TIDMSMT
RNS Number : 0636G
Scottish Mortgage Inv Tst PLC
11 November 2022
RNS Announcement
Scottish Mortgage Investment Trust PLC
Legal Entity Identifier: 213800G37DCS3Q9IJM38
Results for the six months to 30 September 2022
The following is the unaudited Interim Financial Report for the
six months to 30 September 2022 which was approved by the Board on
10 November 2022.
Interim Management Report
Scottish Mortgage's long-term capital appreciation has come from
financing and patiently supporting the development of growth
companies. The trust was founded to provide capital to businesses
with big opportunities but restricted access to funding following
the market panic of 1907. It is important at times of stress to
remember this founding story: corporate potential has little to do
with the cycles of greed and fear in stock markets.
Long-term growth investing is crucial for driving society
forward. After a long period of global expansion, it's easy to slip
into the mindset that investors passively benefit from broader
progress and economic growth. We believe causality flows in the
other direction: long-term investment enables growth and progress.
Technology and new ways of doing things aren't adopted simply
because their time has come. They happen because investors give
entrepreneurs the financing and time to build their visions into
reality.
Without investment in technology, infrastructure and
entrepreneurship, it will be tough to dig ourselves out of our
current malaise. If so little of aggregate savings are directed
into ventures exploring new technologies and approaches, what does
it imply for the future? We risk condemning ourselves to the
environment of anaemic growth and stagnant wages that has
characterised the United Kingdom over the past decade.
Financing the development of long-term growth companies is not
what interests most investors. To understand that, you need only
observe the commentary of recent months, focused on 'risk off',
deleveraging and the flight to safety. The market's focus has
narrowed to a handful of economic variables. Stock prices react
dramatically to each monthly update. This environment is
off-putting, but it is not relevant to our investment
decision-making. Instead, we must evaluate the ongoing position of
our holdings, unpicking the growth engines of recent years and
verifying that they're still functioning. At the same time, we are
redoubling our efforts to find new investments that can adapt to
difficult economic conditions and position themselves to do well in
the future.
Returns
Over ten years, Scottish Mortgage's net asset value per share
with debt at fair value (NAV) has increased by 528% versus a 208%
increase in the FTSE All-World index (both in total return terms).
Over five years, it has increased by 115% against 53%. Six months
of data is always too short a period to infer much that is useful
from stock prices. However, since the end of March, our NAV has
decreased by 15% compared to a 7% decrease in the index.
Although our focus remains on long-term capital appreciation, we
are aware that a small but consistent dividend is of value to many
shareholders. The Board is therefore recommending an interim
dividend of 1.60p per share, an increase of 5% over last year's
payment of 1.52p. We do not believe that this increase will have
any bearing on our investment decisions or unduly constrain future
capital appreciation.
Portfolio
Moderna, the mRNA therapeutics company, remains our largest
holding. It continues to make progress in its infectious disease
portfolio with the bivalent booster for Covid but one practical
example. It was particularly encouraging to see pharmaceutical
company Merck paying Moderna $250m to jointly develop and
commercialise a personalised cancer vaccine to treat melanoma. Our
contention has always been that Moderna's technology would have
applications well beyond Covid, and commercial partners are now
committing serious capital to such developments.
Despite the economic headwinds, Tesla has been able to sell
every car it can manufacture and continues to scale up its
production capabilities rapidly. Its execution in a challenging
operating environment has been impressive, as has its ability to
control costs whilst growing sales. The Model Y SUV is the crucial
volume driver over the next few years, with production ramping in
Berlin and Texas. Scaling the battery cells supply chain remains
the most significant constraint.
We made a further investment into Northvolt during the period
and it is now one of our largest positions. This private European
battery producer is looking increasingly well-placed to supply the
rapidly growing demand for electric vehicles. We also supported
capital raisings from two nascent private companies with ambitious
plans to reduce the world's carbon footprint. Swiss company
Climeworks is developing a technology for capturing carbon directly
from the air, which is likely to be necessary given the finite
capacity for re-forestation. Its challenge is to scale up its
impact. Upside Foods is seeking to produce animal protein in
bioreactors which will allow for meat production without the carbon
emissions from rearing and slaughtering animals. It is working with
regulators towards product launches.
We have reduced several Chinese holdings, including
long-standing investments in Alibaba and Tencent. The regulatory
environment in China remains challenging, and we are concerned that
ongoing uncertainty will harm the risk-tolerant culture that has
driven the long-term success of China's private sector.
Outlook
Powerful forces of change are creating significant
opportunities. These include society's transition away from
carbon-fuelled transport and energy generation and the application
of information technology to our understanding of the molecular
basis of disease. While rising interest rates and increasing
friction between the United States and China create a problematic
environment to navigate, the long-term advantages of companies are
often built in periods of stress and capital shortage.
The principal risks and uncertainties facing the Company are set
out at the end of this document.
10 November 2022
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this document
Total return information sourced from Refinitiv/StatPro/Baillie
Gifford.
See disclaimer at end of this document.
Past performance is not a guide to future performance.
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of Financial Statements has been prepared
in accordance with FRS 104 'Interim Financial Reporting';
b) the Interim Management Report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.7R
(indication of important events during the first six months, their
impact on the condensed set of Financial Statements and a
description of the principal risks and uncertainties for the
remaining six months of the year); and
c) the Interim Financial Report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes therein).
By order of the Board
Fiona McBain
Chair
10 November 2022
Income Statement (unaudited)
For the six months ended For the six months ended
30 September 2022 30 September 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================================== ======== =========== =========== ======== ========= =========
(Losses)/gains on investments - (2,368,395) (2,368,395) - 2,721,589 2,721,589
Currency losses - (176,320) (176,320) - (15,778) (15,778)
Income from investments and interest receivable 25,904 - 25,904 13,640 - 13,640
Investment management fee (note 3) - (18,557) (18,557) - (27,179) (27,179)
Other administrative expenses (3,135) - (3,135) (3,644) - (3,644)
================================================== ======== =========== =========== ======== ========= =========
Net return before finance costs and taxation 22,769 (2,563,272) (2,540,503) 9,996 2,678,632 2,688,628
================================================== ======== =========== =========== ======== ========= =========
Finance costs of borrowings - (32,405) (32,405) - (19,526) (19,526)
================================================== ======== =========== =========== ======== ========= =========
Net return on ordinary activities before taxation 22,769 (2,595,677) (2,572,908) 9,996 2,659,106 2,669,102
================================================== ======== =========== =========== ======== ========= =========
Tax on ordinary activities (2,050) (471) (2,521) (1,281) (4,905) (6,186)
================================================== ======== =========== =========== ======== ========= =========
Net return on ordinary activities after taxation 20,719 (2,596,148) (2,575,429) 8,715 2,654,201 2,662,916
================================================== ======== =========== =========== ======== ========= =========
Net return per ordinary share (note 4) 1.44p (180.36p) (178.92p) 0.62p 187.38p 188.00p
================================================== ======== =========== =========== ======== ========= =========
Dividends proposed per ordinary share (note 5) 1.60p 1.52p
================================================== ======== =========== =========== ======== ========= =========
The accompanying notes on the following pages are an integral
part of the Financial Statements.
The total column of this statement is the profit and loss
account of the Company. The supplementary revenue and capital
return 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 all gains
and losses of the Company have been reflected in the above
statement.
Balance Sheet (unaudited)
At 31 March At 31 March
At 30 September At 30 September 2022 2022
2022 2022 (audited) (audited)
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----- --------------- --------------- ----------- -------------
Fixed assets
Investments held at fair
value through profit or loss 6 14,003,641 16,669,469
------------------------------- ----- --------------- --------------- ----------- -------------
Current assets
Debtors 2,948 13,142
Cash and cash equivalents 230,387 229,962
------------------------------- ----- --------------- --------------- ----------- -------------
233,335 243,104
------------------------------- ----- --------------- --------------- ----------- -------------
Creditors
Amounts falling due within
one year:
Bank loans 7 (403,117) (502,032)
Buybacks outstanding and
related stamp duty (11,579) -
Other creditors and accruals (23,080) (23,814)
------------------------------- ----- --------------- --------------- ----------- -------------
(437,776) (525,846)
------------------------------- ----- --------------- --------------- ----------- -------------
Net current liabilities (204,441) (282,742)
------------------------------- ----- --------------- --------------- ----------- -------------
Total assets less current
liabilities 13,799,200 16,386,727
------------------------------- ----- --------------- --------------- ----------- -------------
Creditors
Amounts falling due after
more than one year:
Bank loans 7 (609,074) (516,384)
Loan notes 7 (1,041,561) (985,613)
Debenture stocks 7 (127,388) (127,559)
Provision for deferred tax
liability (1,642) (1,172)
------------------------------- ----- --------------- --------------- ----------- -------------
(1,779,665) (1,630,728)
------------------------------- ----- --------------- --------------- ----------- -------------
Net assets 12,019,535 14,755,999
------------------------------- ----- --------------- --------------- ----------- -------------
Capital and reserves
Share capital 74,239 74,239
Share premium account 928,400 928,400
Capital redemption reserve 19,094 19,094
Capital reserve 10,977,083 13,717,685
Revenue reserve 20,719 16,581
------------------------------- ----- --------------- --------------- ----------- -------------
Shareholders' funds 12,019,535 14,755,999
------------------------------- ----- --------------- --------------- ----------- -------------
Net asset value per ordinary
share
(after deducting borrowings
at book)* 841.7p 1,021.8p
------------------------------- ----- --------------- --------------- ----------- -------------
Ordinary shares in issue 9 1,428,019,945 1,444,131,650
------------------------------- ----- --------------- --------------- ----------- -------------
* See Glossary of Terms and Alternative Performance Measures at the end of this announcement.
The accompanying notes on the following pages are an integral
part of the Financial Statements
Statement of Changes in Equity (unaudited)
For the six months ended 30 September 2022
Called Share Capital Capital
up share premium redemption reserve Revenue Shareholders'
capital account reserve * reserve funds
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----- --------- -------- ----------- --------------- -------- -------------
Shareholders' funds
at 1 April 2022 74,239 928,400 19,094 13,717,685 16,581 14,755,999
Net return on ordinary
activities
after taxation - - - (2,596,148) 20,719 (2,575,429)
Shares bought back 9 - - - (131,171) - (131,171)
Dividends paid during
the period 5 - - - (13,283) (16,581) (29,864)
------------------------ ----- --------- -------- ----------- --------------- -------- -------------
Shareholders' funds at
30 September 2022 74,239 928,400 19,094 10,977,083 20,719 12,019,535
------------------------ ----- --------- -------- ----------- --------------- -------- -------------
For the six months ended 30 September 2021
Called Share Capital Capital
up share premium redemption reserve Revenue Shareholders'
capital account reserve * reserve funds
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ----- --------- -------- ----------- --------------- -------- -------------
Shareholders' funds
at 1 April 2021 74,239 781,771 19,094 16,105,297 9,069 16,989,470
Net return on ordinary
activities
after taxation - - - 2,654,201 8,715 2,662,916
Shares bought back 9 - - - (137,732) - (137,732)
Shares sold from treasury 9 - 3,175 - 9,038 - 12,213
Dividends paid during
the period 5 - - - (18,915) (9,069) (27,984)
--------------------------- ----- --------- -------- ----------- --------------- -------- -------------
Shareholders' funds
at 30 September 2021 74,239 784,946 19,094 18,611,889 8,715 19,498,883
--------------------------- ----- --------- -------- ----------- --------------- -------- -------------
* The Capital Reserve balance at 30 September 2022 includes
investment holding gains on fixed asset investments of
GBP3,838,304,000 (30 September 2021 - gains of
GBP12,122,474,000).
The accompanying notes on the following pages are an integral
part of the Financial Statements
Cash Flow Statement (unaudited)
For the six months ended 30 September
2022 2021
Notes GBP'000 GBP'000
----------------------------------------------------- ----- ----------- -----------
Cash flows from operating activities
Net return on ordinary activities before taxation (2,572,908) 2,669,102
Losses/(gains) on investments 2,368,395 (2,721,589)
Currency losses 176,320 15,778
Finance costs of borrowings 32,405 19,526
Overseas capital gains tax incurred - (3,335)
Overseas withholding tax incurred (2,286) (1,281)
Changes in debtors and creditors 2,964 1,657
----------------------------------------------------- ----- ----------- -----------
Cash from operations 4,890 (20,142)
Interest paid (31,937) (18,518)
----------------------------------------------------- ----- ----------- -----------
Net cash outflow from operating activities (27,047) (38,660)
----------------------------------------------------- ----- ----------- -----------
Net cash inflow/(outflow) from investing activities 348,800 (172,338)
----------------------------------------------------- ----- ----------- -----------
Equity dividends paid 5 (29,864) (27,984)
Shares bought back into treasury and stamp duty
thereon (119,592) (163,149)
Shares sold from treasury - -
Bank loans repaid (1,026,906) -
Bank loans drawn down and loan notes issued 7 855,034 386,090
----------------------------------------------------- ----- ----------- -----------
Net cash (outflow)/inflow from financing activities (321,328) 194,957
----------------------------------------------------- ----- ----------- -----------
Increase/(decrease) in cash and cash equivalents 425 (16,041)
Exchange movements - 2,748
Cash and cash equivalents at start of period 229,962 212,128
----------------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at end of period * 230,387 198,835
----------------------------------------------------- ----- ----------- -----------
* Cash and cash equivalents represent cash at bank and short
term money market deposits repayable on demand.
The accompanying notes are an integral part of the Financial
Statements.
Holding Period of Investments as at 30 September 2022
(unaudited)
More than 5 years 2-5 years Less than 2 years
=================================== ================================ ====================================
Name % of Name % of Name % of
total total total
assets assets assets
========================= ======== ====================== ======== ========================== ========
Tesla Inc 6.8 Northvolt AB U 3.6 Moderna 6.9
Space Exploration
Technologies
ASML 5.2 U 3.2 Adyen 1.3
Illumina 10 4.2 Blockchain.com U 0.8
Meituan (p) 3.4 MercadoLibre 2.9 Solugen Inc U 0.7
ByteDance Ltd Redwood Materials
Amazon.com 10 2.9 U 2.5 Inc U 0.7
Tencent Holdings
10 2.8 NIO Inc p 2.2 Roblox 0.5
Tempus Labs Inc ChargePoint Holdings
Kering 10 2.4 U 2.0 Inc 0.5
The Brandtech Blockstream Corporation
Group U 2.0 Stripe Inc U 1.9 Inc U 0.5
Ginkgo BioWorks
Inc p 1.8 Pinduoduo Inc 1.8 Databricks Inc U 0.5
Snowflake Inc
Wise Plc p 1.7 p 1.4 Rappi Inc U 0.5
Epic Games Inc
Delivery Hero 1.6 U 1.3 Nuro Inc U 0.5
Zipline International
Ferrari 1.6 Inc U 1.1 GoPuff Inc U 0.4
Ant International Salt Pay Co Ltd
NVIDIA 1.4 Ltd U 1.0 U 0.4
Recursion
Denali Therapeutics Pharmaceuticals Honor Technology
p 1.2 Inc p Inc U 0.4
Relativity Space
Netflix 1.1 0.8 Inc U 0.4
Alibaba Group The Production Horizon Robotics
p 10 0.9 Board U 0.7 U 0.4
Spotify Technology
SA p 0.8 Carbon Inc U 0.6 Climeworks AG U 0.3
Housing Development
Finance Corporation Jiangxiaobai Holdings
10 Ltd U 0.5 Capsule Corp U 0.3
Affirm Holdings
0.8 Inc p 0.5 10x Genomics 0.3
Workrise Technologies
Zalando 0.7 Zoom 0.5 Inc U 0.3
HelloFresh p 0.7 Ocado 0.5 Cloudflare 0.3
Indigo Agriculture
Inc U 0.5 Shopify 0.4 DoorDash 0.3
Atlas Copco 10 0.5 Tanium Inc U 0.4 PsiQuantum U 0.1
Vir Biotechnology Bolt Threads Inc Upside Foods Inc
Inc p 0.5 U 0.4 U 0.1
JRSK Inc (Away)
Kinnevik 0.4 U 0.4 Clear Secure Inc 0.1
Essence Healthcare Clover Health Investments
U 0.4 Convoy Inc U 0.3 p 0.1
Thumbtack Inc Uptake Technologies ARCH Ventures Fund
U 0.3 Inc U 0.3 XI U <0.1
Warby Parker Aurora Innovation ARCH Ventures Fund
Inc p 0.3 Inc p 0.3 XII U <0.1
Antler East Africa
Zocdoc Inc U 0.2 Wayfair 0.3 Fund I LP U <0.1
Sinovation Fund
III U 0.1 Lilium NV p 0.3 Beam Therapeutics <0.1
ARCH Ventures Heartflow Inc
Fund IX U 0.1 U 0.3
WI Harper Fund KSQ Therapeutics
VIII U 0.1 U 0.2
Sana Biotechnology
Udacity Inc U 0.1 Inc p 0.2
Innovation Works
Development Joby Aviation
Fund U 10 Inc p 0.2
0.1 Carvana 0.1
WI Harper Fund 0.1 ARCH Ventures
VII U 10 Fund X
Overage U
0.1
Global AI Opportunities ARCH Ventures
Fund 10 <0.1 Fund X U 0.1
Rubius Therapeutics <0.1 Zymergen Inc p <0.1
Inc p
Intarcia Therapeutics -
U
Total 47.7 Total 33.3 Total 17.6
========================= ======== ====================== ======== ========================== ========
(U) Denotes unlisted (private company) security.
(p) Denotes listed security previously held in the portfolio as
an unlisted (private company) security (.)
(10) (Denotes security held for more than 10 years.)
(Net liquid assets represent 1.4% of total assets. See Glossary
of Terms and Alternative Performance Measures at the end of this
announcement)
List of Investments at 30 September 2022 (unaudited)
Fair value % Contribution Fair value
30 September of to absolute 31 March
2022 total performance* 2022
Name Business GBP'000 assets % Notes GBP'000
-------------------- ------------------------------ ------------- ------- ------------- ------------- ----------
Clinical stage biotechnology
Moderna company 974,886 6.9 (1.1) 1,204,059
Electric cars, autonomous
driving and solar
Tesla Inc energy 971,935 6.8 (1.1) 1,115,783
ASML Lithography 735,111 5.2 (1.9) 1,080,697
Illumina Biotechnology equipment 577,118 4.1 (3.0) 1,078,156
Battery developer
and
manufacturer, specialised
Northvolt in
AB lithium-ion technology
Series E1 for
Pref. (U) electric vehicles 273,451 1.9 0.3 232,425
Battery developer
and
manufacturer, specialised
Northvolt in
AB lithium-ion technology
Series E2 for
Pref. (U) electric vehicles 142,647 1.0 0.2 119,977
Battery developer
and
manufacturer, specialised
Northvolt in
AB lithium-ion technology
Promissory for
Note (U) electric vehicles 78,832 0.5 - New purchase -
Battery developer
and
manufacturer, specialised
Northvolt in
AB lithium-ion technology
Series A for
Ord. (U) electric vehicles 30,660 0.2 - 26,060
Battery developer
and
manufacturer, specialised
Northvolt in
AB lithium-ion technology
Series D1 for
Pref. (U) electric vehicles 995 - - 845
------------- ------- ------------- ------------- ----------
526,585 3.6 0.5 379,307
------------- ------- ------------- ------------- ----------
Meituan (p) Local services aggregator 488,205 3.4 0.8 389,841
Space Exploration
Technologies Designs, manufactures
Series J and launches rockets
Pref. (U) and spacecraft 202,281 1.4 0.4 144,901
Designs, manufactures
Space Exploration and
Technologies launches rockets
Series N and
Pref. (U) spacecraft 162,575 1.1 0.4 116,458
Designs, manufactures
Space Exploration and
Technologies launches rockets
Class A and
Common (U) spacecraft 79,306 0.5 0.2 56,810
Designs, manufactures
Space Exploration and
Technologies launches rockets
Class C and
Common (U) spacecraft 24,461 0.2 0.1 17,523
------------- ------- ------------- ------------- ----------
468,623 3.2 1.1 335,692
------------- ------- ------------- ------------- ----------
Latin American e-commerce Significant
MercadoLibre platform 418,298 2.9 (0.5) addition 333,435
Online retailer
and cloud
Amazon.com computing 409,676 2.9 (0.6) 500,852
Significant
Tencent Holdings Internet services 395,527 2.8 (0.8) reduction 708,821
ByteDance
Ltd
Series E
Pref. (U) Social media 189,407 1.3 0.2 165,590
ByteDance
Ltd
Series E-1
Pref. (U) Social media 170,396 1.2 0.2 148,970
------------- ------- ------------- ------------- ----------
359,803 2.5 0.4 314,560
------------- ------- ------------- ------------- ----------
Luxury goods producer
and
Kering retailer 338,969 2.4 (0.4) 409,853
Designs and manufactures
electric and autonomous
NIO Inc (p) vehicles 317,065 2.2 (0.1) 359,220
The Brandtech
Group Class
A-3 (U) Digital advertising 214,538 1.5 (0.1) 240,053
The Brandtech
Group Class
A-1 (U) Digital advertising 73,026 0.5 (0.2) 81,711
------------- ------- ------------- ------------- ----------
287,564 2.0 (0.3) 321,764
------------- ------- ------------- ------------- ----------
Offers molecular
diagnostics
tests for cancer
Tempus Labs and
Inc aggregates clinical
Series E oncology
Pref. (U) records 133,217 0.9 0.1 114,805
Offers molecular
diagnostics
tests for cancer
Tempus Labs and
Inc aggregates clinical
Series F oncology
Pref. (U) records 48,627 0.4 - 41,906
Offers molecular
diagnostics
tests for cancer
Tempus Labs and
Inc aggregates clinical
Series G-3 oncology
Pref. (U) records 44,004 0.3 - New purchase -
Offers molecular
diagnostics
tests for cancer
Tempus Labs and
Inc aggregates clinical
Series G-2 oncology
Pref. (U) records 41,221 0.3 - 35,187
Offers molecular
diagnostics
tests for cancer
Tempus Labs and
Inc aggregates clinical
Series G oncology
Pref. (U) records 7,848 0.1 - 6,763
------------- ------- ------------- ------------- ----------
274,917 2.0 0.1 198,661
------------- ------- ------------- ------------- ----------
Stripe Inc
Series
G Pref.
(U) Online payment platform 178,763 1.3 - 166,921
Stripe Inc
Class B
Common (U) Online payment platform 62,937 0.4 - 58,768
Stripe Inc
Series
H Pref.
(U) Online payment platform 26,678 0.2 - 24,487
------------- ------- ------------- ------------- ----------
268,378 1.9 - 250,176
------------- ------- ------------- ------------- ----------
Pinduoduo
Inc Chinese e-commerce 261,463 1.8 1.0 142,114
Ginkgo BioWorks Bio-engineering
Inc (p) company 253,779 1.8 (0.1) 277,228
Online platform
Wise Plc to send and
(p) receive money 245,042 1.7 0.5 183,614
Delivery Online food delivery
Hero service 231,231 1.6 0.1 231,834
Ferrari Luxury automobiles 228,722 1.6 - 228,349
Significant
NVIDIA Visual computing 195,357 1.4 (1.6) reduction 582,378
Developer of a SaaS-based
Snowflake cloud data warehousing Significant
Inc (p) platform 192,587 1.4 (0.1) addition 163,321
Adyen Global payment company 191,335 1.3 (0.4) 223,895
Epic Games
Inc (U) Gaming platform 186,870 1.3 0.3 144,064
Denali
Therapeutics
(p) Biotechnology 169,181 1.2 0.2 150,121
Subscription service
for TV shows and
Netflix movies 161,031 1.1 (0.4) 264,214
Logistics company
that
Zipline designs, manufactures
International and
Inc operates drones
Series D to deliver
Pref. (U) medical supplies 56,172 0.4 - 58,508
Logistics company
that
Zipline designs, manufactures
International and
Inc operates drones
Series E to deliver
Pref. (U) medical supplies 48,330 0.4 - 44,887
Logistics company
that
Zipline designs, manufactures
International and
Inc operates drones
Series C to deliver
Pref. (U) medical supplies 47,969 0.3 - 49,964
------------- ------- ------------- ------------- ----------
152,471 1.1 - 153,359
------------- ------- ------------- ------------- ----------
Ant International Online financial
Ltd Class services
C Ord. (U) platform 136,322 1.0 - 136,502
Online retailing
Alibaba Group and financial Significant
(p) services 135,032 0.9 (0.4) reduction 419,268
Uses image
recognition/machine
learning
Recursion and automation
Pharmaceuticals to improve
Inc (p) drug discovery 132,756 0.8 0.5 75,850
Spotify
Technology Online music streaming
SA (p) service 127,851 0.8 (0.4) 189,643
Blockchain.com Software platform
Series C-1 for digital
Pref. (U) assets 51,988 0.4 (1.1) 182,169
Blockchain.com Software platform
Series D for digital
Pref. (U) assets 51,056 0.4 (0.2) 75,950
Blockchain.com Software platform
Inc Promissory for digital
note (U) assets 4,479 - - New purchase -
------------- ------- ------------- ------------- ----------
107,523 0.8 (1.3) 258,119
------------- ------- ------------- ------------- ----------
Housing
Development
Finance Indian mortgage
Corporation provider 106,950 0.8 0.1 101,717
International online
clothing
Zalando retailer 99,729 0.7 (0.9) 220,640
Solugen exists to
scale
synthetic biology
Solugen Inc and bring
Series C-1 green chemicals
Pref. (U) to the world 98,185 0.7 0.2 67,922
HelloFresh
(p) Grocery retailer 89,238 0.7 (0.5) 161,987
Redwood
Materials
Inc
Series C Environmental battery
Pref. (U) recycling 85,550 0.7 0.1 74,535
The Production
Board Series Holding company
A-2 for food
Pref. (U) technology companies 50,882 0.4 (0.2) 77,166
The Production
Board Series Holding company
A-3 for food
Pref. (U) technology companies 34,593 0.3 - 28,266
------------- ------- ------------- ------------- ----------
85,475 0.7 (0.2) 105,432
------------- ------- ------------- ------------- ----------
Carbon Inc Manufactures and
Series D develops
Pref. (U) 3D printers 49,627 0.4 - 49,205
Carbon Inc Manufactures and
Series E develops
Pref. (U) 3D printers 31,046 0.2 - 30,782
------------- ------- ------------- ------------- ----------
80,673 0.6 - 79,987
------------- ------- ------------- ------------- ----------
Indigo Agriculture
Inc Series Analyses plant microbiomes
D to increase crop
Pref. (U) yields 28,569 0.2 - 25,049
Indigo Agriculture
Inc Series Analyses plant microbiomes
E to increase crop
Pref. (U) yields 19,912 0.1 - 14,670
Indigo Agriculture
Inc Series Analyses plant microbiomes
F to increase crop
Pref. (U) yields 18,942 0.1 - 14,776
Indigo Agriculture
Inc Series Analyses plant microbiomes
G to increase crop
Pref. (U) yields 11,689 0.1 - 9,447
Indigo Agriculture Analyses plant microbiomes
Inc Common to increase crop
(U) yields 1,047 - - 2,221
------------- ------- ------------- ------------- ----------
80,159 0.5 - 66,163
------------- ------- ------------- ------------- ----------
Human co-experience
platform enabling
shared
experiences among
Roblox users 79,871 0.5 (0.1) New purchase -
Jiangxiaobai
Holdings
Ltd
Series C Producer of alcoholic
Pref. (U) beverages 75,305 0.5 0.1 55,950
ChargePoint Electric vehicle
Holdings charging Significant
Inc solutions 76,055 0.5 - addition 69,111
Atlas Copco Engineering 73,141 0.5 - 86,205
Online platform
which
provides lending
Affirm Holdings and
Inc Class consumer credit
A (p) services 68,947 0.5 (0.5) 144,207
Remote conferencing
service
Zoom provider 67,691 0.5 (0.1) 91,537
Blockstream
Corporation
Inc
Series B-1 Financial software
Pref. (U) developer 66,713 0.5 (0.1) 71,135
Online grocery retailer
and Significant
Ocado technology provider 66,289 0.5 (0.6) addition 102,395
Databricks
Inc
Series H
Pref. (U) Data software solutions 66,222 0.5 - 58,997
Biotechnology company
Vir Biotechnology developing anti-infective
Inc (p) therapies 65,664 0.5 - 73,365
Provider of an on-demand
delivery platform
designed to
Rappi Inc connect consumers
Series F with
Pref. (U) local stores 64,951 0.5 - 58,899
Delivery business,
using self-
Nuro Inc driving purpose-built
Series C electric
Pref. (U) vehicles 39,217 0.3 (0.1) 55,561
Delivery business,
using self-
Nuro Inc driving purpose-built
Series D electric
Pref. (U) vehicles 25,693 0.2 - 28,433
------------- ------- ------------- ------------- ----------
64,910 0.5 (0.1) 83,994
------------- ------- ------------- ------------- ----------
Cloud-based commerce
Shopify platform provider 62,916 0.4 (0.5) 133,802
GoPuff Inc
(GoBrands) On demand retail
Series G delivery
Pref. (U) service 61,948 0.4 - 55,476
Salt Pay
Co Ltd
Non-Voting
Ordinary Payment and management
Shares (U) solutions 53,520 0.4 (0.1) 60,434
Salt Pay
Co Ltd
Voting Ordinary Payment and management
Shares (U) solutions 1 - - 1
------------- ------- ------------- ------------- ----------
53,521 0.4 (0.1) 60,435
------------- ------- ------------- ------------- ----------
Honor
Technology
Inc
Series D Provider of home-care
Pref. (U) services 31,498 0.3 (0.1) 37,375
Honor
Technology
Inc
Series E Provider of home-care
Pref. (U) services 21,989 0.1 - 24,766
------------- ------- ------------- ------------- ----------
53,487 0.4 (0.1) 62,141
------------- ------- ------------- ------------- ----------
Tanium Inc
Class Provides security
B Common and systems
(U) management solutions 53,227 0.4 (0.4) 104,374
Relativity Aerospace company,
Space designs
Inc Series and builds rockets
D using 3D
Pref. (U) printers 32,902 0.3 - 44,217
Relativity Aerospace company,
Space designs
Inc Series and builds rockets
E using 3D
Pref. (U) printers 19,666 0.1 (0.1) 21,583
------------- ------- ------------- ------------- ----------
52,568 0.4 (0.1) 65,800
------------- ------- ------------- ------------- ----------
Bolt Threads
Inc Natural fibres and
Series D fabrics
Pref. (U) manufacturer 27,621 0.2 - 25,308
Bolt Threads
Inc Natural fibres and
Series E fabrics
Pref. (U) manufacturer 23,860 0.2 - 21,696
------------- ------- ------------- ------------- ----------
51,481 0.4 - 47,004
------------- ------- ------------- ------------- ----------
Kinnevik Investment company 50,675 0.4 (0.2) 85,605
Designer and developer
of AI
chips and algorithms
principally for
advanced
driving assistance
Horizon Robotics systems
Series C and autonomous
Pref. (U) vehicles 49,819 0.4 - 44,187
Essence
Healthcare
Series 3 Cloud-based health
Pref. (U) provider 49,569 0.4 0.1 38,304
JRSK Inc
(Away)
Series D
Pref. (U) Manufactures luggage 20,085 0.1 - 17,355
JRSK Inc
(Away)
Series Seed
Pref. (U) Manufactures luggage 10,830 0.1 - 9,651
JRSK Inc
(Away)
Convertible
Promissory
Note (U) Manufactures luggage 8,653 0.1 - 8,034
JRSK Inc
(Away)
Convertible
Promissory
Note
2021 (U) Manufactures luggage 8,653 0.1 - 8,034
------------- ------- ------------- ------------- ----------
48,221 0.4 - 43,074
------------- ------- ------------- ------------- ----------
Thumbtack
Inc Online directory
Series G service for
Pref. (U) local businesses 28,948 0.2 - 33,513
Thumbtack
Inc Online directory
Series I service for
Pref. (U) local businesses 11,022 0.1 - 11,741
Thumbtack
Inc Online directory
Series H service for local
Pref. (U) businesses 5,790 - - 6,703
Thumbtack
Inc Online directory
Class A service for
Common (U) local businesses 871 - - 3,023
Thumbtack
Inc Online directory
Series A service for
Pref. (U) local businesses 514 - - 1,783
Thumbtack
Inc Online directory
Series C service for
Pref. (U) local businesses 150 - - 521
Thumbtack
Inc Online directory
Series B service for
Pref. (U) local businesses 35 - - 121
------------- ------- ------------- ------------- ----------
47,330 0.3 - 57,405
------------- ------- ------------- ------------- ----------
Climeworks
AG
Series F
Preferred Renewable energy
(U) equipment 46,925 0.3 - New purchase -
Climeworks
AG
Non Voting Renewable energy
Shares (U) equipment 358 - - New purchase -
------------- ------- ------------- ------------- ----------
47,283 0.3 - -
------------- ------- ------------- ------------- ----------
Digital platform
providing
Capsule Corp home delivery of
Series D prescription
Pref. (U) medication 46,779 0.3 - 47,719
A life science and
diagnostics
10x Genomics company 45,611 0.3 (0.4) 103,343
Convoy Inc Marketplace for
Series D truckers and
Pref. (U) shippers 28,978 0.2 - 27,763
Convoy Inc Marketplace for
Series E truckers and
Pref. (U) shippers 16,909 0.1 - 15,190
------------- ------- ------------- ------------- ----------
45,887 0.3 - 42,953
------------- ------- ------------- ------------- ----------
Uptake
Technologies
Inc
Promissory Designs and develops
Note (U) enterprise software 24,870 0.2 - 22,785
Uptake
Technologies
Inc
Series D Designs and develops
Pref. (U) enterprise software 20,435 0.1 (0.2) 41,545
------------- ------- ------------- ------------- ----------
45,305 0.3 (0.2) 64,330
------------- ------- ------------- ------------- ----------
Workrise
Technologies Online platform
Inc connecting
Series E contractors with
Pref. (U) work 45,165 0.3 (0.1) 51,918
Online and physical
Warby Parker glasses
Inc (p) retailer 45,092 0.3 (0.4) 96,854
Application software
Cloudflare developer 43,023 0.3 - New purchase -
Provides restaurant
food
DoorDash delivery services 40,849 0.3 (0.3) 81,972
Aurora Innovation Developer of driverless
Inc Common vehicle
(p) technology 40,349 0.3 (0.4) 86,922
Online household
goods
Wayfair retailer 38,716 0.3 (0.5) 111,760
Lilium NV
(p) On demand air transportation 36,309 0.3 (0.1) 53,503
Develops software
Heartflow for
Inc cardiovascular
Series E disease
Pref. (U) diagnosis and treatment 33,066 0.3 (0.1) 41,525
KSQ Therapeutics
Inc Series
C
Pref. (U) Biotechnology company 22,792 0.1 - 19,996
KSQ Therapeutics
Inc Series
D
Pref. (U) Biotechnology company 8,476 0.1 - 7,303
------------- ------- ------------- ------------- ----------
31,268 0.2 - 27,299
------------- ------- ------------- ------------- ----------
Biotechnology company
Sana creating and delivering
Biotechnology engineered cells
Inc (p) as medicine 29,976 0.2 - 35,003
Online platform
for searching
Zocdoc Inc for doctors and
Series D-2 booking
Pref. (U) appointments 29,630 0.2 0.1 22,321
Joby Aviation
Inc (p) Electric aircraft 29,391 0.2 - 38,040
PsiQuantum
Series D Operates as a biotechnology
Pref. (U) company 21,084 0.1 - 18,988
Upside Foods
Inc
Series C-1 Cultivated meat
Pref. (U) producer 20,602 0.1 - New purchase -
Clear Secure Biometric security
Inc firm 20,478 0.1 - 20,393
Online platform
for buying
Carvana used cars 18,343 0.1 (0.5) 83,168
Sinovation
Fund Venture capital
III (U) fund 13,692 0.1 - 10,145
ARCH Ventures Venture capital
Fund IX fund to invest
(U) in biotech start-ups 13,655 0.1 - 16,579
Illumina
CVR Biotechnology equipment 13,524 0.1 - -
WI Harper
Fund Venture capital
VIII (U) fund 12,134 0.1 - 9,757
Clover Health
Investments
B Healthcare insurance
Common (p) provider 7,785 0.1 - -
Clover Health
Investments
A Common Healthcare insurance
(p) provider 4,005 - (0.1) 20,938
------------- ------- ------------- ------------- ----------
11,790 0.1 20,938
------------- ------- ------------- ------------- ----------
Udacity Inc
Series D
Pref. (U) Online education 10,572 0.1 - 8,269
Innovation
Works
Development Venture capital
Fund (U) fund 10,431 0.1 - 16,201
ARCH Ventures
Fund X Venture capital
Overage fund to invest
(U) in biotech start-ups 8,706 0.1 - 6,840
Venture capital
ARCH Ventures fund to invest
Fund X (U) in biotech start-ups 8,412 0.1 - 6,331
WI Harper
Fund Venture capital
VII (U) fund 8,066 0.1 - 7,589
ARCH Ventures Venture capital
Fund XI fund to invest Significant
(U) in biotech start-ups 6,448 <0.1 - addition 3,362
Zymergen Developer of molecular
Inc (p) technology 5,511 <0.1 - 4,840
Global AI Artificial intelligence
Opportunities based
Fund algorithmic trading 4,466 <0.1 - 5,114
ARCH Ventures Venture capital
Fund XII fund to invest
(U) in biotech start-ups 1,571 <0.1 0.1 New purchase -
Rubius
Therapeutics
Inc (p) Biotechnology 1,334 <0.1 - 14,309
VC Fund helping
Antler East entrepreneurs establish
Africa their
Fund I LP businesses in
(U) East Africa 990 <0.1 - 276
Beam
Therapeutics Biotechnology company 440 <0.1 - 447
Intarcia Implantable drug - - - -
Therapeutics delivery
Inc system
Common ++
(U)
Intarcia Implantable drug - - - -
Therapeutics delivery
Inc system
Convertible
Bond ++
(U)
Intarcia Implantable drug - - - -
Therapeutics delivery
Inc system
Series EE
Pref. ++
(U)
- - -
-------------------- ------------------------------ ------------- ------- ------------- ------------- ----------
Total Investments 14,003,641 98.6
Net Liquid
Assets # 198,676 1.4
---------------------------------------------------- ------------- ------- ------------- ------------- ----------
Total Assets
# 14,202,317 100.0
---------------------------------------------------- ------------- ------- ------------- ------------- ----------
* Contribution to absolute performance has been calculated on a
total return basis over the period 1 April 2022 to 30 September
2022. For a definition of total return please see the Glossary of
Terms and Alternative Performance Measures at the end of this
announcement.
Significant additions and reductions to investments have been
noted where the change is at least a 20% movement from the value of
the holding at 31 March 2022. The change in value over the period
also reflects the share price performance and the movement in
exchange rates.
# See Glossary of Terms and Alternative Performance Measures at the end of this announcement.
++ The Intarcia Therapeutics holdings are valued at nil at 30 September 2022.
(U) Denotes unlisted (private company) security.
(p) Denotes listed security previously held in the portfolio as
an unlisted (private company) security.
Source: Baillie Gifford/StatPro. See disclaimer at the end of
this announcement.
Distribution of Assets* (unaudited)
Geographical Analysis
At At
30 September 2022 31 March 2022
% %
================= ============= ================== ==============
North America 58.8 59.7
United States 57.9 58.5
Canada 0.9 1.2
Europe 21.8 21.9
United Kingdom 2.4 2.0
Eurozone 14.1 15.5
Developed Europe (non Euro) 5.3 4.4
South America 2.9 2.0
Brazil 2.9 2.0
Asia 16.5 16.4
China 15.7 15.8
India 0.8 0.6
Total assets 100.0 100.0
================================ ================== ==============
Sectoral Analysis
At At
30 September 2022 31 March 2022
% %
============ ============ ================== ==============
Consumer Staples 3.0 3.0
Consumer Discretionary 33.7 33.5
Technology 22.4 24.9
Healthcare 18.6 19.4
Financials 5.8 5.3
Industrials 10.4 9.1
Basic Materials 3.6 2.7
Real Estate 0.0 0.1
Energy 1.1 0.7
Net Liquid Assets 1.4 1.3
Total assets 100.0 100.0
========================== ================== ==============
(*) See Glossary of Terms and Alternative Performance Measures
at end of this announcement.
Unlisted
Unlisted (private
Listed (private company) company) Net liquid
equities securities bonds assets Total
% % % % %
--------- ------------------------------------- --------- ----------
30 September
2022 66.8 30.9 0.9 1.4 100.0
31 March 2022 73.9 24.6 0.2 1.3 100.0
--------------- --------- ------------------------------------- --------- ---------- ------
Includes holdings in preference shares and ordinary shares.
http://www.rns-pdf.londonstockexchange.com/rns/0636G_2-2022-11-10.pdf
http://www.rns-pdf.londonstockexchange.com/rns/0636G_1-2022-11-10.pdf
Absolute Performance to 30 September 2022 (unaudited)
Total return Total return Total return (%)#
(%)# (%)# since inception
for five years For ten years (2 June 2010)++
------------------------------ ---------------- --------------- ------------------
Overall investment portfolio 106.7 495.4 625.5
Private and previously
private companies 92.0 886.0 726.0
FTSE All-World Index (in
sterling terms) 52.7 207.9 273.9
# For a definition of total return please see Glossary of Terms
and Alternative Performance Measures at the end of this
announcement.
++ Date of investment in first private company security. Source:
StatPro/Baillie Gifford and underlying index providers.
Valuing Private Companies
We aim to hold our private company investments at 'fair value'
i.e., the price that would be paid in an open-market transaction.
Valuations are adjusted both during regular valuation cycles and on
an ad hoc basis in response to 'trigger events'. Our valuation
process ensures that private companies are valued in both a fair
and timely manner.
The valuation process is overseen by a valuations committee at
Baillie Gifford which takes advice from an independent third party
(S&P Global). The portfolio managers feed into the process, but
the valuations committee owns the process and the portfolio
managers only receive final valuation 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. The prices
are also reviewed twice per year by the Scottish Mortgage Board and
are subject to the scrutiny of external auditors in the annual
audit process.
Recent market volatility has meant that recent pricing has moved
much more frequently than would have been the case with the
quarterly valuations cycle.
Beyond the regular cycle, the valuations committee 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); or changes to the valuation
of comparable public companies.
The valuations committee also monitors relevant market indices
on a weekly basis and update valuations in a manner consistent with
our external valuer's (S&P Global) most recent valuation report
where appropriate. When market volatility is particularly
pronounced the team undertake these checks daily. Any ad hoc change
to the fair valuation of any holding is implemented swiftly and
reflected in the next published NAV. There is no delay.
Scottish Mortgage Investment Trust
Instruments valued 87
Revaluations performed 297
Percentage of portfolio revalued
2+ times 97%
Percentage of portfolio revalued
4+ times 40%
================================== ====
Year to date, most revaluations have been decreases. A handful
of companies have raised capital at an increased valuation. The
average movement in both valuation and share price for those which
have decreased in value is shown below.
Average movement Average movement
in investee company in investee company
valuation* share price
Scottish
Mortgage* (17.8%) (13.7%)
* Data reflecting period 1 April 2022 - 30 September
2022 to align with the Company's reporting period
end
============================================================
Share prices have decreased less than headline valuations
because Scottish Mortgage typically holds preference stock, which
provides downside protection. The share price movement reflects a
probability weighted average of both the regular valuation, which
would be realised in an IPO, and the downside protected valuation,
which would be normally be triggered in the event of a corporate
sale or liquidation.
Notes to the Condensed Financial Statements (unaudited)
1. The condensed Financial Statements for the six months to 30
September 2022 comprise the statements set out on above together
with the related notes below. They have been prepared in accordance
with FRS 104 'Interim Financial Reporting' and the AIC's Statement
of Recommended Practice issued in November 2014 and updated in July
2022 with consequential amendments. They have not been audited or
reviewed by the Auditor pursuant to the Auditing Practices Board
Guidance on 'Review of Interim Financial Information'. The
Financial Statements for the six months to 30 September 2022 have
been prepared on the basis of the same accounting policies as set
out in the Company's Annual Report and Financial Statements at 31
March 2022.
Going Concern
The Directors have considered the nature of the Company's
assets, its liabilities, projected income and expenditure together
with its investment objective and policy, dividend policy and
principal risks and uncertainties, as set out at the end of this
document. The Board has, in particular, considered the impact of
heightened market volatility since the Covid-19 pandemic and over
recent months due to the macroeconomic and geopolitical concerns,
including the Russia-Ukraine war and US-China tensions. It has
reviewed the results of specific leverage and liquidity stress
testing, but does not believe the Company's going concern status is
affected. The Company's assets, the majority of which are 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) Regulations 2011. Accordingly, the Directors
considered it appropriate to adopt the going concern basis of
accounting in preparing these Financial Statements and confirm that
they are not aware of any material uncertainties which may affect
the Company's ability to continue in operational existence for a
period of at least twelve months from the date of approval of these
Financial Statements.
2. The financial information contained within this Interim
Financial Report does not constitute statutory accounts as defined
in sections 434 to 436 of the Companies Act 2006. The financial
information for the year ended 31 March 2022 has been extracted
from the statutory accounts which have been filed with the
Registrar of Companies. The Auditors' Report on those accounts was
not qualified, did not include a reference to any matters to which
the Auditors drew attention by way of emphasis without qualifying
its report and did not contain statements under sections 498 (2) or
(3) of the Companies Act 2006.
3. Baillie Gifford & Co Limited, a wholly owned subsidiary
of Baillie Gifford & Co, has been appointed by the Company as
its Alternative Investment Fund Manager ('AIFM') and Company
Secretary. The investment management function has been delegated to
Baillie Gifford & Co. The management agreement can be
terminated on six months' notice. The annual management fee is
0.30% on the first GBP4 billion of total assets less current
liabilities (excluding short term borrowings for investment
purposes) and 0.25% thereafter, calculated and payable
quarterly.
4. Net Return per Ordinary Share
Six months to Six months to
30 September 30 September
2022 2021
GBP'000 GBP'000
Revenue return on ordinary activities
after taxation 20,719 8,715
Capital return on ordinary activities
after taxation (2,596,148) 2,654,201
------------- -------------
Total net return (2,575,429) 2,662,916
------------- -------------
Weighted average number of ordinary
shares in issue 1,439,460,353 1,416,515,214
------------- -------------
The net return per ordinary share figures are based on the above
totals of revenue and capital and the weighted average number of
ordinary shares in issue during each period.
There are no dilutive or potentially dilutive shares in
issue.
5. Dividends
Six months to Six months to
30 September 30 September
2022 2021
GBP'000 GBP'000
Amounts recognised as distributions
in the period:
Previous year's final dividend
of 2.07p (2021 - 1.97p), paid
1 July 2022 29,864 27,984
------------- -------------
29,864 27,984
------------- -------------
Dividends proposed in the period:
Interim dividend for the year
ending 31 March 2023 of 1.60p
(2022 - 1.52p) 22,848 21,459
------------- -------------
22,848 21,459
------------- -------------
The interim dividend was declared after the period end date and
has therefore not been included as a liability in the Balance
Sheet. It is payable on 16 December 2022 to shareholders on the
register at the close of business on 25 November 2022. The
ex-dividend date is 24 November 2022. The Company's Registrars
offer a Dividend Reinvestment Plan and the final date for elections
for this dividend is 29 November 2022.
6. Fair Value Hierarchy
The fair value hierarchy used to analyse the basis on which the
fair values of financial instruments held at fair value through the
profit and loss account are measured 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 Company's investments are financial assets designated at
fair value through profit or loss. An analysis of the Company's
financial asset investments based on the fair value hierarchy
described above is shown below.
Investments held at fair value through profit or loss
Level 1 Level 2 Level 3 Total
As at 30 September 2022 GBP'000 GBP'000 GBP'000 GBP'000
Equities/funds 9,471,002 - - 9,471,002
Private company ordinary shares - - 656,843 656,843
Private company preference
shares * - - 3,652,682 3,652,682
Private company convertible
note - - 125,486 125,486
Limited Partnership Investments - - 84,104 84,104
Contingent Value Rights - - 13,524 13,524
--------- -------- --------- ----------
Total financial asset investments 9,471,002 - 4,532,639 14,003,641
--------- -------- --------- ----------
Level 1 Level 2 Level 3 Total
As at 31 March 2022 (audited) GBP'000 GBP'000 GBP'000 GBP'000
Equities/funds 12,473,650 - - 12,473,650
Private company ordinary shares - - 609,779 609,779
Private company preference
shares * - - 3,470,105 3,470,105
Private company convertible
note - - 38,853 38,853
Limited Partnership Investments - - 77,082 77,082
---------- -------- --------- ----------
Total financial asset investments 12,473,650 - 4,195,819 16,669,469
---------- -------- --------- ----------
During the period, no investments were transferred from Level 3
to Level 1 on becoming listed. The fair value of listed investments
is bid value or, in the case of holdings on certain recognised
overseas exchanges, last traded price. Listed Investments are
categorised as Level 1 if they are valued using unadjusted quoted
prices for identical instruments in an active market and as Level 2
if they do not meet all these criteria but are, nonetheless, valued
using market data.
* 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.
Private company investments
The Company's holdings in unlisted (private company) investments
are categorised as Level 3. Private company 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' private company investment policy applies techniques
consistent with the International Private Equity and Venture
Capital Valuation Guidelines 2018 ('IPEV'). The techniques applied
are predominantly market-based approaches. The market-based
approaches available under IPEV are set out below and are followed
by an explanation of how they are applied to the Company's private
company portfolio:
3/4 Multiples;
3/4 Industry Valuation Benchmarks; and
3/4 Available Market Prices.
The nature of the private company portfolio 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 private company investments are valued according to a three
monthly cycle of measurement dates. The fair value of the private
company investments will be reviewed before the next scheduled
three monthly measurement date on the following occasions:
3/4 At the year end and half year end of the Company; and
3/4 Where there is an indication of a change in fair value as
defined in the IPEV guidelines (commonly referred to as 'trigger'
events).
Further information on the private company valuation process is
provided under 'Valuing Private Companies' above.
7. The total value of the borrowings (at book) is
GBP2,181,140,000 (31 March 2022 - GBP2,131,588,000).
The bank loans falling due within one year are a US$350 million
revolving 3 year loan with National Australia Bank Limited ('NAB')
and a US$100 million revolving 3 year loan with Scotiabank (31
March 2022 - US$391 million revolving 3 year loan with NAB, a US$50
million revolving 5 year loan with The Royal Bank of Scotland
International Limited ('RBSI'), a US$100 million revolving 3 year
loan with Scotiabank and a US$120 million revolving 3 year loan
with Industrial and Commercial Bank of China ('ICBC')).
During the period, the US$391 million revolving 3 year loan with
NAB was reduced to a facility of US$350 million and the ICBC US$120
million revolving 3 year loan was repaid. The RBSI US$50 million
revolving 5 year loan facility was repaid and subsequently reduced
to a facility of US$25 million.
The bank loans falling due after more than one year are a US$200
million fixed rate loan and a US$180 million fixed rate loan with
RBSI and a US$300 million fixed rate loan with Scotiabank ( 31
March 2022 - US$200 million fixed rate loan and a US$180 million
fixed rate loan with RBSI and a US$300 million fixed rate loan with
Scotiabank).
8. The fair value of the borrowings at 30 September 2022 was GBP1,705,071,000 (31 March 2022 - GBP2,001,685,000).
9. Share Capital: Ordinary Shares of 5p Each
At 31 March
At 30 September 2022
2022 (audited)
No. of shares No. of shares
Allotted, called up and fully paid
ordinary shares of 5p each 1,428,019,945 1,444,131,650
Treasury shares of 5p each 56,760,935 40,649,230
--------------- --------------
Total 1,484,780,880 1,484,780,880
--------------- --------------
In the six months to 30 September 2022, the Company sold no
ordinary shares from treasury (year to 31 March 2022 - 34,950,000
ordinary shares at a premium to net asset value, with a nominal
value of GBP1,747,500 raising net proceeds of GBP518,246,000).
In the six months to 30 September 2022, 16,111,705 ordinary
shares with a nominal value of GBP805,585 were bought back at a
total cost of GBP131,171,000 and held in treasury (year to 31 March
2022 - 12,437,319 shares with a nominal value of GBP621,000 were
bought back at a total cost of GBP157,597,000 and held in
treasury). At 30 September 2022 the Company had authority remaining
to buy back 204,723,592 ordinary shares.
10. Transaction costs on acquisitions within the portfolio
amounted to GBP383,000 (30 September 2021 - GBP382,000) and
transaction costs on sales amounted to GBP1,089,000 (30 September
2021 - GBP190,000). These costs are included in the book cost of
acquisitions and in the net proceeds of disposals.
11. Related Party Transactions
There have been no transactions with related parties during the
first six months of the current financial year that have materially
affected the financial position or the performance of the Company
during that period and there have been no changes in the related
party transactions described in the last Annual Report and
Financial Statements that could have had such an effect on the
Company during that period.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
Glossary of Terms and Alternative Performance Measures (APM)
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). Net Asset Value is calculated on the basis of
borrowings stated at book value or fair value. An explanation of
each basis is provided below. The NAV per share is calculated by
dividing this amount by the number of ordinary shares in issue
(excluding treasury shares).
Net Asset Value (Borrowings at Book)/Shareholders' Funds
Borrowings are valued at adjusted net issue proceeds. The value
of the borrowings at book is set out in note 7 above.
Net Asset Value (Borrowings at Fair Value) (APM)
Borrowings are valued at an estimate of their market worth. The
value of the borrowings at fair is set out in note 8 above and a
reconciliation to Net Asset Value with borrowings at book value is
provided below.
30 September 31 March
2022 2022
Net Asset Value per ordinary share (borrowings
at book value) 841.7p 1,021.8p
Shareholders' funds (borrowings at book GBP12,019,535,000 GBP14,755,999,000
value)
Add: book value of borrowings GBP2,181,140,000 GBP2,131,588,000
Less: fair value of borrowings (GBP1,705,071,000) (GBP2,001,885,000)
------------------ ------------------
Net Asset Value (borrowings at fair value) GBP12,495,604,000 GBP14,885,702,000
------------------ ------------------
Shares in issue at year end (excluding
treasury shares) 1,428,019,945 1,444,131,650
Net Asset Value per ordinary share (borrowings
at fair value) 875.0p 1,030.8p
------------------ ------------------
Net Liquid Assets
Net liquid assets comprise current assets less current
liabilities, excluding borrowings.
Discount/Premium (APM)
As stockmarkets and share prices vary, an investment trust's
share price is rarely the same as its 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, it is said to be trading at a premium.
30 September 2022 30 September 2021
2022 2022 2021 2021
NAV (book) NAV (fair) NAV (book) NAV (fair)
----- ----------------- ---------------- ---------------- ----------------
Net Asset Value per
share (a) 841.7p 875.0p 1,381.1p 1,378.8p
Share price (b) 782.4p 782.4p 1,428.0p 1,428.0p
----- ----------------- ---------------- ---------------- ----------------
Discount ((b)-(a))
÷ (a) (7.0%) (10.6%) 3.4% 3.6%
----------------- ---------------- ---------------- ----------------
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 represents
borrowings at book value less cash and cash equivalents (including
any outstanding trade settlements) expressed as a percentage of
shareholders' funds.
30 September 31 March
2022 2022
Borrowings (at book value) GBP2,181,140,000 GBP2,131,588,000
Less: cash and cash equivalents (GBP230,387,000) (GBP229,962,000)
Less: sales for subsequent settlement - (GBP6,450,000)
Add: purchases for subsequent - -
settlement
---- ----------------- -----------------
Adjusted borrowings (a) GBP1,950,753,000 GBP1,895,176,000
---- ----------------- -----------------
Shareholders' funds (b) GBP12,019,535,000 GBP14,755,999,000
---- ----------------- -----------------
Gearing: (a) as a percentage
of (b) 16% 13%
----------------- -----------------
30 September 31 March
2022 2022
Borrowings (at book value) (a) GBP2,181,140,000 GBP2,131,588,000
Shareholders' funds (b) GBP12,019,535,000 GBP14,755,999,000
---- ----------------- -----------------
Potential gearing: (a) as a
percentage of (b) 18% 14%
----------------- -----------------
Turnover (APM)
Annual turnover is calculated on a rolling 12 month basis. The
lower of purchases and sales for the 12 months is divided by the
average assets, with average assets being calculated on assets as
at each month's end.
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.
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.
30 September 2022 30 September 2021
NAV NAV Share NAV NAV Share
(book) (fair) price (book) (fair) price
---------- --------- -------- -------- --------- -------- --------
Closing NAV per
share/share price (a) 841.7p 875.0p 782.4p 1,381.1p 1,378.8p 1,428.0p
Dividend adjustment
factor * (b) 1.0025 1.0024 1.0026 1.0020 1.0012 1.0016
---------- --------- -------- -------- --------- -------- --------
Adjusted closing (c =
NAV per share/share a x
price b) 843.8p 877.1p 784.4p 1,383.9p 1,380.4p 1,430.3p
---------- --------- -------- -------- --------- -------- --------
Opening NAV per
share/share price (d) 1,021.8p 1,030.8p 1,026.0p 1,195.1p 1,190.0p 1,137.0p
---------- --------- -------- -------- --------- -------- --------
(c ÷
Total return d)-1 (17.4%) (14.9%) (23.5%) 15.8% 16.0% 25.8%
---------- --------- -------- -------- --------- -------- --------
Principal Risks and Uncertainties
The principal risks facing the Company are financial risk,
private company investments risk, investment strategy risk, climate
and governance risk, discount risk, regulatory risk, custody and
depositary risk, operational risk, leverage risk, political risk
and emerging risks. An explanation of these risks and how they are
managed is set out on pages 9 and 10 of the Company's Annual Report
and Financial Statements for the year to 31 March 2022 which is
available on the Company's website: scottishmortgage.com.
The principal risks and uncertainties have not changed since the
date of that report.
Shareholders will be notified on or around 18 November 2022 that
the Interim Financial Report has been published and will be
available on the Scottish Mortgage page of the Managers' website
scottishmortgageit.com. (++)
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
Scottish Mortgage Investment Trust PLC is an actively managed,
low cost investment trust, investing in a concentrated global
portfolio of companies with the aim of maximising its total return
over the long term. It looks for strong businesses with
above-average returns and aims to achieve a greater return than the
FTSE All-World Index (in sterling terms) over a five year rolling
period.
You can find up to date performance information about Scottish
Mortgage on the Scottish Mortgage page of the Managers' website at
scottishmortgageit.com++
++ 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.
Scottish Mortgage is managed by Baillie Gifford & Co, the
Edinburgh based fund management group with over GBP 221 billion
under management and advice in active equity and bond portfolios
for clients in the UK and throughout the world (as at 10 November
2022).
Investment Trusts are UK public limited companies and are not
authorised or regulated by the Financial Conduct Authority.
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 stock markets in which the
Company invests and by the supply and demand for the Company's
shares.
10 November 2022
For further information please contact:
Stewart Heggie, Baillie Gifford & Co
Tel: 0131 275 5117
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
Automatic Exchange of Information
In order to fulfil its obligations under UK tax legislation
relating to the automatic exchange of information, Scottish
Mortgage 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, Scottish Mortgage
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/government/publications/
exchange-of-information-account-holders.
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No Provider has any obligation to update, modify or amend the
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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
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under statute or otherwise, in respect of any loss or damage
suffered by you as a result of or in connection with any opinions,
recommendations, forecasts, judgements, or any other conclusions,
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FTSE Index Data
London Stock Exchange Group plc and its group undertakings
(collectively, the 'LSE Group'). (c)LSE Group 2022. FTSE Russell is
a trading name of certain LSE Group companies. 'FTSE(R)',
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The LSE Group does not promote, sponsor or endorse the content of
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Sustainable Finance Disclosure Regulation ('SFDR')
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 Scottish
Mortgage Investment Trust PLC is marketed in the EU by the AIFM, BG
& 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 Governance and
Sustainable Principles and Guidelines as its policy on integration
of sustainability risks in investment decisions. 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 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. More
detail on the Managers' approach to sustainability can be found in
the Governance and Sustainability Principles and Guidelines
document, available publicly on the Baillie Gifford website
bailliegifford.com.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework of
criteria for environmentally sustainable economic activities in
respect of six environmental objectives. It builds on the
disclosure requirements under SFDR by introducing additional
disclosure obligations in respect of Alternative Investment Funds
that invest in an economic activity that contributes to an
environmental objective. The Company does not commit to make
sustainable investments as defined under SFDR. As such, the
underlying investments do not take into account the EU criteria for
environmentally sustainable economic activities.
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END
IR URSKRUAUAAAA
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