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Scot.Mort Inv Tst (SMT)

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Friday 06 November, 2020

Scot.Mort Inv Tst

Half-year Report

RNS Number : 4479E
Scottish Mortgage Inv Tst PLC
06 November 2020
 

RNS Announcement

 

 

 

Scottish Mortgage Investment Trust PLC

 

 

 

Legal Entity Identifier: 213800G37DCS3Q9IJM38

 

 

 

Results for the six months to 30 September 2020

 

The following is the unaudited Interim Financial Report for the six months to 30 September 2020 which was approved by the Board on 5 November 2020.

 

 

Interim management report

 

           

 

Over the long run, stock market returns are driven by a small number of exceptional companies. The progress of such companies is rarely smooth or linear. They have breakthroughs and they have setbacks. Sentiment in the market exaggerates the peaks and troughs, driving price volatility that is commonly mistaken for risk. When we believe we have identified an exceptional company that is pursuing a large opportunity, we look beyond this cycle of feast and famine. With a longer timeframe, such oscillations matter less and the picture of compounding growth becomes clearer. Many, if not most, investments won't turn out as we hope. However, for the companies that do succeed, the returns are transformational and they have a disproportionate impact on the portfolio. This is why we approach our task with optimism. It is more important to identify the factors that will allow a company to prosper than to enumerate the potential pitfalls along the way. This approach has driven our long-run returns. Over five years Scottish Mortgage's net asset value per share with debt at fair value (NAV) has increased by 340% versus a 96% increase in the FTSE All-World index (both in total return terms). Over 10 years it has increased by 674% against 191%. Six months of data is too short a period to infer much that is useful from stock prices. Since the end of March our NAV rose by 76% compared to a 24% increase in the index.

Whilst our focus is on the generation of long-term increases in capital values, we recognise that a small but consistent dividend is of value to many investors. The Board is therefore recommending an interim dividend of 1.45p, a modest increase to the previous year.

Looking at the recent period, we must avoid the temptation to match outcomes with easy or obvious explanations. The global pandemic has, for sure, had big short-term impacts but a company's stock price incorporates an estimate of all future cashflows and is not simply a measure of relative success at this unusual time. The oddities of the pandemic will fade, some long-running shifts in our economy will have been accelerated and the stresses we have experienced will spark new waves of innovation. More importantly for your portfolio, several holdings have made considerable progress and we have greater clarity on both the size of opportunity and the companies' ability to execute.

The increase in Tesla's stock price and its dramatic impact on the Trust's returns should be seen in context. Whilst the company and its colourful founder attract an unusually high degree of attention, emotion and noise, the underlying return picture is far from an aberration. Returns are concentrated in a handful of big winners. With far less drama, this has been the case for our holdings in both Amazon and Tencent over the past decade. Tesla's success has been earned over a period of ownership extending back to 2013 and, as with most successful investments, we have endured large drawdowns in its stock price on the way to the current position.

Tesla has made significant operational progress. It has successfully added capacity and the production ramp of its latest model has progressed far more smoothly than for any of its previous vehicles. Demand for its products is strong and the response from its traditional competitors remains muted. It is still our largest holding even though we sold over 40% of our shares during the period (raising £1.18bn) to ensure that the portfolio has an appropriate level of diversification.

This picture of strong execution and greater clarity on the investment case is shared by a number of the portfolio's other significant winners. Wayfair, the furniture retailer, has benefited from a surge in demand as people have spent more time at home and invested in upgrading their living environment. Whilst this may be a temporary, Covid-related phenomenon, the company has also moved decisively into profitability after an extended investment phase. The long-term profitability of Wayfair's business model has been hotly debated and the demonstration of a clear ability to make money is much more important for the company's value than a temporary spike in demand.

Food delivery companies Meituan and Delivery Hero have also answered important questions about their future. The former has grown beyond its nearest rival to become the dominant food delivery company in China. The impact of Covid has been to drive up demand for its other delivery services such as grocery and general merchandise. The addressable market in meal delivery is many times larger than Meituan's business today and we now must also factor in the possibility of success in these other categories. Delivery Hero has restructured the geography of its business and now dominates many of the world's most attractive growth markets. Local scale is an important determinant of success and is also allowing Delivery Hero to expand from delivering meals into other delivery services.

The examples of Wayfair, Delivery Hero and Meituan serve to illustrate the growing number of opportunities we have to invest in digital businesses of scale beyond the giant western platforms. This becomes more important as our views on the platform companies are less differentiated than was once the case. In the period, we sold the remaining holding in Facebook and made the first reduction to our Amazon holding that was not driven by diversification concerns. Whilst we have huge respect for Amazon's vision and ability to execute, its starting capitalisation of over $1.5 trillion makes the path to large future returns more challenging.

The era of electrification that Tesla is helping to materialise will take decades to arrive and have far-reaching consequences. Technological progress is driving down costs along an exponential curve that the fossil fuel industry will be unable to match. It is challenging to predict the impact of such change on the complex system that is the global economy. We eschew prediction and prefer to partner with the entrepreneurs that are driving change. Encouragingly we are seeing more opportunities. Chinese electric vehicle producer, Nio, has endured difficult trading conditions since its IPO in late 2018 but its business is back on track and its balance sheet has been strengthened by continued investment from its founder and through local government support. In the period we invested in Northvolt, a company which will be critical to the creation of European battery manufacturing capacity. Its access to cheap hydroelectric power in Swedish Lapland should give it a cost advantage as the industry grows rapidly. We also made a commitment to ChargePoint, one of the world's largest electric vehicle-charging networks.

 

Outlook

A clear lesson from this year's events is that we should treat confident pronouncements about the future with scepticism. Rather than engage in such speculation, we prefer to back the companies building the future of our economy with the capital and patience they require. Such opportunities remain plentiful.

 

 

The principal risks and uncertainties facing the Company are set out at the end of this document.

 

5 November 2020

 

Past performance is not a guide to future performance.

Total return information sourced from Refinitiv/StatPro/Baillie Gifford.

See disclaimer at end of this document.

 

 

Responsibility statement

 

We confirm that to the best of our knowledge:

a)  the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';

b)  the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (indication of important events during the first six months, their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the year); and

c)  the Interim Financial Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

 

By order of the Board

Fiona McBain

Chair

5 November 2020

 

 

Income statement (unaudited)

 

 

For the six months ended

 30 September 2020

For the six months ended

 30 September 2019

 

 

 

 

 

 

 

 

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

 

Gains on investments

6,376,063 

6,376,063 

289,983 

289,983 

Currency gains/(losses)

6,895 

6,895 

(10,394)

(10,394)

Income from investments and interest receivable

10,659 

10,659 

18,860 

18,860 

Investment management fee (note 3)

(18,727)

(18,727)

(11,613)

(11,613)

Other administrative expenses

(3,279)

(3,279)

(1,926)

(1,926)

Net return before finance costs and taxation

7,380 

6,364,231 

6,371,611 

16,934 

267,976 

284,910 

Finance costs of borrowings

(15,764)

(15,764)

(15,741)

(15,741)

Net return on ordinary activities before taxation

7,380 

6,348,467 

6,355,847 

16,934 

252,235 

269,169 

Tax on ordinary activities

(387)

(387)

(622)

(622)

Net return on ordinary activities after taxation

6,993 

6,348,467 

6,355,460  

16,312 

252,235 

268,547 

Net return per ordinary share (note 4)

0.48p

433.36p

433.84p

1.10p

17.01p

18.11p

Dividends proposed per ordinary share (note 5)

1.45p

 

 

1.39p

 

 

 

 

The accompanying notes on the following pages are an integral part of the Financial Statements.

The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

 

Balance sheet (unaudited)

 

 

At 30 September 2020

 

£'000

At 31 March 2020

(audited)

£'000

Fixed assets

 

 

15,436,406 

9,079,650 

Current assets

 

 

Debtors

769 

48,420

77,956 

38,526 

78,725 

86,946 

Creditors

 

 

Amounts falling due within one year:

 

 

Bank loans (note 7)

(282,333)

(294,367)

Debenture stock (note 7)

(20,161)

(24,632)

(15,187)

(306,965)

(329,715)

(228,240)

(242,769)

15,208,166 

8,836,881 

Creditors

 

 

Amounts falling due after more than one year:

 

 

Loan notes (note 7)

(485,096)

(464,112)

(127,999)

(128,135)

(613,095)

(592,247)

14,595,071 

8,244,634 

Capital and reserves

 

 

Share capital

74,239 

74,239 

Share premium account

822,934 

764,521 

Capital redemption reserve

19,094 

19,094 

Capital reserve

13,671,811 

7,363,915 

6,993 

22,865 

14,595,071 

8,244,634 

999.8p

567.3p

1,459,765,760 

1,453,259,808 

See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

The accompanying notes on the following pages are an integral part of the Financial Statements.

 

 

Statement of Changes in Equity (unaudited)

 

For the six months ended 30 September 2020

 

Called up share
capital

£'000

Share premium account

£'000

Capital redemption reserve

£'000

Capital

reserve*

£'000

Revenue reserve

£'000

Shareholders'
funds

£'000

Shareholders' funds at 1 April 2020

74,239

764,521

19,094

7,363,915 

22,865 

8,244,634 

Net return on ordinary activities after taxation

 

-

 

-

 

-

 

6,348,467 

 

6,993 

 

6,355,460 

Shares bought back

-

-

-

(164,564)

(164,564)

Shares sold from treasury (note 9)

-

58,413

-

128,434 

186,847 

Dividends paid during the period (note 5)

-

-

-

(4,441)

(22,865)

(27,306)

Shareholders' funds at 30 September 2020

74,239

822,934

19,094

13,671,811 

6,993 

14,595,071 

 

 

For the six months ended 30 September 2019

 

Called up share
capital

£'000

Share premium account

£'000

Capital redemption reserve

£'000

Capital

reserve*

£'000

Revenue reserve

£'000

Shareholders'
funds

£'000

Shareholders' funds at 1 April 2019

73,713

710,569

19,094

6,602,885 

23,669 

7,429,930 

Net return on ordinary activities after taxation

-

-

-

252,235 

16,312 

268,547 

Shares issued (note 9)

526

53,952

-

54,478 

Dividends paid during the period (note 5)

-

-

-

(2,128)

(23,669)

(25,797)

Shareholders' funds at 30 September 2019

74,239

764,521

19,094

6,852,992 

16,312 

7,727,158 

 

* The Capital Reserve balance at 30 September 2020 includes investment holding gains on fixed asset investments of £9,878,399,000 (30 September 2019 - gains of £4,129,108,000).

 

The accompanying notes on the following pages are an integral part of the Financial Statements.

 

Cash flow statement (unaudited)

 

 

Six months to

 30 September 2020

 

£'000

Six months to

 30 September 2019

 

£'000

Cash flows from operating activities

 

 

Net return on ordinary activities before taxation

6,355,847 

269,169 

Gains on investments

(6,376,063)

(289,983)

Currency (gains)/losses

(6,895)

10,394 

Finance costs of borrowings

15,764 

15,741 

Overseas withholding tax refunded

145 

Overseas withholding tax incurred

(387)

(767)

Changes in debtors and creditors

10,634 

(748)

Cash from operations

(1,100)

3,951 

Interest paid

(16,477)

(16,053)

Net cash outflow from operating activities

(17,577)

(12,102)

Net cash inflow from investing activities

66,171 

98,419 

Equity dividends paid (note 5)

(27,306)

(25,797)

Shares bought back into treasury and stamp duty thereon

(164,534)

Shares sold from treasury

186,847 

Shares issued

54,478 

Bank loans repaid

(20,000)

Bank loans drawn down and loan notes issued (note 7)

19,972 

Net cash (outflow)/inflow from financing activities

(5,021)

28,681 

Increase in cash and cash equivalents

43,573 

114,998 

Exchange movements

(4,143)

5,688 

Cash and cash equivalents at start of period

38,526 

35,587 

Cash and cash equivalents at end of period

77,956 

156,273 

 

Cash and cash equivalents represent cash at bank and short term money market deposits repayable on demand.

 

The accompanying notes are an integral part of the Financial Statements.

 

Holding period of investments as at 30 September 2020

 

 

More than 5 years

 

 

2-5 years

 

Less than 2 years

Name

% of total assets

 

Name

% of total assets

 

Name

% of total assets

Tesla Inc

 12.0

 

Meituan Dianping p

 3.6

 

Zoom

 1.6

Amazon.com 10

 7.9

 

Delivery Hero

 2.7

 

Wayfair

 1.5

Alibaba Group p

 6.1

 

NIO p

 2.4

 

MercadoLibre

 1.2

Tencent Holdings 10

 5.5

 

NVIDIA

 2.3

 

Stripe U

 0.8

Illumina

 4.4

 

Ant International U

 1.8

 

Space Exploration

  Technologies  U

0.8

ASML

 3.9

 

Shopify

 1.3

 

Kering 10

 2.8

 

HelloFresh p

 1.3

 

Carvana

 0.7

Netflix

 2.3

 

Tempus Labs Inc U

 1.1

 

Northvolt U

 0.7

Spotify Technology SA p

 2.0

 

Ginkgo BioWorks U

 1.0

 

KE Holdings

 0.6

Zalando

 1.9

 

Denali Therapeutics p

 0.9

 

Snowflake p

 0.6

Ferrari

 1.8

 

TransferWise U

 0.9

 

Ocado

 0.5

Alphabet 10

 1.1

 

Grail U

 0.8

 

Bytedance U

 0.4

You & Mr Jones

 1.1

 

Pinduoduo

 0.8

 

Recursion Pharmaceuticals U

 0.4

Inditex 10

 1.0

 

Tanium U

 0.6

 

Affirm U

 0.4

Workday

 0.9

 

Vir Biotechnology p

 0.6

Jiangxiaobai U

 0.3

Kinnevik

 0.9 

 

Anaplan p

 0.6

 

Sana Biotechnology U

 0.3

Intuitive Surgical 10

0.9

 

Zipline U

 0.5

 

Epic Games U

 0.3

Atlas Copco 10

 0.8

 

Indigo Agriculture U

 0.4

 

Away Inc (JRSK) U

 0.2

Trip.com 10

 0.6

 

CureVac p

 0.4

 

Lilium U

 0.2

Housing Development

 Finance Corporation 10

 

 0.5

 

Carbon U

0.4

 

Zymergen U

 0.2

HeartFlow U

0.3

Convoy U

0.2

JAND Inc (Warby

 Parker)  

 0.3

 

The Production Board U

 0.2

 

Aurora U

0.1

AUTO1 U

 0.2

 

Joby Aero U

0.1

Essence Healthcare

 0.3

 

Bolt Threads U

 0.2

 

ARCH Ventures Fund X  

  Overage U

<0.1 

Rocket Internet

0.3

 

Lyft p

0.2

 

Palantir Technologies p

0.3

 

Full Truck Alliance U

0.2

 

ARCH Ventures Fund X U

<0.1

Alnylam

Pharmaceuticals

0.2

 

 

Clover Health U

 0.2

 

 

 

Uptake Technologies U

0.2

 

 

 

Thumbtack

0.2

 

Slack Technologies p

 0.1

 

 

 

Bluebird Bio Inc

 0.2

 

ARCH Ventures Fund IX U

 0.1

 

 

 

Innovation Works

 Development Fund 10 U

 

 0.1

 

Eventbrite p

 0.1

 

Rubius Therapeutics p

 0.1

 

Airbnb

 0.1

 

KSQ Therapeutics U

 0.1

 

 

 

ZocDoc

 0.1

 

Udacity U

 0.1

 

WI Harper Fund VIII

 0.1

 

Orchard Therapeutics p

 0.1

 

Sinovation Fund III

 0.1

 

UNITY Biotechnology p

 0.1

 

 

 

WI Harper Fund VII

 <0.1 

 

Intarcia Therapeutics U

 

 

 

Global AI Opportunities

 Fund

 

 <0.1 

 

 

 

 

 

 

Total

60.7

 

Total

26.9

 

Total

12.1

U   Denotes unlisted (private company) security.

Denotes listed security previously held in the portfolio as an unlisted (private company) security .

10   Denotes security held for more than 10 years.

Net liquid assets represent 0.3% of total assets. See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

 

List of investments at 30 September 2020 (unaudited)

 

Name

Business

Fair value

30 September 2020

£'000

%

of total assets

Contribution to absolute performance*

%

Notes

Fair value

31 March

2020

£'000

Tesla Inc

Electric cars, autonomous driving

 and solar energy

1,853,704

12.0

24.8

Significant

reduction

790,650

Amazon.com

Online retailer and cloud

 computing

1,218,015

7.9

6.8

 

849,809

Alibaba Group p

Online retailing and financial

 services

943,313

6.1

2.8

 

595,818

Tencent Holdings

Internet services

844,726

5.5

2.5

 

596,292

Illumina

Biotechnology equipment

679,102

4.4

1.8

 

565,677

ASML

Lithography

598,446

3.9

1.8

Significant

addition

347,067

Meituan Dianping p

Local services aggregator

558,908

3.6

3.9

 

225,547

Kering

Luxury goods producer and

 retailer

433,966

2.8

0.5

Significant

addition

286,032

Delivery Hero

Online food delivery service

412,131

2.7

1.8

 

278,012

NIO Inc p

Designs and manufactures

 electric and autonomous vehicles

368,279

2.4

3.0

 

50,171

NVIDIA

Visual computing

362,062

2.3

2.0

 

184,024

Netflix

Subscription service for TV shows

   and movies

358,977

2.3

1.2

 

281,127

Spotify Technology SA p

Online music streaming service

310,297

2.0

2.2

 

161,695

Zalando

International online clothing retailer

295,998

1.9

1.6

Significant

addition

87,796

Ant International

  Limited Class C Ord.

Online financial services platform

286,449

1.8

0.8

 

209,168

Ferrari

Luxury automobiles

284,611

1.8

0.4

 

250,807

Zoom

Remote conferencing service 

  provider

254,319

1.6

1.6

 

82,451

Wayfair

Online household goods retailer

235,897

1.5

2.8

 

45,049

Shopify

Cloud-based commerce platform

 provider

206,039

1.3

1.8

 

87,895

HelloFresh p

Grocery retailer

202,382

1.3

0.9

 

125,253

MercadoLibre

Latin American e-commerce

 platform

190,729

1.2

0.9

Significant

addition

56,182

 

 

 

 

 

 

Name

Business

Fair value

30 September 2020

£'000

%

of total assets

Contribution to absolute performance *

%

Notes

Fair value

31 March

2020

£'000

Tempus Labs Inc

  Series E Pref.

Offers molecular diagnostics

 tests for cancer and

  aggregates clinical oncology

  records

123,585

0.8

0.2

 

95,821

Tempus Labs Inc

  Series F Pref.

Offers molecular diagnostics

 tests for cancer and

  aggregates clinical oncology

  records

45,111

0.3

0.1

 

34,976

Tempus Labs Inc

  Series G Pref.

Offers molecular diagnostics

 tests for cancer and

  aggregates clinical oncology

 records

7,281

<0.1

 

5,645

 

 

175,977

1.1

0.3

 

136,442

Alphabet

Holding company for Google and

 associated ventures

166,694

1.1

0.5

 

137,517

You & Mr Jones Class

  A Units

Digital advertising

124,149

0.8

0.3

 

100,004

You & Mr Jones Class

 C Units

Digital advertising

38,644

0.3

0.1

 

30,296

 

 

162,793

1.1

0.4

 

130,300

Ginkgo Bioworks Inc

 Series D Pref.

Bio-engineering company

73,050

0.5

  - 

 

76,164

Ginkgo Bioworks Inc

 Series C Pref.

Bio-engineering company

71,036

0.4

  - 

 

74,064

Ginkgo Bioworks Inc

 Series E Pref.

Bio-engineering company

18,469

0.1

  - 

Significant

addition

12,804

 

 

162,555

1.0

-

 

163,032

Inditex

Global clothing retailer

155,004

1.0

0.1

 

149,757

Workday

Enterprise information

 technology

139,970

0.9

0.7

 

88,318

Denali Therapeutics p

Biotechnology

139,262

0.9

0.7

Significant

addition

52,834

Transferwise Ltd

 Series D Pref. U

Online money transfer services

64,901

0.4

0.1

 

47,633

Transferwise Ltd

 Series Ord. U

Online money transfer services

30,866

0.2

0.1

 

20,247

Transferwise Ltd

 Series A Pref. U

Online money transfer services

15,844

0.1

  - 

 

11,078

Transferwise Ltd

 Series B Pref. U

Online money transfer services

13,770

0.1

  - 

 

10,076

               

 

 

 

Name

Business

Fair value

30 September 2020

£'000

%

of total assets

Contribution to absolute performance *

%

Notes

Fair value

31 March

2020

£'000

Transferwise Ltd

 Series E Pref. U

Online money transfer services

7,849

0.1

        - 

 

5,761

Transferwise Ltd

 Series Seed Pref. U

Online money transfer services

4,110

<0.1

   - 

 

2,696

Transferwise Ltd

 Series C Pref. U

Online money transfer services

606

<0.1

   - 

 

424

 

 

137,946

0.9

0.2

 

97,915

Kinnevik

Investment company

134,271

0.9

0.9

 

56,880

Intuitive Surgical

Surgical robots

133,928

0.9

0.4

 

97,625

Atlas Copco

Engineering

129,303

0.8

0.4

 

94,603

Grail Inc Series B

 Pref. U

Clinical stage biotechnology

 company

127,938

0.8

0.4

 

77,077

Stripe Inc Series G

 Pref. U

Online payment platform

124,465

0.8

0.5

Significant

addition

29,597

Space Exploration

 Technologies Corp

 Series J Pref. U

Designs, manufactures and

 launches rockets and

 spacecraft

67,371

0.5

0.1

 

57,234

Space Exploration

 Technologies Corp

 Series N Pref. U

Designs, manufactures and

 launches rockets and

 spacecraft

54,146

0.3

         - 

New purchase

      - 

 

 

121,517

0.8

0.1

 

57,234

Pinduoduo Inc

Chinese e-commerce

119,721

0.8

1.1

 

60,602

Carvana

Online platform for buying used

  cars

110,248

0.7

0.3

New purchase

   - 

NorthVolt AB

 Preference E1 U

Battery developer and

  manufacturer, specialised in

  lithium-ion technology for electric

  vehicles

104,038

0.7

          - 

New purchase

       - 

Tanium Inc Class B Common U

Provides security and systems

  management solutions

100,565

0.6

0.2

Significant

addition

46,629

Trip.com

Travel agent

99,248

0.6

0.2

 

78,099

Vir Biotechnology Inc p

Biotechnology company

  developing anti-infective

  therapies

97,754

0.6

   - 

 

95,187

Anaplan Inc Common p

Enterprise planning software

90,585

0.6

0.6

 

45,661

KE Holdings

Chinese real estate platform

88,890

0.6

0.4

New purchase

  - 

Snowflake Inc Class B

  Common p

Developer of a SaaS-based cloud

  data warehousing platform

53,253

0.4

0.3

 

8,584

Snowflake Inc Class A

 Common p

Developer of a SaaS-based cloud

  data warehousing platform

34,053

0.2

0.1

New purchase

        - 

 

 

87,306

0.6

0.4

 

8,584

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

Business

Fair value

30 September 2020

£'000

%

of total assets

Contribution to absolute performance *

%

Notes †

Fair value

31 March

2020

£'000

Ocado

Online grocery retailer and

  technology provider

82,820

0.5

0.1

New purchase

 - 

Housing Development

  Finance Corporation

Indian mortgage provider

77,448

0.5

0.1

 

73,911

Zipline International Inc

  Series D Pref. U

Logistics company that designs,

 manufactures and operates

  drones to deliver medical

  supplies

38,380

0.3

0.1

 

28,204

Zipline International Inc

  Series C Pref. U

Logistics company that designs,

   manufactures and operates

   drones to deliver medical  

  supplies

32,775

0.2

0.1 

 

20,258

 

 

71,155

0.5

0.2 

 

48,462

Indigo Agriculture Inc

  Series D Pref. U

Analyses plant microbiomes to

  increase crop yields

30,180

0.2

(0.1)

 

37,834

Indigo Agriculture Inc

   Series E Pref. U

Analyses plant microbiomes to

  increase crop yields

17,782

0.1

 - 

 

19,531

Indigo Agriculture Inc

   Series F Pref. U

Analyses plant microbiomes to

  increase crop yields

16,939

0.1

 - 

Sub promissory note conversion and significant addition

10,126

Indigo Agriculture Inc

  Common U

Analyses plant microbiomes to

  increase crop yields

3,390

<0.1

 - 

Significant

addition

2,120

 

 

68,291

0.4

(0.1)

 

69,611

Bytedance Ltd Series

  E Pref. U

Social media

67,750

0.4

0.1 

 

60,486

CureVac p

Biotechnology

63,759

0.4

0.4 

Significant

addition

12,680

Carbon Inc Series D

 Pref. U

Manufactures and develops

 3D printers

37,631

0.2

0.1 

 

28,031

Carbon Inc Series E

 Pref. U

Manufactures and develops

 3D printers

23,542

0.2

0.1 

 

19,394

 

 

61,173

0.4

0.2 

 

47,425

 

 

 

 


 

 

Name Business

Fair value

30 September 2020

£'000

%

of total assets

Contribution to absolute performance *

%

Notes †

Fair value

31 March

2020

£'000

Recursion

 Pharmaceuticals Inc

 Series C Pref.U

Uses image

 recognition/machine

 learning and automation to

 improve drug discovery

39,902

0.3

   - 

 

37,136

Recursion

 Pharmaceuticals Inc

 Series D Pref. U

Uses image

 recognition/machine

 learning and automation to

 improve drug discovery

19,338

0.1

      - 

New purchase

  - 

 

 

59,240

0.4

-

 

37,136

Affirm Inc Series F

 Pref. U

Online platform which

 provides lending and

 consumer credit services

33,328

0.2

0.1

 

22,979

Affirm Inc Series G

 Pref. U

Online platform which

 provides lending and

 consumer credit services

14,697

0.1

     - 

New purchase

          - 

Affirm Inc Series G-1

 Pref. U

Online platform which

 provides lending and

 consumer credit services

9,134

0.1

         - 

New purchase

           - 

 

 

57,159

0.4

0.1

 

22,979

JAND Inc (Warby

 Parker) Series D

 Pref. U

Online and physical glasses

 retailer

27,526

0.2

    - 

 

23,631

JAND Inc (Warby

 Parker) Series A

 Common U

Online and physical glasses

 retailer

17,750

0.1

   - 

 

15,239

JAND Inc (Warby

 Parker) Series E

 Pref. U

Online and physical glasses

 retailer

6,690

<0.1

 - 

 

5,744

 

 

51,966

0.3

-

 

44,614

Essence Healthcare

 Series 3 Pref. U

Cloud-based health provider

50,873

0.3

0.1

 

45,391

Jiangxiaobai Holdings

 Ltd Series C Pref. U

Producer of alcoholic

 beverages

48,699

0.3

   - 

New purchase

   - 

Rocket Internet

Internet start-up factory

47,483

0.3

 

45,777

Sana Biotechnology

 Inc Series B Pref. U

Biotechnology company

 creating and delivering

 engineered cells as medicine

32,230

0.2

  - 

New purchase

  - 

Sana Biotechnology

 Inc Series A-2

  Pref. U

Biotechnology company

 creating and delivering

 engineered cells as medicine

12,371

0.1

  - 

 

8,011

 

 

44,601

0.3

-

 

8,011

                     

 

 

 

 

Name

Business

Fair value

30 September 2020

£'000

%

of total assets

Contribution to absolute performance *

%

Notes †

Fair value

31 March

2020

£'000

Palantir

 Technologies p

Data integration software and

 service provider

41,199

0.3

0.1 

 

26,535

Heartflow Inc Series

 E Pref. U

Develops software

 for cardiovascular disease

 diagnosis and treatment

39,774

0.3

   - 

 

38,009

Epic Games Inc U

Gaming platform

38,675

0.3

New purchase

 - 

Alnylam

 Pharmaceuticals

Biotechnology

36,780

0.2

0.2 

 

28,682

The Production

 Board Series A-2

 Pref. U

Holding company for food

 technology companies

35,891

0.2

 - 

 

36,130

AUTO1 Group GmbH

 Series E Pref. U

Online retailer of used cars

35,429

0.2

0.1 

 

22,277

Thumbtack Inc

 Series G Pref. U

Online directory service for local

 businesses

28,995

0.2

   - 

 

30,942

Thumbtack Inc

 Series H Pref. U

Online directory service for local

 businesses

5,799

<0.1

 - 

 

6,188

 

 

34,794

0.2

 

37,130

Bolt Threads Inc

 Series D Pref. U

Natural fibres and fabrics

 manufacturer

26,247

0.2

 - 

 

24,181

Bolt Threads Inc

 Convertible

 Promissory Note p

Natural fibres and fabrics

 manufacturer

7,672

<0.1

 - 

 

7,236

 

 

33,919

0.2

 

31,417

Lyft Inc p

Ridesharing services

32,904

0.2

0.1 

 

33,372

Full Truck Alliance

 Ltd Series A-15

 Pref. U

Freight-truck matching platform

32,844

0.2

 - 

 

28,976

JRSK Inc (Away)

 Series D Pref. U

Manufactures luggage

16,348

0.1

(0.1)

 

21,388

JRSK Inc (Away)

 Convertible

 Promissory Note U

Manufactures luggage

8,509

0.1

 - 

New purchase

  - 

JRSK Inc (Away)

 Series Seed Pref. U

Manufactures luggage

7,782

<0.1

 (0.1)

 

14,804

 

 

32,639

0.2

(0.2)

 

36,192

 

 

 

 

 

 

Name

Business

Fair value

30 September 2020

£'000

%

 of total assets

Contribution to absolute performance *

%

Notes †

Fair value

31 March

2020

£'000

Clover Health

 Investments Series

 D Pref. U

Healthcare insurance provider

31,632

0.2

0.1 

 

25,499

Lilium GmbH Series

 B-2 U

On demand air transportation

29,217

0.2

 - 

New purchase

 - 

Bluebird Bio Inc

Provider of biotechnological

  products and services

29,003

0.2

0.1 

 

25,755

Zymergen Inc U

Developer of molecular technology

27,073

0.2

New purchase

Uptake Technologies

 Inc Series D Pref. U

Designs and develops

 enterprise software

24,127

0.2

 - 

 

26,375

Convoy Inc Series D

 Pref. U

Marketplace for truckers and

 shippers

22,571

0.2

 - 

 

22,408

Innovation Works

 Development Fund  U

Venture capital fund

20,298

0.1

 

19,329

Slack Technologies

 Inc p

Enterprise messaging platform

19,197

0.1

 - 

 

20,030

ARCH Ventures Fund

 IX U

Venture capital fund to invest in

 biotech start-ups

19,173

0.1

0.1 

 

14,028

Airbnb Inc Series E

 Pref. U

Online market place for travel

 accommodation

18,572

0.1

  - 

 

20,625

Zocdoc Inc Series D

 2 Pref. U

Online platform for searching for

 doctors and booking

 appointments

17,229

0.1

 

16,862

Aurora Innovation Inc

 Series B Pref. U

Developer of driverless vehicle

 technology

16,156

0.1

(0.1)

 

20,161

Eventbrite Inc p

Online ticketing service

13,671

0.1

0.1 

 

9,599

Rubius Therapeutics

 Inc p

Biotechnology

13,275

0.1

 

12,156

Joby Aero Inc Series

 C Pref. U

Electric aircraft

11,603

0.1

 - 

 

10,704

KSQ Therapeutics

 Inc Series C Pref. U

Biotechnology company

9,626

0.1

(0.1)

 

17,887

Udacity Inc Series D

 Pref. U

Online education

9,390

0.1

 

9,774

Orchard

 Therapeutics p

Gene therapy for rare diseases

8,711

0.1

 - 

 

16,551

Unity

 Biotechnology p

Clinical stage biotechnology

 company

8,602

0.1

 - 

 

14,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

Business

Fair value

30 September 2020

£'000

% of total assets

 

 

 

Notes †

Fair value

31 March

2020

£'000

WI Harper Fund VIII U

Venture capital fund

8,183

0.1

   - 

 

7,540

Sinovation Fund III U

Venture capital fund

7,282

0.1

  - 

 

7,694

WI Harper Fund VII U

Venture capital fund

6,423

<0.1

 - 

 

5,515

Global AI

 Opportunities Fund

Artificial intelligence based

 algorithmic trading

4,525

<0.1

  - 

 

4,358

ARCH Ventures Fund

 X Overage U

Venture capital fund to invest in

 biotech start-ups

2,744

<0.1

  - 

Additional investment

813

ARCH Ventures Fund

 X U

Venture capital fund to invest in

 biotech start-ups

2,530

<0.1

 - 

Additional investment

845

Intarcia Therapeutics

 Inc Series EE Pref. U‡

Implantable drug delivery

 system

  - 

 - 

 - 

 

2,671

Intarcia Therapeutics

  Inc Convertible

 Bond U‡

Implantable drug delivery

 system

 - 

  (0.1) 

 

3,370

Intarcia Therapeutics

 Inc Common U‡

Implantable drug delivery

 system

  - 

 - 

 

62

 

 

(0.1) 

 

6,103

Total Investments

 

15,436,406

99.7

 

 

 

Net Liquid Assets#

 

54,093

0.3

 

 

 

Total Assets#

 

15,490,499

100.0

 

 

 

Contribution to absolute performance has been calculated on a total return basis over the period 1 April 2020 to 30 September 2020. For a definition of total return please see the Glossary of Terms and Alternative Performance Measures at the end of this announcement.

Significant additions and reductions to investments have been noted where the change is at least a 20% movement from the value of the holding at 31 March 2020. The change in value over the period also reflects the share price performance and the movement in exchange rates.

# See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

 

The Intarcia Therapeutics holdings are valued at nil at 30 September 2020.

U   Denotes unlisted (private company) security.  

p   Denotes listed security previously held in the portfolio as an unlisted (private c ompany) security.

 

The investment in Facebook was sold during the period.

 

Source: Baillie Gifford/StatPro. See disclaimer at the end of this announcement.

 

Past performance is not a guide to future performance.

 

Distribution of assets* (unaudited)

 

 

 

At

30 September 2020

%

At

31 March 2020

%

North America

53.4

54.9

 

United States

52.1

53.9

 

Canada

1.3

1.0

Europe

22.4

22.5

 

United Kingdom

1.5

1.7

 

Eurozone

16.5

17.4

 

Developed Europe (non Euro)

4.4

3.4

South America

1.2

0.6

 

Brazil

1.2

0.6

Asia

23.0

22.0

 

China

22.5

21.2

 

India

0.5

0.8

Total assets (before deduction of loans, loan notes and debentures)

100.0

100.0

         

 

Sectoral Analysis

 

 

 

At

30 September 2020

%

At

31 March 2020

%

Consumer Services

39.8

41.4

Consumer Goods

19.4

13.7

Technology

19.1

19.9

Healthcare

11.6

14.4

Financials

6.6

6.6

Industrials

2.9

3.1

Basic Materials

0.2

-

Overseas Bonds

0.1

0.1

Net Liquid Assets

0.3

0.8

Total assets (before deduction of loans, loan notes and debentures)

100.0

100.0

 

 

Listed Equities

%

Unlisted Securities

%

Unlisted

Bonds

%

Net Liquid Assets

%

Total

%

30 September 2020

82.6

17.0

0.1

0.3

100.0

31 March 2020

79.1

19.9

0.2

0.8

100.0

 

 

 

Private Company Investing

 

http://www.rns-pdf.londonstockexchange.com/rns/4479E_1-2020-11-5.pdf

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed financial statements (unaudited)

 

1. 

The condensed Financial Statements for the six months to 30 September 2020 comprise the statements set out in the previous pages 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. They have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The Financial Statements for the six months to 30 September 2020 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 March 2020.

 

Going Concern

The Directors have considered the nature of the Company's assets, its liabilities, projected income and expenditure together with its investment objective and policy, dividend policy and principal risks and uncertainties, as set out at the end of this document. The Board has, in particular, considered the impact of heightened market volatility since the coronavirus outbreak but does not believe the Company's going concern status is affected. The Company's assets, the majority of which are in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) Regulations 2011. Accordingly, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements and confirm that they are not aware of any material uncertainties which may affect the Company's ability to continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements.

2. 

The financial information contained within this Interim Financial Report does not constitute statutory accounts as defined in sections 424 to 436 of the Companies Act 2006. The financial information for the year ended 31 March 2020 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditor Report on those accounts was not qualified, did not include a reference to any matter to which the Auditor drew attention by way of emphasis without qualifying its report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

3. 

Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed by the Company as its Alternative Investment Fund Manager (AIFM) and Company Secretary. The investment management function has been delegated to Baillie Gifford & Co. The management agreement can be terminated on six months' notice. The annual management fee is 0.30% on the first £4 billion of total assets less current liabilities (excluding short term borrowings for investment purposes) and 0.25% thereafter, calculated and payable quarterly.  

4. 

Net return per ordinary share

Six months to

 30 September 2020

£'000

Six months to

30 September 2019

£'000

Revenue return on ordinary activities after taxation

6,993

16,312

Capital return on ordinary activities after taxation

6,348,467

252,235

Total net return

6,355,460

268,547

Weighted average number of ordinary shares in issue

1,464,928,674

1,482,684,432

Net return per ordinary share figures are based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during each period.

There are no dilutive or potentially dilutive shares in issue.

 

 

 

 

 

 

 

 

Notes to the condensed financial statements (unaudited) (ctd)

 

5. 

Dividends

Six months to

 30 September 2020

£'000

Six months to

30 September 2019

£'000

Amounts recognised as distributions in the period:

 

 

Previous year's final dividend of 1.86p (2019 - 1.74p), paid 1 July 2020

27,306

25,797

 

27,306

25,797

Dividends proposed in the period:

 

 

Interim dividend for the year ending 31 March 2021 of 1.45p (2020 - 1.39p)

21,167

20,638

 

21,167

20,638

 

The interim dividend was declared after the period end date and has therefore not been included as a liability in the Balance Sheet. It is payable on 4 December 2020 to shareholders on the register at the close of business on 20 November 2020.  The ex-dividend date is 19 November 2020. The Company's Registrars offer a Dividend Reinvestment Plan and the final date for elections for this dividend is 23 November 2020.

6. 

Fair Value

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit and loss account are measured is described below. 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 Company's investments are financial assets designated at fair value through profit or loss. An analysis of the Company's financial asset investments based on the fair value hierarchy described above is shown below.

 

Investments held at fair value through profit or loss

 

As at 30 September 2020

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

 

Equities/funds

12,783,463

-

-

12,783,463

 

Unlisted ordinary shares

-

-

439,020

439,020

 

Unlisted preference shares

-

-

2,197,743

2,197,473

 

Unlisted convertible note

-

-

16,180

16,180

 

Total financial asset investments

12,783,463

-

2,652,943

15,436,406

 

 

 

 

 

 

 

As at 31 March 2020 (audited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

 

Equities/funds

7,238,048

-

-

7,238,048

 

Unlisted ordinary shares

-

-

302,049

302,049

 

Unlisted preference shares

-

-

1,518,821

1,518,821

 

Unlisted convertible notes

-

-

20,732

20,732

 

Total financial asset investments

7,238,048

-

1,841,602

9,079,650

               

 

Notes to the condensed financial statements (unaudited) (ctd)

 

 

During the period, investments with a book cost of £59,323,000 were transferred from Level 3 to Level 1 on becoming listed. The fair value of listed investments is bid value or, in the case of holdings on certain recognised overseas exchanges, last traded price. Listed Investments are categorised as Level 1 if they are valued using unadjusted quoted prices for identical instruments in an active market and as Level 2 if they do not meet all these criteria but are, nonetheless, valued using market data.

 

 

Unlisted Investments

The Company's holdings in unlisted investments are categorised as Level 3. Unlisted investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by the Managers. The Managers' unlisted investment policy applies techniques consistent with the International Private Equity and Venture Capital Valuation Guidelines 2018 ('IPEV'). The techniques applied are predominantly market-based approaches. The market-based approaches available under IPEV are set out below and are followed by an explanation of how they are applied in the Company's unlisted portfolio:

Multiples;

Industry Valuation Benchmarks; and

Available Market Prices.

The nature of the unlisted portfolio will influence the valuation technique applied. The valuation approach recognises that, as stated in the IPEV Guidelines, the price of a recent investment, if resulting from an orderly transaction, generally represents fair value as at the transaction date and may be an appropriate starting point for estimating fair value at subsequent measurement dates. However, consideration is given to the facts and circumstances as at the subsequent measurement date, including changes in the market or performance of the investee company. Milestone analysis is used where appropriate to incorporate the operational progress of the investee company into the valuation. Additionally, the background to the transaction must be considered. As a result, various multiples-based techniques are employed to assess the valuations particularly in those companies with established revenues. Discounted cashflows are used where appropriate. An absence of relevant industry peers may preclude the application of the Industry Valuation Benchmarks technique and an absence of observable prices may preclude the Available Market Prices approach. All valuations are cross-checked for reasonableness by employing relevant alternative techniques.

The unlisted investments are valued according to a three monthly cycle of measurement dates. The fair value of the unlisted investments will be reviewed before the next scheduled three monthly measurement date on the following occasions:

At the year end and half year end of the Company; and

Where there is an indication of a change in fair value as defined in the IPEV guidelines (commonly referred to as 'trigger' events).

7.

The total value of the borrowings (at book) is £895,428,000 (31 March 2020 - £906,775,000).

The bank loans falling due within one year are a US$200 million revolving 3 year loan with National Australia Bank Limited ('NAB'), a US$80 million revolving 3 year loan with The Royal Bank of Scotland International Limited ('RBS') and a US$85 million revolving 2 year loan with RBS (31 March 2020 - US$200 million revolving 2 year loan with NAB, a US$80 million revolving 3 year loan with RBS and a US$85 million revolving 2 year loan with RBS).

During the period, further to an arrangement made in 2017, a £20 million 3.65% unsecured loan note maturing in 2044 was issued to finance the redemption of the £20 million 8-14% stepped interest debenture that matured on 30 September 2020.

On 21 April 2020, the US$200 million 2 year revolving credit facility with NAB was refinanced with at US£200 million 3 year revolving credit facility with NAB.

There were no bank loans falling due in more than one year (31 March 2020 - none).

8.

The fair value of the borrowings at 30 September 2020 was £1,009,936,000
(31 March 2020 - £930,473,000).

 

 

 

Notes to the condensed financial statements (unaudited) (ctd)

 

 

9.

 

 

At

 30 September 2020

Number of shares

At

31 March 2020

(audited)

Number of shares

Share capital: Ordinary shares of 5p each

 

 

Allotted, called up and fully paid

1,459,765,760

1,453,259,808

 

 

 

 

In the six months to 30 September 2020, the Company sold 24,175,000 ordinary shares from treasury with a nominal value of £1,209,000 at a premium to net asset value raising net proceeds of £186,847,000 (year to 31 March 2020 - issued 10,525,000 ordinary shares, with a nominal value of £526,000, at a premium to net asset value, raising net proceeds of £54,478,000).

In the six months to 30 September 2020, 17,669,048 ordinary shares with a nominal value of £883,000 were bought back at a total cost of £164,564,000 and held in treasury (year to 31 March 2020 - 31,521,072 shares with a nominal value of £1,576,000 were bought back at a total cost of £166,738,000 and held in treasury). At 30 September 2020 the Company had authority remaining to buy back 201,214,437 ordinary shares.

10.

Transaction costs on acquisitions within the portfolio amounted to 1,364,000 (30 September 2019 -nil) and transaction costs on sales amounted to £88,000 (30 September 2019 - £133,000). These costs are included in the book cost of acquisitions and in the net proceeds of disposals.

11.

Subsequent Events

Unlisted Investments

On 26 October the fair valuation of Ant International Limited was increased to £353,139,000 (an increase of £66,690,000 from the fair valuation at 30 September 2020) following the announcement of the opening listing price for its upcoming initial public offering (IPO).

12.

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.

 

 

 

 

Glossary of Terms and Alternative Performance Measures (APM)

 

Total Assets

Total assets less current liabilities, before deduction of all borrowings.

 

Net Asset Value

Also described as shareholders' funds. Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings). Net Asset Value is calculated on the basis of borrowings stated at book value or fair value. An explanation of each is provided below. The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares).

 

Net Asset Value (Borrowings at Book)/Shareholders' Funds

Borrowings are valued at adjusted net issue proceeds. The value of the borrowings at book is set out in note 7 above.

 

Net Asset Value (Borrowings at Fair Value) (APM)

Borrowings are valued at an estimate of their market worth. The value of the borrowings at fair is set out in note 8 above and a reconciliation to Net Asset Value with borrowings at book value is provided below.

 

 

30 September 2020

31 March 2020

Net Asset Value per ordinary share (borrowings at book value)

999.8p

567.3p

Shareholders' funds (borrowings at book value)

£14,595,071k

£8,244,634k

Add:  book value of borrowings

£895,428k

£906,775k

Less: fair value of borrowings

(£1,009,936k)

(£930,473k)

Net Asset Value (borrowings at fair value)

£14,480,563k

£8,220,936k

Shares in issue at year end (excluding treasury shares)

1,459,765,760

1,453,259,808

Net Asset Value per ordinary share (borrowings at fair value)

992.0p

565.7p

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.

 

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same, but if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

 

Gearing represents borrowings at book value less cash and cash equivalents (including any outstanding trade settlements) expressed as a percentage of shareholders' funds.

 

Turnover (APM)

Annual turnover is calculated by dividing the lower of purchases and sales by the average of opening and closing total assets.

 

Active Share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

 

Total Return (APM)

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

 

 

 

 

30 September 2020

30 September 2019

 

 

NAV

(book)

NAV

(fair)

Share

price

NAV

(book)

NAV

(fair)

Share

price

Closing NAV per share/share price

(a)

999.8p

992.0p

991.0p

520.4p

515.1p

503.5p

Dividend adjustment factor *

(b)

1.0026

1.0025

1.0023

1.0033

1.0033

1.0036

Adjusted closing NAV per share/share price

(c = a x b)

1002.4p

994.5p

993.3p

522.1p

516.8p

505.3p

Opening NAV per share/share price

(d)

567.3p

565.7p

573.5p

504.0p

500.8p

512.0p

Total return

(c ÷ d) - 1

76.7%

75.8%

73.2%

3.6%

3.2%

(1.3%)

The dividend adjustment factor is calculated on the assumption that the final dividend of 1.86p (2019 - 1.74p) paid by the Company during the period was reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.

 

 

Principal Risks and Uncertainties

The principal risks facing the Company are financial risk, unlisted investments 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 9 and 10 of the Company's Annual Report and Financial Statements for the year to 31 March 2020 which is available on the Company's website: www.scottishmortgageit.com.‡ The principal risks and uncertainties have not changed since the date of that report with the exception of the ongoing situation regarding Covid-19.

 

The Board and Managers continue to review the portfolio for the potential impact of the pandemic. The business continuity arrangements of the Managers and other third party service providers have proven robust with operations continuing largely as normal.

 

Shareholders will be notified on or around 20 November 2020 that the Interim Financial Report has been published and will be available on the Scottish Mortgage page of the Managers' website www.scottishmortgageit.com .

 

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

Scottish Mortgage Investment Trust PLC is an actively managed, low cost investment trust, investing in a concentrated global portfolio of companies with the aim of maximising its total return over the long term. It looks for strong businesses with above-average returns and aims to achieve a greater return than the FTSE All-World Index (in sterling terms) over a five year rolling period.

 

You can find up to date performance information about Scottish Mortgage on the Scottish Mortgage page of the Managers' website at www.scottishmortgageit.com

 

Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

 

Scottish Mortgage is managed by Baillie Gifford & Co, the Edinburgh based fund management group with over £296 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 5 November 2020).

 

Investment Trusts are UK public limited companies and are not authorised or regulated by the Financial Conduct Authority.

 

Past performance is not a guide to future performance.  The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stock markets in which the Company invests and by the supply and demand for the Company's shares.

 

5 November 2020

 

 

For further information please contact:

 

Stewart Heggie, Baillie Gifford & Co

Tel: 0131 275 5117

 

 

Mark Knight, Director, Four Communications

Tel: 0203 761 4438 or 07803 758810

 

 

Automatic Exchange of Information

 

In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Scottish Mortgage Investment Trust PLC is required to collect and report certain information about certain shareholders.

The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, Scottish Mortgage Investment Trust PLC will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities. Shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders https://www.gov.uk/government/publications/exchange-of-information-account-holders.

 

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FTSE Index data

 

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