TIDMUSA
RNS Number : 8634I
Baillie Gifford US Growth Trust PLC
10 August 2023
RNS Announcement: USA Results
Baillie Gifford US Growth Trust plc ('USA')
Legal Entity Identifier: 213800UM1OUWXZPKE539
Regulated Information Classification: Notice of Results.
Results for the year ended 31 May 2023
During the financial year to 31 May 2023, the Company's share
price and net asset value ('NAV' after deducting borrowings at fair
value) returned
-13.8% and -2.7% respectively. This compares with a total return
of 4.7% for the S&P 500 Index * (in sterling terms). During the
period from 23 March 2018, launch date, to 31 May 2023 the
Company's share price and NAV (after deducting borrowings at fair
value) returned 44.1% and 90.4% respectively. This compares with a
total return of 102.0% for the S&P 500 Index * (in sterling
terms).
- Turnover in the portfolio over the financial year was 7.1%
which is consistent with our five year plus time horizon.
- As at 31 May 2023, we held 25 private company investments
which collectively compromised 34.5% of total assets * .
- We made one additional private company investment: Oddity.
- We sold Peloton, Teladoc, Appian, Butterfly Network, Carvana
and First Republic during the period.
- We added three listed holdings to the portfolio: Roblox, Sweetgreen and Doximity.
Baillie Gifford US Growth Trust seeks to invest predominantly in
listed and unlisted US companies which the Company believes have
the potential to grow substantially faster than the average
company, and to hold onto them for long periods of time, in order
to produce long term capital growth. The Company has total assets
of GBP608.9 million (before deduction of loans of GBP40.3 million)
as at 31 May 2023.
You can find up to date performance information about Baillie
Gifford US Growth on the US Growth Trust page of the Managers'
website at bgusgrowthtrust.com ++.
Baillie Gifford US Growth Trust is managed by Baillie Gifford
& Co, the Edinburgh based fund management group with
approximately GBP230 billion under management and advice in active
equity and bond portfolios for clients in the UK and throughout the
world (as at 8 August 2023).
* Source: Refinitiv and relevant underlying index providers. See
disclaimer at the end of this announcement. For a definition of
terms see Glossary of Terms and Alternative Performance Measures at
the end of this announcement.
++ 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.
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.
10 August 2023
For further information please contact:
Naomi Cherry, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 020 3920 0555 or 07872 495 396
The following is the results announcement for the year to 31 May
2023 which was approved by the Board on 9 A ugust 2023.
Chairman's Statement
Dear Shareholders
During the financial year to 31 May 2023, the Company's share
price and net asset value total return, calculated by deducting
borrowings at fair value, were -13.8% and -2.7% respectively. This
compares with a total return of 4.7% for the S&P 500 Index *
(in sterling terms). Over the period from 23 March 2018 (launch
date and first trade date), the Company's share price and net asset
value total return, calculated by deducting borrowings at fair
value, returned 44.1% and 90.4% respectively compared to a total
return of 102.0% for the S&P 500 Index * (in sterling
terms).
Information about the Company's portfolio performance is covered
by our portfolio managers, Gary Robinson and Kirsty Gibson, in
their Managers' Review.
Share Issuance and Buy-backs
The Company's shares moved from a discount of 12.3% last year to
a discount of 22.4% at 31 May 2023 as sentiment continued to turn
against the Company's growth investing style. Having bought back
2,206,300 shares, to be held in treasury, at a total cost of GBP3.6
million in May 2022 with limited impact on the discount, the Board
took the decision to use the capital to invest in new growth
opportunities instead. The Company issued no shares during the year
to 31 May 2023.
The Board regularly reviews the Company's liquidity policy and
it is a key discussion point at Board meetings. The Board
acknowledges the discount is a challenge to many shareholders but
notes that, from the data provided to the Board, there continues to
be natural buyers of the Company's shares in the market.
As at 31 May 2023, the Company had authority, which was granted
at the 2022 Annual General Meeting, to issue a further 30.5 million
shares and to buy-back a further 45.7 million shares. These
authorities expire in September 2023. The Company will be seeking
to renew both the issuance and buy-back authorities at the
forthcoming Annual General Meeting.
Since the year end and as we enter our sixth year of business,
the Board concluded it would be timely to review our broking
arrangements. After meeting with several suitable firms, the Board
have agreed that we will be best supported by the specialist team
at Panmure Gordon (UK) Limited going forward. We are grateful to
Investec for their work on our behalf since IPO.
Gearing
The Company had two loan facilities in place with ING Bank N.V.,
London Branch, throughout the year to 31 May 2023. The first was a
US$25 million five-year revolving credit facility which expired on
31 July 2023 and the second is a US$25 million three-year fixed
rate facility which expires on 23 October 2023. The facilities are
available to be used to fund purchases of securities as and when
suitable opportunities arise. As at 31 May 2023, the facilities had
been drawn down in full (31 May 2022 - US$50 million). Net gearing
stayed at 6% over the course of the year. Subsequent to the year
end on, 26 July 2023 the US$25 million five-year revolving credit
facility was refinanced with a US$25 million three-year revolving
credit facility from ING Bank N.V., London Branch.
Earnings and Dividend
The Company's priority is to generate capital growth over the
long term. The Company therefore has no dividend target and will
not seek to provide shareholders with a particular level of
dividend. The net revenue return per share for the year to 31 May
2023 was a negative 1.55p (year to 31 May 2022 - a negative 1.88p).
As the revenue account is again running at a deficit, the Board is
recommending that no final dividend be paid. Should the level of
underlying income increase in future years, the Board will seek to
distribute the minimum permissible to maintain investment trust
status by way of a final dividend.
Private Company (Unlisted) Investments
As at the Company's year end, the portfolio weighting in private
company (unlisted) investments stood at 34.5% of total assets,
invested in twenty-five companies (2022 - 36.4% invested in
twenty-four companies). There was one new private company purchase
in the year, Oddity. There is commentary on the new and existing
holdings in the Managers' Review and Review of Investments below.
Your portfolio managers remain alert to further special and high
potential opportunities not widely accessible through public
markets. In respect of the valuation process, the private company
(unlisted) investments continue to be revalued on a three-month
rolling cycle which is overseen by the valuations group at Baillie
Gifford who take advice from an independent third party, S&P
Global. As a Board we continue to scrutinise and challenge the
Managers on the valuation of the private company (unlisted)
investments. They are also subject to the scrutiny of the external
auditor on an annual basis. More detail on this process can be
found below.
Environmental, Social and Governance (ESG) Matters
The Company's Managers believe that sustainability is
inextricably linked to being a long-term investor, and their
thoughts on this topic are set out in more detail below. The
Managers' pursuit of long-term growth opportunities typically
involves investment in entrepreneurial, disruptive and
technologydriven businesses. These companies are often
capital-light with a low carbon footprint.
Annual General Meeting
The Annual General Meeting of the Company will be held at
Baillie Gifford's offices in Edinburgh at 9.30am on Monday, 18
September 2023. All shareholders are invited to attend, and the
Board looks forward to welcoming you. The meeting will be followed
by a presentation from the Managers. I encourage shareholders to
submit their votes by proxy before the applicable deadline ahead of
the meeting and to submit any questions for the Board or Managers
in advance by email to trustenquiries@bailliegifford.com or by
calling 0800 917 2112 (Baillie Gifford may record your call). In
order to increase the accessibility of the Annual General Meeting
the Board plan to hold the 2024 Annual General Meeting in London.
Details of how shareholders can watch this year's Annual General
Meeting online can be found in the Notice of Annual General Meeting
on page 69 of the Annual Report and Financial Statements.
Outlook
In my outlook statements for the last three years, I have
reflected on both the opportunity and risks of growth investing
against the turbulent global backdrop that we have all been living
through. As I wrote last year's statement, I'm certain that the
optimist in me was hoping that the market for growth companies
would have stabilised over the coming twelve months, but in general
the valuations of more predictable assets have fared better than
the firms we look to find and hold on your behalf over the long
term. My inner optimist remains, though I fear this coming year
will be equally hard to predict. That is not to say that our
Managers have not been able to make good progress - not least in
getting back to face-to-face engagement with the leadership of
those companies already held and those they have decided to
research. The Board continues to believe that the companies we hold
are very well placed to generate extremely attractive returns to
investors over the long term and as such, we remain confident in
our outlook.
Tom Burnet
Chairman
9 August 2023
* Source: Refinitiv and relevant underlying index providers. See
disclaimer at the end of this announcement.
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Managers' Review
During the period from 23 March 2018, launch date and first
trade date, to 31 May 2023, the Company's share price and net asset
value total return (after deducting borrowings at fair value)
returned 44.1% and 90.4%, respectively. This compares with a total
return of 102.0% for the S&P 500 Index * (in sterling
terms).
We are disappointed. We asked you to judge us over the long
term, and as shareholders and managers of the Baillie Gifford US
Growth Trust, we are dissatisfied with our five-year performance.
These are not the numbers we looked to deliver at the Company's
fifth anniversary.
It has been a volatile period. We have experienced multiple
once-in-a-generation events since the Company was founded: a global
pandemic, war, and supply shocks. With such turbulence, it is easy
to overlook the fundamental progress the underlying companies we
invest your capital in have made.
We launched Baillie Gifford US Growth Trust in March 2018 with
the belief that a fund with a five-plus year time horizon that
could invest in the most exceptional public and private growth
businesses in the US, brought something different to the market and
had the opportunity to deliver outsized returns. We continue to
believe that to be the case. When we began, 0% of the portfolio was
invested in private companies. At the end of May 2023, that number
stands at 34.5%. We now have two private companies in the top ten
and six in the top twenty. We believe this is something to be
celebrated, not feared. We are delighted that private companies
have grown sufficiently to make considerable contributions to the
Company's future performance. We believe these companies are among
the most important forces behind future progress.
Whilst share prices have been volatile since inception, the
fundamental progress of the companies within the Company has been
phenomenal.
Zipline, the drone delivery company, was our first private
investment. Today it represents 2.3% of total assets. In 2018,
Zipline's operations were predominantly in Rwanda, where its
autonomous drones played a pivotal role in delivering medical
supplies, specifically blood, to hard-to-reach locations. Fast
forward to 2023, and Zipline serves 3,400 hospitals and health
facilities globally and is contracted to serve more than 10,000 by
the end of the year. While initially focusing on medical supplies,
the company has expanded into ecommerce, animal, and agricultural
products. Zipline is now the largest autonomous drone delivery
company on earth, having flown over forty million commercial,
autonomous miles, and is on track to make twice as many deliveries
this year as all previous years combined. And with Zipline's home
delivery system launching two months ago in the US, it is just
getting started.
In 2018, Shopify, the commerce platform for merchants and the
largest public investment in the Company, had gross merchandise
value ('GMV') of US$40 billion, a 2.6% take rate, and revenue had
just crossed the one-billion-dollar mark. Fast forward to 2023, and
GMV sits at close to US$200 billion, the company's take rate in
quarter one was over 3.0% and FY22 revenue was close to US$3
billion. Additionally, the company launched numerous products,
including Shop Pay Instalments in 2021 and Audiences (an
advertising tool) in 2022. With net cash of US$3.9 billion, there
is plenty of scope for innovation and new product launches.
Space Exploration Technologies ('SpaceX') makes rockets and
satellites. In 2018 SpaceX made 21 launches, about half of which
made successful ground landings. In 2022 the company launched 61
orbital missions, nearly doubling its previous single-year record
of 31, set in 2021. That number means that SpaceX launched, on
average, every six days from one of three sites. It is driving the
launch market, taking two-thirds market share. It has achieved this
by making its service much cheaper, driven by reusable rockets.
Nothing illustrates this more effectively than SpaceX recently
relaunching one of its Falcon rockets for the fifteenth time.
SpaceX is leveraging this cost advantage to move into the
communicationns sector with Starlink, a low earth orbit satellite
constellation to deliver fast broadband to rural areas. It already
has over one million customers. Starlink recorded its first quarter
of positive free cash flow in 2022 and President and COO Gwynne
Shotwell has said publicly that the internet business "will make
money" in 2023, joining the core launch business which already
"makes money".
Amazon's cloud offering AWS has grown revenues from US$26
billion in 2018 to US$80 billion today. Wayfair, the online
homeware business, has more than doubled its top line since 2018,
seen gross margin expansion of more than 700 basis points and
nearly doubled its active customer base from 13 million to over 21
million. CoStar, the commercial and residential real estate
company, has increased its revenue 126%, adding over US$1 billion,
since the Company's launch, expanded margins and reduced them again
as it invests counter-cyclically in new growth opportunities.
Watsco, the heating, ventilation and air conditioning ('HVAC')
distribution business, has improved gross margins by 410 basis
points, built an ecommerce business which is now over 33% of sales
and grown EPS at a 24% compound annual growth rate.
Of course, the progress of companies in the Company's portfolio
has not been a linear journey; there have been highs and lows.
However, when surrounded by noise and volatility, it is easy to
forget how far many of the companies we invest in on behalf of the
Company have come. The fundamental progress on a five-year view has
been remarkable for many businesses.
Opportunity Remains
In nature, there exists a mushroom: the matsutake. Matsutake are
wild mushrooms that emerge in some of the most disturbed
environments in the world. However, matsutake is not considered a
pest; it is a gourmet treat: the most valuable mushroom in the
world.
Nature shows us that valuable products can emerge even within
the most disturbed environments. The same applies to companies;
difficult times help us identify resilience and adaptability, two
core tenets of long-run success. While the term disturbance has
negative connotations, disturbance can renew as well as destroy.
The razing of a forest, while on the face of it destructive,
enables new life to flourish. In a burning and charred world, it is
easy to forget the potential and opportunity that lies beneath. The
pull toward the safety of established trees or, in our world,
companies, threatens to overwhelm.
Patience is key: the most impactful innovations may lie dormant
until the environment is right for them to flourish. A great number
of innovations arrive before their time. Dormancy can result from
inertia, powerful incumbency, and resistance to change. Idea
creation is the easy task; creating success is where the hard work
begins. Disturbance creates opportunities for innovation because it
enables heterogeneity - it opens the possibility of alternative
landscapes and new ways of doing things. As the pull toward
convention and homogeneity continues, disturbance can create
lasting transformations that enable exuberant growth and
progress.
The rapidly changing macro environment over the past year is the
stock market equivalent of disturbance. While uncomfortable to
experience, it may be that periodic disturbance is necessary to
separate the wheat from the chaff and to help the landscape evolve
- enabling new forces the opportunity to flourish in time and drive
progress. However, much like the razing of a forest, damage has
been done. For some companies, the damage, whether the consequence
of unsustainable business models or an overreliance on cheap access
to capital, will be fatal. For some, the damage is painful but
survivable, for others, the changed landscape marks a significant
opportunity.
Like fungi, companies evolve in response to the environment in
which they find themselves. In the past year, we have seen a clear
shift in the portfolio toward profitable growth. Companies continue
to invest in the future, but they are cognisant that the path of
progress is less likely to be funded by others.
Companies have felt the squeeze of the macroeconomic
environment. Growth rates have slowed. Estimates and expectations
have been reset. Those who over-invested in their cost bases during
the pandemic years must readjust now. Companies such as Wayfair,
Twilio, Shopify and Snap have announced layoffs which bring about
cultural challenges but also the opportunity for increased
discipline and operational efficiency while continuing to invest in
the long-run opportunity. Cloud companies such as Snowflake,
Cloudflare and Datadog are experiencing slower growth rates as
their underlying customers look for ways to reduce costs. Still the
structural opportunity for cloud companies remains very much intact
- Amazon CEO Andy Jassy has suggested around 90% of IT spend is
still on-premise. Other companies like Duolingo, the gamified
language learning app, and The Trade Desk, the programmatic
advertising platform, which are earlier still in their structural
opportunity, have seen limited impact from the macroeconomic
environment. Duolingo has recently seen its seventh straight
quarter of accelerating user growth, and revenue increase 34% year
on year in 2022. It has shifted the number of paying users from
around 4% at IPO in 2021 to around 8% today and continues to
innovate with the launch of Duolingo Max, its AI-powered offering
which enables roleplay and personalised feedback. The Trade Desk
has grown its share of the global advertising market from 0.6% to
1.0% since 2020; its revenues have grown over 20% annually since
March 2018. The company has continued to innovate, launching its
first upfront advertising product this year.
Companies which survive and adapt to the macroeconomic shocks of
the past year can emerge stronger than before, and like the
matsutake mushroom, those that do are likely to be far more
valuable in future.
Portfolio Changes
To the end of May, turnover was low at 7.1%, reflecting our
belief in the companies we own. Having revisited the upside cases
for most of the Company's holdings, we continue to believe in the
underlying investment opportunities.
Almost every beneficiary of Covid-19 has seen a significant
de-rating. When performance is challenged, it is easy to be drawn
into focusing on the underperforming stocks and those where your
conviction is waning. We believe new ideas and enthusiasms should
drive portfolio changes. Thus, we have spent time on new ideas and
underwriting the Company's investments. Bringing new ideas, or a
new perspective on a current holding, to the table and comparing
them to our existing portfolio enables constructive discussion of
ideas, moving the conversation beyond short-term challenges to
whether a stock merits a position in the portfolio and at what
scale.
There have been some changes to the top ten over the last year,
with NVIDIA, Netflix and CoStar moving into its ranks. All have
become larger holdings because of solid share price performance;
CoStar and Netflix over the past year and NVIDIA since the
beginning of this year. A reduction in Illumina moved it out of the
top ten. The ability to read DNA remains foundational for advances
in healthcare, but the competitive landscape is evolving rapidly,
and the company's execution has disappointed.
We added several new listed holdings to the portfolio over the
last year: Roblox, Sweetgreen and Doximity. Roblox is an online
gaming and game creation platform with a strong market share in the
9-12-year-old demographic. We began researching the company before
its IPO and were excited at its opportunity to 'age up' its user
base and broaden the experiences available on the platform. We used
share price weakness to initiate a holding. We also bought a small
holding in Sweetgreen, a salad restaurant chain. Again, we have
followed the business for some time. The company is early in its
store rollout. Still, its strong brand, positive store economics,
creative management team and clear plan to self-sustainability led
us to take a position. Doximity's vision is to become the
'Bloomberg of Medicine'. The company has created free-to-use
products which improve quality and productivity within a social
network for doctors and monetises by selling hypertargeted,
unobtrusive advertising to pharmaceutical companies. With only 20%
of pharmaceutical marketing budgets allocated to digital
advertising compared to around 80% for Fortune 100 companies, the
opportunity is significant.
We sold Peloton, Teladoc, Appian, Butterfly Network, Carvana and
First Republic during the period. Abiomed was acquired by Johnson
and Johnson. Butterfl y Network, the portable ultrasound company,
struggled with its go-to-market strategy and significant turnover
among its executive team. While we hope Butterfly can succeed, we
felt the probability of doing so was diminishing, and we sold the
holding. Our most recent sale was Carvana, the online used car
dealership. While the opportunity for the business remains large,
we concluded that it had become constrained by its financing
position. The company has taken steps to address its finances, but
we are concerned the cost controls may cut into its ability to
compete effectively.
We sold First Republic as the bank grappled with a run on its
deposits in the wake of the Silicon Valley Bank collapse. We have
long admired First Republic's service model, deep customer
relationships, conservative lending culture and management team,
but these features did not provide protection when panic set in.
Given the existential risk in the near term posed by deposit
withdrawals and the higher cost of replacement funding depressing
future profitability, we sold the holding with a heavy heart.
We made one additional unlisted investment over the last twelve
months: Oddity. We have included a description of this business
below. Given the market environment, none of our existing private
company holdings went public during the period. The net result was
that, at the end of May, we held 25 private company investments
which comprised 34.5% of total assets. Considering companies that
were previously private company investments, but are now public,
this figure rises to 38.0%.
Investment Principles
As we have done for the last three years, we have included our
investment principles again, unaltered. We hope that by publishing
our investment framework in this and future communications we
provide shareholders with a useful reminder of our philosophy and a
yardstick with which to measure us.
Our second principle begins: 'Short-term volatility is an
inevitable feature of the market, and we will not manage the
portfolio to reduce volatility at the expense of long-term gain.'
In recognizing the inescapability of volatility up front, we can be
better prepared for it when it happens. The last few years have
been particularly volatile and challenging. However, our philosophy
and process remain our rock in these difficult times, and our
confidence in it and the Company's underlying holdings has not
weakened.
Outlook
When surrounded by noise and volatility, taking a step back and
gaining perspective is difficult. But it is essential to do so. The
barrier between what is and what could be has never felt lower. As
a child, movies and sci-fi books talked about quantum computing,
artificial intelligence, space travel, drone delivery, software
code as medicine and biology's power to solve the world's problems.
These topics are no longer a figment of imagination. The Company
owns companies addressing each: PsiQuantum, NVIDIA, SpaceX,
Zipline, Moderna and Ginkgo Bioworks. The future feels closer than
it has ever been before, and that is indicative of a world ripe
with opportunity.
It is true that success does not happen in a vacuum; more than
creativity and innovation is needed. Success also depends upon the
environment into which an idea is born. We are long-term investors,
but we cannot lose sight of the fact that companies have to face
their current circumstances as they are today, not as they will
look in the future. Still, those businesses that can survive, adapt
and thrive in the face of significant disturbance have the
opportunity to emerge from this environment stronger than they went
in.
As managers of the Baillie Gifford US Growth Trust, the worst
thing we could do right now is to go against the philosophy that
underpins our approach and try and 'fix' performance, focusing on
the short term at the expense of the long term. Performance has
been poor, and we are disappointed. No one sets out to
underperform. Even if we know periods of underperformance are
inevitable for a long-term growth investor, it does not make it
easier. However, given the opportunities in front of the companies
the Company invests in, we cannot panic and pro-cyclically turn
defensive. We will not get every investment right. But we have
underwritten the investment cases for the companies held in the
portfolio and are excited about their long-term potential. The
forest has been razed; we must not trample on the seedlings before
they have had a chance to flourish.
The US Equity Team
Valuing Private Companies
We aim to hold our private company investments at 'fair value',
i.e. the price that would be paid in an open-market transaction.
Valuations are adjusted both during regular valuation cycles and on
an ad hoc basis in response to 'trigger events'. Our valuation
process ensures that private companies are valued in both a fair
and timely manner.
The valuation process is overseen by a valuations group at
Baillie Gifford, which takes advice from an independent third party
(S&P Global). The valuations group is independent from the
investment team with all voting members being from different
operational areas of the firm, and the investment managers only
receive final valuation notifications once they have been
applied.
We revalue the private holdings on a three-month rolling cycle,
with one-third of the holdings reassessed each month. During stable
market conditions, and assuming all else is equal, each investment
would be valued four times in a 12-month period. For investment
trusts, the prices are also reviewed twice per year by the
respective boards and are subject to the scrutiny of external
auditors in the annual audit process.
Beyond the regular cycle, the valuations committee also monitors
the portfolio for certain 'trigger events'. These may include
changes in fundamentals, a takeover approach, an intention to carry
out an Initial Public Offering ('IPO'), company news which is
identified by the valuation team or by the portfolio managers, or
meaningful changes to the valuation of comparable public companies.
Any ad hoc change to the fair valuation of any holding is
implemented swiftly and reflected in the next published net asset
value ('NAV'). There is no delay.
The valuations committee also monitors relevant market indices
on a weekly basis and updates valuations in a manner consistent
with our external valuer's (S&P Global) most recent valuation
report where appropriate.
Continued market volatility has meant that recent pricing has
moved much more frequently than would have been the case with the
quarterly valuations cycle. The following data quantifies the
revaluations carried out during the year to 31 May 2023, however
does not reflect the ongoing monitoring of the private investment
portfolio that has not resulted in a change in valuation.
Baillie Gifford US Growth
Trust*
================================== =====
Percentage of portfolio revalued
up to 4 times (#) 30%
Percentage of portfolio revalued
up to 6 times 80%
Percentage of portfolio revalued
up to 7 times 20%
---------------------------------- -----
* Data reflecting period from 1 June 2022 to 31 May 2023 to
align with the Company's reporting period.
(#) Includes additions in the year.
Year to date, most revaluations have been decreases, with a
small number of companies raising capital at an increased
valuation. The average movement in company valuations and share
prices for those are shown below.
Average Average
movement movement
in company in share
valuation price
================== ============ ==========
Baillie Gifford
US Growth Trust
* -15.5% -18.6%
================== ============ ==========
* Data reflecting period from 1 January 2022 to 31 May 2023 to
align with the Company's reporting period.
During the year to 31 May 2023, as we continued to write down
some of the valuations of the investments in the portfolio, the
economic reality of the liquidation preferences having been
reviewed, leading to a less pronounced divergence in the valuation
decreases across the various share classes held in the portfolio
and the underlying company valuations.
Investment Principles
To our shareholders
Our core task is to invest in the exceptional growth businesses
in America. Over the full course of time, these companies will
develop deep competitive moats and generate abnormal profits and
unusually high shareholder returns. We endeavour to generate
returns for our clients by helping in the creation and improvement
of such useful enterprise. To the extent that we are successful in
identifying these companies, we believe that we can multiply the
wealth of our clients over the long term.
Managing shareholders' money is a huge privilege, and not one we
take lightly. It is a relationship, not a transaction.
Relationships can only be built on a foundation of trust and
understanding. It is with this in mind that we seek to lay out the
fundamental principles by which we will manage your money and the
framework for how we make decisions so that you, our shareholders,
can decide whether it aligns with your investment philosophy.
3/4 We believe the fundamental measure of our success will be
the value we create for our shareholders over the long term. It is
only over periods of five years or more that the characteristics we
look for in businesses become apparent. Our turnover has been low,
consistent with our time horizon. We ask that our shareholders
measure our performance over similar periods.
3/4 Short-term volatility is an inevitable feature of the
market, and we will not manage the portfolio to reduce volatility
at the expense of long-term gain. Many managers are risk-averse and
fear loss more than they value gain. Therefore, they accept
smaller, more predictable risks rather than the larger and less
predictable ones. We believe that this is harmful to long-term
returns, and we will not shy away from making investments that are
perceived to be risky if we believe that the potential payoffs are
worthwhile. This means that our performance may be lumpy over the
short term.
3/4 We believe, and academic work has shown, that long-term
equity returns are dominated by a small handful of exceptional
growth companies that deliver outsized returns. Most stocks do not
matter for long-term equity returns, and investors will be poorly
served by owning them. In our search for exceptional growth
companies, we will make mistakes. But the asymmetry inherent in
equity markets, where we can make far more in a company if we are
right than lose if we are wrong, tells us that the costliest of
mistakes is excessive risk aversion.
3/4 We do not believe that the index is the right starting point
for portfolio construction. The index allocates capital based on
size. We believe that capital should be allocated based on marginal
return and the ability to grow at those rates of return. Big
companies are not immune to disruption. We do not manage the
portfolio to an active share target, but we expect the active share
of this fund to be high.
3/4 The role of capital markets has changed, and we have evolved
with it. As companies are remaining private for longer, so too have
we broadened our search for exceptional growth companies into
private companies. We are largely indifferent to a company's
private or public status. We will conduct diligent analysis and
allocate capital to where the highest returns are likely to be.
3/4 We may discuss long-term trends and themes present in the
portfolio, but we do not plan on discussing short-term performance.
We believe our duty is to maximise the long-term wealth of our
shareholders, and that creating narratives around short-term
performance serves our shareholders poorly.
3/4 We will endeavour to operate in the most efficient, honest,
and economical way possible. That means keeping our management fees
and ongoing costs low. We recognise that even modest amounts, when
allowed to compound over long periods of time, add up to staggering
sums, and we do not wish to dilute the compounding of returns with
the compounding of costs.
With this foundation, we hope to build Baillie Gifford US Growth
into a world class savings vehicle. We are grateful that you have
joined us on this journey, and we look forward to a long and
hopefully prosperous relationship with you.
Baillie Gifford Statement on Stewardship
Baillie Gifford's over-arching ethos is that we are 'actual'
investors. We have a responsibility to behave as supportive and
constructively engaged long-term investors. We invest in companies
at different stages in their evolution, across vastly different
industries and geographies and we celebrate their uniqueness.
Consequently, we are wary of prescriptive policies and rules,
believing that these often run counter to thoughtful and beneficial
corporate stewardship. Our approach favours a small number of
simple principles which help shape our interactions with
companies.
Our Stewardship Principles
Prioritisation of Long-term Value Creation
We encourage our holdings to be ambitious and focus their
investments on long-term value creation. We understand that it is
easy to be influenced by short-sighted demands for profit
maximisation but believe these often lead to sub-optimal long-term
outcomes. We regard it as our responsibility to steer holdings away
from destructive financial engineering towards activities that
create genuine economic and stakeholder value over the long run. We
are happy that our value will often be in supporting management
when others do not.
A Constructive and Purposeful Board
We believe that boards play a key role in supporting corporate
success and representing the interests of all capital providers.
There is no fixed formula, but it is our expectation that boards
have the resources, information, cognitive and experiential
diversity they need to fulfil these responsibilities. We believe
that good governance works best when there are diverse skillsets
and perspectives, paired with an inclusive culture and strong
independent representation able to assist, advise and
constructively challenge the thinking of management.
Long-term Focused Remuneration with Stretching Targets
We look for remuneration policies that are simple, transparent
and reward superior strategic and operational endeavour. We believe
incentive schemes can be important in driving behaviour, and we
encourage policies which create genuine long-term alignment with
external capital providers. We are accepting of significant payouts
to executives if these are commensurate with outstanding long-run
value creation, but plans should not reward mediocre outcomes. We
think that performance hurdles should be skewed towards long-term
results and that remuneration plans should be subject to
shareholder approval.
Fair Treatment of Stakeholders
We believe it is in the long-term interests of all enterprises
to maintain strong relationships with all stakeholders - employees,
customers, suppliers, regulators and the communities they exist
within. We do not believe in one-size-fits-all policies and
recognise that operating policies, governance and ownership
structures may need to vary according to circumstance. Nonetheless,
we believe the principles of fairness, transparency and respect
should be prioritised at all times.
Sustainable Business Practices
We believe an entity's long-term success is dependent on
maintaining its social licence to operate and look for holdings to
work within the spirit and not just the letter of the laws and
regulations that govern them. We expect all holdings to consider
how their actions impact society, both directly and indirectly, and
encourage the development of thoughtful environmental practices and
'net-zero' aligned climate strategies as a matter of priority.
Climate change, environmental impact, social inclusion, tax and
fair treatment of employees should be addressed at board level,
with appropriately stretching policies and targets focused on the
relevant material dimensions. Boards and senior management should
understand, regularly review and disclose information relevant to
such targets publicly, alongside plans for ongoing improvement.
Purposeful Company Conversations
We talk often with the boards, managers and staff of the
companies we invest in. These conversations are central to our
research and monitoring. Gaining an insight into the motivations
and abilities of the people running each company makes us more
effective owners. We are both grateful for, and mindful of, the
time that is made available to us.
We use that time as effectively as we can. We monitor every
holding against our key investment contentions, which include
statements on the broader societal impact of growth for each
business. These frameworks help us to prioritise our questions when
we meet with companies.
In return we communicate our reasons for owning the shares
clearly to our holdings as a minimum. Simply knowing that you have
a shareholder on the books who will support you if you make choices
that enhance the long-term return opportunity can help management
teams to be ambitious. More directly, we can provide capital
support on occasion too, particularly for the private companies in
the Company's portfolio.
It is far from a one-way street. We are not afraid to provide
thoughtful challenge to the companies we invest in. We are clear
about our views on topics we see as being key to each investment
case. Some examples of the discussions we have found most useful
this year are noted below.
Duolingo
We met with Duolingo, an online education business, in its
Pittsburgh offices towards the end of 2022. We explored the
company's use of AI. The company had shifted its product
development focus towards generative AI earlier that year, and by
the time we met with it every engineer in its organisation was
using it. We discussed its content generation capabilities and the
possibilities this might unlock. The founder Luis Von Ahn believes
that human tutor equivalence could be five years away, well within
our investment time horizon. The company aims to make great
education universally available. We discussed how the high quality
of its free product both furthers its mission and acts as an edge
versus potential competition. The social benefits of Duolingo's
growth do not just align with shareholder returns, they reinforce
the company's potential. This is an exciting combination.
Shopify
We met with the Chief Operating Officer of the ecommerce
platform Shopify in London in late 2022. Shopify's platform helps
merchants of all sizes to sell online effectively and with little
hassle. Its tools level the online playing field, which should lead
to more competition and greater consumer choice. Having enjoyed
strong demand for their services during the Covid-19 pandemic, the
company has had to readjust to a much tougher environment. Shopify
has made staff redundant and discontinued some of its investment
projects. These choices present serious challenges to a growth
business, but the discussion highlighted the considered approach
that Shopify is taking as well as its efforts to maintain the pace
of innovation at the projects it considers most important to its
merchants.
Twilio
Twilio is a cloud-based software platform. It provides software
that developers use when adding communication capabilities into
their applications, allowing businesses to communicate with their
customers in ways that were not possible until recently. Twilio has
grown its sales substantially but has made little progress toward
profitability. It has had to change focus in a toughening
environment, making staff redundant and renegotiating compensation.
We spoke with the company's Chief Operating Officer about these
issues in 2022, including the dilutive effect of their stock-based
compensation agreements. We followed up with a call in February
this year to talk with the CEO and the leaders of Twilio's newly
formed business divisions. Twilio still has serious challenges to
address, but we believe that the stage is set for a more
disciplined and efficient company to emerge.
Ginkgo Bioworks
The synthetic biology business has only been a public company
since 2021, though the Company has invested in Ginkgo since 2019.
Ginkgo designs, tests and ferments programmed cells for a wide
range of end uses; from healthcare to chemicals manufacturing. It
is a complicated and nascent business, and during the year we
discussed with the company how it communicates its progress to
public market participants. We suggested that the company might
benefit from providing more disclosure about the potential value of
its projects. Ginkgo often retains a right to participate in the
future success of a product it develops via milestones, royalties
or ownership. We think this is poorly understood. Improving
awareness here could put the company on the strongest possible
footing as it grows.
Solugen
Solugen is a synthetic biology company that has remained
private. It has been held in the Company's portfolio since 2021.
Solugen aims to bring greener, cleaner and safer chemical
production processes into the mainstream without sacrificing
quality or raising costs. It does this by developing processes that
harness both enzymes and metal catalysts. It already has products
at commercial scale serving the oil and gas sector; an important
validation of the concept. It is a highly ambitious, and
potentially transformational business. We accepted the offer of a
board observer position at the company. This has helped to deepen
our understanding of how this innovative business is governed. It
has also broadened our network of contacts who are experts in this
space, providing valuable additional opportunities to learn more
about this fast-developing industry.
Review of Investments
A review of the Company's ten largest investments and additions
to the private company securities as at 31 May 2023 is given
below.
Top Ten Holdings
Space Exploration Technologies
6.5% of total assets *
Space Exploration Technologies designs, manufactures and
launches advanced rockets and spacecraft. By fully embracing
innovation and vertical integration, the company has opened up a
series of cost and capability improvements which are transforming
the space industry. These improvements have unlocked a diverse
range of revenue generating opportunities in areas such as global
satellite connectivity and space logistics.
Space Exploration Technologies is a private company
investment.
Shopify
5.4% of total assets *
Shopify provides software tools which allow merchants to easily
set-up and manage their businesses across an increasingly complex
and fragmented retail landscape. Shopify's software helps to make
merchants more efficient by automating large swathes of their
operations (e.g. marketing, inventory management, payments, order
processing, shipping) thus allowing them to focus on product market
fit. The company maintains a rapid pace of innovation and is run by
an impressive founder who has built a distinctive merchant-focused
culture.
The Trade Desk
5.3% of total assets *
The advertising industry is undergoing a wholesale shift in the
way that advertising is bought and sold. Whereas in the past
advertising was bought and sold in bundles, in the digital world,
advertising can be transacted on a one to one basis, targeting only
the audiences that are relevant. The Trade Desk provides the
technology that enables this targeted buying of advertising through
real-time auctions. Its platform connects media buyers to a wide
range of digital inventory and provides a set of tools to help
buyers determine what price to pay for those ad opportunities. This
is known as programmatic advertising - the buying of advertising
using data. Programmatic advertising is still in its infancy and is
growing rapidly, supported by higher efficacy and a tangible
demonstration of return on investment. As the programmatic industry
becomes mainstream, it will consolidate around a handful of buying
platforms, and we believe that The Trade Desk will emerge as the
leading buying platform for the independent internet.
Stripe
4.2% of total assets *
Stripe is a payments technology company. Founded in 2010 by
Irish brothers Patrick and John Collison, the company is in the
process of developing a platform for sending money seamlessly and
compliantly between any two internet-connected nodes in the world.
The company processes massive volumes of payments from a broad
customer base, ranging from US start-ups to global giants. Stripe's
long-term ambition is to make entrepreneurship easier and thus
significantly increase the amount of business conducted online.
Stripe is a private company investment.
Tesla
4.1% of total assets *
Tesla makes electric cars, battery storage and solar power
systems. The company has proven that cars can be environmentally
friendly without compromising on style, safety, or performance. We
are in the early stages of a major shift in the transportation
industry towards EVs, and Tesla is the best positioned globally to
capitalize on this. It is an innovative and mission-driven company
whose success is aligned with the interests of the planet.
NVIDIA
4.0% of total assets *
NVIDIA designs and manufactures graphics processing units (GPUs)
for the gaming and professional markets. They are highly
specialised semiconductor chips that can be used for a range of
applications, from gaming to machine learning and artificial
intelligence ('AI'). After years of investment into both hardware
and software, NVIDIA is well positioned to benefit from the rise of
generative AI, as its chips form the infrastructure layer to power
large language models. NVIDIA is using its scale to further
reinvest in its opportunity; designing new hardware to make data
centres more powerful and energy efficient, whilst building
software to help companies adopt AI more quickly.
Amazon
3.7% of total assets *
Amazon addresses huge market opportunities in the form of global
retail and global IT spending. In retail, it competes on price,
selection and convenience and is improving all three as it gets
bigger. Amazon's AWS (Amazon Web Services) division is less mature
than its retail business, but it is no less exciting. Here, Amazon
is in a clear position of leadership in what could turn out to be
one of the largest and most important market shifts of our time.
Both opportunities are outputs of what is perhaps most distinctive
of all about Amazon - its culture. Amazon optimises for customer
delight. The company is run with a uniquely long-term perspective.
It is willing to be bold and scale its experiments (and failures)
as it grows. These cultural distinctions allow Amazon to possess
the rare and attractive combination of scale and immaturity.
Moderna
3.5% of total assets *
Moderna is a leader in the field of mRNA therapeutics, a new
class of medicines that leverage the body's natural
protein-production apparatus to treat diseases. It is known for its
Covid-19 vaccine, but its long-term growth opportunity is far
broader. mRNA is a foundational technology that theoretically has
the potential to induce the production of just about any protein -
human or non-human - inside our cells. This versatility opens up a
wide range of therapeutic opportunities for mRNA. Furthermore,
mRNA, like DNA, is, in a sense, digital, and is therefore
programmable. In moving from one drug to the next, the delivery
mechanism and building blocks remain the same. The only thing that
changes is the code. Because of this, Moderna's mRNA platform ought
to be more scalable than past drug development approaches. Indeed,
Moderna may have more in common with a software company than a
traditional biotech business.
Netflix
2.8% of total assets *
Netflix has the potential to become the first truly global
content and distribution media brand. Its base of more than 230
million subscribers allows it to invest in building a strong
customer proposition through its library of exclusive and desirable
content. This in turn attracts more subscribers, creating a
powerful flywheel that distances itself from other likely
competitors. The shift from linear TV to on-demand streaming is
still in the early stages, and Netflix is a prime beneficiary.
CoStar Group
2.6% of total assets *
CoStar provides information, analytics and online marketplaces
to the commercial real estate industry in the US. The market for
commercial real estate information and analytics is vast. Each
transaction has numerous participants and copious information
requirements and, to facilitate transactions, participants must
have accurate and current information. CoStar provides this
information through its CoStar Suite, a dataset that has been built
up over three decades. It aims to provide industry professionals
with the knowledge to research and complete transactions, price
optimally and stay up to date with market changes. The company has
leveraged its position to expand into online marketplaces in both
commercial real estate, apartment listings and most recently
residential real estate. The company is led by its ambitious
founder, Andy Florance, who has shown himself to be a shrewd
operator who is willing to sacrifice short-term profitability for
long-term growth.
Private Company Securities Purchased in the Year to 31 May
2023
Oddity
0.9% of total assets *
Oddity is a cosmetics and skincare holding company, focused on
launching online-only direct-to-consumer brands. Fundamentally, the
company believes the western beauty industry has failed to make the
transition to online and remains stuck in a paradigm of online
replenishment purchases rather than customer acquisition. Oddity's
brands present customers with high quality products in
high-retention categories, at prestige price points (foundation at
US$45 vs US$8-16 for mass market) and take away the primary
frictions of online purchasing through a returns guarantee and
product matching. The promise and ambition is to use the common
data-driven backbone to iteratively launch brands with US$1 billion
plus sales potential and form a new type of Consumer Packaged Goods
('CPG') company.
* Total assets less current liabilities, before deduction of
borrowings. See Glossary of Terms and Alternative Performance
Measures at the end of this announcement.
List of Investments as at 31 May 2023
2023 % of total 2022
Value assets Value
Name Business GBP'000 * GBP'000
===================================== ==================================== ============ ============= ============
Space Exploration Technologies
Class A Common (U) Rocket and spacecraft company 2,374 0.4 2,122
Space Exploration Technologies
Class C Common (U) Rocket and spacecraft company 732 0.1 655
Space Exploration Technologies
Series J Preferred (U) Rocket and spacecraft company 20,041 3.3 17,917
Space Exploration Technologies
Series K Preferred (U) Rocket and spacecraft company 4,568 0.8 4,083
Space Exploration Technologies
Series N Preferred (U) Rocket and spacecraft company 11,505 1.9 10,285
------------ ------------- ------------
39,220 6.5 35,062
Cloud-based commerce platform
Shopify Class A provider 33,135 5.4 19,215
The Trade Desk Advertising technology company 32,448 5.3 26,818
Stripe Class B Common (U) Online payment platform 2,281 0.4 4,452
Stripe Series G Preferred (U) Online payment platform 11,110 1.8 21,678
Stripe Series H Preferred (U) Online payment platform 1,430 0.2 1,865
Stripe Series I Preferred (U) Online payment platform 10,860 1.8 -
------------ ------------- ------------
25,681 4.2 27,995
Electric cars, autonomous driving
Tesla and solar energy 24,967 4.1 30,401
NVIDIA Graphics chips 24,334 4.0 12,481
Online retailer and cloud computing
Amazon provider 22,361 3.7 21,988
Moderna Therapeutic messenger RNA 21,025 3.5 25,556
Subscription service for TV
Netflix shows and movies 17,247 2.8 9,620
Commercial property information
CoStar Group provider 15,817 2.6 12,610
Brex Class B Common (U) Corporate credit cards for start-ups 8,050 1.3 10,922
Brex Series D Preferred (U) Corporate credit cards for start-ups 7,574 1.3 10,276
------------ ------------- ------------
15,624 2.6 21,198
Zipline International Series
C Preferred (U) Drone-based medical delivery 8,771 1.4 5,995
Zipline International Series
E Preferred (U) Drone-based medical delivery 4,970 0.8 3,695
Zipline International Series
F Preferred (U) Drone-based medical delivery 807 0.1 -
------------ ------------- ------------
14,548 2.3 9,690
Workday Enterprise information technology 13,548 2.2 10,155
Faire Wholesale (U) Online wholesale marketplace 4,546 0.7 7,590
Faire Wholesale Series F Preferred
(U) Online wholesale marketplace 5,114 0.9 7,886
Faire Wholesale Series G Preferred
(U) Online wholesale marketplace 3,789 0.6 4,569
------------ ------------- ------------
13,449 2.2 20,045
Cloud-based provider of network
Cloudflare services 12,589 2.1 9,551
Duolingo Mobile learning platform 11,944 2.0 3,162
Doordash Online local delivery 11,482 1.9 7,065
Air conditioning, heating and
refrigeration
Watsco equipment distributor 11,076 1.8 10,024
Alnylam Pharmaceuticals Therapeutic gene silencing 11,066 1.8 7,650
Discord Series I Preferred (U) Communication software 11,006 1.8 11,740
Solugen Series C-1 Preferred Combines enzymes and metal catalysts
(U) to make chemicals 7,257 1.2 7,010
Combines enzymes and metal catalysts
Solugen Series D Preferred (U) to make chemicals 3,487 0.6 -
------------ ------------- ------------
10,744 1.8 7,010
Lyra Health Series E Preferred Digital mental health platform
(U) for enterprises 6,688 1.1 7,101
Lyra Health Series F Preferred Digital mental health platform
(U) for enterprises 1,591 0.3 1,656
------------ ------------- ------------
8,279 1.4 8,757
IT monitoring and analytics
Datadog platform 8,193 1.3 7,645
User generated content game
Roblox company 8,115 1.3 -
Databricks Series H Preferred
(U) Data and AI platform 7,974 1.3 8,193
Developer of a SaaS-based cloud
Snowflake (P) data warehousing platform 7,598 1.3 6,124
Twilio Cloud-based communications platform 7,399 1.2 9,969
Electric field based cancer
Novocure therapies 7,182 1.2 8,406
Marketplace for truckers and
Convoy Common (U) shippers 557 0.1 -
Marketplace for truckers and
Convoy Series D Preferred (U) shippers 2,962 0.5 4,834
Marketplace for truckers and
Convoy Series E Preferred (U) shippers 2,792 0.5 3,967
Convoy Convertible Loan Note Marketplace for truckers and
(U) shippers 403 0.1 -
------------ ------------- ------------
6,714 1.2 8,801
Snyk Ordinary Shares (U) Developer of security software 2,424 0.4 1,659
Snyk Series F Preferred (U) Developer of security software 4,061 0.6 3,889
------------ ------------- ------------
6,485 1.0 5,548
Gene sequencing equipment and
Illumina consumables 6,183 1.0 14,453
Chewy Online pet supplies retailer 6,168 1.0 4,868
Video game platform and software
Epic Games (U) developer 6,060 1.0 10,555
Workrise Technologies Series Jobs marketplace for the energy
D Preferred (U) sector 2,662 0.4 3,595
Workrise Technologies Series Jobs marketplace for the energy
D-1 Preferred (U) sector 592 0.1 799
Workrise Technologies Series Jobs marketplace for the energy
E Preferred (U) sector 2,741 0.5 3,531
------------ ------------- ------------
5,995 1.0 7,925
Clinical stage neurodegeneration
Denali Therapeutics company 5,803 1.0 4,590
Image sharing and social media
Pinterest company 5,698 0.9 3,550
Medical tools to treat vascular
Penumbra diseases 5,696 0.9 4,847
Online cosmetics and skincare
Oddity Tech Ltd Class A (U) company 5,648 0.9 -
Remote conferencing service
Zoom Video Communications provider 5,385 0.9 9,006
MarketAxess Holdings Electronic bond trading platform 5,071 0.9 5,475
BillionToOne Series C Preferred Molecular diagnostics technology
(U) platform 3,438 0.6 3,662
BillionToOne Promissory Note Molecular diagnostics technology
(U) platform 1,614 0.3 -
------------ ------------- ------------
5,052 0.9 3,662
Away (JRSK) Series D Preferred
(U) Travel and lifestyle brand 1,698 0.3 1,327
Away (JRSK) Convertible Promissory
Note 2021 (U) Travel and lifestyle brand 1,075 0.2 1,085
Away (JRSK) Convertible Promissory
Note (U) Travel and lifestyle brand 1,075 0.2 1,085
Away (JRSK) Series Seed Preferred
(U) Travel and lifestyle brand 1,165 0.2 617
------------ ------------- ------------
5,013 0.9 4,114
Roku Online media player 4,895 0.8 8,337
Online furniture and homeware
Wayfair retailer 4,831 0.8 7,430
HashiCorp Open source infrastructure software 4,709 0.8 3,549
Affirm (P) Consumer finance 2,116 0.3 4,466
Affirm Class B (P) Consumer finance 2,373 0.4 4,467
------------ ------------- ------------
4,489 0.7 8,933
10X Genomics Single cell sequencing company 4,361 0.7 4,441
Online educational services
Coursera provider 4,176 0.6 5,824
Tanium Class B Common (U) Online security management 3,814 0.6 6,737
Self-driving vehicles for local
Nuro Series C Preferred (U) delivery 2,040 0.3 3,930
Self-driving vehicles for local
Nuro Series D Preferred (U) delivery 1,645 0.3 3,201
------------ ------------- ------------
3,685 0.6 7,131
PsiQuantum Series D Preferred
(U) Silicon photonic quantum computing 3,535 0.6 3,770
Snap Class A Camera and social media company 3,399 0.6 4,889
Bioengineering company developing
microorganisms that produce
Ginkgo Bioworks (P) various proteins 2,946 0.5 5,842
Online marketplace for travel
Airbnb Class B Common (P) accommodation 2,725 0.4 2,951
Social network and digital workflow
Doximity tools for medical professionals 2,680 0.4 -
Niantic Series C Preferred (U) Augmented reality games 2,608 0.4 3,841
Online and physical glasses
Warby Parker (P) retailer 2,406 0.4 3,846
Indigo Agriculture Common (U) Agricultural technology company 11 <0.1 42
Indigo Agriculture Series E Preferred
(U) Agricultural technology company 1,415 0.2 1,414
Indigo Agriculture Series F Preferred
(U) Agricultural technology company 398 0.1 416
Indigo Agriculture Series G Preferred
(U) Agricultural technology company 551 0.1 592
------------ ------------- ------------
2,375 0.4 2,464
Lemonade Insurance company 2,335 0.4 3,111
Capsule Series 1-D Preferred
(U) Digital pharmacy 1,305 0.2 -
Capsule Series E Preferred (U) Digital pharmacy 807 0.1 -
------------ ------------- ------------
2,112 0.3 -
Recursion Pharmaceuticals Drug discovery platform 2,111 0.3 1,340
Technology-based real estate
Redfin brokerage firm 2,048 0.3 2,136
Online directory service for
Thumbtack Class A Common (U) local businesses 810 0.1 1,108
Thumbtack Series A Preferred Online directory service for
(U) local businesses 58 <0.1 79
Thumbtack Series B Preferred Online directory service for
(U) local businesses 4 <0.1 5
Thumbtack Series C Preferred Online directory service for
(U) local businesses 17 <0.1 23
Thumbtack Series I Preferred Online directory service for
(U) local businesses 1,113 0.2 1,135
------------ ------------- ------------
2,002 0.3 2,350
Chegg Online education company 1,777 0.3 4,987
Rivian Automotive Developer of security platform 1,560 0.3 3,472
Sweetgreen Salad fast food chain 1,212 0.2 -
Aurora (P) Self-driving technology 368 0.1 1,003
Aurora Innovation Class B Common
(P) Self-driving technology 785 0.1 1,767
------------ ------------- ------------
1,153 0.2 2,770
Blockstream Series B-1 Preferred Bitcoin and digital asset
(U) infrastructure 1,140 0.2 2,254
Sana Biotechnology Gene editing technology 929 0.2 825
Honor Technology Series D Preferred
(U) Home care provider 609 0.1 2,451
Honor Technology Series E Preferred
(U) Home care provider 264 <0.1 1,037
------------ ------------- ------------
873 0.1 3,488
-------------------------------------------------------------------------- ------------ ------------- ------------
Total Investments 605,908 99.5
Net Liquid Assets # 3,033 0.5
--------------------------------------------------------------------------- ------------ ------------- ------------
Total Assets * 608,941 100.0
--------------------------------------------------------------------------- ------------ ------------- ------------
* Total assets less current liabilities, before deduction of
borrowings. See Glossary of Terms and Alternative Performance
Measures at the end of this announcement.
(P) Denotes listed (private company) security previously held in
the portfolio as an unlisted (private company) security.
(U) Denotes unlisted (private company) security.
# See Glossary of Terms and Alternative Performance Measures at
the end of this announcement.
Listed Unlisted Net liquid Total assets
equities securities assets *
% % # %
%
============ ========= =========== ========== ============
31 May 2023 65.0 34.5 0.5 100.0
============ ========= =========== ========== ============
31 May 2022 63.2 36.4 0.4 100.0
============ ========= =========== ========== ============
Figures represent percentage of total assets. See Glossary of
Terms and Alternative Performance Measures at the end of this
announcement.
Includes holdings in ordinary shares, preference shares and
convertible promissory notes.
# See Glossary of Terms and Alternative Performance Measures at the end of this announcement.
Key contributors and detractors to performance - year to 31 May
2023
Contributors Absolute Performance Detractors Absolute Performance
% * % *
=============== ==================== ====================== ====================
Shopify Class A 2.6 Stripe (U) (2.7)
NVIDIA 2.4 First Republic Bank # (1.2)
Netflix 1.5 Faire Wholsesale (U) (1.2)
The Trade Desk 1.3 Brex (U) (1.1)
Duolingo 1.0 Tesla (0.9)
=============== ==================== ====================== ====================
* Absolute performance (in sterling terms) has been calculated
on a total return basis over the period 1 June 2022 to 31 May 2023.
For the definition of total return see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
(P) Denotes listed (private company) security previously held in
the portfolio as an unlisted (private company) security.
(U) Denotes unlisted (private company) security.
# First Republic Bank was sold during the period.
Distribution of Total Assets*
At At
31 May 2023 31 May 2022
% %
======================== ================== ==================
Communication Services 11.7 4.2
Consumer Discretionary 18.8 20.7
Consumer Staples 1.3 0.4
Financials 3.9 6.1
Healthcare 13.7 18.2
Industrials 16.2 14.8
Information Technology 31.3 33.8
Materials 2.3 1.1
Real Estate 0.3 0.3
Net Liquid Assets 0.5 0.4
100.0 100.0
======================== ================== ==================
* Total assets less current liabilities before deduction of all
borrowings. See Glossary of Terms and Alternative Performance
Measures at the end of this announcement.
Private Companies Summary
Portfolio activity - year to 31 May 2023
GBP24.8m of new capital deployed in private companies during the
year.
New buys Follow on funding
rounds
=============== ======================
Oddity Tech Ltd BillionToOne Solugen
Convoy Stripe
Capsule Zipline
=============== ============ ========
Concentration
At 31 May we held 25 private companies which equated to 34.5% of
total assets.
3/4 Five companies account for 51.6% of the private company exposure.
3/4 Ten companies account for 73.3% of the private company exposure.
Private exposure % of total
assets *
=============================== ==========
Space Exploration Technologies 6.5
=============================== ==========
Stripe 4.2
=============================== ==========
Brex 2.6
=============================== ==========
Zipline International 2.3
=============================== ==========
Faire Wholesale 2.2
=============================== ==========
Other 16.7
=============================== ==========
* Total assets less current liabilities before deduction of all
borrowings. See Glossary of Terms and Alternative Performance
Measures at the end of this announcement.
Size
Our private company exposure tends to be weighted to the upper
end of the maturity curve, focused on late stage private companies
who are scaling up and becoming profitable.
Cap Total equity % of total assets Number of holdings
value (USD) *
======= ============= ================= ==================
Micro <$300m 0.1 1
======= ============= ================= ==================
Small $300m-$2bn 8.5 11
======= ============= ================= ==================
Medium $2bn-$10bn 11.1 8
======= ============= ================= ==================
Large >$10bn 14.8 5
======= ============= ================= ==================
34.5 25
===================== ================= ==================
As at 31 May 2023.
* Total assets less current liabilities before deduction of all
borrowings. See Glossary of Terms and Alternative Performance
Measures at the end of this announcement.
Income Statement
For the year ended 31 May
2023 2023 2022 2022 2022
2023 Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBPí000 GBP'000 GBP'000 GBPí000
============================ ===== ============ ======== ============= ======== ========= =============
Losses on investments - (10,169) (10,169) - (314,153) (314,153)
Currency losses - (700) (700) - (2,976) (2,976)
Income 2 850 - 850 568 - 568
Investment management
fee 3 (3,345) - (3,345) (4,865) - (4,865)
Other administrative
expenses (670) - (670) (676) - (676)
============================ ===== ============ ======== ============= ======== ========= =============
Net return before finance
costs
and taxation (3,165) (10,869) (14,034) (4,973) (317,129) (322,102)
============================ ===== ============ ======== ============= ======== ========= =============
Finance costs of borrowings (1,482) - (1,482) (741) - (741)
============================ ===== ============ ======== ============= ======== ========= =============
Net return before taxation (4,647) (10,869) (15,516) (5,714) (317,129) (322,843)
============================ ===== ============ ======== ============= ======== ========= =============
Tax (71) - (71) (67) - (67)
============================ ===== ============ ======== ============= ======== ========= =============
Net return after taxation (4,718) (10,869) (15,587) (5,781) (317,129) (322,910)
============================ ===== ============ ======== ============= ======== ========= =============
Net return per ordinary
share 4 (1.55p) (3.56p) (5.11p) (1.88p) (103.24p) (105.12p)
============================ ===== ============ ======== ============= ======== ========= =============
The total column of this Statement represents the profit and
loss account of the Company. The supplementary revenue and capital
columns are prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in this Statement derive from
continuing operations.
A Statement of Comprehensive Income is not required as the
Company does not have any other comprehensive income and the net
return after taxation is both the profit and comprehensive income
for the year.
Balance Sheet
As at 31 May
2023 2023 2022 2022
Notes GBP'000 GBP'000 GBP'000 GBP'000
======================================= ===== ======== =========== ======== ===========
Fixed assets
Investments held at fair value through
profit or loss 6 605,908 621,587
======================================= ===== ======== =========== ======== ===========
Current assets
Debtors 657 359
Cash and cash equivalents 3,440 3,007
======================================= ===== ======== =========== ======== ===========
4,097 3,366
======================================= ===== ======== =========== ======== ===========
Creditors
Amounts falling due within one year 8 (41,406) (20,930)
======================================= ===== ======== =========== ======== ===========
Net current liabilities (37,309) (17,564)
======================================= ===== ======== =========== ======== ===========
Total assets less current liabilities 568,599 604,023
======================================= ===== ======== =========== ======== ===========
Creditors
Amounts falling due after more than
one year 8 - (19,837)
======================================= ===== ======== =========== ======== ===========
Net assets 568,599 584,186
======================================= ===== ======== =========== ======== ===========
Capital and reserves
Share capital 3,073 3,073
Share premium account 250,827 250,827
Special distributable reserve 168,942 168,942
Capital reserve 165,931 176,800
Revenue reserve (20,174) (15,456)
======================================= ===== ======== =========== ======== ===========
Shareholders' funds 568,599 584,186
======================================= ===== ======== =========== ======== ===========
Net asset value per ordinary share
(after deducting borrowings at book
value * ) 186.33p 191.44p
======================================= ===== ======== =========== ======== ===========
Ordinary shares in issue 10 305,153,700 305,153,700
======================================= ===== ======== =========== ======== ===========
Statement of Changes in Equity
For the year to 31 May 2023
Share Share Special distributable Capital Revenue Shareholders'
capital premium account reserve Reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ======== ================ ========================= ========= ======== ===============
Shareholders' funds at 1
June 2022 3,073 250,827 168,942 176,800 (15,456) 584,186
Net return after taxation - - - (10,869) (4,718) (15,587)
========================= ======== ================ ========================= ========= ======== ===============
Shareholders' funds at 31
May 2023 3,073 250,827 168,942 165,931 (20,174) 568,599
========================= ======== ================ ========================= ========= ======== ===============
For the year to 31 May 2022
Share Share Special distributable Capital Revenue Shareholders'
capital premium account reserve Reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ======== ================ ========================= ========= ======== ===============
Shareholders' funds at 1
June 2021 3,068 249,020 168,942 497,528 (9,675) 908,883
Ordinary shares issued
(note 10) 5 1,807 - - - 1,812
Ordinary shares bought
back into treasury (note
10) - - - (3,599) - (3,599)
Net return after taxation - - - (317,129) (5,781) (322,910)
========================= ======== ================ ========================= ========= ======== ===============
Shareholders' funds at 31
May 2022 3,073 250,827 168,942 176,800 (15,456) 584,186
========================= ======== ================ ========================= ========= ======== ===============
* The Capital Reserve balance at 31 May 2023 includes investment
holding gains of GBP26,558,000 (2022 - GBP13,165,000).
Cash Flow Statement
For the year ended 31 May
2023 2023 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000
=========================================== ======== ======== ========= =========
Cash flows from operating activities
Net return before taxation (15,516) (322,843)
Net losses on investments 10,169 314,153
Currency losses 700 2,976
Finance costs of borrowings 1,482 741
Overseas withholding tax incurred (71) (67)
Changes in debtors and creditors (308) (387)
============================================ ======== ======== ========= =========
Cash from operations * (3,544) (5,427)
Finance costs paid (1,481) (745)
============================================ ======== ======== ========= =========
Net cash outflow from operating activities (5,025) (6,172)
============================================ ======== ======== ========= =========
Cash flows from investing activities
Acquisitions of investments (63,894) (146,903)
Disposals of investments 69,383 129,027
============================================ ======== ======== ========= =========
Net cash inflow/(outflow) from investing
activities 5,489 (17,876)
============================================ ======== ======== ========= =========
Cash flows from financing activities
Ordinary shares issued - 1,812
Ordinary shares bought back into treasury
and stamp duty thereon - (3,599)
Bank loans drawn down # - 9,082
Bank loans repaid # - -
=========================================== ======== ======== ========= =========
Net cash inflow from financing activities - 7,295
============================================ ======== ======== ========= =========
Increase/(decrease) in cash and cash
equivalents 464 (16,753)
Exchange movements (31) 1,276
Cash and cash equivalents at start
of the period 3,007 18,484
============================================ ======== ======== ========= =========
Cash and cash equivalents at 31 May 3,440 3,007
============================================ ======== ======== ========= =========
* Cash from operations includes dividends received in the period
of GBP472,000 (2022 - GBP448,000) and interest received of
GBP154,000 (2022 - GBP1,000).
# Cash movements in bank loans are shown on a net basis. Prior
year balances have been updated to reflect this.
Notes to the Financial Statements
1. Principal accounting policies
The Financial Statements for the year to 31 May 2023 have been
prepared in accordance with Financial Reporting Standard 102, 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' on the basis of the accounting policies set out in the
Annual Report and Financial Statements which are unchanged from the
prior year and have been applied consistently.
2. Income
2023 2022
GBP'000 GBP'000
========================= ================= =================
Income from investments
Overseas dividends 472 448
Overseas interest 224 119
========================= ================= =================
696 567
========================= ================= =================
Other income
Deposit interest 154 1
========================= ================= =================
Total income 850 568
========================= ================= =================
3. Investment Management Fee
Baillie Gifford & Co Limited, a wholly owned subsidiary of
Baillie Gifford & Co, has been appointed as the Company's
Alternative Investment Fund Manager ('AIFM') and Company
Secretaries. Baillie Gifford & Co Limited has delegated
portfolio management services to Baillie Gifford & Co. Dealing
activity and transaction reporting has been further sub-delegated
to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong
Kong) Limited.
With effect from 1 September 2021 the annual management fee is
0.70% on the first GBP100 million of net assets, 0.55% on the next
GBP900 million of net assets and 0.50% on the remaining net assets.
Prior to 1 September 2021 the fee was 0.70% on the first GBP100
million of net assets and 0.55% on the remaining net assets.
Management fees are calculated and payable quarterly. The Board is
of the view that calculating the fee with reference to performance
would be unlikely to exert a positive influence on performance.
4. Net Return per Ordinary Share
2023 2023 2023 2022 2022 2022
Revenue Capital Total Revenue Capital Total
======================= ============== ============== =============== ============== ============ ==============
Net return after
taxation (1.55p) (3.56p) (5.11p) (1.88p) (103.24p) (105.12p)
======================= ============== ============== =============== ============== ============ ==============
Revenue return per ordinary share is based on the net revenue
loss after taxation of GBP4,718,000 (2022 - net revenue loss after
taxation of GBP5,781,000) and on 305,153,700 (2022 - 307,185,443)
ordinary shares, being the weighted average number of ordinary
shares in issue (excluding treasury shares) during each period.
Capital return per ordinary share is based on the net capital
loss for the financial period of GBP10,869,000 (2022 - net capital
loss of GBP317,129,000) and on 305,153,700 (2022 - 307,185,443)
ordinary shares, being the weighted average number of ordinary
shares in issue (excluding treasury shares) during each period.
Total return per ordinary share is based on the total loss for
the financial period of GBP15,587,000 (2022 - total loss of
GBP322,910,000) and on 305,153,700 (2022 - 307,185,443) ordinary
shares, being the weighted average number of ordinary shares in
issue (excluding treasury shares) during each period.
There are no dilutive or potentially dilutive shares in
issue.
5. Ordinary Dividends
There are no dividends paid or proposed in respect of the
financial year. There is no investment income available for
distribution by way of dividend for the year to 31 May 2023 due to
the revenue loss of GBP4,718,000 in the year (2022 - revenue loss
of GBP5,781,000).
6. Fair Value Hierarchy
Level 1 Level 2 Level 3 Total
As at 31 May 2023 GBP'000 GBP'000 GBP'000 GBP'000
====================================== ======== ======== ======== ================
Listed securities 396,272 - - 396,272
Unlisted ordinary shares - - 37,307 37,307
Unlisted preference shares* - - 168,162 168,162
Unlisted convertible promissory notes - - 4,167 4,167
====================================== ======== ======== ======== ================
Total financial asset investments 396,272 - 209,636 605,908
====================================== ======== ======== ======== ================
Level 1 Level 2 Level 3 Total
As at 31 May 2022 GBP'000 GBP'000 GBP'000 GBP'000
====================================== ======= ======= ======= =======
Listed securities 394,228 - - 394,228
Unlisted ordinary shares - - 45,842 45,842
Unlisted preference shares* - - 179,347 179,347
Unlisted convertible promissory notes - - 2,170 2,170
====================================== ======= ======= ======= =======
Total financial asset investments 394,228 - 227,359 621,587
====================================== ======= ======= ======= =======
* The investments in preference shares are not classified as
equity holdings as they include liquidation preference rights that
determine the repayment (or multiple thereof) of the original
investment in the event of a liquidation event such as a
take-over.
During the year to 31 May 2023 no investments (31 May 2022 -
investments with a book cost of GBP10,542,000) were transferred
from Level 3 to Level 1 on becoming listed.
Investments in securities are financial assets held at fair
value through profit or loss. In accordance with Financial
Reporting Standard 102, the tables above provide an analysis of
these investments based on the fair value hierarchy described
below, which reflects the reliability and significance of the
information used to measure their fair value.
Fair Value Hierarchy
The fair value hierarchy used to analyse the fair values of
financial assets is described below. The levels are determined by
the lowest (that is the least reliable or least independently
observable) level of input that is significant to the fair value
measurement for the individual investment in its entirety as
follows:
Level 1 - using unadjusted quoted prices for identical
instruments in an active market;
Level 2 - using inputs, other than quoted prices included within
Level 1, that are directly or indirectly observable (based on
market data); and
Level 3 - using inputs that are unobservable (for which market
data is unavailable).
The valuation techniques used by the Company are explained in
the accounting policies below.
Listed Investments
The fair value of listed security investments is the last traded
price on recognised overseas exchanges.
Unlisted Investments
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 valuation policy applies techniques consistent with the
IPEV Guidelines.
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 to the Company's unlisted portfolio:
- Multiples;
- Industry Valuation Benchmarks; and
- Available Market Prices.
The nature of the unlisted portfolio currently 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. Transaction costs
The purchases and sales proceeds figures above include
transaction costs of GBP12,000 (2022 - GBP29,000) and GBP14,000
(2022 - GBP25,000) respectively, being GBP26,000 (2022 - GBP54,000)
in total.
8. Borrowing facilities
The Company entered into a US$25 million five-year revolving
credit facility with ING Bank N.V., London Branch on 1 August 2018.
Subsequent to the year end on 26 July 2023, this loan was
refinanced with a new unsecured US$25 million three-year revolving
credit facility from ING Bank N.V., London Branch. The Company
entered into a US$25 million three-year fixed rate facility with
ING Bank N.V., London Branch on 23 October 2020.
At 31 May 2023 creditors falling due within one year include
borrowings of US$25 million (sterling value GBP20,171,000) at an
interest rate of 6.87017% (2022 - US$25 million (sterling value
GBP19,837,000) at an interest rate of 3.09786%) drawn down under
the five year revolving credit facility. At 31 May 2023 and 31 May
2022 there were drawings of US$25 million at an interest rate of
1.902% drawn down under the three-year fixed rate facility.
The main covenants relating to the loan are that borrowings
should not exceed 30% of the Company's adjusted net asset value and
the Company's minimum adjusted net asset value shall be GBP140
million. The adjusted net asset value calculation includes the
deduction of 100% of any unlisted securities. There were no
breaches in the loan covenants during the year to 31 May 2023 (31
May 2022 - none).
9. Analysis of Change in Net Debt
At 31 May Cash Exchange Other At 31 May
2022 flows movement non-cash 2023
GBP'000 GBP'000 GBP'000 changes GBP'000
========================== ========= ======== ================ ========= =========
Cash and cash equivalents 3,007 464 (31) - 3,440
Loans due within one
year (19,837) - (669) (19,836) (40,342)
Loans due within two
to three years (19,837) - - 19,837 -
========================== ========= ======== ================ ========= =========
(36,667) 464 (700) 1 (36,902)
========================== ========= ======== ================ ========= =========
10. Share Capital
2023 2023 2022 2022
Number GBP'000 Number GBP'000
============================================ ============ ======== ============ ========
Allotted, called up and fully paid ordinary
shares of 1p each 305,153,700 3,051 305,153,700 3,051
Treasury shares of 1p each 2,206,300 22 2,206,300 22
============================================ ============ ======== ============ ========
307,360,000 3,073 307,360,000 3,073
============================================ ============ ======== ============ ========
In the year to 31 May 2023, the Company issued no shares (in the
year to 31 May 2022, the Company issued a total of 525,000 shares
with nominal value GBP5,250 representing 0.2% of the issued share
capital at 31 May 2021, raising net proceeds of GBP1,812,000, which
was invested in accordance with the Company's investment
policy).
Over the period from 31 May 2023 to 7 August 2023 the Company
has issued no shares.
The Company's authority to buy back shares up to a maximum of
14.99% of the Company's issued share capital was renewed at the
Annual General Meeting held on 16 September 2022. In the year to 31
May 2023 no shares were bought back (2022 - 2,206,300 shares with a
nominal value of GBP22,063 were bought back at a total cost of
GBP3,599,000 and held in treasury). At 31 May 2023 the Company had
authority to buy back 45,742,539 ordinary shares.
Over the period from 31 May 2023 to 7 August 2023 the Company
bought back no shares..
11. The financial information set out above does not constitute
the Company's statutory accounts for the year ended 31 May 2023 or
the year ended 31 May 2022 but is derived from those accounts.
Statutory accounts for the period to 31 May 2022 have been
delivered to the Registrar of Companies, and those for the year to
31 May 2023 will be delivered in due course. The auditor has
reported on those accounts; the reports were (i) unqualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report
and (iii) did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006.
12. Transactions with Related Parties and the Managers and
Secretaries
No Director has a contract of service with the Company. During
the year no Director was interested in any contract or other matter
requiring disclosure under section 412 of the Companies Act
2006.
Details of the management fee arrangements are included in note
3 above.
13. The Annual Report and Financial Statements will be available
on the Managers' website bgusgrowthtrust.com ++ on or around 17
August 2023.
Glossary of Terms and Alternative Performance Measures
('APM')
An alternative performance measure ('APM') is a financial
measure of historical or future financial performance, financial
position, or cash flows, other than a financial measure defined or
specified in the applicable financial reporting framework. The
APM's noted below are commonly used measures within the investment
trust industry and serve to improve comparability between
investment trusts.
Total Assets
This is the Company's definition of Adjusted Total Assets, being
the total value of all assets held less all liabilities (other than
liabilities in the form of borrowings).
Shareholders' Funds and Net Asset Value
Shareholders' funds is the value of all assets held less all
liabilities, with borrowings deducted at book cost. Net asset value
('NAV') is the value of all assets held less all liabilities, with
borrowings deducted at either fair value or book value as described
below. Per share amounts are calculated by dividing the relevant
figure by the number of ordinary shares in issue.
Borrowings at Book Value
Borrowings are valued at adjusted net issue proceeds.
Borrowings at Fair Value (APM)
Borrowings are valued at an estimate of their market worth.
Net Asset Value (Reconciliation of NAV at Book Value to NAV at
Fair Value)
31 May 2023 31 May
2022
================================================ ================ ================
Net Asset Value per ordinary share (borrowings
at book value) 186.33p 191.44p
Shareholders' funds (borrowings at book value) GBP568,599,000 GBP584,186,000
Add: book value of borrowings GBP40,342,000 GBP39,674,000
Less: fair value of borrowings (GBP39,904,000) (GBP39,081,000)
================================================ ================ ================
Shareholders' funds (borrowings at fair value) GBP569,037,000 GBP584,779,000
================================================ ================ ================
Number of shares in issue 305,153,700 305,153,700
Net Asset Value per ordinary share (borrowings
at fair value) 186.48p 191.63p
================================================ ================ ================
Net Liquid Assets
Net liquid assets comprise current assets less current
liabilities (excluding borrowings).
(Discount )/Premium (APM)
As stock markets and share prices vary, an investment trust's
share price is rarely the same as its NAV. When the share price is
lower than the NAV per share it is said to be trading at a
discount. The size of the discount is calculated by subtracting the
share price from the NAV per share and is usually expressed as a
percentage of the NAV per share. If the share price is higher than
the NAV per share, this situation is called a premium .
31 May 31 May
2023 2022
=========================================== =========== ========= =========
Net asset value per ordinary share (after
deducting borrowings at fair value) (a) 186.48p 191.63p
Share price (b) 144.80p 168.00p
=========================================== =========== ========= =========
((b)-(a))
÷
Discount (borrowings at fair value) (a) 22.4% 12.3%
=========================================== =========== ========= =========
31 May 31 May
2023 2022
=========================================== =========== ========= =========
Net asset value per ordinary share (after
deducting borrowings at book value) (a) 186.33p 191.44p
Share price (b) 144.80p 168.00p
=========================================== =========== ========= =========
((b)-(a))
÷
Discount (borrowings at book value) (a) 22.3% 12.2%
=========================================== =========== ========= =========
Total Return (APM)
The total return is the return to shareholders after reinvesting
any dividend on the date that the share price goes ex-dividend. The
Company does not pay a dividend, therefore, the one year and since
inception total returns for the share price and NAV per share at
book and fair value are the same as the percentage movements in the
share price and NAV per share at book and fair value as detailed
above.
Ongoing Charges (APM)
The total recurring expenses (excluding the Company's cost of
dealing in investments and borrowing costs) incurred by the Company
as a percentage of the average net asset value (with debt at fair
value).
Ongoing Charges Calculation
31 May 31 May
2023 2022
GBP'000 GBP'000
========================================== ============= ========= =========
Investment management fee 3,345 4,865
Other administrative expenses 670 676
========================================================= ========= =========
Total expenses (a) 4,015 5,541
========================================== ============= ========= =========
Average daily cum-income net asset value (b) 578,722 898,007
========================================== ============= ========= =========
((a) ÷
Ongoing charges (b)) 0.69% 0.62%
========================================== ============= ========= =========
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other
public company, an investment trust can borrow money to invest in
additional investments for its portfolio. The effect of the
borrowing on the shareholders' assets is called 'gearing'. If the
Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the
value of the Company's assets falls, the situation is reversed.
Gearing can therefore enhance performance in rising markets but can
adversely impact performance in falling markets.
Gearing is the Company's borrowings at book value less cash and
cash equivalents (including any outstanding trade settlements)
expressed as a percentage of shareholders' funds.
31 May 2023 31 May
2022
===================================== =============== ===============
Borrowings (at book cost) GBP40,342,000 GBP39,674,000
Less: cash and cash equivalents (GBP3,440,000) (GBP3,007,000)
===================================== =============== ===============
Adjusted borrowings (a) GBP36,902,000 GBP36,667,000
===================================== =============== ===============
Shareholders' funds (b) GBP568,599,000 GBP584,186,000
===================================== =============== ===============
Gearing: (a) as a percentage of (b) 6% 6%
===================================== =============== ===============
Gross gearing is the Company's borrowings at par expressed as a
percentage of shareholders' funds.
31 May 2023 31 May
2022
=============================================== =============== ===============
Borrowings (at book cost) (a) GBP40,342,000 GBP39,674,000
Shareholders' funds (b) GBP568,599,000 GBP584,186,000
=============================================== =============== ===============
Potential gearing: (a) as a percentage of (b) 7% 7%
----------------------------------------------- --------------- ---------------
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers
Regulations, leverage is any method which increases the Company's
exposure, including the borrowing of cash and the use of
derivatives. It is expressed as a ratio between the Company's
exposure and its net asset value and can be calculated on a gross
and a commitment method. Under the gross method, exposure
represents the sum of the Company's positions after the deduction
of sterling cash balances, without taking into account any hedging
and netting arrangements. Under the commitment method, exposure is
calculated without the deduction of sterling cash balances and
after certain hedging and netting positions are offset against each
other.
Active Share (APM)
Active share, a measure of how actively a portfolio is managed,
is the percentage of the portfolio that differs from its
comparative index. It is calculated by deducting from 100 the
percentage of the portfolio that overlaps with the comparative
index. An active share of 100 indicates no overlap with the index
and an active share of zero indicates a portfolio that tracks the
index.
Treasury Shares
The Company has the authority to make market purchases of its
ordinary shares for retention as treasury shares for future
reissue, resale, transfer, or for cancellation. Treasury shares do
not receive distributions and the Company is not entitled to
exercise the voting rights attaching to them.
Private (Unlisted) Company
An unlisted or private company means a company whose shares are
not available to the general public for trading and are not listed
on a stock exchange.
Sustainable Finance Disclosure Regulation ('SFDR')
The EU Sustainable Finance Disclosure Regulation ('SFDR') does
not have a direct impact in the UK due to Brexit, however, it
applies to third-country products marketed in the EU. As Baillie
Gifford US Growth Trust plc is marketed in the EU by the AIFM, BG
& Co Limited, via the National Private Placement Regime (NPPR)
the following disclosures have been provided to comply with the
high-level requirements of SFDR. The AIFM has adopted Baillie
Gifford & Co's ESG Principles and Guidelines as its policy on
integration of sustainability risks in investment decisions.
Baillie Gifford & Co's approach to investment is based on
identifying and holding high quality growth businesses that enjoy
sustainable competitive advantages in their marketplace. To do this
it looks beyond current financial performance, undertaking
proprietary research to build an in-depth knowledge of an
individual company and a view on its long-term prospects. This
includes the consideration of sustainability factors
(environmental, social and/ or governance matters) which it
believes will positively ornegatively influence the financial
returns of an investment. More detail on the Managers' approach to
sustainability can be found in the ESG Principles and Guidelines
document, available publicly on the Baillie Gifford website
bailliegifford.com.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework or
criteria for environmentally sustainable economic activities in
respect of six environmental objectives. It builds on the
disclosure requirements under SFDR by introducing additional
disclosure obligations in respect of alternative investment funds
that invest in an economic activity that contributes to an
environmental objective. The Company does not commit to make
sustainable investments as defined under SFDR. As such, the
underlying investments do not take into account the EU criteria for
environmentally sustainable economic activities.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
++ 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.
Third party data provider disclaimer
No third party data provider ('Provider') makes any warranty,
express or implied, as to the accuracy, completeness or timeliness
of the data contained herewith nor as to the results to be obtained
by recipients of the data.
No Provider shall in any way be liable to any recipient of the
data for any inaccuracies, errors or omissions in the index data
included in this document, regardless of cause, or for any damages
(whether direct or indirect) resulting therefrom. No Provider has
any obligation to update, modify or amend the data or to otherwise
notify a recipient thereof in the event that any matter stated
herein changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have any
liability whatsoever to you, whether in contract (including under
an indemnity), in tort (including negligence), under a warranty,
under statute or otherwise, in respect of any loss or damage
suffered by you as a result of or in connection with any opinions,
recommendations, forecasts, judgements or any other conclusions, or
any course of action determined, by you or any third party, whether
or not based on the content, information or materials contained
herein.
S&P Index data
The S&P 500 Index ('Index') is a product of S&P Dow
Jones Indices LLC, a division of S&P Global, or its affiliates
('SPDJI'). Standard & Poor's(R) and S&P(R) are registered
trademarks of Standard & Poor's Financial Services LLC, a
division of S&P Global ('S&P'); Dow Jones(R) is a
registered trademark of Dow Jones Trademark Holdings LLC ('Dow
Jones'). Neither S&P Dow Jones Indices LLC, Dow Jones Trademark
Holdings LLC, their affiliates nor their third party licensors make
any representation or warranty, express or implied, as to the
ability of any index to accurately represent the asset class or
market sector that it purports to represent and neither S&P Dow
Jones Indices LLC, Dow Jones Trademark Holdings LLC, their
affiliates nor their third party licensors shall have any liability
for any errors, omissions, or interruptions of any index or the
data included therein.
FTSE Index Data
London Stock Exchange Group plc and its group undertakings
(collectively, the 'LSE Group'). (c) LSE Group 2023. FTSE Russell
is a trading name of certain of the LSE Group companies. 'FTSE(R)'
'Russell(R)', 'FTSE Russell(R)', is/are a trade mark(s) of the
relevant LSE Group companies and is/are used by any other LSE Group
company under license. All rights in the FTSE Russell indexes or
data vest in the relevant LSE Group company which owns the index or
the data. Neither LSE Group nor its licensors accept any liability
for any errors or omissions in the indexes or data and no party may
rely on any indexes or data contained in this communication. No
further distribution of data from the LSE Group is permitted
without the relevant LSE Group company's express written consent.
The LSE Group does not promote, sponsor or endorse the content of
this communication.
9 August 2023
- ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FZGGRGLDGFZZ
(END) Dow Jones Newswires
August 10, 2023 02:00 ET (06:00 GMT)
Grafico Azioni Baillie Gifford Us Growth (LSE:USA)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Baillie Gifford Us Growth (LSE:USA)
Storico
Da Gen 2024 a Gen 2025
