The
information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 which forms part of
domestic law in the United Kingdom pursuant to The European Union
Withdrawal Act 2018, as amended by The Market Abuse (Amendment) (EU
Exit) Regulations 2019.
Scottish Mortgage Investment Trust PLC
(SMT)
Legal
Entity Identifier: 213800G37DCS3Q9IJM38
Board Announcement: Scottish Mortgage
makes available at least £1 billion for buybacks over the next two
years.
·
The Company's public and private portfolio is
delivering strong operational results.
·
Over recent months, the Board has further
strengthened the Company's balance sheet.
·
The Board has now decided to make available at
least £1 billion for buybacks over the next two years.
Scottish Mortgage's public and
private portfolio is delivering strong operational results,
evidenced in part by free cashflow from the portfolio companies
having more than doubled over the past year. Collectively,
portfolio companies have adapted to a higher cost of capital and
are funding their future growth. Against this backdrop and having
further strengthened the Company's balance sheet, the Board now
intends to take more concerted action to address the discount to
net asset value at which the Company's shares continue to
trade.
When allocating capital, the Company
considers a range of factors including, but not limited to, the
level of gearing, exposure to private investments and general
market conditions. Over recent months, the Board has further
strengthened the Company's balance sheet via debt reduction,
leaving invested borrowings at 13% of net assets, at an average
interest rate cost of 3.2%. Meanwhile, Scottish Mortgage has
continued to provide patient growth capital, including to private
companies. Currently, private companies represent 26.2% of the
portfolio, which would rise to 28.3%, assuming £1 billion of share
repurchases at current market levels.
Share buybacks are a key component of
capital allocation decisions. Buybacks provide shareholders with
significant benefits including improved liquidity in the Company's
shares, an immediate accretion to the net asset value per share and
are a strong demonstration of confidence in the underlying
valuation of the portfolio. Over the last two years the Company has
bought back approximately £353m of its shares. During that period,
the Board and Managers have been actively considering increasing
the level of buybacks.
The Board has now decided to make
available at least £1 billion for the purpose of purchasing its own
shares over the next two years.
Justin Dowley, Chair of Scottish
Mortgage Investment Trust PLC commented:
"We
remain committed to using share repurchases strategically to
enhance liquidity in our shares and to seek to facilitate trading
around net asset value. Our Company has a strong balance sheet, and
its portfolio companies are delivering strong operational
results. We are acting upon this investment opportunity by
materially increasing the capital available to our liquidity policy
over the next two years with the aim of maximising returns for our
shareholders."
Tom Slater, Manager of Scottish
Mortgage Investment Trust PLC commented:
"In
a volatile period for growth investment, we own a portfolio of
established companies achieving rapid expansion, propelled by
enduring structural trends. Advances in foundational technologies
are unlocking exciting new products, services, and business models.
These well-funded public and private companies are shaping the
future of the economy. The stock market has yet to fully recognise
their progress, which creates the opportunity for us to buy the
portfolio for less than its market value. In doing so, we can
provide liquidity and augment returns for our shareholders. We
intend to pursue this opportunity with
conviction."
Baillie Gifford & Co is responsible for arranging for the
release of this announcement on behalf of the
Company.
15
March 2024
Regulated Information Classification:
Additional regulated information required to be
disclosed under the laws of a Member State
Enquiries:
Baillie Gifford:
Stewart Heggie
0131 474 5117
Stewart.heggie@bailliegifford.com
Press:
Jonathan Atkins
Four Communications
020 3103 9553
jonathan.atkins@fourcommunications.com
Corporate brokers:
Jefferies International
Limited
020 7029 8703
stuart.klein@jefferies.com
Deutsche Numis
David Benda
02072601275
d.benda@dbnumis.com