Final Results

RNS Number : 4044M

Mid Wynd Inter Inv Trust PLC

16 August 2011

 



MID WYND INTERNATIONAL INVESTMENT TRUST PLC

Results for the year to 30 June 2011

In the year to 30 June 2011 net asset value per share rose by 24.7% compared to a 19.2% rise in the comparative index, the FTSE World Index (in sterling terms).  The Company's share price rose by 35.8%.

·	Performance was creditable despite the short term headwind of the Company's continued heavy exposure to developing markets which are currently experiencing rising interest rates.
·	Stock selection outweighed asset allocation and thematic factors in driving returns.
·	A final dividend of 10.0p per share is being proposed, making full year dividends of 16.5p, an increase of 6.5% on the previous year.
·	During the year 310,000 shares were issued at a premium to net asset value.
·	A five-for-one share subdivision is proposed with the aim of improving liquidity in the Company's shares.

Past performance is not a guide to future performance. The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. You should view your investment as long term. The Company has borrowed money to make further investment (sometimes known as gearing). The risk is that when this money is repaid by the Company, the value of the investments may not be enough to cover the borrowing and interest costs, and the Company will make a loss. If the Company's investments fall in value, any borrowings will increase the amount of this loss. The Company can buy back and cancel its own shares. The risks from borrowing, referred to above, are increased when the Company buys back and cancels its shares. You can find up to date performance information about Mid Wynd on the Mid Wynd page of the Managers' website www.midwynd.co.uk .

The objective of Mid Wynd International Investment Trust PLC is to achieve capital and income growth by investing on a worldwide basis. The Company has total assets of £71.8m (before deduction of bank loans of £5.5m).

Mid Wynd is managed by Baillie Gifford & Co, the Edinburgh based fund management group with around £69 billion under management and advice at 15 August 2011.

16 August 2011

For further information please contact:

Michael MacPhee, Manager,

Mid Wynd International Investment Trust PLC                                      0131 275 2000

Roland Cross, Director, Broadgate Marketing                                       020 7726 6111

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

Chairman's Statement

Performance

In the year to 30 June 2011, net asset value rose by 24.7% to 1,257.2p per share, the share price increased 35.8% to 1,270.0p and the FTSE World Index rose by 19.2% in sterling terms. Overall, the year has been a creditable one despite a fairly persistent headwind from inflationary pressures in developing economies and a steady stream of interest rate hikes in these countries in consequence. Western recovery limps along at an unusually subdued pace, especially subdued in the context of the uniquely aggressive monetary stimulus that preceded and has accompanied it. There are oases of hope within this otherwise parched Western desert. German export led growth has been notable, for example, assisted by a currency weakened by the problems of the periphery. The Greek tragedy is ongoing with no real catharsis in sight but equally little sign that those at the centre of the EU project are prepared to let this problem run entirely out of control. For the moment, Greece and fellow olive belt countries serve to prevent undue Euro strength. More broadly, if the West is weakening its currencies and exporting its way out of trouble so far as it can, it may be that developing economies are changing their strategy too. Their 'new normal' is domestic investment, real wage growth, productivity improvements, credit growth and consumption. It is not yet clear, however, that tolerating currency strength is as much part of their new regimen as enforcing currency weakness was of their old one. So, it is not yet clear either that the long-awaited rebalancing of the global economy can happen without major speed bumps.

Earnings and Dividend

We had expected earnings to fall this year, but in the event the Company generated a revenue return of 17.16p per share for the year to 30 June 2011 compared with 16.85p per share for the previous year. Marine Harvest was again a notable contributor, together with Letshego and Ryanair, against a general background of positive dividend news across the portfolio. Several higher yielding additions to the equity portfolio during the year offset the fall in bond income and benefited the Company's revenue position.

A final dividend of 10p will be recommended, taking the full year total to 16.5p, an increase of 6.5% on last year. For next year, we anticipate revenue earnings broadly in line with the current year. Our accumulated revenue reserve stands at 20p per share which provides flexibility to maintain or increase dividends should a shortfall occur in future years.

Discount and share buybacks/ issuance

The Company's shares have traded at a premium for some months now and, to satisfy demand, 310,000 new shares have been issued (from within the Company's block listing facility) raising £3,875,000. The new shares have been issued at small premia to NAV, thereby enhancing NAV by 0.15%. In addition to ongoing authority to buy back shares, the Company is now in a position to hold any shares bought back in Treasury for reissue or cancellation at a later date. Over time this ought to assist in improving liquidity and enabling today's narrower bid-offer spread to persist or improve further, as might the proposed five for one share split outlined below.

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

Chairman's Statement (Ctd)

Sub-division

Mid Wynd's shares have been trading at a share price over £10 since early September 2010 and the Board is aware that having a share price of this magnitude means that savers who make small monthly share purchases through the Baillie Gifford Share Plan may find that a considerable proportion of their monthly payment remains uninvested. Participants in the Dividend Reinvestment Plan are similarly affected. The Board has decided it would be appropriate to sub-divide each of the existing shares of 25p nominal value into five shares of 5p nominal value. Such a sub-division requires shareholder approval and this will be dealt with by Resolution 13 set out in the Notice of Annual General Meeting in the Annual Report.

Outlook

What looked bad last year looks much the same this year. What looked good structurally mainly still looks good. What has changed may be simplified as follows: corporate margins have risen again and share prices have risen to reflect that. Real standards of living are a bit lower in the West and a bit higher elsewhere. Inflation is an increasing problem in most places and commodity prices have been very strong as old world currencies have been weak. Quantitative easing has had a remarkable effect on asset prices and rather little on economic activity other than those in the developing world to which much of the newly created money has fled. Quantitative easing has been an extraordinary experiment. Money has so far gone where it is least needed. This has cauterised the wound but done nothing to cure the infection.

On the bright side, corporations have rarely if ever done so well. Margins and returns on capital are at or near record highs. Western workforces are exposed to the full force of global competition and lack bargaining power. Balance sheet deleveraging has been dramatic and dividend expectations have risen repeatedly. By contrast, government finances are still in a sorry state. We expressed the view last year that sovereign bond yields seemed to us lower than was consonant with the short and long term fiscal health of the issuers. This view, which we continue to hold, led us to reduce bond holdings radically. While there are a few notable instances of differentiation within the Eurozone, the main sovereign yields have not much changed over the year. Short interest rates in the West are still at very low levels, increasingly negative in real terms while budget deficits remain ugly and are mostly growing uglier.

Debasing one's currency, inducing higher inflation, describing it as temporary and running negative real interest rates has been the first line response. Austerity, as we argued last year, is much disliked and too much is usually self-defeating. Greece is in the process of confirming this contention. No new structural solution for Western economies has been found over the past year, and the potential for some sort of market led upheaval has increased in the meantime.

Upheaval, though, remains a secondary prospect to the more likely short term 'extend and pretend' outcome of muddling through and hoping that 'something will turn up'. Like Mr Micawber, affected Western governments appear to have wound up in a modern form of debtors' prison. Micawber eventually makes a successful fresh start by emigrating to Australia, a leading developing economy of its day. As we have noted before, our portfolio has largely done likewise. While we hold a lot of British shares, for example, only a tiny proportion can be said to be exposed to the UK domestic economy.

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

Chairman's Statement (Ctd)

Overshadowed by the ongoing saga of excess leverage, governmental dysfunction and rising sovereign risk, the pace of change on the ground in the world of business is accelerating and the creative elements of creative destruction are cause both for optimism and for investment enthusiasm. We inhabit a world full of new consumers, new technologies and new types of businesses imbued with the potential to evolve rapidly and innovate profitably. Rapid capital-light growth is frequently proving possible. Our portfolio strives to capture as much of this opportunity as it can.

Taking both positive and negative elements into account, we have opted to remain fairly fully invested but have recently taken out some insurance against the possibility that sovereign distress becomes and remains the main story. It is plausible to envisage major bond markets selling off and adverse short term consequences for most investments. With volatility then very low, and insurance consequently reasonably priced, we sold index futures equivalent to a fifth of the value of gross assets and capped related potential liabilities by purchasing out of the money call options to an equivalent gross value.

This markedly reduces net exposure to equities. It is an alternative to simply increasing the level of cash we hold relative to equities, as doing that would have various unintended consequences. First, cash is no panacea, with real interest rates negative in most places. Secondly, we wish to address a lowish yet significant probability; our central case remains that a forward-looking equity portfolio is as attractive or is a more attractive long term proposition than alternatives. Third, even if we are right to be concerned, timing our concern appropriately is nearly impossible - the insurance has been taken out to last until mid June next year.

In summary, macro-economic uncertainty is high as structural western funding concerns are neither going away nor being adequately addressed. Corporate winners, however, are thriving as rarely before and major structural changes in the corporate landscape are underway. Online retailers are winning market share from high streets and malls. The developing world is building and exploiting infrastructure. Rising living standards there are leading to growth in consumption and changes in the nature of demand. Productivity enhancing technologies and capital spending are providing great leaps forward in many industries. Healthcare is throwing up innovation that looks likely to transform human lives over coming decades. We have set ourselves to cater for the main elements of this outlook in trying to both preserve shareholders' capital and make worthwhile returns on it as opportunity allows.

Annual General Meeting and Board Changes

The Company's Annual General Meeting will be held at noon on Monday 10 October 2011, at the offices of Baillie Gifford & Co, as outlined in the Notice of Meeting at the end of the Annual Report. To celebrate thirty years since its listing on the London Stock Exchange, the Company will offer its shareholders a buffet lunch following the meeting. This will be my last AGM as Chairman, having served as your Chairman since 1989. I look forward to seeing you there, and would encourage you to indicate your intention to attend by marking your Proxy Forms or Forms of Direction as appropriate.

You will note that the Notice of Meeting includes two Resolutions which relate to Directors' fees. The first, number 2, is to approve the Directors' Remuneration Report, which appears on page 28 of the Annual Report and notifies you of an increase in the level of fees to take effect from 1 July 2011. The second, number 12, is to authorise an increase in the overall limit on Directors' fees to £125,000 per annum. Although the current level of fees is within the agreed limit the increase provides flexibility for the appointment of a fifth Director and an increase in fee levels in future years.

I am sorry to finish on a sad note, but I would like to express regret at the death earlier this year of Bruce Johnston. Bruce was well known to many of the Company's shareholders and played an important role in the flotation of Mid Wynd's shares on the Stock Exchange in 1981 as well as giving valuable service as a Director from 1989 to 2005.

Patrick MS Barron

Chairman

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

 

The following is the unaudited preliminary statement for the year to 30 June 2011 which was approved by the Board on 15 August 2011.  The Directors of Mid Wynd International Investment Trust PLC are recommending to the Annual General Meeting of the Company to be held on 10 October 2011 the payment of a final dividend of 10.0p (9.0p last year) per ordinary share, making a total of 16.5p (15.5p last year) per ordinary share for the year ended 30 June 2011.

INCOME STATEMENT

(unaudited)

	For the year ended 30 June 2011				For the year ended 30 June 2010
	Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	12,589	12,589		-	11,977	11,977
Currency losses	-	(117)	(117)		-	(293)	(293)
Income (note 2)	1,338	-	1,338		1,263	-	1,263
Investment management fee	(159)	(159)	(318)		(126)	(126)	(252)
Other administrative expenses	(186)	-	(186)		(168)	-	(168)
Net return before finance costs and taxation	993	12,313	13,306		969	11,558	12,527
Finance costs of borrowings	(54)	(54)	(108)		(45)	(45)	(90)
Net return on ordinary activities before taxation	939	12,259	13,198		924	11,513	12,437
Tax on ordinary activities	(63)	-	(63)		(77)	7	(70)
Net return on ordinary activities after taxation	876	12,259	13,135		847	11,520	12,367
Net return per ordinary share (note 3)	17.16p	239.99p	257.15p		16.85p	229.23p	246.08p
Dividends paid and proposed per ordinary share (note 4)	16.50p				15.50p

The total column of the Income Statement is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

BALANCE SHEET

 (unaudited)

30 June 2011 £'000		30 June 2010 £'000
Fixed Assets
Investments held at fair value through profit or loss	70,360		54,586
Current Assets
Debtors	238		1,378
Cash and deposits	1,359		402
	1,597		1,780
Creditors Amounts falling due within one year (note 5)	(5,668)		(2,957)
Net current liabilities	(4,071)		(1,177)
Total assets less current liabilities	66,289		53,409
Creditors Amounts falling due after more than one year (note 5)	-		(3,347)
Total net assets	66,289		50,062
Capital and reserves
Called-up share capital	1,318		1,241
Capital redemption reserve	16		16
Share premium	3,818		20
Capital reserve	59,554		47,295
Revenue reserve	1,583		1,490
Shareholders' funds	66,289		50,062
Net asset value per ordinary share (after deducting borrowings at fair value)	1,257.2p		1,008.2p
Net asset value per ordinary share (after deducting borrowings at par)	1,257.2p		1,008.7p

DISTRIBUTION OF ASSETS

 (unaudited)

			30 June 2011 %		30 June 2010 %
Equities:	United Kingdom		24.3		20.8
	Continental Europe		20.3		19.7
	North America		14.6		18.5
	Asia Pacific including Japan		7.8		6.3
	Emerging Markets		25.0		28.5
Total Equities			92.0		93.8
Fixed interest			6.0		4.7
Net liquid assets			2.0		1.5
Total assets (before deduction of bank loans)			100.0		100.0

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

SUMMARISED CASH FLOW STATEMENT (unaudited)
	For the year ended 30 June 2011			For the year ended 30 June 2010
	£'000	£'000		£'000	£'000
Net cash inflow from operating activities		828			755
Net cash outflow from servicing of finance		(109)			(90)
Taxation
Corporation tax paid	-			(154)
Total tax paid		-			(154)
Financial investment
Acquisitions of investments	(29,760)			(30,573)
Disposals of investments	27,242			28,147
Realised currency profit	42			29
Net cash outflow from financial investment		(2,476)			(2,397)
Equity dividends paid (note 4)		(783)			(754)
Net cash outflow before use of liquid resources and financing		(2,540)			(2,640)
Financing
Shares issued	3,875			-
Shares purchased for cancellation	(378)			(238)
Bank loans drawn down	-			3,137
Net cash inflow from financing		3,497			2,899
Increase in cash		957			259
Reconciliation of net cash flow to movement in net debt
Increase in cash in the year		957			259
Net cash inflow from bank loans		-			(3,137)
Exchange movement on bank loans		(159)			(322)
Movement in net debt in the year		798			(3,200)
Net debt at 1 July		(4,945)			(1,745)
Net debt at 30 June		(4,147)			(4,945)
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation		13,306			12,527
Gains on investments		(12,589)			(11,977)
Currency losses		117			293
Amortisation of fixed interest book cost		(57)			(70)
Decrease in accrued income		86			44
Decrease in debtors		2			10
Increase in creditors		28			9
Overseas tax suffered		(65)			(58)
Income tax suffered		-			(23)
Net cash inflow from operating activities		828			755

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

(unaudited)

For the year ended 30 June 2011

	Share capital £'000	Capital redemption reserve £'000	Share premium £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 July 2010	1,241	16	20	47,295	1,490	50,062
Net return on ordinary activities after taxation	-	-	-	12,259	876	13,135
Shares issued	77	-	3,798	-	-	3,875
Dividends paid during the year (note 4)	-	-	-	-	(783)	(783)
Shareholders' funds at 30 June 2011	1,318	16	3,818	59,554	1,583	66,289

For the year ended 30 June 2010

	Share capital £'000	Capital redemption reserve £'000	Share premium £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 July 2009	1,257	-	20	36,391	1,397	39,065
Net return on ordinary activities after taxation	-	-	-	11,520	847	12,367
Shares purchased for cancellation	(16)	16	-	(616)	-	(616)
Dividends paid during the year (note 4)	-	-	-	-	(754)	(754)
Shareholders' funds at 30 June 2010	1,241	16	20	47,295	1,490	50,062

*Capital reserve balance as at 30 June 2011 included an investment holding gain of £16,251,000 (30 June 2010: gain of £8,682,000).

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

THIRTY LARGEST HOLDINGS at 30 June 2011 (unaudited)
Name	Region		Business	2011		2010
				Value £'000	% of total assets	Value £'000
Level E Maya Fund		United Kingdom	Artificial intelligence based   algorithmic trading	2,454	3.4	2,473
Odontoprev		Emerging Markets	Dental health services - Brazil	2,286	3.2	941
Ocean Wilsons		United Kingdom	Tugboats, platform supply   vessels and container handling -   Brazil	1,755	2.4	1,145
ASOS		United Kingdom	Online fashion retailer	1,710	2.4	774
Kone		Continental Europe	Elevators	1,704	2.4	1,167
Athena Debt Opportunities    Fund		Fixed Interest	Distressed debt	1,622	2.3	1,303
YOOX		Continental Europe	Online fashion retailer	1,399	1.9	-
IP Group		United Kingdom	Commercialisation of intellectual   property	1,254	1.7	-
Seadrill		Continental Europe	Deep water oil rigs	1,247	1.7	826
Dragon Oil		Emerging Markets	Oil and gas exploration and   production - Turkmenistan	1,126	1.6	570
Santos Brasil Participacoes		Emerging Markets	Container handling and   logistics services - Brazil	1,064	1.5	525
Schindler		Continental Europe	Elevators	1,061	1.5	796
China Merchants Bank		Emerging Markets	Bank - China	1,056	1.5	1,137
Cetip		Emerging Markets	Investment services - Brazil	1,026	1.4	558
Reinet Investments SCA		Continental Europe	Investment holding company	993	1.4	835
Brazil CPI Linked   15/05/2045		Fixed Interest	Brazilian inflation-linked bond	939	1.3	-
So-Net Entertainment		Asia Pacific including Japan	Internet services - Asia	916	1.3	-
Better Capital		United Kingdom	Fund investing in distressed   businesses	885	1.2	810
Novozymes		Continental Europe	Enzyme producer	878	1.2	622
Naspers		Emerging Markets	Media company - South Africa and    China	875	1.2	563
Digital Garage		Asia Pacific including Japan	Internet business incubator - Japan	856	1.2	-
Edenred		Continental Europe	Prepaid service vouchers	856	1.2	-
Kenmare Resources		Emerging Markets	Natural resource mining -   Mozambique	813	1.1	206
Healthspring		North America	Medicare	790	1.1	665
Chunghwa Telecom		Emerging Markets	Fixed line, mobile, broadband   and internet services - Taiwan	753	1.0	-
Start Today		Asia Pacific including  Japan	Online fashion retailer - Japan	731	1.0	-
The Biotech Growth Trust		United Kingdom	Biotechnology investment trust	723	1.0	600
Burford Capital		United Kingdom	Fund of lawsuits	714	1.0	370
Verizon Communications		North America	Broadband and telecommunications	709	1.0	-
Nanoco		United Kingdom	Quantum dot manufacture,   second generation LEDs	705	1.0	-
				33,900	47.1	16,886

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

NOTES

(unaudited)

1.	The financial information within this preliminary announcement has been extracted from the unaudited financial statements for the year to 30 June 2011 and has been prepared on the basis of the accounting policies set out in the Company's Annual Report and Financial Statements at 30 June 2010.
				30 June 2011 £'000					30 June 2010 £'000
2.	Income
	Income from investments and interest receivable			1,335					1,257
	Other income			3					6
				1,338					1,263
				30 June 2011					30 June 2010
3.	Net return per ordinary share
	Revenue return			17.16p					16.85p
	Capital return			239.99p					229.23p
	Total return			257.15p					246.08p
	Revenue return per ordinary share is based on the net revenue on ordinary activities after taxation of £876,000 (2010 - £847,000) and on 5,108,300 (2010 - 5,025,506) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share is based on the net capital gain for the financial year of £12,259,000 (2010 - net capital gain of £11,520,000) and on 5,108,300 (2010 - 5,025,506) ordinary shares, being the weighted average number of ordinary shares in issue during the year. There are no dilutive or potentially dilutive shares in issue.
4.		Ordinary Dividends	2011			2010		2011 £'000		2010 £'000
		Amounts recognised as distributions in the year:
		Previous year's final (paid 7 October 2010)	9.00p			8.50p		447		427
		Interim (paid 1 April 2011)	6.50p			6.50p		336		327
			15.50p			15.00p		783		754
		We also set out below the total dividends paid and payable in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered.  The revenue available for distribution by way of dividend for the year is £876,000 (2010 - £847,000).

MID WYND INTERNATIONAL INVESTMENT TRUST PLC NOTES (CTD) (unaudited)
4.	Ordinary Dividends (Ctd)
		2011		2010		2011 £'000		2010 £'000
	Dividends paid and payable in respect of the year:
	Interim dividend per ordinary share (paid 1 April 2011)	6.50p		6.50p		336		327
	Proposed final dividend per ordinary share (payable 14 October 2011)	10.00p		9.00p		527		447
		16.50p		15.50p		863		774
	If approved the recommended final dividend will be paid on 14 October 2011 to all shareholders on the register at the close of business on 9 September 2011. The ex-dividend date is 7 September 2011. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for receipt of elections for this dividend is 23 September 2011.
5.	Creditors falling due within one year include a £2 million bank loan repayable on 27 August 2011 (2010 - £2 million) and bank loans of ¥300 million (2010 - ¥300 million) and €1.32 million (2010 - €1.32 million) which are repayable on 27 February 2012 and were creditors falling due in more than one year in the previous year's financial statements.
6.	In the year to 30 June 2011 the Company allotted 310,000 ordinary shares with a nominal value of £77,500 for a total consideration of £3,875,000 (2010 - bought back 65,000 ordinary shares with a nominal value of £16,250 at a total cost of £616,000). At 30 June 2011 the Company had authority to buy back 743,918 ordinary shares and to allot a further 186,276 ordinary shares without application of pre-emption rights in accordance with the authorities granted at the AGM in September 2010.
7.	The Annual Report and Financial Statements will be available on the Managers' website www.bailliegifford.com  on or around 30 August 2011.
8.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 June 2011. The financial information for 2010 is derived from the statutory accounts for 2010 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2010 accounts, their report was unqualified and did not contain a statement under sections 495 to 497 of the Companies Act 2006.  The statutory accounts for 2011 will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
9.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

                                                                        - ends -                                                  

 

END

 

 

FR UVANRAOAWAAR