TIDMUSA
RNS Number : 5242A
Baillie Gifford US Growth Trust PLC
23 January 2024
RNS Announcement
Baillie Gifford US Growth Trust plc
Legal Entity Identifier: 213800UM1OUWXZPKE539
Regulated Information Classification: Half Yearly Financial
Report
Results for six months to 30 November 2023
During the six months to 30 November 2023, the Company's share
price and NAV (after deducting borrowings at fair value) returned
12.3% and 4.1% respectively. This compares with a total return of
7.9% for the S&P 500 Index* (in sterling terms). We have a
long-term approach and would ask shareholders to judge performance
over periods of five years or more.
- During the period from 23 March 2018, launch date and first
trade date, to 30 November 2023, the Company's share price and NAV
(after deducting borrowings at fair value) returned 61.8% and 98.2%
respectively. This compares with a total return of 117.8% for the
S&P 500 Index* (in sterling terms).
- At the end of November, we held positions in 24 private
companies which comprised 31.7% of total assets.
- We made three new purchases over the last six months, Meta
Platforms, Samsara and Sprout Social. In addit ion, we made five
complete sales during the period: Illumina, MarketAxess, Novocure,
Redfin and Snap.
- It has been a better year. The storm is easing. We know we
cannot assume that the sun will always shine, but we take comfort
from the fact that the companies held in your portfolio are
executing, and executing well. When fundamentals will be better
reflected in share prices is nigh on impossible to predict. Trying
to predict the mood of the multitude of market participants is a
fool's game for the long-term stock picker. Instead, we must double
down on what differentiates us - long-term, active, growth,
bottom-up stock pickers focused on fundamentals.
- British physicist David Deutsch said, "We have a duty to be
optimistic. Because the future is open, not predetermined and
therefore cannot just be accepted: we are all responsible for what
it holds". We take that responsibility seriously. US Growth holds
companies which are determining that future. But it will take time.
Navigating storms is part of the process. We believe the portfolio
is well-positioned to navigate and realise its potential. That
feels like a dream opportunity.
* Source: LSEG and relevant underlying index providers. See
disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Baillie Gifford US Growth Trust plc seeks to invest
predominantly in listed and unlisted US companies which the Company
believes have the potential to grow substantially faster than the
average company, and to hold onto them for long periods of time, in
order to produce long term capital growth. The Company has total
assets of GBP631.4 million (before deduction of loans of GBP39.5
million) as at 30 November 2023.
Baillie Gifford US Growth Trust plc is managed by Baillie
Gifford & Co, the Edinburgh based fund management group with
approximately GBP218.4 billion under management and advice in
active equity and bond portfolios for clients in the UK and
throughout the world (as at 22 January 2024).
The following is the unaudited Interim Financial Report for the
six months to 30 November 2023 which was approved by the Board on
22 January 2024 .
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 Guidance and Transparency Rule
4.2.7R (being an indication of important events that have occurred
during the first six months of the financial year, 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 financial year); and
c. the Interim Financial Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.8R (disclosure of related party transactions and changes
therein).
On behalf of the Board
Tom Burnet
Chair
22 January 2024
Chair's interim update
Performance
During the first half of the financial year, the Company's share
price and net asset value (after deducting borrowings at fair
value) ('NAV') total return* were 12.3% and 4.1% respectively. This
compares with a total return of 7.9% for the S&P 500 Index (in
sterling terms). The discount tightened during the period from
22.4% to 16.2%.
Further information about the Company's portfolio performance is
covered by our portfolio managers, Gary Robinson and Kirsty Gibson,
in their Interim management report.
Discount management
The Board acknowledges the discount is a challenge to many
shareholders and the investment trust sector has been trading at
discounts last seen during the financial crisis reaching an average
sector low for the year of 16.9% at the end of October 2023. As at
1 June 2023 the Company was trading at a discount of 22.4%. This
discount tightened to 16.2% as at 30 November 2023, being the end
of the interim period.
The Board regularly reviews the Company's liquidity policy and
it is a key discussion point at our Board meetings. We understand
that repurchasing shares provides NAV accretion and can reduce
share price volatility but we are also cognisant that buying back
will result in the sale of public companies to fund the buy back
and as such the portfolio will be skewed further towards the
private company investments. Importantly if the exposure to private
companies is a key driver behind the discount any such buy back
could result in the discount widening rather than tightening.
Following extensive Board discussions, a decision was reached
during the period that the Company should undertake buy backs. The
Company bought back 200,000 shares for a total consideration of
GBP319,000. The Board will continue to monitor the discount and the
application of the liquidity policy.
Gearing
During the period, the US$25 million five year revolving credit
facility was refinanced with a US$25 million three year revolving
credit facility from ING Bank N.V., London Branch, and the US$25
million three year fixed rate facility was refinanced with a US$25
million three ear revolving credit facility from The Royal Bank of
Scotland International Limited.
Gearing* remained stable over the course of the period at 6% (6%
as at 31 May 2023).
Outlook
Historically, periods of high inflation have led to
underperformance in equity markets. As interest rates are used to
control the inflation, growth equity valuations are often
particularly hard hit and elements of your portfolio have borne the
brunt of this over the last couple of years. As inflation drops and
with interest rates potentially peaking, perhaps we can allow
ourselves some optimism that valuations might begin to recover over
the coming months. In any case, the Board remains supportive of the
Managers' long-term approach to investing and we continue to
encourage Gary and Kirsty to concentrate on identifying and buying
into some of North America's most exciting companies. In that
regard, the Board is pleased with your Company's progress and
remains confident in the future.
Tom Burnet
Chair
22 January 2024
* Alternative performance measure, see Glossary of terms and
Alternative Performance Measures at the end of this
announcement.
Interim management report
During the period from 23 March 2018, launch date and first
trade date, to 30 November 2023, the Company's share price and NAV
(after deducting borrowings at fair value) returned 61.8% and 98.2%
respectively. This compares with a total return of 117.8% for the
S&P 500 Index* (in sterling terms).
This has not been a smooth journey. From launch until the end of
Q3 2023, the top 15 listed holdings of the current portfolio
experienced 59 drawdowns of greater than 20%. The largest single
peak to trough hit was 82% for Shopify from November 2021 to
October 2022. It has delivered a 347% share price rise since we
first invested in it for the Company. The average share price rise
of the top 15 since our first investment is 305% with Tesla topping
the list with a 1,351% return. This is asymmetry in action.
During the six months to 30 November 2023, the Company's share
price and NAV (after deducting borrowings at fair value) returned
12.3% and 4.1% respectively. This compares with a total return of
7.9% for the S&P 500 Index* (in sterling terms). We have a
long-term approach and would ask shareholders to judge performance
over periods of five years or more.
Portfolio
"The big money is not in the buying and the selling, but in the
waiting", Charlie Munger.
It feels only fitting to begin this Interim Report with a
Mungerism. In part to mark the passing of a legendary investor but
also to highlight its timeless relevance. The waiting, or a
willingness to be patient, is an underappreciated skill set in
investing. However, patience is different to inaction. In
investing, patience is a willingness to ride out share price
underperformance, given your conviction in the underlying strength
of the company's business model and culture, even if the
fundamentals are showing short-term weakness. To be effective it
also requires a corresponding willingness to accept your mistakes
and move on. Inaction, on the other hand, is about hope, not
conviction. The hope that share prices recover, and a better exit
opportunity presents itself.
We hypothesised that 2022 would be a year of reorientation, and
2023 would be a year of execution. Our portfolio companies
experienced a valuation re-set following the pandemic. Faced with a
higher interest rate environment and demand volatility, many spent
much of 2022 reorientating their business models whilst
endeavouring to execute on their long-term opportunities. As 2023
came to a close, the evidence for our hypothesis that it would be a
year of execution has been building.
For some, the reorientation, and subsequent execution, has been
easier given the greater levels of resilience in their business
models. They were already profitable or generating free cash flow
('FCF') . Examples would be CoStar, the US commercial and
residential property data and marketplaces business, or Tesla, the
electric vehicle manufacturer.
For others, it was a case of trimming some of the low interest
rate environment excesses whilst maintaining the necessary
investments for future growth. These companies removed teams or
mothballed projects which no longer made economic sense, enabling
them to transition to profitability. Examples include Shopify, the
merchant-focused e-commerce platform, and Amazon, the online
retailer.
Some remained less resilient from a cash flow or profitability
perspective but had significant war chests of cash, providing them
time to make the transition to self-sustainability whilst
continuing to invest. An example would be Ginkgo Bioworks, the
organism design company, whose current burn rate means it has two
and a half years of cash remaining.
The final group of companies was lacking resilience. Some, like
Wayfair, the online home furnishing business, and Affirm, the
buy-now-pay-later company, made significant changes to shore up the
resilience of their business models and are in far stronger
positions than when the downturn began. For others, like Carvana,
the online second-hand car marketplace, or Redfin, the real estate
brokerage, we lost conviction in their ability to emerge from this
environment stronger than when they went in. We consequently sold
these holdings.
What we are seeing in the fundamentals at many of the businesses
the Company holds only adds to our excitement about the future
value of these companies. Wayfair has returned to revenue growth
against a declining home market. CoStar is counter-cyclically
investing its more than US$5 billion cash pile into future growth
opportunities. Shopify launched ShopifyMagic, integrating
artificial intelligence across its entire offering whilst
delivering a 16% FCF margin, up from negative one year earlier.
Duolingo, the gamified language learning app, is growing users at
over 60% year-on-year despite spending just 16% of revenues on
marketing. DoorDash, the food delivery app, has seen strong cohort
dynamics and delivered close to US$900 million in FCF over the last
twelve months.
It has not been plain sailing for all. Moderna continues to work
through the uncertainty of Covid-19 vaccine demand, as the market
moves from a pandemic to an endemic phase. Whilst we continue to
believe in the opportunity for RNA as a treatment platform, and the
data for future treatments is positive, the journey to steady state
Covid revenues has been painful. Convoy, a marketplace for shippers
and truckers and one of the Company's private investments, fell
victim to the macro-economic environment. Despite the best efforts
of its management team, Convoy had yet to reach the necessary scale
to withstand the freight market's decline and could not cut its way
to profitability. Convoy has gone out of business.
While share prices have shown strength over the past year, we
continue to see opportunity in the dislocations between stock
prices and the underlying valuations of companies. Future cash
flows and earnings drive value, and a fundamental pillar of our
investment philosophy is that price reflects value in the long run.
However, price is driven by mood, momentum and broader sentiment in
the short term, creating opportunity.
We bought a position in Meta (formerly named Facebook). Several
years ago, we sold out of Meta on concerns around three Rs:
regulation, relevance and recruitment. We have seen progress on all
three fronts. The regulatory environment feels more benign. Reels
is battling TikTok effectively, ramping toward a US$10 billion
revenue run rate and helping Meta to remain relevant. We have a
hypothesis as to why the best engineers want to come to Meta:
artificial intelligence ('AI'). The greatest opportunity in AI
comes from proprietary datasets, and Meta has a considerable
advantage here. AI can be a significant revenue and returns driver
for the company. These reasons, combined with a shift in attitude
internally around allocating resources, led us to re-take a
holding.
We took a new holding in Sprout Social, the social media
management company. The proliferation of social media channels has
made managing a brand online increasingly complex, while its
importance has risen. Sprout's platform provides a single control
centre that enables effective analysis and management across social
media. The market has consolidated significantly over the past few
years, and the resulting potential for substantial revenue growth
with margin expansion is underappreciated.
We added to Pinterest, the visual discovery platform;
Sweetgreen, the salad chain; and Amazon, the online retailer, as
these companies have continued to execute against their long-term
opportunity sets, yet their valuations have remained undemanding.
Oddity, a cosmetics and skincare holding company, and one of our
private investments, listed in the period.
During the period we sold our holdings in Novocure, Snap,
Redfin, MarketAxess and Illumina. Redfin, the online brokerage, and
Snap, the social media company, have made changes to their business
models. We question whether they will emerge from this environment
stronger than they went in. Novocure, the tumour-treating fields
company, has faced challenges expanding its offering beyond the
treatment of brain cancer. Both MarketAxess, the bond trading
platform, and Illumina, the gene sequencing business, continue to
dominate within their respective niches, however they have not
delivered the levels of growth that we hoped for.
Outlook
It has been a better year. The storm is easing. We know we
cannot assume that the sun will always shine, but we take comfort
from the fact that the companies held in your portfolio are
executing, and executing well. When fundamentals will be better
reflected in share prices is nigh on impossible to predict. Trying
to predict the mood of the multitude of market participants is a
fool's game for the long-term stock picker. Instead, we must double
down on what differentiates us - long-term, active, growth,
bottom-up stock pickers focused on fundamentals.
British physicist David Deutsch said, "We have a duty to be
optimistic. Because the future is open, not predetermined and
therefore cannot just be accepted: we are all responsible for what
it holds". We take that responsibility seriously. US Growth holds
companies which are determining that future. But it will take time.
Navigating storms is part of the process. We believe the portfolio
is well-positioned to navigate and realise its potential. That
feels like a dream opportunity.
The principal risks and uncertainties facing the Company are set
out below.
Baillie Gifford & Co
Managers and Secretaries
22 January 2024
* S&P 500 Index total return (in sterling terms). Source:
LSEG and relevant underlying index providers. See disclaimer at the
end of this announcement.
Free cash flow is the cash a company generates after taking into
consideration cash outflows that support its operations and
maintain its capital assets.
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 group at
Baillie Gifford, which takes advice from an independent third party
(S&P Global). The valuations group is independent from the
investment team, as well as Baillie Gifford's Private Companies
Specialist team, with all voting members being from different
operational areas of the firm, and the investment team only
receives 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. During stable
market conditions, and assuming all else is equal, each investment
would be valued two times in a six month period. For Baillie
Gifford US Growth, and our other investment trusts, the prices are
also reviewed twice per year by the respective boards and are
subject to the scrutiny of external auditors in the annual audit
process.
Beyond the regular cycle, the valuations team 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'); company news which is identified
by the valuation team or by the investment team; or meaningful
changes to the valuation of comparable public companies. Any ad hoc
change to the fair valuation of any holding is implemented swiftly
and reflected in the next published net asset value. There is no
delay.
The valuations team also monitors relevant market indices on a
weekly basis and updates valuations in a manner consistent with our
external valuer's (S&P Global) most recent valuation report
where appropriate. Continued market volatility has meant that
recent pricing has moved much more frequently than would have been
the case with the quarterly valuations cycle.
Baillie Gifford US Growth
Trust *
---------------------------------- ------
Instruments (lines of stock
reviewed) 57
---------------------------------- ------
Revaluations performed 150
---------------------------------- ------
Percentage of portfolio revalued
up to 2 times 64.9%
---------------------------------- ------
Percentage of portfolio revalued
up to 4 times 94.7%
---------------------------------- ------
Percentage of portfolio revalued
at least 5 times 5.3%
---------------------------------- ------
For the six months to 30 November 2023, most revaluations have
been decreases, however we have seen some recovery within the
portfolio. In the period, we have seen one portfolio company raise
capital at an increased valuation reflecting the continued robust
performance of the underlying investment and the changing market
backdrop in specific sectors at the time of the raise. The average
movement in both company valuation and share price for those that
have decreased in value is shown below.
Average movement Average movement
in investee company in investee
valuation share price
--------------------------- --------------------- -----------------
Baillie Gifford US Growth
Trust* -6.2% 2.1%
--------------------------- --------------------- -----------------
Share prices have increased compared to the decrease in headline
valuations. This is a result of holding classes of stock with
preferential liquidation rights and therefore providing down side
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 normally
be triggered in the event of a corporate sale or liquidation.
*Data reflecting period 1 June 2023 to 30 November 2023 to align
with the Company's reporting period end.
Baillie Gifford's stewardship principles
Baillie Gifford's overarching ethos is that we are 'Actual'
investors. That means we seek to invest for the long term. Our role
as an engaged owner is core to our mission to be effective stewards
for our clients. As an active manager, we invest in companies at
different stages of their evolution across many industries and
geographies, and focus on their unique circumstances and
opportunities. Our approach favours a small number of simple
principles rather than overly prescriptive policies. This helps
shape our interactions with holdings and ensures our investment
teams have the freedom and retain the responsibility to act in
clients' best interests.
Long-term value creation
We believe that companies that are run for the long term are
more likely to be better investments over our clients' time
horizons. We encourage our holdings to be ambitious, focusing on
long-term value creation and capital deployment for growth. We know
events will not always run according to plan. In these instances we
expect management to act deliberately and to provide appropriate
transparency. We think helping management to resist short-term
demands from shareholders often protects returns. We regard it as
our responsibility to encourage holdings away from destructive
financial engineering towards activities that create genuine value
over the long run. Our value will often be in supporting management
when others don't.
Alignment in vision and practice
Alignment is at the heart of our stewardship approach. We seek
the fair and equitable treatment of all shareholders alongside the
interests of management. While assessing alignment with management
often comes down to intangible factors and an understanding built
over time, we look for clear evidence of alignment in everything
from capital allocation decisions in moments of stress to the
details of executive remuneration plans and committed share
ownership. We expect companies to deepen alignment with us, rather
than weaken it, where the opportunity presents itself.
Governance fit for purpose
Corporate governance is a combination of structures and
behaviours; a careful balance between systems, processes and
people. Good governance is the essential foundation for long-term
company success. We firmly believe that there is no single
governance model that delivers the best long-term outcomes. We
therefore strive to push back against one-dimensional global
governance principles in favour of a deep understanding of each
company we invest in. We look, very simply, for structures, people
and processes which we think can maximise the likelihood of
long-term success. We expect to trust the boards and management
teams of the companies we select, but demand accountability if that
trust is broken.
Sustainable business practices
A company's ability to grow and generate value for our clients
relies on a network of interdependencies between the company and
the economy, society and environment in which it operates. We
expect holdings to consider how their actions impact and rely on
these relationships. We believe long-term success depends on
maintaining a social licence to operate and look for holdings to
work within the spirit and not just the letter of the laws and
regulations that govern them. Material factors should be addressed
at the board level as appropriate.
List of Investments
as at 30 November 2023 (unaudited)
2023 2023
Value % of total
Name Business GBP'000 assets *
----------------------------------- ---------------------------------------------- -------- -----------------------
Space Exploration Technologies
Series J Preferred (U) Rocket and spacecraft company 20,640 3.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Space Exploration Technologies
Series N Preferred (U) Rocket and spacecraft company 11,848 1.9
----------------------------------- ---------------------------------------------- -------- -----------------------
Space Exploration Technologies
Series K Preferred (U) Rocket and spacecraft company 4,704 0.7
----------------------------------- ---------------------------------------------- -------- -----------------------
Space Exploration Technologies
Class A Common (U) Rocket and spacecraft company 2,445 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Space Exploration Technologies
Class C Common (U) Rocket and spacecraft company 754 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
40,391 6.4
---------------------------------------------------------------------------------- -------- -----------------------
Shopify Class A Cloud-based commerce platform provider 36,477 5.8
----------------------------------- ---------------------------------------------- -------- -----------------------
The Trade Desk Advertising technology company 31,210 4.9
----------------------------------- ---------------------------------------------- -------- -----------------------
Amazon Online retailer and cloud computing provider 30,664 4.9
----------------------------------- ---------------------------------------------- -------- -----------------------
NVIDIA Graphics chips 28,765 4.6
----------------------------------- ---------------------------------------------- -------- -----------------------
Stripe Series G Preferred
(U) Online payment platform 12,037 1.9
----------------------------------- ---------------------------------------------- -------- -----------------------
Stripe Series I Preferred
(U) Online payment platform 11,729 1.9
----------------------------------- ---------------------------------------------- -------- -----------------------
Stripe Class B Common (U) Online payment platform 2,472 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Stripe Series H Preferred
(U) Online payment platform 1,450 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
27,688 4.4
---------------------------------------------------------------------------------- -------- -----------------------
Electric cars, autonomous driving and
Tesla solar energy 24,089 3.8
----------------------------------- ---------------------------------------------- -------- -----------------------
Subscription service for TV shows and
Netflix movies 17,962 2.8
----------------------------------- ---------------------------------------------- -------- -----------------------
Workday Enterprise information technology 16,545 2.6
----------------------------------- ---------------------------------------------- -------- -----------------------
Duolingo Mobile learning platform 16,229 2.6
----------------------------------- ---------------------------------------------- -------- -----------------------
Brex Class B Common (U) Corporate credit cards for start-ups 8,283 1.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Brex Series D Preferred (U) Corporate credit cards for start-ups 7,793 1.3
----------------------------------- ---------------------------------------------- -------- -----------------------
16,076 2.6
---------------------------------------------------------------------------------- -------- -----------------------
CoStar Group Commercial property information provider 15,811 2.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Doordash Online local delivery 15,797 2.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Zipline International Series
C Preferred (U) Drone-based medical delivery 8,587 1.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Zipline International Series
E Preferred (U) Drone-based medical delivery 4,866 0.8
----------------------------------- ---------------------------------------------- -------- -----------------------
Zipline International Series
F Preferred (U) Drone-based medical delivery 790 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
14,243 2.3
---------------------------------------------------------------------------------- -------- -----------------------
Meta Platforms Social networking website 13,535 2.1
----------------------------------- ---------------------------------------------- -------- -----------------------
Cloudflare Cloud-based provider of network services 13,406 2.1
----------------------------------- ---------------------------------------------- -------- -----------------------
Faire Wholesale Series F Preferred
(U) Online wholesale marketplace 4,942 0.8
----------------------------------- ---------------------------------------------- -------- -----------------------
Faire Wholesale (U) Online wholesale marketplace 4,338 0.7
----------------------------------- ---------------------------------------------- -------- -----------------------
Faire Wholesale Series G Preferred
(U) Online wholesale marketplace 3,674 0.6
----------------------------------- ---------------------------------------------- -------- -----------------------
12,954 2.1
---------------------------------------------------------------------------------- -------- -----------------------
Air conditioning, heating and refrigeration
Watsco equipment distributor 12,481 2.0
----------------------------------- ---------------------------------------------- -------- -----------------------
Moderna Therapeutic messenger RNA 12,225 1.9
----------------------------------- ---------------------------------------------- -------- -----------------------
Discord Series I Preferred
(U) Communication software 11,044 1.8
----------------------------------- ---------------------------------------------- -------- -----------------------
Databricks Series H Preferred
(U) Data and AI platform 10,587 1.6
----------------------------------- ---------------------------------------------- -------- -----------------------
Databricks Series I Preferred
(U) Data and AI platform 395 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
10,982 1.7
---------------------------------------------------------------------------------- -------- -----------------------
Affirm Class B (P) Consumer finance 5,368 0.9
----------------------------------- ---------------------------------------------- -------- -----------------------
Affirm (P) Consumer finance 4,413 0.7
----------------------------------- ---------------------------------------------- -------- -----------------------
9,781 1.6
---------------------------------------------------------------------------------- -------- -----------------------
Datadog IT monitoring and analytics platform 9,622 1.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Alnylam Pharmaceuticals Therapeutic gene silencing 9,618 1.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Pinterest Image sharing and social media company 9,191 1.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Snyk Series F Preferred (U) Developer security software 5,357 0.8
----------------------------------- ---------------------------------------------- -------- -----------------------
Snyk Ordinary Shares (U) Developer security software 3,197 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
8,554 1.3
---------------------------------------------------------------------------------- -------- -----------------------
Solugen Series C-1 Preferred Combines enzymes and metal catalysts
(U) to make chemicals 5,720 0.9
----------------------------------- ---------------------------------------------- -------- -----------------------
Solugen Series D Preferred Combines enzymes and metal catalysts
(U) to make chemicals 2,783 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
8,503 1.3
---------------------------------------------------------------------------------- -------- -----------------------
Roku Online media player 8,376 1.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Developer of a SaaS-based cloud data
Snowflake (P) warehousing platform 8,242 1.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Lyra Health Series E Preferred
(U) Digital mental health platform for enterprises 6,449 1.0
----------------------------------- ---------------------------------------------- -------- -----------------------
Lyra Health Series F Preferred
(U) Digital mental health platform for enterprises 1,546 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
7,995 1.2
---------------------------------------------------------------------------------- -------- -----------------------
Coursera Online educational services provider 7,660 1.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Roblox User Generated Content game company 7,288 1.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Oddity (P) Online cosmetics and skincare company 6,794 1.1
----------------------------------- ---------------------------------------------- -------- -----------------------
Twilio Cloud-based communications platform 6,571 1.0
----------------------------------- ---------------------------------------------- -------- -----------------------
Wayfair Online furniture and homeware retailer 6,367 1.0
----------------------------------- ---------------------------------------------- -------- -----------------------
Workrise Technologies Series
E Preferred (U) Jobs marketplace for the energy sector 2,501 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Workrise Technologies Series
D Preferred (U) Jobs marketplace for the energy sector 2,400 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Workrise Technologies Series
D-1 Preferred (U) Jobs marketplace for the energy sector 533 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
5,434 0.9
---------------------------------------------------------------------------------- -------- -----------------------
Epic Games (U) Video game platform and software developer 5,349 0.8
----------------------------------- ---------------------------------------------- -------- -----------------------
Sprout Social Social media management firm 5,015 0.8
----------------------------------- ---------------------------------------------- -------- -----------------------
BillionToOne Series C Preferred
(U) Molecular diagnostics technology platform 3,281 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
BillionToOne Promissory Note
(U) Molecular diagnostics technology platform 1,605 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
4,886 0.8
---------------------------------------------------------------------------------- -------- -----------------------
Away (JRSK) Series D Preferred
(U) Travel and lifestyle brand 1,518 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Away (JRSK) Convertible Promissory
Note (U) Travel and lifestyle brand 1,019 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Away (JRSK) Convertible Promissory
Note 2021 (U) Travel and lifestyle brand 1,019 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Away (JRSK) Series Seed Preferred
(U) Travel and lifestyle brand 918 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
4,474 0.7
---------------------------------------------------------------------------------- -------- -----------------------
Tanium Class B Common (U) Online security management 4,341 0.7
----------------------------------- ---------------------------------------------- -------- -----------------------
Zoom Video Communications Remote conferencing service provider 3,950 0.6
----------------------------------- ---------------------------------------------- -------- -----------------------
Penumbra Medical tools to treat vascular diseases 3,860 0.6
----------------------------------- ---------------------------------------------- -------- -----------------------
Nuro Series C Preferred (U) Self-driving vehicles for local delivery 2,072 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Nuro Series D Preferred (U) Self-driving vehicles for local delivery 1,667 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
3,739 0.6
---------------------------------------------------------------------------------- -------- -----------------------
PsiQuantum Series D Preferred
(U) Silicon photonic quantum computing 3,510 0.6
----------------------------------- ---------------------------------------------- -------- -----------------------
Chewy Online pet supplies retailer 3,471 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
10X Genomics Single cell sequencing company 3,449 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Denali Therapeutics Clinical stage neurodegeneration company 3,400 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Samsara Connected operations cloud software company 3,137 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Airbnb Class B Common (P) Online market place for travel accommodation 3,070 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Thumbtack Class A Common (U) Online directory service for local businesses 1,700 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Thumbtack Series I Preferred
(U) Online directory service for local businesses 1,202 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Thumbtack Series A Preferred Online directory service for local businesses 121 <0.1
(U)
----------------------------------- ---------------------------------------------- -------- -----------------------
Thumbtack Series C Preferred Online directory service for local businesses 35 <0.1
(U)
----------------------------------- ---------------------------------------------- -------- -----------------------
Thumbtack Series B Preferred Online directory service for local businesses 8 <0.1
(U)
----------------------------------- ---------------------------------------------- -------- -----------------------
3,066 0.5
---------------------------------------------------------------------------------- -------- -----------------------
Sweetgreen Salad fast food chain 2,974 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
HashiCorp Open source infrastructure software 2,856 0.5
----------------------------------- ---------------------------------------------- -------- -----------------------
Niantic Series C Preferred
(U) Augmented reality games 2,775 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Social network and digital workflow tools
for
Doximity medical professionals 2,725 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Bioengineering company developing micro
Ginkgo Bioworks (P) organisms that produce various proteins 2,347 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Lemonade Insurance company 2,269 0.4
----------------------------------- ---------------------------------------------- -------- -----------------------
Warby Parker (P) Online and physical glasses retailer 2,204 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Aurora Innovation Class B
Common (P) Self-driving technology 1,214 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Aurora (P) Self-driving technology 888 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
2,102 0.3
---------------------------------------------------------------------------------- -------- -----------------------
Chegg Online education company 1,924 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Rivian Automotive Developer security platform 1,736 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Recursion Pharmaceuticals Drug discovery platform 1,606 0.3
----------------------------------- ---------------------------------------------- -------- -----------------------
Honor Technology Series D
Preferred (U) Home care provider 855 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
Honor Technology Series E
Preferred (U) Home care provider 370 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
Honor Technology Subordinated Home care provider 99 <0.1
Convertible Promissory Note
(U)
----------------------------------- ---------------------------------------------- -------- -----------------------
1,324 0.2
---------------------------------------------------------------------------------- -------- -----------------------
Capsule Series 1-D Preferred
(U) Digital pharmacy 724 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
Capsule Series E Preferred
(U) Digital pharmacy 447 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
1,171 0.2
---------------------------------------------------------------------------------- -------- -----------------------
Blockstream Series B-1 Preferred
(U) Bitcoin and digital asset infrastructure 1,151 0.2
----------------------------------- ---------------------------------------------- -------- -----------------------
Sana Biotechnology Gene editing technology 612 0.1
----------------------------------- ---------------------------------------------- -------- -----------------------
Indigo Agriculture Class A Agricultural technology company 131 <0.1
Common (U)
----------------------------------- ---------------------------------------------- -------- -----------------------
Convoy Common# (U) Marketplace for truckers and shippers - -
----------------------------------- ---------------------------------------------- -------- -----------------------
Convoy Convertible Loan Note# Marketplace for truckers and shippers - -
(U)
----------------------------------- ---------------------------------------------- -------- -----------------------
Convoy Series D Preferred# Marketplace for truckers and shippers - -
(U)
----------------------------------- ---------------------------------------------- -------- -----------------------
Convoy Series E Preferred# Marketplace for truckers and shippers - -
(U)
----------------------------------- ---------------------------------------------- -------- -----------------------
Total investments 627,194 99.3
----------------------------------------------------------------------------------- -------- -----------------------
Net liquid assets* 4,234 0.7
----------------------------------------------------------------------------------- -------- -----------------------
Total assets * 631,428 100.0
----------------------------------------------------------------------------------- -------- -----------------------
Private Total
Listed company Net liquid assets*
equities investments assets * *
% % % %
----------------- --------- ------------------------------- -------------------- -------------------
30 November 2023 67.6 31.7 0.7 100.0
----------------- --------- ------------------------------- -------------------- -------------------
31 May 2023 65.0 34.5 0.5 100.0
----------------- --------- ------------------------------- -------------------- -------------------
* See Glossary of terms and Alternative Performance Measures at
the end of this announcement.
(P) Denotes listed investment previously held in portfolio as a
private company (unlisted) investment.
(U) Denotes private company (unlisted) investment.
Includes holdings in ordinary shares, preference shares and
promissory notes.
# The Convoy holdings were valued at nil at 30 November 2023
subsequent to the company ceasing operations. More information can
be found in the Interim management report above.
Figures represent percentage of total assets.
Distribution of total assets* (unaudited)
Sectoral Analysis as at 30 November 2023
As at 30 November 2023 As at 31 May 2023
% %
----------------------- ---------------------- -----------------
Information technology 34.0 31.3
----------------------- ---------------------- -----------------
Consumer discretionary 21.2 18.8
----------------------- ---------------------- -----------------
Communication services 13.8 11.7
----------------------- ---------------------- -----------------
Industrials 12.2 16.2
----------------------- ---------------------- -----------------
Healthcare 8.2 13.7
----------------------- ---------------------- -----------------
Financials 4.6 3.9
----------------------- ---------------------- -----------------
Real estate 2.5 0.3
----------------------- ---------------------- -----------------
Materials 1.7 2.3
----------------------- ---------------------- -----------------
Consumer staples 1.1 1.3
----------------------- ---------------------- -----------------
Net liquid assets 0.7 0.5
----------------------- ---------------------- -----------------
Private company exposure as at 30 November 2023
As at 30 November 2023 As at 31 May 2023
% %
------------------------------- ---------------------- -----------------
Space Exploration Technologies 6.4 6.5
------------------------------- ---------------------- -----------------
Stripe 4.4 4.2
------------------------------- ---------------------- -----------------
Brex 2.6 2.6
------------------------------- ---------------------- -----------------
Zipline 2.3 2.3
------------------------------- ---------------------- -----------------
Faire Wholesale 2.1 2.2
------------------------------- ---------------------- -----------------
Other 13.9 16.7
------------------------------- ---------------------- -----------------
* See Glossary of terms and Alternative Performance Measures at
the end this announcement.
Income statement (unaudited)
For the six months ended For the six months ended For the year ended
30 November 2023 30 November 2022 31 May 2023 (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Gains/(losses) on
investments - 25,868 25,868 - (8,235) (8,235) - (10,169) (10,169)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Currency
gains/(losses) - 697 697 - (2,100) (2,100) - (700) (700)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income 305 - 305 363 - 363 850 - 850
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Investment management
fee 3 (1,707) - (1,707) (1,719) - (1,719) (3,345) - (3,345)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Other administrative
expenses (341) - (341) (331) - (331) (670) - (670)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net return before
finance
costs and taxation (1,743) 26,565 24,822 (1,687) (10,335) (12,022) (3,165) (10,869) (14,034)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Finance cost of
borrowings (1,144) - (1,144) (621) - (621) (1,482) - (1,482)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net return before
taxation (2,887) 26,565 23,678 (2,308) (10,335) (12,643) (4,647) (10,869) (15,516)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Tax (27) - (27) (37) - (37) (71) - (71)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net return after
taxation (2,914) 26,565 23,651 (2,345) (10,335) (12,680) (4,718) (10,869) (15,587)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net return per
ordinary
share 4 (0.96p) 8.71p 7.75p (0.77p) (3.39p) (4.16p) (1.55p) (3.56p) (5.11p)
The accompanying notes below are an integral part of the
Financial Statements.
The total column of this Statement represents 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 the
Company does not have any other comprehensive income and the net
return after taxation is both the profit and comprehensive income
for the period.
Balance sheet (unaudited)
At 31 May
2023
At 30 November
2023 (audited)
Notes GBP'000 GBP'000
---------------------------------------------- ----- -------------- -----------
Fixed assets
---------------------------------------------- ----- -------------- -----------
Investments held at fair value through profit
or loss 6 627,194 605,908
---------------------------------------------- ----- -------------- -----------
Current assets
---------------------------------------------- ----- -------------- -----------
Debtors 895 657
---------------------------------------------- ----- -------------- -----------
Cash at bank 4,959 3,440
---------------------------------------------- ----- -------------- -----------
5,854 4,097
---------------------------------------------- ----- -------------- -----------
Creditors
---------------------------------------------- ----- -------------- -----------
Amounts falling due within one year 7 (41,117) (41,406)
---------------------------------------------- ----- -------------- -----------
Net current liabilities (35,263) (37,309)
---------------------------------------------- ----- -------------- -----------
Total assets less current liabilities 591,931 568,599
---------------------------------------------- ----- -------------- -----------
Creditors
---------------------------------------------- ----- -------------- -----------
Amounts falling due after more than one year 7 - -
---------------------------------------------- ----- -------------- -----------
Net assets 591,931 568,599
---------------------------------------------- ----- -------------- -----------
Capital and reserves
---------------------------------------------- ----- -------------- -----------
Share capital 3,073 3,073
---------------------------------------------- ----- -------------- -----------
Share premium account 250,827 250,827
---------------------------------------------- ----- -------------- -----------
Special distributable reserve 168,942 168,942
---------------------------------------------- ----- -------------- -----------
Capital reserve 192,177 165,931
---------------------------------------------- ----- -------------- -----------
Revenue reserve (23,088) (20,174)
---------------------------------------------- ----- -------------- -----------
Shareholders' funds 591,931 568,599
---------------------------------------------- ----- -------------- -----------
Net asset value per ordinary share
(after deducting borrowings at book value) 194.11p 186.33p
---------------------------------------------- ----- -------------- -----------
Ordinary shares in issue 8 304,953,700 305,153,700
---------------------------------------------- ----- -------------- -----------
The accompanying notes below are an integral part of the
Financial Statements.
Statement of changes in equity (unaudited)
For the six months to 30 November 2023
Share Special Capital
Share premium distributable 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 June 2023 3,073 250,827 168,942 165,931 (20,174) 568,599
-------------------------- -------- -------- -------------- ------------- -------- -------------
Ordinary shares bought
back into treasury 8 - - - (319) - (319)
-------------------------- -------- -------- -------------- ------------- -------- -------------
Net return after taxation - - - 26,565 (2,914) 23,651
-------------------------- -------- -------- -------------- ------------- -------- -------------
Shareholders' funds at
30 November 2023 3,073 250,827 168,942 192,177 (23,088) 591,931
-------------------------- -------- -------- -------------- ------------- -------- -------------
For the six months to 30 November 2022
Share Special Capital
Share premium distributable 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 June 2022 3,073 250,827 168,942 176,800 (15,456) 584,186
------------------------------ -------- -------- -------------- ------------- -------- -------------
Ordinary shares bought 8 - - - - - -
back into treasury
-------------------------- -------- -------- -------------- ------------- -------- -------------
Net return after taxation - - - (10,335) (2,345) (12,680)
------------------------------ -------- -------- -------------- ------------- -------- -------------
Shareholders' funds at
30 November 2022 3,073 250,827 168,942 166,465 (17,801) 571,506
------------------------------ -------- -------- -------------- ------------- -------- -------------
* The capital reserve as at 30 November 2023 includes investment
holding gains of GBP70,038,000 (30 November 2022 - gains of
GBP14,173,000).
The accompanying notes on below are an integral part of the
Financial Statements.
Cash flow statement (unaudited)
For the six months to 30 November
2023 2022
GBP'000 GBP'000
--------------------------------------------- -------- --------
Cash flows from operating activities
--------------------------------------------- -------- --------
Net return before taxation 23,678 (12,643)
--------------------------------------------- -------- --------
Net (gains)/losses on investments (25,868) 8,235
--------------------------------------------- -------- --------
Currency (gains)/losses (697) 2,100
--------------------------------------------- -------- --------
Finance costs of borrowings 1,144 621
--------------------------------------------- -------- --------
Overseas withholding tax incurred (27) (36)
--------------------------------------------- -------- --------
Changes in debtors and creditors 40 (226)
--------------------------------------------- -------- --------
Cash from operations * (1,730) (1,949)
--------------------------------------------- -------- --------
Finance costs paid (865) (619)
--------------------------------------------- -------- --------
Net cash outflow from operating activities (2,595) (2,568)
--------------------------------------------- -------- --------
Cash flows from investing activities
--------------------------------------------- -------- --------
Acquisitions of investments (31,575) (19,787)
--------------------------------------------- -------- --------
Disposals of investments 36,157 23,905
--------------------------------------------- -------- --------
Net cash inflow from investing activities 4,582 4,118
--------------------------------------------- -------- --------
Cash flows from financing activities
--------------------------------------------- -------- --------
Ordinary shares bought back into treasury (319) -
--------------------------------------------- -------- --------
Bank loans drawn down - -
--------------------------------------------- -------- --------
Bank loans repaid - -
--------------------------------------------- -------- --------
Net cash outflow from financing activities (319 ) -
--------------------------------------------- -------- --------
Increase in cash and cash equivalents 1,668 1,550
--------------------------------------------- -------- --------
Exchange movements (149) 211
--------------------------------------------- -------- --------
Cash and cash equivalents at start of period 3,440 3,007
--------------------------------------------- -------- --------
Cash and cash equivalents at 30 November 4,959 4,768
--------------------------------------------- -------- --------
* Cash from operations includes dividends received in the period
of GBP182,000 (30 November 2022 - GBP246,000) and interest paid of
GBP24,000 (30 November 2022 - interest received of GBP13,000).
Cash movements in bank loans are shown on a net basis. Prior
year balances have been updated to reflect this.
The accompanying notes below are an integral part of the
Financial Statements.
Notes to the Financial Statements (unaudited)
1. Basis of accounting
The condensed Financial Statements for the six months to 30
November 2023 comprise the statements set out 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, updated in October
2019, April 2021 and July 2022 with consequential amendments, and
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
November 2023 have been prepared on the basis of the same
accounting policies as set out in the Company's Annual Report and
Financial Statements for the year ended 31 May 2023.
Going concern
Having considered the nature of the Company's principal risks
and uncertainties, as set out below, together with its current
position, investment objective and policy, assets and liabilities,
projected income and expenditure and the Company's dividend policy,
it is the Directors' opinion that the Company has adequate
resources to continue in operational existence for the foreseeable
future. The Board has, in particular, considered the impact of
heightened market volatility due to macroeconomic and geopolitical
concerns, but does not believe the Company's going concern status
is affected. 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.
As at 30 November 2023, the Company had a net current liability of
GBP35 million primarily as a result of the US$25 million three year
revolving credit facility with ING Bank N.V., London Branch, and
the US$25 million three year revolving credit facility with The
Royal Bank of Scotland International, which are due to mature on 26
July 2026 and 18 October 2026 respectively but which are rolled
forward on a three monthly 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) (Tax) Regulations 2011. Accordingly, the
Directors consider 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 to do so over a period of
at least twelve months from the date of approval of these Financial
Statements.
2. Financial information
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 to 31 May 2023 has been extracted from the
statutory accounts which have been filed with the Registrar of
Companies. The Auditor's Report on those accounts was not
qualified, did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying the
report and did not contain a statement under sections 498(2) or (3)
of the Companies Act 2006.
3. Investment manager
The Company has appointed Baillie Gifford & Co Limited, a
wholly owned subsidiary of Baillie Gifford & Co, as its
Alternative Investment Fund Manager and Company Secretaries.
Baillie Gifford & Co Limited has delegated portfolio management
services to Baillie Gifford & Co. Dealing activity and
transaction reporting have been further sub-delegated to Baillie
Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong)
Limited. The Management Agreement can be terminated on six months'
notice.
The annual management fee is 0.70% on the first GBP100 million
of net assets, 0.55% on the next GBP900 million of net assets and
0.50% on the remaining net assets.
4. Net return per ordinary share
For the year
For the For the ended
six months six months
to to 31 May 2023
30 November 30 November
2023 2022 (audited)
------------------------------------ ----------------
GBP'000 p GBP'000 p GBP'000 p
------------------------------------ ------- ------ -------- ------ -------- ------
Revenue return after taxation (2,914) (0.96) (2,345) (0.77) (4,718) (1.55)
------------------------------------ ------- ------ -------- ------ -------- ------
Capital return after taxation 26,565 8.71 (10,335) (3.39) (10,869) (3.56)
------------------------------------ ------- ------ -------- ------ -------- ------
Net return 23,651 7.75 (12,680) (4.16) (15,587) (5.11)
------------------------------------ ------- ------ -------- ------ -------- ------
Weighted average number of ordinary
shares in issue 305,143,317 305,153,700 305,153,700
------------------------------------ --------------- ---------------- ----------------
Net return per ordinary share is 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
No interim dividend has been declared. The Company's objective
is to produce capital growth and the policy is only to distribute,
by way of a final dividend, the minimum required to maintain
investment trust status. It is not currently envisaged that any
dividend will be paid in the foreseeable future.
6. Fixed assets - investments
The fair value hierarchy used to analyse the fair values of
financial assets 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 held at fair
value through profit or loss. In accordance with FRS 102, an
analysis of the Company's financial asset investments based on the
fair value hierarchy described above is shown below.
Level Level Level
1 2 3 Total
As at 30 November 2023 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- --------
Listed equities 427,413 - - 427,413
-------------------------------------- -------- -------- -------- --------
Unlisted ordinary shares - - 33,010 33,010
-------------------------------------- -------- -------- -------- --------
Unlisted preference shares* - - 163,029 163,029
-------------------------------------- -------- -------- -------- --------
Unlisted convertible promissory notes - - 3,742 3,742
-------------------------------------- -------- -------- -------- --------
Total financial asset investments 427,413 - 199,781 627,194
-------------------------------------- -------- -------- -------- --------
Level Level Level
1 2 3 Total
As at 31 May 2023 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- --------
Listed equities 396,272 - - 396,272
-------------------------------------- -------- -------- -------- --------
Unlisted ordinary shares - - 37,307 37,307
-------------------------------------- -------- -------- -------- --------
Unlisted preference shares* - - 168,162 168,162
-------------------------------------- -------- -------- -------- --------
Unlisted convertible promissory notes - - 4,167 4,167
-------------------------------------- -------- -------- -------- --------
Total financial asset investments 396,272 - 209,636 605,908
-------------------------------------- -------- -------- -------- --------
* 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
takeover.
The valuation techniques used by the Company are explained in
the accounting policies on page 55 of the Annual Report and
Financial Statements for the year ended 31 May 2023. 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 Company's holdings
in private company investments are categorised as Level 3 as
unobservable data is a significant input to their fair value
measurements.
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 valuation policy applies methodologies consistent with the
International Private Equity and Venture Capital Valuation
guidelines 2022 ('IPEV'). These methodologies can be categorised as
follows: (a) market approach (multiples, industry valuation
benchmarks and available market prices); (b) income approach
(discounted cash flows); and (c) replacement cost approach (net
assets). The techniques applied are predominantly market-based
approaches.
During the period investments with a book value of GBP5,725,000
(31 May 2023 - none) were transferred from Level 3 to Level 1 on
becoming listed.
7. Bank loans
The Company has a US$25,000,000 three year revolving credit
facility with ING Bank N.V., London Branch, which expires on 26
July 2026 and a US$25,000,000 three year revolving credit facility
with The Royal Bank of Scotland International Limited which expires
on 18 October 2026. At 30 November 2023, creditors falling due
within one year include US$50,000,000 (sterling value
GBP39,496,000) drawn down under the two three year revolving credit
facilities. At 30 November 2023, there were no creditors falling
due after more than one year. At 31 May 2023, creditors falling due
within one year included US$50,000,000 (sterling value
GBP40,342,000) drawn under the five year revolving credit facility
and the three year fixed rate facility.
The fair value of borrowings as at 30 November 2023 was
GBP39,496,000 (31 May 2023 - GBP39,904,000).
8. Share capital
30 November 30 November 31 May 31 May
2023 2023 2023 2023
Number GBP'000 Number GBP'000
-------------------------------------------- ----------- ----------- ----------- --------
Allotted, called up and fully paid ordinary
shares of 1p each 304,953,700 3,049 305,153,700 3,051
-------------------------------------------- ----------- ----------- ----------- --------
Treasury shares of 1p each 2,406,300 24 2,206,300 22
-------------------------------------------- ----------- ----------- ----------- --------
307,360,000 3,073 307,360,000 3,073
-------------------------------------------- ----------- ----------- ----------- --------
The Company has authority to allot shares under section 551 of
the Companies Act 2006. The Board has authorised use of this
authority to issue new shares at a premium to net asset value in
order to enhance the net asset value per share for existing
shareholders and improve the liquidity of the Company's shares. In
the six months to 30 November 2023, the Company issued no ordinary
shares (in the year to 31 May 2023, the Company issued no
shares).
Over the period from 30 November 2023 to 22 January 2024 the
Company issued no shares.
The Company's authority to buy back shares up to a maximum of
14.99% of the Company's issued share capital was renewed at the
Annual General Meeting held on 18 September 2023. 200,000 shares
with a nominal value of GBP2,000 were bought back at a total cost
of GBP319,000 and held in treasury in the six months to 30 November
2023 (year to 31 May 2023 - no shares were bought back). At 30
November 2023 the Company had authority to buy back 45,542,539
ordinary shares.
Over the period from 30 November 2023 to 22 January 2024 the
Company bought back a further 100,000 shares.
9. 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 are 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.
10. Principal Risks and Uncertainties
The principal risks facing the Company are financial risk,
private company investment risk, investment strategy risk,
environmental, social and governance risk, discount risk,
regulatory risk, custody and depositary risk, operational risk,
cyber security risk, leverage risk, political and associated
economic risk and emerging risks. An explanation of these risks and
how they are managed is set out on pages 6 and 7 of the Company's
Annual Report and Financial Statements for the year ended 31 May
2023 which is available on the Company's website:
bgusgrowthtrust.com++.
The principal risks and uncertainties have not changed since the
date of that report.
11. The Interim Financial Report will be available at
bgusgrowthtrust.com++ and will be posted to shareholders on or
around 6 February 2024.
++ 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.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
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Sustainable Finance Disclosures 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 Baillie
Gifford US Growth is marketed in the EU by the AIFM, Baillie
Gifford & 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 stewardship
principles and guidelines as its policy on integration of
sustainability risks in investment decisions.
Baillie Gifford & Co believes that a company cannot be
financially sustainable in the long run if its approach to business
is fundamentally out of line with changing societal expectations.
It defines 'sustainability' as a deliberately broad concept which
encapsulates a company's purpose, values, business model, culture,
and operating practices. 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 up 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. The likely impact on the
return of the portfolio from a potential or actual material decline
in the value of investment due to the occurrence of an
environmental, social or governance event or condition will vary
and will depend on several factors including but not limited to the
type, extent, complexity and duration of an event or condition,
prevailing market conditions and existence of any mitigating
factors.
Whilst consideration is given to sustainability matters, there
are no restrictions on the investment universe of the Company,
unless otherwise stated within in its Investment Objective and
Policy. Baillie Gifford & Co can invest in any companies it
believes could create beneficial long-term returns for investors.
However, this might result in investments being made in companies
that ultimately cause a negative outcome for the environment or
society.
More detail on the Investment Manager's approach to
sustainability can be found in the stewardship principles and
guidelines document, available publicly on the Baillie Gifford
website bailliegifford.com.
The underlying investments do not take into account the EU
criteria for environmentally sustainable economic activities
established under the EU Taxonomy Regulation.
Glossary of terms and Alternative Performance Measures
('APM')
An Alternative Performance Measure is a financial measure of
historical or future financial performance, financial position or
cash flows, other than a financial measure defined or specified in
the applicable financial reporting framework. The APMs noted below
are commonly used measures within the investment trust industry and
serve to improve comparability between investment trusts.
Total assets
This is the Company's definition of adjusted total assets, being
the total value of all assets held less all liabilities (other than
liabilities in the form of borrowings).
Shareholders' funds and net asset value
Shareholders' funds is the value of all assets held less all
liabilities, with borrowings deducted at book value. Net Asset
Value ('NAV') is the value of all assets held less all liabilities,
with borrowings deducted at either fair value or book value as
described below. Per share amounts are calculated by dividing the
relevant figure by the number of ordinary shares in issue.
Borrowings at book value
Borrowings are valued at nominal par value (book value).
Borrowings are valued at adjusted net issue proceeds. The value of
the borrowings at book is set out in note 7 above.
Borrowings at fair value (APM)
Borrowings are valued at an estimate of their market worth. The
fair value of borrowings is set out in note 7 above and a
reconciliation to net asset value with borrowings at book value is
provided below.
Net asset value (borrowings at fair value) (APM)
30 November 31 May 2023
2023
----------------------------------------------- --------------- ---------------
Net asset value per ordinary share (borrowings
at book value) 194.11p 186.33p
----------------------------------------------- --------------- ---------------
Shareholders' funds (borrowings at book GBP591,931,000 GBP568,599,000
value)
----------------------------------------------- --------------- ---------------
Add: book value of borrowings GBP39,496,000 GBP40,342,000
----------------------------------------------- --------------- ---------------
Less: fair value of borrowings (GBP39,496,000) (GBP39,904,000)
----------------------------------------------- --------------- ---------------
Shareholders' funds (borrowings at fair GBP591,931,000 GBP569,037,000
value)
----------------------------------------------- --------------- ---------------
Number of shares in issue 304,953,700 305,153,700
----------------------------------------------- --------------- ---------------
Net asset value per ordinary share (borrowings
at fair value) 194.11p 186.48p
----------------------------------------------- --------------- ---------------
Net liquid assets
Net liquid assets comprise current assets less current
liabilities (excluding borrowings).
Discount/premium (APM)
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.
30 November 31 May 2023
2023
----------------------------------------------------------------- ----------- -----------
Net asset value per ordinary share (after deducting
borrowings at fair value) (a) 194.11p 186.48p
---------------------------------------------------- ----------- ----------- -----------
Share price (b) 162.60p 144.80p
---------------------------------------------------- ----------- ----------- -----------
(b -
a) ÷
Discount (borrowings at fair value) a 16.2% 22.4%
---------------------------------------------------- ----------- ----------- -----------
30 November 31 May 2023
2023
----------------------------------------------------------------- ----------- -----------
Net asset value per ordinary share (after deducting
borrowing at book value) (a) 194.11p 186.33p
---------------------------------------------------- ----------- ----------- -----------
Share price (b) 162.60p 144.80p
---------------------------------------------------- ----------- ----------- -----------
(b -
a) ÷
Discount (borrowings at book value) a 16.2% 22.3%
---------------------------------------------------- ----------- ----------- -----------
Total return (APM)
The total return is the return to shareholders after reinvesting
the dividend on the date that the share price goes ex-dividend. The
Company does not pay a dividend, therefore, the six month and since
inception total returns for the share price and NAV per share at
book and fair value are the same as the percentage movements in the
share price and NAV per share at book and fair value as detailed at
the beginning of the announcement.
Ongoing charges (APM)
The total recurring expenses (excluding the Company's cost of
dealing in investments and borrowing costs) incurred by the Company
as a percentage of the average net asset value (with borrowings at
fair value).
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 is the Company's borrowings at book value less cash and
cash equivalents (including any outstanding trade settlements)
expressed as a percentage of shareholders' funds.
30 November 31 May 2023
2023
----------------------------------------------- -------------- --------------
Borrowings (at book value) GBP39,496,000 GBP40,342,000
----------------------------------------- ---- -------------- --------------
Less: cash and cash equivalents (GBP4,959,000) (GBP3,440,000)
----------------------------------------- ---- -------------- --------------
Less: sales for subsequent settlement - -
----------------------------------------- ---- -------------- --------------
Add: purchases for subsequent settlement - -
----------------------------------------- ---- -------------- --------------
Adjusted borrowings (a) GBP34,537,000 GBP36,902,000
----------------------------------------- ---- -------------- --------------
Shareholders' funds (b) GBP591,931,000 GBP568,599,000
----------------------------------------- ---- -------------- --------------
Gearing: (a) as a percentage of (b) 6% 6%
----------------------------------------------- -------------- --------------
Gross gearing is the Company's borrowings expressed as a
percentage of shareholders' funds.
30 November 31 May 2023
2023
-------------------------------------------- -------------- --------------
Borrowings (at book value) (a) GBP39,496,000 GBP40,342,000
-------------------------------------- ---- -------------- --------------
Shareholders' funds (b) GBP591,931,000 GBP568,599,000
-------------------------------------- ---- -------------- --------------
Gross gearing: (a) as a percentage of
(b) 7% 7%
-------------------------------------------- -------------- --------------
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers
Regulations, leverage is any method which increases the Company's
exposure, including the borrowing of cash and the use of
derivatives. It is expressed as a 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 (APM)
Active share, a measure of how actively a portfolio is managed,
it 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.
Treasury shares
The Company has the authority to make market purchases of its
ordinary shares for retention as treasury shares for future
reissue, resale, transfer, or for cancellation. Treasury shares do
not receive distributions and the Company is not entitled to
exercise the voting rights attaching to them.
Private (unlisted) company
A private (unlisted) company means a company whose shares are
not available to the general public for trading and not listed on
the stock exchange.
Baillie Gifford US Growth Trust plc is a listed UK company. The
value of its shares and any income from them can fall as well as
rise 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. Investment in
investment trusts should be regarded as medium to long-term. The
Company's risk could be increased by its investment in unlisted
investments. These assets may be more difficult to sell, so changes
in their prices may be greater. The Company is listed on the London
Stock Exchange and is not authorised or regulated by the Financial
Conduct Authority. You can find up to date performance information
about Baillie Gifford US Growth Trust plc on the US Growth page of
the Managers' website at bgusgrowthtrust.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.
Naomi Cherry, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
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END
IR BIGDBLGDDGSD
(END) Dow Jones Newswires
January 23, 2024 02:00 ET (07:00 GMT)
Baillie Gifford Us Growth (LSE:USA)
Gráfica de Acción Histórica
De Dic 2024 a Ene 2025
Baillie Gifford Us Growth (LSE:USA)
Gráfica de Acción Histórica
De Ene 2024 a Ene 2025
