TIDMEWI
RNS Number : 7510Y
Edinburgh Worldwide Inv Trust PLC
08 December 2017
RNS Announcement: Preliminary Results
Edinburgh Worldwide Investment Trust plc
========================================
Legal Entity Identifier: 213800JUA8RKIDDLH380
The following is the unaudited preliminary statement for the
year to 31 October 2017 which was approved by the Board on 7
December 2017.
-- Over the year to 31 October 2017, the Company's net asset value per share, cum income with debt at fair value,
increased by 31.6% and the share price by 43.0%. The comparative index, the S&P Global Small Cap Index*,
increased by 13.4% in sterling terms.
-- The revenue account for 2017 is running at a deficit after the deduction of operating expenses, so once again no
final dividend is being paid. The Company's objective remains that of generating capital growth. Should the level
of underlying income increase in future years, the Board will seek to distribute the minimum permissible to
maintain investment trust status.
-- A number of the Company's holdings contributed to the positive performance, notably: Alnylam Pharmaceutical, a
gene silencing company; LendingTree, an online loan marketplace; and IPG Photonics, a manufacturer of
fibre-lasers used in metal processing. 4D Pharma, a company harnessing bacteria for medicine, was the notable
detractor to performance.
-- As at the year end, the Company held three unlisted equity investments: Oxford Nanopore Technologies, Unity
Biotechnology and Spire Global accounting for 2.1% of total assets (2016 - 2.8% of total assets in four
holdings).
Summary
-------
Edinburgh Worldwide aims to achieve long term capital growth by
investing in listed companies throughout the world. The Trust has
total assets of GBP387.9 million (before deduction of loans of
GBP35.0 million) as at 31 October 2017.
Edinburgh Worldwide is managed by Baillie Gifford & Co
Limited, the Edinburgh based fund management group with around
GBP175 billion under management and advice as at 7 December
2017.
Past performance is not a guide to future performance.
The value of an investment and any income from it is not
guaranteed and may go down as well as up and investors may not get
back the amount invested. This is because the share price is
determined by the changing conditions in the relevant stockmarkets
in which the Company invests and by the supply and demand for the
Company's shares. Investment in investment trusts should be
regarded as medium to long-term. You can find up to date
performance information about Edinburgh Worldwide on the Edinburgh
Worldwide page of the Managers' website at
http://www.edinburghworldwide.co.uk++
(*) See disclaimer at the end of this announcement.
++ Neither the contents of the Managers' website nor the
contents of any website accessible from hyperlinks on the Managers'
website (or any other website) is incorporated into, or forms part
of, this announcement.
8 December 2017
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co
Tel: 0131 275 2000
Roland Cross, Director, Four Broadgate
Tel: 020 3697 4200
Chairman's Statement
====================
Performance
In the year to 31 October 2017 the Company's net asset value
('NAV') per share, when calculated by deducting borrowings at fair
value, increased by 31.6% and the share price by 43.0%. The
comparative index, the S&P Global Small Cap Index, increased by
13.4% in sterling terms during this period. Over the course of the
year the discount to net assets with borrowings deducted at fair
value averaged 7.9% and stood at 3.9% as at 31 October 2017.
Portfolio turnover was 13.2% compared to 15.6% in 2016 and the
ongoing charges have reduced from 0.92% to 0.87%, partly as a
consequence of the tiered management fee.
The good relative and absolute performance was driven by a
number of holdings, most notably Alnylam Pharmaceuticals, a gene
silencing company, LendingTree, an online loan marketplace, and IPG
Photonics, a manufacturer of fibre-lasers used in metal processing.
All three companies are headquartered in the United States. On
balance, the fundamental performance of the holdings in the
portfolio continues to be progressing as hoped. Greater detail on
this can be found within the Managers' Review below.
For interest, since the broadening of the Company's investment
policy, at the end of January 2014, to target less mature
entrepreneurial businesses at the time of initial investment, the
Company's NAV per share, when calculated by deducting borrowings at
fair value, has increased by 65%, the share price by 71% and the
comparative index by 59% in sterling terms. Over the fourteen years
that Baillie Gifford has been managing the Company's assets, NAV
per share has increased by 389%, the share price by 494% and the
comparative index(*) by 284%, all in total return terms.
Unlisted Investments
The Company is permitted to invest up to 5% of total assets in
unlisted equity investments, in aggregate, at time of acquisition.
As at the Company's year end, the portfolio weighting in unlisted
equity investments stood at 2.1% of total assets, invested in three
holdings (2016 - 2.8% of total assets in four holdings). There was
one new unlisted purchase during the year, Spire Global, which
designs, manufactures and operates a constellation of 'nano
satellites'. Further information can be found within the Managers'
Review.
We were forced sellers of two of our unlisted holdings,
Skyscanner and Souq, which were acquired by Ctrip.com and Amazon
respectively. Although these were sold at a profit, this was a
disappointing outcome for us as we had hoped that these would be
long term holdings with the potential for more significant upside
returns. The ability to invest in unlisted equities through a
closed ended vehicle is one of the notable benefits of the
investment trust structure and a differentiating factor versus open
ended peers. The loss of a holding, listed or unlisted, due to a
merger or takeover, is usually one of the notable headwinds faced
by the Managers in achieving significant returns over the long
term.
Borrowings
The extent and range of equity gearing is discussed by the Board
and Managers at each Board meeting. Together we agree that the
Company should typically be geared to equities to maximise
potential returns, with the current parameters set at +5% to +15%.
Over the year, the invested equity gearing ranged between 5.5% and
9.0%, and stood at 8.6% at the financial year end (2016 -
8.8%).
The Company has a five year fixed rate multi-currency loan from
National Australia Bank Limited, expiring in September 2019. At
present, drawings are EUR9.4 million, US$25.6 million and GBP7.5
million, with a weighted average interest rate of 2.80%.
Earnings and Dividend
As stated in my predecessor's reports, the Company's objective
is that of generating capital growth and investors should not
expect any income from this investment. This year the net revenue
return per share was a positive 0.30p, due largely to a one-off
refund of French withholding tax and associated interest (2016 -
deficit of 0.12p). However, the revenue account for 2017 is running
at a deficit after the deduction of operating expenses, so 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.
Investment Approach
The ability to identify the companies that value innovation, and
have the capability to develop commercial opportunities around it,
is key to unearthing the market leaders of the future and is a key
focus for the Managers. Such companies can be expected to thrive
regardless of the underlying economic conditions. Nonetheless, the
actions of investors often exhibit indiscriminate tendencies and
immature growth companies can undergo notable price volatility. The
structure of investment trusts permits their managers and
discerning long term investors to take positions for the long term
when the tide of money or sentiment depresses valuations. Rather
than focus on macro economic developments, the Managers will
therefore continue to focus their efforts on picking growth
companies that create and exploit opportunities and which exhibit
excellent long term growth prospects and the potential for positive
long term returns.
An overview of the portfolio is provided by the Managers
below.
Changes in the portfolio's management
Due to increased responsibilities on Baillie Gifford's Long Term
Global Growth Desk, John MacDougall decided to stand down as the
Company's Deputy portfolio manager. The Board was supportive of
this decision and would like to thank him for his contributions to
the success of the Company.
Svetlana Viteva and Luke Ward were appointed Deputy portfolio
managers, effective 7 December. Both Svetlana and Luke joined
Baillie Gifford in 2012 and work closely with Douglas Brodie as
part of Baillie Gifford's Global Discovery investment desk, from
which Edinburgh Worldwide is managed. The Board is enthused by
their appointment and looks forward to working more closely with
them.
Annual General Meeting
The Annual General Meeting of the Company will be held at
Baillie Gifford's offices in Edinburgh at 12 noon on Wednesday 24
January 2018. The Company will once again be seeking to renew its
share buyback, issuance and treasury share powers. The buy back
facility is sought to allow the Company to buy back its own shares
when the discount is substantial in absolute terms and relative to
its peers. Issuance, either from treasury or of new shares, will
only be undertaken at a premium to the prevailing cum income NAV,
with debt calculated at par, in order to satisfy natural market
demand. This would enhance the NAV per share for existing
shareholders as well as dilute ongoing costs and help with trading
liquidity of the shares of the Company. Further information on
these resolutions can be found on page 21 and pages 52 and 53 of
the Annual Report and Financial Statements.
Douglas Brodie, Svetlana Viteva and Luke Ward, the portfolio's
Manager and Deputy Managers, will give a presentation and take
questions. The Board will also be available to respond to any
questions that you may have. I hope that you will be able to
attend.
Henry CT Strutt
Chairman
7 December 2017
* MSCI All Countries World Index (in sterling terms) until 31
January 2014, thereafter S&P Global Small Cap Index (in
sterling terms). The index data has been chain linked to form one
comparative index figure. Figures are total return with net asset
value at par. See disclaimer at the end of this announcement
For a definition of terms see Glossary of Terms, note 10.
Past performance is not a guide to future performance.
Managers' Review
================
As we postulated in the Interim Report, the current year has
seen global stock markets return to a more fundamental approach,
displacing the geopolitical shocks and macroeconomic uncertainty
that beset much of 2016. The move away from a sentiment-led market
backdrop has benefited the absolute and relative performance of the
Company's portfolio. We are not particularly surprised by this.
Stock market analysis has consistently shown that, in the longer
term, company specific fundamentals ultimately prevail, hence our
focus on stock selection and structural growth opportunities. Our
remit is to unearth what we believe to be the most innovative,
forward-thinking young businesses; those companies that are
typically below the radar of many investors but which have the
ambition to be much larger and the capability to reshape their
respective industries. It's a challenge we relish but one that
requires patience combined with the ability to craft an investment
case over many years, potentially decades. The strong net asset
value performance over the past year reflects the substantial
progress made by many of our underlying holdings, not just over the
past 12 months but arguably over much longer periods of time.
Whilst it's pleasing to see many of the holdings grow and garner
greater investor attention, we believe that many of the best
performing holdings still offer the prospect of very significant
future returns. This reflects on many of these businesses being
still comparatively small and immature relative to the size of the
opportunity that they are looking to address.
When observing the stocks that contribute most to performance
over an annual period it's common to identify certain themes. In
contrast, performance over the current period is notable for the
diverse spread of holdings that contributed positively;
encompassing biotechnology companies, online aggregators,
e-commerce retailers and companies involved in digital
manufacturing and software. The commonalities across these
businesses are far from obvious but we believe they do exist. They
include being businesses that we have typically owned for several
years and which have grown to be amongst our largest positions in
the portfolio. They typically have entrepreneurial founder managers
still involved with the business and, perhaps most importantly,
they share a belief that what they offer, be it drugs, lasers or
software code, is substantially superior to what was available
before. This innovative disruptive streak is what distinguishes
many of our holdings and we believe it is testament to the current
environment being rife with new tools and technologies which can be
harnessed by nimble, entrepreneurial companies. The other important
attribute that these holdings share is growing evidence that what
they offer is inherently scalable. The topic of scalability
captures many attributes but at its core is the ability of a
business to become stronger and more defensible as it grows.
Scalability is what helps bridge an interesting idea into a
tangible, successful and differentiated business. Consequently,
understanding how a business could scale and evolve forms a key
component of how we think about business growth. Getting these
aspects of our analysis right often means the difference between
identifying a good business versus a truly transformational
one.
The longstanding holding in Alnylam Pharmaceuticals made a
notable contribution to performance as it revealed a highly
positive outcome for its most clinically advanced drug candidate; a
significant achievement that paves the way for this drug to be
approved in the coming months. This is the first example from its
extensive drug pipeline to successfully navigate the clinical
trials process and it significantly validates the core
gene-silencing technology platform that underpins the business. The
initial success has been in an inherited disorder called TTR
Amyloidosis, a serious disease that manifests through chronic and
often fatal damage to nerve and cardiac tissue. With limited
treatment options hitherto available, the evidence that Alnylam's
drug reversed the disease offers a profound benefit to this
critical patient group. We have written before on the changing
landscape of drug development. What has long been a process
dominated by serendipity is becoming increasingly rational. The
synchronised efforts of science to unlock the molecular basis of
disease alongside novel highly targeted intervention will bring
profound changes in healthcare. Alnylam embodies much of this
change; a technology that explicitly links the growing appreciation
of genetics in driving disease with the ability to intervene
directly at the genetic level. Novel, high potential therapeutic
platforms are comparatively rare, perhaps the drug discovery
industry might see a handful of these every decade or so, even
rarer still is for one company to have robust proprietary ownership
of the technology. The combination of these two observations makes
us excited about the ongoing potential of Alnylam, both
therapeutically and commercially.
Other notable contributors to performance include LendingTree,
the online marketplace for US consumers to efficiently access
financial products, and IPG Photonics, manufacturer of fibre-lasers
used in various metal processing applications. LendingTree's very
robust growth hints at the emerging network effects and scale
advantages that are common traits amongst dominant online
marketplaces. With an offering that benefits borrowers through
choice and transparency, combined with a broad base of lenders that
increasingly recognise the power of targeting borrowers through
digital channels, we see significant scope for the business to grow
and further strengthen its emerging advantage. IPG Photonics has
seen a marked acceleration in growth rates recently as adoption of
fibre-lasers, a product category they pioneered, broadens out. This
is being driven by the company's success in producing lasers that
operate at increasing power levels, a development that has seen the
technology move away from comparatively simple applications, such
as metal etching, towards mainstream industrial processes such as
welding. With a growing range of applications, we see a role for
fibre-lasers in helping to drive the automation of production lines
around the world, a development that could underpin many years of
growth for the business.
Portfolio Update
We acquired several new holdings in the period. The holdings in
Teladoc, Mindbody, CEVA, Ambarella and STAAR Surgical were
commented on in the Interim Report. New holdings in the second half
of the year included Spire Global, Mulesoft, Penumbra, Exact
Sciences, Novocure and NuCana. Spire Global is an unlisted company
that designs, manufactures and operates a constellation of
nano-satellites. These are a fraction of the size, weight, and
complexity of traditional satellite hardware, yet offer improved
performance and significantly lower costs when used in combination.
With its rapidly growing network of orbiting nano-satellites, Spire
is attempting to solve large problems in diverse areas such as
weather forecasting, aircraft tracking and maritime monitoring.
Mulesoft sells software to corporates that helps them to connect
their IT assets through the use of Application Programming
Interfaces (APIs). Historically, patching together disparate pieces
of software within a business had required costly specialist system
integration and cumbersome point-to-point code. In contrast, APIs
have the potential to revolutionise how IT departments operate by
enabling faster and cheaper IT integration without compromising
integrity and security of the network. The opportunity is large and
expanding, driven by the proliferation of software and computing
devices, and we believe Mulesoft's technological lead is
significant. Penumbra designs and manufactures advanced medical
tools for minimally invasive clot removal. Through removing blood
clots quickly, the outcomes for stroke victims can be significantly
improved compared to conventional drug based treatments. This has
the effect of significantly lowering lifetime care costs with the
additional benefit of enabling the procedure to be performed in an
outpatient setting.
The new holdings in Exact Sciences, Novocure and NuCana are all
examples of innovative approaches to combat cancer. Exact offers a
low cost molecular diagnostic cancer test based on its
understanding of epigenetic changes that occur very early as a
cancer forms. The initial test, marketed as Cologuard, is focused
on colon cancer, the second most prevalent cancer in the US. The
test has been selling extremely well which we believe is testament
to the significant value this test confers to the patient and the
healthcare system. We expect the very strong growth for Cologuard
to continue and we are intrigued by early moves to apply the
company's genetic insights to potentially other cancers such as
lung, ovarian or prostate. Novocure has pioneered a novel
therapeutic modality, known as Tumour Treating Fields. It uses low
intensity intermediate frequency alternating electric fields to
stop the division of cancer cells. The first application of this
new therapeutic approach is for treating patients with
glioblastoma, an aggressive form of brain cancer. We are encouraged
by the clinical evidence and the early commercial traction which
Novocure has seen to date and we believe the mechanism of action
could have broad application in treating other solid tumours.
NuCana is an Edinburgh based healthcare company that has developed
a proprietary chemistry that improves the potency and duration of
action of traditional chemotherapy agents. These chemical
modifications should prevent mechanisms of drug resistance often
seen in chemotherapy treatment and should avoid many of the
toxicity issues that drastically impact on patients. With several
clinical trials due to report over the coming years we see great
potential for the business to transform the chemotherapy field.
The holdings in AAC Technologies and Abcam were sold following a
period of strong share price performance that, in our opinion,
resulted in the shares being fairly valued. Exa, Novadaq exited the
portfolio on the back of the companies being acquired. Since the
Company's financial year end, Imagination Technologies has also
been acquired.
Income statement
================
For the year ended For the year ended
31 October 2017 (unaudited) 31 October 2016 (audited)
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================================== ========== ========= ========= ========= ========= ========
Gains on investments - 85,581 85,581 - 46,083 46,083
Currency gains/(losses) - 824 824 - (2,740) (2,740)
Income (note 2) 1,268 - 1,268 1,178 - 1,178
Investment management fee (535) (1,606) (2,141) (436) (1,307) (1,743)
Other administrative expenses (513) - (513) (483) - (483)
================================================== ========== ========= ========= ========= ========= ========
Net return before finance costs and taxation 220 84,799 85,019 259 42,036 42,295
================================================== ========== ========= ========= ========= ========= ========
Finance costs of borrowings (250) (749) (999) (239) (719) (958)
================================================== ========== ========= ========= ========= ========= ========
Net return on ordinary activities before taxation (30) 84,050 84,020 20 41,317 41,337
================================================== ========== ========= ========= ========= ========= ========
Tax on ordinary activities 179 28 207 (81) - (81)
================================================== ========== ========= ========= ========= ========= ========
Net return on ordinary activities after taxation 149 84,078 84,227 (61) 41,317 41,256
================================================== ========== ========= ========= ========= ========= ========
Net return per ordinary share (note 4) 0.30p 171.58p 171.88p (0.12p) 84.31p 84.19p
================================================== ========== ========= ========= ========= ========= ========
The total column of this statement is the profit and loss
account of the Company. The supplementary revenue and capital
columns are prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in this statement derive from
continuing operations.
A Statement of Comprehensive Income is not required as there is
no other comprehensive income.
Balance sheet
=============
At 31 October 2017 (unaudited) At 31 October 2016
GBP'000 (audited)
GBP'000
====================================================== ============================== ==================
Fixed assets
Investments held at fair value through profit or loss 383,846 292,799
------------------------------------------------------ ------------------------------ ------------------
Current assets
Debtors 102 127
Cash and cash equivalents 4,686 13,244
------------------------------------------------------ ------------------------------ ------------------
4,788 13,371
------------------------------------------------------ ------------------------------ ------------------
Creditors
Amounts falling due within one year (771) (650)
====================================================== ============================== ==================
Net current assets 4,017 12,721
====================================================== ============================== ==================
Total assets less current liabilities 387,863 305,520
====================================================== ============================== ==================
Creditors
Amounts falling due after more than one year (note 6) (35,024) (36,908)
====================================================== ============================== ==================
Net assets 352,839 268,612
====================================================== ============================== ==================
Capital and reserves
Share capital 2,450 2,450
Share premium account 82,180 82,180
Special reserve 35,220 35,220
Capital reserve 232,020 147,942
Revenue reserve 969 820
Shareholders' funds 352,839 268,612
====================================================== ============================== ==================
Net asset value per ordinary share
(after deducting borrowings at fair value) (note 6) 718.89p 546.13p
====================================================== ============================== ==================
Net asset value per ordinary share
(after deducting borrowings at par) 720.02p 548.14p
====================================================== ============================== ==================
Ordinary shares in issue 49,004,319 49,004,319
====================================================== ============================== ==================
Statement of changes in equity
==============================
For the year ended 31 October 2017 (unaudited)
Share Share premium Special reserve Capital* reserve Revenue reserve Shareholders'
capital account GBP'000 GBP'000 GBP'000 funds
GBP'000 GBP'000 GBP'000
========================== ======== ============= =============== ================ =============== =============
Shareholders' funds at 1
November 2016 2,450 82,180 35,220 147,942 820 268,612
Net return on ordinary
activities after
taxation - - - 84,078 149 84,227
Shareholders' funds at 31
October 2017 2,450 82,180 35,220 232,020 969 352,839
========================== ======== ============= =============== ================ =============== =============
For the year ended 31 October 2016 (audited)
Share Share premium Special reserve Capital* reserve Revenue reserve Shareholders'
capital account GBP'000 GBP'000 GBP'000 funds
GBP'000 GBP'000 GBP'000
==================== ======== =================== =============== ================ =============== =============
Shareholders' funds
at 1 November 2015 2,450 82,180 35,220 106,625 881 227,356
Net return on
ordinary activities
after
taxation - - - 41,317 (61) 41,256
Shareholders' funds
at 31 October 2016 2,450 82,180 35,220 147,942 820 268,612
==================== ======== =================== =============== ================ =============== =============
* The capital reserve as at 31 October 2017 includes investment
holdings gains of GBP71,923,000 (2016 - gains of
GBP50,479,000).
Cash flow statement
===================
For the year ended 31 October 2017 (unaudited) For the year ended 31 October 2016 (audited)
GBP'000 GBP'000 GBP'000 GBP'000
====================== ====================== ====================== ====================== ======================
Cash flows from
operating activities
Net return on ordinary
activities before
taxation* 84,020 41,337
Net gains on
investments (85,581) (46,083)
Currency
(gains)/losses (824) 2,740
Finance costs of
borrowings 999 958
Overseas tax
repaid/(incurred) 207 (81)
Changes in debtors and
creditors 148 50
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Cash from operations (1,031) (1,079)
Interest paid (1,001) (944)
Net cash outflow from
operating activities (2,032) (2,023)
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Cash flows from
investing activities
Acquisitions of
investments (50,072) (38,768)
Disposal of
investments 44,606 47,932
Net cash
(outflow)/inflow from
investing activities (5,466) 9,164
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
(Decrease)/increase in
cash and cash
equivalents (7,498) 7,141
Exchange movements (1,060) 3,369
Cash and cash
equivalents at 1
November 13,244 2,734
====================== ====================== ====================== ====================== ======================
Cash and cash
equivalents at 31
October 4,686 13,244
====================== ====================== ====================== ====================== ======================
* Dividends received in the year amounted to GBP1,159,000 (2016
- GBP1,173,000)
Portfolio and equity performance as at 31 October
2017 (unaudited)
=================================================
Fair value Performance Fair value
2017 2016
GBP'000 GBP'000
================== =================== ============= =========== ============ =============
% of total Absolute Relative
Name Business Country assets % %
================== =================== ============= =========== ============ ========= ========= =============
Anylam Therapeutic gene
Pharmaceuticals silencing USA 22,449 5.8 214.4 172.1 6,552
Electronic bond
MarketAxess trading platform USA 21,640 5.6 6.7 (7.6) 20,394
Online loan
LendingTree marketplace USA 17,178 4.4 207.8 166.4 4,582
High-power fibre
IPG Photonics lasers USA 14,208 3.7 101.7 74.6 7,770
Electric cars,
autonomous
driving and
Tesla Inc solar energy USA 11,209 2.9 54.2 33.4 7,271
Domestic and
iRobot military robots USA 9,244 2.4 21.8 5.4 7,585
Online furniture
and homeware
Wayfair retailer USA 8,964 2.3 92.8 66.9 4,652
Intellectual
property
IP Group commercialisation UK 8,079 2.1 (1.7) (14.9) 8,238
Temenos Group Banking software Switzerland 7,955 2.1 65.6 43.3 4,834
Measurement and
calibration
Renishaw equipment UK 6,963 1.8 94.2 68.1 3,629
Small unmanned
AeroVironment aircraft systems USA 6,774 1.7 96.1 69.7 3,456
Online luxury
Yoox Net-A-Porter fashion retailer Italy 6,564 1.7 20.7 4.5 2,192
Online and mobile
platform for
restaurant
pick-up and
delivery
GrubHub orders USA 6,432 1.7 47.2 27.4 4,371
Online food
Ocado retailer UK 5,676 1.5 4.6 (9.5) 5,431
US online real
Zillow Class C estate portal USA 5,646 1.5 13.8 (1.6) 4,961
Clinical stage
biotechnology
Galapagos company Belgium 5,640 1.5 46.3 26.6 3,855
Animal breeding
Genus services UK 5,180 1.3 26.8 9.7 4,133
Investment
Financial Engines advisory firm USA 5,165 1.3 20.8 4.5 4,295
Internet fashion
Start Today retailer Japan 5,083 1.3 43.8 24.4 4,286
Biotech focused on
genetic
Cellectis engineering France 4,942 1.3 79.2 55.1 2,177
Chinese e-commerce
Baozun SPN ADR solution provider USA 4,569 1.2 98.6(*) 88.1(*) -
Provides of
non-invasive
molecular
test for early
Exact Sciences cancer detection USA 4,552 1.2 31.2(*) 27.4(*) -
Internet platform
for restaurant
InfoMart Corp supplies Japan 4,388 1.1 17.0 1.3 3,777
Cloud-based
accounting
Xero software New Zealand 4,255 1.1 70.5 47.6 2,439
Designs and
develops
measurement
Faro Technologies devices USA 4,204 1.1 42.0 22.8 2,951
Enterprise
software
Mulesoft 'A' developer USA 4,192 1.1 9.7(*) 6.5(*) -
Therapeutic
Morphosys antibodies Germany 4,180 1.1 80.6 56.3 2,315
Novel DNA
Oxford Nanopore sequencing
Technologies(++) technology UK 4,176 1.1 16.2 0.6 3,306
IP
commercialisation
focused on
Puretech Health health care UK 4,154 1.1 (8.3) (20.6) 3,608
Manufacturer of
medical devices
for
Novocure cancer treatment USA 4,136 1.1 22.3(*) 22.3(*) -
Dialog Analogue chips for
Semiconductor mobile phones Germany 3,992 1.0 16.6 0.9 3,432
Antibody
conjugates based
Seattle Genetics biotechnology USA 3,947 1.0 9.0 (5.7) 3,620
Pet health
insurance
Trupanion provider USA 3,923 1.0 59.9 38.4 2,452
Online educational
Chegg company USA 3,899 1.0 3.0(*) 2.9(*) -
Website for
Stamps.com postage services USA 3,884 1.0 111.3 82.8 3,379
Online fashion
ASOS retailer UK 3,874 1.0 8.4 (6.2) 3,570
Bacteria derived
novel
4D Pharma therapeutics UK 3,748 1.0 (51.3) (57.9) 7,930
Xeros Technology Commercial laundry
Group manufacturer UK 3,733 1.0 8.3 (6.3) 3,479
Portfolio and equity performance as at 31 October 2017
(unaudited) (Ctd)
Performance Fair value
2016
GBP'000
================= =================== =========== =========== ============= =============
Fair value Absolute Relative
2017 % of total % %
Name Business Country GBP'000 assets
================= =================== =========== =========== ============= ========== ========== =============
Instrumentation
National equipment used in
Instruments research and
Corp testing USA 3,706 1.0 50.4 30.2 2,516
Therapies for
Cosmos gastrointestinal
Pharmaceuticals diseases Italy 3,643 0.9 (7.5) (19.9) 3,977
Therapeutic
Genmab antibody company Denmark 3,636 0.9 12.7 (2.5) 3,241
Online business
MonotaRO supplies Japan 3,586 0.9 3.9 (10.1) 3,475
Online recruitment
SEEK portal Australia 3,461 0.9 19.0 2.9 3,647
Provides online
Lifull (formerly property
Next) information Japan 3,438 0.9 (15.9) (27.2) 4,113
Develops cancer
Foundation diagnostic
Medicine technology USA 3,389 0.9 82.3 57.7 1,859
Develops and
manufactures high
margin visual
STAAR Surgical implants USA 3,142 0.8 47.8(*) 23.4(*) -
Online medical
M3 database Japan 3,131 0.8 (10.0) (22.2) 3,492
Video compression
and image
processing
Ambarella semiconductors USA 3,124 0.8 (3.4)(*) (8.5)(*) -
Kingdee Enterprise
International management
Software software China 3,081 0.8 21.3 4.9 2,541
High-performance
Victrex thermo-plastics UK 3,048 0.8 40.4 21.5 2,227
Licenses DSP-based
platforms
applications to
the semiconductor
CEVA industry USA 2,998 0.8 29.0(*) 22.3(*) -
Drug discovery
Peptidream platform Japan 2,998 0.8 12.6 (2.5) 2,661
Splunk Data diagnostics USA 2,913 0.8 2.8 (11.0) 3,819
Telemedicine
Teladoc services provider USA 2,912 0.7 46.8(*) 36.8(*) -
Internet business
Digital Garage incubator Japan 2,902 0.7 4.9 (9.2) 2,788
Fabrication and
inspection
Suss Mocrotec equipment Germany 2,875 0.7 152.5 118.5 1,146
UK online property
Rightmove portal UK 2,865 0.7 12.7 (2.5) 2,577
US online real
Zillow Class A estate portal USA 2,825 0.7 15.0 (0.5) 2,458
Ink jet printing
Xaar technology UK 2,794 0.7 19.6 3.5 2,410
Graphics
Imagination semiconductor
Technologies designer UK 2,743 0.7 (20.1) (30.9) 3,435
Customised cell
Horizon lines to aid drug
Discovery discovery UK 2,596 0.7 98.4 71.7 1,303
Language
translation
SDL services UK 2,591 0.7 25.3 8.5 2,093
Software solutions
for financial
Basware transactions Finland 2,477 0.6 23.4 6.8 2,405
Real time blood
glucose
Dexcom monitoring USA 2,470 0.6 (47.2) (54.3) 4,676
3D Printer
Stratasys manufacturer USA 2,451 0.6 8.5 (6.1) 1,794
Development,
commercialisation
and
manufacturing of
proprietary
Pacira pharmaceutical
Pharmaceuticals products USA 2,414 0.6 (7.3) (19.8) 2,605
Business
management
software for
the wellness
Mindbody CL sector USA 2,308 0.6 9.0(*) (0.1)(*) -
Manufacturer of
custom industrial
Codexis enzymes USA 2,295 0.6 12.0 (3.1) 2,067
Manufacturer of
small, low cost
Spire Global(++) satellites USA 2,259 0.6 (3.6)(*) (6.6)(*) -
Digital
watermarking
Digimarc technology USA 2,188 0.6 3.9 (10.1) 2,109
Adaptimmune Clinical stage
Therapeutics biopharmaceutical
ADR company UK 2,186 0.6 65.9 43.6 1,321
An
oncology-focused
biotechnology
NuCana SPN ADR company UK 2,156 0.6 (23.7)(*) (26.0)(*) -
Manufacturer of a
novel blood clot
extraction
Penumbra technology USA 2,130 0.5 9.5(*) 6.3(*) -
Produces advanced
Oxford instrumentation
Instruments equipment UK 2,121 0.5 42.6 23.4 1,509
Portfolio and equity performance as at 31 October 2017
(unaudited) (Ctd)
Performance
================= ================= =========== =========== ============== ==============
Fair value Absolute Relative Fair value
2017 % of total % % 2016
Name Business Country GBP'000 assets GBP'000
================= ================= =========== =========== ============== ========== ========== ==============
Provides
technology
solutions to
automate
mortgage
origination
Ellie Mae process USA 2,032 0.5 (21.9) (32.4) 2,602
Ceres Power Developer of
Holding fuel cells UK 1,995 0.5 29.8 12.3 1,506
Sports analytics
focused on
optimising
Catapult Group athlete
International performance Australia 1,961 0.5 8.1(*) 4.5(*) -
Cloud-based
benefits
software
Benefitfocus provider USA 1,947 0.5 (23.6)(*) (26.8)(*) -
Biotechnology
Unity company seeking
Biotechnology to
Inc develop anti
Series B Pref. ageing
(++) therapies USA 1,506 0.4 (8.1) (20.4) 1,638
Regenerative
Tissue Regenix medical devices UK 1,430 0.4 (48.0) (55.0) 1,770
Commercial
Zumtobel lighting Austria 1,350 0.3 (9.3) (21.5) 1,499
Immunotherapy
Aduro services
Biotechnology provider USA 1,302 0.3 (32.2) (41.3) 1,145
Small and
medium-sized
enterprises
China Financial lending in
Services China China 1,276 0.3 (1.1) (14.4) 1,334
Automotive
Ricardo engineer UK 1,123 0.3 (9.6) (21.8) 1,261
Analytical
reagents and
Avacta Group instrumentation UK 1,087 0.3 (25.7) (35.7) 1,465
Summit Drug discovery
Therapeutics and development UK 1,065 0.3 (22.5) (32.9) 799
Rational drug
C4X Discovery design and
Holdings optimisation UK 851 0.2 (31.1) (40.4) 891
Acacia Research Patent licenser USA 745 0.2 (29.3) (38.8) 1,065
Quantum dot
Nanoco manufacturer UK 732 0.2 (45.6) (52.9) 1,365
Develops
printed,
rewritable
Thin Film memory
Electronics media Norway 519 0.1 (45.8) (53.1) 960
Drug
Foamix reformulation
Pharmaceuticals technology Israel 510 0.1 (29.3) (38.9) 724
Discovery and
development of
materials for
mass market
Ilika applications UK 466 0.1 (53.6) (59.9) 1,007
Systems for
diamond grading
Sarine and
Technologies cutting Singapore 462 0.1 (42.1) (49.9) 820
Outsourced
hVIVO (formerly pre-clinical
Retroscreen analytical
Virology) services UK 400 0.1 (67.7) (72.1) 1,284
Manufactures
Applied Graphene graphene
Materials nanoplatelets UK 242 0.1 (76.4) (79.6) 516
Gas to liquid
Velocys technology UK 162 0.0 2.2 (11.6) 162
Develops and
markets medical
GI Dynamics devices Australia 34 0.0 94.1 68.0 18
Mines, processes
and
manufactures
natural
China Lumena New thenardite
Material products China 0 0.0 0.0 (15.6) 0
South East Asian
Ensogo e-commerce Australia 0 0.0 0.0 (15.6) 0
Total equities 383,846 99.0
================================================= =========== ============== ========== ========== ==============
Net liquid assets 4,017 1.0
================================================= =========== ============== ========== ========== ==============
Total assets at fair value# 387,863 100.0
==================================== =========== =========== ============== ========== ========== ==============
Absolute and relative performance has been calculated on a total
return basis over the period 1 November 2016 to 31 October 2017
(performance figures for investments bought during the period are
part-period returns - see note below). Absolute performance is in
sterling terms; relative performance is against S&P Global
Small Cap Index (in sterling terms).
* Figures relate to part-period returns where equity has been purchased during the period.
# Before deduction of loan.
++ Denotes unlisted security.
Source: Baillie Gifford/StatPro and relevant underlying index
providers. See disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Distribution of total assets* by industry (unaudited)
Portfolio Weightings
(relative to comparative index )
at 31 October 2017
Industry Analysis % points overweight/(underweight)
31 October 2017
% of total assets*
---------- ---------------------------------------------- -------------------- ----------------------------------
Equities: Biotechnology 18.4 15.4
Internet Software and Services 10.1 7.9
Capital Markets 9.0 6.4
Electronic Equipment, Instruments and Components 8.6 5.2
Software 7.8 4.8
Internet and Direct Marketing Retail 7.8 7.3
Thrifts and Mortgage Finance 4.4 3.6
Semiconductors and Semiconductor Equipment 4.2 1.7
Health Care Equipment and Supplies 3.3 1.1
Life Sciences Tools and Services 3.0 2.1
Automobiles 2.9 2.8
Pharmaceuticals 2.6 1.0
Household Durables 2.4 0.6
Aerospace and Defence 1.7 0.3
Chemicals 1.5 (2.0)
Technology Hardware, Storage and Peripherals 1.4 1.0
Professional Services 1.4 0.0
Machinery 1.1 (3.6)
Health Care Technology 1.0 0.6
Diversified Consumer Services 1.0 0.3
Insurance 1.0 (1.9)
Trading Companies and Distributors 0.9 (0.6)
Media 0.9 (1.1)
Electrical Equipment 0.9 0.0
Health Care Providers and Services 0.7 (0.8)
IT Services 0.7 (1.8)
Consumer Finance 0.3 (0.4)
Energy Equipment and Services 0.0 (1.2)
Net Liquid Assets 1.0
Total assets* 100.0
========================================================== ==================== ==================================
* Total assets before deduction of bank loan.
S&P Global Small Cap Index (in sterling
terms). Weightings exclude industries where
the Company has no exposure.
See disclaimer at the end of this announcement.
Distribution of total assets (unaudited)
========================================
Geographical Analysis
31 October 2017 31 October 2016
% %
============================== ================ ==================
North America 56.1 45.5
USA 56.1 45.5
Europe 32.6 37.2
United
Kingdom 20.3 25.4
Eurozone 9.1 8.5
Developed
Europe
(non euro) 3.2 3.3
Africa
and Middle
East - 0.5
UAE - 0.5
Asia 7.8 10.6
Japan 6.6 8.3
China 1.1 1.3
Hong Kong - 0.7
Singapore 0.1 0.3
Australasia 2.5 2.0
Australia 1.4 1.2
New Zealand 1.1 0.8
Total equities 95.8
Net liquid assets 1.0 4.2
============================== ================ ================
Total assets* 100.0 100.0
============================== ================ ================
Sectoral Analysis
31 October 2017 31 October 2016
% %
========================= ================ === ================
Consumer Discretionary 15.0 15.2
Energy 0.0 0.1
Financials 14.7 13.9
Health Care 29.0 26.1
Industrials 6.0 7.0
Information Technology 32.8 31.5
Materials 1.5 2.0
Net Liquid Assets 1.0 4.2
========================= ================ === ================
Total assets* 100.0 100.0
========================= ================ === ================
* Total assets before deduction of loans
Notes (unaudited)
=================
1. The unaudited financial statements for the year to 31 October 2017 have been prepared in accordance
with FRS102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'
The accounting policies adopted are consistent with those of the previous financial year.
In accordance with the Financial Reporting Council's guidance on going concern and liquidity
risk, the Directors have undertaken a rigorous review of the Company's ability to continue
as a going concern. An explanation of the Company's principal risks and how they are managed
is set out on pages 7 and 8 and contained in note 17 to the Financial Statements.
The Company's assets, the majority of which are investments in quoted securities which are
readily realisable, exceed its liabilities significantly. All borrowings require the prior
approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed
by the Board on a regular basis.
Accordingly, the Financial Statements have been prepared on the going concern basis as it
is the Directors' opinion, having assessed the principal risks and other matters set out in
the Viability Statement in the Annual Report and Financial Statements, that the Company will
continue in operational existence for a period of at least twelve months from the date of
approval of the Financial Statements.
The Directors consider the Company's functional currency to be sterling as the Company's shareholders
are predominantly based in the UK and the Company and its investment manager, who are subject
to the UK's regulatory environment, are also UK based.
===========================================================================================================
2. Income 2017 2016
GBP'000 GBP'000
============================================================== ===================== ====================
Income from investments 1,166 1,178
Deposit interest 102 -
===================================================================== ===================== ====================
1,268 1,178
===================================================================== ===================== ====================
3. Baillie Gifford & Co Limited are appointed as Managers and Secretaries. With effect from 1
September 2016 the annual management fee is 0.95% on the first GBP50m of net assets, 0.65%
on the next GBP200m of net assets and 0.55% on the remaining net assets. Prior to 1 September
2016 the fee was 0.95% on the first GBP50m of net assets and 0.65% on the remaining net assets.
Management fees are calculated and payable quarterly.
4. 2017 2016
Net return per ordinary share Revenue Capital Total Revenue Capital Total
=============================== ======== ======== ======= ======== ======== ======
Net return on ordinary
activities after taxation 0.30p 171.58p 171.88p (0.12p) 84.31p 84.19p
=============================== ======== ======== ======= ======== ======== ======
Revenue return per ordinary share is based on the net revenue return on ordinary activities
after taxation of GBP149,000 (2016 - net revenue loss of GBP61,000) and on 49,004,319 ordinary
shares, being the weighted average number of ordinary shares in issue during each year.
Capital return per ordinary share is based on the net capital gain for the financial year
of GBP84,078,000 (2016 - net capital gain of GBP41,317,000) and on 49,004,319 ordinary shares,
being the weighted average number of ordinary shares in issue during each year.
There are no dilutive or potentially dilutive shares in issue.
==================================================================================================================
Notes (unaudited) (Ctd)
5. There are no dividends paid and proposed in respect of the financial year. The revenue available
for distribution by way of dividend for the year is GBP149,000 (2016 - revenue loss GBP61,000)
which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010
are considered.
6. The five year fixed rate facility with National Australia Bank Limited of EUR9.4m, US$25.6m
and GBP7.5m, expires on 30 September 2019. The drawings were as follows:
At 31 October 2017 and 31 October 2016
National Australia Bank Limited:
3/4 EUR9,400,000 at an interest rate of 1.59% per annum.
3/4 US$25,600,000 at an interest rate of 3.14% per annum.
3/4 GBP7,500,000 at an interest rate of 3.12% per annum.
The main covenants relating to the loan facility with National Australia Bank Limited are:
total borrowings shall not exceed 35% of the Company's adjusted gross assets and the minimum
adjusted gross assets shall be GBP110m.
The fair value of borrowings at 31 October 2017 was GBP35,574,000 (2016 - GBP37,895,000).
Net asset value per share (after deducting borrowings at fair value) was 718.89p (2016 - 546.13p).
7. The Company incurred transaction costs on purchases of GBP23,000
(2016 - GBP26,000) and on sales of GBP23,000 (2016 - GBP17,000).
8. At the Annual General Meeting on 24 January 2017 the Company renewed its authority to purchase
shares in the market, in respect of 7,345,747 ordinary shares (equivalent to approximately
14.99% of its issued share capital at that date). No shares were bought back during the years
to 31 October 2017 or 2016. At 31 October 2017 the Company had authority to buy back 7,345,747
ordinary shares.
9. The financial information set out above does not constitute the Company's statutory accounts
for the year ended 31 October 2017. The financial information for 2016 is derived from the
statutory accounts for 2016 which have been delivered to the Registrar of Companies. The Auditors
have reported on the 2016 accounts, their report was unqualified and did not contain a statement
under section 495,496 and 497 of the Companies Act 2006. The statutory accounts for 2017 are
unaudited and 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.
10. Glossary of Terms
Total Assets
Total assets less current liabilities, before deduction of all borrowings.
Net Asset Value
Also described as shareholders' funds, Net Asset Value (NAV) is the value of total assets
less liabilities (including borrowings). The NAV per share is calculated by dividing this
amount by the number of ordinary shares in issue.
Net Asset Value (Borrowings at Fair Value)
Borrowings are valued at an estimate of their market worth.
Net Asset Value (Borrowings at Par Value)
Borrowings are valued at their nominal par value.
Net Liquid Assets
Net liquid assets comprise current assets less current liabilities, excluding borrowings.
Notes (unaudited) (Ctd)
11. Glossary of Terms (Ctd)
Discount/Premium
As stock markets and share prices vary, an investment trust's share price is rarely the same
as its NAV. When the share price is lower than the NAV per share it is said to be trading
at a discount. The size of the discount is calculated by subtracting the share price from
the NAV per share and is usually expressed as a percentage of the NAV per share. If the share
price is higher than the NAV per share, this situation is called a premium.
Total Return
The total return is the return to shareholders after reinvesting the net dividend on the date
that the share price goes ex-dividend.
Ongoing Charges
The total expenses (excluding borrowing costs) incurred by the Company as a percentage of
the average net asset value (with debt at fair value).
Gearing
At its simplest, gearing is borrowing. Just like any other public company, an investment trust
can borrow money to invest in additional investments for its portfolio. The effect of the
borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the
shareholders' assets grow proportionately more because the debt remains the same. But if the
value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance
performance in rising markets but can adversely impact performance in falling markets.
Gearing is the Company's borrowings at par less cash and cash equivalents expressed as a percentage
of shareholders' funds.
Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.
Leverage
For the purposes of the Alternative Investment Fund Managers Directive, leverage is any method
which increases the Company's exposure, including the borrowing of cash and the use of derivatives.
It is expressed as ratio between the Company's exposure and its net asset value and can be
calculated on a gross and a commitment method. Under the gross method, exposure represents
the sum of the Company's positions after the deduction of sterling cash balances, without
taking into account any hedging and netting arrangements. Under the commitment method, exposure
is calculated without the deduction of sterling cash balances and after certain hedging and
netting positions are offset against each other.
Active Share
Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio
that differs from its comparative index. It is calculated by deducting from 100 the percentage
of the portfolio that overlaps with the comparative index. An active share of 100 indicates
no overlap with the index and an active share of zero indicates a portfolio that tracks the
index.
12. The Annual Report and Financial Statements will be available on the Edinburgh Worldwide page
of the Managers' website http://www.edinburghworldwide.co.uk on or around 18 December 2017.
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.
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
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an indemnity), in tort (including negligence), under a warranty,
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suffered by you as a result of or in connection with any opinions,
recommendations, forecasts, judgments, or any other conclusions, or
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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(R) and S&P(R) are
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Source: MSCI. The MSCI information may only be used for your
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- Ends -
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