TIDMBGUK
RNS Number : 9027U
Baillie Gifford UK Growth Fund PLC
28 November 2019
RNS Announcement
Baillie Gifford UK Growth Fund plc
Legal Entity Identifier: 549300XX386SYWX8XW22
Regulated Information Classification: Half Yearly Financial
Report
Results for the six months to 31 October 2019
3/4 Over the six month period to 31 October 2019, the Company's
net asset value per share total return decreased by 3.6% compared
to an increase in the FTSE All-Share Index total return of 0.4%.
The share price total return for the same period fell by 8.7%.
3/4 One new position was initiated in the period; Farfetch, an
online apparel retailer. There was one complete sale in the period;
Jupiter Fund Management.
3/4 The net revenue return per share was 2.51p compared to 3.14p
in the corresponding period last year. As highlighted previously,
no interim dividend will be declared as all future dividends will
be paid as a single final dividend.
3/4 The Managers remain satisfied with the operational
performance of the underlying holdings and are optimistic about the
scale of the long-term opportunities ahead for those companies.
Past performance is not a guide to future performance
Total return information is sourced from Refinitiv/Baillie
Gifford and relevant underlying index providers. See disclaimer at
end of this announcement.
Baillie Gifford UK Growth aims to achieve capital growth
predominantly from investment in UK equities with the aim of
providing a total return in excess of the FTSE All-Share Index. At
31 October 2019 the Company had total assets of GBP290.5
million.
Baillie Gifford UK Growth is managed by Baillie Gifford, an
Edinburgh based fund management group with approximately GBP207
billion under management and advice as at 27 November 2019.
Baillie Gifford UK Growth 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. 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 UK Growth at
www.bgukgrowthfund.com(++) .
Past performance is not a guide to future performance. See
disclaimer at end of this announcement.
++ 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.
27 November 2019
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co
Tel: 0131 275 2000
Mark Knight, Four Communications
Tel: 0203 697 4200 or 07803 758810
The following is the unaudited Interim Financial Report for the
six months to 31 October 2019.
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 (indication of important events during the first six months,
their impact on the Financial Statements and a description of the
principal risks and uncertainties for the remaining six months of
the year); and
c) the Interim Financial Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.8R (disclosure of related party transactions and changes
therein).
By order of the Board
Carolan Dobson
Chairman
27 November 2019
Chairman's Statement
Performance
Over the six month period to 31 October 2019, the Company's net
asset value ('NAV') per share total return (capital and income)
decreased by 3.6% compared to an increase in the FTSE All-Share
Index total return of 0.4%. The share price total return for the
same period fell by 8.7%.
While this is a somewhat disappointing short-term return, the
Board is confident in the long-term strategy being implemented on
its behalf by the managers. The Board recognises that market
conditions over this period have been particularly challenging for
the focused portfolio of good quality UK growth stocks held. The
Board maintains an active dialogue with the managers about the
composition of the portfolio and is confident that the longer-term
prospects for these portfolio companies look very exciting.
Continuation Vote
The Board is grateful for the expression of trust, in the
Company's strategy and the abilities of the managers, shown by
shareholders in voting overwhelmingly in favour of continuing the
life of the Company, for a further five-year period, at the
Company's Annual General Meeting that took place 1 August 2019.
Over 99.99% of votes cast were in favour of continuation.
Earnings and Dividends
The net revenue return per share for the six months to 31
October 2019 was 2.51p versus 3.14p for the equivalent period in
2018. No interim dividend is being declared. As highlighted in my
most recent annual Chairman's Statement, future dividends are to be
paid by way of a single final payment and will be the minimum
permissible to maintain investment trust status, reflecting our
priority which is capital growth.
Gearing
During the year, the Company replaced its Scotiabank GBP35
million revolving one-year credit facility with a GBP20 million
revolving credit facility with National Australia Bank. This new
facility contains the option to increase the amount borrowed to
GBP35 million. No borrowings were drawn in the period and this
continues to be the position.
The Board sets internal guidelines for the portfolio managers'
use of gearing which are altered from time to time but are subject
to net effective gearing not representing more than 20% of
shareholders' funds.
Discount Management
No shares were bought back in the six months to 31 October
2019.
The Company's share buy-back policy seeks to operate in the best
interests of shareholders by taking
into account the relative level of the Company's share price
discount to NAV when compared with peer group trusts, the absolute
level of discount, volatility in the level of discount and the
impact from share buy-back activity on the long-term liquidity of
the Company's issued shares.
Board Composition
As part of the Board's succession planning, Andrew Hutton
retired as a Director at the conclusion of the Company's Annual
General Meeting, held 1 August 2019, and shareholders approved the
appointment of Scott Cochrane and Ruary Neill to the Board.
Outlook
At the time of writing the macro backdrop continues to be
opaque. The UK has not left the European Union and the result of
December's General Election is far from obvious. The risks of a
disorderly Brexit remain high and continue to weigh over those
companies with material exposure to the domestic UK economy; the
portfolio does not have notable exposure to those companies most
sensitive to the UK economy and contains exceptional UK companies
which can grow over many years. Whilst the benefits of this
approach might not always be reflected in short-term shareholder
returns, the Board and Managers firmly believe it provides a
repeatable basis for adding value for long term investors.
Carolan Dobson
Chairman
27 November 2019
Past performance is not a guide to future performance.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures (APM) at the end of this announcement.
Total return information is sourced from Refinitiv/Baillie
Gifford and relevant underlying index providers. See disclaimer at
the end of this announcement.
Interim Management Report
It has been a tumultuous six months in world politics and
economics, and UK investors continue to be chiefly preoccupied with
what the denouement of the drawn-out Brexit negotiation process
will look like. Depending on the noises coming from Westminster on
any given day, the FTSE All-share swings from one direction to
another - either favouring or eschewing domestically (or
internationally) exposed equities; investor behaviour is seemingly
more influenced by short-term moves in the value of Sterling than
fully considering the specifics of the underlying constituent
companies. Against this volatile backdrop, we made very few changes
to the portfolio. We recognise that, in turbulent times, it might
feel challenging to "just" do nothing. However, we are deeply
sceptical of our ability to trade our way around unpredictable
short-term events. Instead, we remain steadfast in our belief that
our mental energies are most usefully spent in building, as well as
maintaining, our conviction in the long-term opportunities and
competitive strengths of the individual businesses we are invested
in on your behalf.
It might be tempting to argue that our inactivity has not served
shareholders well since our performance during this period lagged
the benchmark. Nobody likes underperforming, but we fundamentally
believe that to generate attractive long-term returns in excess of
the benchmark, one has to accept short-term volatility against it.
We do not pretend that we have the ability to outperform every
period in a smooth manner and we would question the wisdom of even
trying to do so.
Although at times our growth style will not be in favour, we
believe that it will generate investment success over the long
term. Not owning some well-known UK blue chips impacted relative
performance in the period but we would rather own the companies we
do as we remain convinced they have superior, multi-decade, growth
opportunities. That is why we do not react to short term market
volatility by trading out of shares that have done poorly when the
long-term company fundamentals remain intact. We do not think this
is credible or indeed rational. Reacting in such a way and locking
in losses is the real risk that we, and fellow shareholders, should
be worried about. That is why we ask to be judged over a five-year
period as we think that this time frame allows a much greater
chance of the market appreciating the strengths of the businesses
we own. A fund manager that is too concerned or pressurised about
short term performance and volatility is likely to act in strange
ways that may not be in the long-term interests of shareholders.
Patience remains our watchword and our low level of portfolio
turnover is a sign of our confidence in the portfolio. Nonetheless,
we did sell Jupiter Fund Management, our only complete sale in the
period, due to concerns over its future growth prospects.
Rather than fear short-term volatility, we often seek to turn it
to our advantage. A good recent example was our decision to add to
our holding in Abcam, the online provider of antibodies and other
research tools to life scientists across the globe, a company we
have invested in for 15 years for other portfolios. In our meeting
in September, the CEO Alan Hirzel outlined various new projects
that would potentially double the size of the business over the
next five years. Abcam is a very profitable company, generating a
lot of cash and so it has money to invest. It has also demonstrated
a disciplined approach to allocating capital in the past, so this
was exactly what we wanted to hear. The market's reaction was
somewhat different to ours. It saw a cut to short term profits, so
marked the shares down. This provided us with the opportunity to
increase our exposure to this fantastic British growth company.
Similarly, our view is that, distracted by news flow around
Brexit, trade wars and the proposed de-merger of its UK business,
the market continues to underestimate Prudential's strengths. In
particular, its open-ended growth opportunity in Asia where
penetration rates of investment and life insurance products remain
low and are likely to grow significantly faster than the underlying
economies. Here, too, we decided to take advantage of the weakness
in the shares and added to the position.
Volatility also played a part in our new holding in Farfetch,
our only new purchase in the period. Although currently loss
making, this is the largest and fastest growing online platform for
luxury goods globally. It connects consumers in 190 countries with
3000 luxury brands and sellers (high end boutiques). Unlike other
online fashion companies, it is not a digital wholesaler. This
means it does not buy any inventory but connects in real time (and
to varying degrees) to the stock systems of its sellers. This
enables it to offer an unrivalled assortment of current luxury
fashion which is an important attraction for its global customer
base.
Shortly after we started buying the shares, the company released
interim results which were taken badly by the market. The main
disappointment was reduced growth guidance due to an unwillingness
to match the irrational promotional activities of competitors. We
think this slight sacrifice in the pace of rapid market share gains
is sensible in exchange for the fostering of good relationships
with luxury brands which are increasingly turning their backs on
traditional third-party distribution. The company also made an
acquisition which spooked the market as it likely sees it as
introducing a new layer of complexity to the business. We see it as
a bold, but potentially very rewarding, move over the
longer-term.
There are various risks to the Farfetch investment case and we
have only taken a small holding to reflect these. However, we like
the large, global, growth opportunity ahead of the company and
remain impressed with the scale of its ambition as well as the
calibre of its management team. Rather than kicking ourselves at
the seemingly unfortunate short-term timing of our initial
purchase, we took advantage of the share price weakness to continue
buying more.
Having flagged the merits, it would be wrong to argue that
volatility is always the friend of the long-term investor and that
share price weakness invariably presents an opportunity. The risk
we are preoccupied with above all else is that of the permanent
loss of capital. Whilst we will patiently tolerate the short-term
bumps along the road, provided we assess that the long-term
investment case still stacks up, we readily admit that such
assessments will sometimes be wrong. We will make mistakes. In that
context, we would acknowledge that our investment in Ted Baker has
proven disappointing. Shareholders might remember that we reduced
our holding meaningfully in the beginning of the year after the
company's founder left following a series of unproven allegations.
We were wary as to the longer-term impact his departure might have
on the development of the business. Unfortunately, trading has
deteriorated significantly since then. We have come to the view
that the combination of stiff industry headwinds and internal
disruption now make it unlikely that the business will adapt as
successfully as we had hoped over the next five years.
Even more than usual, it feels like we live in interesting and
uncertain times - times of technological, societal, political and
economic disruption. Rather than despair, however, we think this
presents an exciting backdrop for bottom-up growth investors such
as ourselves. The pace of change in many industries is quickening
and this will likely increase the divergence between those
companies which adapt and thrive and those which fall by the
wayside. In this volatile and news-driven environment, more than
ever, our chances of picking the winners will be greatly aided by
cultivating the resilience to remain patient and resolutely focused
on understanding long-term, structural changes. If we are
successful, superior investment returns will follow.
Baillie Gifford & Co
Managers & Secretaries
27 November 2019
List of Investments as at 31 October 2019 (unaudited)
=====================================================
Value % of
Name Business GBP'000 Total Assets
================================= ========================================================== ======== =============
Basic Materials
Rio Tinto Metals and mining company 7,369 2.5
Victrex Speciality high-performance chemicals manufacturer 5,097 1.8
======== =============
12,466 4.3
======== =============
Consumer Goods
Diageo International drinks company 9,002 3.1
Burberry Luxury goods retailer 8,167 2.8
Ted Baker Fashion retailer 1,231 0.4
======== =============
18,400 6.3
======== =============
Consumer Services
Auto Trader Group Advertising portal for second hand cars in the UK 11,385 3.9
Rightmove UK's leading online property portal 9,726 3.4
RELX Professional publications and information provider 8,867 3.1
Operator of online and mobile market place for takeaway
Just Eat food 8,143 2.8
Boohoo.com Online fashion retailer 7,929 2.7
Inchcape Car wholesaler and retailer 6,319 2.2
Carnival World's largest cruise ship operator 5,486 1.9
Mitchells & Butlers Pub and restaurant operator 5,057 1.7
Euromoney Institutional Investor Specialist publisher 4,475 1.5
Farfetch Online fashion retailer 1,344 0.5
68,731 23.7
======== =============
Financials
St. James's Place UK wealth manager 11,156 3.8
Hargreaves Lansdown UK retail investment platform 11,031 3.8
Prudential International life insurer 10,268 3.5
Legal & General Insurance and investment management company 8,553 3.0
Helical Property developer 7,105 2.5
Hiscox Property and casualty insurance 6,003 2.1
Just Group Provider of retirement income products and services 4,757 1.6
IntegraFin Provides platform services to financial clients 4,697 1.6
IG Group Spread betting website 2,733 0.9
Draper Esprit Technology focused venture capital firm 2,630 0.9
AJ Bell Investment platform 2,626 0.9
M&G Prudential Investment management company 1,627 0.6
73,186 25.2
======== =============
Name Business Value % of
GBP'000 Total Assets
==================== =============================================================== ======== =============
Health Care
Abcam Online platform selling antibodies to life science researchers 9,890 3.4
Genus World leading animal genetics company 9,238 3.2
======== =============
19,128 6.6
======== =============
Industrials
Renishaw World leading metrology company 9,855 3.4
HomeServe Domestic insurance 9,359 3.2
Halma Specialist engineer 8,743 3.0
Howden Joinery Manufacturer and distributor of kitchens to trade customers 8,305 2.9
Ultra Electronics Aerospace and defence company 7,489 2.6
Bunzl Distributor of consumable products 7,284 2.5
Volution Group Supplier of ventilation products 6,396 2.2
Ashtead Construction equipment rental company 6,355 2.2
Bodycote Heat treatment and materials testing 4,944 1.7
PageGroup Recruitment consultancy 4,860 1.7
Rolls-Royce Power systems manufacturer 4,632 1.6
Specialist service provider to the global marine and energy
James Fisher & Sons industries 3,264 1.1
======== =============
81,486 28.1
======== =============
Technology
First Derivatives IT consultant and software developer 5,769 2.0
Provider of professional services focusing on information
FDM Group technology 5,660 1.9
======== =============
11,429 3.9
======== =============
Total Equities 284,826 98.1
Net Liquid Assets 5,644 1.9
Total Assets 290,470 100.0
===================================================================================== ======== =============
Stocks highlighted in bold are the 20 largest holdings.
Income Statement (unaudited)
For the six months ended For the six months ended For the year ended
31 October 2019 31 October 2018 30 April 2019
(audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ======== ======== ======== ======== ======== ======== ======== ========= ========
Losses on investments - (14,054) (14,054) - (36,074) (36,074) - (6,850) (6,850)
Currency losses - (9) (9) - - - - - -
Income from investments and
interest receivable 4,243 - 4,243 5,291 - 5,291 8,658 - 8,658
Investment management fee
(note 3) (221) (515) (736) (94) (220) (314) (239) (556) (795)
Other administrative
expenses (239) - (239) (461) - (461) (689) - (689)
=========================== ======== ======== ======== ======== ======== ======== ======== ========= ========
Net return before finance
costs and taxation 3,783 (14,578) (10,795) 4,736 (36,294) (31,558) 7,730 (7,406) 324
Finance costs of borrowings (9) (21) (30) (11) (26) (37) (20) (47) (67)
=========================== ======== ======== ======== ======== ======== ======== ======== ========= ========
Net return on ordinary
activities before taxation 3,774 (14,599) (10,825) 4,725 (36,320) (31,595) 7,710 (7,453) 257
Tax on ordinary activities - - - - - - - - -
=========================== ======== ======== ======== ======== ======== ======== ======== ========= ========
Net return on ordinary
activities after taxation 3,774 (14,599) (10,825) 4,725 (36,320) (31,595) 7,710 (7,453) 257
=========================== ======== ======== ======== ======== ======== ======== ======== ========= ========
Net return per ordinary
share (note 4) 2.51p (9.70p) (7.19p) 3.14p (24.13p) (20.99p) 5.12p (4.95p) 0.17p
=========================== ======== ======== ======== ======== ======== ======== ======== ========= ========
Note:
Dividends paid and payable
per share (note 5) - 1.50p 4.45p
=========================== ======== ======== ======== ======== ======== ======== ======== ========= ========
The total column of this statement is 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 the above statement derive from
continuing operations.
A Statement of Comprehensive Income is not required as all gains
and losses of the Company have been reflected in the above
statement.
The accompanying notes at the end of this document are an
integral part of the Financial Statements.
Balance Sheet (unaudited)
At 31 October 2019 At 30 April 2019
(audited)
GBP'000 GBP'000
Fixed assets
Investments held at fair value through profit or loss
(note 6) 284,826 300,207
====================================================== ================== ================
Current assets
Debtors 225 1,487
Cash and deposits 5,842 4,488
====================================================== ================== ================
6,067 5,975
====================================================== ================== ================
Creditors
Amounts falling due within one year (423) (447)
Net current assets 5,644 5,528
====================================================== ================== ================
Net assets 290,470 305,735
====================================================== ================== ================
Capital and reserves
Share capital 40,229 40,229
Share premium account 9,875 9,875
Capital redemption reserve 19,759 19,759
Warrant exercise reserve 417 417
Share purchase reserve 60,433 60,433
Capital reserve 149,406 164,005
Revenue reserve 10,351 11,017
====================================================== ================== ================
Shareholders' funds 290,470 305,735
====================================================== ================== ================
Net asset value per ordinary share* 193.0p 203.1p
====================================================== ================== ================
Ordinary shares in issue (note 7) 150,520,484 150,520,484
====================================================== ================== ================
*See Glossary of Terms and Alternative Performance Measures at
the end of this announcement.
The accompanying notes at the end of this document are an
integral part of the Financial Statements.
Statement of Changes in Equity (unaudited)
For the six months ended 31 October 2019
Share Capital Warrant Share
Share premium redemption exercise purchase Capital Revenue Shareholders'
capital account reserve reserve reserve reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============== ========= ============ =========== =========== ============ ============ ======== =============
Shareholders'
funds at 1
May 2019 40,229 9,875 19,759 417 60,433 164,005 11,017 305,735
Net return on
ordinary
activities
after
taxation - - - - - (14,599) 3,774 (10,825)
Dividends paid
(note 5) - - - - - - (4,440) (4,440)
============== ========= ============ =========== =========== ============ ============ ======== =============
Shareholders'
funds at 31
October 2019 40,229 9,875 19,759 417 60,433 149,406 10,351 290,470
============== ========= ============ =========== =========== ============ ============ ======== =============
For the six months ended 31 October 2018
Share Capital Warrant Share
Share premium redemption exercise purchase Capital Revenue Shareholders'
capital account reserve reserve reserve reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============== ========= ============ =========== =========== ============ ============ ======== =============
Shareholders'
funds at 1
May 2018 40,229 9,875 19,759 417 60,433 171,458 10,081 312,252
Net return on
ordinary
activities
after
taxation - - - - - (36,320) 4,725 (31,595)
Dividends paid
(note 5) - - - - - - (4,516) (4,516)
============== ========= ============ =========== =========== ============ ============ ======== =============
Shareholders'
funds at 31
October 2018 40,229 9,875 19,759 417 60,433 135,138 10,290 276,141
============== ========= ============ =========== =========== ============ ============ ======== =============
*The Capital Reserve balance at 31 October 2019 includes
investment holding losses of GBP18,589,000 (31 October 2018 -
losses of GBP34,477,000)
The accompanying notes at the end of this document are an
integral part of the Financial Statements.
Condensed Cash Flow Statement (unaudited)
=========================================
Six months to Six months to
31 October 31 October
2019 2018
GBP'000 GBP'000
================================================== ============= =============
Cash flows from operating activities
Net return on ordinary activities before taxation (10,825) (31,595)
Net losses on investments 14,054 36,074
Currency losses 9 -
Finance costs of borrowings 30 37
Changes in debtors and creditors 1,237 1,101
================================================== ============= =============
Cash from operations 4,505 5,617
Interest paid (29) (41)
================================================== ============= =============
Net cash inflow from operating activities 4,476 5,576
-------------------------------------------------- ------------- -------------
Cash flows from investing activities
Acquisitions of investments (5,204) (295,251)
Disposals of investments 6,531 307,949
Net cash inflow from investing activities 1,327 12,698
================================================== ============= =============
Cash flows from financing activities
Bank loan repaid - (12,000)
Equity dividends paid (4,440) (4,516)
Net cash outflow from financing activities (4,440) (16,516)
================================================== ============= =============
Increase in cash and cash equivalents 1,363 1,758
Exchange movements (9) -
Cash and cash equivalents at start of year 4,488 3,642
================================================== ============= =============
Cash and cash equivalents at end of year* 5,842 5,400
================================================== ============= =============
* Cash and cash equivalents represent cash at bank and short
term money market deposits repayable on demand.
The accompanying notes at the end of this document are an
integral part of the Financial Statements.
Notes to the condensed financial statements (unaudited)
1. The condensed Financial Statements for the six months to 31 October 2019 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 and updated in October 2019 with consequential amendments and have
not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance
'Review of Interim Financial Information'. The Financial Statements for the six months to
31 October 2019 have been prepared on the basis of the same accounting policies as set out
in the Company's Annual Report and Financial Statements at 30 April 2019.
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, its assets and
liabilities and projected income and expenditure, together with 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 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. There are currently no drawings under
the National Australia Bank one year GBP20m revolver facility put in place in July 2019. In
accordance with the Company's Articles of Association, shareholders have a right to vote on
the continuation of the Company every 5 years, the next vote being in 2024. 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. The financial information contained within this Interim Financial Report does not constitute
statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial
information for the year ended 30 April 2019 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 their report, and did not contain a statement under
sections 498(2) or (3) of the Companies Act 2006.
3. Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been
appointed by the Company as its Alternative Investment Fund Manager (AIFM) and Company Secretary.
The investment management function has been delegated to Baillie Gifford & Co. The management
agreement can be terminated on six months' notice. The annual fee is 0.5% of net asset value,
calculated on a quarterly basis. Baillie Gifford & Co Limited was appointed AIFM and Company
Secretary on 29 June 2018 and for the year to 30 April 2019 agreed to waive its management
fee to the extent of GBP732,000 (approximately equal to six months management fee payable
to Baillie Gifford).
=======================================================================================================
4. Net return per ordinary share Six months to Six months to
31 October 2019 31 October 2018
GBP'000 GBP'000
============================================================== =================== ==================
Revenue return on ordinary activities after taxation 3,774 4,725
Capital return on ordinary activities after taxation (14,599) (36,320)
================================================================== =================== ==================
Total net return (10,825) (31,595)
================================================================== =================== ==================
Weighted average number of ordinary shares in issue 150,520,484 150,520,484
================================================================== =================== ==================
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 Six months to Six months to
31 October 2019 31 October 2018
GBP'000 GBP'000
========================================================================= ================= ================
Amounts recognised as distributions in the period:
Previous year's final dividend of 2.95p (2018 - 3.00p), paid 6 August 2019 4,440 4,516
4,440 4,516
============================================================================== ================= ================
Amounts paid and payable in respect of the period:
Interim dividend (2019 - 1.50p) - 2,258
============================================================================== ================= ================
- 2,258
------------------------------------------------------------------------------ ----------------- ----------------
No interim dividend has been declared in respect of the current period.
6. Fair Value Hierarchy
The fair value hierarchy used to analyse the basis on which the fair values of financial instruments
held at fair value through the profit or loss account are measured is described below. Fair
value measurements are categorised on the basis of the lowest level input that is significant
to the fair value measurement.
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 fair value of listed investments is bid price. The financial assets designated as valued
at fair value through profit or loss are all categorised as Level 1 in the above hierarchy.
All of the Company's investments fall into Level 1 for the periods reported.
7. At 31 October 2019, the Company had the authority to buy back 22,563,020 ordinary shares and
to issue/sell from treasury 15,052,048 ordinary shares without application of pre-emption
rights in accordance with the authorities granted at the AGM in August 2019. During the six
months to 31 October 2019, no shares were bought back into treasury
(30 April 2019 - nil) and no shares were issued/sold from treasury (30 April 2019 - nil).
8. During the period, transaction costs on equity purchases amounted to GBP3,000 (31 October
2018 - GBP1,430,000) and on equity sales GBP3,000 (31 October 2018 - GBP83,000).
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 have been no changes in the related party transactions
described in the last Annual Report and Financial Statements that could have had such an effect
on the Company during that period.
None of the views expressed in this document should be construed as advice to buy or sell
a particular investment.
----------------
10. Glossary of Terms and Alternative Performance Measures (APM)
Total Assets
Total assets less current liabilities, before deduction of all borrowings.
Net Asset Value
Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings).
The NAV per share is
calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury
shares).
Net Liquid Assets
Net liquid assets comprise current assets less current liabilities, excluding borrowings.
Discount/Premium (APM)
As stockmarkets and share prices vary, an investment trust's share price is rarely the same
as its NAV. When the share price is lower than the NAV per share it is said to be trading
at a discount. The size of the discount is calculated by subtracting the share price from
the NAV per share and is usually expressed as a percentage of the NAV per share. If the share
price is higher than the NAV per share, it is said to be trading at a premium.
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.
31 October 31 October 30 April 2019 30 April
2019 2019 NAV 2019 Share
NAV Share price
price
------------- -------------- ------------- ------------- ------------- ------------
Closing NAV
per
share/share
price (a) 193.0p 172.5p 203.1p 192.0p
Dividend
adjustment
factor* (b) 1.0145 1.0162 1.0236 1.0255
Adjusted
closing NAV
per
share/share
price (c = a x b) 195.8p 175.3p 207.9p 196.9p
Opening NAV
per
share/share
price (d) 203.1p 192.0p 207.5p 187.5p
------------- -------------- ------------- ------------- ------------- ------------
(c ÷ d) -
Total Return 1 (3.6%) (8.7%) 0.2% 5.0%
------------- -------------- ------------- ------------- ------------- ------------
* The dividend adjustment factor is calculated on the assumption that the dividends of 2.95p
(2019 - 4.50p) paid by the Company during the year were reinvested into shares of the Company
at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.
Ongoing Charges (APM)
The total expenses (excluding borrowing costs) incurred by the Company as a percentage of
the average net asset value. The ongoing charges have been calculated on the basis prescribed
by The Association of Investment Companies.
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.
Equity gearing is the Company's borrowings adjusted for cash and cash equivalents expressed
as a percentage of shareholders' funds.
Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.
The Company currently has no borrowings drawn down.
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers (AIFM) Directive, 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, 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.
11. The Interim Financial Report will be available on the Company's page on the Managers' website
www.bgukgrowthfund.com++ on or around 13 December 2019.
Principal Risks and Uncertainties
The principal risks facing the Company are financial risk,
investment strategy risk, discount risk, regulatory risk, custody
and depositary risk, operational risk, leverage risk and political
risk. 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 to 30 April 2019 which is available on the
Company's website: www.bgukgrowthfund.com++. The principal risks
and uncertainties have not changed since the date of that
report.
++ 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.
Automatic Exchange of Information
In order to fulfil its obligations under UK tax legislation
relating to the automatic exchange of information, the Company is
required to collect and report certain information about certain
shareholders.
The legislation requires investment trust companies to provide
personal information to HMRC on certain investors who purchase
shares in investment trusts. Accordingly, the Company will have to
provide information annually to the local tax authority on the tax
residencies of a number of non-UK based certificated shareholders
and corporate entities.
New shareholders, excluding those whose shares are held in
CREST, who come on to the share register will be sent a
certification form for the purposes of collecting this
information.
For further information, please see HMRC's Quick Guide:
Automatic Exchange of Information - information for account holders
http://www.gov.uk/government/publications/exchange-of-information-account-holders.
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END
IR LLFVRLFLDFIA
(END) Dow Jones Newswires
November 28, 2019 02:00 ET (07:00 GMT)
Baillie Gifford Uk Growth (LSE:BGUK)
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