LONDON - Edinburgh Worldwide Investment Trust plc (EWI), in its Annual Report and Financial Statements for the year ended October 31, 2024, has highlighted a series of high-level risks affecting its business model and future performance. The report, which was announced to the Stock Exchange on January 20, 2025, and is now available for inspection, details the company’s risk assessment and mitigation strategies.
The Board of Directors confirmed that the Financial Statements prepared in accordance with UK accounting standards present a true and fair view of the company’s financial position. They also attested to the report’s overall fairness and comprehensibility, which provides shareholders with necessary information to assess the company’s performance, business model, and strategy.
One of the principal risks identified is Investment Strategy Risk, which has escalated due to market perceptions and ineffective strategy implementation. This has led to a comprehensive review and subsequent action plan approved by shareholders on December 18. The report suggests that market conditions for growth stocks, typically held by EWI, are improving, though a significant minority shareholder has proposed changes that could alter the company’s investment strategy.
Financial risks also remain high, with market volatility driven by macroeconomic factors and geopolitical concerns. The Board regularly reviews portfolio metrics and engages in discussions with the portfolio manager regarding market insights and individual investments.
Investments in smaller, immature companies have been deemed riskier, especially during periods of economic instability. The Board mitigates this risk by ensuring a diversified portfolio across industries and countries.
Private company investments are another area of increased risk, particularly in volatile markets. The Board reviews valuations frequently, with input from third-party valuation specialists and external audit scrutiny.
The risk of the company’s shares trading at a widening discount is also high, prompting the Board to authorize share buybacks and announce plans to return up to £130 million to shareholders.
Political and associated economic risks are on the rise, with the Board monitoring political developments and portfolio diversification to mitigate potential negative impacts.
Cybersecurity risks are considered moderate but increasing, with Baillie Gifford, EWI’s management company, performing due diligence on third-party service providers and reporting on the effectiveness of information security controls.
Climate and governance risks are deemed moderate and unchanged, with EWI’s managers employing strong ESG stewardship and engagement policies.
Regulatory, custody and depositary, operational, and leverage risks are currently assessed as low, with effective control procedures in place.
The report also discusses emerging risks that could pose a threat in the long term, emphasizing the Board’s ongoing discussions on principal risks and uncertainties.
This summary of Edinburgh Worldwide Investment Trust’s risk landscape is based on the company’s latest Annual Report and Financial Statements, which have been made available for public inspection.
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