TIDMEWI
RNS Number : 1982V
Edinburgh Worldwide Inv Trust PLC
10 December 2021
RNS Announcement: Results
Edinburgh Worldwide Investment Trust plc
========================================
Legal Entity Identifier: 213800JUA8RKIDDLH380
Regulated Information Classification: Additional regulated
information required to be disclosed under the applicable laws.
The following is the results announcement for the year to 31
October 2021 which was approved by the Board on 9 December
2021.
Results for the year to 31 October 2021
3/4 Over the year to 31 October 2021 the Company's net asset value per share, cum income
with debt at fair value, increased by 18.3% and the share price by 11.1%. The comparative
index, the S&P Global Small Cap Index* total return, increased by 35.9% in sterling terms.
3/4 A number of the Company's holdings contributed to the positive performance, notably:
Tesla, an electric car, autonomous driving and solar energy company, Codexis, an industrial
and pharmaceutical enzyme developer, Upwork, an online freelancing and recruitment services
platform and unlisted PsiQuantum, a developer of commercial quantum computing. In addition,
the formerly private company QuantumScape, a developer of solid state lithium metal batteries
for electric cars, and Oxford Nanopore, a DNA sequencer, both of which listed during the year.
3/4 The Company's portfolio has been managed with a focus on the opportunity set lower down
the market capitalisation spectrum since the end of January 2014. It is pleasing to note the
280.7% growth in the NAV since then is significantly ahead of the 149.9% achieved by the comparative
index.
3/4 No final dividend is being paid. Should the level of underlying income increase in future
years, the Board will seek to distribute the minimum permissible to maintain investment trust
status as the Company's objective remains that of generating capital growth.
3/4 Over the course of the financial year, the Company issued over 50.9 million new shares
at a premium to its NAV, raising net proceeds of GBP182.2 million.
3/4 As at the financial year end, the Company held twelve unlisted investments accounting
for 10.8% of total assets (2020 - 5.8% of total assets in nine holdings). As part of this
year's Annual General Meeting business, shareholder authority is being sought to increase
the permitted investment in unlisted investments from the current 15% to a proposed 25% of
total assets, as measured at the time of initial investment.
(*) Source: Refinitiv and relevant underlying index providers.
See disclaimer at the end of this announcement .
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Edinburgh Worldwide's objective is the achievement of long term
capital growth by investing primarily in listed companies
throughout the world. The Trust has total assets of GBP1,407.5
million (before deduction of loans of GBP66.2 million) as at 31
October 2021.
Edinburgh Worldwide is managed by Baillie Gifford & Co
Limited, the Edinburgh based fund management group with over GBP330
billion under management and advice as at 9 December 2021.
Past performance is not a guide to future performance.
The value of an investment and any income from it is not
guaranteed and may go down as well as up and investors may not get
back the amount invested. This is because the share price is
determined by the changing conditions in the relevant stock markets
in which the Company invests and by the supply and demand for the
Company's shares. Investment in investment trusts should be
regarded as medium to long-term. You can find up to date
performance information about Edinburgh Worldwide on the Edinburgh
Worldwide page of the Managers' website at edinburghworldwide.co.uk
++
++ 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.
10 December 2021
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co Mark Knight, Director, Four Communications
Tel: 0131 275 2000 Tel: 0203 697 4200 or 07803 75
Chairman's Statement
====================
Performance
In the year to 31 October 2021, the Company's net asset
value('NAV') per share, when calculated by deducting borrowings at
fair value, increased by 18.3% and the share price by 11.1%, both
in total return terms. The comparative index, the S&P Global
Small Cap Index * total return, increased by 35.9% in sterling
terms during this period. The Company finished the year with a
market capitalisation of GBP1,294.6 million and total assets of
GBP1,407.5 million. Over the course of the financial year the share
price averaged a 0.7% premium to net assets, with borrowings
deducted at fair value. Portfolio turnover was 9.1% compared to
8.4% for the Company's financial year to 31 October 2020 and the
ongoing charge has reduced to 0.66% from 0.72%. The Company's
portfolio has been managed with a focus on the opportunity set
lower down the market capitalisation spectrum since the end of
January 2014. It is pleasing to note the 280.7% growth in the NAV
since then is significantly ahead of the 149.9% achieved by the
comparative index. The chart below shows the distribution of
returns for all the stocks held within the portfolio since 31
January 2014; each bar representing the return of each stock whilst
held in the portfolio. This cumulative period holding analysis
shows the broad distribution of returns achieved by the holdings
from time of initial purchase to 31 October 2021 or the date in
which the holding was fully sold from the portfolio.
Asymmetry of Returns
Whilst it is understandably disappointing to report relative
underperformance for the year to 31 October 2021, this should be
set in the context of positive absolute returns and this being the
first financial year of relative NAV underperformance since the
financial year to 31 October 2016. Over the year, the top
contributors to relative and absolute performance included Tesla,
an electric car, autonomous driving and solar energy company,
Codexis, an industrial and pharmaceutical enzyme developer, Upwork,
an online freelancing and recruitment services platform and
unlisted PsiQuantum, a developer of commercial quantum computing.
In addition, the formerly private company QuantumScape, a developer
of solid state lithium metal batteries for electric cars, and
Oxford Nanopore, a DNA sequencer, both of which listed during the
year. The top detractors to relative and absolute performance over
the year are names that rank amongst the top contributors to
performance over five years: LendingTree, an online consumer
finance marketplace, MarketAxess, an electronic bond trading
platform, and Ocado, an online grocery retailer and technology
provider.
Share Buybacks, Treasury and Issuance
The Company will once again be seeking to renew its share
buyback, issuance and treasury share authorities. The buyback
facility is sought to allow the Company to buy back its own shares
when the discount is substantial in absolute terms and relative to
its peers. Issuance, either from treasury or of new shares, will
only be undertaken at a premium to the prevailing NAV, with debt
calculated at par, in order to satisfy natural market demand.
Issuance at a premium enhances the NAV per share for existing
shareholders, dilutes ongoing costs and helps with the trading
liquidity of the shares of the Company.
Over the course of the last financial year, the Company issued
50.9 million new shares at a premium to its NAV, raising net
proceeds of GBP182.2 million and increasing the NAV per share by
0.32%. This equates to 14.4% of the issued share capital at the
start of the year. Growth in assets along with the Company's tiered
management fee has contributed to the reduction in the Company's
ongoing charges for the year.
Unlisted Investments
The Managers have shareholder authority to invest up to 15% of
the Company's total assets, at the time of initial investment, in
unlisted investments. As at the Company's year end, the portfolio
weighting in private companies stood at 10.8% of total assets,
invested in twelve companies (2020 - 5.8% of total assets in nine
companies). Six new private company investments were made during
the year: Relativity Space, a 3D printing and aerospace launch
company, QuantumScape which has now listed, Astranis Space
Technologies, a geostationary communications satellite operator and
manufacturer, Shine Technologies (Illuminated Holdings), producer
of medical radioscopes, Snyk, a software security developer, and
Lightning Labs, a money transfer software developer.
At the Company's Annual General meeting ('AGM') held on 23
January 2019, shareholders approved an increase in the permissible
limit of investment in unlisted investments from 5% to 15% of total
assets at the time of initial investment. As part of the 2 February
2022 AGM business, the Board is seeking shareholder approval to
increase this authority to 25% as the Board and Managers are of the
view that private companies are becoming an increasingly relevant
part of the Company's objective; to invest in a global portfolio of
initially immature entrepreneurial companies, typically with a
market capitalisation of less than US$5 billion at the time of
initial investment, which are believed to offer long-term growth
potential.
Accelerating improvements in technology are reducing the capital
and time needed for young businesses to both experiment with and
scale their product offerings. For many new entrepreneurs this is
delaying the need for a public fundraising or resulting in some
really exceptional companies entering the stock market when they
are larger and more mature, and the rising availability of private
capital is serving to compound this shift. In 2006, 18 private
companies globally had valuations of over US$500 million with an
aggregate value of US$18 billion. As of the end of 2020 there were
923 companies with valuations of over US$500 million, and an
aggregate value of US$2.2 trillion. This makes this market
approximately the same size as the S&P MidCap 400 index. As at
31 October 2021, Baillie Gifford had GBP4 billion invested in 73
private companies across 14 countries.
Given the potential for this to be an increasingly valuable
source of investment ideas for Edinburgh Worldwide and Baillie
Gifford's growing capability to deploy capital here, the Board
would like the Managers to have flexibility to invest a greater
portion of the Company's assets in private companies as suitable
opportunities arise. This would allow better scope for long term
asymmetry to play out within existing private holdings without
limiting the Managers' ability to invest opportunistically in new
ideas in the future. The number of private holdings is expected to
continue increasing gradually whilst several more businesses will
also undertake public listings in the fullness of time, as has been
the case to date with, for example, Oxford Nanopore, QuantumScape
and Spire Global this year.
Over the last seven years, Edinburgh Worldwide has invested in
eighteen private companies and the weighting has risen from 0% to a
little under 11% of the Company's assets as at 31 October 2021.
Depending on the outcome of the shareholder vote, and in due course
reflecting on future investor sentiment at the time towards private
companies and the investable opportunity set, and the performance
being generated from such holdings, the Board will keep the matter
of the weighting to unlisted investments under review.
Borrowings
The extent and range of equity gearing is discussed by the Board
and Managers at each Board meeting. Both parties agree that the
Company should typically be geared to equities to maximise
potential returns, with the current aspirational parameters set at
+5% to +15% of shareholders' funds. Over the year, the invested
equity gearing ranged between -2.7% and +2.6%, and stood at +2.5%
of shareholders' funds at the financial year end (2020 -
+0.9%).
During the period, the Company entered into a new five year
GBP100 million multi-currency revolving credit facility, with The
Royal Bank of Scotland International Limited, with an expiry date
of 9 June 2026. This facility is in addition to the existing five
year GBP25 million multi-currency revolving credit facility, with
National Australia Bank Limited, with an expiry date of 29 June
2023 and the five year GBP36 million multi-currency revolving
credit facility, with National Australia Bank Limited, with an
expiry date of 30 September 2024. As at 31 October 2021, the
Company had drawings of EUR7,200,000, US$53,150,000 and
GBP21,300,000.
Earnings and Dividend
The Company's objective is that of generating capital growth and
investors should not expect any income from this investment. This
year the net revenue return per share was a negative 0.62p (2020 -
negative 0.46p per share). As the revenue account is running at a
deficit, no final dividend is being recommended by the Board.
Should the level of underlying income increase in future years, the
Board will seek to distribute to shareholders the minimum
permissible to maintain investment trust status by way of a final
dividend.
Board Composition and Ceiling on Aggregate Remuneration
During the course of the year, Mr William Ducas retired from the
Board. I would like to place on record my and the Board's thanks
for his contribution to Company discussions and his pragmatic
advice and guidance. There are no changes expected in Board
composition over the coming year although Mr Donald Cameron has
highlighted to colleagues that he is unlikely to stand for
re-election at the Company's 2023 AGM .
The current aggregate remuneration ceiling for Directors' fees
is set at GBP200,000 per annum. Based on the level of aggregate
remuneration expected to be paid for the financial year ending 31
October 2022 (GBP182,500 - being GBP40,500 for the Chairman,
GBP27,000 for each Director, an additional GBP6,000 for the
Chairman of the Audit and Management Engagement Committee and an
additional GBP1,000 for the Senior Independent Director), should
the Board wish to appoint a new Director the aggregate fees would
likely exceed the current authorised limit. Accordingly, it is
proposed that, pursuant to Resolution 14, as set out in the Notice
of Annual General Meeting, the maximum permissible aggregate amount
of fees payable to the Directors be increased to GBP250,000 per
annum in aggregate.
Investment Outlook
Markets continued to rise notably until the tail end of the
first quarter of 2021 and subsequently declined due in part to
concerns regarding future inflation and dislocated supply, largely
as a result of Covid-19 and the measures put in place to curb its
impact on businesses. More recently, market sentiment has been
pushed and pulled by attempts at 'normality' against a backdrop of
new virus variants and a Chinese regulatory clampdown. However,
there are now signs that markets are becoming more fundamentals-led
rather than momentum driven.
As mentioned in the past, your portfolio managers continue to
direct their efforts to picking the best entrepreneurial, immature
growth companies that create and exploit investment opportunities,
and which exhibit excellent long-term growth prospects and the
potential for positive long term returns wherever they are listed
and whatever the macro backdrop. Whilst markets exhibit volatility,
the investment trust structure permits the portfolio managers and
discerning long-term investors to take positions in exciting,
dynamic and innovative companies for the long term.
An overview of the portfolio is provided on pages 13 and 15 of
the Annual Report and .Financial Statements.
Annual General Meeting
As part of the Company's AGM business, the Company is seeking to
update its Articles of Association, details of which can be found
on page 71 of the Annual Report and Financial Statements. The
principal proposed change regards the ability to hold hybrid AGMs,
permitting, in extremis circumstances such as those resulting from
Covid-19, shareholders to attend by electronic means as well as in
person. It is however intended that future meetings be physical
unless restrictions prohibiting this are in force at the time.
It is anticipated that the Company's next AGM will be held in
person and be held at Baillie Gifford's offices in Edinburgh at 12
noon on Wednesday 2 February 2022. The Managers will be presenting
and I and the Board look to see as many of you there as
possible.
Should the situation change, further information will be made
available through the Company's website at edinburghworldwide.co.uk
and the London Stock Exchange regulatory news service. Further
information, including the proposed resolutions and information on
the deadlines for submitting votes by proxy should you not be able
to attend, can be found on pages 68 to 70 of the Annual Report and
Financial Statements. Shareholders who hold shares
in their own name on the main register will be provided with a
Form of Proxy and there are also special arrangements for holders
of shares through the abrdn Investment Trusts Share Plan,
Individual Savings Account and Investment Plan for Children who are
provided with a Form of Direction. If you hold shares through a
share platform or other nominee, the Board would encourage you to
contact these organisations directly as soon as possible to arrange
for you to submit votes in advance of the AGM.
Henry CT Strutt
Chairman
9 December 2021
(*) Source: Refinitiv and relevant underlying index providers.
See disclaimer at the end of this announcement .
calculated by dividing the value of sales by the average of the
opening and closing value of the investment portfolio.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Managers' Review
================
What We Seek to Offer
Edinburgh Worldwide Investment Trust's philosophy is one where
we seek ambitious, problem-solving companies with what we believe
to be excellent long-term growth potential. By identifying
attractive growth companies earlier, we seek to benefit during the
most dynamic phase of a company's lifecycle and retain ownership of
successful companies as they grow and thrive. It's an approach that
requires patience, a long-term mindset and recognition that
progress in young companies rarely happens in a straight line. The
solutions that our holdings are working towards are not designed to
be transient or modestly incremental. Should they succeed the
likelihood is that they will embed themselves as key drivers of
their respective industries in the years that follow.
Our style of investing is one in which many of our ideas will
ultimately fail to live up to our lofty aspirations for them.
Rather than fret about this we view it as an inevitable outcome of
our bias towards immature companies with long-term potential.
Occasionally, that failure can be abrupt, with clear implications
for the viability of the business and the capital invested. For
others, it will be much less spectacular: a solid business emerges
with acceptable returns for investors but with nagging frustration
that the outcomes could have been much better. But some companies
(and it's the minority) will both surprise and delight: their
initial traction in opening new avenues for growth will likely make
our original hypothesis look rather feeble. This wide range of
outcomes is evident in the asymmetry of returns chart shown in the
Chairman's statement.
It's from this extreme dispersion of outcomes that we actively
desire long-term returns to be moulded. Sorting the deep winners
from the losers and the also-rans takes both time and patience. The
differentiating factors that drive that outcome will most likely be
formed within the individual companies themselves, refined further
by their operating environment and lastly polished through the
actions of their shareholders. Attempting to take the readout on
that experiment at anything less than five years will probably not
tell you very much. It's for this reason that we view the NAV
performance in the year ended 31 October 2021 as more an
observation. It's effectively a snapshot that probably conveys more
about the prevailing narrative within stock markets than a useful
barometer on how our approach is faring. With Edinburgh Worldwide's
NAV having risen by 203% over the five years to the end of October
2021 (versus the 69% rise in the comparative index * ) we think the
evidence leans towards our philosophy having long-term merit.
Implicit in the dispersion of winners versus losers discussed
above is the direct link between a company's progress and the
magnitude of the investment returns that it can generate. A
company's operational success will translate ultimately into
cashflow, the present value of which investors can use to judge a
company's intrinsic value. But the notion of a company's cashflow
(or its more relatable cousin, profits) is not an abstract one that
resides in a CFO's or investment analyst's spreadsheet. It's the
output of a myriad of interactions and decisions involving the
company and its surroundings. How those cashflows are produced and
how they impact a wider group of stakeholders, society and the
environment, will also be crucial determinants of not only their
size, but their long-term durability and permissibility.
Consequently, the notion of sustainability, in all its guises, is
something we believe to be deeply ingrained in bona fide long-term
growth investing.
In Edinburgh Worldwide, we think our remit and philosophy enable
us to go a step further. We have long found that the most
interesting companies are invariably those that position themselves
on the frontiers of socio-economic change, rather than shy away
from it. They are the ones that address the most pressing
questions, seek to tackle the largest problems and build solutions
that seek to drive the world forward. For such companies,
sustainability is not just the how they go about operating, it's
also the why: why they exist, why society should care and why,
ultimately, they might be an outstanding investment
opportunity.
We think our focus on companies pursuing durable long-term
progress, improving outcomes and reducing both costs and frictions
across a range of diverse areas, means that the portfolio is
well-positioned to participate in the change that will follow.
Moreover, through provision of primary capital to private companies
we think that role can become more active.
Observations and Portfolio Update
The past year has seen stock markets wrestle with a world trying
to get back to normal and the oscillations from optimism to fear
seem even more pronounced than usual. Second and third order
effects related to the pandemic will likely persist but predicting
these with conviction is difficult and can arguably be a
distraction from our core task (although we are mindful of the
opportunities they may create in markets prone to overreaction). In
the near-term, we expect that supply-demand imbalances will
persist, behaviours of consumers and businesses will be hard to
predict and the overall level of uncertainty will remain elevated.
Against such a backdrop we expect the narrative and typical time
horizon in equity markets to remain skewed to a 'here and now'
mindset.
The second and third quarter reporting periods have been
atypical in that companies were annualising the immediate impact of
the pandemic. For some companies this presents as a recovery-type
boost but for several of our companies, especially those that were
natural beneficiaries of the pandemic (e.g. Telemedicine providers
or ecommerce businesses) this period has been one where the
comparator has been tough. As previously discussed, we are more
intrigued by how the fortunes of such businesses have been
transformed on a multi-year, perhaps even a multi-decade basis.
Annualising an extreme base effect often excites stock markets but
it tends to tell you very little of relevance to the real long-term
progress of a business.
For companies such as Teladoc, the stock market's questioning
relates to a modest near-term membership growth opportunity. Yet we
think the evidence of the company going much deeper with existing
members is much more reflective of the value being built. Likewise,
with Ocado the shrinking basket size and limited near-term growth
could be expected from a business that was running at well above
optimal capacity a year ago. Much more relevant in our minds is the
increasingly delighted noises emerging from its grocery partners as
they go live with their Ocado-enabled facilities.
A notable area of weakness in the portfolio has been our Chinese
stocks. Referring to our holdings by geographic location always
feels rather odd to us but is probably justified in this context,
given the challenges that have emerged. We prefer to simplify the
debate on China investing to two key axes. The first axis is a
geopolitical one. The roots here extend well beyond the recent
months but the 'who lists where and why' and 'where do companies
keep sensitive customer data' arguments don't feel like they will
be resolved imminently. The second axis is arguably a bit easier
for investors to have a considered view on, namely domestic Chinese
companies where the accrued power and influence have begun to sit
at odds with the more holistic, openly socialist approach of the
governing party. Certain sectors have been singled out for
intervention, most obviously those involved in aspects of lending,
education and gaming. For some of our holdings such as Huya and
Agora this has created headwinds, even if the impact on these
businesses is much more indirect than direct.
In actively looking for companies that are innovating and trying
to move the world forward we believe we are concentrating on an
opportunity set whose own actions will be the greatest determinant
of their own success or failure. As observers along frontiers of
innovation in a wide range of industries and applications, we
continue to be excited by the opportunities that abound.
Consequently, we feel that the current portfolio and investment
approach is as relevant as it's ever been. We think this is well
illustrated by the eleven new purchases we reported on in the
Interim Report to the end of April 2021 and is reinforced by the
further five names (two listed businesses and three private) we
purchased over the subsequent six months. We introduce these
below:
- ITM Power is a UK company which designs and manufactures PEM
electrolysers (proton exchange membrane). Electrolysers are devices
that produce hydrogen gas using electricity and water as inputs
(with oxygen gas as a side-product). The hydrogen gas can then be
used as chemical feedstock or it can be consumed in a fuel cell to
yield back energy and water. With the declining cost of renewable
energy and mounting imperative across society and industry of net
zero targets, we see the prospect of the much-heralded hydrogen
economy being transformed over the coming decades. Green
electrolyser-derived hydrogen is likely to be the most viable route
for many heavy emitting industries to decarbonise. While batteries
are a practical energy store in many applications, when the energy
storage requirement is long term and the utilisation conditions are
more demanding, the benefits of hydrogen come to the fore. ITM is
among the major electrolyser producers that cater to this
opportunity. It focuses uniquely on the more differentiated PEM
type electrolysers and has the largest PEM manufacturing
capacity.
3/4 Shine Technologies (Illuminated Holdings) is a private
nuclear technology company, with an initial focus on the production
of medical radioisotopes for diagnostic and therapeutic procedures.
The company's approach offers
several advantages here, being cleaner, safer and more
affordable to operate than legacy infrastructure. It also addresses
a growing gap between the supply and demand for these important
products within healthcare systems around the world. Longer term,
Shine has a path to leverage this technology and operating
experience into larger and more transformational opportunities
around nuclear waste recycling and the production of clean fusion
energy.
- Snyk is a private IT security company focused on the growing
opportunity in application development. It offers a toolkit for
software developers that allows them to detect vulnerabilities and
fix bugs themselves, embedding security functions at an early stage
and significantly improving the pace at which the software can be
signed off and released for use. We think such tools will become
increasingly standard in the software application development cycle
as Snyk has the synergistic advantage of appealing to both the
developer community and those tasked to maintain the robustness of
a company's overall IT operations. As more code is tested against,
and modified by, Snyk's toolkit we think the company will be well
positioned to create a valuable data advantage that will become
increasingly hard for others to replicate.
- Angelalign is China's leading domestic provider of invisible
orthodontic products. The clear aligners market in China is
relatively small but growing rapidly, underpinned by secular
drivers like greater awareness of dental care and aesthetics
associated with increasing disposable incomes. Angelalign
effectively democratises access to such orthodontic treatments by
empowering all dental professionals, not just the limited number of
orthodontic specialists. We are encouraged by its success so far
and with the founding management team still in place, we believe it
can become the dominant player in this rapidly expanding
market.
- Lightning Labs is a private San Francisco-based company which
was founded to drive the adoption of, and to commercialise, the
Bitcoin Lightning Network, an open source project which operates as
a second layer built on top of Bitcoin. The Lightning Network
substantially improves Bitcoin's utility by enabling scalable,
instantaneous and nearly free payments. The software designed and
maintained by Lightning Labs is quickly gaining traction among
developers seeking to build Lightning applications. It has the
potential to establish itself as the go-to codebase not only for
payment applications but for incipient higher-level protocols for
programmatically routing any data/value over the Lightning Network.
It does this instantly, privately and at exceptionally low cost.
While early, we are intrigued by the potential for Lightning Labs
to become a key infrastructure provider in the emerging Bitcoin
ecosystem.
We sold the position in Cloudera following a takeover offer from
private equity. We also exited the holding in Yext. Our original
investment hypothesis was that Yext was well-placed to carve out a
highly differentiated position in the increasingly important area
of corporate knowledge management. The product roadmap since has
diverged from what we perceive to be Yext's core skillset and
competitive strength.
* S&P Global Small Cap Index total return (in sterling
terms). Source: Refinitiv and relevant underlying index providers.
See disclaimer at the end of this announcement.
Investment Philosophy
=====================
Most small businesses are destined to stay small given their
limited scope for both structural growth and meaningful
differentiation. Such businesses constitute the bulk of the smaller
companies' universe yet are of no appeal to us. However, what is
intriguing about the smaller companies' universe is that it
contains a subset of immature but potentially high growth
companies. By identifying attractive growth companies earlier we
seek to benefit from growth at an earlier stage in a company's
lifecycle and retain ownership of successful companies as they grow
and thrive; we see our role as investing in what are potentially
the larger companies of the future as opposed to the smaller
companies of today.
We are looking to concentrate on the part of the market where we
believe our analytical effort and the pursuit of genuinely
transformational growth can be better exploited. The focus at time
of initial investment is on younger, more immature companies that
are global and exhibiting strong growth.
It is important to remember that big successful ideas typically
start out as small, tentative and unproven. Early iterations are
easy to dismiss as unworkable but experimentation with, and
evolution of, an initially raw concept can, over time, yield huge
commercial relevance. Our philosophy involves weighing up what is
proven and tangible alongside what has promise and long term
potential. Integral to this approach is recognising the role of
innovation in business development; it provides the fuel for
business creation, growth and long term competitive
differentiation. Consequently, identifying companies that value
innovation, having both a cultural acceptance of it and a means to
develop commercial opportunities around it, is fundamental to our
investment approach.
Growth companies, especially those which are young and hard to
model, are difficult businesses to value. The wide range of
potential outcomes and profitability that is heavily skewed to
future years is a combination of uncertainties that many investors
struggle with. We do not have all the answers but by approaching
the challenge with a genuine long term perspective, accepting a
degree of uncertainty, backing robust innovation and
entrepreneurial management, we believe we are well positioned to
identify the smaller businesses most likely to shape the world in
which we live. As technological advancements encroach into an
increasing pool of opportunity, the rate and extent of growth that
a small business can achieve, in a relatively short period of time,
is almost unrecognisable to that of a few years ago. Innovative
smaller businesses that are unburdened by the legacy of historic
business practices, or those willing to adapt to change, are best
positioned to harness this opportunity.
Baillie Gifford Statement on Stewardship
Reclaiming Activism for Long-Term Investors
Reclaiming Activism for Long-Term Investors
Baillie Gifford's over-arching ethos is that we are 'actual'
investors. We have a responsibility to behave as supportive and
constructively engaged long-term investors. We invest in companies
at different stages in their evolution, across vastly different
industries and geographies and we celebrate their uniqueness.
Consequently, we are wary of prescriptive policies and rules,
believing that these often run counter to thoughtful and beneficial
corporate stewardship. Our approach favours a small number of
simple principles which help shape our interactions with
companies.
Our Stewardship Principles
Prioritisation of long-term value creation
We encourage company management and their boards to be ambitious
and focus their investments on long-term value creation. We
understand that it is easy for businesses to be influenced by
short-sighted demands for profit maximisation but believe these
often lead to sub-optimal long-term outcomes. We regard it as our
responsibility to steer businesses away from destructive financial
engineering towards activities that create genuine economic
value
over the long run. We are happy that our value will often be in
supporting management when others do not.
A constructive and purposeful board
We believe that boards play a key role in supporting corporate
success and representing the interests of minority shareholders.
There is no fixed formula, but it is our expectation that boards
have the resources, cognitive diversity and information they need
to fulfil these responsibilities. We believe that a board works
best when there is strong independent representation able to
assist, advise and constructively test the thinking of
management.
Long-term focused remuneration with stretching targets
We look for remuneration policies that are simple, transparent
and reward superior strategic and operational endeavour. We believe
incentive schemes can be important in driving behaviour, and we
encourage policies which create alignment with genuine long-term
shareholders. We are accepting of significant pay-outs to
executives if these are commensurate with outstanding long-run
value creation, but plans should not reward mediocre outcomes. We
think that performance hurdles should be skewed towards long-term
results and that remuneration plans should be subject to
shareholder approval.
Fair treatment of stakeholders
We believe it is in the long-term interests of companies to
maintain strong relationships with all stakeholders, treating
employees, customers, suppliers, governments and regulators in a
fair and transparent manner. We do not believe in one-size-fits-all
governance and we recognise that different shareholder structures
are appropriate for different businesses. However, regardless of
structure, companies must always respect the rights of all equity
owners.
Sustainable business practices
We look for companies to act as responsible corporate citizens,
working within the spirit and not just the letter of the laws and
regulations that govern them. We believe that corporate success
will only be sustained if a business's long-run impact on society
and the environment is taken into account. Management and boards
should therefore understand and regularly review this aspect of
their activities, disclosing such information publicly alongside
plans for ongoing improvement.
Income statement
================
For the year ended For the year ended
31 October 2021 31 October 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================================== ======== ======== ======== ======== ======== ========
Gains on investments - 178,323 178,323 - 329,236 329,236
Currency losses - (1,631) (1,631) - (1,360) (1,360)
Income (note 2) 827 - 827 773 - 773
Investment management fee (1,952) (5,857) (7,809) (1,145) (3,434) (4,579)
Other administrative expenses (907) - (907) (715) - (715)
============================================== ======== ======== ======== ======== ======== ========
Net return before finance costs and taxation (2,032) 170,835 168,803 (1,087) 324,442 323,355
============================================== ======== ======== ======== ======== ======== ========
Finance costs of borrowings (340) (1,019) (1,359) (331) (991) (1,322)
============================================== ======== ======== ======== ======== ======== ========
Net return before taxation (2,372) 169,816 167,444 (1,418) 323,451 322,033
============================================== ======== ======== ======== ======== ======== ========
Tax (50) - (50) (61) - (61)
============================================== ======== ======== ======== ======== ======== ========
Net return after taxation (2,422) 169,816 167,394 (1,479) 323,451 321,972
============================================== ======== ======== ======== ======== ======== ========
Net return per ordinary share (note 4) (0.62p) 43.37p 42.75p (0.46p) 100.89p 100.43p
============================================== ======== ======== ======== ======== ======== ========
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 year.
Balance sheet
=============
At 31 October 2021 At 31 October 2020
GBP'000 GBP'000
=============================================================== ================== ==================
Fixed assets
Investments held at fair value through profit or loss (note 6) 1,376,365 1,002,194
=============================================================== ================== ==================
Current assets
Debtors 322 160
Cash and cash equivalents 33,127 40,894
=============================================================== ================== ==================
33,449 41,054
=============================================================== ================== ==================
Creditors
Amounts falling due within one year (note 8) (68,459) (51,514)
=============================================================== ================== ==================
Net current liabilities (35,010) (10,460)
=============================================================== ================== ==================
Net assets 1,341,355 991,734
=============================================================== ================== ==================
Capital and reserves
Share capital 4,052 3,543
Share premium account 497,999 316,281
Special reserve 35,220 35,220
Capital reserve 808,197 638,381
Revenue reserve (4,113) (1,691)
Shareholders' funds 1,341,355 991,734
=============================================================== ================== ==================
Net asset value per ordinary share 331.03p 279.90p
=============================================================== ================== ==================
Ordinary shares in issue (note 9) 405,203,695 354,318,695
=============================================================== ================== ==================
Statement of changes in equity
==============================
For the year ended 31 October 2021
Share premium
Share account Special reserve Capital reserve* Revenue Shareholders'
capital GBP'000 GBP'000 GBP'000 reserve funds
GBP'000 GBP'000 GBP'000
=================== ========= =================== ================= ================== ========= ===============
Shareholders' funds
at 1 November 2020 3,543 316,281 35,220 638,381 (1,691) 991,734
Ordinary shares
issued (note 9) 509 181,718 - - - 182,227
Net return after
taxation - - - 169,816 (2,422) 167,394
Shareholders' funds
at 31 October 2021 4,052 497,999 35,220 808,197 (4,113) 1,341,355
=================== ========= =================== ================= ================== ========= ===============
For the year ended 31 October 2020
Share premium
Share account Special reserve Capital reserve* Revenue Shareholders'
capital GBP'000 GBP'000 GBP'000 reserve funds
GBP'000 GBP'000 GBP'000
=================== ========= =================== ================= ================== ========= ===============
Shareholders' funds
at 1 November 2019 3,026 183,754 35,220 314,930 (212) 536,718
Ordinary shares
issued (note 9) 517 132,527 - - - 133,044
Net return after
taxation - - - 323,451 (1,479) 321,972
Shareholders' funds
at 31 October 2020 3,543 316,281 35,220 638,381 (1,691) 991,734
=================== ========= =================== ================= ================== ========= ===============
* The capital reserve balance as at 31 October 2021 includes
investment holdings gains on fixed asset investments of
GBP591,196,000 (2020 - gains of GBP476,217,000).
Cash flow statement
===================
For the year ended For the year ended
31 October 2021 31 October 2020
GBP'000 GBP'000 GBP'000 GBP'000
================================================= ========= ========= ========= =========
Cash flows from operating activities
Net return before taxation 167,444 322,033
Net gains on investments (178,323) (329,236)
Currency losses 1,631 1,360
Finance costs of borrowings 1,359 1,322
Overseas withholding tax incurred (50) (62)
Changes in debtors and creditors 416 623
------------------------------------------------- --------- --------- --------- ---------
Cash from operations* (7,523) (3,960)
Interest paid (1,244) (1,378)
Net cash outflow from operating activities (8,767) (5,338)
------------------------------------------------- --------- --------- --------- ---------
Cash flows from investing activities
Acquisitions of investments (305,256) (164,843)
Disposals of investments 108,235 65,917
Net cash outflow from investing activities (197,021) (98,926)
------------------------------------------------- --------- --------- --------- ---------
Cash flows from financing activities
Ordinary shares issued (note 9) 182,227 133,044
Bank loans drawn down 318,406 198,933
Bank loans repaid (299,373) (198,933)
Net cash inflow from financing activities 201,260 133,044
------------------------------------------------- --------- --------- --------- ---------
(Decrease)/increase in cash and cash equivalents (4,528) 28,780
Exchange movements (3,239) (1,228)
Cash and cash equivalents at 1 November 40,894 13,342
================================================= ========= ========= ========= =========
Cash and cash equivalents at 31 October 33,127 40,894
================================================= ========= ========= ========= =========
* Cash from operations includes dividends received of GBP781,000
(2020 - GBP727,000) and no deposit interest received
(2020 - GBP60,000)
Twenty largest holdings and Twelve Month Performance at
31 October 2021
=============
Fair % of Absolute Relative
Value total performance performance
Name Business Country 2021 assets(*) % %
GBP'000
=================== ==================== =========== ============ ================ ============= =============
Electric vehicles,
autonomous
driving
Tesla and solar energy USA 85,450 6.1 171.4 99.6
US online real
Zillow (#) estate portal USA 51,095 3.6 10.5 (18.7)
Drug developer
focussed
on
harnessing gene
Alnylam silencing
Pharmaceuticals technology USA 46,706 3.3 22.6 (9.8)
Online grocery
retailer
and technology
Ocado provider UK 45,747 3.3 (20.8) (41.7)
Online freelancing
and
recruitment
Upwork services platform USA 41,225 2.9 141.3 77.5
Ophthalmic implants
for
vision
STAAR Surgical correction USA 39,236 2.8 54.0 13.3
Designs,
manufactures and
Space Exploration launches
Technologies advanced rockets
(#U) and spacecraft USA 38,016 2.6 73.4 (++) 27.6 (++)
Industrial and
pharmaceutical
enzyme
Codexis developer USA 33,953 2.4 145.7 80.8
Developer of
commercial
PsiQuantum quantum 266.1
(#U) computing USA 33,757 2.4 (++) 169.3
Electronic bond
trading
MarketAxess platform USA 33,339 2.4 (28.1) (47.1)
Telemedicine
Teladoc services provider USA 32,447 2.3 (28.2) (47.2)
Manufacturer of
medical
devices for
Novocure cancer treatment USA 27,476 2.0 (20.8) (41.7)
Online educational
Chegg company USA 26,259 1.9 (23.7) (43.8)
Enterprise
financial software
BlackLine provider USA 25,922 1.8 22.6 (9.8)
Oxford Nanopore Novel DNA
Technologies sequencing
(#P) technology UK 25,910 1.8 113.5 57.1
Enterprise
Kingdee management
International software
Software provider China 24,591 1.7 19.0 (12.4)
Chinese
bio-pharmaceutical
development and
distribution
Zai Lab ADR company China 23,525 1.7 19.8 (11.9)
Ceres Power Developer of fuel
Holding cells UK 23,497 1.7 79.5 32.0
Cloud based
accounting
software for
small and
medium-sized New
Xero enterprises Zealand 21,537 1.5 36.9 0.7
Enterprise software
Appian developer USA 20,944 1.5 48.1 9.0
=================== ==================== =========== ============ ================ ============= =============
700,632 49.7
==================================================== ============ ================ ============= =============
* Total assets comprises all assets held less all liabilities
other than liabilities in the form of borrowings.
Absolute and relative performance has been calculated on a total
return basis over the period 1 November 2020 to 31 October 2021.
Absolute performance is in sterling terms; relative performance is
against S&P Global Small Cap Index (in sterling terms).
(#) More than one line of stock held. Holding information
represents the aggregates of both lines of stock.
(++) Figures relate to part-period returns where security has
been purchased or added to during the period.
(U) Denotes unlisted security.
(P) Denotes listed security previously held in the portfolio as
an unlisted security .
Source: Baillie Gifford/StatPro and relevant underlying index
providers. See disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
List of investments as at 31 October 2021
=========
Fair Fair
Value % of Value
2021 total 2020
Name Business Country GBP'000 assets GBP'000
======================= ==================================== =========== ========= ========= =========
Electric vehicles, autonomous
driving and solar
Tesla energy USA 85,450 6.1 51,332
Zillow Class C US online real estate portal USA 44,097 3.1 33,235
Zillow Class A US online real estate portal USA 6,998 0.5 6,272
========= ========= =========
51,095 3.6 39,507
========= ========= =========
Drug developer focussed on
Alnylam harnessing gene
Pharmaceuticals silencing technology USA 46,706 3.3 32,238
Online grocery retailer and
Ocado technology provider UK 45,747 3.3 49,460
Online freelancing and recruitment
services
Upwork platform USA 41,225 2.9 12,250
Ophthalmic implants for vision
STAAR Surgical correction USA 39,236 2.8 21,787
Space Exploration
Technologies Designs, manufactures and
Series N launches advanced
Preferred (U) rockets and spacecraft USA 21,788 1.5 12,374
Space Exploration
Technologies Designs, manufactures and
Series J launches advanced
Preferred (U) rockets and spacecraft USA 9,884 0.7 5,613
Space Exploration
Technologies Designs, manufactures and
Series K launches advanced
Preferred (U) rockets and spacecraft USA 4,506 0.3 2,559
Space Exploration
Technologies Designs, manufactures and
Class A launches advanced
Common (U) rockets and spacecraft USA 1,405 0.1 -
Space Exploration
Technologies Designs, manufactures and
Class C launches advanced
Common (U) rockets and spacecraft USA 433 0.0 -
========= ========= =========
38,016 2.6 20,546
========= ========= =========
Industrial and pharmaceutical
enzyme
Codexis developer USA 33,953 2.4 11,961
PsiQuantum Series
C Developer of commercial quantum
Preferred (U) computing USA 20,626 1.5 3,867
PsiQuantum Series
D Developer of commercial quantum
Preferred (U) computing USA 13,131 0.9 -
--------- --------- ---------
33,757 2.4 3,867
--------- --------- ---------
MarketAxess Electronic bond trading platform USA 33,339 2.4 46,703
Teladoc Telemedicine services provider USA 32,447 2.3 26,308
Manufacturer of medical devices
for cancer
Novocure treatment USA 27,476 2.0 28,789
Chegg Online educational company USA 26,259 1.9 32,964
Enterprise financial software
BlackLine provider USA 25,922 1.8 19,058
Oxford Nanopore
Technologies Novel DNA sequencing technology UK 1,132 0.1 11,276
Oxford Nanopore
Technologies
(P) Novel DNA sequencing technology UK 24,778 1.7 -
========= ========= =========
25,910 1.8 11,276
========= ========= =========
Kingdee International Enterprise management software
Software provider China 24,591 1.7 17,622
Chinese bio-pharmaceutical
development and
Zai Lab ADR distribution company China 23,525 1.7 16,207
Ceres Power Holding Developer of fuel cells UK 23,497 1.7 11,924
Cloud based accounting software
for small and New
Xero medium-sized enterprises Zealand 21,537 1.5 15,729
Appian Enterprise software developer USA 20,944 1.5 14,160
List of investments as at 31 October 2021 (ctd)
Fair Fair
Value % of Value
2021 total 2020
Name Business Country GBP'000 assets GBP'000
========================= ======================================= ============= ========= ========= =========
Solid-state batteries for
QuantumScape (P) electric vehicles USA 19,255 1.4 -
Cloud based software for social
media
Sprout Social management USA 18,599 1.3 -
Genmab Antibody based drug development Denmark 18,001 1.3 12,691
Non-invasive molecular tests
for early cancer
Exact Sciences detection USA 17,900 1.3 14,746
IP commercialisation focused
PureTech Health on healthcare UK 17,701 1.2 12,951
Law enforcement equipment
and software
Axon Enterprise provider USA 17,351 1.2 7,810
Critical event management
Everbridge software provider USA 17,253 1.2 12,019
Online furniture and homeware
Wayfair retailer USA 15,783 1.1 16,691
CyberArk Software Cyber security solutions provider Israel 15,115 1.1 8,827
Manufacturer of insulin pumps
Tandem Diabetes for diabetic
Care patients USA 14,746 1.0 12,508
Small unmanned aircraft and
tactical missile
AeroVironment systems USA 14,318 1.0 13,022
Hydrogen energy solutions
ITM Power manufacturer UK 13,811 1.0 -
Trupanion Pet health insurance provider USA 13,790 1.0 10,236
LendingTree Online consumer finance marketplace USA 13,786 1.0 25,321
ShockWave Medical Medical devices manufacturer USA 13,366 1.0 4,538
Video compression and image
processing
Ambarella semiconductors USA 13,232 0.9 4,129
Livestock breeding and technology
Genus services UK 12,842 0.9 9,517
Enterprise sales management
Zuora software USA 12,451 0.9 1,823
Akili Interactive
Labs
Series C Preferred
(U) Digital medicine company USA 3,614 0.3 4,600
Akili Interactive
Labs
Series D Preferred
(U) Digital medicine company USA 8,754 0.6 -
--------- --------- ---------
12,368 0.9 4,600
--------- --------- ---------
Pacira BioSciences Opioid free analgesics developer USA 12,235 0.9 10,510
Adaptimmune
Therapeutics Cell therapies for cancer
ADR treatment UK 12,135 0.9 8,494
M3 Online medical database Japan 12,017 0.9 14,556
Cardlytics Digital advertising platform USA 11,770 0.8 -
LiveRamp Marketing technology company USA 11,523 0.8 13,392
MonotaRO Online business supplies Japan 11,489 0.8 14,932
Relativity Space
Series D 3D printing and aerospace
Preferred (U) launch company USA 7,812 0.5 -
Relativity Space
Series E 3D printing and aerospace
Preferred (U) launch company USA 3,648 0.3 -
========= ========= =========
11,460 0.8 -
========= ========= =========
Biotechnology company focused
on next
Sutro Biopharma generation protein therapeutics USA 11,041 0.8 6,462
Online platform for restaurant
InfoMart supplies Japan 11,039 0.8 9,936
IPG Photonics High-power fibre lasers USA 10,473 0.8 10,613
Designs and manufactures power
systems and
American Superconductor superconducting wire USA 10,292 0.7 6,071
Temenos Group Banking software provider Switzerland 10,210 0.7 7,594
Software development tools
JFrog and management Israel 9,860 0.7 -
Astranis Space
Technologies Communication satellite manufacturing
Series C and
Preferred (U) operation USA 9,329 0.7 -
Messaging tools for business
and customer
LivePerson interactions USA 9,315 0.7 10,247
Splunk Data diagnostics USA 8,884 0.6 11,316
List of investments as at 31 October 2021 (ctd)
Fair Fair
Value % of Value
2020 total 2019
Name Business Country GBP'000 assets GBP'000
======================== ========================================= ============= ========= ========= =========
Shine Technologies
(Illuminated
Holdings)
Serices C-5 Preferred
(U) Medical radioisotope production USA 8,754 0.6 -
Consumer robotics and connected
iRobot devices USA 7,809 0.6 7,896
Quanterix Ultra-sensitive protein analysers USA 7,742 0.6 -
Snyk Ordinary
Shares (U) Security software UK 2,736 0.2 -
Snyk Series F
Preferred (U) Security software UK 4,560 0.4 -
========= ========= =========
7,296 0.6 -
========= ========= =========
Lightning Labs Lightning software that enables
Series B users to send
Preferred (U) and receive money USA 7,295 0.5 -
Measurement and calibration
Renishaw equipment UK 7,055 0.5 7,863
Cloud based virtual banking
Q2 Holdings solutions provider USA 6,997 0.5 8,625
Specialised processor chips
Graphcore Series for machine
D2 Preferred (U) learning applications UK 5,244 0.4 4,247
Specialised processor chips
Graphcore Series for machine
E Preferred (U) learning applications UK 1,672 0.1 -
========= ========= =========
6,916 0.5 4,247
========= ========= =========
Cloud based accounting software
for small and
freee K.K. medium-sized enterprises Japan 6,833 0.5 -
Affinity based diagnostic
reagents and
Avacta Group therapeutics UK 6,642 0.5 9,218
IP Group Intellectual property commercialisation UK 6,601 0.4 4,324
Manufacturer of gas and flow
Sensirion Holding sensors Switzerland 5,939 0.4 2,400
SEEK Online recruitment portal Australia 5,846 0.4 3,812
Reaction Engines
(U) Advanced heat exchange company UK 5,750 0.4 5,750
Digital watermarking technology
Digimarc provider USA 5,693 0.4 3,791
Discovery and development
of novel materials
Ilika for mass market applications UK 5,379 0.4 3,348
Clinical stage biotechnology
company focussing
on autoimmune and fibrosis
Galapagos diseases Belgium 5,187 0.4 8,806
Advanced instrumentation and
equipment
Oxford Instruments provider UK 5,144 0.4 3,526
Rightmove UK online property portal UK 4,771 0.3 4,263
Cloud-based healthcare software
Tabula Rasa HealthCare developer USA 4,711 0.3 3,686
Biotechnology tools focused
on cell
Berkeley Lights characterisation USA 4,186 0.3 7,274
Nanomedicine company focused
on cancer
Nanobiotix ADR radiotherapy France 4,066 0.3 -
Voice and video platform technology
Agora ADR provider China 4,056 0.3 4,987
Commerce platform for small
and medium-sized
BASE enterprises Japan 3,951 0.3 -
Huya ADR A live game streaming platform China 3,725 0.3 5,036
Chinese e-commerce solution
Baozun SPN ADR provider China 3,712 0.3 8,314
Satellite powered data collection
and analysis
Spire Global (P) company USA 3,570 0.3 -
Antibody based drug discovery
Morphosys platform Germany 3,451 0.2 5,866
Peptide based drug discovery
PeptiDream platform Japan 3,377 0.2 6,843
Stratasys 3D printer manufacturer USA 3,327 0.2 1,429
Victrex High-performance thermo-plastics UK 2,909 0.2 2,345
KSQ Therapeutics
Series Biotechnology target identification
C Preferred (U) company USA 2,744 0.2 1,925
Licenses IP to the semiconductor
CEVA industry USA 2,743 0.2 2,573
ASOS Online fashion retailer UK 2,532 0.2 4,494
Online marketplace for buying
EverQuote insurance USA 2,329 0.2 4,853
List of investments as at 31 October 2021 (ctd)
Fair Fair
Value % of Value
2021 total 2020
Name Business Country GBP'000 assets GBP'000
======================= =================================== ============= =========== ============== ============
C4X Discovery Rational drug design and
Holdings optimisation UK 2,178 0.2 510
C4X Discovery
Warrants Software to aid drug design UK 37 0.0 -
=========== ============== ============
2,215 0.2 510
=========== ============== ============
Next generation chemotherapy
NuCana SPN ADR developer UK 2,178 0.1 4,523
Genetic engineering for cell
Cellectis based therapies France 1,915 0.1 2,966
Regenerative medicine and
nerve repair
AxoGen company USA 1,880 0.1 1,645
New Horizon Health Cancer screening company China 1,870 0.1 -
Therapies for gastrointestinal
Cosmo Pharmaceuticals diseases Italy 1,846 0.1 2,084
Employee benefits software
Benefitfocus provider USA 1,810 0.1 1,807
Analytics and data collection
Catapult Group technology for
International sports teams and athletes Australia 1,752 0.1 1,638
Developer of novel therapies
using engineered
Rubius Therapeutics red blood cells USA 1,596 0.1 505
4D Pharma Microbiome biology therapeutics UK 1,105 0.1 1,971
4D Pharma Warrants Microbiome biology therapeutics UK 0 0.0 35
=========== ============== ============
1,105 0.1 2,006
=========== ============== ============
Online Chinese used car
Uxin ADR marketplace China 984 0.1 420
Chinook Therapeutics
(formerly Aduro
Biotechnology) Immunotherapy drug development USA 917 0.1 1,117
Chinook Therapeutics
(formerly Aduro
Biotechnology)
CVR Line Immunotherapy drug development USA 0 0.0 -
=========== ============== ============
917 0.1 1,117
=========== ============== ============
Kaleido Biosciences Microbiome chemistry therapeutics USA 898 0.1 913
Summit Therapeutics Developer of novel antibiotics USA 835 0.1 479
Biotechnology company seeking
Unity Biotechnology to develop
(P) anti-ageing therapies USA 595 0.0 1,018
Ricardo Engineering services provider UK 577 0.0 483
Biotechnology company focussed
Adicet Bio (formerly on age
resTORbio) related disorders USA 553 0.0 728
Adicet Bio (formerly Biotechnology company focussed
res on age
TORbio) CVR Line related disorders USA 0 0.0 -
=========== ============== ============
553 0.0 728
=========== ============== ============
Angelalign Technology Medical devices manufacturer China 261 0.0 -
Regenerative medicine technology
Tissue Regenix provider UK 104 0.0 66
Polymer technology company
Xeros Technology with laundry and
Group textile applications UK 76 0.0 93
VYNE Therapeutics Biopharmaceutical company
(formerly Menlo focused in the
Therapeutics) dermatology space USA 49 0.0 248
Velocys Gas to liquid technology UK 27 0.0 19
Ensogo (D) South East Asian e-commerce Australia 0 0.0 0
Mines, processes and manufactures
China Lumena New natural
Materials (S) thenardite products China 0 0.0 0
Total equities 1,376,365 97.8
=========================================================================== =========== ============== ============
Net liquid assets 31,143 2.2
=========================================================================== =========== ============== ============
Total assets at
fair value* 1,407,508 100.0
=========================================================================== =========== ============== ============
* Total assets comprises all assets held less all liabilities
other than liabilities in the form of borrowings.
(U) Denotes unlisted security.
(P) Denotes listed security previously held in the portfolio and an unlisted security.
(D) Denotes delisting security.
(S) Denotes suspended unlisted security.
Listed Unlisted Net liquid Total
equities securities assets assets
% % % %
================= ========== ============ =========== ========
31 October 2021 87.0 10.8 2.2 100.0
================= ========== ============ =========== ========
31 October 2020 90.5 5.8 3.7 100.0
================= ========== ============ =========== ========
Figures represent percentage of total assets.
Includes holdings in preference shares, ordinary shares and
convertible promissory notes.
Distribution of total assets(*) by industry
Industry Analysis Portfolio Weightings
31 October 2021 (relative to comparative index )
% of total assets* at 31 October 2021
================================================= ==================== =================================
Software 17.5 12.1
Biotechnology 15.2 10.8
Healthcare Equipment and Supplies 7.3 5.3
Automobiles 6.1 5.8
Aerospace and Defence 6.0 5.1
Healthcare Technology 4.6 4.0
Electrical Equipment 4.1 2.3
Real Estate Management and Development 3.6 1.5
Professional Services 3.3 1.7
Life Sciences Tools and Services 3.3 2.0
Food and Staples Retailing 3.3 2.4
Technology Hardware, Storage and Peripherals 3.1 2.5
Capital Markets 2.8 (0.1)
Electronic Equipment, Instruments and Components 2.1 (0.3)
IT Services 1.9 (0.4)
Diversified Consumer Services 1.9 1.1
Pharmaceuticals 1.8 0.1
Internet and Direct Marketing Retail 1.5 1.0
Auto Components 1.4 (0.2)
Semiconductors and Semiconductor Equipment 1.1 (1.9)
Insurance 1.0 (1.6)
Consumer Finance 1.0 0.2
Interactive Media and Services 0.9 0.2
Media 0.8 (0.7)
Trading Companies and Distributors 0.8 (0.6)
Household Durables 0.6 (1.1)
Entertainment 0.3 (0.8)
Chemicals 0.2 (2.9)
Internet and Catalogue Retail 0.2 0.2
Healthcare Providers and Services 0.1 (1.9)
Machinery <0.1 (4.2)
Energy Equipment and Services <0.1 (0.6)
Net Liquid Assets 2.2
================================================== ==================== =================================
Total assets* 100.0
================================================== ==================== =================================
* Total assets comprises all assets held less all liabilities other than liabilities in the
form of borrowings.
S&P Global Small Cap Index (in sterling terms). Weightings
exclude industries where the Company has no exposure.
See disclaimer at the end of this announcement.
Distribution of total assets
============================
Geographical Analysis
31 October 2021 31 October 2020
% %
================================= ================ ==================
North America 66.9 63.5
USA 66.9 63.5
Europe 20.9 20.7
United Kingdom 15.6 15.5
Eurozone 1.1 2.2
Developed
Europe (non
euro) 4.2 3.0
Asia 8.0 10.1
Japan 3.5 5.0
China 4.5 5.1
Australasia 2.0 2.0
Australia 0.5 0.5
New Zealand 1.5 1.5
================================ ================ ================
Total equities 97.8 96.3
================================= ================ ================
Net liquid assets 2.2 3.7
================================= ================ ================
Total assets* 100.0 100.0
================================= ================ ================
Sectoral Analysis
31 October 2021 31 October 2020
% %
========================= ================ === ================
Communication Services 5.6 5.6
Consumer Discretionary 15.0 16.5
Financials 4.9 8.3
Healthcare 32.3 32.5
Industrials 14.2 9.2
Information Technology 25.6 24.0
Materials 0.2 0.2
Net Liquid Assets 2.2 3.7
========================= ================ === ================
Total assets* 100.0 100.0
========================= ================ === ================
* Total assets comprises all assets held less all liabilities
other than liabilities in the form of borrowings.
Notes to the condensed financial statements (unaudited)
=======================================================
1. Basis of Accounting
The Financial Statements for the year to 31 October 2021 have been prepared in accordance
with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'
and on the basis of the accounting policies which are unchanged from the prior year and have
been applied consistently.
=====================================================================================================
2. Income 2021 2020
GBP'000 GBP'000
================================================================================= ======== ========
Income from investments
UK dividends 411 154
Overseas dividends 402 538
Overseas interest 14 21
===================================================================================== ======== ========
827 713
===================================================================================== ======== ========
Other income
Deposit interest - 60
===================================================================================== ======== ========
Total income 827 773
===================================================================================== ======== ========
Total income comprises:
Dividends from financial assets designated at fair value through profit or loss 813 692
Interest from financial assets designated at fair value through profit or loss 14 21
Interest from financial assets not at fair value through profit or loss - 60
===================================================================================== ======== ========
827 773
===================================================================================== ======== ========
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 three months' notice.
The annual management fee is 0.75% on the first GBP50m of net assets, 0.65% on the next GBP200m
of net assets and 0.55% on the remaining net assets. Management fees are calculated and payable
quarterly.
4. 2021 2020
Net return per ordinary Revenue Capital Total Revenue Capital Total
share
========================== ======== ======== ====== ======== ======== =======
Net return after taxation (0.62p) 43.37p 42.75p (0.46p) 100.89p 100.43p
Revenue return per ordinary share is based on the net revenue loss after taxation of GBP2,422,000
(2020 - net revenue loss of GBP1,479,000) and on 391,579,802 (2020 - 320,606,304) ordinary
shares, being the weighted average number of ordinary shares during the year.
Capital return per ordinary share is based on the net capital gain for the financial year
of GBP169,816,000 (2020 - net capital gain of GBP323,451,000) and on 391,579,802 (2020 - 320,606,304)
ordinary shares, being the weighted average number of ordinary shares in issue during the
year.
There are no dilutive or potentially dilutive shares in issue.
5. Dividends
There are no dividends paid and proposed in respect of the financial year. There is no revenue
available for distribution by way of dividend for the year to 31 October 2021. Revenue loss
of GBP2,442,000 (2020 - revenue loss of GBP1,479,000) which is the basis on which the requirements
of section 1158 of the Corporation Tax Act are considered.
6. Fair Value
Hierarchy
=================== ================== =============== =========== =============================================
As at 31 October Level 1 Level 2 Level 3 Total
2021 GBP'000 GBP'000 GBP'000 GBP'000
=================== ================== =============== =========== =============================================
Listed equities 1,224,768 - - 1,224,768
Unlisted ordinary shares - - 18,235 18,235
Unlisted preference
shares* - - 133,362 133,362
Unlisted
convertible
promissory note - - - -
=================== ================== =============== =========== =============================================
Total financial asset
investments 1,224,768 - 151,597 1,376,365
-------------------------- ------------------ --------------- ----------- ---------------------------------------------
As at 31 October Level 1 Level 2 Level 3 Total
2020 GBP'000 GBP'000 GBP'000 GBP'000
=================== ================== =============== =========== =============================================
Listed equities 941,393 - - 941,393
Unlisted ordinary shares - - 23,213 23,213
unlisted preference
shares* - - 37,319 37,319
Unlisted convertible
promissory note - - 269 269
-------------------------- ------------------ --------------- ----------- ---------------------------------------------
Total financial asset
investments 941,393 - 60,801 1,002,194
-------------------------- ------------------ --------------- ----------- ---------------------------------------------
* The investments in preference shares are not classified as equity holdings as they include
liquidation preference rights that determine the repayment (or multiple thereof) of the original
investment in the event of a liquidation event such as a take-over.
Investments in securities are financial assets designated at fair value through profit or
loss. In accordance with Financial Reporting Standard 102, the tables above provide an analysis
of these investments based on the fair value hierarchy described below, which reflects the
reliability and significance of the information used to measure their fair value.
Fair Value Hierarchy
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).
7. Transaction Costs
The Company incurred transaction costs on purchases of GBP129,000 (2020 - GBP49,000) and on
sales of GBP32,000 (2020 - GBP21,000).
8. Bank Loans
During the period, the Company entered into a new five year GBP100 million multi-currency
revolving credit facility, with The Royal Bank of Scotland International Limited, with an
expiry date of 9 June 2026. This facility is in addition to the existing five year GBP25 million
multi-currency revolving credit facility, with National Australia Bank Limited, with an expiry
date of 29 June 2023 and the five year GBP36 million multi-currency revolving credit facility,
with National Australia Bank Limited, with an expiry date of 30 September 2024. As at 31 October
2021, the Company had drawings of EUR7,200,000, US$53,150,000 and GBP21,300,000 under the
GBP100 million revolving rate facility. There were no drawings under the GBP25 million or
GBP36 million facility. At 31 October 2020 the drawings were EUR1,410,900, US$18,545,250 and
GBP9,185,037 under the GBP25 million revolving credit facility and EUR1,410,900, US$18,545,250
and GBP8,314,963 under the GBP36 million revolving credit facility.
The sterling value of the bank loans at 31 October 2021 was GBP66,153,000 (31 October 2020
- GBP48,728,000).
9. Share Capital
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 year to 31 October 2021 the Company issued a total
of 50,885,000 shares on a non pre-emptive basis (nominal value of GBP509,000, representing
14.4% of the issued share capital at 31 October 2020) at a premium to net asset value (on
the basis of debt valued at book value) raising net proceeds of GBP182,227,000 (In the year
to 31 October 2020 - 51,720,000 shares with a nominal value of GBP517,000, representing 17.1%
of the issued share capital at 31 October 2019 raising net proceeds of GBP133,044,000).
The Company also has authority to buy back shares. In the year to 31 October 2021 no ordinary
shares were bought back therefore the Company's authority remains unchanged at 54,588,887
ordinary shares.
10. Analysis of
Change in Debt
================== =============== =========== ================== =======================
At 31 October At 31
2020 Cash Exchange October
GBP'000 flows movement 2021
GBP'000 GBP'000 GBP'000
================== =============== =========== ================== =======================
Cash and cash
equivalents 40,894 (4,528) (3,239) 33,127
Loans due within
one year (48,728) (19,033) 1,608 (66,153)
================== =============== =========== ================== =======================
(7,834) (23,561) (1,631) (33,026)
================== =============== =========== ================== =======================
11. Financial Information
The financial information set out above does not constitute the Company's statutory accounts
for the year ended 31 October 2021 or the year ended 31 October 2020 but is derived from
those
accounts. Statutory accounts for the period to 31 October 2020 have been delivered to the
Registrar of Companies, and those for the year to 31 October 2021 will be delivered in due
course. The auditor has reported on those accounts; the reports were (i) unqualified, (ii)
did not include a reference to any matters to which the auditor drew attention by way of
emphasis
without qualifying their report and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006.
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.
Total Assets
The total value of all assets held less all liabilities other
than liabilities in the form of borrowings.
Net Asset Value ('NAV')
Also described as shareholders' funds, net asset value is the
value of total assets less liabilities (including borrowings). Net
asset value can be calculated on the basis of borrowings stated at
book value and fair value. An explanation of each basis is provided
below. The net asset value per share is calculated by dividing this
amount by the number of ordinary shares in issue excluding any
shares held in treasury.
Net Asset Value (Borrowings at Book Value)
Borrowings are valued at their nominal book value. The value of
the borrowings at book and fair value are set out on page 67 of the
Annual Report and Financial Statements.
Net Asset Value (Borrowings at Fair Value) (APM)
Borrowings are valued at an estimate of their market value. The
value of the borrowings at book and fair value are set out on page
67 of the Annual Report and Financial Statements.
Net Asset Value (Reconciliation of NAV at Book Value to NAV at
Fair Value)
31 October 31 October
2021 2020
============================================================== ================ ===============
Net Asset Value per ordinary share (borrowings at book value) 331.03p 279.90p
Shareholders' funds (borrowings at book value) GBP1,341,355,000 GBP991,734,000
Add: book value of borrowings GBP66,153,000 GBP48,728,000
Less: fair value of borrowings (GBP66,153,000) (GBP48,728,000)
============================================================== ================ ===============
Shareholders' funds (borrowings at fair value) GBP1,341,355,000 GBP991,734,000
============================================================== ================ ===============
Number of shares in issue 405,203,695 354,318,695
============================================================== ================ ===============
Net Asset Value per ordinary share (borrowings at fair value) 331.03p 279.90p
============================================================== ================ ===============
At 31 October 2021 and 31 October 2020 all borrowings are in the
form of short term floating rate borrowings and their fair value is
considered equal to their book value, hence there is no difference
in the net asset value at book value and fair value.
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 net asset value. When the
share price is lower than the net asset value 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 net asset value per share
and is usually expressed as a percentage of the net asset value per
share. If the share price is higher than the net asset value per
share, this situation is called a premium.
31 October 31 October
2021 2020
========================== ==================== ========== ==========
Net asset value per share (a) 331.03p 279.90p
Share price (b) 319.50p 287.50p
(Discount)/premium ((b)-(a)) ÷(a) (3.5%) 2.7%
========================== ==================== ========== ==========
Total Return (APM)
The total return is the return to shareholders after reinvesting
the net dividend on the date that the share price goes
ex-dividend.
Compound Annual Return (APM)
The compound annual return converts the return over a period of
longer than one year to a constant annual rate of return applied to
the compound value at the start of each year.
Glossary of Terms and Alternative Performance Measures ('APM')
(Ctd)
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 debt at fair
value). The ongoing charges have been calculated on the basis
prescribed by the Association of Investment Companies.
Ongoing Charges Calculation
31 October 31 October
2021 2020
======================================================================= ================ ==============
Investment management fee GBP7,809,000 GBP4,579,000
Other administrative expenses GBP907,000 GBP715,000
======================================================================= ================ ==============
Total Expenses (a) GBP8,716,000 GBP5,294,000
======================================================================= ================ ==============
Average daily cum-income net asset value (with debt at fair value) (b) GBP1,324,089,000 GBP736,409,000
======================================================================= ================ ==============
Ongoing charges (a) as a percentage of (b) 0.66% 0.72%
======================================================================= ================ ==============
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.
31 October 31 October
2021 2020
========================================= ================ ===============
Borrowings (at book value) GBP66,153,000 GBP48,728,000
Less: cash and cash equivalents (GBP33,127,000) (GBP40,894,000)
Less: sales for subsequent settlement - -
Add: purchases for subsequent settlement - GBP1,173,000
========================================= ================ ===============
Adjusted borrowings (a) GBP33,026,000 GBP9,007,000
========================================= ================ ===============
Shareholders' funds (b) GBP1,341,355,000 GBP991,734,000
========================================= ================ ===============
Gearing: (a) as a percentage of (b) 2% 1%
========================================= ================ ===============
Potential gearing is the Company's borrowings expressed as a
percentage of shareholders' funds.
31 October 31 October
2021 2020
============================================= ================ ==============
Borrowings (at book value) (a) GBP66,153,000 GBP48,728,000
Shareholders' funds (b) GBP1,341,355,000 GBP991,734,000
--------------------------------------------- ---------------- --------------
Potential gearing (a) as a percentage of (b) 5% 5%
============================================= ================ ==============
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.
Glossary of Terms and Alternative Performance Measures ('APM')
(Ctd)
Active Share (APM)
Active share, a measure of how actively a portfolio is managed,
is the percentage of the portfolio that differs from its
comparative index. It is calculated by deducting from 100 the
percentage of the portfolio that overlaps with the comparative
index. An active share of 100 indicates no overlap with the index
and an active share of zero indicates a portfolio that tracks the
index.
Share Split
A share split (or stock split) is the process by which a company
divides its existing shares into multiple shares. Although the
number of shares outstanding increases, the total value of the
shares remains the same with respect to the pre-split value.
Unlisted Company
An unlisted company means a company whose shares are not
available to the general public for trading and not listed on a
stock exchange.
The Annual Report and Financial Statements will be available on
the Edinburgh Worldwide page of the Managers' website
edinburghworldwide.co.uk on or around 22 December 2021.
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on
the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
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(END) Dow Jones Newswires
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