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Scot.Mort Inv Tst (SMT)

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Monday 08 November, 2021

Scot.Mort Inv Tst

Half-year Report

RNS Number : 5702R
Scottish Mortgage Inv Tst PLC
08 November 2021
 

RNS Announcement

 

 

 

Scottish Mortgage Investment Trust PLC

 

 

 

Legal Entity Identifier: 213800G37DCS3Q9IJM38

 

 

 

Results for the six months to 30 September 2021

 

The following is the unaudited Interim Financial Report for the six months to 30 September 2021 which was approved by the Board on 5 November 2021.

 

 

Interim management report

 

           

 

Philosophy:

We aim to identify, own and support the world's most exceptional growth companies whether public or private; companies that offer the potential of genuinely transformative returns. Over the long-run, it is such companies that drive stock-market returns. They make equity investing truly worthwhile.

We see our role as partners to these companies. Supporting them through the provision of both capital and patience and backing them to do incredible things. Their path will rarely be a straight-line. All great companies face periods of difficulty and market doubt, if not outright hostility. These periods can be difficult to endure but great returns cannot be achieved without such testing journeys. 

This requires us to be resolutely long-term through both good times and bad. The road ahead will have its fair share of bumps, some companies will not work out as hoped but it is through supporting and holding onto just a small number of extraordinary companies that exceptional returns can be achieved.

 

Returns:

This approach has driven our returns. Over ten years Scottish Mortgage's net asset value per share with debt at fair value (NAV) has increased by 1,072% versus a 275% increase in the FTSE All-World index (both in total return terms). Over five years it has increased by 341% against 83%. Six months of data is always too short a period to infer much that is useful from stock prices. However, since the end of March our NAV rose by 16% compared to a 9% increase in the index.

Although our focus remains on long-term capital appreciation we are aware that a small but consistent dividend is of value to many shareholders. Acknowledging the Company's recent performance, the Board is recommending an interim dividend of 1.52p, an increase of 5% over last year's payment of 1.45p.

 

Portfolio:

Over short periods, such as the last six months, the market has naturally found various things to worry about. A long-term approach is helpful here. It enables us to focus not on the cacophony of the stock-markets but the more predictable drumbeat of deep underlying progress. It has been the long-term and exponential improvements in computing technologies, genomic sequencing and energy storage that continue to strike us as the most important determinates of long-term returns.

These long-term trends may be too slow to shape financial news headlines in a single period but they compound over time as they grow in impact. Moreover, the powerful trends in computing technologies appear to not just be continuing but broadening in utility and application beyond the narrow remits of consumer internet to industries larger and far more diverse.

This broadening is slowly being reflected in the changing shape of the portfolio. The Trust's investment in healthcare and biology companies for example has grown from 11.6% a year ago to 21.4% today. We are finding and supporting a growing number of businesses that we believe are benefiting from the intersection of biology and information technology. 

Our largest holding, Moderna has been the greatest contributor to this change, writing what is effectively code in the form of RNA to program human cells. Moderna has helped the world to start escaping the tragedies and confinement of the last 18 months. However, it is the breadth and scalability of its mRNA technology platform rather than its Covid vaccine that holds the greatest promise. Its pipeline of programs is both large and growing, targeting diseases such as flu, Zika, HIV, cancer and many more.

Recursion Pharmaceuticals and Tempus are successfully leveraging growing quantities of big data combined with machine learning to powerful effect in drug discovery and cancer treatment. We took a new holding in 10x Genomics whose products enable the analysis of single cells complementing Illumina's next generation sequencing and enabling a more granular understanding of biology.

We continue to see opportunities for technology platforms to improve resource allocation in the economy across a growing range of areas such as freight, food and finance. At the same time the question of how to regulate big tech platforms continues to challenge law-makers across the globe. China has taken to this task with particular vigour. It has demonstrated far greater speed and forcefulness in approach than elsewhere. This sharp adjustment has naturally presented challenges both in market sentiment and for technology businesses that are having to adapt to a rapidly altering regulatory environment. At the same time there has been a push for the rewards of China's growing prosperity to be more evenly distributed. Together these shifts have negatively impacted the share prices of many of our Chinese holdings. 

The underlying progress of the companies however remains surprisingly strong. Alibaba and Tencent both continue to grow revenue in excess of 20% whilst Meituan and Pinduoduo are both growing considerably faster. The companies themselves are keenly aware of their need to contribute not just to shareholder returns but to society to ensure true sustainability. We will continue to assess the long-term implications of the new regulatory approach as they apply to each of our holdings.

 

Outlook:

Our attention remains focused on maximising returns over the next ten years for Scottish Mortgage shareholders. We have no right to claim insight over the possible gyrations of stock markets over shorter time periods.

As we anticipate the next decade we are both optimistic and enthused. It strikes us that there are multiple drivers of change and thus opportunity. These include the continuing digitisation of our economy, the intersection of information technology and biology and the much-needed energy transition. Together they provide an opportunity set that is profound and diverse. We look forward to continuing to back the companies and visionaries that drive and take advantage of these powerful long-term trends.

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

 

5 November 2021

 

For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this document.

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

See disclaimer at end of this document.

Past performance is not a guide to future performance.

 

 

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 2021

 

 

Income statement (unaudited)

 

 

For the six months ended

 30 September 2021

For the six months ended

 30 September 2020

 

 

 

 

 

 

 

 

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

 

Gains on investments

2,721,589 

2,721,589 

6,376,063 

6,376,063 

Currency (losses)/gains

(15,778)

(15,778)

6,895 

6,895 

Income from investments and interest receivable

13,640 

13,640 

10,659 

10,659 

Investment management fee (note 3)

(27,179)

(27,179)

(18,727)

(18,727)

Other administrative expenses

(3,644)

(3,644)

(3,279)

(3,279)

Net return before finance costs and taxation

9,996 

2,678,632 

2,688,628 

7,380 

6,364,231 

6,371,611 

Finance costs of borrowings

(19,526)

(19,526)

(15,764)

(15,764)

Net return on ordinary activities before taxation

9,996 

2,659,106 

2,669,102 

7,380 

6,348,467 

6,355,847 

Tax on ordinary activities

(1,281)

(4,905)

(6,186)

(387)

(387)

Net return on ordinary activities after taxation

8,715 

2,654,201 

2,662,916 

6,993 

6,348,467 

6,355,460 

Net return per ordinary share (note 4)

0.62p

187.38p

188.00p

0.48p

433.36p

433.84p

Dividends proposed per ordinary share (note 5)

1.52p

 

 

1.45p

 

 

 

 

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 2021

 

£'000

At 31 March 2021

(audited)

£'000

Fixed assets

 

 

Investments held at fair value through profit or loss (note 6)

20,955,958 

18,042,688 

Current assets

 

 

Debtors

1,892 

20,883 

Shares sold from treasury awaiting settlement

12,213 

Cash and cash equivalents

198,835 

212,128 

 

212,940 

233,011 

Creditors

 

 

Amounts falling due within one year:

 

 

Bank loans (note 7)

(327,066)

(264,550)

Buybacks outstanding and related stamp duty

(25,418)

Other creditors and accruals

(24,162)

(21,020)

 

(351,228)

(310,988)

Net current liabilities

(138,288)

(77,977)

Total assets less current liabilities

20,817,670 

17,964,711 

Creditors

 

 

Amounts falling due after more than one year:

 

 

Bank loans (note 7)

(504,220)

(362,289)

Loan notes (note 7)

(682,827)

(482,629)

Debenture stocks (note 7)

(127,711)

(127,864)

Provision for deferred tax liability

(4,029)

(2,459)

 

(1,318,787)

(975,241)

 

19,498,883 

16,989,470 

Capital and reserves

 

 

Share capital

74,239 

74,239 

Share premium account

784,946 

781,771 

Capital redemption reserve

19,094  

19,094 

Capital reserve

18,611,889 

16,105,297 

Revenue reserve

8,715 

9,069 

Shareholders' funds

19,498,883 

16,989,470 

Net asset value per ordinary share

(after deducting borrowings at book)*

1,381.1p

1,195.1p

Ordinary shares in issue (note 9)

1,411,799,194 

1,421,618,969 

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 2021

 

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 2021

74,239

781,771

19,094

16,105,297 

9,069 

16,989,470 

Net return on ordinary activities after taxation

-

-

-

2,654,201 

8,715 

2,662,916 

Shares bought back

-

-

-

(137,732)

(137,732)

Shares sold from treasury (note 9)

-

3,175

-

9,038 

12,213 

Dividends paid during the period (note 5)

-

-

-

(18,915)

(9,069)

(27,984)

Shareholders' funds at 30 September 2021

74,239

784,946

19,094

18,611,889 

8,715 

19,498,883 

 

 

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 

 

* The Capital Reserve balance at 30 September 2021 includes investment holding gains on fixed asset investments of £12,122,474,000 (30 September 2020 - gains of £9,878,399,000).

 

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

Cash flow statement (unaudited)

 

 

Six months to

 30 September 2021

£'000

Six months to

 30 September 2020

£'000

Cash flows from operating activities

 

 

Net return on ordinary activities before taxation

2,669,102 

6,355,847 

Gains on investments

(2,721,589)

(6,376,063)

Currency losses/(gains)

15,778 

(6,895)

Finance costs of borrowings

19,526 

15,764 

Overseas capital gains tax incurred

(3,335)

Overseas withholding tax incurred

(1,281)

(387)

Changes in debtors and creditors

1,657 

10,634 

Cash from operations

(20,142)

(1,100)

Interest paid

(18,518)

(16,477)

Net cash outflow from operating activities

(38,660)

(17,577)

Net cash (outflow)/inflow from investing activities

(172,338)

66,171 

Equity dividends paid (note 5)

(27,984)

(27,306)

Shares bought back into treasury and stamp duty thereon

(163,149)

(164,534)

Shares sold from treasury

186,847 

Debenture repaid

(20,000)

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

386,090 

19,972 

Net cash inflow/(outflow) from financing activities

194,957 

(5,021)

(Decrease)/increase in cash and cash equivalents

(16,041)

43,573 

Exchange movements

2,748 

(4,143)

Cash and cash equivalents at start of period

212,128 

38,526 

Cash and cash equivalents at end of period

198,835 

77,956 

 

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 2021

 

 

More than 5 years

 

 

2-5 years

 

Less than 2 years

Name

% of total assets

 

Name

 

Name

% of total assets

Illumina 10

5.8

 

NIO Inc p

 2.8

 

Moderna

 9.2

ASML

5.5

 

Delivery Hero

 2.6

 

MercadoLibre

 1.9

Tesla Inc

4.7

 

ByteDance Ltd U

 1.8

 

Northvolt U

 1.8

Tencent Holdings 10

4.1

 

Affirm Holdings Inc p

 1.7

 

Adyen

 1.4

Ginkgo BioWorks Inc p

3.2

 

Shopify

 1.2

 

Stripe Inc U

 1.3

Meituan Dianping p

2.9

 

Space Exploration

  Technologies U

 

 1.2

 

Carvana

 1.0

Amazon.com 10

2.6

Wayfair

 0.9

Alibaba Group p

2.5

 

Recursion

  Pharmaceuticals Inc p

 

 1.1

 

Snowflake Inc p

 0.8

NVIDIA

2.2

Ocado

 0.7

Kering 10

2.1

 

Tempus Labs Inc U

 1.1

 

DoorDash

 0.7

Netflix

 2.0

 

Zoom

 0.9

 

Epic Games U

 0.7

Wise Plc p

 1.9

 

Ant International Ltd U

 0.9

 

Lilium NV p

 0.7

Zalando

 1.6

 

Pinduoduo Inc

 0.8

 

Blockstream Corporations Inc U

 0.4

HelloFresh p

 1.5

 

Zipline International Inc U

 0.7

 

GoPuff Inc U

 0.4

Spotify Technology SA p

 1.3

 

Vir Biotechnology Inc p

 0.6

 

Honor Technology Inc U

 0.4

You & Mr Jones U

 1.2

 

The Production Board U

 0.5

 

Blockchain.com U

 0.4

Denali Therapeutics p

 1.1

 

Tanium Inc U

 0.5

Solugen Inc U

 0.4

Ferrari

 1.0

 

Sana Biotechnology Inc p

 0.4

 

Redwood Materials Inc U

 0.4

Housing Development

  Finance Corporation 10

 0.6

 

Indigo Agriculture Inc U

 0.4

 

Rappi Inc U

 0.4

 

Carbon Inc U

 0.4

 

Relativity Space Inc U

 0.3

Warby Parker Inc p

 0.5

 

Full Truck Alliance Ltd p

 0.3

 

ChargePoint Holdings Inc

 0.3

Kinnevik

 0.5

 

Bolt Threads Inc U

 0.3

 

Databricks Inc U

 0.3

Atlas Copco 10

 0.5

 

HeartFlow Inc U

 0.2

 

Joby Aviation Inc p

 0.3

Thumbtack Inc U

 0.4

 

Rubius Therapeutics Inc p

 0.2

 

Jiangxiaobai Holdings Ltd U

 0.3

Airbnb Inc p

 0.3

 

Aurora Innovation Inc U

 0.2

 

Workrise Technologies Inc U

 0.3

Innovation Works

  Development Fund U 10

 

0.2

 

JRSK Inc (Away) U

Uptake Technologies Inc U

 0.2

0.2

 

Capsule U

10x Genomics

 0.2

0.2

Essence Healthcare U

ARCH Ventures Fund IX U

Zocdoc Inc U

Sinovation Fund III U

WI Harper Fund VIII U

Udacity Inc U

WI Harper Fund VII U 10

Global AI Opportunities

  Fund

Intarcia Therapeutics Inc U

 

  0.2

0.1

0.1

<0.1

<0.1

<0.1

<0.1

 

<0.1

-

 

KSQ Therapeutics Inc U

ARCH Ventures Fund X

  Overage U

 <0.1

 

<0.1

 

Convoy Inc U

Horizon Robotics U

Nuro Inc U

 0.2

0.2

0.2

ARCH Ventures Fund X U

<0.1

 

Clear Secure Inc

Clover Health Investments p

KE Holdings

Zymergen p

PsiQuantum U

Salt Pay Co Ltd U

ARCH Ventures Fund XI U

Beam Therapeutics

 

 0.1

0.1

0.1

0.1

0.1

0.1

<0.1

<0.1

Total

50.6

 

Total

21.2

 

Total

27.3

U   Denotes unlisted (private company) security.

p   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 0.9% of total assets. See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

 

List of investments at 30 September 2021 (unaudited)

 

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

Moderna

Clinical stage biotechnology

  company

 1,943,247

 9.2

7.2

 

 646,271

Illumina

Biotechnology equipment

 1,221,406

 5.8

0.6

 

 1,059,297

ASML

Lithography

 1,163,871

 5.5

1.4

 

 923,130

Tesla Inc

Electric cars, autonomous driving

  and solar energy

 983,770

 4.7

0.7

 

 828,668

Tencent Holdings

Internet services

858,577

 

 4.1

 

(1.4)

 

 

1,110,755

 

Ginkgo BioWorks Inc p

Bio-engineering company

 674,515

 3.2

2.1 

Significant addition to investment

 259,544

Meituan Dianping p

Local services aggregator

 606,440

 2.9

(0.7)

 

 717,711

NIO Inc p

Designs and manufactures electric

  and autonomous vehicles

 593,453

 2.8

(0.1)

 

 634,335

Delivery Hero

Online food delivery service

 549,846

 2.6

 

 544,212

Amazon.com

Online retailer and cloud computing

 546,650

 2.6

0.4 

Significant reduction to investment

 910,847

Alibaba Group p

Online retailing and financial services

 525,851

 2.5

(1.5)

 

 792,539

NVIDIA

Visual computing

 471,257

 2.2

1.2 

 

 334,991

Kering

Luxury goods producer and retailer

 446,133

 2.1

0.3 

 

 422,631

Netflix

Subscription service for TV shows

  and movies

 420,171

 2.0

0.3 

 

 351,135

MercadoLibre

Latin American e-commerce

  platform

 404,568

 1.9

0.2 

 

 303,802

Wise Plc p

Online platform to send and receive  

  money

 403,024

 1.9

1.1 

 

 189,200

ByteDance Ltd Series

 E Pref. U

Social media

 199,017

 0.9

0.1 

 

 173,187

ByteDance Ltd Series

  E-1 Pref. U

Social media

 179,042

 0.9

0.1 

 

 155,805

 

 

 378,059

 1.8

0.2 

 

 328,992

Northvolt AB Series E1

  Pref. U

 

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

233,679

 1.1

0.1 

 

218,459

Northvolt AB Series E2

  Pref. U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

 115,663  

0.5

 

 

New purchase

-

Northvolt AB Series A

  Ord. U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

 17,499

0.1

 

 

Significant addition to investment

 362

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

Northvolt AB MIP 1

 Warrants U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

 4,381

0.1

 

 4,094

Northvolt AB MIP 4

  Warrants U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

1,495

<0.1

Significant addition to investment

364

Northvolt AB MIP 3

 Warrants U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

 1,301

 <0.1

 

 1,214

Northvolt AB MIP 2

 Warrants U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

 780

<0.1

 

729

Northvolt AB Series D1

  Pref. U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

  551

 <0.1

 

 

 

  New purchase

Northvolt AB MIP 5

 Warrants U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

 473

 <0.1 

New purchase

 - 

Northvolt AB Series D

  Pref. U

Battery developer and manufacturer,

 specialised in lithium-ion

  technology for electric vehicles

 300

 <0.1

 

280

 

 

376,122

1.8

0.1 

 

225,502

Affirm Holdings Inc

  Class A p

Online platform which provides

  lending and consumer credit

  services

198,608

 0.9

0.4 

 

114,837

Affirm Holdings Inc

 Class B p

Online platform which provides

  lending and consumer credit

  services

163,749

 0.8

0.3 

 

94,681

 

 

362,357

1.7

0.7 

 

209,518

Zalando

International online clothing retailer

 334,539

 1.6

 

 290,851

HelloFresh p

Grocery retailer

 318,390

 1.5

0.5 

 

 253,246

Adyen

Global payment company

 304,010

 1.4

0.4 

 

 237,488

Spotify Technology SA p

Online music streaming service

 276,378

 1.3

(0.3)

 

 321,399

Stripe Inc Series G Pref.U

Online payment platform

 179,483

 0.9

0.2 

 

149,651 

Stripe Inc Series Class B

 Common U

Online payment platform

 63,191

 0.3

0.1 

 

New purchase

 -

Stripe Inc Series H Pref. U

Online payment platform

 26,330

 0.1

 

 21,954

 

 

 269,004

 1.3

0.3 

 

 171,605

                       

 

 

 

 

 

 

 

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

Shopify

Cloud-based commerce platform

   provider

 262,154

 1.2

0.3

 

 209,270

Space Exploration

  Technologies Corp

  Series J Pref. U

Designs, manufactures and

  launches rockets and spacecraft

 109,142

 0.5

0.1

 

 98,196

Space Exploration

  Technologies Corp

  Series N Pref. U

Designs, manufactures and

  launches rockets and spacecraft

 87,718

 0.4

-

 

 78,921

Space Exploration

  Technologies Corp

  Class A Common U

Designs, manufactures and

  launches rockets and spacecraft

 42,790

 0.2

-

 

  Significant addition to investment

 17,404

Space Exploration

  Technologies Corp

  Class C Common U

Designs, manufactures and

  launches rockets and spacecraft

 13,198

 0.1

-

 

 11,875

 

 

 252,848

 1.2

0.1

 

 206,396

You & Mr Jones

  Class A Units U

Digital advertising

 185,412

 0.9

0.3

 

 135,899

You & Mr Jones

  Class C Units U

Digital advertising

 60,743

 0.3

0.1

 

 42,971

 

 

 246,155

 1.2

0.4

 

 178,870

Recursion

  Pharmaceuticals Inc p

Uses image recognition/machine

  learning and automation to

  improve drug discovery

 238,359

 1.1

1.1

  Significant addition to investment

 55,509

Denali Therapeutics p

Biotechnology

 230,020

 1.1

-

 

 253,963

Tempus Labs Inc

  Series E Pref. U

Offers molecular diagnostics tests

   for cancer and aggregates

   clinical oncology records

 131,682

 0.6

-

 

 128,690

Tempus Labs Inc

  Series F Pref. U

Offers molecular diagnostics tests

   for cancer and aggregates

 clinical oncology records

 48,066

 0.2

-

 

 46,974

Tempus Labs Inc

  Series G-2 Pref. U

Offers molecular diagnostics tests

   for cancer and aggregates

   clinical oncology records

 37,082

 0.2

-

 

 36,240

Tempus Labs Inc

  Series G Pref. U

Offers molecular diagnostics tests

   for cancer and aggregates

   clinical oncology records

 7,758

 0.1

-

 

 7,581

 

 

 224,588

 1.1

-

 

 219,485

Ferrari

Luxury automobiles

 211,390

 1.0

-

  Significant reduction to investment

 304,315

Carvana

Online platform for buying used

  cars

 205,342

 1.0

0.2

 

 174,501

 

 

 

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

Zoom

Remote conferencing service

   provider

 199,386

 0.9

(0.1)

 

 239,408

Wayfair

Online household goods retailer

 198,493

 0.9

(0.2)

 

 239,353

Ant International Ltd

  Class C Ord. U

Online financial services platform

 194,666

 0.9

(0.2)

 

 240,306

Pinduoduo Inc

Chinese e-commerce

 178,774

 0.8

(0.4)

 

 258,258

Snowflake Inc p

Developer of a SaaS-based

  cloud data warehousing

  platform

 174,885

 0.8

0.3 

Significant addition to investment

 74,865

Zipline International

  Inc Series D Pref. U

Logistics company that designs,

   manufactures and operates

  drones to deliver medical

  supplies

 58,975

 0.3

-

 

 61,116

Zipline International Inc

 Series C Pref. U

Logistics company that designs,

   manufactures and operates

  drones to deliver medical

  supplies

 50,362

 0.2

-

 

 52,190

Zipline International Inc

 Series E Pref. U

Logistics company that designs,

   manufactures and operates

  drones to deliver medical

  supplies

 44,499

 0.2

-

 

 46,114

 

 

 153,836

 0.7

-

 

 159,420

Ocado

Online grocery retailer and

  technology provider

 145,372

 0.7

(0.2)

Significant addition to investment

 124,357

DoorDash

Provides restaurant food

  delivery services

 140,757

 0.7

0.3 

 

 87,606

Epic Games Inc U

Gaming platform

 139,741

 0.7

(0.1)

 

 155,065

Lilium NV p

On demand air transportation

 137,831

 0.7

-

Significant addition to investment

 54,226

Vir Biotechnology Inc p

Biotechnology company

  developing anti-infective

  therapies

 120,578

 0.6

(0.1)

 

 136,754

Housing Development

  Finance Corporation

Indian mortgage provider

 116,832

 0.6

0.1 

 


105,134

The Production Board

   Series A-2 Pref. U

Holding company for food

 technology companies

 88,998

 0.4

0.3 

 

 35,080

The Production Board

  Series A-3 Pref. U

Holding company for food

  technology companies

 25,958

 0.1

-

New purchase

 - 

 

 

 114,956

 0.5

0.3 

 

 35,080

Warby Parker Inc p

Online and physical glasses

   retailer

 111,482

 0.5

0.3 

 

 59,165

Kinnevik

Investment company

 111,214

 0.5

0.2 

 

 150,313

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

Tanium Inc Class B

   Common U

Provides security and systems

  management solutions

 107,333

 0.5

-

 

 106,961

Atlas Copco

Engineering

 97,185

 0.5

-

Significant reduction to investment

 154,175

Sana Biotechnology

  Inc p

Biotechnology company creating

   and delivering engineered cells

   as medicine

 93,260

 0.4

(0.3)

 

 134,828

Indigo Agriculture Inc

  Series D Pref. U

Analyses plant microbiomes to

   increase crop yields

 33,570

 0.2 

-

 

 32,807

Indigo Agriculture Inc

  Series F Pref. U

Analyses plant microbiomes to

   increase crop yields

 17,120

 0.1

-

 

 16,731

Indigo Agriculture Inc

  Series E Pref. U

Analyses plant microbiomes to

   increase crop yields

 17,064

 0.1

-

 

 17,187

Indigo Agriculture Inc

  Series G Pref. U

Analyses plant microbiomes to

   increase crop yields

 11,125

 <0.1

-

 

 

New purchase

 -

Indigo Agriculture Inc

  Common U

Analyses plant microbiomes to

   increase crop yields

 3,770

 <0.1 

-

 

 3,685 

 

 

 82,649

 0.4

-

 

 70,410

Thumbtack Inc Series

 G Pref. U

Online directory service for local

  businesses

 47,802

 0.2

0.1 

 

 40,115

Thumbtack Inc Series

  I Pref. U

Online directory service for local

  businesses

 14,121

 0.1

-

 

 

New purchase

 -

Thumbtack Inc Series

  H Pref. U

Online directory service for local

  businesses

 9,560

0.1 

-

 

 8,023 

Thumbtack Inc Class

  A CommonU

Online directory service for local

  businesses

 5,274

 <0.1 

-

New purchase

 - 

Thumbtack Inc Series

  A Pref. U

Online directory service for local

  businesses

 3,110

 <0.1 

-

New purchase

 - 

Thumbtack Inc Series

  C Pref. U

Online directory service for local

  businesses

 910

<0.1 

-

New purchase

 - 

Thumbtack Inc Series

  B Pref. U

Online directory service for local

  businesses

 211

 <0.1

-

New purchase

 - 

 

 

 80,988

 0.4

0.1 

 

 48,138

Carbon Inc Series D

  Pref. U

Manufactures and develops 3D

   printers

 49,001

 0.2

-

 

 45,876

Carbon Inc Series E

  Pref. U

Manufactures and develops 3D

   printers

 30,655

 0.2

-

 

 28,700

 

 

 79,656

 0.4

-

 

 74,576

Blockstream

   Corporation Inc

  Series B-1 Pref. U

Financial software developer

 78,207

 0.4

-

New purchase

 - 

GoPuff Inc (GoBrands)

   Series G Pref. U

On demand retail delivery service

 77,881

 0.4

0.1 

 

 54,360

                     

 

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

Honor Technology Inc

   Series D Pref. U

Provider of home-care services

 48,683

 0.3

0.1 

 

 36,240

Honor Technology Inc

  Series E Pref. U

Provider of home-care services

 27,802

 0.1

-

New purchase

 - 

 

 

 76,485

 0.4

0.1 

 

 36,240

Blockchain.com Series

   C-1 Pref. U

Software platform for digital assets

 74,694

 0.4

-

New purchase

 - 

Rappi Inc. Series F

   Pref. U

Provider of an on-demand delivery

  platform designed to connect

  consumers with local stores

 74,165

 0.4

-

New purchase

 - 

Redwood Materials

   Inc. Series C Pref. U

Environmental battery recycling

 74,165

 0.4

-

New purchase

 - 

Solugen Inc. Series

  C-1 Pref. U

Specialty chemicals manufacturer

 74,165

 0.4

-

New purchase

 - 

Full Truck Alliance

  Ltd p

Freight-truck matching platform

 71,162

 0.3

0.1 

 

 51,854

Relativity Space Inc

  Series D Pref. U

Designs and builds rockets using

  3D printers

 48,786

 0.2

-

 

 34,930

Relativity Space Inc

  Series E Pref. U

Designs and builds rockets using

  3D printers

 22,249

 0.1

0.1 

New purchase

 - 

 

 

 71,035

 0.3

0.1 

 

 34,930

ChargePoint Holdings

   Inc

Electric vehicle charging solutions

 67,792

 0.3

(0.1)

 

 77,408

Airbnb Inc Class B

   Common p

Online market place for travel

  accommodation

 66,852

 0.3

(0.1)

 

 73,048

Databricks Inc Series

  H Pref. U

Data software solutions

 66,526

 0.3

-

New purchase

 - 

Joby Aviation Inc

  Series C Pref. p

Electric aircraft

 56,421

 0.3

-

  Significant addition to investment

 18,438

Jiangxiaobai Holdings

  Ltd Series C Pref. U

Producer of alcoholic beverages

 56,267

 0.3

0.1 

 

 45,632

Workrise Technologies

   Inc Series E Pref. U

Online platform connecting

  contractors with work

 56,250

 0.3

-

 

 47,112

Bolt Threads Inc

  Series D Pref. U

Natural fibres and fabrics

  manufacturer

 30,668

 0.2

-

 

 32,360 

Bolt Threads Inc

  Series E Pref. U

Natural fibres and fabrics

  manufacturer

 24,006

 0.1

-

 

New purchase

 -

 

 

 54,674

 0.3

-

 

 32,360

HeartFlow Inc Series

  E Pref. U

Develops software for

  cardiovascular disease diagnosis

   and treatment

 53,552

 0.2

0.1 

 

 37,644

Capsule Corp Series

   D Pref. U

Digital platform providing home

  delivery of prescription medication

 52,201

 0.2

-

New purchase

 - 

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

10x Genomics

Life science and diagnostics

  company

 45,776

 0.2

-

New purchase

 - 

Rubius Therapeutics

  Inc p

Biotechnology

 45,506

 0.2

(0.1)

 

 65,822

Aurora Innovation Inc

   Series B Pref. U

Developer of driverless vehicle

 technology

 43,141

 0.2

-

 

 38,552

JRSK Inc (Away)

  Series D Pref. U

Manufactures luggage

 16,752

0.1 

-

 

 15,197

JRSK Inc (Away)

  Series Seed Pref. U

Manufactures luggage

 9,137

 0.1

-

 

 7,113

JRSK Inc (Away)

  Convertible

  Promissory Note U

Manufactures luggage

 8,716

 <0.1

-

 

 8,531

JRSK Inc (Away)

  Convertible

  Promissory Note

  2021 U

Manufactures luggage

 8,158

<0.1 

-

New purchase

 - 

 

 

 42,763

 0.2

-

 

 30,841

Convoy Inc Series D

  Pref. U

Marketplace for truckers and

  shippers

 27,110

 0.1

-

 

 25,871

Convoy Inc Series E

  Pref. U

Marketplace for truckers and

  shippers

 14,833

 0.1

-

New purchase

 - 

 

 

 41,943

 0.2

-

 

 25,871

Uptake Technologies

  Inc Series D Pref. U

Designs and develops enterprise

  software

 39,792

 0.2

-

 

 35,598

Innovation Works

  Development Fund U

Venture capital fund

 39,697

 0.2

0.1 

 

 20,622

Essence Healthcare

  Series 3 Pref. U

Cloud-based health provider

 39,631

 0.2

-

 

 45,950

Horizon Robotics

  Series C Pref. U

Designer and developer of AI chips

  and algorithms principally for

  advanced driving assistance

  systems and autonomous vehicles

 

37,082

 

 0.2

 

-

 

 

 36,240

Nuro Inc Series C

  Pref. U

Delivery business, using self-driving

   purpose-built electric vehicles

 

 37,082

 

0.2

 

-

 

 

36,240

Clear Secure Inc

Biometric security firm

 30,445

 0.1

-

New purchase

 - 

Clover Health

  Investments Corp p

Healthcare insurance provider

 

28,107

 

 0.1

-

 

 

28,214

KE Holdings

Chinese real estate platform

 25,392

 0.1

(0.3)

 

 77,434

ZocDoc Inc Series

  D-2 Pref. U

Online platform for searching for

  doctors and booking

  appointments

 

 

22,029

 

 

0.1

-

 

 

 

16,421

 

 

 

 

 

 

 

 

Name

Business

Fair value

30 September 2021

£'000

% of total assets

Contribution to absolute performance*

%

 

 

 

Notes †

Fair value

31 March

2021

£'000

ARCH Ventures Fund

  IX U

Venture capital fund to invest in

   biotech start-ups

 21,759

 0.1

0.1 

Return of capital


18,556

Zymergen Inc p

Developer of molecular technology

 21,613

 0.1

(0.1)

  Significant addition to investment

 25,368

PsiQuantum Series D

  Pref. U

Developer of commercial quantum

  computing

 

18,541

 

0.1

-

New purchase

 

 - 

Salt Pay Co Ltd Non-

  Voting Ordinary 

  Shares U

Payment and management

  solutions

 

 

18,540

 

 

0.1

-

New purchase

 

 

 - 

Salt Pay Co Ltd Voting

  Ordinary Shares U

Payment and management

  solutions

 

1

 

<0.1  

-

New purchase

 

 - 

 

 

 18,541

 0.1

-

 

-

KSQ Therapeutics Inc

  Series C Pref. U

Biotechnology

 

13,947

 

 <0.1

 

-

 

 

13,630 

Sinovation Fund III U

Venture capital fund

 11,000

<0.1 

-

 

 8,613

WI Harper Fund VIII U

Venture capital fund

 9,549

<0.1 

-

 

 9,174

Udacity Inc Series D

   Pref. U

Online education

 8,988

 <0.1 

-

 

 8,928

WI Harper Fund VII U

Venture capital fund

 7,319

 <0.1 

-

 

 6,404

ARCH Ventures Fund

  X Overage U

Venture capital fund to invest in

   biotech start-ups

 6,564

 <0.1

-

 

 4,144

ARCH Ventures Fund

   X U

Venture capital fund to invest in

   biotech start-ups

 6,126

<0.1 

-

 

 3,750

Global AI Opportunities

   Fund

Artificial intelligence based

  algorithmic trading

 

5,275

 

<0.1 

 

-

 

 

 5,107

ARCH Ventures Fund

   XI U

Venture capital fund to invest in

   biotech start-ups

 2,825

 <0.1 

-

  Additional

  investment

 652

Beam Therapeutics

Biotechnology

 663

<0.1 

-

  New purchase

-

Intarcia Therapeutics

  Inc Common U

Implantable drug delivery system

 - 

 - 

-

 

 - 

Intarcia Therapeutics

  Inc Convertible

  BondU

Implantable drug delivery system

 - 

 - 

-

 

 - 

Intarcia Therapeutics

  Inc Series EE Pref. U

Implantable drug delivery system

 - 

 - 

-

 

 - 

 

 

 - 

 - 

-

 

-

Total Investments

 

20,955,958

99.1

 

 

 

Net Liquid Assets#

 

188,778

 0.9

 

 

 

Total Assets#

 

21,144,736

100.0

 

 

 

               

Contribution to absolute performance has been calculated on a total return basis over the period 1 April 2021 to 30 September 2021. 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 2021. 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 2021.

U   Denotes unlisted (private company) security.  

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

 

The following investments were completely sold during the period: Alnylam Pharmaceuticals, Auto1 Group, CureVac, Eventbrite, Lyft, Unity Biotechnology and Workday. Grail was acquired by Illumina in exchange for cash proceeds and Illumina shares.

 

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)

 

Geographical Analysis

 

 

 

At

30 September 2021

%

At

31 March 2021

%

North America

57.1

50.0

 

United States

55.4

48.9

 

Canada

1.6

1.1

 

Caymen Islands

0.1

-

Europe

23.5

24.0

 

United Kingdom

2.6

1.6

 

Eurozone

16.4

17.7

 

Developed Europe (non Euro)

4.5

4.7

South America

1.9

1.7

 

Brazil

1.9

1.7

Asia

17.5

24.3

 

China

16.9

23.7

 

India

0.6

0.6

Total assets *

100.0

100.0

         

 

Sectoral Analysis

 

 

 

At

30 September 2021

%

At

31 March 2021

%

Consumer Staples

3.4

3.0

Consumer Discretionary

32.1

39.0

Technology

23.3

25.5

Healthcare

21.4

17.2

Financials

4.8

4.1

Industrials

9.0

7.4

Basic Materials

4.4

1.7

Real Estate

0.1

0.4

Energy

0.6

0.7

Net Liquid Assets

0.9

1.0

Total assets *

100.0

100.0

 

 

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

 

 

 

Listed equities

%

Unlisted (private company) securities

%

Unlisted (private company)

bonds

%

Net liquid assets

%

Total

%

30 September 2021

79.7

19.3

0.1

0.9

100.0

31 March 2021

78.7

20.2

0.1

1.0

100.0

 

† Includes holdings in preference shares and ordinary shares.

 

 

http://www.rns-pdf.londonstockexchange.com/rns/5702R_1-2021-11-7.pdf

 

 

Absolute Performance to 30 September 2021

 

 

 

 

 

 

 

 

 

Total return (%)#

for five years

Total return (%)#

For ten years

Total return (%)#

since inception (2 June 2010)

 

 

 

 

 

Overall investment portfolio

 

339.9

1,057.8

1,084.7

Private and previously private companies

 

205.6

1,386.3

1,033.3

FTSE All-World Index (in sterling terms)

 

83.1

274.8

274.2

 

For a definition of total return please see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

Date of investment in first private company security. Source: StatPro/Baillie Gifford and underlying index providers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed financial statements (unaudited)

 

1. 

The condensed Financial Statements for the six months to 30 September 2021 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 and April 2021 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 2021 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 2021.

 

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 during the Covid-19 pandemic 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 2021 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 matter to which the Auditors 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 2021

£'000

Six months to

30 September 2020

£'000

Revenue return on ordinary activities after taxation

8,715

6,993

Capital return on ordinary activities after taxation

2,654,201

6,348,467

Total net return

2,662,916

6,355,460

Weighted average number of ordinary shares in issue

1,416,515,214

1,464,928,674

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 2021

£'000

Six months to

30 September 2020

£'000

Amounts recognised as distributions in the period:

 

 

Previous year's final dividend of 1.97p (2020 - 1.86p), paid 1 July 2021

27,984

27,306

 

27,984

27,306

Dividends proposed in the period:

 

 

Interim dividend for the year ending 31 March 2022 of 1.52p (2021 - 1.45p)

21,459

21,167

 

21,459

21,167

 

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 3 December 2021 to shareholders on the register at the close of business on 19 November 2021.  The ex-dividend date is 18 November 2021. The Company's Registrars offer a Dividend Reinvestment Plan and the final date for elections for this dividend is 22 November 2021.

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. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows:

Level 1 - using unadjusted quoted prices for identical instruments in an active market;

Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on

  market data); and

Level 3 - using inputs that are unobservable (for which market data is unavailable).

The Company's investments are financial assets 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 2021

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

 

Equities/funds

16,846,771

-

-

16,846,771

 

Private company ordinary shares

-

-

587,463

587,463

 

Private company preference shares

-

-

3,391,581

3,391,581

 

Private company convertible note

-

-

16,874

16,874

 

Warrants

-

-

8,430

8,430

 

Limited partnership investments

-

-

104,839

104,839

 

Total financial asset investments

16,846,771

-

4,109,187

20,955,958

               

 

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

 

 

 

As at 31 March 2021 (audited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

 

Equities/funds

14,345,430

-

-

14,345,430

 

Private company ordinary shares

-

-

597,839

597,839

 

Private company preference shares

-

-

3,004,792

3,004,792

 

Private company convertible note

-

-

15,949

15,949

 

Warrants

-

-

6,764

6,764

 

Limited partnership investments

-

-

71,914

71,914

 

Total financial asset investments

14,345,430

-

3,697,258

18,042,688

 

During the period, investments with a book cost of £281,364,000 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.

 

 

Private company investments

The Company's holdings in unlisted (private company) investments are categorised as Level 3. Private company investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by the Managers. The Managers' private company 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 private company portfolio:

Multiples;

Industry Valuation Benchmarks; and

Available Market Prices.

The nature of the private company 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 private company investments are valued according to a three monthly cycle of measurement dates. The fair value of the private company 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 £1,641,824,000 (31 March 2021 - £1,237,332,000).

The bank loans falling due within one year are a US$391 million revolving 3 year loan with National Australia Bank Limited ('NAB') and a US$50 million revolving 5 year loan with The Royal Bank of Scotland International Limited ('RBS') (31 March 2021 - US$200 million revolving 3 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).

 

The bank loans falling due after more than one year are a US$200 million fixed rate loan and a US$180 million fixed rate loan with RBS and a US$300 million fixed rate loan with The Bank of Nova Scotia.

 

During the period, the US$200 million revolving 3 year loan with NAB was refinanced with a US$391 million revolving 3 year loan with NAB, the US$80 million revolving 3 year loan with RBS was refinanced on expiry with a US$180 million 5 year fixed rate credit facility with RBS and the US$85 million revolving 2 year loan with RBS was part refinanced with a US$50 million revolving 5 year loan with RBS.

 

During the period the Company issued the following private placement unsecured loan notes:

 

 - £100 million at a coupon of 2.03% maturing on 10 August 2036

 - £100 million at a coupon of 2.30% maturing on 10 August 2046

 

Following the period end, on 12 October 2021, a US$120 million revolving 3 year loan was drawn down from Industrial and Commercial Bank of China Limited ('ICBC').

8.

The fair value of the borrowings at 30 September 2021 was £1,674,997,000
(31 March 2021 - £1,309,443,000).

9.

 

 

At

 30 September 2021

Number of shares

At

31 March 2021

(audited)

Number of shares

Share capital: Ordinary shares of 5p each

 

 

Allotted, called up and fully paid

1,411,799,194

1,421,618,969

 

 

 

 

In the six months to 30 September 2021, the Company sold 850,000 ordinary shares from treasury with a nominal value of £42,500 at a premium to net asset value raising net proceeds of £12,213,000 (year to 31 March 2021 - issued 24,725,000 ordinary shares, with a nominal value of £1,236,250, at a premium to net asset value, raising net proceeds of £193,559,000).

In the six months to 30 September 2021, 10,669,775 ordinary shares with a nominal value of £533,000 were bought back at a total cost of £137,731,000 and held in treasury (year to 31 March 2021 - 56,365,839 shares with a nominal value of £2,818,000 were bought back at a total cost of £613,920,000 and held in treasury). At 30 September 2021 the Company had authority remaining to buy back 208,586,466 ordinary shares.

10.

Transaction costs on acquisitions within the portfolio amounted to £382,000 (30 September 2020 - £1,364,000) and transaction costs on sales amounted to £190,000 (30 September 2020 - £88,000). These costs are included in the book cost of acquisitions and in the net proceeds of disposals.

11.

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 basis 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 2021

31 March 2021

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

1,381.1p 

1,195.1p 

Shareholders' funds (borrowings at book value)

£19,498,883k 

£16,989,470k 

Add:  book value of borrowings

£1,641,824k 

£1,237,332k 

Less: fair value of borrowings

(£1,674,997k)

(£1,309,443k)

Net Asset Value (borrowings at fair value)

£19,465,710k 

£16,917,359k 

Shares in issue at year end (excluding treasury shares)

1,411,799,194 

1,421,618,969 

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

1,378.8p 

1,190.0p 

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 on a rolling 12 month basis. The lower of purchases and sales for the 12 months is divided by the average assets, with average assets being calculated on assets as at each month's end.

 

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 2021

30 September 2020

 

 

NAV

(book)

NAV

(fair)

Share

price

NAV

(book)

NAV

(fair)

Share

price

Closing NAV per share/share price

(a)

1,381.1p

1,378.8p

1,428.0p

999.8p

992.0p

991.0p

Dividend adjustment factor *

(b)

1.0020 

1.0012 

1.0016 

1.0026

1.0025

1.0023

Adjusted closing NAV per share/share price

(c = a x b)

1,383.9p

1,380.4p

1,430.3p

1,002.4p

994.5p

993.3p

Opening NAV per share/share price

(d)

1,195.1p

1,190.0p

1,137.0p

567.3p

565.7p

573.5p

Total return

(c ÷ d) - 1

15.8%

16.0%

25.8%

76.7%

75.8%

73.2%

The dividend adjustment factor is calculated on the assumption that the final dividend of 1.97p (2020 - 1.86p) 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, private company 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 2021 which is available on the Company's website: 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.

 

Shareholders will be notified on or around 17 November 2021 that the Interim Financial Report has been published and will be available on the Scottish Mortgage page of the Managers' website 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 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 £363 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 5 November 2021).

 

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 2021

 

 

For further information please contact:

 

Catharine Flood, Baillie Gifford & Co

Tel: 0131 275 2718

 

 

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 gov.uk/government/publications/exchange-of-information-account-holders.

 

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