REG - Schiehallion Fund Schiehallion - MNTN - The Schiehallion Fund Interim Report to 31/07/24
13/09/2024 07:00
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RNS Number : 0306E Schiehallion Fund Limited (The) 13 September 2024
RNS Announcement
The Schiehallion Fund Limited
Legal Entity Identifier: 213800NQOLJA1JCWXQ56
Regulated Information Classification: Interim Financial Report
The following is the unaudited Interim Financial Report for the six months to
31 July 2024 which was approved by the Board on 12 September 2024.
Board update
David Chiswell resigned as non-executive Director of the Company in April 2024
due to ongoing health issues and has sadly since passed away. David made a
significant contribution to the Board during his tenure and was an effective
and widely admired Director who will be much missed by the Board and the
Managers. David held positions across the biotechnology industry and his
contributions to the field were recognised in 2006 when he was awarded the OBE
by The Queen for services to the industry.
The Directors recognise the importance of succession planning and review the
Board composition annually. The Board is committed to maintaining the Board's
depth and breadth of knowledge, experience and professional expertise. The
Board will communicate future succession plans in due course.
During the period, the Board engaged with the relevant shareholder following
the significant number of votes against the re-appointment of Dr Yueh at the
Annual General Meeting on 10 May 2024. The shareholder's concerns related to
the number of simultaneous directorships. A review of the Chair's and other
Directors' commitments was carried out and the Nomination Committee remains
satisfied that Dr Yueh is capable of devoting sufficient time to the Company.
There have been no significant changes to Dr Yueh's other commitments since 31
January 2024. Her total number of mandates from her directorships continues to
comply with the UK Corporate Governance Code. The Directors continue to
believe that the Board has a balance of skills and experience which enable it
to provide effective strategic leadership and proper governance of the
Company.
Summary of unaudited results*
Ordinary shares 31 July 2024 31 January 2024 % change
(audited)
Shareholders' funds US$1,178.17m US$1,219.14m
Net asset value per Ordinary share 114.61¢ 118.37¢ (3.2%)
Share price 103.00¢ 71.50¢ 44.1%
Discount† 10.1% 39.6%
Number of shares in issue 1,027,973,907 1,029,898,907
Market capitalisation US$1,058.81m US$736.38m
Six months to Six months to
31 July 2024
31 July 2023
Revenue earnings per Ordinary share (0.04¢) (0.30¢)
Period's high and low
Six months to 31 July 2024 For the period 1 February 2023 to 8 September 2023 For the period 9 September 2023 to 31 January 2024
Ordinary shares High Low High Low High Low
Net asset value per Ordinary share 120.57¢ 114.61¢ 117.98¢ 103.94¢ 118.66¢ 103.40¢
Share price 103.00¢ 57.00¢ 92.50¢ 59.00¢ 74.00¢ 45.00¢
Discount† (11.66%) (51.23%) (22.53%) (44.93%) (36.29%) (56.48%)
Notes
* For a definition of terms see Glossary of terms and
Alternative Performance Measures at the end of this announcement.
† Alternative Performance Measure, see Glossary of terms and
Alternative Performance Measures at the end of this announcement.
All investment strategies have the potential for profit and loss. Past
performance is not a guide to future performance.
Investment objective
The Schiehallion Fund Limited seeks to generate capital growth for investors
through making long-term minority investments in later stage private
businesses that the Company considers to have transformational growth
potential and to have the potential to become publicly traded.
Principal risks and uncertainties
The principal and emerging risks facing the Company are:
Investment and strategic risks - liquidity of investments; market, economic,
political and environmental risks; valuation risk; investment strategy risk;
discount risk; and Environmental, Social and Governance ('ESG') risk.
External risks - political and associated economic risk; legal and regulatory
risk.
Operational risks - performance and reliance on third party service providers;
cyber security threats; and key professionals.
Emerging risks - geopolitical tensions, including the Russia-Ukraine conflict
and US-China tensions, high energy prices, inflation and interest rates; cyber
risk; and the proliferation of AI technology.
An explanation of these risks and how they are managed is set out on pages 39
to 44 of the Company's Annual Report and Financial Statements for the year to
31 January 2024 which is available on the Company's website:
schiehallionfund.com
Responsibility statement
The Directors of The Schiehallion Fund Limited confirm that to the best of
their knowledge:
a. the Interim Financial Report has been prepared in accordance
with IAS 34 Interim Financial Reporting and the Directors have elected to
prepare financial statements that comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board;
b. the Interim Management Report includes a fair review of the
information required by:
i. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the first
six months of the financial year and 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
ii. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or the performance of the enterprise during that period.
On behalf of the Board
Dr Linda Yueh CBE
Chairperson
12 September 2024
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website, and for
the preparation and dissemination of financial statements. Legislation in
Guernsey governing the preparation and dissemination of financial statements
may differ
from legislation in other jurisdictions.
Interim management report
The six months to 31 July 2024 saw NAV total return down 3.2%. However, the
share price increased by 44.1% over the period, causing the discount to narrow
to 10.1%.
Both private and public holdings contributed to the NAV decrease. On the
public side, key negative contributors were buy-now pay-later provider Affirm
and foreign exchange platform Wise. Affirm's share price dropped 42% and
Wise's dropped 17%. Underlying operational performance at both companies was
still strong. Affirm saw 51% revenue growth and achieving over one million
users of its Affirm Card product, whilst Wise grew revenues 23% and more than
tripled profits. Over the life of the fund, both stocks remain strong net
contributors to performance. On the private side, German real estate broker
McMakler was the main negative contributor, as it continues to battle
macroeconomic headwinds in the domestic property market.
Positive contributors included Italian consumer digital application company
Bending Spoons and American expense management and credit card company Brex.
Bending Spoons has continued to deliver strong operational performance and
show signs of having successfully integrated its recent acquisitions. We added
more to our position reflecting growing conviction in the investment case.
Brex has posted stronger operational results and improved margins as it gains
efficiency following a difficult workforce reduction exercise.
Across the portfolio, operating performance remains broadly strong.
Portfolio-weighted revenue growth was 41% over the period, with 39% of the
companies by portfolio weighting being EBITDA-positive, and nearly 50% of
companies in total being cash generative. The vast majority of the companies
within the portfolio have cash balances greater than a year, with just under
5% having less than 12 months cash runway.
Portfolio management
Over the six months to 31 July, we made one new investment and completed two
sales.
The new investment was in Tekever. Tekever is a Portuguese aerial intelligence
company. It produces software-defined autonomous surveillance drones for both
non-lethal military and civilian use cases.
The sales were of public company Allbirds and private company Graphcore.
Footwear company Allbirds had struggled to expand its customer base and
product reach since its IPO, with a couple of false starts into apparel and
high-performance footwear. We felt the capital could be better used elsewhere
in our opportunity set. AI semiconductor design company Graphcore was acquired
by Softbank. Despite having had setbacks in customer contracts and chip
developments, at the sale price we were able to recoup the majority of our
initial investment. Nonetheless, neither of these sales represent the kinds of
outcomes that we seek.
We had one holding IPO in the period. Tempus AI, owner of one of the world's
biggest libraries of clinical and molecular data, listed at a 20% premium to
its end-of-May carrying valuation. The period also saw further private capital
raising activity, with autonomous driving software company Wayve receiving a
large investment from Softbank, Nvidia and Microsoft. We first took a position
in Wayve for the fund in January 2022.
We have continued to execute on the share buyback program announced in
November 2023. To 31 July 2024, the fund has bought back 4,526,000 shares. We
will continue to allocate the remaining 12% of capital across new private
opportunities, supporting existing companies and buying back shares.
Private company valuations
Over the reporting period, there were 170 revaluation events, with ~45% of the
portfolio being revalued three times or more. The average movement at the
private company level was -6.3%.
The gradual uptick in private markets activity over the past twelve months
have given us opportunities to compare our carrying valuations with external
price discovery moments. Over the last year, we have seen eleven such price
discovery events. On nine occasions we needed to revalue our holdings up, with
a median upwards revaluation of 18%. On two occasions we needed to revalue our
holdings down, with a median downwards revaluation of 2%.
As a reminder of our valuation process, we aim for a targeted +/- 20% range to
the new valuation, with some balance of being over and under - neither
consistently conservative nor consistently bullish. The overall median
movement over the twelve months has been an increase of 16%, giving us comfort
over the fair value positions and their proximity to eventual transaction
events.
Looking forward
We continue to see causes for optimism in the underlying holdings. The
companies within the fund have reacted well to a tough couple of years in
private markets, and we believe are well positioned to continue to take
advantage of their competitive positions in the years ahead. We have been
continuing to invest in our capability at Baillie Gifford, with four more
investors joining our team during the period.
More and more excellent companies are coming back to the market to organise
rounds - if not for their own primary capital needs, then to facilitate
liquidity for their early venture backers, who are coming under pressure for
liquidity from their own clients. The result is a much healthier crop of
interesting companies raising capital than we have seen for the last couple of
years. We believe the share price appreciation over the last six months hints
at an improved sentiment in general towards growth equity in the markets. If
so, it is a sentiment we share.
Peter Singlehurst
Robert Natzler
Portfolio executive summary
Performance
6 months 1 year 3 years Since inception
% % % % *
Share price 44.1% 56.1% (49.3%) (8.4%)
NAV (3.2%) 4.7% (30.2%) 15.0%
* Inception date: 27 March 2019.
All figures are stated on a total return basis† for periods to 31 July
2024.
† Alternative Performance Measure - see Glossary of terms and
Alternative Performance Measures at the end of this announcement.
Source: Baillie Gifford/LSEG. See disclaimer at the end of this announcement.
Key contributors to and detractors from Company performance - six months to 31 July 2024
Contributors† Absolute return *
(%)
Tempus AI§ 32.6
Bending Spoons 13.7
Space Exploration Technologies 7.8
Brex 15.0
HeartFlow 57.2
Detractors† Absolute return *
(%)
McMakler GmbH (96.9)
Affirm§ (30.2)
Northvolt (21.9)
Flix SE (22.9)
Wise§ (10.8)
* Absolute performance (in US$ terms) has been calculated on a
total return basis (including reinvestment of any dividends paid by portfolio
holdings) over the period 1 February 2024 to 31 July 2024.
† The contributors to and detractors from Company performance
are listed in descending order.
§ Denotes listed investment previously held in the portfolio as
a private company investment.
Source: Revolution.
Distribution of total net assets (unaudited)
Geographical as at 31 July 2024
Geographical % at % at Number of
31 July 31 January investments
2024 2024 at 31 July
2024
1 United States 54.2 50.7 30
2 China 8.0 7.7 3
3 United Kingdom 7.6 8.4 2
4 Italy 5.7 4.0 1
5 India 3.0 3.4 1
6 Germany 2.3 5.8 2
7 Sweden 2.1 2.7 1
8 Portugal 1.8 - 1
9 Australia 1.6 1.8 1
10 Brazil 0.8 0.9 1
11 Canada <0.1 0.2 1
12 Net current assets 12.9 14.4
Sectoral as at 31 July 2024
Sectoral % at % at Number of
31 July 31 January investments
2024 2024 at 31 July
2024
1 Information technology 25.8 21.3 13
2 Industrials 15.4 13.0 6
3 Financials 15.3 18.0 5
4 Consumer discretionary 9.5 10.1 6
5 Communication services 8.9 8.8 3
6 Healthcare 4.7 3.6 4
7 Consumer staples 3.8 4.2 4
8 Materials 2.8 2.6 1
9 Real estate 0.9 4.0 2
10 Net current assets 12.9 14.4
The above sectoral distribution is not derived from any index.
Baillie Gifford - 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
twelve-month period. For Schiehallion and our 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
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 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.
Generally speaking, public markets have continued to be less volatile in the
six months to 31 July 2024, and overall, an improvement in market conditions
has led to an increase in private market deal activity. The data below
quantifies the revaluations carried out during the six months to 31 July
2024, however, it does not reflect the ongoing monitoring of the private
investment portfolio which has not resulted in a change in valuation.
The Schiehallion Fund*
Instruments held 68
Percentage of portfolio revalued up to 2 times 55.9%
Percentage of portfolio revalued 3+ times 44.1%
* Data reflecting period 1 February 2024 to 31 July 2024.
List of investments
as at 31 July 2024 (unaudited)
Name Business Country 2024 2024
Total value US$'000 % of net
assets *
Space Exploration Technologies Designs, manufactures and launches advanced rockets and spacecraft United States 95,248 8.1
ByteDance Social media and news aggregation company China 68,518 5.8
Bending Spoons Mobile application software developer Italy 66,970 5.7
Wise§ Online platform to send and receive money UK 55,336 4.7
Brex Corporate credit cards for startups United States 46,251 3.9
Affirm§ Online platform which provides point of sale consumer finance United States 36,717 3.1
Dailyhunt (VerSe Innovation) Telephone voice, data, text messaging, and roaming services India 35,636 3.0
Tempus AI§ Oncological records aggregator and diagnostic testing provider United States 35,029 3.0
Wayve Technologies AI based software for self-driving cars UK 34,297 2.9
Solugen Combines enzymes and metal catalysts to make chemicals United States 33,030 2.8
Stripe Online payment platform United States 32,618 2.7
Databricks Data software solutions United States 30,488 2.6
Chime Financial Digital current account provider United States 27,314 2.4
Faire Wholesale Online wholesale marketplace United States 27,153 2.3
Flix SE European mobility provider Germany 25,435 2.2
Northvolt Lithium ion battery manufacturer Sweden 24,147 2.1
Grammarly Online platform for checking grammar, spelling and improving written United States 23,521 2.0
communication
Kepler Computing Semiconductor company United States 23,137 2.0
Epic Games Video game developer United States 22,263 1.9
Rappi Provider of an on-demand delivery platform designed to connect consumers with United States 22,091 1.9
local stores
Tekever Unmanned systems technology and services manufacturer Portugal 21,641 1.8
Warby Parker§ Online and physical corrective eyewear retailer United States 21,199 1.8
Pet Circle (Millell Pty Ltd) Pet food and accessories Australia 18,881 1.6
Oddity§ Direct to consumer cosmetics United States 18,804 1.6
Genki Forest Technology Group Non-alcoholic beverages China 18,700 1.6
HeartFlow Develops software for cardiovascular disease diagnosis and treatment United States 16,055 1.3
PsiQuantum Silicon photonic quantum computing United States 14,985 1.3
Tanium Online security management United States 14,649 1.2
Merlin Labs Autonomous flight technology United States 14,625 1.2
Oscar Health§ Healthcare insurance provider United States 14,534 1.2
Nuro Developer of autonomous delivery vehicles United States 14,287 1.2
Cohesity Data storage United States 11,302 1.0
Workrise Technologies Jobs marketplace for the energy sector United States 10,967 0.9
Airbnb§ Online market place for travel accommodation United States 10,730 0.9
Loft Online property platform Brazil 9,078 0.8
AWAY (JRSK Inc) Travel and lifestyle brand United States 8,567 0.8
Jiangxiaobai Producer of alcoholic beverages China 7,000 0.6
Carbon Manufactures and develops 3D printers United States 6,516 0.6
Honor Technology Provider of home-care services United States 4,754 0.4
MasterClass (Yanka Industries) Online education subscription platform United States 1,387 0.1
McMakler GmbH Real estate services Germany 1,166 0.1
Illumina CVR Gene sequencing equipment and consumables United States 407 <0.1
Indigo Agriculture Microbial seed treatments to increase crop yields and grain marketplace United States 380 <0.1
Blockstream Financial software developer Canada 316 <0.1
Total investments 1,026,129 87.1
Name 2024 2024
% of net
Total value US$'000
assets*
US Treasury Bill 20/03/2025 22,556 2.0
US Treasury Bill 15/05/2025 22,537 1.9
US Treasury Bill 05/09/2024 22,536 1.9
US Treasury Bill 23/01/2025 22,513 1.9
US Treasury Bill 29/11/2024 22,510 1.9
US Treasury Bill 31/10/2024 22,504 1.9
Total US Treasury Bills 135,156 11.5
Cash 19,293 1.6
Other current assets and liabilities (2,061) (0.2)
Capital gains tax provision† (346) <0.0
Net current assets less capital gains tax provision 152,042 12.9
Total net assets less capital gains tax provision 1,178,171 100.0
§ Denotes listed investment previously held in the portfolio as
a private company investment.
* See Glossary of terms and Alternative Performance Measures at
the end of this announcement.
† The tax liability provision at 31 July 2024 relates to a
potential liability for Indian capital gains tax that may arise on the
Company's Indian investments should they be sold in the future, based on the
net unrealised taxable capital gain at the period end and on enacted Indian
tax rates.
Name Listed Private Net current Net assets *
investments company assets * %
% investments %
%
31 July 2024 16.3 70.8 12.9 100.0
31 January 2024 14.3 71.3 14.4 100.0
Allocation of net assets (unaudited)
Name 2024 2024
% of net
Total value US$'000
assets *
Listed investments 192,349 16.3
Private company investments 833,373 70.8
Contingent value rights 407 <0.1
US Treasury Bills 135,156 11.5
Cash and cash equivalents 19,293 1.6
Net current assets (2,407) (0.2)
Total net assets 1,178,171 100.0
* See Glossary of terms and Alternative Performance Measures at
the end of this announcement.
The Company may hold various classes of shares in investee companies, some of
which may have a preference on winding up.
Statement of comprehensive income (unaudited)
For the six months to 31 July 2024 For the six months to 31 July 2023 For the year to 31 January 2024
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
(Losses)/gains on investments - (39,662) (39,662) - (46,896) (46,896) - 69,768 69,768
Currency gains/(losses) - 27 27 - (9) (9) - 75 75
Income 2 4,670 - 4,670 3,512 - 3,512 8,211 - 8,211
Investment management fee 3 (4,471) - (4,471) (3,937) - (3,937) (8,152) - (8,152)
Other administrative expenses 4 (577) - (577) (637) - (637) (1,263) - (1,263)
Operating (loss)/profit before finance costs and taxation (378) (39,365) (40,013) (1,062) (46,905) (47,967) (1,204) 69,843 68,639
Finance cost of borrowings - - - - - - - - -
Operating (loss)/profit before taxation (378) (39,635) (40,013) (1,062) (46,905) (47,967) (1,204) 69,843 68,639
Tax on ordinary activities - 486 486 - - - - (834) (834)
(Loss)/profit and total comprehensive (loss)/income for the period (378) (39,149) (39,527) (1,062) (46,905) (47,967) (1,204) 69,009 67,805
For the six months to 31 July 2024 For the six months to 31 July 2023 For the year to 31 January 2024
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Total comprehensive (loss)/income for the period analysed as follows:
Attributable to Ordinary shareholders 5 (378) (39,149) (39,527) (1,483) (48,168) (49,651) (1,204) 69,009 67,805
Attributable to C shareholders* 5 421 1,263 1,684
(Loss)/profit and total comprehensive (loss)/profit for the period (378) (39,149) (39,527) (1,062) (46,905) (47,967) (1,204) 69,009 67,805
(Loss)/earnings per Ordinary share 5 (0.04¢) (3.81¢) (3.85¢) (0.30¢) (9.62¢) (9.92¢) (0.12¢) 6.69¢ 6.57¢
(Loss)/earnings per C share* 5 0.06¢ 0.18¢ 0.24¢
* The Company's C shares converted into Ordinary shares on
8 September 2023 and therefore there is no C shares income/(loss) to report
for the six months to 31 July 2024 and the year to 31 January 2024.
The total column of this Statement represents the Statement of Comprehensive
Income of the Company.
The supplementary revenue and capital columns are prepared under guidance
published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing
operations.
The accompanying notes below are an integral part of the Financial Statements.
Statement of financial position (unaudited)
Notes At At At 31 January At 31 January
2024
31 July 31 July
US$'000 2024
2024 2024 US$'000
US$'000 US$'000
Fixed assets
Investments held at fair value through profit or loss 7 1,026,129 1,043,781
Current assets
US Treasury Bills 135,156 167,522
Cash and cash equivalents 19,293 11,306
Debtors 2,257 1,743
156,706 180,571
Current liabilities
Amounts falling due within one year (4,318) (4,381)
Net current assets 152,388 176,190
Non-current liabilities
Amounts falling due after more than one year:
Provision for tax liability§ (346) (834)
Net assets 1,178,171 1,219,137
Capital and reserves
Share capital 8 1,211,978 1,213,903
Capital reserve (24,967) 15,621
Capital redemption reserve 4,526 2,601
Revenue reserve (13,366) (12,988)
Shareholders' funds 1,178,171 1,219,137
The accompanying notes below are an integral part of the Financial Statements.
§ The tax liability provision at 31 July 2024 relates to a
potential liability for Indian capital gains tax that may arise on the
Company's Indian investments should they be sold in the future, based on the
net unrealised taxable capital gain at the period end and on enacted Indian
tax rates. The amount of any future tax amounts payable may differ from this
provision, depending on the value and timing of any future sales of such
investments and future Indian tax rates.
Statement of changes in equity (unaudited)
Six months to 31 July 2024
Notes Share Capital Capital Revenue Shareholders'
capital reserve * redemption reserve funds
US$'000 US$'000 reserve US$'000 US$'000
US$'000
Shareholders' funds at 1 February 2024 1,213,903 15,621 2,601 (12,988) 1,219,137
Ordinary shares bought back and cancelled 8 (1,925) (1,439) 1,925 - (1,439)
Total comprehensive loss for the period - Ordinary shares - (39,149) - (378) (39,527)
Shareholders' funds at 31 July 2024 1,211,978 (24,967) 4,526 (13,366) 1,178,171
Six months to 31 July 2023
Share Capital Capital Revenue Shareholders'
capital reserve * redemption reserve funds
US$'000 US$'000 reserve US$'000 US$'000
US$'000
Shareholders' funds at 1 February 2023 1,216,503 (51,536) - (11,784) 1,153,183
Total comprehensive loss for the period - Ordinary shares - (48,168) - (1,483) (49,651)
Total comprehensive income for the period - C shares† - 1,263 - 421 1,684
Shareholders' funds at 31 July 2023 1,216,503 (98,441) - (12,846) 1,105,216
* Includes investment holdings gains of US$1,188,000 (31 July
2023 - losses of US$113,452,000).
† The C shares converted to Ordinary shares on 8 September
2023 and therefore there is no C share (loss)/income to report for the six
months to 31 July 2024.
The accompanying notes below are an integral part of the Financial Statements.
Statement of cash flows (unaudited)
Six months to Six months to
31 July 2024
31 July 2023
US$'000 US$'000 US$'000 US$'000
Cash flows from operating activities
Operating loss before taxation (40,013) (47,967)
US Treasury Bills interest (3,958) (2,236)
Net losses on investments 39,662 46,896
Currency (gains)/losses (27) 9
Changes in debtors and creditors (525) (592)
Net cash outflow in operating activities* (4,861) (3,890)
Cash flows from investing activities
Acquisitions of US Treasury Bills (78,936) (53,111)
Disposals of US Treasury Bills 115,206 118,826
Acquisitions of investments (31,782) (45,621)
Disposals of investments 9,772 48,555
Net cash inflow from investing activities 14,260 68,649
Cash flows from financing activities
Ordinary shares bought back and cancelled (1,439) -
Net cash outflow from financing activities (1,439) -
Net increase in cash and cash equivalents 7,960 64,759
Effect of exchange rate fluctuations on cash and cash equivalents 27 (9)
Cash and cash equivalents at 1 February 11,306 45,799
Cash and cash equivalents at 31 July 19,293 110,549
* Cash from operations includes interest received of US$263,000
(2023 - US$878,000).
The accompanying notes below are an integral part of the Financial Statements.
Notes to the Financial Statements (unaudited)
01 Basis of accounting
The condensed Financial Statements for the six months to 31 July 2024
comprises the statements set out above together with the related notes below.
They have been prepared in accordance with International Financial Reporting
Standards (IFRS). The Financial Statements for the six months to 31 July 2024
have been prepared on the basis of the same accounting policies as set out in
the Company's Annual Report and Financial Statements at 31 January 2024.
Equity investment
The ordinary shares and C shares of the Company are classified as equity in
accordance with the definition of equity instruments under IAS 32 Financial
Instruments: presentation (IAS 32). The proceeds from the issue of shares are
recognised in the Statement of Changes in Equity net of incremental issuance
costs.
Going concern
In accordance with The Financial Reporting Council's guidance on going concern
and liquidity risk, the Directors have undertaken a rigorous review of the
Company's ability to continue as a going concern.
In undertaking this review, the Board has considered the Company's principal
risks and uncertainties, as set out on the inside front cover, and in
particular considered the impact of heightened market volatility due to
macroeconomic and geopolitical concerns, including the Russia-Ukraine war and
heightened tensions between China and both the USA and Taiwan. Liquidity
stress testing has been carried out and having done so the Board does not
believe the Company's going concern status is affected. The Company maintains
sufficient cash balances to enable it to meet its liabilities as they fall
due.
In managing the Company's assets, the Investment Manager will seek to ensure
that the Company holds at all times a proportion of assets that is
sufficiently liquid to enable it to discharge its payment obligations.
Accordingly, the Financial Statements have been prepared on the going concern
basis as it is the Directors' opinion, having assessed the principal risks and
uncertainties, that the Company will continue in operational existence for a
period of at least 12 months from the date of approval of these Financial
Statements.
02 Income
Six months to 31 July 2024 Six months to 31 July 2023 Year to
31 January 2024
US$'000 US$'000
US$'000
US Treasury Bills interest 3,958 2,236 5,305
Overseas interest 449 398 862
Deposit interest 263 878 2,044
Total income 4,670 3,512 8,211
03 Investment management fee
Six months to 31 July 2024 Six months to 31 July 2023 Year to
31 January 2024
US$'000 US$'000
US$'000
Investment management fee 4,471 3,937 8,152
The Company has appointed Baillie Gifford & Co Limited as its Investment
Manager (the 'Investment Manager'). As the entity appointed to be responsible
for risk management and portfolio management, the Investment Manager has also
been appointed as the Company's Alternative Investment Fund Manager ('AIFM').
Baillie Gifford & Co Limited has delegated portfolio management services
to Baillie Gifford Overseas Limited. The Investment Management Agreement is
terminable on not less than six months' notice.
Under the terms of the Investment Management Agreement, the Investment Manager
will be entitled to an annual fee (exclusive of VAT, which shall be added
where applicable) of: 0.9% on the net asset value excluding cash or cash
equivalent assets up to and including US$650 million; 0.8% on the net asset
value of the Company excluding cash or cash equivalent assets exceeding US$650
million up to and including US$1.3 billion; and 0.7% on the net asset value
excluding cash or cash equivalent assets exceeding US$1.3 billion. Management
fees are calculated and payable quarterly.
Cash equivalents include US Treasury Bills.
04 Other administrative expenses
Six months to Six months to Year to
31 July 2024 31 July 2023 31 January 2024
US$'000 US$'000 * US$'000
General administrative expenses 172 228 412
Administrator's fee 48 28 105
Auditor's remuneration for audit services 151 154 296
Directors' fees 206 227 450
577 637 1,263
* Expenses relating directly to a share class were charged
directly to that share class. Expenses pertaining to both Ordinary and C
shares were split equally between the share classes.
05 Earnings per share
Six months to Six months to Year to
31 July 2024
31 July 2023
31 January 2024
Ordinary shares US$'000 ¢ US$'000 ¢ US$'000 ¢
Revenue return on ordinary activities after taxation (378) (0.04) (1,483) (0.30) (1,204) (0.12)
Capital return on ordinary activities after taxation (39,149) (3.81) (48,168) (9.62) 69,009 6.69
Loss/(profit) and total comprehensive (loss)/income for the period (39,527) (3.85) (49,651) (9.92) 67,805 6.57
Weighted average number of Ordinary shares in issue 1,028,445,885 500,430,002 1,032,208,365
Six months to
31 July 2023
C shares* US$'000 ¢
Revenue return on ordinary activities after taxation 421 0.06
Capital return on ordinary activities after taxation 1,263 0.18
Profit and total comprehensive income for the period 1,684 0.24
Weighted average number of C shares in issue 700,000,000
Net return per share is based on the above totals of revenue and capital and
the weighted average number of shares in issue during each period. There are
no dilutive or potentially dilutive shares in issue.
* The Company's C shares were converted into Ordinary shares on
8 September 2023 and therefore there were no C shares in issue at 31 January
2024 and 31 July 2024 and no allocable (loss)/income to report for those
periods.
06 Ordinary dividends
There were no dividends paid or proposed in respect of the six months to
31 July 2024 (2023 - nil).
07 Financial instruments
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).
As at 31 July 2024 Level 1 US$'000 Level 2 US$'000 Level 3 US$'000 Total
US$'000
Listed equities 192,349 - - 192,349
Private company ordinary shares - - 209,837 209,837
Private company preference shares* - - 610,144 610,144
Private company convertible promissory notes - - 13,392 13,392
Contingent value rights† - - 407 407
Total financial asset investments 192,349 - 833,780 1,026,129
As at 31 January 2024 Level 1 US$'000 Level 2 US$'000 Level 3 US$'000 Total
US$'000
Listed equities 173,665 - - 173,665
Private company ordinary shares - - 172,693 172,693
Private company preference shares* - - 684,298 684,298
Private company convertible promissory notes - - 12,718 12,718
Contingent value rights† - - 407 407
Total financial asset investments 173,665 - 870,116 1,043,781
* 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.
† See Glossary of terms and Alternative Performance Measures
below.
During the six months to 31 July 2024, the investment in Tempus AI with a
fair value (IPO price) of US$32,553,000 was transferred from Level 3 to Level
1 on becoming listed.
During the year to 31 January 2024, the investment in Oddity with a fair
value (IPO price) of US$11,800,000 was transferred from Level 3 to Level 1 on
becoming listed.
The valuation techniques used by the Company are explained in the accounting
policies on pages 85 and 86 of the Company's Annual Report and Financial
Statements for the year to 31 January 2024. Listed investments are
categorised as Level 1 if they are valued using unadjusted quoted prices for
identical instruments in an active market and as Level 2 if they do not meet
all these criteria but are, nonetheless, valued using market data. The
Company's holdings in unlisted investments are categorised as Level 3
unobservable data is a significant input to their fair value measurements.
08 Share capital
31 July 31 July 31 January 31 January
2024 2024 2024 2024
Number US$'000 Number US$'000
Allotted, called up and fully paid Ordinary shares of US$1 each 1,027,973,907 1,211,978 1,029,898,907 1,213,903
By way of a Special Resolution passed on 10 May 2024 the Directors of the
Company were granted a general authority to allot or sell from treasury,
without regard to the pre-emption rights contained in the Articles of
Incorporation of the Company, up to 102,882,390 Ordinary shares or C shares
(as defined in the Articles of Incorporation). This authority will expire at
the end of the period concluding immediately prior to the Annual General
Meeting of the Company to be held in 2029 (or, if earlier, five years from the
date of the passing of the resolution).
During the six months to 31 July 2024 the Company did not issue any Ordinary
shares or C shares. In the period from 1 August 2024 to 10 September 2024
the Company issued no Ordinary shares or C shares.
By way of a Special Resolution passed on 10 May 2024 the Directors of the
Company have general authority to make market purchases of up to 154,145,753
Ordinary shares, being 14.99% of the Ordinary shares in issue as at 10 May
2024, being the date of the passing of the resolution. This authority will
expire at the conclusion of the Annual General Meeting of the Company to be
held in respect of the year ending 31 January 2025.
1,925,000 Ordinary shares were bought back during the six months to 31 July
2024 (31 July 2023 - nil). In the period from 1 August 2024 to 10 September
2024 200,000 Ordinary shares were bought back.
Holders of Ordinary shares have the right to receive income and capital from
assets attributable to such share class. Ordinary shareholders have the right
to receive notice of general meetings of the Company and have the right to
attend and vote at all general meetings.
09 Transactions with related parties and the investment manager and administrator
There have been no transactions with related parties during the first six
months of the current financial year that have materially affected the
financial position or the performance of the Company during that period and
there have been no changes in the related party transactions described in the
last Annual Report and Financial Statements that could have such an effect on
the Company during that period.
Further shareholder information
Automatic Exchange of Information
In order to fulfil its legal obligations under the Guernsey Common Reporting
Standard Legislation relating to the Automatic Exchange of Information, the
Company is required to collect and report certain information about certain
shareholders.
The legislation will require investment companies to provide personal
information to the Guernsey authorities on certain investors who purchase
shares in investment funds. As an affected company, The Schiehallion Fund
Limited will have to provide information annually to the local authority on
the tax residencies of non-UK based certificated shareholders and corporate
entities.
Foreign Account Tax Compliance Act
Pursuant to the reciprocal information sharing inter-governmental agreement
entered into by the States of Guernsey and the US Treasury, and for the
purposes of the US Foreign Account Tax Compliance Act ('FATCA') of the
Company registered with the Internal Revenue Service ('IRS') as a Foreign
Financial Institution ('FFI') and received a Global Intermediary
Identification Number (R2NXXB.9999.SL.831). The Company can be located on the
IRS FFI list.
Third party data providers 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.
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.
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 par value. Per share amounts are calculated by dividing the relevant
figure by the number of ordinary shares in issue.
Total Return
The total return is the return to shareholders after reinvesting the net
dividend on the date that the share price goes ex-dividend. The Company does
not pay a dividend, therefore, the total returns for the share price and NAV
per share are the same as the percentage movements in the share price and NAV
per share as detailed above.
Capital deployed (APM)
Capital deployed reflects cumulative amounts invested since inception of the
Company.
Contingent value rights
'CVR' after an instrument name indicates a security, usually arising from a
corporate action such as a takeover or merger, which represents a right to
receive potential future value, should the continuing company achieve certain
milestones.
Total net assets
Total value of all assets held less current liabilities, other than
liabilities in the form of borrowings.
Net current assets
Net current assets comprise current assets less current liabilities (excluding
borrowings).
(Discount)/premium (APM)
As stock markets and share prices vary, an investment company's share price is
rarely the same as its NAV. When the share price is lower than the NAV per
share it is said to be trading at a discount. The size of the discount is
calculated by subtracting the share price from the NAV per share and is
usually expressed as a percentage of the NAV per share. If the share price is
higher than the NAV per share, it is said to be trading at a premium.
Ordinary shares 31 July 31 January
2024 2024
Closing NAV per share (a) 114.61¢ 118.37¢
Closing share price (b) 103.00¢ 71.50¢
Discount expressed as a percentage (b - a) ÷ a (10.1%) (39.6%)
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
You can find up to date performance information about The Schiehallion Fund on
the Company website at schiehallionfund.com‡
The Schiehallion Fund Limited is managed by Baillie Gifford, the Edinburgh
based fund management group with around £207.8 billion under management and
advice in active equity and bond portfolios for clients in the UK and
throughout the world (as at 10 September 2024). The Administrator, Secretary
and Designated Manager is Alter Domus (Guernsey) Limited.
‡ 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.
13 September 2024
For further information please contact:
Alex Blake, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
- ends -
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