REG - Baillie Gifford US - Baillie Gifford US Growth Trust Interim Results
23/01/2024 07:00
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RNS Number : 5242A Baillie Gifford US Growth Trust PLC 23 January 2024
RNS Announcement
Baillie Gifford US Growth Trust plc
Legal Entity Identifier: 213800UM1OUWXZPKE539
Regulated Information Classification: Half Yearly Financial Report
Results for six months to 30 November 2023
During the six months to 30 November 2023, the Company's share price and NAV
(after deducting borrowings at fair value) returned 12.3% and 4.1%
respectively. This compares with a total return of 7.9% for the S&P 500
Index* (in sterling terms). We have a long-term approach and would ask
shareholders to judge performance over periods of five years or more.
- During the period from 23 March 2018, launch date and first trade date, to
30 November 2023, the Company's share price and NAV (after deducting
borrowings at fair value) returned 61.8% and 98.2% respectively. This compares
with a total return of 117.8% for the S&P 500 Index* (in sterling terms).
- At the end of November, we held positions in 24 private companies which
comprised 31.7% of total assets.
- We made three new purchases over the last six months, Meta Platforms,
Samsara and Sprout Social. In addition, we made five complete sales during the
period: Illumina, MarketAxess, Novocure, Redfin and Snap.
- It has been a better year. The storm is easing. We know we cannot assume
that the sun will always shine, but we take comfort from the fact that the
companies held in your portfolio are executing, and executing well. When
fundamentals will be better reflected in share prices is nigh on impossible to
predict. Trying to predict the mood of the multitude of market participants is
a fool's game for the long-term stock picker. Instead, we must double down on
what differentiates us - long-term, active, growth, bottom-up stock pickers
focused on fundamentals.
- British physicist David Deutsch said, "We have a duty to be optimistic.
Because the future is open, not predetermined and therefore cannot just be
accepted: we are all responsible for what it holds". We take that
responsibility seriously. US Growth holds companies which are determining that
future. But it will take time. Navigating storms is part of the process. We
believe the portfolio is well-positioned to navigate and realise its
potential. That feels like a dream opportunity.
* Source: LSEG and relevant underlying index providers. See disclaimer at the
end of this announcement.
Past performance is not a guide to future performance.
Baillie Gifford US Growth Trust plc 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 £631.4 million (before deduction of loans of
£39.5 million) as at 30 November 2023.
Baillie Gifford US Growth Trust plc is managed by Baillie Gifford & Co,
the Edinburgh based fund management group with approximately £218.4 billion
under management and advice in active equity and bond portfolios for clients
in the UK and throughout the world (as at 22 January 2024).
The following is the unaudited Interim Financial Report for the six months to
30 November 2023 which was approved by the Board on 22 January 2024.
Responsibility statement
We confirm that to the best of our knowledge:
a. the condensed set of Financial Statements has been prepared in accordance
with FRS 104 'Interim Financial Reporting';
b. the Interim Management Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.7R (being an
indication of important events that have occurred during the first six months
of the financial year, their impact on the condensed set of Financial
Statements and a description of the principal risks and uncertainties for the
remaining six months of the financial year); and
c. the Interim Financial Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of
related party transactions and changes therein).
On behalf of the Board
Tom Burnet
Chair
22 January 2024
Chair's interim update
Performance
During the first half of the financial year, the Company's share price and net
asset value (after deducting borrowings at fair value) ('NAV') total return*
were 12.3% and 4.1% respectively. This compares with a total return of 7.9%
for the S&P 500 Index† (in sterling terms). The discount tightened
during the period from 22.4% to 16.2%.
Further information about the Company's portfolio performance is covered by
our portfolio managers, Gary Robinson and Kirsty Gibson, in their Interim
management report.
Discount management
The Board acknowledges the discount is a challenge to many shareholders and
the investment trust sector has been trading at discounts last seen during the
financial crisis reaching an average sector low for the year of 16.9% at the
end of October 2023. As at 1 June 2023 the Company was trading at a discount
of 22.4%. This discount tightened to 16.2% as at 30 November 2023, being the
end of the interim period.
The Board regularly reviews the Company's liquidity policy and it is a key
discussion point at our Board meetings. We understand that repurchasing shares
provides NAV accretion and can reduce share price volatility but we are also
cognisant that buying back will result in the sale of public companies to fund
the buy back and as such the portfolio will be skewed further towards the
private company investments. Importantly if the exposure to private companies
is a key driver behind the discount any such buy back could result in the
discount widening rather than tightening. Following extensive Board
discussions, a decision was reached during the period that the Company should
undertake buy backs. The Company bought back 200,000 shares for a total
consideration of £319,000. The Board will continue to monitor the discount
and the application of the liquidity policy.
Gearing
During the period, 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, and the US$25 million three year fixed rate facility
was refinanced with a US$25 million three ear revolving credit facility from
The Royal Bank of Scotland International Limited.
Gearing* remained stable over the course of the period at 6% (6% as at 31 May
2023).
Outlook
Historically, periods of high inflation have led to underperformance in equity
markets. As interest rates are used to control the inflation, growth equity
valuations are often particularly hard hit and elements of your portfolio have
borne the brunt of this over the last couple of years. As inflation drops and
with interest rates potentially peaking, perhaps we can allow ourselves some
optimism that valuations might begin to recover over the coming months. In any
case, the Board remains supportive of the Managers' long-term approach to
investing and we continue to encourage Gary and Kirsty to concentrate on
identifying and buying into some of North America's most exciting companies.
In that regard, the Board is pleased with your Company's progress and remains
confident in the future.
Tom Burnet
Chair
22 January 2024
* Alternative performance measure, see Glossary of terms and Alternative
Performance Measures at the end of this announcement.
Interim management report
During the period from 23 March 2018, launch date and first trade date, to 30
November 2023, the Company's share price and NAV (after deducting borrowings
at fair value) returned 61.8% and 98.2% respectively. This compares with a
total return of 117.8% for the S&P 500 Index* (in sterling terms).
This has not been a smooth journey. From launch until the end of Q3 2023, the
top 15 listed holdings of the current portfolio experienced 59 drawdowns of
greater than 20%. The largest single peak to trough hit was 82% for Shopify
from November 2021 to October 2022. It has delivered a 347% share price rise
since we first invested in it for the Company. The average share price rise
of the top 15 since our first investment is 305% with Tesla topping the list
with a 1,351% return. This is asymmetry in action.
During the six months to 30 November 2023, the Company's share price and NAV
(after deducting borrowings at fair value) returned 12.3% and 4.1%
respectively. This compares with a total return of 7.9% for the S&P 500
Index* (in sterling terms). We have a long-term approach and would ask
shareholders to judge performance over periods of five years or more.
Portfolio
"The big money is not in the buying and the selling, but in the waiting",
Charlie Munger.
It feels only fitting to begin this Interim Report with a Mungerism. In part
to mark the passing of a legendary investor but also to highlight its timeless
relevance. The waiting, or a willingness to be patient, is an underappreciated
skill set in investing. However, patience is different to inaction. In
investing, patience is a willingness to ride out share price underperformance,
given your conviction in the underlying strength of the company's business
model and culture, even if the fundamentals are showing short-term weakness.
To be effective it also requires a corresponding willingness to accept your
mistakes and move on. Inaction, on the other hand, is about hope, not
conviction. The hope that share prices recover, and a better exit opportunity
presents itself.
We hypothesised that 2022 would be a year of reorientation, and 2023 would be
a year of execution. Our portfolio companies experienced a valuation re-set
following the pandemic. Faced with a higher interest rate environment and
demand volatility, many spent much of 2022 reorientating their business models
whilst endeavouring to execute on their long-term opportunities. As 2023 came
to a close, the evidence for our hypothesis that it would be a year of
execution has been building.
For some, the reorientation, and subsequent execution, has been easier given
the greater levels of resilience in their business models. They were already
profitable or generating free cash flow ('FCF')†. Examples would be CoStar,
the US commercial and residential property data and marketplaces business, or
Tesla, the electric vehicle manufacturer.
For others, it was a case of trimming some of the low interest rate
environment excesses whilst maintaining the necessary investments for future
growth. These companies removed teams or mothballed projects which no longer
made economic sense, enabling them to transition to profitability. Examples
include Shopify, the merchant-focused e-commerce platform, and Amazon, the
online retailer.
Some remained less resilient from a cash flow or profitability perspective but
had significant war chests of cash, providing them time to make the transition
to self-sustainability whilst continuing to invest. An example would be Ginkgo
Bioworks, the organism design company, whose current burn rate means it has
two and a half years of cash remaining.
The final group of companies was lacking resilience. Some, like Wayfair, the
online home furnishing business, and Affirm, the buy-now-pay-later company,
made significant changes to shore up the resilience of their business models
and are in far stronger positions than when the downturn began. For others,
like Carvana, the online second-hand car marketplace, or Redfin, the real
estate brokerage, we lost conviction in their ability to emerge from this
environment stronger than when they went in. We consequently sold these
holdings.
What we are seeing in the fundamentals at many of the businesses the Company
holds only adds to our excitement about the future value of these companies.
Wayfair has returned to revenue growth against a declining home market. CoStar
is counter-cyclically investing its more than US$5 billion cash pile into
future growth opportunities. Shopify launched ShopifyMagic, integrating
artificial intelligence across its entire offering whilst delivering a 16% FCF
margin, up from negative one year earlier. Duolingo, the gamified language
learning app, is growing users at over 60% year-on-year despite spending just
16% of revenues on marketing. DoorDash, the food delivery app, has seen strong
cohort dynamics and delivered close to US$900 million in FCF over the last
twelve months.
It has not been plain sailing for all. Moderna continues to work through the
uncertainty of Covid-19 vaccine demand, as the market moves from a pandemic to
an endemic phase. Whilst we continue to believe in the opportunity for RNA as
a treatment platform, and the data for future treatments is positive, the
journey to steady state Covid revenues has been painful. Convoy, a marketplace
for shippers and truckers and one of the Company's private investments, fell
victim to the macro-economic environment. Despite the best efforts of its
management team, Convoy had yet to reach the necessary scale to withstand the
freight market's decline and could not cut its way to profitability. Convoy
has gone out of business.
While share prices have shown strength over the past year, we continue to see
opportunity in the dislocations between stock prices and the underlying
valuations of companies. Future cash flows and earnings drive value, and a
fundamental pillar of our investment philosophy is that price reflects value
in the long run. However, price is driven by mood, momentum and broader
sentiment in the short term, creating opportunity.
We bought a position in Meta (formerly named Facebook). Several years ago, we
sold out of Meta on concerns around three Rs: regulation, relevance and
recruitment. We have seen progress on all three fronts. The regulatory
environment feels more benign. Reels is battling TikTok effectively, ramping
toward a US$10 billion revenue run rate and helping Meta to remain relevant.
We have a hypothesis as to why the best engineers want to come to Meta:
artificial intelligence ('AI'). The greatest opportunity in AI comes from
proprietary datasets, and Meta has a considerable advantage here. AI can be a
significant revenue and returns driver for the company. These reasons,
combined with a shift in attitude internally around allocating resources, led
us to re-take a holding.
We took a new holding in Sprout Social, the social media management company.
The proliferation of social media channels has made managing a brand online
increasingly complex, while its importance has risen. Sprout's platform
provides a single control centre that enables effective analysis and
management across social media. The market has consolidated significantly over
the past few years, and the resulting potential for substantial revenue growth
with margin expansion is underappreciated.
We added to Pinterest, the visual discovery platform; Sweetgreen, the salad
chain; and Amazon, the online retailer, as these companies have continued to
execute against their long-term opportunity sets, yet their valuations have
remained undemanding. Oddity, a cosmetics and skincare holding company, and
one of our private investments, listed in the period.
During the period we sold our holdings in Novocure, Snap, Redfin, MarketAxess
and Illumina. Redfin, the online brokerage, and Snap, the social media
company, have made changes to their business models. We question whether they
will emerge from this environment stronger than they went in. Novocure, the
tumour-treating fields company, has faced challenges expanding its offering
beyond the treatment of brain cancer. Both MarketAxess, the bond trading
platform, and Illumina, the gene sequencing business, continue to dominate
within their respective niches, however they have not delivered the levels of
growth that we hoped for.
Outlook
It has been a better year. The storm is easing. We know we cannot assume that
the sun will always shine, but we take comfort from the fact that the
companies held in your portfolio are executing, and executing well. When
fundamentals will be better reflected in share prices is nigh on impossible to
predict. Trying to predict the mood of the multitude of market participants is
a fool's game for the long-term stock picker. Instead, we must double down on
what differentiates us - long-term, active, growth, bottom-up stock pickers
focused on fundamentals.
British physicist David Deutsch said, "We have a duty to be optimistic.
Because the future is open, not predetermined and therefore cannot just be
accepted: we are all responsible for what it holds". We take that
responsibility seriously. US Growth holds companies which are determining that
future. But it will take time. Navigating storms is part of the process. We
believe the portfolio is well-positioned to navigate and realise its
potential. That feels like a dream opportunity.
The principal risks and uncertainties facing the Company are set out below.
Baillie Gifford & Co
Managers and Secretaries
22 January 2024
* S&P 500 Index total return (in sterling terms). Source: LSEG and
relevant underlying index providers. See disclaimer at the end of this
announcement.
† Free cash flow is the cash a company generates after taking into
consideration cash outflows that support its operations and maintain its
capital assets.
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, as well as Baillie
Gifford's Private Companies Specialist team, with all voting members being
from different operational areas of the firm, and the investment team only
receives 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 two times in a six
month period. For Baillie Gifford US Growth, and our other 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 team 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
investment team; 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. There
is no delay.
The valuations team 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.
Baillie Gifford US Growth Trust*
Instruments (lines of stock reviewed) 57
Revaluations performed 150
Percentage of portfolio revalued up to 2 times 64.9%
Percentage of portfolio revalued up to 4 times 94.7%
Percentage of portfolio revalued at least 5 times 5.3%
For the six months to 30 November 2023, most revaluations have been decreases,
however we have seen some recovery within the portfolio. In the period, we
have seen one portfolio company raise capital at an increased valuation
reflecting the continued robust performance of the underlying investment and
the changing market backdrop in specific sectors at the time of the raise. The
average movement in both company valuation and share price for those that have
decreased in value is shown below.
Average movement in investee company valuation Average movement in investee share price
Baillie Gifford US Growth Trust* -6.2% 2.1%
Share prices have increased compared to the decrease in headline valuations.
This is a result of holding classes of stock with preferential liquidation
rights and therefore providing down side protection.
The share price movement reflects a probability- weighted average of both the
regular valuation, which would be realised in an IPO, and the downside
protected valuation, which would normally be triggered in the event of a
corporate sale or liquidation.
*Data reflecting period 1 June 2023 to 30 November 2023 to align with the
Company's reporting period end.
Baillie Gifford's stewardship principles
Baillie Gifford's overarching ethos is that we are 'Actual' investors. That
means we seek to invest for the long term. Our role as an engaged owner is
core to our mission to be effective stewards for our clients. As an active
manager, we invest in companies at different stages of their evolution across
many industries and geographies, and focus on their unique circumstances and
opportunities. Our approach favours a small number of simple principles rather
than overly prescriptive policies. This helps shape our interactions with
holdings and ensures our investment teams have the freedom and retain the
responsibility to act in clients' best interests.
Long-term value creation
We believe that companies that are run for the long term are more likely to be
better investments over our clients' time horizons. We encourage our
holdings to be ambitious, focusing on long-term value creation and capital
deployment for growth. We know events will not always run according to plan.
In these instances we expect management to act deliberately and to provide
appropriate transparency. We think helping management to resist short-term
demands from shareholders often protects returns. We regard it as our
responsibility to encourage holdings away from destructive financial
engineering towards activities that create genuine value over the long run.
Our value will often be in supporting management when others don't.
Alignment in vision and practice
Alignment is at the heart of our stewardship approach. We seek the fair and
equitable treatment of all shareholders alongside the interests of management.
While assessing alignment with management often comes down to intangible
factors and an understanding built over time, we look for clear evidence of
alignment in everything from capital allocation decisions in moments of stress
to the details of executive remuneration plans and committed share ownership.
We expect companies to deepen alignment with us, rather than weaken it, where
the opportunity presents
itself.
Governance fit for purpose
Corporate governance is a combination of structures and behaviours; a careful
balance between systems, processes and people. Good governance is the
essential foundation for long-term company success. We firmly believe that
there is no single governance model that delivers the best long-term outcomes.
We therefore strive to push back against one-dimensional global governance
principles in favour of a deep understanding of each company we invest in. We
look, very simply, for structures, people and processes which we think can
maximise the likelihood of long-term success. We expect to trust the boards
and management teams of the companies we select, but demand accountability if
that trust is broken.
Sustainable business practices
A company's ability to grow and generate value for our clients relies on a
network of interdependencies between the company and the economy, society and
environment in which it operates. We expect holdings to consider how their
actions impact and rely on these relationships. We believe long-term success
depends on maintaining a 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. Material factors should be addressed at the board level as
appropriate.
List of Investments
as at 30 November 2023 (unaudited)
Name Business 2023 2023
Value
% of total
£'000
assets *
Space Exploration Technologies Rocket and spacecraft company 20,640 3.3
Series J Preferred (U)
Space Exploration Technologies Rocket and spacecraft company 11,848 1.9
Series N Preferred (U)
Space Exploration Technologies Rocket and spacecraft company 4,704 0.7
Series K Preferred (U)
Space Exploration Technologies Rocket and spacecraft company 2,445 0.4
Class A Common (U)
Space Exploration Technologies Rocket and spacecraft company 754 0.1
Class C Common (U)
40,391 6.4
Shopify Class A Cloud-based commerce platform provider 36,477 5.8
The Trade Desk Advertising technology company 31,210 4.9
Amazon Online retailer and cloud computing provider 30,664 4.9
NVIDIA Graphics chips 28,765 4.6
Stripe Series G Preferred (U) Online payment platform 12,037 1.9
Stripe Series I Preferred (U) Online payment platform 11,729 1.9
Stripe Class B Common (U) Online payment platform 2,472 0.4
Stripe Series H Preferred (U) Online payment platform 1,450 0.2
27,688 4.4
Tesla Electric cars, autonomous driving and solar energy 24,089 3.8
Netflix Subscription service for TV shows and movies 17,962 2.8
Workday Enterprise information technology 16,545 2.6
Duolingo Mobile learning platform 16,229 2.6
Brex Class B Common (U) Corporate credit cards for start-ups 8,283 1.3
Brex Series D Preferred (U) Corporate credit cards for start-ups 7,793 1.3
16,076 2.6
CoStar Group Commercial property information provider 15,811 2.5
Doordash Online local delivery 15,797 2.5
Zipline International Series C Preferred (U) Drone-based medical delivery 8,587 1.4
Zipline International Series E Preferred (U) Drone-based medical delivery 4,866 0.8
Zipline International Series F Preferred (U) Drone-based medical delivery 790 0.1
14,243 2.3
Meta Platforms Social networking website 13,535 2.1
Cloudflare Cloud-based provider of network services 13,406 2.1
Faire Wholesale Series F Preferred (U) Online wholesale marketplace 4,942 0.8
Faire Wholesale (U) Online wholesale marketplace 4,338 0.7
Faire Wholesale Series G Preferred (U) Online wholesale marketplace 3,674 0.6
12,954 2.1
Watsco Air conditioning, heating and refrigeration equipment distributor 12,481 2.0
Moderna Therapeutic messenger RNA 12,225 1.9
Discord Series I Preferred (U) Communication software 11,044 1.8
Databricks Series H Preferred (U) Data and AI platform 10,587 1.6
Databricks Series I Preferred (U) Data and AI platform 395 0.1
10,982 1.7
Affirm Class B (P) Consumer finance 5,368 0.9
Affirm (P) Consumer finance 4,413 0.7
9,781 1.6
Datadog IT monitoring and analytics platform 9,622 1.5
Alnylam Pharmaceuticals Therapeutic gene silencing 9,618 1.5
Pinterest Image sharing and social media company 9,191 1.5
Snyk Series F Preferred (U) Developer security software 5,357 0.8
Snyk Ordinary Shares (U) Developer security software 3,197 0.5
8,554 1.3
Solugen Series C-1 Preferred (U) Combines enzymes and metal catalysts to make chemicals 5,720 0.9
Solugen Series D Preferred (U) Combines enzymes and metal catalysts to make chemicals 2,783 0.4
8,503 1.3
Roku Online media player 8,376 1.3
Snowflake (P) Developer of a SaaS-based cloud data 8,242 1.3
warehousing platform
Lyra Health Series E Preferred (U) Digital mental health platform for enterprises 6,449 1.0
Lyra Health Series F Preferred (U) Digital mental health platform for enterprises 1,546 0.2
7,995 1.2
Coursera Online educational services provider 7,660 1.2
Roblox User Generated Content game company 7,288 1.2
Oddity (P) Online cosmetics and skincare company 6,794 1.1
Twilio Cloud-based communications platform 6,571 1.0
Wayfair Online furniture and homeware retailer 6,367 1.0
Workrise Technologies Series E Preferred (U) Jobs marketplace for the energy sector 2,501 0.4
Workrise Technologies Series D Preferred (U) Jobs marketplace for the energy sector 2,400 0.4
Workrise Technologies Series D-1 Preferred (U) Jobs marketplace for the energy sector 533 0.1
5,434 0.9
Epic Games (U) Video game platform and software developer 5,349 0.8
Sprout Social Social media management firm 5,015 0.8
BillionToOne Series C Preferred (U) Molecular diagnostics technology platform 3,281 0.5
BillionToOne Promissory Note (U) Molecular diagnostics technology platform 1,605 0.3
4,886 0.8
Away (JRSK) Series D Preferred (U) Travel and lifestyle brand 1,518 0.2
Away (JRSK) Convertible Promissory Note (U) Travel and lifestyle brand 1,019 0.2
Away (JRSK) Convertible Promissory Travel and lifestyle brand 1,019 0.2
Note 2021 (U)
Away (JRSK) Series Seed Preferred (U) Travel and lifestyle brand 918 0.1
4,474 0.7
Tanium Class B Common (U) Online security management 4,341 0.7
Zoom Video Communications Remote conferencing service provider 3,950 0.6
Penumbra Medical tools to treat vascular diseases 3,860 0.6
Nuro Series C Preferred (U) Self-driving vehicles for local delivery 2,072 0.3
Nuro Series D Preferred (U) Self-driving vehicles for local delivery 1,667 0.3
3,739 0.6
PsiQuantum Series D Preferred (U) Silicon photonic quantum computing 3,510 0.6
Chewy Online pet supplies retailer 3,471 0.5
10X Genomics Single cell sequencing company 3,449 0.5
Denali Therapeutics Clinical stage neurodegeneration company 3,400 0.5
Samsara Connected operations cloud software company 3,137 0.5
Airbnb Class B Common (P) Online market place for travel accommodation 3,070 0.5
Thumbtack Class A Common (U) Online directory service for local businesses 1,700 0.3
Thumbtack Series I Preferred (U) Online directory service for local businesses 1,202 0.2
Thumbtack Series A Preferred (U) Online directory service for local businesses 121 <0.1
Thumbtack Series C Preferred (U) Online directory service for local businesses 35 <0.1
Thumbtack Series B Preferred (U) Online directory service for local businesses 8 <0.1
3,066 0.5
Sweetgreen Salad fast food chain 2,974 0.5
HashiCorp Open source infrastructure software 2,856 0.5
Niantic Series C Preferred (U) Augmented reality games 2,775 0.4
Doximity Social network and digital workflow tools for 2,725 0.4
medical professionals
Ginkgo Bioworks (P) Bioengineering company developing micro 2,347 0.4
organisms that produce various proteins
Lemonade Insurance company 2,269 0.4
Warby Parker (P) Online and physical glasses retailer 2,204 0.3
Aurora Innovation Class B Common (P) Self-driving technology 1,214 0.2
Aurora (P) Self-driving technology 888 0.1
2,102 0.3
Chegg Online education company 1,924 0.3
Rivian Automotive Developer security platform 1,736 0.3
Recursion Pharmaceuticals Drug discovery platform 1,606 0.3
Honor Technology Series D Preferred (U) Home care provider 855 0.1
Honor Technology Series E Preferred (U) Home care provider 370 0.1
Honor Technology Subordinated Convertible Promissory Note (U) Home care provider 99 <0.1
1,324 0.2
Capsule Series 1-D Preferred (U) Digital pharmacy 724 0.1
Capsule Series E Preferred (U) Digital pharmacy 447 0.1
1,171 0.2
Blockstream Series B-1 Preferred (U) Bitcoin and digital asset infrastructure 1,151 0.2
Sana Biotechnology Gene editing technology 612 0.1
Indigo Agriculture Class A Common (U) Agricultural technology company 131 <0.1
Convoy Common# (U) Marketplace for truckers and shippers - -
Convoy Convertible Loan Note# (U) Marketplace for truckers and shippers - -
Convoy Series D Preferred# (U) Marketplace for truckers and shippers - -
Convoy Series E Preferred# (U) Marketplace for truckers and shippers - -
Total investments 627,194 99.3
Net liquid assets* 4,234 0.7
Total assets* 631,428 100.0
Listed Private Net liquid Total
equities
company
assets*
investments †
assets* *
%
%
% %
30 November 2023 67.6 31.7 0.7 100.0
31 May 2023 65.0 34.5 0.5 100.0
* See Glossary of terms and Alternative Performance Measures at the end of
this announcement.
(P) Denotes listed investment previously held in portfolio as a private
company (unlisted) investment.
(U) Denotes private company (unlisted) investment.
† Includes holdings in ordinary shares, preference shares and promissory
notes.
# The Convoy holdings were valued at nil at 30 November 2023 subsequent to the
company ceasing operations. More information can be found in the Interim
management report above.
Figures represent percentage of total assets.
Distribution of total assets* (unaudited)
Sectoral Analysis as at 30 November 2023
As at 30 November 2023 As at 31 May 2023
% %
Information technology 34.0 31.3
Consumer discretionary 21.2 18.8
Communication services 13.8 11.7
Industrials 12.2 16.2
Healthcare 8.2 13.7
Financials 4.6 3.9
Real estate 2.5 0.3
Materials 1.7 2.3
Consumer staples 1.1 1.3
Net liquid assets 0.7 0.5
Private company exposure as at 30 November 2023
As at 30 November 2023 As at 31 May 2023
% %
Space Exploration Technologies 6.4 6.5
Stripe 4.4 4.2
Brex 2.6 2.6
Zipline 2.3 2.3
Faire Wholesale 2.1 2.2
Other 13.9 16.7
* See Glossary of terms and Alternative Performance Measures at the end this
announcement.
Income statement (unaudited)
For the six months ended 30 November 2023 For the six months ended 30 November 2022 For the year ended 31 May 2023 (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments - 25,868 25,868 - (8,235) (8,235) - (10,169) (10,169)
Currency gains/(losses) - 697 697 - (2,100) (2,100) - (700) (700)
Income 305 - 305 363 - 363 850 - 850
Investment management fee 3 (1,707) - (1,707) (1,719) - (1,719) (3,345) - (3,345)
Other administrative expenses (341) - (341) (331) - (331) (670) - (670)
Net return before finance costs and taxation (1,743) 26,565 24,822 (1,687) (10,335) (12,022) (3,165) (10,869) (14,034)
Finance cost of borrowings (1,144) - (1,144) (621) - (621) (1,482) - (1,482)
Net return before taxation (2,887) 26,565 23,678 (2,308) (10,335) (12,643) (4,647) (10,869) (15,516)
Tax (27) - (27) (37) - (37) (71) - (71)
Net return after taxation (2,914) 26,565 23,651 (2,345) (10,335) (12,680) (4,718) (10,869) (15,587)
Net return per ordinary share 4 (0.96p) 8.71p 7.75p (0.77p) (3.39p) (4.16p) (1.55p) (3.56p) (5.11p)
The accompanying notes below are an integral part of the Financial Statements.
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 period.
Balance sheet (unaudited)
Notes At 30 November 2023 At 31 May
£'000 2023
(audited)
£'000
Fixed assets
Investments held at fair value through profit or loss 6 627,194 605,908
Current assets
Debtors 895 657
Cash at bank 4,959 3,440
5,854 4,097
Creditors
Amounts falling due within one year 7 (41,117) (41,406)
Net current liabilities (35,263) (37,309)
Total assets less current liabilities 591,931 568,599
Creditors
Amounts falling due after more than one year 7 - -
Net assets 591,931 568,599
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 192,177 165,931
Revenue reserve (23,088) (20,174)
Shareholders' funds 591,931 568,599
Net asset value per ordinary share 194.11p 186.33p
(after deducting borrowings at book value)
Ordinary shares in issue 8 304,953,700 305,153,700
The accompanying notes below are an integral part of the Financial Statements.
Statement of changes in equity (unaudited)
For the six months to 30 November 2023
Notes Share capital £'000 Share Special distributable reserve Capital Revenue reserve £'000 Shareholders'
reserve *
premium £'000 £'000 funds
£'000
account
£'000
Shareholders' funds at 1 June 2023 3,073 250,827 168,942 165,931 (20,174) 568,599
Ordinary shares bought back into treasury 8 - - - (319) - (319)
Net return after taxation - - - 26,565 (2,914) 23,651
Shareholders' funds at 30 November 2023 3,073 250,827 168,942 192,177 (23,088) 591,931
For the six months to 30 November 2022
Notes Share capital £'000 Share Special distributable reserve Capital Revenue reserve £'000 Shareholders'
reserve *
premium £'000 £'000 funds
£'000
account
£'000
Shareholders' funds at 1 June 2022 3,073 250,827 168,942 176,800 (15,456) 584,186
Ordinary shares bought back into treasury 8 - - - - - -
Net return after taxation - - - (10,335) (2,345) (12,680)
Shareholders' funds at 30 November 2022 3,073 250,827 168,942 166,465 (17,801) 571,506
* The capital reserve as at 30 November 2023 includes investment holding gains
of £70,038,000 (30 November 2022 - gains of £14,173,000).
The accompanying notes on below are an integral part of the Financial
Statements.
Cash flow statement (unaudited)
For the six months to 30 November
2023 2022
£'000 £'000
Cash flows from operating activities
Net return before taxation 23,678 (12,643)
Net (gains)/losses on investments (25,868) 8,235
Currency (gains)/losses (697) 2,100
Finance costs of borrowings 1,144 621
Overseas withholding tax incurred (27) (36)
Changes in debtors and creditors 40 (226)
Cash from operations* (1,730) (1,949)
Finance costs paid (865) (619)
Net cash outflow from operating activities (2,595) (2,568)
Cash flows from investing activities
Acquisitions of investments (31,575) (19,787)
Disposals of investments 36,157 23,905
Net cash inflow from investing activities 4,582 4,118
Cash flows from financing activities
Ordinary shares bought back into treasury (319) -
Bank loans drawn down† - -
Bank loans repaid† - -
Net cash outflow from financing activities (319) -
Increase in cash and cash equivalents 1,668 1,550
Exchange movements (149) 211
Cash and cash equivalents at start of period 3,440 3,007
Cash and cash equivalents at 30 November 4,959 4,768
* Cash from operations includes dividends received in the period of £182,000
(30 November 2022 - £246,000) and interest paid of £24,000 (30 November 2022
- interest received of £13,000).
† Cash movements in bank loans are shown on a net basis. Prior year balances
have been updated to reflect this.
The accompanying notes below are an integral part of the Financial Statements.
Notes to the Financial Statements (unaudited)
1. Basis of accounting
The condensed Financial Statements for the six months to 30 November 2023
comprise the statements set out above together with the related notes below.
They have been prepared in accordance with FRS 104 'Interim Financial
Reporting' and the AIC's Statement of Recommended Practice issued in November
2014, updated in October 2019, April 2021 and July 2022 with consequential
amendments, and have not been audited or reviewed by the Auditor pursuant to
the Auditing Practices Board Guidance on 'Review of Interim Financial
Information'. The Financial Statements for the six months to 30 November 2023
have been prepared on the basis of the same accounting policies as set out in
the Company's Annual Report and Financial Statements for the year ended 31 May
2023.
Going concern
Having considered the nature of the Company's principal risks and
uncertainties, as set out below, together with its current position,
investment objective and policy, assets and liabilities, projected income and
expenditure and the Company's dividend policy, it is the Directors' opinion
that the Company has adequate resources to continue in operational existence
for the foreseeable future. The Board has, in particular, considered the
impact of heightened market volatility due to macroeconomic and geopolitical
concerns, but does not believe the Company's going concern status is affected.
The Company's assets, the majority of which are investments in quoted
securities which are readily realisable, exceed its liabilities significantly.
All borrowings require the prior approval of the Board. Gearing levels and
compliance with borrowing covenants are reviewed by the Board on a regular
basis. As at 30 November 2023, the Company had a net current liability of £35
million primarily as a result of the US$25 million three year revolving credit
facility with ING Bank N.V., London Branch, and the US$25 million three year
revolving credit facility with The Royal Bank of Scotland International, which
are due to mature on 26 July 2026 and 18 October 2026 respectively but which
are rolled forward on a three monthly basis. The Company has continued to
comply with the investment trust status requirements of section 1158 of the
Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax)
Regulations 2011. Accordingly, the Directors consider it appropriate to adopt
the going concern basis of accounting in preparing these Financial Statements
and confirm that they are not aware of any material uncertainties which may
affect the Company's ability to continue to do so over a period of at least
twelve months from the date of approval of these Financial Statements.
2. Financial information
The financial information contained within this Interim Financial Report does
not constitute statutory accounts as defined in sections 434 to 436 of the
Companies Act 2006. The financial information for the year to 31 May 2023 has
been extracted from the statutory accounts which have been filed with the
Registrar of Companies. The Auditor's Report on those accounts was not
qualified, did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying the report and did not
contain a statement under sections 498(2) or (3) of the Companies Act 2006.
3. Investment manager
The Company has appointed Baillie Gifford & Co Limited, a wholly owned
subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund
Manager and Company Secretaries. Baillie Gifford & Co Limited has
delegated portfolio management services to Baillie Gifford & Co. Dealing
activity and transaction reporting have been further sub-delegated to Baillie
Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. The
Management Agreement can be terminated on six months' notice.
The annual management fee is 0.70% on the first £100 million of net assets,
0.55% on the next £900 million of net assets and 0.50% on the remaining net
assets.
4. Net return per ordinary share
For the For the For the year ended
six months to
six months to
31 May 2023
30 November 2023
30 November 2022
(audited)
£'000 p £'000 p £'000 p
Revenue return after taxation (2,914) (0.96) (2,345) (0.77) (4,718) (1.55)
Capital return after taxation 26,565 8.71 (10,335) (3.39) (10,869) (3.56)
Net return 23,651 7.75 (12,680) (4.16) (15,587) (5.11)
Weighted average number of ordinary shares in issue 305,143,317 305,153,700 305,153,700
Net return per ordinary share is based on the above totals of revenue and
capital and the weighted average number of ordinary shares in issue during
each period. There are no dilutive or potentially dilutive shares in issue.
5. Dividends
No interim dividend has been declared. The Company's objective is to produce
capital growth and the policy is only to distribute, by way of a final
dividend, the minimum required to maintain investment trust status. It is not
currently envisaged that any dividend will be paid in the foreseeable future.
6. Fixed assets - investments
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 Company's investments are financial assets held at fair value through
profit or loss. In accordance with FRS 102, an analysis of the Company's
financial asset investments based on the fair value hierarchy described above
is shown below.
Level 1 Level 2 Level 3 Total
£'000
£'000
£'000
£'000
As at 30 November 2023
Listed equities 427,413 - - 427,413
Unlisted ordinary shares - - 33,010 33,010
Unlisted preference shares* - - 163,029 163,029
Unlisted convertible promissory notes - - 3,742 3,742
Total financial asset investments 427,413 - 199,781 627,194
Level 1 Level 2 Level 3 Total
£'000
£'000
£'000
£'000
As at 31 May 2023
Listed equities 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
* 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 takeover.
The valuation techniques used by the Company are explained in the accounting
policies on page 55 of the Annual Report and Financial Statements for the year
ended 31 May 2023. Listed investments are categorised as Level 1 if they are
valued using unadjusted quoted prices for identical instruments in an active
market and as Level 2 if they do not meet all these criteria but are,
nonetheless, valued using market data. The Company's holdings in private
company investments are categorised as Level 3 as unobservable data is a
significant input to their fair value measurements.
Private company investments are valued at fair value by the Directors
following a detailed review and appropriate challenge of the valuations
proposed by the Managers. The Managers' private company valuation policy
applies methodologies consistent with the International Private Equity and
Venture Capital Valuation guidelines 2022 ('IPEV'). These methodologies can be
categorised as follows: (a) market approach (multiples, industry valuation
benchmarks and available market prices); (b) income approach (discounted cash
flows); and (c) replacement cost approach (net assets). The techniques applied
are predominantly market-based approaches.
During the period investments with a book value of £5,725,000 (31 May 2023 -
none) were transferred from Level 3 to Level 1 on becoming listed.
7. Bank loans
The Company has a US$25,000,000 three year revolving credit facility with ING
Bank N.V., London Branch, which expires on 26 July 2026 and a US$25,000,000
three year revolving credit facility with The Royal Bank of Scotland
International Limited which expires on 18 October 2026. At 30 November 2023,
creditors falling due within one year include US$50,000,000 (sterling value
£39,496,000) drawn down under the two three year revolving credit facilities.
At 30 November 2023, there were no creditors falling due after more than one
year. At 31 May 2023, creditors falling due within one year included
US$50,000,000 (sterling value £40,342,000) drawn under the five year
revolving credit facility and the three year fixed rate facility.
The fair value of borrowings as at 30 November 2023 was £39,496,000 (31 May
2023 - £39,904,000).
8. Share capital
30 November 2023 30 November 2023 31 May 31 May
2023
2023
Number £'000
Number £'000
Allotted, called up and fully paid ordinary shares of 1p each 304,953,700 3,049 305,153,700 3,051
Treasury shares of 1p each 2,406,300 24 2,206,300 22
307,360,000 3,073 307,360,000 3,073
The Company has authority to allot shares under section 551 of the Companies
Act 2006. The Board has authorised use of this authority to issue new shares
at a premium to net asset value in order to enhance the net asset value per
share for existing shareholders and improve the liquidity of the Company's
shares. In the six months to 30 November 2023, the Company issued no ordinary
shares (in the year to 31 May 2023, the Company issued no shares).
Over the period from 30 November 2023 to 22 January 2024 the Company 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 18 September 2023. 200,000 shares with a nominal value of £2,000 were
bought back at a total cost of £319,000 and held in treasury in the six
months to 30 November 2023 (year to 31 May 2023 - no shares were bought back).
At 30 November 2023 the Company had authority to buy back 45,542,539 ordinary
shares.
Over the period from 30 November 2023 to 22 January 2024 the Company bought
back a further 100,000 shares.
9. Related Party Transactions
There have been no transactions with related parties during the first six
months of the current financial year that have materially affected the
financial position or the performance of the Company during that period and
there are no changes in the related party transactions described in the last
Annual Report and Financial Statements that could have had such an effect on
the Company during that period.
10. Principal Risks and Uncertainties
The principal risks facing the Company are financial risk, private company
investment risk, investment strategy risk, environmental, social and
governance risk, discount risk, regulatory risk, custody and depositary risk,
operational risk, cyber security risk, leverage risk, political and associated
economic risk and emerging risks. An explanation of these risks and how they
are managed is set out on pages 6 and 7 of the Company's Annual Report and
Financial Statements for the year ended 31 May 2023 which is available on the
Company's website: bgusgrowthtrust.com‡.
The principal risks and uncertainties have not changed since the date of that
report.
11. The Interim Financial Report will be available at
bgusgrowthtrust.com‡ and will be posted to shareholders on or around 6
February 2024.
‡ Neither the contents of the Managers' website nor the contents of any
website accessible from hyperlinks on the Managers' website (or any other
website) is incorporated into, or forms part of, this announcement.
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
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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.
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whatsoever to you, whether in contract (including under an indemnity), in tort
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with any opinions, recommendations, forecasts, judgements, or any other
conclusions, or any course of action determined, by you or any third party,
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not based on the content, information or materials contained herein.
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a division of S&P Global, or its affiliates ('SPDJI'). Standard &
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Sustainable Finance Disclosures 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 is marketed in the
EU by the AIFM, Baillie Gifford & 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 stewardship principles and
guidelines as its policy on integration of sustainability risks in investment
decisions.
Baillie Gifford & Co believes that a company cannot be financially
sustainable in the long run if its approach to business is fundamentally out
of line with changing societal expectations. It defines 'sustainability' as a
deliberately broad concept which encapsulates a company's purpose, values,
business model, culture, and operating practices. 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 up 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 or negatively influence the financial
returns of an investment. The likely impact on the return of the portfolio
from a potential or actual material decline in the value of investment due to
the occurrence of an environmental, social or governance event or condition
will vary and will depend on several factors including but not limited to the
type, extent, complexity and duration of an event or condition, prevailing
market conditions and existence of any mitigating factors.
Whilst consideration is given to sustainability matters, there are no
restrictions on the investment universe of the Company, unless otherwise
stated within in its Investment Objective and Policy. Baillie Gifford & Co
can invest in any companies it believes could create beneficial long-term
returns for investors. However, this might result in investments being made in
companies that ultimately cause a negative outcome for the environment or
society.
More detail on the Investment Manager's approach to sustainability can be
found in the stewardship principles and guidelines document, available
publicly on the Baillie Gifford website bailliegifford.com.
The underlying investments do not take into account the EU criteria for
environmentally sustainable economic activities established under the EU
Taxonomy Regulation.
Glossary of terms and Alternative Performance Measures ('APM')
An Alternative Performance Measure is a financial measure of historical or
future financial performance, financial position or cash flows, other than a
financial measure defined or specified in the applicable financial reporting
framework. The APMs 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 value. 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 nominal par value (book value). Borrowings are valued
at adjusted net issue proceeds. The value of the borrowings at book is set out
in note 7 above.
Borrowings at fair value (APM)
Borrowings are valued at an estimate of their market worth. The fair value of
borrowings is set out in note 7 above and a reconciliation to net asset value
with borrowings at book value is provided below.
Net asset value (borrowings at fair value) (APM)
30 November 2023 31 May 2023
Net asset value per ordinary share (borrowings at book value) 194.11p 186.33p
Shareholders' funds (borrowings at book value) £591,931,000 £568,599,000
Add: book value of borrowings £39,496,000 £40,342,000
Less: fair value of borrowings (£39,496,000) (£39,904,000)
Shareholders' funds (borrowings at fair value) £591,931,000 £569,037,000
Number of shares in issue 304,953,700 305,153,700
Net asset value per ordinary share (borrowings at fair value) 194.11p 186.48p
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.
30 November 2023 31 May 2023
Net asset value per ordinary share (after deducting borrowings at fair value) (a) 194.11p 186.48p
Share price (b) 162.60p 144.80p
Discount (borrowings at fair value) (b - a) ÷ a 16.2% 22.4%
30 November 2023 31 May 2023
Net asset value per ordinary share (after deducting borrowing at book value) (a) 194.11p 186.33p
Share price (b) 162.60p 144.80p
Discount (borrowings at book value) (b - a) ÷ a 16.2% 22.3%
Total return (APM)
The total return is the return to shareholders after reinvesting the dividend
on the date that the share price goes ex-dividend. The Company does not pay a
dividend, therefore, the six month 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 at the beginning of the announcement.
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 borrowings at fair value).
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.
30 November 2023 31 May 2023
Borrowings (at book value) £39,496,000 £40,342,000
Less: cash and cash equivalents (£4,959,000) (£3,440,000)
Less: sales for subsequent settlement - -
Add: purchases for subsequent settlement - -
Adjusted borrowings (a) £34,537,000 £36,902,000
Shareholders' funds (b) £591,931,000 £568,599,000
Gearing: (a) as a percentage of (b) 6% 6%
Gross gearing is the Company's borrowings expressed as a percentage of
shareholders' funds.
30 November 2023 31 May 2023
Borrowings (at book value) (a) £39,496,000 £40,342,000
Shareholders' funds (b) £591,931,000 £568,599,000
Gross 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, it 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
A private (unlisted) company means a company whose shares are not available to
the general public for trading and not listed on the stock exchange.
Baillie Gifford US Growth Trust plc is a listed UK company. The value of its
shares and any income from them can fall as well as rise and investors may not
get back the amount invested. This is because the share price is determined by
the changing conditions in the relevant stock markets in which the Company
invests and by the supply and demand for the Company's shares. Investment in
investment trusts should be regarded as medium to long-term. The Company's
risk could be increased by its investment in unlisted investments. These
assets may be more difficult to sell, so changes in their prices may be
greater. The Company is listed on the London Stock Exchange and is not
authorised or regulated by the Financial Conduct Authority. You can find up to
date performance information about Baillie Gifford US Growth Trust plc on the
US Growth page of the Managers' website at bgusgrowthtrust.com‡
‡ Neither the contents of the Managers' website nor the contents of any
website accessible from hyperlinks on the Managers' website (or any other
website) is incorporated into, or forms part of, this announcement.
Naomi Cherry, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
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