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RNS Number : 2325J Schiehallion Fund Limited (The) 04 April 2024
RNS Announcement
The Schiehallion Fund Limited
Regulated Information Classification: Annual Financial and Audit Reports
Legal Entity Identifier: 213800NQOLJA1JCWXQ56
Results for the year to 31 January 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.
3 April 2024
For further information please contact:
Alex Blake, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Agency
Tel: 0203 920 0555 or 07872 495396
The following is the Preliminary Results Announcement for the year to 31
January 2024 which was approved by the Board on 3 April 2024.
Chairperson's statement
The Schiehallion Fund Limited (the 'Company' or 'Schiehallion') seeks to
generate capital growth for investors through 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.
Investment performance
During the financial year to 31 January 2024, the Company's ordinary share net
asset value ('NAV') returned negative 0.9% and share price returned negative
22.3%. The share price discount to NAV widened from 23% to 40% as sentiment
remained against growth stocks and private company investments. Further
commentary on performance is included in the Investment Manager's review
below.
Over the period from 27 March 2019 (launch date) to 31 January 2024, the
Company's ordinary share NAV returned positive 18.8% and price returned
negative 28.5%.
Capital allocation
In November 2023, the Board announced a capital allocation update, noting
that:
• its priority is to ensure that the Company has sufficient capital to
deliver on its objectives, including supporting existing investments and
satisfying the Company's ongoing working capital requirements;
• it believed that the Ordinary Shares represented an attractive investment
opportunity at a deep discount to NAV;
• the Company intended to allocate up to US$20 million towards share
repurchases given the limited available capital at that time; and
• it would keep this capital allocation and associated share buyback policy
under review.
Over the three months to 31 January 2024, the Company has bought back 2.6
million shares at a cost of approximately $1.9 million. Since the
financial year end, the Company has bought back an additional 1.1 million
shares.
The Company will be seeking authority to renew the buyback authority for the
ordinary shares at the forthcoming Annual General Meeting ('AGM'). The
Directors are also seeking a 10% share issuance authority at the AGM. This
authority would expire at the conclusion of the AGM in 2025.
Conversion of C shares
In August 2023, the Board announced that the C Shares proceeds were 86.6%
deployed. The calculation date for the conversion of the C Shares into
ordinary shares was 31 August, and the conversion ratio was 0.7601 ordinary
shares for each C Share. The new ordinary shares were admitted to trading on
12 September 2023.
Costs and charges
The ongoing charges for the ordinary shares as at 31 January 2024 were 0.85%
(2023 - 0.87%).
The Company has a tiered management fee, which means that the benefits of
scale are shared with investors. In addition, no management fee is charged on
cash and the Investment Manager absorbs the valuation costs and legal costs
associated with making private company investments.
Earnings and dividend
The Company's priority is to generate capital growth over the long-term. The
Company therefore has no dividend target and will not seek to provide
shareholders with a particular level of distribution. This period the net
revenue return per ordinary share was negative 0.12 cents (year to 31 January
2023, negative 0.98 cents). The Board is recommending that no final dividend
be paid.
Board
Members of the Board come from a broad variety of backgrounds and the Board
can draw on a very extensive pool of knowledge and experience. Directors'
biographies can be found on pages 50 to 52 of the Annual Report and Financial
Statements.
During the year, the Board undertook a due diligence visit at the Investment
Manager's offices, meeting representatives from the Investment Manager's
private company investment, valuation and legal teams. I also visited
portfolio companies in San Francisco, which allowed me to observe the
Investment Manager's investment process in action.
All the Directors are subject to annual re-election at the AGM in May. Whilst
Director remuneration has been frozen for the forthcoming year, the Board is
seeking shareholder approval to increase the level of the limit on the
aggregate fees that may be paid to Directors from £360,000 per annum to
£430,000 per annum. This proposed increase would provide additional
flexibility for future Board planning.
Annual General Meeting
The AGM will be held at 3pm on Friday 10 May 2024 at the offices of Herbert
Smith Freehills, Exchange House, Primrose Street, London EC2A 2EG.
Shareholders are reminded that they are able to submit proxy voting forms
before the applicable deadline on Wednesday 8 May 2024 and also to direct any
questions for the Board or Manager in advance by email to
trustenquiries@bailliegifford.com or by calling 0800 917 2112 (please note
that Baillie Gifford may record your call).
The Board is also seeking approval for amendments to the Company's Articles of
Incorporation clarifying the Company's general authority to buyback its
shares.
Information on the resolutions can be found on pages 110 and 111 of the Annual
Report and Financial Statements. The Directors consider that all resolutions
to be put to shareholders are in their and the Company's best interests as a
whole and recommend that shareholders vote in their favour.
Investment outlook
The past year has been characterised by geo-political tensions, inflationary
pressures, higher interest rates, increased cost of borrowing, and a
recessionary environment. The Israel-Hamas conflict worsened the uncertainties
in the global economy. Although inflationary pressures have begun to ease,
these factors have collectively contributed to a challenging economic and
market environment.
Despite the considerable uncertainties, the Board and the Investment Manager
are optimistic about the outlook for the Company with its focus on the
long-term and investing in companies with transformational potential. The
Company invests in companies with exceptional growth potential which are not
widely accessible in public markets. The potential of the companies in our
portfolio is generally dependent on their ability to take advantage of
opportunities. Therefore, the Board is positive about the growth prospects of
these companies, and the pipeline of private companies that the Investment
Manager has access to. The Board and the Investment Manager are confident in
the investment outlook for
the Company.
Dr Linda Yueh CBE
Chairperson
3 April 2024
Past performance is not a guide to future performance. For a definition of
terms used see Glossary of terms and alternative performance measures at the
end of this announcement.
Investment Manager's review
Performance
The 12 months to 31 January 2024 saw public market recovery and less private
market volatility. The Net Asset Value ('NAV') total return was negative 0.9%
for the ordinary shares. Although the year ended with a small negative return,
this was the result of a weak first half followed by a recovery in the second
half of the year.
Performance for the year was driven by a mix of public market uplift and
increased valuations in private holdings. Listed holdings, Affirm, Wise, and
Oscar Health, saw significant increases in their share prices throughout 2023
of 408%, 272%, and 64%, respectively. Private holdings, such as Bending Spoons
and SpaceX, also experienced strong increases in their valuations. Bending
Spoons' valuation increased over 150% in Q4 on the back of strong operational
performance following successful integrations of their recent acquisitions and
a new funding round where the company was valued at $2.55 billion. SpaceX
conducted another substantial secondary tender offer that values the company
at $180 billion, making it the second most valuable start-up in the world
behind ByteDance, which is also in your portfolio.
The largest detractors of NAV performance were private holdings, specifically
Convoy, which ceased operations in October 2023, Indigo Agriculture, and
Solugen. When considering the broader portfolio, companies are well
capitalised, with over 90% by capital weighting having more than 12 months of
cash runway. In recent months, we have seen an increased focus on capital
efficiency as companies seek to strike the right balance between growth and
profitability. We remain optimistic about the resilience and potential of the
companies in your portfolio. Operational performance and efficiency continue
to improve, and in several cases, are better than expected following rate
hikes and broader economic and political tension.
Portfolio
The operational performance within the portfolio remained solid overall,
particularly the top 20 companies which generated an average of approximately
40% revenue growth and with over 40% gross margins. Operating margins have
also improved as companies continue to focus on efficiency and a path toward
profitability. By capital weighting, over one fifth of the portfolio comprised
profitable companies. At last available reporting approximately 10% of
companies have less than a year of cash runway remaining but the majority have
since raised or are raising more capital. The mean average years of remaining
cash runway was over five years.
At the reporting date the five largest holdings - SpaceX, Wise, Affirm,
ByteDance, and Bending Spoons - represent our ability to construct a unique
portfolio that is unconstrained by geography or sector. The holdings range
from a manufacturer of rockets and spacecrafts to payment platforms to digital
media apps. The average top-line growth rate for these companies was 48%, with
average gross margins of 57%. Each company is cash-generative, and three of
the five companies are profitable.
Outside of the five largest, holdings such as Oddity, the beauty and wellness
platform, achieved 57% net revenue growth, 64% gross margin growth, and 130%
free cash flow growth in FY 2024. Flix, the global bus and train operator,
continued strong top-line performance, and is profitable and cash-generative.
As such, the company is a strong IPO candidate in 2024. Tempus AI, the data
and artificial intelligence healthcare platform also achieved strong top-line
growth, fattening gross margins, and improved operational efficiency for the
year.
While the operating performance of the broader portfolio has been solid, some
companies faced challenges, specifically Convoy, a U.S. based freight company,
which shut down its operations in October 2023. Convoy struggled with a
perfect storm of a contraction in capital markets and a freight recession,
which impacted revenues. The company explored both raising capital and being
acquired, but was ultimately unsuccessful. Due to the challenging capital
market environment and the nature of investing in private companies, such an
outcome, while disappointing, is not unexpected on occasion. Brex, the
business credit cards and cash management platform, saw its growth rates slow
versus the prior year as it looked to diversify its product offering in the
face of declining spend of venture-backed businesses. Despite current
headwinds, the company has a significant cash runway and is focused on
operational efficiency and profitability before entering public markets.
Deployment
Historically, the two options for capital deployment within Schiehallion were
investing in new companies, or putting additional capital into existing ones.
Following the merger of the C-Share and Ordinary pools, and within the context
of the shares trading at a large discount, we announced a share buyback
programme. We believe this represents an attractive opportunity to create
value for shareholders through the accretive effect on Net Asset Value.
However, our primary objective continues to be concentrating capital into the
existing portfolio to support our companies' ongoing growth and into new
opportunities that have the disruptive and growth potential we seek, and to
take advantage of valuations that might be at an attractive discount. As of
year-end, we had bought back 2.6 million shares.
Alongside the buyback programme, we see continued opportunities to put more
capital into existing investments. As well as the follow-on investments
discussed in the Interim Report, we also made a small additional investment in
Databricks and a more substantial investment in ByteDance. The latter is a
company often in the news, with much of the focus being on TikTok and its fate
in the U.S. What the reporting in Western media outlets often fails to mention
is the scale and profitability of ByteDance's domestic Chinese businesses,
where their Toutiao and Douyin apps generate substantial cash flows. Our
investment case for ByteDance rests on the domestic opportunity, with some
optionality around the international monetisation of TikTok. We purchased
shares in a secondary transaction at a compelling price given the growth and
profitability of ByteDance.
New investments are the third string to our capital deployment bow. As
Schiehallion has closed in on full deployment, the pace of new investments has
naturally slowed, though we do have some remaining capacity. The bar for new
investments is high given the opportunity to buy back our own shares at a
discount or invest more in existing companies where we have a longer history.
But where we see new opportunities clearing this bar, we will invest in them
until we hit the buffer of reserved capital. The team has recently looked at
companies in Australia, Germany, India, Israel, Singapore, South Korea, and of
course, the USA. These businesses are in a wide range of industries, from
precision medicine to immersive entertainment, fintech, and defence. Over half
of our current pipeline is generating top-line growth in excess of 50%, and
more than a third is profitable.
In the second half of the year, we took advantage of public liquidity to sell
and trim some holdings. We sold our holdings in both Ginkgo Bioworks and
Illumina. Both these holdings came about from acquisitions of private
companies, Zymergen and Grail, respectively. We also trimmed our holding in
Affirm. Affirm remains a high conviction holding for us, showing both strong
fundamental and share price growth over the course of 2023. Despite trimming
the holding, it remains amongst Schiehallion's five largest positions.
Looking forward
We are operating in a highly bifurcated market. Companies seem to either be
significantly over or under-priced. This is a perfect market for bottom-up
stock pickers, applying fundamental analysis to businesses and valuations. In
general, the over-priced companies seem to be clustered around the heartland
of Silicon Valley and the Venture Capital ('VC') ecosystem. It is off the
beaten path that we are finding real value. Bootstrapped companies that have
evaded the trappings of overcapitalisation are of particular interest to us.
We are finding an excellent fit with the kind of capital these businesses
need, and the kind of capital offered by Schiehallion and Baillie Gifford. We
are also spending significant time looking at business outside of the US.
It is no great secret that there is a wall of 'dry powder' sitting in VC
funds. Timebound investment windows within these funds will likely incentivise
many investors to over-deploy in the coming years. We believe this will
largely be deployed into areas where investors feel 'safe'. In other words, in
the same kinds of businesses in which their peers are investing. Now could be
a dangerous time to invest with the 'herd', but it could also be the perfect
time to be a contrarian, applying our long-term investment philosophy and
rigorous analytical framework to identify the best companies for our
shareholders.
Peter Singlehurst
3 April 2024
Past performance is not a guide to future performance.
For a definition of terms used see Glossary of terms and alternative
performance measures at the end of this announcement.
Environmental, social and governance (ESG) considerations
Environmental, social and governance ('ESG') considerations are integral when
Baillie Gifford's Private Companies Team research high growth private
companies.
ESG in our philosophy
The Schiehallion Fund invests in companies with a more than five-year time
horizon. Good governance is crucial to enabling companies to flourish over the
long term. Over our investment period, we believe scalability and
profitability depends not only on a company's ability to serve customers well
and execute on its business model, but also on its ability to do this without
jeopardising its social licence to operate. As such, we don't break out
consideration of a company's role in the broader system from our investment
work, under ESG or any other rubric. These considerations are core to
long-term investing. It is the long-term nature of the growth ambition within
our investment philosophy that causes us to pay special attention to the
positive and/or negative external effects of a company's operations. Over
five-year-plus periods, these can have profound impacts on a company's
relationship with customers, regulators and staff. They can hugely help or
hinder the growth of a business. This is not about being a moral conscience
for our clients. Rather, it is a vital part of practising the philosophy that
we believe will grow the value of their capital over the long term.
ESG in our process
The Private Companies Team structures our research into potential investments
by using a proprietary '10 Questions' research framework. These questions aim
to address issues such as the scale of the opportunity, the competitive edge
and potential returns, whilst others focus specifically on ESG related topics.
Question Four ('How will the leadership and cultural attributes help this
business achieve its long-term vision?') asks about the stakeholders within a
firm, the culture within the workplace, whether it cultivates a healthy
organisational mindset capable of delivering the mission and whether a company
is well managed, well governed and worthy of being trusted with our clients'
capital. To answer this question, we typically speak with former and current
employees and board members, as well as gathering the relevant information
from the company and publicly available sources. We have declined companies in
the past based on negative signals from this question.
Meanwhile, Question Five asks about external stakeholders ('Do the company's
customers like them? And why?'). This question helps us evaluate the strength
of customer relationships, as well as to understand why customers use the
company's products or services, and so the social purpose that they serve.
Question Six explores the E and S of ESG in greater depth ('How do
environmental and social factors create opportunities and risks?'), focusing
on material factors that could affect a specific company positively or
negatively in the next five years. We believe this qualitative,
company-specific and nuanced approach is best suited to help us understand the
most important environmental and social factors for a company.
Finally, we ask ourselves how can we help a specific company. Very often, we
focus on governance. While we don't take active board seats, we occasionally
take observer seats and frequently provide encouragement, input and
introductions as companies look to evolve a stronger governance structure that
is better suited for public markets.
As with other research questions, the Private Companies Team is supported by a
wider network within and outside of Baillie Gifford. On ESG topics in
particular, we benefit from the research and expertise of Baillie Gifford's
broader team of ESG professionals, academic networks and impact and
climate-focused investment teams.
Environmental, social and governance engagement
The Company has given discretionary voting powers to Baillie Gifford. For
public holdings within the Fund, the Investment Manager votes against
resolutions they consider may damage shareholders' rights or economic
interests.
The Company believes that it is in the shareholders' interests to consider
environmental, social and governance ('ESG') factors when selecting and
retaining investments and has asked the Investment Manager to take these
issues into account. The Investment Manager does not exclude companies from
their investment universe purely on the grounds of ESG factors but adopt a
positive engagement approach whereby matters are discussed with management
with the aim of improving the relevant policies and management systems and
enabling the Investment Manager to consider how ESG factors could impact
long-term investment returns. The Investment Manager considers governance
factors across the portfolio as part of the investment case and address
environmental and social factors in terms of material risks and opportunities.
The Investment Manager's Statement of Compliance with the UK Stewardship Code
can be found on the Manager's website: bailliegifford.com. The Investment
Manager's policy has been reviewed and endorsed by the Board. The Investment
Manager, Baillie Gifford & Co, are signatories to the United Nations
Principles for Responsible Investment.
By engaging with both the private and public companies within the Schiehallion
Fund's portfolio, the Investment Manager seeks to build constructive
relationships with them, to better inform our investment activities and, where
necessary, effect changes within our holdings, ultimately with the goal of
achieving better returns for our shareholders. As earlier owners of these
companies in the private markets, the Investment Manager is able to gain
insight that is deeper and build relationships that are stronger due to the
increased access to management and information in private markets. As we hold
through the Initial Public Offering ('IPO'), these relationships continue into
public markets. The continuation of ownership, and therefore relationship, is
a key reason these companies choose Schiehallion as a partner.
Engagement Topics
Due to the private nature of the majority of companies within the Schiehallion
Fund, we are unable to disclose the exact nature of our discussions with
specific management teams. That said, there are common themes that we engage
with companies on as they are at a specific inflection point on their journey
to scalable, profitable growth.
Board Composition:
Where the Investment Manager can add value is with board composition and, more
specifically, board transition. Companies within the Schiehallion Fund are
often transitioning from an investor-led board to an independent board as they
grow. The Investment Manager supports companies to build a board of directors
that is useful in the long term. Owing to Baillie Gifford's experience
investing in and engaging with public companies for decades, the Investment
Manager has a network of potential board members that can be introduced to
relevant companies and can engage our internal Governance team to advise on
good board composition more broadly. The importance of a strong board cannot
be underestimated in the growth and late-stage venture market, and into the
public markets.
Chief Financial Officers ('CFOs'):
Baillie Gifford recently held a forum for 25 of its portfolio company CFOs
(including 16 from Schiehallion portfolio companies). The title of the forum
was 'From Private to Public to Perpetuity' with the content of the agenda
structured around the IPO milestone in the life of a high growth company. The
Investment Manager found the event to be a success, with engaged discussions
across a variety of topics, including in environmental, social and governance
areas, as well as receiving positive feedback from the CFOs who attended and a
number of follow up discussions as a result. What was perhaps most striking is
that, regardless of sector or geography, the challenges and opportunities
faced by CFOs are similar and, unsurprisingly, numerous. All parties found the
event to be informative.
The IPO Process:
When thinking about the IPO process, the Investment Manager often engages with
portfolio companies. Baillie Gifford can not only advise on the practicalities
- where to list, what reporting is necessary, employee stock options etc. -
but also on what kind of public company they want to be. With Baillie
Gifford's decades of experience and aligned interests, we believe Baillie
Gifford are useful conversation partners here, though admittedly the current
IPO drought has meant that we have had fewer discussions around IPOs than in
previous years.
Capital Structures:
Increasingly, the Investment Manager has been discussing capital structures
with investee companies. As the fundraising environment has toughened over the
past year or so, companies are exploring other options - such as debt or
capital structure. With the Fund's long-term horizon, the Investment Manager
is able to offer well-aligned advice that hopefully limits unintended and
potentially destructive consequences of complicated capital structures. When
negotiating terms, the Investment Manager seeks clean terms that are well
aligned with long-term interests of our shareholders.
One year summary
The following information illustrates how The Schiehallion Fund Limited
performed over the year ended 31 January 2024.
31 January 2024 31 January 2023
Ordinary shares % change
Shareholders' funds US$1,219.14m US$597.61m
Net asset value per ordinary share 118.37¢ 119.42¢ (0.9%) *
Share price 71.50¢ 92.00¢ (22.3%) *
Discount†* (39.6%) (23.0%)
Number of shares in issue 1,029,898,907 500,430,002
Market capitalisation US$736.38m US$460.40m
Ongoing charges†* 0.85% 0.87%
Year ended Year ended
31 January 2024
31 January 2023
Revenue loss per share (0.12¢) (0.98¢)
C shares# 31 January 2023
Shareholders' funds US$555.57m
Net asset value per C share 79.37¢
Share price 49.00¢
Discount†* (38.3%)
Number of shares in issue 700,000,000
Market capitalisation US$343.0m
Ongoing charges†* 0.71%
Year ended
31 January 2023
Revenue loss per share (0.35¢)
For a definition of terms see Glossary of terms and alternative performance
measures at the end of this announcement.
* Key performance indicator.
† Alternative performance measure, see Glossary of terms and alternative
performance measures at the end of this announcement.
# The C share converted on 8 September 2023 (see page 36 of the Annual
Report).
Source: Baillie Gifford/LSEG. See disclaimer at the end of this announcement
For the period For the period Year ended 31 January 2023
1 February 2023 to 9 September 2023 to
8 September 2023 31 January 2024
Ordinary shares High Low High Low High Low
Net asset value per ordinary share 117.98¢ 103.94¢ 118.66¢ 103.40¢ 153.18¢ 116.84¢
Share price 92.50¢ 59.00¢ 74.00¢ 45.00¢ 214.00¢ 91.50¢
(Discount)/premium† (22.53)% (44.93)% (36.29)% (56.48)% 40.5% (26.90%)
For the period 1 February 2023 to 8 September 2023 Year ended 31 January 2023
C shares¶ High Low High Low
Net asset value per ordinary share 80.78¢ 73.83¢ 97.20¢ 77.32¢
Share price 49.00¢ 39.50¢ 129.00¢ 49.00¢
(Discount)/premium† (38.43)% (50.38)% 36.1% (41.10%)
* Key performance indicator.
† Alternative performance measure, see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
¶ The C shares converted on 8 September 2023 (see page 36 of the Annual
Report).
Source: Baillie Gifford/LSEG. See disclaimer at the end of this announcement.
Review of investments
Space Exploration Technologies Corp (SpaceX)
SpaceX designs, manufactures and launches spacecraft. SpaceX built its
business around simplicity, innovation and affordability leading to a
vertically integrated, lean and nimble organisation that can iterate and
manufacture quickly. SpaceX's re-useable rockets deliver economies of scale
and operating leverage that create a uniquely disruptive business model. The
company has now launched more than 3,300 satellites for its Starlink service.
Geography United States
Valuation at US$88,324,000
31 January 2024
% of net assets at 7.2%
31 January 2024
Valuation at US$70,113,000
31 January 2023
% of net assets 6.1%
at 31 January 2023
Net purchases/(sales) in year to 31 January 2024 -
ByteDance
Famous for video-sharing social networking platforms TikTok and Douyin, as
well as the news aggregator app, Toutiao. The company uses machine learning to
deliver relevant and individualised content. Further innovations include
enabling advertisers to target customers with precision. TikTok is one of the
few Chinese companies to grow a successful overseas operation. Performance
remains strong, with earnings growth exceeding that of peers and active users
encroaching on Meta, although regulatory challenges remain outside of China.
Geography China
Valuation at US$63,835,000
31 January 2024
% of net assets at 5.2%
31 January 2024
Valuation at US$49,808,000
31 January 2023
% of net assets 4.3%
at 31 January 2023
Net purchases/(sales) in year to 31 January 2024 US$18,180,000
Wise
Wise, the international money transfer business, enables customer and business
payments, but eliminates intermediaries and limits transaction costs. Wise
listed in July 2021 at a market capitalisation of c.US$11bn after successive
years of successful execution. New features, such as interest and cashback on
balances, beyond its flagship offering of international currency exchange,
have resulted in customer growth of a third year on year. The company
continues to engage in banking partnerships expanding into Australia, India,
Canada, and Japan.
Geography United Kingdom
Valuation at US$61,991,000
31 January 2024
% of net assets at 5.1%
31 January 2024
Valuation at US$40,121,000
31 January 2023
% of net assets 3.5%
at 31 January 2023
Net purchases/(sales) in year to 31 January 2024 -
Affirm
Affirm is a digital financial services company that offers simple consumer
loans to buy an array of consumer goods. Affirm experienced impressive growth
up to its IPO in 2021 and has continued this as a public company. It continues
to expand its user base and merchant partners, such as Amazon and Walmart, and
recently partnered with Google Pay, expanding the user base to Android users.
Affirm's share price since going public has recovered recently. We chose to
reduce the position during December 2023.
Geography United States
Valuation at US$52,578,000
31 January 2024
% of net assets at 4.3%
31 January 2024
Valuation at US$31,864,000
31 January 2023
% of net assets 2.8%
at 31 January 2023
Net purchases/(sales) in year to 31 January 2024 US$(30,240,000)
Bending Spoons
New purchase
Bending Spoons is a developer and acquirer of digital consumer applications.
The company leverages its shared set of tools to use across different apps,
with the shared goal of maximising long-term value creation while
simultaneously minimising customer acquisition cost and improving the product
for consumers. Scaling its current suite of apps and strategically acquiring
new apps will be crucial to its success.
Geography Italy
Valuation at US$48,922,000
31 January 2024
% of net assets at 4.0%
31 January 2024
Valuation at -
31 January 2023
% of net assets -
at 31 January 2023
Net purchases/(sales) in year to US$20,622,000
31 January 2024
Dailyhunt
Dailyhunt (parent company VerSe) is India's leading local language news and
video aggregator. Its two core platforms are Dailyhunt, a multi-platform news
app, and Josh, a short-form video app, often referred to as India's TikTok.
Dailyhunt drives shareholder value by the virtuous cycle of improved content,
user growth and increased monetisation. The Indian advertising market is
evolving from TV and print to digital and drives revenue higher. Dailyhunt has
generated cash to grow Josh and the results can be seen through user numbers
accelerating.
Geography India
Valuation at US$41,006,000
31 January 2024
% of net assets at 3.3%
31 January 2024
Valuation at US$32,032,000
31 January 2023
% of net assets 2.8%
at 31 January 2023
Net purchases/(sales) in year to -
31 January 2024
Brex
Initially offering corporate credit cards to start-ups, Brex now provides a
range of services to businesses. Brex's digital-first approach has allowed
them to expand from a corporate credit card provider to offer every service a
business needs in a better and cheaper fashion than incumbents. Due to the
nature of its customers, and the business environment for start ups and the
venture community, Brex is weathering a challenging period. However, active
customers continue to grow while customer churn remains low.
Geography United States
Valuation at US$40,212,000
31 January 2024
% of net assets at 3.3%
31 January 2024
Valuation at US$35,733,000
31 January 2023
% of net assets 3.1%
at 31 January 2023
Net purchases/(sales) in year to 31 January 2024 -
McMakler
McMakler is the developer of an online real estate marketing platform designed
to improve service quality, pricing and corporate presentation into the
sector. The German real estate market is incredibly fragmented, McMakler's
platform centralises and automates functions, creating a better system for
buyers, sellers and real estate agents. The macroeconomic environment has had
an adverse effect on the property market especially so in Germany. Despite a
slowdown in transactions McMakler continues to grow and take market share.
Geography Germany
Valuation at US$37,242,000
31 January 2024
% of net assets at 3.1%
31 January 2024
Valuation at US$24,621,000
31 January 2023
% of net assets 2.1%
at 31 January 2023
Net purchases/(sales) in year to US$10,880,000
31 January 2024
Wayve Technologies
Wayve is developing software for autonomous vehicles, using end-to-end deep
learning. Using an entirely machine-learnt approach and training their system
in central London, Wayve promises to safely meet the edge cases that have
previously hampered the self-driving industry. Their approach uses simple and
comparatively cheap hardware, making it easier to adopt than rivals. These
factors - plus Wayve's strong team, partnerships and track record - put it in
a unique position to lead the commercialisation of safe autonomous driving.
Geography United Kingdom
Valuation at US$34,001,000
31 January 2024
% of net assets at 2.8%
31 January 2024
Valuation at US$9,728,000
31 January 2023
% of net assets 0.8%
at 31 January 2023
Net purchases/(sales) in year to -
31 January 2024
Flix
Flix, the bus and train operator in Europe and the USA, provides a booking app
for customers, payment processing, route coordination software, and branding.
Founded in Germany in 2013, Flix quickly achieved more than 90% market share
in its home market, expanded across Europe and now to the US. The company has
recovered well from the pandemic-induced halting of public transport, where
they took the opportunity to acquire Greyhound in the US and have since shown
encouraging operational results.
Geography Germany
Valuation at US$32,996,000
31 January 2024
% of net assets at 2.7%
31 January 2024
Valuation at US$26,665,000
31 January 2023
% of net assets 2.3%
at 31 January 2023
Net purchases/(sales) in year to -
31 January 2024
Denotes listed investments previously held in the portfolio as a private
company investment.
Baillie Gifford's approach to 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 portfolio
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 benchmarks 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.
Periods of market volatility during the year has meant that valuations
continue to be reviewed much more frequently, in some instances resulting in a
further valuation movement. The data below quantifies the revaluations carried
out during the year to 31 January 2024, however it does not reflect the
ongoing monitoring of the private investment portfolio that has resulted in no
changes in valuation.
The Schiehallion Fund*
Instruments valued 406
Instruments held 76
Percentage of portfolio revalued up to 4 times 30.3%
Percentage of portfolio revalued 5 or more times 69.7%
* Data reflecting year to 31 January 2024
In the year ended 31 January 2024, we have seen several investments in the
portfolio raise additional capital at flat and increased valuations with
improved market conditions. The average movement in company valuations and
share prices across the portfolio are shown below.
Valuation movements
Average movement in company valuation 18.3%
Average movement in share price 2.3%
Alternative performance measures - see Glossary of Terms and Alternative
Performance Measures at the end of this announcement,
Baillie Gifford typically holds preference stock and the improvement in
valuation is less pronounced at a share price level due to the downside
protection associated with these investments, which came into play when
valuation write downs were previously applied.
List of Investments at 31 January 2024
Name Business Country 2024 2024 2023 2023 2023
Total % of net Ordinary C share Total
value Assets* Shares value value value
US$'000 US$'000 US$'000* US$'000
Space Exploration Technologies Corp Designs, manufactures and launches advanced rockets and spacecraft United States 88,324 7.2 70,113 - 70,113
ByteDance Ltd Social media and news aggregation company China 63,835 5.2 49,808 - 49,808
Wise PLC - Listed Online platform to send and receive money United Kingdom 61,991 5.1 30,112 10,009 40,121
Affirm Holdings Inc- Listed Online platform which provides point of sale consumer finance United States 52,578 4.3 14,437 17,427 31,864
Bending Spoons S.P.A Mobile application software developer Italy 48,922 4.0 - - -
Dailyhunt (Ver Se Innovation Limited) Indian news aggregator application India 41,006 3.3 32,032 - 32,032
Brex Inc Corporate credit cards for startups United States 40,212 3.3 11,292 24,441 35,733
McMakler GmbH Real estate services Germany 37,242 3.1 - 24,621 24,621
Wayve Technologies Ltd AI based software for self-driving cars United Kingdom 34,001 2.8 - 9,728 9,728
Flix SE European mobility provider Germany 32,996 2.7 13,309 13,356 26,665
Solugen Inc Combines enzymes and metal catalysts to make chemicals United States 32,293 2.6 - 47,881 47,881
Northvolt AB Lithium ion battery manufacturer Sweden 31,772 2.6 22,525 16,280 38,805
Databricks Inc Data software solutions United States 29,873 2.5 - 23,523 23,523
Faire Wholesale Inc Online wholesale marketplace United States 28,509 2.4 - 29,404 29,404
Stripe Inc Online payment platform United States 27,468 2.3 27,943 - 27,943
Chime Financial Inc Digital current account provider United States 26,697 2.2 7,417 19,294 26,711
Tempus Labs Inc Oncological records aggregator and diagnostic testing provider United States 26,402 2.2 20,177 4,210 24,387
Grammarly Inc Online platform for checking grammar, spelling and improving written United States 23,976 2.0 - 22,353 22,353
communication
Kepler Computing Inc Semiconductor company United States 23,137 1.9 - 15,919 15,919
Pet Circle (Millell Pty Ltd) Pet food and accessories Australia 22,975 1.9 - 11,357 11,357
Genki Forest Technology Group Holdings Limited Non-alcoholic beverages China 22,628 1.9 - 29,727 29,727
Rappi Inc Provider of an on-demand delivery platform designed to connect consumers with United States 21,825 1.8 - 19,922 19,922
local stores
Oddity - Listed Direct to consumer cosmetics Israel 19,181 1.6 - - -
Tanium Inc Online security management United States 17,974 1.5 11,799 - 11,799
Epic Games Inc Video game developer United States 17,565 1.4 28,320 - 28,320
Warby Parker (JAND Inc) - Listed Online and physical corrective eyewear retailer United States 16,398 1.3 20,774 - 20,774
PsiQuantum Silicon photonic quantum computing United States 13,996 1.1 - 13,195 13,195
Workrise Technologies Inc Jobs marketplace for the energy sector United States 13,392 1.1 17,073 - 17,073
Nuro Inc Developer of autonomous delivery vehicles United States 13,044 1.1 9,100 12,112 21,212
Loft Holdings Ltd Online property platform Brazil 11,556 0.9 - 15,569 15,569
Cohesity Inc Data storage United States 11,526 0.9 8,033 - 8,033
Airbnb Inc - Listed Online market place for travel accommodation United States 11,082 0.9 8,544 - 8,544
HeartFlow Inc Develops software for cardiovascular disease diagnosis and treatment United States 10,939 0.9 2,029 - 2,029
Merlin Labs Inc Autonomous flight technology United States 10,632 0.9 - 13,842 13,842
Away (JRSK Inc) Travel and lifestyle brand United States 10,590 0.9 12,355 - 12,355
Oscar Health Inc - Listed Healthcare insurance provider United States 10,292 0.8 3,157 - 3,157
Carbon Inc Manufactures and develops 3D printers United States 9,062 0.7 9,670 - 9,670
Jiangxiaobai Holdings Ltd Producer of alcoholic beverages China 8,012 0.7 12,892 - 12,892
Graphcore Ltd Computer chip developer United Kingdom 6,469 0.5 8,706 - 8,706
Honor Technology Inc Provider of home-care services United States 5,379 0.4 2,990 3,888 6,878
MasterClass (Yanka Industries Inc) Online education platform United States 2,732 0.2 6,487 - 6,487
Allbirds Inc - Listed Sustainable direct-to-customer footwear brand United States 2,142 0.2 4,659 1,459 6,118
Blockstream Corp Inc Financial software developer Canada 1,947 0.2 - 8,885 8,885
Indigo Agriculture Inc Microbial seed treatments to increase crop yields and grain marketplace United States 801 0.1 15,839 - 15,839
Illumina CVR Gene sequencing equipment and consumables United States 407 0.0 7,355 - 7,355
Convoy Inc Marketplace for truckers and shippers United States 0 0.0 9,165 4,210 13,375
Scopely Inc Online gaming company United States - - 60,223 - 60,223
Total investments 1,043,781 85.6% 559,420 412,612 972,032
* Investments held in the C share portfolio were transferred to the
Ordinary share portfolio when the C shares converted on 8 September 2023.
Name 2024 2024 2023 2023 2023
Total value % of net Ordinary C shares Total
US$'000 assets shares value value
value US$'000 US$'000
US$'000
US Treasury Bill 05/09/2024 27,909 2.3 - - -
US Treasury Bill 13/06/2024 27,935 2.3 - - -
US Treasury Bill 18/04/2024 27,949 2.3 - - -
US Treasury Bill 22/02/2024 27,948 2.3 - - -
US Treasury Bill 31/10/2024 27,859 2.2 - - -
US Treasury Bill 29/11/2024 27,922 2.3 - - -
US Treasury Bill 18/05/2023 - - - 23,112 23,112
US Treasury Bill 13/07/2023 - - - 22,874 22,874
US Treasury Bill 07/09/2023 - - - 22,870 22,870
US Treasury Bill 23/03/2023 - - - 22,801 22,801
US Treasury Bill 02/11/2023 - - - 22,630 22,630
US Treasury Bill 28/12/2023 - - - 22,510 22,510
Total US Treasury Bills 167,522 13.7 - 136,797 136,797
Cash 11,306 0.9 38,872 6,927 45,799
Other current assets and liabilities (2,638) (0.2) (684) (761) (1,445)
Capital gains tax provision (834) - - - -
Net current assets less capital gains tax provision 175,321 14.4 38,188 142,963 181,151
Total net assets less capital gains tax provision 1,219,137 100.0 597,608 555,575 1,153,183
Listed Private company Net current assets Net
investments investments % assets
% % %
31 January 2024 14.3 71.3 14.4 100.0
31 January 2023 10.3 74.0 15.7 100.0
Allocation of Net Assets
As at 31 January 2023
Name 2024 2024 2023 2023 2023
% of net
Total value US$'000
assets * Ordinary shares value US$'000 C shares Total value US$'000
value US$'000
Listed investments 174,072 14.3 90,123 28,895 119,018
Private company investments 869,709 71.3 469,297 383,717 853,014
US Treasury Bills 167,522 13.7 - 136,797 136,797
Cash and cash equivalents 11,306 0.9 38,872 6,927 45,799
Net current assets less capital gains tax provision (3,472) (0.2) (684) (761) (1,445)
Total net assets 1,219,137 100 597,608 555,575 1,153,183
Company metrics Capital Number of private company acquisitions Number of private company realisations Number of Gross Gross
deployed *
Internal
Multiple on
IPOs/listings
Rate of
Invested
Return
Capital
(IRR) * (MOIC) *
Since launch US$1,122m 48 3 8 0.7% 1.0
* Alternative performance measure, see Glossary of Terms and
Alternative Performance Measures at the end of this announcement.
Distribution of net assets
Geographical
Geographical % at % at Number of investments
31 January
31 January 2023
2024 at 31 January 2024
United States 49.1 57.5 31
United Kingdom 8.4 5.1 3
China 7.7 8.0 3
Germany 5.8 4.4 2
Italy 4.0 - 1
India 3.4 2.8 1
Sweden 2.7 3.4 1
Australia 1.8 1.0 1
Israel 1.6 - 1
Brazil 0.9 1.4 1
Canada 0.2 0.8 1
Net current assets 14.4 15.6
Sectoral
Sectoral % at % at Number of investments
31 January
31 January 2023
2024 at 31 January 2024
Information technology 21.3 20.8 13
Financial 18.0 14.4 6
Industrials 13.0 14.1 6
Consumer discretionary 10.1 11.1 7
Communication services 8.8 7.7 3
Consumer staples 4.2 5.1 4
Real estate 4.0 3.5 2
Healthcare 3.6 3.5 4
Materials 2.6 4.2 1
Net current assets 14.4 15.6
The above sectoral distribution is not derived from any index.
Statement of Comprehensive Income
Notes 2024 2024 2024 2023 2023 2023
Revenue Capital Total Revenue Capital Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Gains/(losses) on investments - 69,768 69,768 - (311,938) (311,938)
Currency gains/(losses) - 75 75 - (17) (17)
Income 2 8,211 - 8,211 2,800 - 2,800
Investment management fee 3 (8,152) - (8,152) (8,931) - (8,931)
Other administrative expenses 4 (1,263) - (1,263) (1,233) - (1,233)
Operating profit/(loss) before finance costs and taxation (1,204) 69,843 68,639 (7,364) (311,955) (319,319)
Finance costs of borrowings - - - (10) - (10)
Operating profit/(loss) before taxation (1,204) 69,843 68,639 (7,374) (311,955) (319,329)
Tax on ordinary activities 10 - (834) (834) - - -
Profit/(loss) and total comprehensive income/(loss) for the year (1,204) 69,009 67,805 (7,374) (311,955) (319,329)
Total comprehensive income/(loss) for the year analysed as follows:
Attributable to ordinary shareholders (1,204) 69,009 67,805 (4,923) (189,131) (194,054)
Attributable to C shareholders* - - - (2,451) (122,824) (125,275)
Profit/(loss) and total comprehensive income/(loss) for the year (1,204) 69,009 67,805 (7,374) (311,955) (319,329)
Earnings/(loss) per ordinary share 5 (0.12¢ ) 6.69¢ 6.57¢ (0.98¢) (37.79¢) (38.77c)
Loss per C share* 5 - - - (0.35¢) (17.55¢) (17.90¢)
* The Company's C shares converted into Ordinary shares on 8 September 2023 as
detailed on page 36 of the Annual Report and therefore there is no C shares
income/(loss) to report for the year ended 31 January 2024.
The total column of this Statement represents the Statement of Comprehensive
Income of the Company. The supplementary revenue and capital columns are
prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing
operations.
Statement of Financial Position
As at 31 January
Notes 2024 2024 2023 2023
US$'000 US$'000 US$'000 US$'000
Non-Current assets
Investments held at fair value through profit or loss 7 1,043,781 972,032
Current assets
US Treasury Bills 167,522 136,797
Cash and cash equivalents 11,306 45,799
Debtors 1,743 884
180,571 183,480
Current liabilities
Amounts falling due within one year: (4,381) (2,329)
Net current assets 176,190 181,151
Non-current liabilities
Amounts falling due after more than one year:
Provision for tax liability (834) -
Net assets 1,219,137 1,153,183
Capital and reserves
Share capital 1,213,903 1,216,503
Capital reserve 15,621 (51,536)
Capital redemption reserve 2,601 -
Revenue reserve (12,988) (11,784)
Shareholders' funds 1,219,137 1,153,183
Shareholders' funds - ordinary shares 1,219,137 597,608
Net asset value per ordinary share 118.37¢ 119.42¢
Number of ordinary shares in issue 1,029,898,907 500,430,002
Shareholders' funds - C shares * 555,575
Net asset value per C share 79.37¢
Number of C shares in issue 700,000,000
* The C shares converted on 8 September 2023 as detailed on page 36 of the
Annual Report and therefore there were no C shares in issue at 31 January
2024.
Statement of Changes in Equity
For the year ended 31 January 2024
Share Capital reserve Capital redemption Revenue Shareholders'
capital US$'000 reserve reserve funds
US$'000 US$'000 US$'000 US$'000
Shareholders' funds at 1 February 2023 1,216,503 (51,536) - (11,784) 1,153,183
Ordinary shares bought back and cancelled (2,600) (1,852) 2,601 - (1,851)
Total comprehensive income/(loss) - 69,009 - (1,204) 67,805
Shareholders' funds at 31 January 2024 1,213,903 15,621 2,601 (12,988) 1,219,137
For the year ended 31 January 2023
Share Capital Capital redemption reserve Revenue Shareholders'
capital reserve US$'000 reserve funds
US$'000 US$'000 US$'000 US$'000
Shareholders' funds at 1 February 2022 1,216,503 260,419 - (4,410) 1,472,512
Total comprehensive loss - ordinary shares - (189,131) - (4,923) (194,054)
Total comprehensive loss - C shares* - (122,824) - (2,451) (125,275)
Shareholders' funds at 31 January 2023 1,216,503 (51,536) - (11,784) 1,153,183
* The C shares converted on 8 September 2023 and therefore there is no C share
(loss)/ income to report for the year ending 31 January 2024.
Statement of Cash Flows
For the year ended 31 January
Notes 2024 2024 2023 2023
US$'000 US$'000 US$'000 US$'000
Cash flows from operating activities
Operating profit/(loss) before taxation 68,639 (319,329)
US Treasury Bills interest (5,305) (1,618)
Net (gains)/losses on investments (69,768) 311,938
Currency (gains)/losses (75) 17
Changes in debtors and creditors 1,194 (899)
Net cash used in operating activities* (5,315) (9,891)
Cash flows from investing activities
Acquisitions of US Treasury Bills (201,508) (161,229)
Disposals of US Treasury Bills 176,088 294,266
Acquisitions of investments 7 (75,589) (166,076)
Disposals of investments 7 73,608 1,848
Net cash used in investing activities (27,401) (31,191)
Cash flows from financing activities
Ordinary shares bought back and cancelled (1,852) -
Net cash outflow from financing activities (1,852) -
Net decrease in cash and cash equivalents (34,568) (41,082)
Effect of exchange rate fluctuations on cash and cash equivalents 75 (17)
Cash and cash equivalents at 1 February 45,799 86,898
Cash and cash equivalents at 31 January 11,306 45,799
*Cash from operations includes interest received of US$2,044,000(2023 -
US$700,000)
2024 2023
US$000 US$000
Cash and cash equivalents comprise the following:
Cash at bank 11,306 45,799
Notes to the Financial Statements
1. Principal Accounting Policies
The Financial Statements for the year ended 31 January 2024 have been prepared
in accordance with International Financial Reporting Standards ('IFRS') as
issued by the International Accounting Standards Board ('IASB').
2. Income
2024 2023
US$'000 US$'000
US Treasury Bills interest 5,305 1,618
Overseas interest 862 482
Deposit interest 2,044 700
Total income 8,211 2,800
3. Investment Management Fee
2024 2023
US$'000 US$'000
Management fee 8,152 8,931
Details of the Investment Management Agreement are set out on page 54 of the
Annual Report. Under the terms of the Investment Management Agreement and with
effect from the date the Company's ordinary shares were admitted to trading on
the Specialist Fund Segment of the Main Market of the London Stock Exchange,
the Investment Manager is 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 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$1.3 billion. Management
fees are calculated and payable quarterly. Cash equivalents include US
Treasury Bills.
4. Other Administrative Expenses
2024 2023
US$'000 US$'000
General administrative expenses 275 305
Administrator's fee 105 86
Auditor's remuneration for audit services 296 236
Directors' fees 450 394
Depositary and custody fees 108 185
Registrar fees 29 27
1,263 1,233
In the year to 31 January 2024 there was US$21,000 (31 January 2023: US$nil)
paid to the Auditor, KPMG Channel Islands Limited, in respect of non-audit
services. These fees were related to the engagement of KPMG Channel Islands
Limited to verify that the C share conversion ratio was calculated correctly
and in accordance with the prospectus.
5. Earnings per Share
Year ended Year ended
31 January 2024
31 January 2023
Ordinary shares US$'000 ¢ US$'000 ¢
Revenue return on ordinary activities after taxation (1,204) (0.12) (4,923) (0.98)
Capital return on ordinary activities after taxation 69,009 6.69 (189,131) (37.79)
Profit/(loss) and total comprehensive income/(loss) for the year 67,805 6.57 (194,054) (38.77)
Weighted average number of ordinary shares in issue 1,032,208,365 500,430,002
6. Ordinary Dividends
There were no dividends paid or proposed in respect of the year to 31 January
2024 (2023 - US$nil).
7. Financial Instruments
Fair Value Hierarchy
The fair value hierarchy used to analyse the fair values of financial assets
is described below. The levels are determined by the lowest (that is the least
reliable or least independently observable) level of input that is significant
to the fair value measurement for the individual investment in its entirety as
follows:
Level 1 - using unadjusted quoted prices for identical instruments in an
active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that
are directly or indirectly observable (based on market data); and
Level 3 - using inputs that are unobservable (for which market data is
unavailable).
The valuation techniques used by the Company are explained in the accounting
policies on page 50 of the Annual Report and Financial Statements. Transfers
between levels of the fair value hierarchy take place when the criteria for
recognition in another level are met, such as the listing of an investment.
As at 31 January 2024 Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
Listed equities 174,072 - - 174,072
Unlisted ordinary shares/warrants - - 172,693 172,693
Unlisted company preference shares* - - 684,298 684,298
Unlisted convertible promissory notes - - 12,718 12,718
Total financial asset investments 174,072 - 869,709 1,043,781
As at 31 January 2023 Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
Listed equities 119,018 - - 119,018
Unlisted ordinary shares/warrants - - 131,977 131,977
Unlisted preference shares* - - 708,914 708,914
Unlisted convertible promissory notes - - 12,123 12,123
Total financial asset investments 119,018 - 853,014 972,032
* The investments in preference shares are not classified as equity
holdings as they include liquidation preference rights that determine the
repayment (or multiple thereof) of the original investment in the event of a
liquidation event such as a take-over.
During the year ended 31 January 2024, the investment in Oddity with a fair
value (IPO price) of US$11,800,000 (2023 - US$ nil) was transferred from Level
3 to Level 1 on becoming listed.
Investments in securities are financial assets held at fair value through
profit or loss. In accordance with IFRS 13, the table above provides an
analysis of these investments based on the fair value hierarchy described
above, which reflects the reliability and significance of the information used
to measure their fair value.
Listed Private company Total
securities securities US$'000
US$'000 US$'000
Cost of investments at 1 February 2023 158,283 863,244 1,021,527
Investment holding gains and losses at 1 February 2023 (39,265) (10,230) (49,495)
Fair value of investments at 1 February 2023 119,018 853,014 972,032
Movements in the period:
Purchases at cost† 3,675 71,914 75,589
Sales - proceeds† (34,813) (38,795) (73,608)
- gains on disposal 6,469 17,370 23,839
Changes in categorisation 10,000 (10,000) -
Changes in investment holding gains and losses 69,723 (23,794) 45,929
Fair value of investments at 31 January 2024 174,072 869,709 1,043,781
Cost of investments at 31 January 2024 143,614 903,733 1,047,347
Investment holding gains and losses at 31 January 2024 30,458 (34,024) (3,566)
Fair value of investments at 31 January 2024* 174,072 869,709 1,043,781
* Includes holdings in preference shares, promissory notes, ordinary
shares and warrants.
The purchases and sales figures above include transaction costs of US$nil
(2023 - US$nil) respectively.
8. Share capital
2024 2024 2023 2023
Number US$'000 Number US$'000
Allotted, called up and fully paid ordinary shares of US$1 each 1,029,898,907 1,213,903 500,430,002 521,701
Allotted, called up and fully paid C shares of US$1 each* - - 700,000,000 694,802
* The Company's C shares converted into Ordinary shares on 8 September 2023 as
detailed on page 36 of the Annual Report and therefore there are no C shares
in issue at 31 January 2024.
By way of a special resolution dated 15 March 2019 the Directors have a
general authority to allot up to 720,000,000 ordinary shares or C shares, such
figure to include the ordinary shares issued at the initial placing.
477,250,000 ordinary shares were issued at the Company's initial placing, with
a further 23,180,002 ordinary shares subsequently issued. No ordinary shares
were issued in the year to 31 January 2024. Accordingly, the Company has the
ability to issue a further 219,569,998 shares under this existing authority
which expires on 15 March 2024.
By way of a special resolution dated 18 March 2021 the Directors have a
general authority to allot up to 700,000,000 C shares. On 26 April 2021, the
Company issued 700,000,000 C shares of US$1 each and raised gross proceeds of
US$700,000,000. The issue costs in respect of the C share issue were
US$5,198,000. These costs consisted of mainly broker commission
(US$4,066,000), legal fees (US$601,000) and listing fees (US$396,000). The C
shares converted on 8 September 2023 with 532,069,905 new ordinary shares
being admitted to trading on 12 September 2023. The conversion was triggered
by the C share capital deployment crossing the 85% threshold outlined in the
prospectus. The C shares were converted proportionately based on respective
NAV at the calculation date 31 August 2023, the nearest practicable date
selected by the Board. As a result the conversion ratio was calculated to be
0.7601 Ordinary shares per C share in issue on 8 September 2023.
By way of ordinary resolutions passed on 12 May 2023 the Directors of the
Company have general authority to make market purchases of up to 75,014,457
ordinary shares and 104,930,000 C shares, being 14.99% of the ordinary and C
shares in issue as at 24 March 2023, being the latest practicable date prior
to the publication of the Company's Annual Report and Financial Statements for
the year ended 31 January 2023. These authorities will expire at the
conclusion of the Annual General Meeting to be held on 10 May 2024. 2,601,000
ordinary shares were bought back during the year ended 31 January 2024 at a
cost of US$1,851,769 (31 January 2023 - nil) hence the remaining authority is
1,029,898,907 ordinary shares. No C shares were bought back during the year
ended 31 January 2024 and following conversion no C shares were in issue at 31
January 2024. In the period from 31 January 2024 to 1 April 2024 1,075,000
ordinary shares were bought back and cancelled. The total cost of shares
bought back and cancelled is charged to the capital reserve. The nominal value
of the shares is transferred from the share capital to the capital redemption
reserve.
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.
9. The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 January 2024 but is derived
from those accounts.
10. The Annual Report and Financial Statements will be available on the
Managers' website schiehallionfund.com‡ on or around 31 March 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.
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.
Total net assets
Total value of all assets held less current liabilities, other than
liabilities in the form of borrowings.
Net asset value
Also described as shareholder funds, net asset value ('NAV') is the value of
total assets less liabilities (including borrowings). The NAV per share is
calculated by dividing this amount by the number of ordinary shares or C
shares as applicable, in issue.
Net Current Assets
Net current assets comprise current assets less current liabilities excluding
borrowings.
Premium / (discount) / (APM)
As stock markets and share prices vary, the 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 NAV per share from the share price 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.
Ordinary shares* 2024 2023
Closing NAV per share (a) 118.37¢ 119.42¢
Closing share price (b) 71.50¢ 92.00¢
(Discount)/premium ((b - a) ÷ (a) expressed as a percentage) (39.6%) (23.0%)
* The C shares converted on 8 September 2023 and therefore there are no C
shares in issue at 31 January 2024.
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 one year 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 on page 2 of the Annual Report.
Capital Deployed (APM)
Capital deployed reflects cumulative amounts invested since inception of the
Company.
Internal Rate of Return (IRR) (APM)
The IRR indicates the annualised rate of return for the Company's investment
portfolio.
Gross Multiple on Invested Capital (MOIC) (APM)
The MOIC expresses, as a multiple, how much return the Company has made on
investment realisations and income, relative to its book cost.
Ongoing Charges (APM)
The total recurring expenses (excluding the Company's costs of dealing in
investments and borrowing costs) incurred by the Company as a percentage of
the average net asset value (with debt at fair value).
Ordinary shares* 2024 2023
US$'000 US$'000
Investment management fee 8,211 5,166
Other administrative expenses 1,263 637
Total expenses 9,474 5,803
Average net asset value (with borrowings deducted at fair value) 1,108,288 668,671
Ongoing Charges ((a) ÷ (b) expressed as a percentage) 0.85% 0.87%
* The C shares converted on 8 September 2023 and therefore there are
no C shares in issue at 31 January 2024
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers Directive,
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 US dollar
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.
Average Revenue Growth Rate (APM)
Calculated by taking an average of the total of each investee company's last
12 months revenue growth (as a percentage).
Average movement at private company valuation level/ per share price (APM)
Calculated by taking an average of all valuation movements (as a percentage)
by company and by line of share class.
You can find up to date performance information about The Schiehallion Fund on
the Schiehallion Fund page of the Managers' website at schiehallionfund.com‡
The Schiehallion Fund Limited is managed by Baillie Gifford, the Edinburgh
based fund management group with around £230billion under management and
advice in active equity and bond portfolios for clients in the UK and
throughout the world (as at 1 April 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.
3 April 2024
Sustainable Finance Disclosure Regulation ('SFDR')
The EU Sustainable Finance Disclosure Regulation ('SFDR') does not have a
direct impact in the UK due to Brexit, however, it applies to third-country
products marketed in the EU. As Schiehallion 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 Governance and Sustainable
Principles and Guidelines as its policy on integration of sustainability risks
in investment decisions.
More detail on the Investment Manager's approach to sustainability can be
found in the Governance and Sustainability Principles and Guidelines document,
available publicly on the Baillie Gifford website bailliegifford.com.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework of criteria for
environmentally sustainable economic activities in respect of six
environmental objectives. It builds on the disclosure requirements under the
SFDR by introducing additional disclosure obligations in respect of AIFs that
invest in an economic activity that contributes to an environmental objective.
The Company does not commit to make sustainable investments as defined under
SFDR. As such, the underlying investments do not take into account the EU
criteria for environmentally sustainable economic activities.
Baillie Gifford Switchboard
0131 275 2000
Jonathan Atkins, Director, Four Agency
Tel 0203 697 4200 or 07872 495396
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