed investment trust, the
Board considers the provisions relating to the role
of the chief executive and executive directors’
remuneration are not relevant.
The Board
The Board has overall responsibility for the
Company’s affairs. It has a number of matters
reserved for its approval including strategy,
investment policy, currency hedging, borrowings,
gearing, treasury matters, dividend and corporate
governance policy. A separate strategy session is
held annually. The Board also reviews the Financial
Statements, investment transactions, revenue
budgets and performance of the Company. Full and
timely information is provided to the Board to enable
it to function effectively and to allow Directors to
discharge their responsibilities.
The Board comprises seven Directors as at
31 October 2023 all of whom are non-executive.
Henry Strutt will not stand for re-election
at the next AGM.
The Chair, Henry Strutt, is responsible for organising
the business of the Board, ensuring its effectiveness
and setting its agenda.
The executive responsibilities for investment
management have been delegated to the Company’s
Alternative Investment Fund Manager (‘AIFM’),
Baillie Gifford & Co Limited, and in the context of
a Board comprising entirely non-executive Directors,
there is no chief executive officer. Helen James
is the Senior Independent Director.
Corporate
governance report
The Board is committed to
achieving and demonstrating
high standards of Corporate
Governance. This statement
outlines how the principles of the
2018 UK Corporate Governance
Code (the ‘Code’) which can be
found at frc.org.uk, and the relevant
principles of the Association
of Investment Companies (‘AIC
Code’) Code of Corporate
Governance issued in 2019 were
applied throughout the financial
year. The AIC Code provides a
framework of best practice for
investment companies and can
be found at theaic.co.uk.
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Edinburgh Worldwide Investment Trust plc
Board of Directors
Comprises independent
non-executive directors
Chair: Henry Strutt*
Senior Independent Director:
Helen James*
Audit and Management
Engagement Committee
Chair: Caroline Roxburgh
Purpose: The primary purpose of a Company’s Audit
and Management Engagement Committee is to
provide oversight of the financial reporting process,
the audit process, the Company’s system of internal
controls, compliance with laws and regulations and to
ensure that the Manager remains suitable to manage
the portfolio, the management contract is competitive
and reasonable for shareholders and that the
Company maintains appropriate administrative
and company secretarial support.
Nomination
Committee
Chair: Henry Strutt*
Purpose: The main purpose of the Nomination
Committee is to oversee Board recruitment and
succession planning as well as Board appraisals
including identifying training needs.
Third-party service providers appointed
by the Board
Alternative Investment Fund Manager and Company Secretary:
Baillie Gifford & Co Limited
(wholly owned subsidiary of Baillie Gifford & Co)
Dealing activity and transaction reporting:
Baillie Gifford Overseas Limited and
Baillie Gifford Asia (Hong Kong) Limited
Ernst & Young LLP
Auditor
The Bank of
New York Mellon
(International) Limited
Depositary
Computershare
Investor Services
PLC
Registrar
Numis Securities
Limited
Company Broker
*
Henry Strutt will stand down from the Board at the conclusion of the 2024 AGM and Jonathan Simpson-Dent will become Chair. Helen James will also
stand down as the Senior Independent Director at the conclusion of the 2024 AGM and Jane McCracken will become the Senior Independent Director.
Governance report
Annual Report and Financial Statements 2023
72
The Directors believe that the Board has a balance
of skills and experience which enable it to provide
effective strategic leadership and proper governance
of the Company. Information about the Directors,
including their relevant experience, can be found on
pages 59 to 62.
There is an agreed procedure for Directors to seek
independent professional advice if necessary at the
Company’s expense. No such advice was sought in
the year to 31 October 2023 or 31 October 2022.
Appointments to the Board
The terms and conditions of Directors’ appointments
are set out in formal letters of appointment which are
available for inspection on request.
Under the provisions of the Company’s Articles of
Association, a Director appointed during the year
is required to seek election by shareholders at the
next Annual General Meeting. In accordance with
the principals of the AIC Code all Directors will offer
themselves for re-election annually.
The reasons why the Board supports the re-elections
are set out on page 66.
Directors are not entitled to any termination
payments in relation to their appointment.
Chair and Directors’ tenure
The Nomination Committee has considered the
question of tenure for Directors and has concluded
that there should not be a set maximum time
limit for a Director or Chair to serve on the Board.
The Nomination Committee keeps under review
the balance of skills, knowledge, experience,
performance and length of service of the Directors
ensuring the Board has the appropriate combination
of skills and Company knowledge and experience.
This is balanced against the appointment of new
Directors having fresh ideas and perspective.
Independence of Directors
All of the Directors are considered by the Board to
be independent of the Managers and free of any
business or other relationship which could interfere
with the exercise of their independent judgement.
The Directors recognise the importance of
succession planning for company boards and review
the Board composition annually. The Board is of
the view that length of service will not necessarily
compromise the independence or contribution of
Directors of an investment trust company, where
continuity and experience can be a benefit to the
Board. The Board concurs with the view expressed
in the AIC Code that long serving Directors
should not be prevented from being considered
independent.
Henry Strutt and Helen James have both served on
the Board for more than nine years. All Directors
offer themselves for re-election annually. Following
formal performance evaluation the Board considers
that Henry Strutt and Helen James continue to be
independent in character and judgement and their
skills and experience were a significant benefit to
the Board.
Meetings
There is an annual cycle of Board meetings which
is designed to address, in a systematic way, overall
strategy, review of investment policy, investment
performance, marketing, revenue budgets, dividend
policy and communication with shareholders. The
Board considers that it meets sufficiently regularly
to discharge its duties effectively. The following
table shows the attendance record for the Board and
Committee Meetings held during the year, excluding
ancillary and sub-committee meetings. The Annual
General Meeting was attended by all the Directors in
office as at 7 March 2023.
Directors’ attendance at meetings
Board
Audit and
Management
Engagement
Committee
Nomination
Committee
Number of meetings 4 2 1
Henry Strutt 4 2 1
Mary Gunn* 3 1 1
Helen James 4 2 1
Caroline Roxburgh 4 2 1
Jonathan Simpson-Dent 4 2 1
Mungo Wilson 4 2 1
*
Appointed a Director on 1 March 2023.
73
Edinburgh Worldwide Investment Trust plc
Nomination Committee
The Nomination Committee consists of the whole
Board and the Chair of the Board is Chair of the
Committee except when the Committee is dealing
with the matter of succession to the Chairpersonship
of the Company. The Committee meets on an annual
basis and at such other times as may be required.
The Committee has written terms of reference
which include reviewing the composition of the
Board, identifying and nominating new candidates
for appointment to the Board, Board appraisal,
succession planning and training. The Committee
also considers whether Directors should be
recommended for re-election by shareholders. The
Committee is responsible for considering Directors’
potential conflicts of interest and for making
recommendations to the Board on whether or not
the potential conflicts should be authorised.
The Committee’s terms of reference are available
on request from the Company and on the Company’s
page on the Managers’ website:
edinburghworldwide.co.uk.
Board diversity
The Board recognises the benefits of diversity,
and the Company’s policy on diversity is referred
to in the Strategic report. The Board’s priority
in appointing new Directors to the Board is to
identify candidates with the best range of skills
and experience to complement existing Directors.
The Board will not display any bias for age, gender,
race, sexual orientation, religion, ethnic or national
origins or disability in considering the appointment
of its Directors. However, it is the Board’s policy
to ensure that all appointments are made on the
basis of merit against the specification prepared for
each appointment. Accordingly the Board does not
consider it appropriate to set diversity targets.
Board composition
In order to fulfil its obligations, the Board recognises
the importance of having a range of skilled and
experienced Directors, balancing the benefits of
length of service and knowledge of the Company
with the desirability of ensuring regular refreshment
of the Board. The Board reviews its composition
annually.
The following disclosures are provided in respect
of the FCA Listing Rules targets that: i) 40% of a
board should be women; ii) at least one senior role
should be held by a woman; and iii) at least one
board member should be from a non-white ethnic
background, as defined by the Office of National
Statistics criteria.
As an externally managed investment company
with no chief executive officer or chief financial
officer, the roles which qualify as senior under FCA
guidance are Chair and Senior Independent Director.
The Board also considers Audit Committee Chair to
represent a senior role within this context.
The Board currently complies in all respects with the
FCA Listing Rules targets.
Gender Number %
Senior
roles
Men 3 43 1
Women 4 57 2
Ethnic background Number %
Senior
roles
White 6 86 3
Asian/Asian British 1 14 –
Performance evaluation
An appraisal of the Chair, each Director and a
performance evaluation and review of the Board
as a whole and the Audit and Management
Engagement Committee was carried out during
the year. After considering and responding to an
evaluation questionnaire each Director had an
interview with the Chair. The Chair’s appraisal
was led by Helen James, the Senior Independent
Director. The appraisals and evaluations considered,
amongst other criteria, the balance of skills of the
Board, training and development requirements, the
contribution of individual Directors and the overall
effectiveness of the Board and its Committees.
Following this process it was concluded that the
performance of each Director, the Chair, the Board
and its Committees continues to be effective and
that each Director and the Chair remain committed
to the Company. For its appraisal during 2021, the
Board secured the services of Lintstock Limited,
Governance report
Annual Report and Financial Statements 2023
74
an independent corporate advisor which has no
other relationship with the Company or its Directors,
in accordance with the requirement for FTSE 350
companies to have Board evaluations externally
facilitated every three years. External facilitation will
next be considered for Board evaluations in 2024.
A review of the Chair’s and other Directors’
commitments was carried out and the Nomination
Committee is satisfied that they are capable of
devoting sufficient time to the Company. There
were no significant changes to the Chair’s other
commitments during the year.
Induction and training
New Directors are provided with an induction
programme which is tailored to the particular
circumstances of the appointee. During the year
briefings on industry and regulatory matters
were provided to the Board by the Managers and
Secretaries. Directors receive other relevant training
as necessary.
Remuneration
As all the Directors are non-executive, there is
no requirement for a separate Remuneration
Committee. Directors’ fees are considered by the
Board as a whole within the limits approved by
shareholders. The Company’s policy on remuneration
is set out in the Directors’ remuneration report on
page 81.
Audit and Management Engagement
Committee
The report of the Audit and Management
Engagement Committee is set out on pages 77
and 79.
Internal controls and risk management
The Directors acknowledge their responsibility
for the Company’s risk management and
internal controls systems and for reviewing their
effectiveness. The systems are designed to manage
rather than eliminate the risk of failure to achieve
business objectives and can only provide reasonable
but not absolute assurance against material
misstatement or loss.
The Board confirms that there is a continuing
process for identifying, evaluating and managing
the significant risks faced by the Company in
accordance with the FRC guidance ‘Guidance on
Risk Management, Internal Control and Related
Financial and Business Reporting’.
The practical measures in relation to the design,
implementation and maintenance of control policies
and procedures to safeguard the Company’s
assets and to manage its affairs properly, including
the maintenance of effective operational and
compliance controls have been delegated to the
Managers and Secretaries.
The Board oversees the functions delegated to the
Managers and Secretaries and the controls managed
by the AIFM in accordance with the Alternative
Investment Fund Managers Directive (as detailed
below). Baillie Gifford & Co’s Internal Audit and
Compliance Departments and the AIFM’s permanent
risk function provide the Audit and Management
Engagement Committee with regular reports on their
monitoring programmes. The reporting procedures
for these departments are defined and formalised
within a service level agreement. Baillie Gifford & Co
conducts an annual review of its system of internal
controls which is documented within an internal
controls report which complies with ISAE 3402 and
Technical Release AAF 01/06 – Assurance Reports
on Internal Controls of Service Organisations
made available to Third Parties. This report is
independently reviewed by Baillie Gifford & Co’s
Auditor and a copy is submitted to the Audit and
Management Engagement Committee.
A report identifying the material risks faced by
the Company and the key controls employed to
manage these risks is reviewed by the Audit and
Management Engagement Committee.
These procedures ensure that consideration is
given regularly to the nature and extent of risks
facing the Company and that they are being
actively monitored. Where changes in risk have
been identified during the year they also provide
a mechanism to assess whether further action is
required to manage these risks.
The Directors confirm that they have reviewed the
effectiveness of the Company’s risk management
and internal controls systems which accord with
the FRC guidance ‘Guidance on Risk Management,
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Edinburgh Worldwide Investment Trust plc
Internal Control and Related Financial and Business
Reporting’ and they have procedures in place to
review their effectiveness on a regular basis. No
significant weaknesses were identified in the year
under review and up to the date of this report.
The Board confirms that these procedures have
been in place throughout the Company’s financial
year and continue to be in place up to the date of
approval of this report.
To comply with the Alternative Investment Fund
Managers Directive, The Bank of New York Mellon
(International) Limited act as the Company’s
Depositary and Baillie Gifford & Co Limited as
its AIFM.
The Depositary’s responsibilities include cash
monitoring, safe keeping of the Company’s financial
instruments, verifying ownership and maintaining a
record of other assets and monitoring the Company’s
compliance with investment limits and leverage
requirements. The Depositary is liable for the loss of
financial instruments held in custody. The Depositary
will ensure that any delegate segregates the assets
of the Company. The Company’s Depositary also
acts as the Company’s Custodian. The Custodian
prepares reports on its key controls and safeguards
which are independently reviewed by KPMG LLP.
The reports are reviewed by Baillie Gifford’s Business
Risk Department and a summary of the key points is
reported to the Audit and Management Engagement
Committee and any concerns are investigated.
The Depositary provides the Audit and Management
Engagement Committee with a report on its
monitoring activities.
The AIFM has established a permanent risk
management function to ensure that effective risk
management policies and procedures are in place
and to monitor compliance with risk limits. The AIFM
has a risk management policy which covers the risks
associated with the management of the portfolio,
and the adequacy and effectiveness of this policy is
reviewed and approved at least annually. This review
includes the risk management processes and
systems and limits for each risk area.
The risk limits, which are set by the AIFM and
approved by the Board, take into account the
objectives, strategy and risk profile of the portfolio.
These limits, including leverage (see note 19 on
page 116), are monitored and the sensitivity of the
portfolio to key risks is undertaken periodically as
appropriate to ascertain the impact of changes
in key variables in the portfolio. Exceptions from
limits monitoring and stress testing undertaken
by Baillie Gifford’s Business Risk Department are
escalated to the AIFM and reported to the Board
along with any remedial measures being taken.
Going concern
In accordance with the Financial Reporting Council’s
guidance on going concern and liquidity risk, the
Directors have undertaken a rigorous review of the
Company’s ability to continue as a going concern.
The Company’s principal risks are market related
and include market risk, liquidity risk and credit
risk. An explanation of these risks and how they
are managed is set out on pages 47 to 52 and
contained in note 17 to the Financial Statements.
The Board has, in particular, considered the impact
of heightened market volatility over recent months
due to macroeconomic and geopolitical concerns,
but does not believe the Company’s going concern
status is affected.
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.
The Company’s primary third party suppliers,
including its Managers and secretaries, custodian
and depositary, registrar, auditor and broker, are
not experiencing significant operational difficulties
affecting their respective services to the Company.
Accordingly, the Financial Statements have been
prepared on the going concern basis as it is the
Directors’ opinion, having assessed the principal
and emerging risks and other matters set out in
the Viability statement on page 47 which assesses
the prospects of the Company over a period of five
years, that the Company will continue in operational
existence until 31 January 2025, which is for a
period of at least twelve months from the date of
approval of these Financial Statements.
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Relations with shareholders
The Board places great importance on
communication with shareholders. The Company’s
Managers communicate regularly with shareholders
and their representatives and report shareholders’
views to the Board. The Chair is available to meet
with shareholders as appropriate. Shareholders
wishing to communicate with any member of
the Board may do so by writing to them at the
Company’s registered office or through the
Company’s broker Numis Securities Limited
(see contact details on page 133).
The Company’s Annual General Meeting provides
a forum for communication with all shareholders.
The level of proxies lodged for each resolution
is announced at the meeting and is published on
the Company’s page of the Managers’ website
edinburghworldwide.co.uk subsequent to the
meeting. The notice period for the Annual
General Meeting is at least twenty working days.
Shareholders and potential investors may obtain
up-to-date information on the Company at
edinburghworldwide.co.uk.
Corporate governance and stewardship
The Company has given discretionary voting powers
to Baillie Gifford & Co. The Managers vote against
resolutions they consider may damage shareholders’
rights or economic interests and report their actions
to the Board.
The Board believes that it is in the shareholders’
interests to consider environmental, social and
governance (‘ESG’) factors, including climate
change, when selecting and retaining investments
and has asked the Managers to take these issues
into account as long as the investment objectives
are not compromised. The Managers do not
exclude companies from their investment universe
purely on the grounds of ESG factors but adopt a
positive engagement approach whereby matters
are discussed with management with the aim of
improving the relevant policies and management
systems and enabling the Managers to consider
how ESG factors could impact long term investment
returns. The Managers’ statement of compliance
with the UK Stewardship Code can be found on
the Managers’ website at bailliegifford.com. The
Managers’ policy has been reviewed and endorsed
by the Board. Baillie Gifford & Co Limited as the
Company’s Manager has considered the Sustainable
Finance Disclosures Regulation (‘SFDR’) and further
details can be found on page 128.
On behalf of the Board
Henry CT Strutt
Chair
25 January 2024
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Edinburgh Worldwide Investment Trust plc
The Audit and Management
Engagement Committee consists
of all current independent
Directors. With reference to the
guidance from the 2019 AIC Code
of Corporate Governance it is
considered appropriate for
Henry Strutt, the Chair, to be
a member of the Audit and
Management Engagement
Committee as he is a qualified
chartered accountant and
as such brings significant
financial experience to the
Committee. The members of
the Committee consider that
they have the requisite financial
skills and experience to fulfil the
responsibilities of the Committee.
Caroline Roxburgh is Chair
of the Committee.
Audit and management
engagement committee
report
The Committee’s authority and duties are clearly
defined within its written terms of reference
which are available on request from the Company
Secretaries and at edinburghworldwide.co.uk.
The terms of reference are reviewed annually.
The Committee’s effectiveness is reviewed on an
annual basis as part of the Board’s performance
evaluation process.
At least once a year the Committee meets with the
external Auditor without any representative of the
Managers being present.
Main activities of the Committee
The Committee met twice during the year, and the
external Auditor, Ernst & Young LLP, attended both
meetings. Baillie Gifford & Co’s Internal Audit and
Compliance Departments and the AIFM’s permanent
risk function provided reports on their monitoring
programmes for the meetings.
The matters considered, monitored and reviewed
by the Committee during the course of the year
included the following:
• the preliminary results announcement and the
Annual and Interim Reports;
• the Company’s accounting policies and practices;
• the regulatory changes impacting the Company;
• the fairness, balance and understandability of
the Annual Report and Financial Statements and
provide advice to the Board whether it provided
the information necessary for shareholders to
assess the Company’s performance, business
model and strategy;
• the effectiveness of the Company’s internal
control environment;
• appointment/reappointment, remuneration and
terms of engagement of the external Auditor;
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Annual Report and Financial Statements 2023
78
• whether the audit services contract should be put
out to tender;
• the policy on the engagement of the external
Auditor to supply non-audit services;
• the independence and objectivity of the external
Auditor and the effectiveness of the external audit
process;
• the need for the Company to have its own internal
audit function;
• internal controls reports received from the
Managers and Custodian;
• the terms of the Investment Management
Agreement, as described on pages 65 and 66 and
the continuing appointment of the Managers; and
• the arrangements in place within Baillie Gifford
& Co whereby their staff may, in confidence, raise
concerns about possible improprieties in matters
of financial reporting or other matters.
Internal audit
The Committee continues to believe that the
compliance and internal controls systems and the
internal audit function in place within the Investment
Managers provide sufficient assurance that a
sound system of internal control, which safeguards
shareholders’ investment and the Company’s assets,
is maintained. An internal audit function, specific to
the Company is therefore considered unnecessary.
Financial reporting
The Committee considers that the most significant
issue likely to affect the Financial Statements is
the existence and valuation of investments as they
represent 97.6% of total assets and the accuracy
and completeness of income from investments.
Unlisted investments
The Committee reviewed the Managers’ valuation
approach for investments in private companies (as
described on page 19) and approved the value of all
unlisted investments at 31 October 2023, following
a detailed review of the valuation of each investment
and relevant challenge where appropriate.
The Managers agreed the holdings in certificated
form to confirmations from the Company’s custodian
and holdings of uncertificated unlisted investments
were agreed to confirmations from the relevant
investee companies.
Listed investments
The majority of the investments are in quoted
securities and market prices are readily available
from independent external pricing sources. The
Committee reviewed the Managers’ Report on
Internal Controls which details the controls in place
regarding recording and pricing of investments and
the reconciliation of investment holdings to third
party data.
The Managers agreed the prices of all the listed
investments at 31 October 2023 to external
price sources and the holdings were agreed to
confirmations from the Company’s Custodian
or transfer agent.
Other matters
The Committee reviewed the Managers’ Report on
Internal Controls which details the controls in place
regarding completeness and accurate recording of
investment income. The accounting treatment of
each special dividend received or receivable during
the year are reviewed by the Managers as they arise.
The Committee considered the factors, including
increasing geopolitical tensions, that might affect
the Company’s viability over a period of five years
and its ability to continue as a going concern
until at least 31 January 2025, which is at least
twelve months from the date of approval of these
Financial Statements, together with reports from
the Managers on the cash position and cash flow
projections of the Company, the liquidity of
its investment portfolio, compliance with debt
covenants, availability of borrowing facilities, and
the Company’s ability to meet its obligations as they
fall due. The Committee also reviewed the Viability
Statement on page 47 and statement on Going
Concern on page 75. Following this assessment,
the Committee recommended to the Board the
appropriateness of the Going Concern basis in
preparing the Financial Statements and confirmed
the accuracy of the Viability Statement and
statement on Going Concern.
79
Edinburgh Worldwide Investment Trust plc
The Auditor confirmed to the Committee that the
investments at 31 October 2023 had been valued in
accordance with the stated accounting policies. The
value of all the listed investments had been agreed
to external price sources and the portfolio holdings
agreed to confirmations from the Company’s
Custodian. The value of unlisted investments had
been supported by valuation papers produced by
the Manager’s Private Companies Valuations Group
and portfolio holdings agreed to confirmation of
ownership obtained directly from the investee
Company.
The Managers and Auditor confirmed to the
Committee that they were not aware of any material
misstatements in the context of the Financial
Statements as a whole and that the Financial
Statements are in accordance with applicable law
and accounting standards.
Internal controls and risk management
The Committee reviewed the effectiveness of the
Company’s risk management and internal controls
systems as described on pages 74 and 75. No
significant weaknesses were identified in the year
under review.
External Auditor
To fulfil its responsibility regarding the independence
of the external Auditor, the Committee reviewed:
• the Auditor’s audit plan for the current year which
includes a report from the Auditor describing their
arrangements to manage auditor independence
and received confirmation of their independence;
and
• the extent of non-audit services provided by the
external Auditor. There were no non-audit fees in
the year to 31 October 2023.
To assess the effectiveness of the external Auditor,
the Committee reviewed and considered:
• the Auditor’s fulfilment of the agreed audit plan;
• feedback from the Secretaries on the performance
of the audit team; and
• the Audit Quality Inspection Report on
Ernst & Young LLP issued by the FRC’s
Audit Quality Review team.
To fulfil its responsibility for oversight of the external
audit process the Committee considered and
reviewed:
• the Auditor’s engagement letter;
• the Auditor’s proposed audit strategy;
• the audit fee; and
• a report from the Auditor on the conclusion of the
audit.
Ernst & Young LLP were appointed as the Company’s
Auditor at the Annual General Meeting held on
24 January 2017. The audit partner responsible for
the audit is to be rotated at least every five years
in accordance with professional and regulatory
standards in order to protect independence and
objectivity and to provide fresh challenge to the
business. The year ending 31 October 2023 is the
second year out of a maximum of five for the current
audit partner, Ahmer Huda.
Ernst & Young LLP have confirmed that they
believe they are independent within the meaning of
regulatory and professional requirements and that
the objectivity of the audit partner and staff is not
impaired.
Having carried out the review described above, the
Committee is satisfied that the Auditor remains
independent and effective for the purposes of this
year’s audit and, as such, has not considered it
necessary to put the audit services contract out to
tender.
There are no contractual obligations restricting the
Committee’s choice of Auditor.
Accountability and audit
The respective responsibilities of the Directors
and the Auditor in connection with the Financial
Statements are set out on pages 84 to 93.
On behalf of the Board
Caroline Roxburgh
Chair of the Audit and Management
Engagement Committee
25 January 2024
Governance report
Annual Report and Financial Statements 2023
80
Directors’
remuneration report
Statement by the Chair
The Directors’ Remuneration Policy is subject
to shareholder approval every three years or
sooner if an alteration to the policy is proposed.
The Remuneration Policy which is set out below
was last approved at the Annual General Meeting
in March 2023 and no changes are proposed
to the policy at the Annual General Meeting to
be held in 2024.
The Board reviewed the level of fees during the
year and following a review of the Directors’ time
commitment and the fees paid by comparable trusts
it was agreed that, with effect from 1 November
2023, the Chair’s fee would increase from £42,000
to £44,250, the Directors’ fees would increase from
£28,000 to £29,500. The additional fee for the
Audit and Management Engagement Committee
Chair and for the Senior Independent Director would
increase to £6,500 and £1,500 respectively. The
fees were last increased on 1 November 2022.
This report has been prepared in
accordance with the requirements
of the Companies Act 2006.
81
Edinburgh Worldwide Investment Trust plc
Directors’ remuneration policy
The Board is composed wholly of non-executive
Directors, none of whom has a service contract with
the Company. There is no separate remuneration
committee and the Board as a whole considers
changes to Directors’ fees from time to time.
Baillie Gifford & Co Limited, the Company
Secretaries, provide comparative information when
the Board considers the level of Directors’ fees.
The Board’s policy is that the remuneration of
Directors should be set at a reasonable level that is
commensurate with the duties and responsibilities
of the role and consistent with the requirement
to attract and retain Directors of the appropriate
quality and experience. The Board believes that
the fees paid to the Directors should reflect the
experience of the Board as a whole, be fair and
should take account of the level of fees paid by
comparable investment trusts. Any views expressed
by shareholders on the fees being paid to Directors
will be taken into consideration by the Board when
reviewing the Board’s policy on remuneration.
Non-executive Directors are not eligible for any
other remuneration or benefits apart from the
reimbursement of allowable expenses. There are
no performance conditions relating to Directors’
fees and there are no long term incentive schemes
or pension schemes. There is no notice period and
no compensation is payable on loss of office.
Limits on Directors’ remuneration
The fees for the non-executive Directors are
payable monthly in arrears and are determined
within the limit set out in the Company’s Articles of
Association which is currently £250,000 per annum
in aggregate. Any change to this limit requires
shareholder approval.
The basic and additional fees payable to Directors in
respect of the year ended 31 October 2023 and the
expected fees payable in respect of the year ending
31 October 2024 are set out in the table below.
The fees payable to the Directors in the subsequent
financial periods will be determined following an
annual review of the Directors’ fees.
Expected
fees for the
year ending
31 October
2024
£
Fees for
the year
ending
31 October
2023
£
Chair’s fee 44,250 42,000
Non-executive Director fee 29,500 28,000
Additional fee for Chair
of the Audit and Management
Engagement Committee
6,500 6,000
Additional fee for the Senior
Independent Director
1,500 1,000
Total aggregate annual fees that can
be paid to the Directors in any year
under the Directors’ Remuneration
Policy, as set out in the Company’s
Articles of Association
250,000 250,000
Governance report
Annual Report and Financial Statements 2023
82
Annual report on remuneration
An ordinary resolution for the approval of this report will be put to the members at the forthcoming Annual
General Meeting.
The law requires the Company’s Auditors to audit certain of the disclosures provided in this report.
Where disclosures have been audited, they are indicated as such. The Auditors’ opinion is included in the
Independent Auditors’ Report on pages 87 to 93.
Directors’ remuneration for the year (audited)
The Directors who served during the year received the following remuneration in the form of fees and
taxable benefits. This represents the entire remuneration paid to the Directors.
Name
2023
Fees
£
2023
Taxable
benefits *
£
2023
Total
£
2022
Fees
£
2022
Taxable
benefits *
£
2022
Total
£
Henry Strutt (Chair) 42,000 2,472 44,472 40,500 2,837 43,337
Caroline Roxburgh
†
(Audit and Management
Engagement Committee Chair)
34,000 176 34,176 31,454 418 31,872
Mary Gunn
#
18,667 32,833 51,500 – – –
Helen James 29,000 2,881 31,881 28,000 1,508 29,508
Jane McCracken
‡
28,000 45,802 73,802 – – –
Jonathan Simpson-Dent 28,000 2,445 30,445 27,000 3,322 30,322
Mungo Wilson 28,000 2,041 30,041 27,000 3,521 30,521
Donald Cameron
¶
9,871 92 9,963 28,546 – 28,546
217,538 88,742 306,280 182,500 11,606 194,106
*
Comprises expenses incurred by Directors in the course of travel to attend Board and Committee meetings.
†
Appointed as Audit and Management Engagement Committee Chair at the conclusion of the AGM held on 2 February 2022.
#
Appointed a Director on 1 March 2023.
‡
Appointed a Director on 1 November 2022.
¶
Retired 7 March 2023.
Annual percentage change in remuneration
This represents the annual percentage change in the entire remuneration paid to the Directors.
Name
% from
2022 to
2023
% from
2021 to
2022
% from
2020 to
2021
Henry Strutt (Chair) 2.6 18.7 (2.8)
Caroline Roxburgh (Audit and Management
Engagement Committee Chair)
7. 2 27.5 38.9
Mary Gunn* – – –
Helen James 8.0 18.0 (2.1)
Jane McCracken
†
– – –
Jonathan Simpson-Dent 0.4 21.3 38.9
Mungo Wilson (1.5) 22.1 (2.9)
*
Appointed a Director on 1 March 2023.
†
Appointed a Director on 1 November 2022.
83
Edinburgh Worldwide Investment Trust plc
Company performance
The following graph compares, for the ten financial
years ended 31 October 2023, the share price
total return (assuming all dividends are reinvested)
to Edinburgh Worldwide ordinary shareholders
compared to the total shareholder return on a
notional investment made up of shares in the
component parts of the FTSE All-Share Index. This
index was chosen for comparison purposes as it is
a widely used measure of performance for UK listed
companies. The Company’s comparative index is
provided for information purposes only.
Performance graph
(figures rebased to 100 at 31 October 2013)
*
MSCI All Countries World Index (in sterling terms) until 31 January
2014, thereafter the S&P Global Small Cap Index total return (in sterling
terms). The comparative index data has been chain linked to form one
comparative index figure. See disclaimer on page 124.
Past performance is not a guide to future performance.
Approval
The Directors’ Remuneration Report on pages 80
to 83 was approved by the Board of Directors and
signed on its behalf on 25 January 2024.
Henry CT Strutt
Chair
Cumulative to 31 October
20232013 2015 2018 2020 20222014 20172016 2019 2021
●
Edinburgh Worldwide
share price
Source:
Baillie Gifford/LSEG and relevant underlying index providers.
See disclaimer on page 124.
All figures are to
tal returns (see Glossary of terms and Alternative
Pe
rformance Measures on pages 130 to 132).
● FTSE All-Share
Index
● Comparative Index
(in sterling terms)
*
0
500
100
400
300
200
Directors’ interests (audited)
The Directors are not required to hold shares in the
Company. The Directors at the financial year end,
and their interests in the Company, were as shown
below. There have been no changes intimated in the
Directors’ interests up to 23 January 2023.
Name
Nature
of interest
Ordinary
shares held
at 31 October
2023
Ordinary
shares held
at 31 October
2022
Henry Strutt Beneficial 358,000 358,000
Mary Gunn* Beneficial – –
Helen James Beneficial 45,936 45,936
Jane McCracken Beneficial 13,365 –
Caroline Roxburgh Beneficial 28,812 20,488
Jonathan
Simpson-Dent
Beneficial 91,966 72,966
Mungo Wilson Beneficial 99,949 99,949
*
Mary Gunn purchased 5,610 ordinary shares on 23 November 2023.
Statement of voting at Annual General Meeting
At the Annual General Meeting held on 7 March 2023,
of the proxy votes received in respect of the Directors’
Remuneration Policy, 98.3% were in favour, 1.0%
were against and votes withheld were 0.7%. At the
Annual General Meeting held on 7 March 2023, of
the proxy votes received in respect of the Directors’
Remuneration Report, 98.2% were in favour, 1.3%
were against and votes withheld were 0.5%.
Relative importance of spend on pay
As the Company has no employees, the Directors
do not consider it appropriate to present a table
comparing remuneration paid to employees with
distributions to shareholders. The Directors’
remuneration for the year is set out above. There
were no distributions to shareholders by way of
dividend or share repurchases during the year
(2022 – none).
Directors’ service details
Name
Date of
appointment
Due date for
election/re-election
Henry Strutt 1 November 2011 Retiring, AGM in 2024
Mary Gunn 1 March 2023 AGM in 2024
Helen James 2 December 2010 AGM in 2024
Jane McCracken 1 November 2022 AGM in 2024
Caroline Roxburgh 1 February 2020 AGM in 2024
Jonathan
Simpson-Dent
1 February 2020 AGM in 2024
Mungo Wilson 8 December 2016 AGM in 2024
Governance report
Annual Report and Financial Statements 2023
84
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to ensure
that the Financial Statements comply with the
Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Under applicable laws and regulations, the Directors
are also responsible for preparing a Strategic
report, Directors’ report, a Directors’ remuneration
report and a Corporate governance statement that
complies with that law and those regulations.
The Directors have delegated responsibility to
the Managers for the maintenance and integrity
of the Company’s page of the Managers’ website.
Legislation in the United Kingdom governing
the preparation and dissemination of Financial
Statements may differ from legislation in other
jurisdictions. The work carried out by the Auditor
does not involve any consideration of these
matters and, accordingly, the Auditor accepts
no responsibility for any changes that may have
occurred to the Financial Statements since they
were initially presented on the website.
The Directors are responsible for preparing
the Annual Report and Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
Financial Statements for each financial year. Under
that law they have elected to prepare the Financial
Statements in accordance with applicable law and
United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice)
including FRS 102 ‘The Financial Reporting Standard
applicable in the UK and Republic of Ireland’.
Under company law the Directors must not approve
the Financial Statements unless they are satisfied
that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of
the Company for that period.
In preparing these Financial Statements, the
Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and accounting estimates that
are reasonable and prudent;
• state whether applicable United Kingdom
Accounting Standards have been followed, subject
to any material departures disclosed and explained
in the Financial Statements; and
• prepare the Financial Statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
Statement of Directors’
responsibilities
in respect of the Annual Report and the Financial Statements
85
Edinburgh Worldwide Investment Trust plc
Each of the Directors, who were in office at the
date of approval of the Financial Statements whose
names and functions are listed within the Directors
and management section, confirm that, to the best
of their knowledge:
• the Financial Statements, which have been
prepared in accordance with applicable law and
United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice)
including FRS 102 ‘The Financial Reporting
Standard applicable in the UK and Republic of
Ireland’, give a true and fair view of the assets,
liabilities, financial position and net return of the
Company;
• the Annual Report and Financial Statements taken
as a whole is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Company’s
performance, business model and strategy; and
• the Strategic Report includes a fair review of the
development and performance of the business
and the position of the Company, together with a
description of the principal risks and uncertainties
that it faces.
On behalf of the Board
Henry CT Strutt
Chair
25 January 2024
Financial
report
The Financial Statements for the
year to 31 October 2023 are set
out on pages 87 to 116 have been
prepared in accordance with
FRS 102 ‘The Financial Reporting
Standard applicable in the UK
and Republic of Ireland’.
87
Edinburgh Worldwide Investment Trust plc
Independent
auditor’s report
to the Members of Edinburgh Worldwide Investment Trust plc
Independence
We are independent of the Company in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to public
interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these
requirements.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation
of the directors’ assessment of the Company’s ability
to continue to adopt the going concern basis of
accounting included:
• Confirming our understanding of the Company’s
going concern assessment process by engaging
with the Directors and the Company Secretary
to determine if all key factors were considered
in their assessment. We considered whether
the factors taken account of in the Directors’
assessment addressed those matters which we
considered important.
• Inspecting the Directors’ assessment of going
concern, including the revenue forecast, for
the period to 31 January 2025 which is at least
12 months from the date the financial statements
were authorised for issue. The Company has
concluded that it is able to continue to meet its
ongoing costs as they fall due.
Opinion
We have audited the financial statements of
Edinburgh Worldwide Investment Trust PLC for
the year ended 31 October 2023 which comprise
the Income Statement, Balance Sheet, Statement
of Changes in Equity, Cash Flow Statement and
the related notes 1 to 19, including a summary
of significant accounting policies. The financial
reporting framework that has been applied in their
preparation is applicable law and United Kingdom
Accounting Standards including FRS 102 ‘The
Financial Reporting Standard applicable in the UK
and Republic of Ireland’ (United Kingdom Generally
Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the Company’s affairs
as at 31 October 2023 and of its loss for the year
then ended;
• have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the
audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Financial report
Annual Report and Financial Statements 2023
88
Overview of our audit approach
Key audit matters • Risk of incorrect valuation or
ownership of the investment portfolio
and the resultant impact on unrealised
gains/(losses).
• Risk of incomplete or inaccurate
revenue recognition, including the
classification of special dividends as
revenue or capital items in the Income
Statement.
Materiality • Overall materiality of £5.8m which
represents 1% of shareholders’ funds.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determine our audit scope for the
Company. This enables us to form an opinion on
the financial statements. We take into account
size, risk profile, the organisation of the Company
and effectiveness of controls, the potential impact
of climate change and changes in the business
environment when assessing the level of work to be
performed. All audit work was performed directly by
the audit engagement team.
Climate change
Stakeholders have been increasingly interested as
to how climate change will impact companies. The
Company has determined that the impact of climate
change could affect the Company’s investments and
the overall investment process. This is explained
on page 53 in the principal and emerging risks
section, which form part of the ‘Other information,’
rather than the audited financial statements. Our
procedures on these disclosures therefore consisted
solely of considering whether they are materially
consistent with the financial statements or our
knowledge obtained in the course of the audit or
otherwise appear to be materially misstated.
Our audit effort in considering climate change
was focused on the adequacy of the Company’s
disclosures in the financial statements as set out
in Note 1a and concluded that there was no further
material impact of climate change to be taken
into account as the investments are valued based
on market pricing as required by FRS 102. We
also challenged the Directors’ considerations of
climate change in their assessment of viability and
associated disclosures.
• Reviewing the factors and assumptions as
applied to the revenue forecast and the liquidity
assessment of the investments. We considered
the appropriateness of the methods used to
calculate the revenue forecast and the liquidity
assessment and determined, through testing
of the methodology and calculations, that the
methods inputs and assumptions utilised were
appropriate to be able to make an assessment
for the Company.
• Assessing the risk of breaching the debt
covenants as a result of a reduction in the value
of the Company’s portfolio. We calculated
and reviewed the Company’s compliance with
debt covenants as at year end, validated the
inputs used to the underlying information and
we performed reverse stress testing in order to
identify what factors would lead to the Company
breaching the financial covenants.
• Considering the mitigating factors that are
within the control of the Company. We reviewed
the Company’s assessment of the liquidity of
investments held and evaluated the Company’s
ability to sell those investments in order to cover
working capital requirements should revenue
decline significantly.
• Reviewing the Company’s going concern
disclosures included in the annual report to assess
whether the disclosures were appropriate and in
conformity with the reporting standards.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the Company’s ability
to continue as a going concern for a period to
31 January 2025 which is at least 12 months from
when the financial statements are authorised
for issue.
In relation to the Company’s reporting on how they
have applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to
in relation to the directors’ statement in the financial
statements about whether the directors considered
it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described
in the relevant sections of this report. However,
because not all future events or conditions can be
predicted, this statement is not a guarantee as to the
Company’s ability to continue as a going concern.
89
Edinburgh Worldwide Investment Trust plc
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Key observations
communicated to
the Audit Committee
Incorrect valuation or ownership
of the investment portfolio and
the resultant impact on unrealised
gains/(losses) (as described
on page 78 in the Report of the
Audit Committee and as per the
accounting policy set out on
pages 99 and 100).
The valuation of the investment
portfolio at 31 October 2023
was £671.3m (2022 – £872.8m)
consisting of quoted investments
with an aggregate value of £491.24m
(2022 – £696.13m) and unquoted
investments with an aggregate value
of £180.06m (2022 – £176.67m).
The valuation of the assets held in
the investment portfolio is the key
driver of the Company’s net asset
value and total return. Incorrect
investment pricing, or a failure to
maintain proper legal title to the
investments held by the Company
could have a significant impact on
the portfolio valuation and the return
generated for shareholders.
The fair value of quoted investments
is determined by reference to
bid value or the last traded price
depending on the convention of the
exchange on which the investment
is quoted.
Unquoted investments are valued at
fair value by the Directors following
a detailed review and appropriate
challenge of the valuations approved
by the Baillie Gifford Fair Value
Pricing Group. The unquoted
investment policy applies
methodologies consistent with
the International Private Equity
and Venture Capital Valuation
guidelines (‘IPEV’).
The valuation of the unquoted
investments, and the resultant
impact on the unrealised gains/
(losses), is the area requiring the
most significant judgment and
estimation in the preparation of the
financial statements and has been
classified as an area of fraud risk.
We have performed the following procedures:
We obtained an understanding of Baillie Gifford’s processes and
controls surrounding legal title and pricing of quoted and unquoted
investments by performing walkthrough procedures in which we
evaluated the design and implementation of controls.
For all quoted investments in the portfolio, we compared the market
prices and exchange rates applied to an independent pricing
vendor and recalculated the investment valuations at the year end.
We reviewed the prices for all quoted investments in the portfolio
to identify prices that have not changed within five business days
of year end to verify whether the listed price is a valid fair value.
Our testing did not identify any prices which had not changed
within the 5 days.
For the 14 unquoted investments held as at 31 October 2023 the
audit team or our valuations specialists reviewed and challenged
the valuations:
• Reviewed the valuation papers prepared by the Investment
Manager’s Private Companies Valuation Group and approved
by the Fair Value Pricing Group to gain an understanding of,
and assess the valuation methodologies and assumptions.
• Discussed the unquoted valuations with the Investment
Manager’s Private Companies Valuation Group to understand
their valuation approach and to challenge certain areas of their
approach, documentation and valuation conclusions;
• Assessed whether the valuations have been performed in line
with the valuation approaches as set out in UK GAAP and
the International Private Equity and Venture capital (‘IPEV’)
guidelines;
• Assessed the appropriateness of the data inputs including
foreign exchange rates and challenged the assumptions used
to support the valuations, where appropriate.
• Assessed other facts and circumstances, such as market
movement and comparative Company information, that have an
impact on the fair market value of the investments; and assessed
whether managements valuation is reasonable.
Where our testing identified instances where individual valuations
were outside the expected range, we held further discussions with
Baillie Gifford and the Audit Committee. In those discussions, we
discussed market trends and the valuation process and requested
further support for the valuation assumptions where appropriate.
For all purchases of unquoted investments and a sample of quoted
investments in the period, we obtained supporting documents from
Baillie Gifford and have agreed these to the purchase cost per the
accounting records and to the bank statements.
We tested the unrealised gains/losses on investments as at the
year end using the book-cost reconciliation.
We compared the Company’s investment holdings at 31 October
2023 to independent confirmations received directly from the
Company’s Depositary or from the investee Company.
The results of
our procedures
identified no material
misstatement in
relation to the risk of
incorrect valuation
or ownership of the
investment portfolio.
Financial report
Annual Report and Financial Statements 2023
90
Risk Our response to the risk
Key observations
communicated to
the Audit Committee
Incomplete or inaccurate revenue
recognition, including the
classification of special dividends
as revenue or capital items in the
Income Statement (per the Audit
Committee report set out on page
80 and the accounting policy set
out on page 105).
The total revenue for the year
to 31 October 2023 was £1.08m
(2022 – £0.99m), consisting
primarily of dividend income from
quoted equity investments. Included
in total revenue was revenue
received from Special Dividends of
£0.001m all of which were classified
as revenue in nature.
There is a risk of incomplete or
inaccurate recognition of revenue
through the failure to recognise
proper income entitlements or to
apply an appropriate accounting
treatment.
The Directors may be required to
exercise judgment in determining
whether income receivable in the
form of special dividends should be
classified as ‘revenue’ or ‘capital’ in
the Income Statement.
We have performed the following procedures:
We obtained an understanding of Baillie Gifford’s processes
and controls surrounding revenue recognition including the
classification of special dividends by performing walkthrough
procedures.
For all dividends, we recalculated the income by multiplying the
investment holdings at the ex-dividend date, traced from the
accounting records, by the dividend per share, which was agreed
to an independent data vendor. We agreed a sample to bank
statements and, where applicable, we also agreed the exchange
rates to an external source.
To test completeness of recorded income, we verified that
dividends had been recorded for each investee Company
held during the year with reference to investee Company
announcements obtained from an independent data vendor.
For all dividends accrued at the year end, we reviewed the
investee Company announcements to assess whether the dividend
obligation arose prior to 31 October 2023. We agreed the dividend
rate to corresponding announcements made by the investee
Company, recalculated the dividend amount receivable and
confirmed this was consistent with cash received as shown on post
year-end bank statements.
For all investments held during the year, we compared the type
of dividends paid with reference to an external data source to
identify those which were ‘special’. We confirmed 1 special dividend
was received during the year which was classified as revenue. We
tested the special dividend, by assessing the appropriateness of
classification as revenue and capital by reviewing the underlying
rationale of the distribution.
The results of
our procedures
identified no material
misstatement in
relation to the risk
of incomplete or
inaccurate revenue
recognition,
including incorrect
classification of
special dividends as
revenue or capital
items in the Income
Statement.
There have been no changes to the areas of audit focus raised in the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably
be expected to influence the economic decisions
of the users of the financial statements. Materiality
provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Company to be
£5.86 million (2022 – £7.76 million), which is 1%
(2022 – 1%) of shareholders’ funds. We believe that
shareholders’ funds provides us with a materiality
aligned to the key measure of the Company’s
performance.
Performance materiality
The application of materiality at the individual
account or balance level. It is set at an amount to
reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with
our assessment of the Company’s overall control
environment, our judgement was that performance
materiality was 75% (2022 – 75%) of our planning
materiality, namely £4.38m (2022 – £5.82m). We
have set performance materiality at this percentage
due to our past experience of the audit that indicates
a lower risk of misstatements, both corrected and
uncorrected.
91
Edinburgh Worldwide Investment Trust plc
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the strategic report and
the directors’ report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
• the strategic report and directors’ reports have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of
the Company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or directors’
report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept,
or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements and the part of the
Directors’ Remuneration Report to be audited
are not in agreement with the accounting records
and returns; or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information
and explanations we require for our audit.
Reporting threshold
An amount below which identified misstatements
are considered as being clearly trivial.
We agreed with the Audit Committee that we would
report to them all uncorrected audit differences in
excess of £0.29m (2022 – £0.39m), which is set at
5% of planning materiality, as well as differences
below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against
both the quantitative measures of materiality
discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information
included in the annual report other than the financial
statements and our auditor’s report thereon. The
directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not
cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information
and, in doing so, consider whether the other
information is materially inconsistent with the
financial statements or our knowledge obtained in
the course of the audit or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives
rise to a material misstatement in the financial
statements themselves. If, based on the work we
have performed, we conclude that there is a material
misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Financial report
Annual Report and Financial Statements 2023
92
Corporate Governance Statement
We have reviewed the directors’ statement in relation
to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to
the Company’s compliance with the provisions of the
UK Corporate Governance Code specified for our
review by the Listing Rules.
Based on the work undertaken as part of our audit,
we have concluded that each of the following
elements of the Corporate Governance Statement is
materially consistent with the financial statements or
our knowledge obtained during the audit:
• Directors’ statement with regards to the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on page 75;
• Directors’ explanation as to its assessment of the
Company’s prospects, the period this assessment
covers and why the period is appropriate set out
on page 47;
• Director’s statement on whether it has a
reasonable expectation that the group will be able
to continue in operation and meets its liabilities set
out on page 47;
• Directors’ statement on fair, balanced and
understandable set out on pages 84 and 85;
• Board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on pages 74 and 75;
• The section of the annual report that describes the
review of effectiveness of risk management and
internal control systems set out on page 47; and
• The section describing the work of the Audit
Committee set out on pages 77 to 79.
Responsibilities of Directors
As explained more fully in the directors’
responsibilities statement set out on page 86, the
directors are responsible for the preparation of the
financial statements and for being satisfied that they
give a true and fair view, and for such internal control
as the directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors
are responsible for assessing the Company’s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern
and using the going concern basis of accounting
unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
93
Edinburgh Worldwide Investment Trust plc
Explanation as to what extent the audit
was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the
prevention and detection of fraud rests with both
those charged with governance of the Company
and management.
• We obtained an understanding of the legal
and regulatory frameworks that are applicable
to the Company and determined that the most
significant are United Kingdom Generally
Accepted Accounting Practice, the Companies
Act 2006, the Association of Investment
Companies Code of Corporate Governance, The
Association of Investment Companies Statement
of Recommended Practice, the Listing Rules, the
UK Corporate Governance Code, Section 1158 of
the Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
• We understood how the Company is complying
with those frameworks by through discussions
with the Audit Committee and Company Secretary
and review of Board minutes and the Company’s
documented policies and procedures.
• We assessed the susceptibility of the Company’s
financial statements to material misstatement,
including how fraud might occur by considering
the key risks impacting the financial statements.
We identified fraud risks with respect to the
incorrect valuation of the unquoted investments
and the resulting impact on the unrealised gains/
(losses) and incomplete or inaccurate revenue
recognition through incorrect classification of
special dividends as revenue or capital items in
the Income Statement. Further discussion of our
approach is set out in the section on key audit
matters above.
• Based on this understanding we designed our
audit procedures to identify non-compliance
with such laws and regulations. Our procedures
involved review of the reporting to the Directors by
the manager with respect to the application of the
documented policies and procedures and review
of the financial statements to ensure compliance
with the reporting requirements of the Company.
A further description of our responsibilities for
the audit of the financial statements is located
on the Financial Reporting Council’s website at
frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters we are required to address
Following the recommendation from the Audit
Committee, we were appointed by the Company on
24 January 2017 to audit the financial statements
for the year ending 31 October 2017 and subsequent
financial periods. The period of total uninterrupted
engagement including previous renewals and
reappointments is 7 years, covering the years ending
31 October 2017 to 31 October 2023.
The audit opinion is consistent with the additional
report to the Audit Committee.
Use of our report
This report is made solely to the Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the Company’s members those matters we are
required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s
members as a body, for our audit work, for this
report, or for the opinions we have formed.
Ahmer Huda (Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
London
25 January 2024
Financial report
Annual Report and Financial Statements 2023
94
For the year ended 31 October
Notes
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Gains on investments 8 – (174,925) (174,925) – (528,279) (528,279)
Currency gains/(losses) 12 – 2,802 2,802 – (6,070) (6,070)
Income 2 1,077 – 1,077 986 – 986
Investment management fee 3 (1,060) (3,181) (4,241) (1,277) (3,830) (5,107)
Other administrative expenses 4 (915) – (915) (953) – (953)
Net return before finance costs
and taxation
(898) (175,304) (176,202) (1,244) (538,179) (539,423)
Finance costs of borrowings 5 (1,578) (4,735) (6,313) (675) (2,026) (2,701)
Net return before taxation (2,476) (180,039) (182,515) (1,919) (540,205) (542,124)
Tax on ordinary activities 6 (51) – (51) (57) – (57)
Net return after taxation (2,527) (180,039) (182,566) (1,976) (540,205) (542,181)
Net return per ordinary share 7 (0.65p) (46.21p) (46.86p) (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 issued 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 (loss)/profit and total comprehensive (expense)/income for the year.
The accompanying notes on pages 98 to 116 are an integral part of the Financial Statements.
Income
statement
95
Edinburgh Worldwide Investment Trust plc
As at 31 October
Notes
2023
£’000
2023
£’000
2022
£’000
2022
£’000
Fixed assets
Investments held at fair value through profit or loss 8 671,300 872,804
Current assets
Debtors 9 324 4,882
Cash and cash equivalents 17 19,146 11,131
19,470 16,013
Creditors
Amounts falling due within one year
10 (106,033) (113,251)
Net current liabilities
(86,563) (97,238)
Net assets 584,737 775,566
Capital and reserves
Share capital 11 4,058 4,058
Share premium account 12 499,723 499,723
Special reserve 12 35,220 35,220
Capital reserve 12 54,352 242,654
Revenue reserve 12 (8,616) (6,089)
Total shareholders’ funds 584,737 775,566
Net asset value per ordinary share 13 151.06p 197.70p
The Financial Statements of Edinburgh Worldwide Investment Trust plc (Company registration number
SC184775) were approved and authorised for issue by the Board and were signed on 25 January 2024.
Henry CT Strutt
Chair
The accompanying notes on pages 98 to 116 are an integral part of the Financial Statements.
Balance
sheet
Financial report
Annual Report and Financial Statements 2023
96
The accompanying notes on pages 98 to 116 are an integral part of the Financial Statements.
For the year ended 31 October 2023
Notes
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 into treasury 11 – – – (8,263) – (8,263)
Net return after taxation 12 – – – (180,039) (2,527) (182,566)
Shareholders’ funds at 31 October 2023 4,058 499,723 35,220 54,352 (8,616) 584,737
For the year ended 31 October 2022
Notes
Share
capital
£’000
Share
premium
account
£’000
Special
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
Shareholders’ funds at 1 November 2021 4,052 497,999 35,220 808,197 (4,113) 1,341,355
Ordinary shares issued 11 6 1,724 – – – 1,730
Ordinary shares bought back into treasury 11 – – – (25,338) – (25,338)
Net return after taxation 12 – – – (540,205) (1,976) (542,181)
Shareholders’ funds at 31 October 2022 4,058 499,723 35,220 242,654 (6,089) 775,566
Statement of
changes in equity
97
Edinburgh Worldwide Investment Trust plc
The accompanying notes on pages 98 to 116 are an integral part of the Financial Statements.
For the year ended 31 October
Notes
2023
£’000
2023
£’000
2022
£’000
2022
£’000
Cash flows from operating activities
Net return before taxation (182,515) (542,124)
Net losses on investments 174,925 528,279
Currency (gains)/losses (2,802) 6,070
Finance costs of borrowings 6,313 2,701
Overseas withholding tax incurred (51) (57)
Changes in debtors and creditors (282) (754)
Cash from operations* (4,412) (5,885)
Interest paid (5,686) (1,942)
Net cash outflow from operating activities (10,098) (7,827)
Cash flows from investing activities
Acquisitions of investments (73,803) (138,189)
Disposals of investments 98,261 115,592
Net cash inflow/(outflow) from investing activities 24,458 (22,597)
Cash flows from financing activities
Ordinary shares issued 11 – 1,730
Ordinary shares bought back into treasury
and stamp duty thereon
11 (8,567) (24,906)
Bank loans drawn down 402,717 335,346
Bank loans repaid (400,000) (306,862)
Net cash (outflow)/inflow from financing activities (5,850) 5,308
Increase/(decrease) in cash and cash equivalents 8,510 (25,116)
Exchange movements (495) 3,120
Cash and cash equivalents at 1 November 11,131 33,127
Cash and cash equivalents at 31 October 19,146 11,131
*
Cash from operations includes dividends received of £718,000 (2022 – £956,000) and interest received of £288,000 (2022 – £100,000).
Cash flow
statement
Financial report
Annual Report and Financial Statements 2023
98
The Company was incorporated under the Companies Act 2006
in Scotland as a public limited company with registered number
SC184775. The Company is an investment company within the
meaning of section 833 of the Companies Act 2006 and carries
on business as an investment trust.
01 Principal accounting policies
The Financial Statements for the year to 31 October 2023
have been prepared in accordance with FRS 102 ‘The
Financial Reporting Standard applicable in the UK and
Republic of Ireland’ and on the basis of the accounting
policies set out below which are unchanged from the prior
year and have been applied consistently.
The Financial Statements have been prepared in accordance
with the Companies Act 2006, applicable United Kingdom
Accounting Standards and with the Statement of
Recommended Practice ‘Financial Statements of Investment
Trust Companies and Venture Capital Trusts’ issued by the
Association of Investment Companies (‘AIC’) in November
2014 and updated in July 2022 with consequential
amendments.
a. Basis of accounting
All of the Company’s operations are of a continuing
nature and the Financial Statements are prepared
on a going concern basis under the historical cost
convention, modified to include the revaluation of fixed
asset investments at fair value through profit or loss,
and on the assumption that approval as an investment
trust under section 1158 of the Corporation Tax Act
2010 and the Investment Trust (Approved Company)
(Tax) Regulations 2011 will be retained. The Board
has, in particular, considered the impact of heightened
market volatility and macroeconomic and geopolitical
concerns, including rising inflation and interest rates but
does not believe the Company’s going concern status is
affected. 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. The Company’s primary third
party suppliers, including its Managers and Secretaries,
Depositary and Custodian, Registrar, Auditor and Broker,
are not experiencing significant operational difficulties
affecting their respective services to the Company.
Accordingly, the Financial Statements have been prepared
on a going concern basis as it is the Directors’ opinion,
having assessed the principal and emerging risks and
other matters set out in the Viability Statement on page
47 which assesses the prospects of the Company over
a period of five years, that the Company will continue in
operational existence until 31 January 2025, which is for a
period of at least twelve months from the date of approval
of these Financial Statements.
In order to reflect better the activities of the Company
and in accordance with guidance issued by the AIC,
supplementary information which analyses the profit
and loss account between items of a revenue and capital
nature has been presented in the Income statement.
In preparing these Financial Statements the Directors
have considered the impact of climate change risk as a
principal risk as set out on page 50 and have concluded
that it does not have a material impact on the Company’s
investments. In line with FRS 102 investments are valued
at fair value, being primarily quoted prices for investments
in active markets at the balance sheet date, and therefore
reflect market participants’ view of climate change risk.
Unlisted investments, valued by reference to comparable
companies (see 1(e) below), similarly reflect market
participants’ view of climate change risk.
b. Functional currency
The Directors consider the Company’s functional and
presentational currency to be sterling as the Company’s
share capital is denominated in sterling, the entity is listed
on a sterling stock exchange in the UK, the Company’s
shareholders are predominantly based in the UK and the
Company and its investment manager, who are subject to
the UK’s regulatory environment, are also UK based.
Notes to the
Financial Statements
99
Edinburgh Worldwide Investment Trust plc
c. Financial instruments
Financial assets and financial liabilities are recognised
in the Company’s Balance sheet when it becomes a party
to the contractual provisions of the instrument.
d. Accounting estimates, assumptions and judgements
The preparation of the Financial Statements requires
the use of estimates, assumptions and judgements.
These estimates, assumptions and judgements affect the
reported amounts of assets and liabilities, at the reporting
date. While estimates are based on best judgement
using information and financial data available, the actual
outcome may differ from these estimates. The key source
of estimation and uncertainty at the balance sheet date
that could affect the carrying value of assets and liabilities
in the next financial year pertains to the fair value of the
unlisted investments.
Judgements
In accordance with the requirements of FRS102 s.8.6 the
Directors have considered the key judgements involved in
the preparation of the Financial Statements. The Directors
key judgements were as follows:
i. the determination of the functional currency of the
Company as sterling (see rationale in 1(b) above); and
ii. the fair valuation of the unlisted investments.
The key judgements in the fair valuation process are:
i. the Managers’ determination of the appropriate
application of the International Private Equity and
Venture Capital Guidelines 2022 (‘IPEV’) to each
unlisted investment; and
ii. the Directors’ consideration of whether each fair
value is appropriate following detailed review and
challenge. The judgement applied in the selection of
the methodology used (see 1(e) below) for determining
the fair value of each unlisted investment can have a
significant impact upon the valuation.
Estimates
The key estimate in the Financial Statements is the
determination of the fair value of the unlisted investments
by the Managers for consideration by the Directors. This
estimate is key as it significantly impacts the valuation of
the unlisted investments at the Balance Sheet date. The
fair valuation process involves estimation using subjective
inputs that are unobservable (for which market data is
unavailable). The main estimates (including key sources
of uncertainty in accordance with FRS102 s.8.7) involved
in the selection of the valuation process inputs are:
i. the selection of appropriate comparable companies
in order to derive revenue multiples and meaningful
relationships between enterprise value, revenue and
earnings growth. Comparable companies are chosen
on the basis of their business characteristics and
growth patterns;
ii. the selection of a revenue metric (either historical
or forecast);
iii. the application of an appropriate discount factor
to reflect the reduced liquidity of unlisted companies
versus their listed peers;
iv. the estimation of the probability assigned to an exit
being through an initial public offering (‘IPO’) or a
company sale;
v. the selection of an appropriate industry benchmark
index to assist with the valuation validation or the
application of valuation adjustments, particularly in
the absence of established earnings or closely
comparable peers; and
vi. the calculation of valuation adjustments derived from
milestone analysis (i.e. incorporating operational
success against the plan/forecasts of the business
into the valuation).
Fair value estimates are cross-checked to alternative
estimation methods where possible to improve the
robustness of the estimates. As the valuation outcomes
may differ from the fair value estimates a price sensitivity
analysis is provided in other price risk sensitivity in note 17
on pages 113 to 115 to illustrate the effect on the Financial
Statements of an over or under estimation of fair values.
The risk of an over or under estimation of fair values
is greater when methodologies are applied using more
subjective inputs.
Financial report
Annual Report and Financial Statements 2023
100
Assumptions
The determination of fair value by the Managers involves
key assumptions dependent upon the valuation technique
used. As explained in 1(e) below, the primary technique
applied under the IPEV Guidelines is the Multiples
approach. Where the Multiples approach is used the
valuation process recognises also, as stated in the
IPEV Guidelines, that the price of a recent investment
may be an appropriate calibration for estimating fair
value. The Multiples approach involves subjective inputs
and therefore presents a greater risk of over or under
estimation and particularly in the absence of a recent
transaction.
The key assumptions for the Multiples approach are
that the selection of comparable companies provides a
reasonable basis for identifying relationships between
enterprise value, revenue and growth to apply in the
determination of fair value. Other assumptions include:
i. the discount applied for reduced liquidity versus listed
peers;
ii. the exit being through either an IPO or a company sale;
and
iii. that the application of milestone analysis and industry
benchmark indices are a reasonable basis for applying
appropriate adjustments to the valuations. Valuations
are cross-checked for reasonableness to alternative
Multiples-based approaches or benchmark index
movements as appropriate.
e. Investments
The Company’s investments are classified, recognised
and measured at fair value through profit or loss in
accordance with sections 11 and 12 of FRS 102. Changes
in the fair value of investments and gains and losses on
disposal are recognised as capital items in the Income
statement.
Recognition and initial measurement
Purchases and sales of investments are accounted for on
a trade date basis. Expenses incidental to purchase and
sale are written off to capital at the time of acquisition or
disposal. All investments are designated as valued at fair
value through profit or loss upon initial recognition and
are measured at subsequent reporting dates at fair value.
Measurement and valuation
Listed investments – The fair value of listed security
investments is bid value or, in the case of holdings on
certain recognised overseas exchanges, at last traded
prices.
Unlisted investments – 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 valuation
policy applies techniques consistent with the IPEV
Guidelines.
The techniques applied are predominantly market-based
approaches. The market-based approaches available
under IPEV Guidelines are set out below and are
followed by an explanation of how they are applied
to the Company’s unlisted portfolio:
• Multiples;
• Industry valuation benchmarks; and
• Available market prices.
The nature of the unlisted portfolio currently will influence
the valuation technique applied. The valuation approach
recognises that, as stated in the IPEV Guidelines, the
price of a recent investment, if resulting from an orderly
transaction, generally represents fair value as at the
transaction date and may be an appropriate starting point
for estimating fair value at subsequent measurement
dates. However, consideration is given to the facts and
circumstances as at the subsequent measurement date,
including changes in the market or performance of the
investee company. Milestone analysis is used where
appropriate to incorporate the operational progress of
the investee company into the valuation. Additionally,
the background to the transaction must be considered.
As a result, various Multiples-based techniques are
employed to assess the valuations particularly in those
companies with established revenues. Discounted
cashflows are used where appropriate. An absence of
relevant industry peers may preclude the application of
the Industry Valuation Benchmarks technique and an
absence of observable prices may preclude the Available
Market Prices approach. All valuations are cross-checked
for reasonableness by employing relevant alternative
techniques.
The unlisted investments are valued according to a three
monthly cycle of measurement dates from the date of
purchase. The fair value of the unlisted investments will
also be reviewed before the next scheduled three monthly
measurement date on the following occasions:
• at the year end and half year end of the Company; and
• where there is an indication of a change in fair value as
defined in the IPEV guidelines (commonly referred to as
‘trigger’ events).
Gains and losses
Gains and losses on investments, including those
arising from foreign currency exchange differences, are
recognised in the Income statement as capital items.
The Managers monitor the investment portfolio on a fair
value basis and uses the fair value basis for investments
in making investment decisions and monitoring financial
performance.
101
Edinburgh Worldwide Investment Trust plc
f. Cash and cash equivalents
Cash and cash equivalents include cash in hand and
deposits repayable on demand. Deposits are repayable
on demand if they can be withdrawn at any time without
notice and without penalty or if they have a maturity or
period of notice of not more than one working day.
g. Income
i. income from equity investments is brought into account
on the date on which the investments are quoted ex-
dividend or, where no ex-dividend date is quoted, when
the Company’s right to receive payment is established;
ii. if scrip dividends are taken in lieu of dividends in
cash, the net amount of the cash dividend declared
is credited to the revenue column of the Income
statement. Any excess in the value of the shares
received over the amount of the cash dividend foregone
is recognised in the capital column of the Income
statement;
iii. special dividends are treated as capital or revenue
depending on the facts of each particular case;
iv. unfranked investment income and overseas dividends
include the taxes deducted at source; and
v. interest receivable on deposits is recognised on an
accruals basis.
h. Expenses
All expenses are accounted for on an accruals basis.
Expenses are charged to the revenue column of the
Income statement except:
i. where they relate directly to the acquisition or disposal
of an investment (transaction costs), in which case
they are charged to the capital within gains/losses on
investments; and
ii. they relate directly to the buy-back/issuance of shares,
in which case they are added to the buy-back cost or
deducted from the share issuance proceeds.
The investment management fee is allocated 25% to
revenue and 75% to capital, in line with the Board’s
expectation of returns from the Company’s investments
over the long term in the form of revenue and capital
respectively.
i. Borrowings and finance costs
Any borrowings are carried in the Balance sheet at
amortised cost, representing the cumulative amount
of net proceeds after issue, plus accrued finance costs.
The finance costs of borrowings are allocated 25% to the
revenue account and 75% to the capital reserve. Gains
and losses on the repurchase or early settlement of debt
are wholly charged to capital.
j. Deferred taxation
Deferred taxation is provided on all timing differences
which have originated but not reversed by the Balance
Sheet date, calculated at the current tax rates expected to
apply when its timing differences reverse, based on what
has been enacted or substantially enacted, relevant to
the benefit or liability. Deferred tax assets are recognised
only to the extent that it will be more likely than not that
there will be taxable profits from which underlying timing
differences can be deducted.
k. Foreign currencies
Transactions involving foreign currencies are converted
at the rate ruling at the time of the transaction. Monetary
assets and liabilities in foreign currencies are translated at
the closing rates of exchange at the Balance sheet date.
Any gain or loss arising from a change in exchange rate
subsequent to the date of the transaction is included as
an exchange gain or loss in the Income statement and
classified as a revenue or capital item as appropriate.
l. Capital reserve
Gains and losses on disposal of investments, changes in
the fair value of investments held, exchange differences
of a capital nature and the amount by which other assets
and liabilities valued at fair value differ from their book
cost are dealt with in this reserve. Purchases of the
Company’s own shares can also be funded from this
reserve. 75% of management fees and finance costs are
allocated to the capital reserve in line with the Board’s
expectation of returns from the Company’s investments
over the long term in the form of revenue and capital
respectively.
m. Single segment reporting
The Company has only one material segment being that
of an investment trust company, investing primarily in
listed companies throughout the world.
Financial report
Annual Report and Financial Statements 2023
102
02 Income
2023
£’000
2022
£’000
Income from investments
UK dividends 379 410
Overseas dividends 340 472
Overseas interest 70 4
Other income 789 886
Deposit interest 288 100
Total income 1,077
986
Total income comprises:
Dividends from financial assets designated at fair value through profit or loss 719 882
Interest from financial assets designated at fair value through profit or loss 70 4
Interest from financial assets not at fair value through profit or loss 288 100
1,077 986
03 Investment management fee
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Investment management fee 1,060 3,181 4,241 1,277 3,830 5,107
Details of the Investment Management Agreement are disclosed on page 66. 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. Management
fees are calculated and payable quarterly.
04 Other administrative expenses
2023
£’000
2022
£’000
General administrative expenses 231 289
Custody charges 170 145
Directors’ fees (see Directors’ remuneration report page 82) 218 183
Auditor’s remuneration for audit services 99 64
Marketing* 89 80
Depositary fees 84 173
Registrar fees 24 19
915 953
*
The Company is part of a marketing programme which includes all the Investment Trusts managed by the Manager. The marketing strategy has an
ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy is borne in partnership by the Company and
the Manager. The Manager matches the Company’s marketing contribution and provides the resource to manage and run the programme.
There were no non-audit fees in the years to 31 October 2023 or 31 October 2022.
103
Edinburgh Worldwide Investment Trust plc
05 Finance costs of borrowings
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Interest on bank loan 1,578 4,735 6,313 675 2,026 2,701
06 Tax
2023
£’000
2022
£’000
Analysis of charge in year
Overseas withholding tax 51 57
Factors affecting tax charge for the year
The tax charge for the year is lower than the standard rate of corporation tax
in the UK of 22.518% (2022 – 19.000%). The differences are explained below:
Net return before taxation (182,515) (542,124)
Net return before taxation multiplied by the standard rate of corporation tax
in the UK of 22.518% (2022 – 19.000%)
(41,099) (103,004)
Capital returns not taxable 38,758 101,526
Income not taxable (UK dividends) (85) (77)
Income not taxable (overseas dividends) (76) (90)
Current year management expenses and non-trade loan relationship deficit not utilised 2,502 1,645
Overseas withholding tax incurred 51 57
Tax charge for the year 51 57
As an investment trust, the Company’s capital gains are not taxable in the United Kingdom.
Factors that may affect future tax charges
At 31 October 2023 the Company had surplus management expenses and losses on non-trading loan relationships of
£77,993,000 (2022 – £70,837,000) which have not been recognised as a deferred tax asset. This is because the Company
is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and,
accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses.
07 Net return per ordinary share
2023
Revenue
2023
Capital
2023
Total
2022
Revenue
2022
Capital
2022
Total
Net return after taxation (0.65p) (46.21p) (46.86p) (0.49p) (134.82p) (135.31p)
Revenue return per ordinary share is based on the net revenue loss after taxation of £2,527,000 (2022 – net revenue loss of
£1,976,000) and on 389,617,177 (2022 – 400,679,723) ordinary shares, being the weighted average number of ordinary shares in
issue (excluding treasury shares) during the year.
Capital return per ordinary share is based on the net capital loss for the financial year of £180,039,000 (2022 – net capital loss
of £540,205,000) and on 389,617,177 (2022 – 400,679,723) ordinary shares, being the weighted average number of ordinary
shares in issue (excluding treasury shares) during the year.
There are no dilutive or potentially dilutive shares in issue.
Financial report
Annual Report and Financial Statements 2023
104
08 Fixed assets – investments
As at 31 October 2023
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 convertible promissory note – – 3,707 3,707
Total financial asset investments 491,243 – 180,057 671,300
As at 31 October 2022
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Listed equities 696,135 – – 696,135
Unlisted ordinary shares – – 22,456 22,456
Unlisted preference shares* – – 153,779 153,779
Unlisted convertible 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 of a liquidation event such as a take-over.
Fair value hierarchy
The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the
lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement
for the individual investment in its entirety as follows:
Level 1 – 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).
The valuation techniques used by the Company are explained in the accounting policies on page 100. A sensitivity analysis by
valuation technique of the unlisted securities is given on pages 113 to 115.
105
Edinburgh Worldwide Investment Trust plc
08 Fixed assets – investments (continued)
Listed
securities
£’000
Unlisted
securities *
£’000
Total
£’000
Cost of investments at 1 November 2022 757,935 118,092 876,027
Investment holding (losses)/gains at 1 November 2022 (61,800) 58,577 (3,223)
Value of investments at 1 November 2022 696,135 176,669 872,804
Movements in year:
Purchases at cost 62,989 4,095 67,084
Sales – proceeds received (93,663) – (93,663)
– realised losses on sales (28,869) – (28,869)
Gains and losses on investments (145,349) (707) (146,056)
Value of investments at end of year 491,243 180,057 671,300
Cost of investments at 31 October 2023
698,392 122,187 820,579
Investment holding losses at 31 October 2023 (207,149) 57,870 (149,279)
Value of investments at 31 October 2023 491,243 180,057 671,300
*
Includes holdings in ordinary shares, preference shares and convertible promissory note.
The Company received £93,663,000 from investments sold in the year (2022 – £120,190,000). The book cost of these
investments when they were purchased was £122,533,000 (2022 – £54,050,000). These investments have been revalued
over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
The purchases and sales proceeds figures above include transaction costs of £67,000 (2022 – £155,000) and £28,000
(2022 – £25,000) respectively.
2023
£’000
2022
£’000
Net gains on investments designated at fair value through profit or loss on initial recognition
Gains on sale (28,869) 66,140
Changes in investment holding gains (146,056) (594,419)
(174,925) (528,279)
Financial report
Annual Report and Financial Statements 2023
106
08 Fixed assets – investments (continued)
Significant holdings disclosure requirements – AIC SORP
Details are disclosed below in accordance with the requirements of paragraph 82 of the AIC Statement of Recommended Practice
‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (updated in July 2022) in relation to unlisted
investments in the top twenty of the List of Investments on page 24. As required, this disclosure includes turnover, pre-tax
profits and net assets attributable to investors as reported within the most recently audited financial statements of the investee
companies, where possible.
As at 31 October 2023
Latest
Financial
Statements
Book cost
£’000
Market
value
£’000
Income
recognised
from holding
in the period
£’000
Turnover
£’000
Pre-tax
profit/
(loss)
£’000
Net assets
attributable to
shareholders
£’000Name Business
Space
Exploration
Technologies
Designs,
manufactures
and launches
advanced
rockets and
spacecraft
n/a 19,570 62,861 Nil Information not publicly available*
PSiQuantum Developer of
commercial
quantum
computing
n/a 16,762 30,802 Nil Information not publicly available*
As at 31 October 2022
Latest
Financial
Statements
Book cost
£’000
Market
value
£’000
Income
recognised
from holding
in the period
£’000
Turnover
£’000
Pre-tax
profit/
(loss)
£’000
Net assets
attributable to
shareholders
£’000Name Business
Space
Exploration
Technologies
Designs,
manufactures
and launches
advanced
rockets and
spacecraft
n/a 19,570 62,861 Nil Information not publicly available*
PsiQuantum Developer of
commercial
quantum
computing
n/a 16,762 27,682 Nil Information not publicly available*
*
Confidentiality agreements prevent the disclosure of this information.
107
Edinburgh Worldwide Investment Trust plc
09 Debtors
2023
£’000
2022
£’000
Amounts falling due within one year:
Income accrued (net of withholding taxes) 73 21
Sales for subsequent settlement – 4,598
Other debtors and prepayments 251 263
324 4,882
None of the above debtors are financial assets designated at fair value through profit or loss. The carrying amount of debtors is a
reasonable approximation of fair value. There are no debtors that were past due or impaired at 31 October 2023 or 31 October 2022.
10 Creditors – amounts falling due within one year
2023
£’000
2022
£’000
The Royal Bank of Scotland International Limited
£100 million multi-currency revolving credit facility
103,249 103,827
Purchases for subsequent settlement – 6,719
Investment management fee 879 1,141
Buybacks and related stamp duty awaiting settlement 128 433
Other creditors and accruals 1,777 1,131
106,033 113,251
Borrowing facilities at 31 October 2023:
A five year £100 million multi-currency revolving credit facility with The Royal Bank of Scotland International Limited
with an expiry date of 9 June 2026.
A five year £36 million multi-currency revolving credit facility with National Australia Bank Limited with an expiry date
of 30 September 2024
At 31 October 2023 drawings were as follows:
• £100 million multi-currency facility with The Royal Bank of Scotland International Limited: €10,600,000 at an interest rate
of 4.73% per annum; US$77,150,000 at an interest rate of 6.75% per annum; and £30,437,000 at an interest rate of 6.63%
per annum. The rollover/maturity date is 9 February 2024.
At 31 October 2022 drawings were as follows:
• £100 million multi-currency facility with The Royal Bank of Scotland International Limited: €10,600,000 at an interest rate
of 1.71900% per annum; US$77,150,000 at an interest rate of 4.31329% per annum; and £27,720,000 at an interest rate
of 3.334430% per annum. The rollover/maturity date is 8 February 2022.
The main covenants relating to both loan facilities with National Australia Bank Limited and the facility with The Royal Bank
of Scotland International Limited are: total borrowings shall not exceed 35% of the Company’s adjusted gross assets and the
minimum adjusted gross assets shall be £260 million. There were no breaches in the loan covenants during the year to 31 October
2023 (2022 – none).
Financial report
Annual Report and Financial Statements 2023
108
11 Share capital
2023
Number
2023
£’000
2022
Number
2022
£’000
Allotted, called up and fully paid ordinary shares of 1p each 387,094,641 3,871 392,285,023 3,923
Treasury shares of 1p each 18,659,054 187 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 year to 31 October 2023 the Company issued no shares
(in the year to 31 October 2022 – 550,000 shares with a nominal value of £6,000, representing 0.1% of the issued share capital
at 31 October 2021 raising net proceeds of £1,730,000).
Over the period from 31 October 2023 to 23 January 2024 the Company has issued no further shares.
The Company also has authority to buy back shares. In the year to 31 October 2023, 5,190,382 shares with a nominal value of
£52,000 were bought back at a total cost of £8,263,000 and held in treasury (2022 – 13,468,672 shares with a nominal value of
£135,000 were bought back at a total cost of £25,338,000 and held in treasury). At 31 October 2023 the Company had authority
to buy back a further 56,303,524 ordinary shares.
Over the period from 31 October 2023 to 23 January 2024 the Company has bought back a further 1,960,933 shares at a total
cost of £2,858,000.
12 Capital and reserves
Share
capital
£’000
Share
premium
account
£’000
Special
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 November 2022 4,058 499,723 35,220 242,654 (6,089) 775,566
Net gains on sales of investments – – – (28,869) – (28,869)
Changes in investment holding gains – – – (146,056) – (146,056)
Exchange differences on bank loans – – – 3,297 – 3,297
Other exchange differences – – – (495) – (495)
Ordinary shares bought back
into treasury
– – – (8,263) – (8,263)
Investment management fee
charged to capital
– – – (3,181) – (3,181)
Finance cost of borrowings
charged to capital
– – – (4,735) – (4,735)
Revenue return after taxation – – – – (2,527) (2,527)
At 31 October 2023 4,058 499,723 35,220 54,352 (8,616) 584,737
The capital reserve includes investment holding losses on fixed asset investments of £149,279,000 (2022 – losses of £3,223,000)
as disclosed in note 8.
The special reserve arose following the court approval for the cancellation of 30% of the value of the share premium account
on 29 April 1999.
The special reserve may be utilised to finance any purchase of the Company’s ordinary shares.
The revenue reserve is the only reserve distributable by way of dividend.
109
Edinburgh Worldwide Investment Trust plc
13 Net asset value per ordinary share
2023 2022
2023
£’000
2022
£’000
Shareholders’ funds 151.06p 197.70p 584,737 775,566
Net asset value per ordinary share is based on the net assets as shown above and 387,094,641 (2022 – 392,285,023) ordinary
shares (excluding treasury shares), being the number of ordinary shares in issue at each year end.
At 31 October 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 per share between including debt at
book, or fair value, in the calculation.
14 Analysis of change in net debt
The net asset value per ordinary share and the net asset value attributable to the ordinary shareholders at the year end calculated
in accordance with the Articles of Association were as follows:
At 1 October
2022
£’000
Cash flows
£’000
Exchange
movement
£’000
At 31 October
2023
£’00
Cash and cash equivalents 11,131 8,510 (495) 19,146
Loans due within one year (103,827) (2,717) 3,295 (103,249)
(92,696) 5,793 2,800 (84,103)
15 Transactions with related parties and the Managers and Secretaries
The Directors’ fees for the year are detailed in the Directors’ remuneration report on page 82. No Director has a contract of service
with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under section
412 of the Companies Act 2006.
Details of the management contract are set out in the Directors’ report on pages 65 and 66. The management fee payable to the
Managers by the Company for the year, as disclosed in note 3, was £4,241,000 (2022 – £5,107,000) of which £879,000 (2022 –
£1,141,000) was outstanding at the year end, as disclosed in note 10.
16 Contingencies, guarantees and financial commitments
At 31 October 2023 there are contingent assets not recognised in the Financial Statements in respect of potential deferred
proceeds from the SPAC acquisitions of two investee companies, which are estimated to be approximately £8.25 million
(31 October 2022 – £8.68 million from one investee company). The economic benefits flowing from the deferred proceeds
are deemed to be probable and the full extent to which this amount will become receivable in due course is dependent on
future events.
There were no contingent liabilities, guarantees or financial commitments at either the current or prior year balance sheet date.
Financial report
Annual Report and Financial Statements 2023
110
17 Financial instruments
As an Investment Trust, the Company invests in listed and unlisted securities and makes other investments so as to meet its
investment objective of achieving long term capital growth. The Company borrows money when the Board and Managers have
sufficient conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing.
In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial
instruments and markets in which it invests.
These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and
credit risk.
The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood of a permanent
loss of capital rather than to minimise the short term volatility. Risk provides the potential for both losses and gains and in
assessing risk the Board encourages the Managers to exploit the opportunities that risk affords.
The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting
period.
Market risk
The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of
changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The
Board of Directors reviews and agrees policies for managing these risks and the Company’s Investment Managers both assess
the exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the
investment portfolio on an ongoing basis.
Details of the Company’s investment portfolio are shown in note 8 and on pages 25 to 29.
i. Currency risk
Certain of the Company’s assets, liabilities and income are denominated in currencies other than sterling (the Company’s
functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling
value of those items.
The Managers monitor the Company’s exposure to foreign currencies and report to the Board on a regular basis. The Managers
assess the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset value and
income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed.
However, the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates
on overseas earnings may have a more significant impact upon a company’s valuation than a simple translation of the currency in
which the company is quoted.
Foreign currency borrowings can limit the Company’s exposure to anticipated future changes in exchange rates which might
otherwise adversely affect the value of the portfolio of investments.
Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability
is quoted, is shown below.
At 31 October 2023
Investments
£’000
Cash and
deposits
£’000
Bank
loans
£’000
Other debtors
and creditors *
£’000
Net
exposure
£’000
US dollar 546,628 18,181 (63,579) (922) 500,308
Japanese yen 12,005 – – – 12,005
Euro 4,987 – (9,233) (101) (4,347)
Hong Kong dollar 3,123 – – – 3,123
Danish krone 9,197 – – – 9,197
Swiss franc 1,044 – – 30 1,074
Australian dollar 7,685 – – – 7,685
Total exposure to currency risk 584,669 18,181 (72,812) (993) 529,045
Sterling 86,631 965 (30,437) (1,467) 55,692
671,300 19,146 (103,249) (2,460) 584,737
*
Includes non-monetary assets of £202,000.
111
Edinburgh Worldwide Investment Trust plc
17 Financial instruments (continued)
i. Currency risk (continued)
At 31 October 2022
Investments
£’000
Cash and
deposits
£’000
Bank
loans
£’000
Other debtors
and creditors *
£’000
Net
exposure
£’000
US dollar 683,180 8,393 (67,008) (2,877) 621,688
Japanese yen 20,977 – – – 20,977
Danish krone 18,474 – – – 18,474
Hong Kong dollar 15,882 – – – 15,882
Swiss franc 10,889 – – 31 10,920
Australian dollar 9,903 – – – 9,903
Euro 13,524 – (9,099) 1,113 5,538
Total exposure to currency risk 772,829 8,393 (76,107) (1,733) 703,382
Sterling 99,975 2,738 (27,720) (2,809) 72,184
872,804 11,131 (103,827) (4,542) 775,566
*
Includes non-monetary assets of £213,000.
Currency risk sensitivity
At 31 October 2023, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total
net assets and total return would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies,
with all other variables held constant, would have had an equal but opposite effect on the Financial Statement amounts. The level
of change is considered to be reasonable based on observations of current market conditions. The analysis is performed on the
same basis for 2022.
2023
£’000
2022
£’000
US dollar 25,015 31,084
Japanese yen 600 1,049
Danish krone 460 924
Australian dollar 384 495
Euro (217) 277
Hong Kong dollar 156 794
Swiss franc 54 546
26,452 35,169
ii. Interest rate risk
Interest rate movements may affect directly:
• the fair value of any investments in fixed interest rate securities;
• the level of income receivable on cash deposits;
• the fair value of any fixed-rate borrowings; and
• the interest payable on any variable rate borrowings.
Interest rate movements may also impact upon the market value of the Company’s investments other than any fixed income
securities. The effect of interest rate movements upon the earnings of an investee company may have a significant impact upon
the valuation of that company’s equity.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account
when making investment decisions and when entering borrowing agreements.
The Board reviews on a regular basis the amount of investments in cash and fixed income securities and the income receivable on
cash deposits, floating rate notes and other similar investments.
The Company finances part of its activities through borrowings at approved levels. The amount of such borrowings and the approved
levels are monitored and reviewed regularly by the Board. Movements in interest rates, to the extent that they affect the market
value of the Company’s fixed rate borrowings, may also affect the amount by which the Company’s share price is at a discount or a
premium to the net asset value (assuming that the Company’s share price is unaffected by movements in interest rates).
Financial report
Annual Report and Financial Statements 2023
112
17 Financial instruments (continued)
ii. Interest rate risk (continued)
The interest rate risk profile of the Company’s financial assets and liabilities at 31 October is shown below:
Financial assets
2023
Fair value
£’000
2023
Weighted
average
interest rate
2023
Weighted
average period
until maturity *
2022
Fair value
£’000
2022
Weighted
average
interest rate
2022
Weighted
average period
until maturity *
Cash and short term deposits:
US dollar 18,181 4.8% n/a 8,393 – n/a
Sterling 965 4.5% n/a 2,738 – n/a
*
Based on expected maturity date.
The cash deposits generally comprise overnight call or short term money market deposits of less than one month which are
repayable on demand. The comparative index rate which determines the interest payments received on cash balances is the
bank base rate.
Financial liabilities
The interest risk profile of the Company’s financial liabilities and the maturity profile of the undiscounted future cash flows
in respect of the Company’s contractual financial liabilities at 31 October are shown below:
Interest Rate Risk Profile
The interest rate risk profile of the Company’s financial liabilities at 31 October was:
2023
£’000
2022
£’000
Floating rate:
Stirling denominated 30,437 27,720
US$ denominated 63,579 67,008
Euro denominated 9,233 9,099
103,249 103,827
Maturity profile
The maturity profile of the Company’s financial liabilities at 31 October was:
2023
£’000
2022
£’000
In less than three months:
Repayment of loans 103,249 103,827
Accumulated interest 1,556 1,008
104,805 104,835
Interest rate risk sensitivity
An increase of 100 basis points in interest rates, with all other variables held constant, would have decreased the Company’s total
net assets and total return for the year ended 31 October 2023 by £5,159,000 (2022 – decreased by £4,198,000). This is due to
the Company’s exposure to interest rates on its revolving floating rate bank loans and cash balances. A decrease of 100 basis
points would have had an equal but opposite effect.
113
Edinburgh Worldwide Investment Trust plc
17 Financial instruments (continued)
iii. Other price risk
Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s
net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to
relevant information from the Managers. The Company’s portfolio of unlisted level 3 investments is not necessarily affected by
market performance, however the valuations are affected by the performance of the underlying securities in line with the valuation
criteria in note 1(e). The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and
the rationale for the current investment positioning to ensure consistency with the Company’s objectives and investment policies.
The portfolio does not seek to reproduce the comparative index: investments are selected based upon the merit of individual
companies and therefore performance may well diverge from the short term fluctuations of the comparative index.
Other price risk sensitivity
A full list of the Company’s investments is given on pages 25 to 29. In addition, a geographical analysis of the portfolio and an
analysis of the investment portfolio by broad industrial or commercial sector is given on pages 30 and 31.
84.0% (2022 – 89.8%) of the Company’s net assets are invested in quoted equities. A 10% increase in quoted equity valuations
at 31 October 2023 would have increased total assets and total return by £49,124,000 (2022 – £69,613,000). A decrease of 10%
would have had an equal but opposite effect.
30.8% (2022 – 22.8%) of the Company’s net assets are invested in unlisted securities. The fair valuation of the unlisted
investments is influenced by the estimates, assumptions and judgements made in the fair valuation process (see 1(d) on pages 99
and 100).
A sensitivity analysis is provided below which recognises that the valuation methodologies employed involve subjectivity in their
significant unobservable inputs and illustrates the potential upside and downside risk resulting from the estimation uncertainty
associated with the fair valuation process. The inputs have been flexed by +/-10% to illustrate what the impact of movements
in these variables would have on the end valuations, with the exception of the Recent Transaction Price valuation approach as it
does not involve significant subjectivity.
As at
31 October 2023
Valuation technique
Significant unobservable inputs*
Fair value of
investments
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range
#
Sensitivity
%
Sensitivity to changes
in significant
unobservable inputs
Recent transaction
price
97,121 N/A a,b n/a n/a n/a n/a
Comparable
company
performance
77,481 Selection of
comparable
companies
a,b,c,f (27.9%)
– 24.2%
(3.4%) 10% If input comparable
company performance
changed by +/-10%,
the fair value would
change by £6,053,422
and -£5,581,056.
Market approach
using comparable
trading multiples
5,455 EV/LTM
revenue
multiple
a,b,c,d 4.10 –
4.9x
6.5x 10% If EV/LTM multiples
changed by +/-10%,
the fair value would
change by £454,432
and -£454,366.
Discount
for lack of
liquidity
e 10% n/a 10% If the illiquidity
discount is changed
by +/-10%, the fair
value would change
by £60,652 and
-£60,586.
Financial report
Annual Report and Financial Statements 2023
114
17 Financial instruments (continued)
iii. Other price risk (continued)
Other Price Risk Sensitivity (continued)
As at
31 October 2022
Valuation technique
Significant unobservable inputs*
Fair value of
investments
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range
#
Sensitivity
%
Sensitivity to
changes in significant
unobservable inputs
Recent transaction
price
82,745 n/a a,b n/a n/a n/a n/a
Comparable
company
performance
83,497 Selection of
comparable
companies
‡
a,b,f (6.2%) –
(64.8%)
(33.3%) 10% If input comparable
company performance
changed by +/-10%,
the fair value would
change by £4,497,000
and -£4,363,000
Market approach
using comparable
trading multiples
10,427 EV/LTM
revenue
multiple
¶
a,b,c,d 5.21x 5.2x 0% If EV/LTM multiples
changed by +/-10%,
the fair value would
change by £394,000
and -£393,000
Discount
for lack of
liquidity
a,b,c,d,e (10%) n/a 10% If the illiquidity
discount is changed
by +/-10%, the fair
value would change by
£47,000 and -£46,000
†
See explanation of significant unobservable inputs below (sections ‘a’ to ‘f’ as relevant).
# Weighted average is calculated by reference to the fair value of holdings as at the respective year end. This therefore gives a clearer indication of
the typical multiple or adjustment being applied across the portfolio.
‡ See explanation for the selection of comparable companies on page 115, section ‘c’. The percentage movements reflect the movement in overall
company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed.
¶ Enterprise value (EV) divided by the last twelve months (LTM) revenue.
* Significant unobservable inputs
The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of
each unlisted company valuation. An explanation of each of the key variable inputs is provided below and includes an indication of
the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(d)
on pages 99 and 100.
a. Application of valuation basis
Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each
investment. When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the
achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable
benchmarks and companies. For those investments where a trading Multiples approach can be taken, the methodology will
factor in revenue, earnings or net assets as appropriate for the investment, and where a suitable correlation can be identified
with the comparable companies then a regression analysis will be performed. Discounted cash flows will also be considered
where appropriate forecasts are available.
b. Probability estimation of liquidation events
The probability of a liquidation event such as a company sale, or alternatively an initial public offering (‘IPO’), is a key variable
input in the Transaction-based and Multiples-based valuation techniques. The probability of an IPO versus a company sale
is typically estimated from the outset to be 50:50 if there has been no indication by the company of pursuing either of these
routes. If the company has indicated an intention to IPO, the probability is increased accordingly to 75% and if an IPO has
become a certainty the probability is increased to 100%. Likewise, in a scenario where a company is pursuing a trade sale
the weightings will be adjusted accordingly in favour of a sale scenario, or in a situation where a company is underperforming
expectations significantly and therefore deemed very unlikely to pursue an IPO.
115
Edinburgh Worldwide Investment Trust plc
17 Financial instruments (continued)
iii. Other price risk (continued)
Significant unobservable inputs (continued)
c. Selection of comparable companies
The selection of comparable companies is assessed individually for each investment at the point of investment, and the
relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting
appropriate comparable companies are the industry sector in which they operate, the geography of the company’s operations,
the respective revenue and earnings growth rates and the operating margins. Typically, between 4 and 10 comparable
companies will be selected for each investment, depending on how many relevant comparable companies are identified. The
resultant revenue or earnings multiples derived will vary depending on the companies selected and the industries they operate
in and can vary in the range of 1x to 10x.
d. Estimated sustainable earnings
The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and
where it is not then sustainable revenues will be used in the valuation. The valuation approach will typically assess companies
based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most
reliable. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business
which will impact earnings going forward, then forward estimated revenue or earnings may be used instead.
e. Application of liquidity discount
The application of a liquidity discount will be applied either through the calibration of a valuation against the most recent
transaction, or by application of a specific discount. The discount applied where a calibration is not appropriate is typically
10%, reflecting that the majority of the investments held are substantial companies with some secondary market activity.
f. Selection of appropriate benchmarks
The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of
each company are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used for
comparison.
Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
Liquidity risk is not significant as the majority of the Company’s assets are investments in quoted securities that are readily
realisable. The Board monitors the exposure to any one holding.
The Company has the power to take out borrowings, which gives it access to additional funding when required. The Company’s
borrowing facilities are detailed in note 10 and the maturity profile of its borrowings are set out on page 112.
Credit risk
This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in
the Company suffering a loss.
This risk is managed as follows:
• where the Managers make an investment in a bond or other security with credit risk, that credit risk is assessed and then
compared to the prospective investment return of the security in question;
• the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate
segregates the assets of the Company. The Managers monitor the Company’s risk by reviewing the Custodian’s internal control
reports and reporting its findings to the Board;
• investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Managers.
Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s Custodian bank ensures
that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of
cash or securities away from the Company is completed; and
• cash is only held at banks that are regularly reviewed by the Managers.
As at 31 October 2023 the Company owned unquoted preference share securities (2022 – none). Some of these may have been
classified as debt by the issuer. There are no material amounts past due in relation to these securities. As these instruments
(alongside the ordinary share securities) have been recognised at fair value through profit and loss, the fair value takes into
account credit, market and other price risk.
Financial report
Annual Report and Financial Statements 2023
116
17 Financial instruments (continued)
iii. Other price risk (continued)
Credit risk exposure
The maximum exposure to credit risk at 31 October was:
2023
£’000
2022
£’000
Fixed interest investments 3,707 434
Cash and short term deposits 19,146 11,131
Debtors and prepayments 324 4,882
23,177 16,447
None of the Company’s financial assets are past due or impaired (2022 – none).
Fair value of financial assets and financial liabilities
The Directors are of the opinion that either the financial assets and liabilities of the Company are stated at fair value or where they
are measured at amortised cost, amortised cost is considered to be a reasonable approximation of fair value.
All short term floating rate borrowings are stated at book cost which is considered to be equal to their fair value given the facilities
are revolving credit facilities and as at 31 October 2023 amounted to £103,827,000 (2022 – £103,827,000).
Capital management
The capital of the Company is its share capital and reserves as set out in note 12 together with its borrowings (see note 10). The
objective of the Company is the achievement of long term capital growth by investing primarily in listed companies throughout
the world. The Company’s investment policy is set out on pages 44 to 45. In pursuit of the Company’s objective, the Board has a
responsibility for ensuring the Company’s ability to continue as a going concern and details of the related risks and how they are
managed are set out on page 75, pages 47 to 52 and pages 74 and 75, respectively. The Company has the authority to issue and
to buy back its shares (see pages 67 to 69) and changes to the share capital during the year are set out in note 11. The Company
does not have any externally imposed capital requirements other than the covenants on its loans which are detailed in note 10.
18 Subsequent events
Up to the date of this report the Company is not aware of any subsequent events.
19 Alternative Investment Fund Managers (AIFM) Directive
In accordance with the Alternative Investment Fund Managers Directive, information in relation to the Company’s leverage and the
remuneration of the Company’s AIFM, Baillie Gifford & Co Limited, is required to be made available to investors. In accordance
with the Directive, the AIFM’s remuneration policy is available at bailliegifford.com or on request (see contact details on the
back cover) and the numerical remuneration disclosures in respect of the AIFM’s relevant reporting period are also available
at bailliegifford.com. The Company’s maximum and actual leverage levels (see Glossary of terms and Alternative Performance
Measures on pages 130 to 132) at 31 October 2022 are shown below:
Leverage
Gross
method
Commitment
method
Maximum limit 2.50:1 2.00:1
Actual 1.18:1 1.18:1
Shareholder
information
Shareholder information
Annual Report and Financial Statements 2023
118
Notice of Annual
General Meeting
The Annual General Meeting of the Company will
be held at the offices of Baillie Gifford & Co, Calton
Square, 1 Greenside Row, Edinburgh EH1 3AN, on
Tuesday, 5 March 2024 at 12 noon.
To accurately reflect the views of shareholders of the
Company, the Board intends to hold the AGM voting
on a poll, rather than on a show of hands as has been
customary. The Board encourages all shareholders
to complete and return proxy voting forms enclosed
with the Annual Report as soon as possible and,
in any event, by no later than 12 noon on 1 March
2024, to ensure that your votes are represented
at the meeting (whether or not you intend to
attend in person). Should you or, if appointed, your
proxy, wish to watch the Annual General Meeting
electronically, please get in touch with the Managers
at trustenquiries@bailliegifford.com, who will be able
to provide you with details and instructions for doing
so. Please note you will not be able to vote and you
will not be counted as part of the quorum but you
will have the opportunity to watch the Managers’
presentation.
Should shareholders have questions for the Board
or the Managers or any queries as to how to vote,
they are welcome as always to submit them by
email to trustenquiries@bailliegifford.com or call
0800 917 2112. Baillie Gifford may record your call.
John
Lewis
A8 Princes Street
Georg
e Street
Calton Square
Bus
Station
Omni
Centre
Balmoral
Hotel
L
e
i
t
h
S
t
r
e
e
t
Queen Street
W
a
t
e
r
l
o
o
P
l
a
c
e
C
a
l
t
o
n
H
i
l
l
C
a
l
t
o
n
R
o
a
d
St Andrew Square
Edinburgh
Waverley
Station
Leith
Walk
A7 North Bridge
York Place
G
r
e
e
n
s
i
d
e R
o
w
Tram
Stop
St Andrew Square
St Andrew Square
Tram
Stop
Baillie Gifford
By Rail:
Edinburgh Waverley – approximately a 5 minute walk away
By Bus:
Lothian Buses local services include:
1, 5, 7, 8, 10, 12, 14, 15, 15A, 16, 22, 25, 34
By Tram:
Stops at St Andrew Square and Leith Walk
Access to Waverley Train Station on foot
119
Edinburgh Worldwide Investment Trust plc
Notice is hereby given that the twenty sixth Annual
General Meeting of Edinburgh Worldwide Investment
Trust plc (the ‘Company’) will be held at the offices
of Baillie Gifford & Co, Calton Square, 1 Greenside
Row, Edinburgh EH1 3AN on Tuesday, 5 March
2024 at 12 noon for the purposes of considering
and, if thought fit, passing the following resolutions,
of which Resolutions 1 to 11 will be proposed as
ordinary resolutions and Resolutions 12 and 13 will
be proposed as special resolutions:
01. To receive and adopt the Annual Report and
Financial Statements of the Company for the
financial year ended 31 October 2023 together
with the Reports of the Directors and of the
Independent Auditor thereon.
02. To approve the Directors’ Annual Report on
Remuneration for the financial year ended
31 October 2023.
03. To re-elect Helen James as a Director of the
Company.
04. To re-elect Caroline Roxburgh as a Director
of the Company.
05. To re-elect Jonathan Simpson-Dent as a Director
of the Company.
06. To re-elect Mungo Wilson as a Director of the
Company.
07. To re-elect Mary Gunn as a Director of the
Company.
08. To re-elect Jane McCracken as a Director of the
Company.
09. To re-appoint Ernst & Young LLP as Independent
Auditor of the Company to hold office until the
conclusion of the next Annual General Meeting
at which the Financial Statements are laid
before the Company.
10. To authorise the Directors to determine the
remuneration of the Independent Auditor of the
Company.
11. That, the Directors of the Company be and
they are hereby generally and unconditionally
authorised in accordance with section 551 of
the Companies Act 2006 (the ‘Act’) to exercise
all the powers of the Company to allot shares in
the Company and to grant rights to subscribe
for or to convert any security into shares in
the Company (‘Securities’) provided that such
authority shall be limited to the allotment of
shares and grant of rights in respect of shares
with an aggregate nominal value of up to
£1,270,941.24 (representing approximately
33% of the nominal value of the issued share
capital as at 23 January 2024), such authority
to expire at the conclusion of the next Annual
General Meeting of the Company after the
passing of this resolution or on the expiry of
15 months from the passing of this resolution,
whichever is the earlier, unless previously
revoked, varied or extended by the Company in
a general meeting, save that the Company may
at any time prior to the expiry of this authority
make an offer or enter into an agreement which
would or might require Securities to be allotted
or granted after the expiry of such authority
and the Directors shall be entitled to allot or
grant Securities in pursuance of such an offer or
agreement as if such authority had not expired.
Shareholder information
Annual Report and Financial Statements 2023
120
12. That, subject to the passing of Resolution 11
above, the Directors of the Company be and
they are hereby generally empowered, pursuant
to sections 570 and 573 of the Companies
Act 2006 (the ‘Act’) to allot equity securities
(within the meaning of section 560(1) of the
Act) for cash pursuant to the authority given by
Resolution 11 above and to sell treasury shares
for cash as if section 561(1) of the Act did not
apply to any such allotment or sale, provided
that this power:
a. expires at the conclusion of the next Annual
General Meeting of the Company after
the passing of this Resolution or on the
expiry of 15 months from the passing of this
Resolution, whichever is the earlier, save that
the Company may, before such expiry, make
an offer or agreement which would or might
require equity securities to be allotted after
such expiry and the Directors may allot equity
securities in pursuance of any such offer or
agreement as if the power conferred hereby
had not expired; and
b. shall be limited to the allotment of equity
securities or the sale of treasury shares up to
an aggregate nominal value of £385,133.71
(representing approximately 10% of the
nominal value of the issued share capital of
the Company as at 23 January 2024).
13. That, in substitution for any existing authority
but without prejudice to the exercise of any such
authority prior to the date hereof, the Company
be generally and unconditionally authorised, in
accordance with section 701 of the Companies
Act 2006 (the ‘Act’) to make market purchases
(within the meaning of section 693(4) of the Act)
of fully paid ordinary shares in the capital of the
Company (‘Ordinary Shares’) (either for retention
as treasury shares for future reissue, resale,
transfer or for cancellation) provided that:
a. the maximum aggregate number of Ordinary
Shares hereby authorised to be purchased
is 57,769,017 or, if less, the number
representing approximately 14.99% of the
issued ordinary share capital (excluding
treasury shares) of the Company as at the
date of the passing of this Resolution;
b. the minimum price (excluding expenses) which
may be paid for each Ordinary Share shall be
the nominal value of that share;
c. the maximum price (excluding expenses)
which may be paid for any Ordinary Share
purchased pursuant to this authority shall not
be more than the higher of:
i. 5% above the average closing price
on the London Stock Exchange of an
Ordinary Share over the five business days
immediately preceding the day of purchase;
and
ii. an amount equal to the higher of the
price of the last independent trade of an
Ordinary Share and the highest current
independent bid for an Ordinary Share
on the trading venue where the purchase
is carried out; and
d. unless previously varied, revoked or renewed
by the Company in a general meeting, the
authority hereby conferred shall expire at
the conclusion of the next Annual General
Meeting, save that the Company may, prior to
such expiry, enter into a contract to purchase
Ordinary Shares under such authority which
will or might be completed or executed wholly
or partly after the expiration of such authority
and may make a purchase of Ordinary Shares
pursuant to any such contract or contracts.
By Order of the Board
Baillie Gifford & Co Limited
Managers and Secretaries
2 February 2024
121
Edinburgh Worldwide Investment Trust plc
Notes
01. A shareholder who is entitled to attend and
vote at the meeting is entitled to appoint one
or more proxies to attend, speak and vote on
his/her behalf. Such proxy need not also be a
shareholder of the Company. If appointing more
than one proxy, each proxy must be appointed
to exercise rights attaching to different shares
held by the shareholder.
02. A proxy form for use by shareholders at the
meeting is enclosed with this document. Proxies
must be lodged with the Company’s registrar,
Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol BS99 6ZY or
eproxyappointment.com, not less than two days
(excluding non-working days) before the time
appointed for the meeting together with any
power of attorney or other authority (if any)
under which it is signed. Completion of the
proxy form will not prevent a shareholder from
attending the meeting and voting in person.
03. Only those shareholders having their name
entered on the Company’s share register not
later than 12 noon on 1 March 2024 or, if the
meeting is adjourned, at 12 noon two days
(excluding non-working days) prior to the date
of the adjourned meeting, shall be entitled to
attend and vote at the meeting in respect of
the number of shares registered in their name
at that time. Changes to the entries on the
Company’s share register after that time shall
be disregarded in determining the rights of any
shareholder to attend, speak and vote at the
meeting, notwithstanding any provision in any
enactment, the Articles of Association of the
Company or other instrument to the contrary.
04. Any corporation which is a shareholder can
appoint one or more corporate representatives
who may exercise on its behalf all of its powers
as a shareholder provided that they do not do so
in relation to the same shares.
05. CREST members who wish to appoint a
proxy or proxies through the CREST electronic
proxy appointment service may do so for the
meeting and any adjournment(s) thereof by
using the procedures described in the CREST
Manual and by logging on to the website
euroclear.com/CREST. CREST personal
members or other CREST sponsored members
and those CREST members who have appointed
a voting service provider(s), should refer to their
CREST sponsor or voting service provider(s),
who will be able to take the appropriate action
on their behalf.
In order for a proxy appointment or instruction
made using the CREST service to be valid,
the appropriate CREST message, regardless
of whether it constitutes the appointment of
a proxy or an amendment to the instruction
given to a previously appointed proxy, must
be transmitted so as to be received by the
Company’s registrars, Computershare Investor
Services PLC (ID 3RA50) by no later than
12 noon on 1 March 2024. No such message
received through the CREST network after this
time will be accepted. The time of receipt will be
taken to be the time from which the Registrars
are able to retrieve the message by enquiry to
CREST. CREST members and, where applicable,
their CREST sponsors or voting service
provider(s) should note that Euroclear does not
make available special procedures in CREST for
any particular messages. Normal system timings
and limitations will therefore apply in relation
to the input of CREST Proxy Instructions.
The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out
in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
06. The right to appoint a proxy does not apply
to persons whose shares are held on their
behalf by another person and who have been
nominated to receive communications from the
Company in accordance with section 146 of the
Companies Act 2006 (‘Nominated Persons’).
Nominated Persons may have a right under
an agreement with the member who holds
the shares on their behalf to be appointed
(or to have someone else appointed) as a proxy.
Alternatively, if Nominated Persons do not have
such a right, or do not wish to exercise it, they
may have a right under such an agreement
to give instructions to the person holding the
shares as to the exercise of voting rights. The
statement of the rights of members in relation
to the appointment of proxies in notes 1 and 2
above does not apply to Nominated Persons.
The rights described in these notes can be
exercised only by members of the Company.
Shareholder information
Annual Report and Financial Statements 2023
122
07. As at 23 January 2024 (being the latest
practicable date prior to the publishing of
this notice) the Company’s issued share
capital (excluding treasury shares) comprised
385,133,708 ordinary shares of 1p each.
Therefore, as at 23 January 2024, the total
number of voting rights exercisable at the
meeting is 385,133,708.
08. Any person holding 3% of the total voting
rights in the Company who appoints a person
other than the Chair as his/her proxy will need
to ensure that both he/she and such third
party comply with their respective disclosure
obligations under the Disclosure Guidance and
Transparency Rules.
09. The members of the Company may require the
Company to publish, on its website, (without
payment) a statement (which is also passed
to the Auditor) setting out any matter relating
to the audit of the Company’s Financial
Statements, including the Auditor’s report and
the conduct of the audit. The Company will
be required to do so once it has received such
requests from either members representing
at least 5% of the total voting rights of the
Company or at least 100 members who have
a relevant right to vote and hold shares in the
Company on which there has been paid up an
average sum per member of at least £100. Such
requests must be made in writing and must state
your full name and address and be sent to the
Company at Calton Square, 1 Greenside Row,
Edinburgh EH1 3AN.
10. Information regarding the meeting, including
information required by section 311A of the
Companies Act 2006, is available from the
Company’s page of the Managers’ website,
edinburghworldwide.co.uk.
11. Under section 319A of the Companies Act 2006,
the Company must answer any question relating
to the business being dealt with at the meeting
put by a member attending the meeting unless:
a. answering the question would interfere unduly
with the preparation for the meeting or involve
the disclosure of confidential information
b. the answer has already been given on a
website in the form of an answer to a question;
or
c. it is undesirable in the interests of the
Company or the good order of the meeting
that the question be answered.
12. Shareholders are advised that, unless otherwise
stated, any telephone number, website or e-mail
address which may be set out in this notice of
meeting or in any related documents (including
the proxy form) is not to be used for the
purposes of serving information or documents
on, or otherwise communicating with, the
Company for any purposes other than those
expressly stated.
13. No Director has a contract of service with the
Company.
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Edinburgh Worldwide Investment Trust plc
Edinburgh Worldwide is an investment
trust. Investment trusts offer investors the
following:
• participation in a diversified portfolio of shares;
• constant supervision by experienced professional
managers; and
• the Company is free from capital gains tax on
capital profits realised within its portfolio although
investors are still liable for capital gains tax on
profits when selling their investment.
How to invest
The Company’s shares are traded on the London
Stock Exchange. They can be bought by placing an
order with a stockbroker or by asking a professional
adviser to do so. If you are interested in investing
directly in Edinburgh Worldwide, you can do so
online. There are a number of companies offering
real time online dealing services.
Sources of further information on the
Company
The ordinary shares of the Company are listed on the
London Stock Exchange and their price is shown in
the Financial Times and The Scotsman under ‘Equity
Investment Instruments’. The price of shares can also
be found on the Company’s page on Baillie Gifford’s
website at edinburghworldwide.co.uk, Trustnet
at trustnet.co.uk and on other financial websites.
Company factsheets are also available on the Baillie
Gifford website and are updated monthly. These are
available from Baillie Gifford on request.
Edinburgh Worldwide share identifiers
ISIN GB00BHSRZC82
Sedol BHSRZC8
Ticker EWI
Legal Entity Identifier 213800JUA8RKIDDLH380
Key dates
The Company pays the minimum permissible level of
final dividend and no interim dividend. If a dividend
was payable this would be due soon after the Annual
General Meeting.
Share register enquiries
Computershare Investor Services PLC maintains the
share register on behalf of the Company. In the event
of queries regarding shares registered in your own
name, please contact the Registrars on
0370 707 1643.
This helpline also offers an automated self-service
functionality (available 24 hours a day, 7 days a
week) which allows you to:
• hear the latest share price;
• confirm your current share holding balance;
• confirm your payment history; and
• order Change of Address, Dividend Bank Mandate
and Stock Transfer forms.
By quoting the reference number on your share
certificate you can check your holding on the
Registrar’s website at investorcentre.co.uk.
Further shareholder
information
Shareholder information
Annual Report and Financial Statements 2023
124
They also offer a free, secure, share management
website service which allows you to:
• view your share portfolio and see the latest market
price of your shares;
• calculate the total market price of each
shareholding;
• view price histories and trading graphs;
• register to receive communications from the
Company, including the Annual Report and
Financial Statements, in electronic format;
• update bank mandates and change address
details; and
• use online dealing services.
To take advantage of this service, please log in at
investorcentre.co.uk and enter your Shareholder
Reference Number and Company Code (this
information can be found on the last dividend
voucher or your share certificate).
Electronic proxy voting
If you hold stock in your own name you can choose
to vote by returning proxies electronically at
eproxyappointment.com.
If you have any questions about this service please
contact Computershare on 0370 707 1643.
CREST proxy voting
If you are a user of the CREST system (including
a CREST Personal Member), you may appoint one
or more proxies or give an instruction to a proxy by
having an appropriate CREST message transmitted.
For further information please refer to the CREST
Manual.
Data protection
The Company is committed to ensuring the
confidentiality and security of any personal data
provided to it. Further details on how personal data
is held and processed on behalf of the Company
can be found in the privacy policy available on the
Company’s website edinburghworldwide.co.uk.
Automatic Exchange of Information
In order to fulfil its obligations under UK tax
legislation relating to the automatic exchange
of information, Edinburgh Worldwide Investment
Trust plc is required to collect and report certain
information about certain shareholders.
The legislation requires investment trust companies
to provide personal information to HMRC on certain
investors who purchase shares in investment trusts.
Accordingly, Edinburgh Worldwide Investment Trust
plc will have to provide information annually to
the local tax authority on the tax residencies of a
number of non-UK based certificated shareholders
and corporate entities.
Shareholders, excluding those whose shares are
held in CREST, who come on to the share register
will be sent a certification form for the purposes
of collecting this information.
For further information, please see HMRC’s Quick
Guide: Automatic Exchange of Information –
information for account holders gov.uk/guidance/
automatic-exchange-of-information-account-holders.
Third party data provider disclaimer
No third party data provider (‘Provider’) makes any
warranty, express or implied, as to the accuracy,
completeness or timeliness of the data contained
herewith nor as to the results to be obtained by
recipients of the data. No Provider shall in any
way be liable to any recipient of the data for any
inaccuracies, errors or omissions in the index data
included in this document, regardless of cause,
or for any damages (whether direct or indirect)
resulting therefrom.
No Provider has any obligation to update, modify
or amend the data or to otherwise notify a recipient
thereof in the event that any matter stated herein
changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have
any liability whatsoever to you, whether in contract
(including under an indemnity), in tort (including
negligence), under a warranty, under statute or
otherwise, in respect of any loss or damage suffered
125
Edinburgh Worldwide Investment Trust plc
by you as a result of or in connection with any
opinions, recommendations, forecasts, judgements,
or any other conclusions, or any course of action
determined, by you or any third party, whether or
not based on the content, information or materials
contained herein.
S&P Index data
The S&P Global Small Cap Index (‘Index’) is a
product of S&P Dow Jones Indices LLC, a division
of S&P Global, or its affiliates (‘SPDJI’). Standard
& Poor’s® and S&P® are registered trademarks of
Standard & Poor’s Financial Services LLC, a division
of S&P Global (‘S&P’); Dow Jones® is a registered
trademark of Dow Jones Trademark Holdings LLC
(‘Dow Jones’). Neither S&P Dow Jones Indices
LLC, Dow Jones Trademark Holdings LLC, their
affiliates nor their third party licensors make any
representation or warranty, express or implied, as
to the ability of any index to accurately represent
the asset class or market sector that it purports to
represent and neither S&P Dow Jones Indices LLC,
Dow Jones Trademark Holdings LLC, their affiliates
nor their third party licensors shall have any liability
for any errors, omissions, or interruptions of any
index or the data included therein.
MSCI Index data
Source: MSCI. The MSCI information may only be
used for your internal use, may not be reproduced
or redisseminated in any form and may not be
used as a basis for or a component of any financial
instruments or products or indices. None of the MSCI
information is intended to constitute investment
advice or a recommendation to make (or refrain from
making) any kind of investment decision and may
not be relied on as such. Historical data and analysis
should not be taken as an indication or guarantee
of any future performance analysis, forecast or
prediction. The MSCI information is provided on an
‘as is’ basis and the user of this information assumes
the entire risk of any use made of this information.
MSCI, each of its affiliates and each other person
involved in or related to compiling, computing or
creating any MSCI information (collectively, the
‘MSCI Parties’) expressly disclaims all warranties
(including, without limitation, any warranties of
originality, accuracy, completeness, timeliness,
non-infringement, merchantability and fitness for a
particular purpose) with respect to this information.
Without limiting any of the foregoing, in no event
shall any MSCI Party have any liability for any direct,
indirect, special, incidental, punitive, consequential
(including, without limitation, lost profits) or any
other damages (msci.com).
FTSE Index data
London Stock Exchange Group plc and its group
undertakings (collectively, the ‘LSE Group’).
© LSE Group 2022. FTSE Russell is a trading
name of certain of the LSE Group companies.
‘FTSE®’ ‘Russell®’, ‘FTSE Russell®’, is/are a trade
mark(s) of the relevant LSE Group companies and
is/are used by any other LSE Group company under
license. All rights in the FTSE Russell indexes or
data vest in the relevant LSE Group company which
owns the index or the data. Neither LSE Group
nor its licensors accept any liability for any errors
or omissions in the indexes or data and no party
may rely on any indexes or data contained in this
communication. No further distribution of data from
the LSE Group is permitted without the relevant
LSE Group company’s express written consent.
The LSE Group does not promote, sponsor or
endorse the content of this communication.
Shareholder information
Annual Report and Financial Statements 2023
126
Communicating
with shareholders
Trust magazine Edinburgh Worldwide Investment Trust web page at
edinburghworldwide.co.uk
Trust magazine
Trust is the Baillie Gifford investment trust magazine
which is published twice a year. It provides an insight
to our investment approach by including interviews
with our fund managers, as well as containing
investment trust news, investment features and
articles about the trusts managed by Baillie Gifford,
including Edinburgh Worldwide. Trust plays an
important role in helping to explain our products
so that readers can really understand them.
You can subscribe to Trust magazine or view a digital
copy at bailliegifford.com/trust.
Suggestions and questions
Any suggestions on how communications with
shareholders can be improved are welcome. Please
contact the Baillie Gifford Client Relations Team
(see contact details in the ‘Further Information’ box
on the back cover) and give them your suggestions.
They will also be very happy to answer questions
that you may have about Edinburgh Worldwide.
Edinburgh Worldwide on the Web
Up-to-date information about Edinburgh Worldwide
can be found on the Company’s page of the
Managers’ website at edinburghworldwide.co.uk.
You will find full details on Edinburgh Worldwide,
including recent portfolio information and
performance figures.
Client relations team contact details
You can contact the Baillie Gifford Client Relations
Team by telephone, email or post:
Telephone: 0800 917 2112
Your call may be recorded for training or monitoring
purposes.
Email: trustenquiries@bailliegifford.com
Website: bailliegifford.com
Address:
Baillie Gifford Client Relations Team
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
Please note that Baillie Gifford is not permitted
to give financial advice. If you would like advice,
please ask an authorised intermediary.
127
Edinburgh Worldwide Investment Trust plc
EWIT: growth companies
shaping our tomorrow
by Douglas Brodie
Investor Douglas Brodie talks
about his approach and exciting
opportunities for the portfolio.
A view from the frontiers
by Douglas Brodie
How Edinburgh Worldwide
Investment Trust spots potential
disruptors in turbulent times.
How Alnylam nips disease
in the bud
by Linda Geddes
The US-based company’s
technology promises to ‘silence’
genetic disorders and target some
of the world’s biggest killers.
© Illustration by David S. Goodsell, Scripps Research and RCSB Protein Data Bank. doi: 10.2210/rcsb_pdb/goodsell-gallery-037.
Shareholder information
Annual Report and Financial Statements 2023
128
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 Baillie Gifford
Japan 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 ESG
Principles and Guidelines as its policy on integration
of sustainability risks in investment decisions.
Baillie Gifford & Co believes that a company cannot
be financially sustainable in the long run if its
approach to business is fundamentally out of line
with changing societal expectations. It defines
‘sustainability’ as a deliberately broad concept which
encapsulates a company’s purpose, values, business
model, culture, and operating practices.
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.
The likely impact on the return of the portfolio
from a potential or actual material decline in the
Sustainable Finance Disclosure
Regulation (‘SFDR’)
value of investment due to the occurrence of
an environmental, social or governance event
or condition will vary and will depend on several
factors including but not limited to the type,
extent, complexity and duration of an event
or condition, prevailing market conditions and
existence of any mitigating factors.
Whilst consideration is given to sustainability
matters, there are no restrictions on the investment
universe of the Company, unless otherwise
stated within in its Investment Objective & Policy.
Baillie Gifford & Co can invest in any companies it
believes could create beneficial long-term returns for
investors. However, this might result in investments
being made in companies that ultimately cause a
negative outcome for the environment or society.
More detail on the Investment Manager’s approach
to sustainability can be found in the ESG Principles
and Guidelines document, available publicly on the
Baillie Gifford website bailliegifford.com and by
scanning the QR code below.
The underlying investments do not take into account
the EU criteria for environmentally sustainable
economic activities established under the EU
Taxonomy Regulation.
129
Edinburgh Worldwide Investment Trust plc
Shareholder information
Annual Report and Financial Statements 2023
130
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 all 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 their nominal book value. The value of the borrowings at book and fair value are
set out on page 116.
Net Asset Value (borrowings at fair value) (APM)
Borrowings are valued at an estimate of their market worth. The value of the borrowings at book and fair
value are set out on page 116.
Net Asset Value (reconciliation of NAV at book value to NAV at fair value)
2023
£’000
2022
£’000
Net asset value per ordinary share (borrowings at book value) 151.06p 197.70p
Shareholders’ funds (borrowings at book value) £584,737 £775,566
Add: book value of borrowings £103,249 £103,827
Less: fair value of borrowings (£103,249) (£103,827)
Shareholders’ funds (borrowings at fair value) £584,737 £775,566
Number of shares in issue 387,094,641 392,285,023
Net asset value per ordinary share (borrowings at fair value) 151.06p 197.70p
At 31 October 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.
Glossary of terms and Alternative
Performance Measures (‘APM’)
131
Edinburgh Worldwide Investment Trust plc
Net liquid assets
Net liquid assets comprise current assets less current liabilities, excluding borrowings.
Discount/premium (APM)
As stock markets 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.
2023 2022
Net asset value per ordinary share (a) 151.06p 197.70p
Share price (b) 124.80p 172.60p
(Discount)/premium ((b) – (a)) ÷ (a) (17.4%) (12.7%)
Total return (APM)
The total return is the return to shareholders after reinvesting the net dividend on the date that the share
price goes ex-dividend.
Compound annual return (APM)
The compound annual return converts the return over a period of longer than one year to a constant annual
rate of return applied to the compound value at the start of each year.
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers (‘AIFM’) Regulations, 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. The leverage figures
at 31 October 2023 are detailed on page 116.
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.
Shareholder information
Annual Report and Financial Statements 2023
132
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.
Gearing is the Company’s borrowings at book value less cash and cash equivalents (including any
outstanding trade settlements) expressed as a percentage of shareholders’ funds.
2023
£’000
2022
£’000
Borrowings (at book value) £103,249 £103,827
Less: cash and cash equivalents (£19,146) (£11,131)
Less: sales for subsequent settlement – (£4,598)
Add: purchases for subsequent settlement – £6,719
Add: buy-backs awaiting settlement £128 £433
Adjusted borrowings (a) £84,231 £95,250
Shareholders’ funds (b) £584,737 £775,566
Gross gearing (a) as a percentage of (b) 14% 12%
Potential gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds.
2023
£’000
2022
£’000
Borrowings (at book value) (a) £103,249 £103,827
Shareholders’ funds (b) £584,737 £775,566
Potential gearing (a) as a percentage of (b) 18% 13%
Ongoing charges (APM)
The total expenses (excluding dealing and borrowing costs) incurred by the Company as a percentage of the
daily average net asset value (with borrowings at market value), as detailed below.
2023
£’000
2022
£’000
Investment management fee £4,241 £5,107
Other administrative expenses £915 £953
Total expenses (a) £5,156 £6,060
Average daily cum-income net asset value
(with debt at fair value)
(b) £731,407 £959,272
Ongoing charges (a) as a percentage of (b) 0.70% 0.63%
Share split
A share split (or stock split) is the process by which a company divides its existing shares into multiple
shares. Although the number of shares outstanding increases, the total value of the shares remains the
same with respect to the pre-split value.
Unlisted (private) company
An unlisted company means a company whose shares are not available to the general public for trading
and not listed on a stock exchange.
133
Edinburgh Worldwide Investment Trust plc
Company
information
Directors
Chair: Henry Strutt
Mary Gunn
Helen James
Jane McCracken
Caroline Roxburgh
Jonathan Simpson-Dent
Mungo Wilson
Registrar
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
T: +44 (0)370 707 1643
Alternative Investment Fund
Managers, Secretaries and
Registered Office
Baillie Gifford & Co Limited
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)131 275 2000
bailliegifford.com
Depositary
The Bank of New York Mellon
(International) Limited
1 Canada Square
London E14 5AL
Company Broker
Numis Securities Limited
45 Gresham Street
London EC2V 7BF
Independent Auditor
Ernst & Young LLP
25 Churchill Place
Canary Wharf
London E14 5EY
Company details
edinburghworldwide.co.uk
Company Registration No. SC184775
ISIN: GB00BHSRZC82
Sedol: BHSRZC8
Ticker: KPC
Legal Entity Identifier:
213800JUA8RKIDDLH380
Further information
Client Relations Team
Baillie Gifford & Co
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)800 917 2112
trustenquiries@bailliegifford.com
Calton Square, 1 Greenside Row, Edinburgh EH1 3AN
Telephone +44 (0)131 275 2000
edinburghworldwide.co.uk