REG - Scot.American Inv. - SAINTS plc Half Year Results
05/08/2025 07:02
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RNS Number : 9112T Scottish American Investment Co PLC 05 August 2025
RNS Announcement
The Scottish American Investment Company P.L.C. (SAINTS)
Legal Entity Identifier: 549300NF03XVC5IFB447
Regulated Information Classification: Interim Financial Report.
The following is the unaudited Interim Financial Report for the six months to
30 June 2025 which was approved by the Board on 4 August 2025.
Results for the six months to 30 June 2025
¾ SAINTS' assets have delivered a positive return over the first six months
of 2025. SAINTS' net asset value total return (borrowings at fair value) was
1.1% over the first six months of 2025, whilst global equities* returned 1%†
over the same period.
¾ SAINTS' share price return over the first six months was 3.6%, helped by
a narrowing of the discount. Over the period, the Company bought back just
over 3.4% of the shares in issue at the start of the year.
¾ The operational performance of SAINTS' holdings remains generally
encouraging and this is feeding through to increased revenues. This reflects
both continued dividend growth from the Company's equity investments, despite
something of a headwind from a strengthening dollar, and increased revenues
from the Company's infrastructure and property investments.
¾ The Company has declared a second interim dividend of 3.75p. Taken with
the previously declared first interim dividend, this represents an increase of
5.4% on the first two interim dividends of 2024
¾ The Board and the Managers remain optimistic about SAINTS' long-term
prospects for inflation beating income growth and attractive returns.
¾ As previously announced, the Board intends to recruit a new Director,
with a view to that person becoming the chairperson of SAINTS at the
conclusion of the AGM in April 2026. The recruitment process, assisted by an
independent search firm, is nearing its conclusion, and Board expects to
announce the appointment of a new Director and chairperson designate in the
coming weeks.
* FTSE All-World Index (in sterling terms).
† Source: LSEG/Baillie Gifford and relevant underlying service
providers. See disclaimer at end of this announcement.
Interim Chairman's statement
SAINTS' objective is to deliver real dividend growth by increasing capital and
growing income.
The Board remains committed to delivering a dividend which increases ahead of
inflation over time, and which is supported by revenues and revenue growth.
SAINTS' investments and its Investment Policy support this objective.
Performance
SAINTS' NAV return was positive over the period, and the net asset value total
return (capital and income with borrowings at fair) was 1.1%. SAINTS' returns
matched those from global equities (as measured by the total of return of the
FTSE All-World Index in sterling terms) which returned 1% over the same
period. Helped by a narrowing of the discount to NAV, SAINTS' share price
return was 3.8% over the period.
The Managers' Review highlights that they have been able to take advantage of
recent volatility to strengthen the portfolio. SAINTS itself has been less
volatile than the market helped by both the dependable nature of its equity
portfolio and the benefits of diversification.
Over the period, SAINTS' property investments returned 3.6%. The principal
contributors to and detractors from performance and the changes to the equity,
property and bond investments are explained in more detail in the Managers'
Review.
Interim Dividend
In June, the Company paid a first interim dividend of 3.625p, and today we are
announcing a second interim dividend of 3.75p per ordinary share. Taken
together, these dividends are 5.4% higher than the equivalent dividends in
2024.
The Board expects SAINTS' dividends to grow ahead of inflation over the long
term and remains confident that this year will mark the Company's 52nd
consecutive year of dividend growth.
Borrowings
In recent years SAINTS' long-term borrowings have been refinanced and modestly
increased at advantageous interest rates. The cost of these borrowings in just
under 3% per annum.
The book value of the total borrowings is £94.7m which, at the period end,
was equivalent to approximately 10.3% of shareholders' funds. The estimated
market or fair value of the borrowings was £62.0m, a decrease from £62.1m at
the end of 2024.
Share buybacks
Over the six-month period, the Company has bought back just over six million
shares (representing just over 3.4% of the shares in issue at the start of the
year) at a cost of some £30.9m. All buybacks have taken place at a
significant discount to the Company's NAV, and so each buyback has increased
the NAV per share of the Company.
The Board
As communicated in the Annual Report and at the last AGM, I have indicated
that I do not intend to stand for re-election as a Director at the next AGM in
2026. A recruitment process is well underway, assisted by an independent
search firm, and the Board expects to announce the appointment of a new
director and chairperson designate in the coming weeks, with a view to that
director becoming the chairperson of SAINTS at the conclusion of the AGM in
April 2026.
Outlook
At the start of the year, I indicated that, after a period of very strong
performance, the risks to equity markets were apparent. Six months on, after
considerable volatility and troubling developments particularly in relation to
trade and government indebtedness but further modest progress from markets,
these risks remain. As we look ahead, we take considerable comfort from the
nature of SAINTS' investments, their operational performance and from the
overall pattern of performance demonstrated through the market's gyrations in
recent months.
SAINTS has been working for individual investors for over 150 years. It is
built to help shareholders' income keep pace with inflation, as well as
providing capital growth. And it is built for resilience.
Lord Macpherson of Earl's Court
Chairman
4 August 2025
Interim management report
Introduction
The single most notable feature of the first half of 2025 for SAINTS has been
the attractive investment opportunities created by a volatile stock market.
Through the tail end of last year there had been precious few investments that
looked compelling to your managers, as share prices reached new highs and
markets reacted euphorically to Donald Trump's election victory. But since the
calendar ticked over to January there has been a significant drawdown and
rebound in stock markets, caused by investors worrying (on and off) about the
tri-headed Cerberus of tariffs, budget deficits, and war in the Middle East.
SAINTS is squarely focused on investing in resilient businesses with strong
and steady growth prospects, so this whipsaw in share prices was not mirrored
by the portfolio, which was notably less volatile. However the ups and downs
of the stock market created good opportunities for us to make two new equity
investments, and by doing so upgrade the portfolio's long-term prospects for
capital and dividend growth. We also added selectively to existing holdings
where drops in share prices had created unexpected opportunities.
Before examining these investments in more detail, our mid-year update will
set the scene with some comments on the market backdrop. We will then report
on performance during the period, before diving into the details of the new
investments, and the sources of funds for them. Finally we will step back from
the short-term and introduce a new way of illustrating SAINTS portfolio. It
has been about a decade since we first introduced the "Portfolio Pyramid" as a
way for shareholders to visualise the Company's entire equity portfolio. We're
always looking to improve, and we believe we have found an even better way to
illustrate the contents of the pyramid.
Market context
As perhaps should have been expected, the first half of the year was anything
but quiet.
President Trump's return to office triggered a storm of executive orders and
policy shifts. Markets are still trying to make sense of the upheaval, but one
thing seems clear: the old world order is changing. The result has been a
sharp uptick in uncertainty for businesses and investors alike.
In Europe, Germany's decision to suspend its long-standing "debt brake" marks
a major turning point. A €1 trillion stimulus plan, half earmarked for
infrastructure and half for defence, is a significant policy shift and could
well pave the way for other countries to loosen the purse strings. Meanwhile,
China has stayed cautious. It's offering some support to its private sector
and tech firms but is holding back on major consumption stimulus-at least
for now.
From mid-February to early April, U.S. equities dropped around 19% as
investors took profits on previously high-flying tech stocks. European and
Chinese equities, by contrast, rallied, buoyed by improving growth prospects
and more attractive valuations.
During the second quarter, things reversed. After a rocky start in April,
global equity markets staged a sharp rebound-once again led by U.S. tech
giants. Investors seemed largely unfazed by the continued wave of executive
orders. The market appeared to be saying: policy chaos is just noise, and the
economy will carry on regardless.
Underneath the optimism, there are cracks. The U.S. has now imposed average
tariffs at their highest level since 1937; a massive new fiscal bill will add
over $3 trillion to U.S. debt over the next decade; and the dollar has
weakened by approximately 10% despite rising bond yields-an odd and possibly
troubling combination.
Add it all up, and the picture is a strange one. Investors seem to be holding
two conflicting ideas: that corporate earnings will keep rising, but that
growing deficits and protectionism may cause problems in the long term.
Currently, optimism is still priced in, even as unease quietly builds.
For investors, this can be troubling. Faced with uncertainty and volatility,
the temptation is to withdraw from the equity market and park money in cash.
But experienced investors know this is a high‑risk strategy: often the
market rebounds before the investor feels comfortable returning, with
hindsight it becomes apparent that the right strategy for the long-term was to
remain invested in the market. SAINTS offers a middle ground: an island of
sanity in the eye of the storm. By focusing on high-quality, resilient
businesses - names which are willing and able to pay consistent dividends even
at the trough of the market - shareholders can remain invested in equities and
sleep well at night, without having to fear the loss of their savings.
The year so far has not been short on noise. But our strategy remains the
same: prudent diversification, focus on long-term fundamentals, and invest in
companies that can weather any storm.
Performance
Global equity markets finished the first half of the year slightly up in
sterling terms, and SAINTS' NAV produced a similar return. A lower discount to
NAV means the share price return was +3.7%, ahead of the index return of +1%.
Equity portfolio performance
As outlined above, the first half of 2025 was, in fact, a game of two halves:
in the first quarter, the portfolio's resilience shone in declining markets
and relative returns were strong. The second quarter saw a reversal as
technology and cyclical stocks were back in vogue, leading to positive returns
for the equity portfolio but which lagged the broader market.
At mid-year, both the portfolio and global equity markets have delivered a
small positive return. However, as has often been the case in the past, the
portfolio's emphasis on long-term compounding and dividend dependability
resulted in a smoother return journey - i.e. lower volatility compared to the
rather turbulent path taken by global indices.
SAINTS' holdings in derivative exchanges (Deutsche Boerse, B3, Hong Kong
Exchanges and CME) significantly boosted performance over the past six months.
High volatility in financial markets is actually a boon for these companies,
which thrive in such environments. For example, Deutsche Boerse owns Eurex,
one of Europe's largest derivative trading platforms. In addition, the
announcement of Germany's debt brake suspension, and the associated large move
in the German bond yield, led to significant trading on the platform, meaning
profits were rising as investors were frantically adjusting their hedging. All
of SAINTS' exchange investments delivered strong operational results as their
clients traded more heavily than usual as market volatility spiked.
These financial infrastructure assets have all the attractive characteristics
of long-term compounders: they operate in a structurally growing industry,
have formidable barriers to competition, and generate large amount of surplus
cash because they do not need much capital investment to grow.
Admiral Group, the UK-based insurer, also featured among the top contributors
since the start of the year. The company's share price rose as profitability
improved markedly, with the added bonus of some regulatory clarity in the UK
insurance sector. With a proven underwriting record, conservative reserving,
and good opportunities for continued growth in the UK and European insurance
markets, Admiral continues to be a valuable holding within SAINTS' financials
exposure. It is pleasing that since our decision to add to the holding two
years ago, following a sharp fall in the share price as the insurance cycle
temporarily swung downwards, has since been rewarded by a more than 50%
increase in the shares and, in the latest period, the announcement of a more
than 60% increase in the ordinary dividend (with a special dividend to boot).
On the other side of the ledger, several otherwise dependable names were a
modest drag on returns, including Novo Nordisk, Procter & Gamble, PepsiCo,
and Watsco.
Novo Nordisk had a difficult first half of the year. After a remarkable
run-where it became the most valuable company in Europe-its share price pulled
back sharply. The drop was triggered by concern about market share loss to its
major competitor, Eli Lilly, and so-called 'compounders': companies that are
selling diluted versions of the drug at a lower price, despite health
regulators warning these products are unsafe and that sales should stop
immediately. These issues have proved sufficiently challenging that Novo
Nordisk's board decided to ask the CEO to step down. The company has sharply
reduced its financial guidance for 2025, with growth for the full year now
expected to be in the range of 8-14% (a slowdown from prior expectations of 13
to 21%). Of course, most companies would love to grow their profits in the
range of 8-14%, but the slowdown has caught everybody by surprise, hence the
tumbling share price.
Our base case is that in the years ahead, Novo Nordisk and Eli Lilly will
trade positions as both continue to improve their obesity drugs: sometimes Eli
Lilly will be in the ascendant (as now) and other times it will be Novo
Nordisk (as was the case a couple of years ago). So as the market for these
drugs grows significantly in the years to come, we still expect Novo Nordisk
to deliver strong growth in earnings and dividends. However, given that the
company's recent issues have been serious enough for the board to replace the
CEO, something which has happened only a handful of times in the company's
multi-decade history, we are returning to our investment case and re-testing
our core assumptions, to make sure of our convictions. We originally invested
in the company in 2016, at a time when the share price had fallen sharply due
to market share losses in the company's other major business, insulin. That
opportunity proved to be a great investment over the next several years, and
we took significant gains on the holding through 2023. The more recent fall in
the share price may yet prove to be another great investment opportunity. But
we will go back and re-test our base case assumptions before coming to any
conclusion.
Both Procter & Gamble ("P&G") and PepsiCo saw their share prices
decline in the first half of the year after reporting earnings growth below
market expectations. P&G was affected by inventory destocking, and perhaps
a bit of down-trading from consumers tightening their belts, leading
management to reduce their guidance for the year. Meanwhile PepsiCo reported a
slowdown in its snacks business. After growing earnings by around 10% a year
during the period 2021-23, PepsiCo reported underlying EPS growth of just 2%
in 2024.
It has been a difficult year for Consumer Staples companies, not just P&G
and Pepsi but also many other names in the sector. Not long ago many of these
companies were raising their prices substantially to offset cost inflation,
and they were widely praised by investors for their ability to preserve
margins. Many of them were also enjoying the benefits of volumes surging and
customers up-trading to premium products, as people everywhere celebrated the
end of lockdowns and went back out to drink in bars, eat in restaurants, and
splurge on holidays. It is the view of your managers that what we have
witnessed in the past 12 months, with sluggish results reported by many of
these companies, is largely the short-term unwinding of this mini-boom. We
expect growth to re-accelerate in the next few years, and valuations to be
re-assessed upwards. As with all SAINTS holdings which encounter struggles, we
go back and test our core assumptions to make sure we're not deluding
ourselves. But our general feeling is that nothing is fundamentally broken in
these companies. And they will continue to be resilient compounders.
These are companies with well-invested brands, fortress balance sheet, and
long experience of operating through the ups and downs of economic cycles. All
of them have continued to increase dividends, which is an important signal.
Other asset classes
A compelling advantage of the closed-end investment trust structure is the
ability to borrow at attractive rates and long maturities and invest for
higher returns than the cost of borrowing. SAINTS has modest debt of £95m,
implying gearing of less than 10%, with a blended fixed interest rate just
below 3%. Your managers invest this in a mix of properties, bonds and
infrastructure names. All three asset classes delivered positive returns over
the period.
The property portfolio returned 3.6% in the first half of the year, mostly
from rental income as the value of properties rose marginally compared to the
end of 2024. After a period of sharp rises in interest rates, the last six
months have been more positive for the sector, as a deceleration in inflation
has allowed the Bank of England to lower interest rates. The vast majority of
the property portfolio generates income which is inflation-protected, either
through indexation or fixed increases, and rent reviews in the last six months
have increased the contracted rent income by about 7%.
The fixed income portfolio contributed positively as prices rose for our
government bond holdings, with a weaker US dollar generally supportive of
these assets. Together with the income contribution from our Nestle and Tesco
bonds, the return from the fixed income portion of the assets was +2.3% in the
first half.
Our infrastructure holdings delivered very strong returns over the first half
of 2025, up by 15%. These were supported by a modest decline in bond yields,
strong operational performance, a catch-up from previously depressed
valuations and corporate activity. At the start of the year, the asset class
was priced for disappointment. UK renewable investment trusts, for example,
were trading at discounts of over 30% to NAV. As the year progressed,
reassuring results and stabilisation in bond yields - to which these companies
are sensitive - helped lift valuations. Our European grid holding, Terna,
performed particularly well, supported by expansion plans, and rising demand
for defensive assets in an environment of growing geopolitical and
policy uncertainty.
In that infrastructure space, we stood up for shareholders in June, and
prevailed. Assura, a specialist in GP surgeries across the UK and Ireland was
subject to a bid approach from a KKR-led private equity consortium that we
felt undervalued the long-term prospects of the business. When a second bidder
- UK-listed Primary Health Properties - entered the fray, we judged their
proposal to combine the two businesses as offering a significantly better
outcome for shareholders. Not only would this create a larger, more
cost-efficient business better able to support the NHS in its transformation
and modernisation, but it would allow shareholders to retain exposure to an
attractive and growing earnings stream.
Although Assura's board initially recommended KKR's offer, we made our
opposition clear-both directly to the company and publicly through the
press-arguing that the KKR bid was opportunistic and not in shareholders' best
interests. Ultimately, the board reversed its position and backed the PHP
offer, which is expected to complete in mid-August. This kind of shareholder
advocacy is a vital role of active asset managers-one that passive investors
are rarely able to fulfil.
Revenue progression
The operational performance of SAINTS' holdings remains generally encouraging
and this is feeding through to increased revenues. This reflects both
continued dividend growth from the Company's equity investments, despite
something of a headwind from a strengthening dollar, and increased revenues
from the Company's infrastructure and property investments. Assuming no
further headwind from exchange rates we currently expect the Company's
earnings per share growth over the year to support another year of dividend
growth ahead of inflation, subject to the Board's judgement and discretion.
Transactions
As mentioned at the outset of this update, volatility in the stock market
created a number of good investment opportunities for SAINTS equity portfolio.
As managers we keep a Focus List of companies always ready-to-go, names where
we have conducted deep research and see a great fit for SAINTS in terms of
long-term growth and resilience, but where the current share price does not
look attractive relative to names already in the portfolio. When markets
thrash about, babies often get thrown out with the bathwater. We use this as
an opportunity to upgrade, typically by taking the least deserving children
out of the portfolio and using these as sources of funds to invest in more
promising ones. (We have not yet mentioned this analogy to our own children).
One of the new investments is Accenture, the global consulting and technology
services firm. This is a company with a terrific track record of growth in its
earnings and dividends over a long period of time, and we believe the sources
of its past success are likely to remain sources of future success. It begins
with the ever-onwards march of technology. As software and hardware
relentlessly improve, organisations are forever looking for advice and
assistance in implementing change to make use of that technology. This is
complex, and the clear leader in this sphere is Accenture. When companies need
advice on how to move to the Cloud or clean up their data to use AI, they pick
up the phone to Accenture. The company is an expert in developing 'playbooks'
for different industries, so it can advise what works best for a food factory,
which is not the same as what works best for a building society. Using these
playbooks, it can also offer outsourced services where the client hands over
the work to Accenture, such as application development. We expect technology
to continue evolving, revenue to continue growing, and with careful cost
control to see continued profit and dividend growth. The company has
compounded earnings per share at approximately 12% per annum over the past
decade and has consistently grown its dividend.
That's why it was on our Focus List. But the share price wasn't quite
attractive enough to displace anything in the portfolio. Then came Mr Trump
and Mr Musk. As the latter got to work with his "Department of Government
Efficiency" initiative, he threatened to terminate multiple contracts for
companies like Accenture. The share price of Accenture tumbled. We saw this as
an over‑reaction (government contracts are only a small part of Accenture's
revenue) and we did not view Mr Musk's efforts as likely to endure. This gave
us an opportunity to make a long-term investment for SAINTS at an attractive
valuation.
Our second new purchase was Jack Henry, a provider of banking software in the
US. It supplies core platforms to small and mid-sized financial institutions,
and has built its business around long-term, subscription-based revenues. The
company came to our attention many years ago when speaking to one of its
competitors. "Of course, we all know the company in our industry with the
best reputation is Jack Henry". Further investigation revealed this reputation
was well-earned: the company has been carefully managed with a singular focus
for many years, trying to deliver the best software with the best service.
Over the past 15 years this has allowed the company to compound its earnings
at around 10% per annum and raise its dividend every year for more than two
decades. We see many years of growth to come, as the company sells ever more
functionality to its customers and continues to gain share from
its competitors.
The valuation of the shares has always looked a bit rich to us, and it has sat
on our Focus List for a long time. But the most recent quarterly results
showed a slowdown in growth, which prompted a relative de-rating of the share
price. We know from observing the company over the years that this is likely
to prove temporary: it tends to come and go with animal spirits in the US
banking sector. We took this as an opportunity to invest for SAINTS.
Both Accenture and Jack Henry are companies we have researched and admired for
a long time, but whose rich valuations were a hurdle. Finally, we have been
given an opportunity to buy into what we believe are two strong, durable
compounders, at an attractive valuation.
Alongside new purchases, we have added selectively to several existing
holdings over the past six months where volatility has made the relative
valuation more attractive. Most notably we have added to Amadeus, the airline
IT firm, where we foresee many years of growth but there are short-term
concerns in the stock market about consumer spending on travel. And Edenred,
the vouchers business, which has sold off quite sharply on concerns about
regulatory changes in France and Brazil at a time of widening government
deficits (Edenred's meal vouchers are particularly attractive when the
government offers a tax break). Our analysis suggests the risk here is quite
low, and the most likely outcome is that Edenred will continue to deliver
profit and dividend growth for years to come. We added to the holding.
Now to the sources of funds. We divested from our long-standing holding in
United Parcel Service (UPS). For many years UPS has enjoyed the benefits of a
well-invested and highly-evolved package delivery network, built over more
than 100 years, which have allowed it to offer lower rates and better on-time
delivery performance to shippers. It has always been a cyclical business, but
the rise of e-commerce in the past 20 years has been a fantastic source of
volume growth across cycles. In the past few years, the earnings have have
fallen, and to begin with we viewed this as just another cyclical downturn,
following the COVID boom in online shopping around 2020-21. But our ongoing
research revealed something more sinister: rising volumes have attracted more
competition. Firms like Amazon have built their own delivery network, regional
and local delivery companies have become stronger, and incumbent mail systems
like the US Postal Service have become more competitive. Eventually UPS was
forced to walk away from a sizeable portion of business delivering packages
for Amazon-despite prior management assurances that this relationship would
remain stable. This was the second notable strategic reversal within a year,
raising broader questions around intensifying competition and management's
strategic direction. Our confidence in the long-term growth case was
materially reduced. We reduced the position size last year, and when better
opportunities came along it was time to upgrade the remainder of the holding.
Later in the half, we also divested from TCI, a Taiwanese "nutraceutical"
manufacturer. TCI had grown rapidly selling health-related products like
protein and collagen drinks, with China its biggest market. But a Chinese
government crackdown on online marketing in 2022 severely impacted the
business, and although TCI found some success expanding in Europe and the
U.S., this was insufficient to offset the persistent headwinds in its core
Chinese market. The dividend was cut, and with our growth expectations reduced
it was a clear candidate to reallocate capital elsewhere.
We also made some small changes in the infrastructure and fixed income
portfolios.
Within the infrastructure portfolio, we divested SAINTS holding in BBGI, the
UK-listed infrastructure trust, after it received a takeover bid. We
reinvested the proceeds into Transurban, the world's largest listed toll-road
operator. Transurban manages key urban motorway networks across Australia and
North America, with inflation-linked tolling built into its long-dated
concession agreements. It offers dependable income, pricing power, and
attractive long-term growth potential as urban populations and congestion
continue to rise.
The bond portfolio also saw modest changes. In response to rising yields in
the UK and an improving opportunity in Sterling-denominated credit, we sold
out of two long-duration, USD‑denominated sovereign bonds in emerging
markets, and reinvested the proceeds into Sterling corporate bonds issued by
Nestlé and Tesco. These new holdings offer yields close to 6%, low default
risk, and the added advantage of aligning more closely with the currency in
which SAINTS pays its dividend. This not only improves income resilience but
also reduces currency-related volatility in SAINTS' earnings base.
From type of growth to type of compounding
At this year's AGM meeting (which for the first time was streamed online and
is available for re-play at www.saints-it.com) we introduced a new way of
categorizing the companies in our portfolio: transitioning from "types of
growth" to "types of compounding."
We introduced the "Portfolio Pyramid" chart about a decade ago. The rationale
was to give shareholders a clear way of seeing the entire equity portfolio in
one place and present it in a clearer and more informative way than a simple
list of names on a page. We split the companies into four different "types of
growth". Of those, the "Compounding Machines" have consistently represented
the bulk of the portfolio: companies with strong and enduring competitive
positions within markets that have solid long-term growth prospects. The other
categories were "Exceptional Revenue Opportunities": companies which we expect
to deliver rapid compound growth in earnings and dividends for a few years,
before eventually becoming "compounding machines". The third and fourth
categories have been a smaller part of the portfolio. "Management
Acceleration" (companies with potential to get better) and "Long-Cycle"
companies (cyclical but uncorrelated with the traditional economic cycle.)
What we have found over the years is that we have had much more success
investing in the two largest categories, the steady and rapid compounders.
The share of the portfolio invested in these categories has naturally
increased to over 90%. We have had limited success in the other categories,
to the point that we have either divested or, in a few cases, they have
transformed into ongoing compounders.
With these compounders now approaching 100% of the portfolio, the old
classification is no longer helpful. This prompted a simple question: as
shareholders in SAINTS ourselves, what would we find useful to know about the
portfolio about the different companies within it?
With hindsight the answer seems obvious. All of the companies in the portfolio
represent some type of resilient long-term compounding. But compound growth in
earnings and dividends can happen in a few different ways. In fact, broadly
speaking, four different ways. The new classification divides the portfolio
into these four categories, each representing a different type of long-term
compounding: Everyday Royalties, Share Gainers, Market Expanders, and
Adjacency Builders. Here is a brief description of each:
• "Everyday royalties": These are companies with
well-established positions in markets growing at GDP rates. The products and
services they sell are everyday items at very low risk of disruption: think
coffee and lipstick. This gives them the opportunity to deliver streams of
earnings and dividends of unusually long duration. Their ability to deliver
steady volume growth is complemented by pricing power driven by innovation.
Procter & Gamble exemplifies this category, with its diversified portfolio
of 65 brands reaching five billion consumers, selling daily-use items like
Oral-B toothpaste and Fairy washing detergent. P&G's innovation allows it
to maintain leadership in categories like fabric care (Fairy), baby care
(Pampers), and grooming (Gillette) while raising prices for products perceived
as superior. Typically, we expect revenues of these companies to grow their
revenues by mid-single digits, and earnings per share to compound at a rate of
5-10% for a very long period of time.
• "Share gainers": These are companies which compound
earnings and dividends by capturing market share through superior products or
services. Fastenal, the US distributor of industrial parts, is a prime
example. It started out selling bolts and other fasteners to manufacturing
companies in the US in 1967, and with its excellent customer service and
competitive prices it has been steadily adding products and gaining market
share ever since. It installed vending machines at its clients' premises in
2008: bolts, washers and gloves as easy to retrieve as cans of Coca Cola,
allowing employees quick access to parts and enabling companies to stay on top
of their inventory. In a highly fragmented market, we expect years of
continued to compound growth, with earnings and dividends per share in this
category compounding at around 10% annually.
• "Market Expanders": These businesses benefit from more
rapid rates of compounding in their end-markets, typically well above GDP.
Novo Nordisk illustrates this category perfectly. We expect its insulin
business will continue to compound at solid rates for many years to come,
driven by rising numbers of diabetics, rising diagnoses of diabetics, and
continued innovation in the insulin space permitting price increases.
Alongside this, we see rapid growth in the market for its obesity treatments,
where prescription rates remain very low and the benefits of Novo's medicines
are enormous. Often your holdings are at the forefront of driving the
innovation that is expanding the market, and such is the case with Novo
Nordisk. We expect long-duration compounding at rates of 10% or even higher.
• "Adjacency Builders": These companies leverage their
competitive advantages in core markets to expand into adjacent industries.
Atlas Copco is a standout example. Starting as a leader in air compressors,
Atlas Copco pioneered oil-free technology to enter sensitive markets like food
production and pharmaceuticals. Later, it expanded into vacuum technology
through acquisitions, establishing itself as a leader in this rapidly growing
field. As these companies build positions in markets adjacent to their core
competency, we expect earnings and dividends to compound at attractive rates
averaging 10%.
It is worth noting that many companies can be described as spanning multiple
categories; Atlas Copco, for instance, is still gaining market share through
innovation in its traditional compressor business, alongside its efforts to
build businesses in adjacent markets. So, it could be described as both a
Market Share compounder and an Adjacency compounder. In these instances, our
classification tries to reflect the aspect of compounding which is at the
heart of our investment case. In the Atlas Copco example, it is the ability to
build adjacent businesses over the long-term which really excites us and cuts
to the heart of our belief in its ability to compound earnings and dividends
at attractive rates.
This new classification remains an internal framework designed to help
visualise SAINTS' portfolio. We do not set targets for portfolio weights based
on these classifications; instead, they serve as an illustration that helps
shareholders to understand how the Company's holdings contribute to long-term
growth in portfolio earnings and dividends, and ultimately growth in SAINTS
NAV and share price.
http://www.rns-pdf.londonstockexchange.com/rns/9112T_1-2025-8-4.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9112T_1-2025-8-4.pdf)
Conclusion
It has been a busy six months. Markets have been volatile, creating
opportunities for new investments and additions to existing holdings, while
exiting names where the long-term prospects were weaker. Global equity markets
finished the first half of the year slightly up in sterling terms, and SAINTS'
NAV produced a similar return. A lower discount to NAV means the share price
return was +3.7%, ahead of the index return of +1%.
While the early April storm in financial markets may have passed, volatile
headlines and executive orders have stirred an undercurrent of uncertainty. In
this kind of environment, resilience matters.
SAINTS' portfolio remains anchored in high-quality businesses with solid
foundations, strong leadership, and the ability to weather cycles. As the
landscape evolves, we believe this approach offers both reassurance and
enduring value.
Baillie Gifford & Co
4 August 2025
See the disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Responsibility statement
We confirm that to the best of our knowledge:
a. the condensed set of Financial Statements has been prepared in
accordance with FRS 104 'Interim Financial Reporting';
b. the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.7R
(indication of important events during the first six months, their impact on
the Financial Statements and a description of principal risks and
uncertainties for the remaining six months of the year); and
c. the Interim Financial Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes therein).
By order of the Board
Lord Macpherson of Earl's Court
Chairman
4 August 2025
Performance attribution for the six months to 30 June 2025
For the six months to 30 June 2025
Portfolio breakdown Average Average Total return † Total return *†
allocation allocation SAINTS benchmark
SAINTS benchmark * % %
% %
Global equities 95.7 99.9 0.4
Infrastructure equities(‡) 3.0 0.1 14.9
Bonds 1.1 2.3
Direct property 9.8 3.6
Deposits 0.4 -
Borrowings at book value (10.1) 1.5
Portfolio total return (borrowings at book value) 1.1
Other items(#) (0.1)
Fund total return (borrowings at book value) 1.0
Adjustment for change in fair value of borrowings 0.1
Fund total return (borrowings at fair value) 1.1 1.0
* The Company's benchmark is the FTSE All-World Index (in sterling terms).
† Alternative performance measure - see glossary of terms and
Alternative Performance Measures at the end of this announcement.
# Includes Baillie Gifford and OLIM Property Limited management fees.
‡ The allocation reflects the six infrastructure equity holdings set out
in the list of investments below.
Source: Baillie Gifford / LSEG and relevant underlying index providers. See
disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
List of investments
as at 30 June 2025 (unaudited)
Name Business 30 June 2025 30 June 2025
Value % of total
£'000 assets
Global equities
Microsoft Computer software 37,201 3.7
Deutsche Boerse Securities exchange owner/operator 33,472 3.3
Procter & Gamble Household product manufacturer 28,678 2.8
Taiwan Semiconductor Manufacturing Semiconductor manufacturer 27,777 2.7
Partners Group Asset management 25,895 2.6
Apple Consumer technology 25,575 2.5
CME Derivatives exchange operator 24,844 2.5
Admiral Car insurance 23,145 2.3
Coca Cola Beverage company 22,537 2.2
Atlas Copco Engineering 22,524 2.2
Anta Sports Sportswear manufacturer and retailer 22,407 2.2
Schneider Electric Electrical power products 21,689 2.1
Fastenal Distribution and sales of industrial supplies 20,543 2.0
Amadeus IT Group Technology provider for the travel industry 20,093 2.0
Novo Nordisk Pharmaceutical company 19,722 2.0
Watsco Distributes air conditioning, heating and refrigeration equipment 19,410 1.9
Analog Devices Integrated circuits 19,113 1.9
B3 S.A. Securities exchange owner/operator 18,623 1.8
Roche Pharmaceuticals and diagnostics 18,196 1.8
Wolters Kluwer Information services and solutions provider 17,800 1.8
Experian Credit scoring and marketing services 17,606 1.7
L'Oréal Cosmetics 17,221 1.7
Epiroc Mining and infrastructure equipment provider 16,756 1.7
Midea Group Appliance manufacturer 16,742 1.7
Pepsico Snack and beverage company 16,593 1.6
McDonald's Fast food restaurants 16,275 1.6
Carsales.com Online marketplace for classified car advertisements 15,501 1.5
USS Secondhand car auctioneer 15,030 1.5
United Overseas Bank Commercial banking 14,539 1.4
Nestlé Food producer 14,511 1.4
Cisco Systems Data networking equipment 14,224 1.4
Edenred Voucher programme outsourcer 14,164 1.4
NetEase Online gaming company 14,129 1.4
Accenture Global professional services 13,729 1.4
Hong Kong Exchanges and Clearing Securities exchange owner/operator 12,762 1.3
Intuit Software 11,751 1.2
Jack Henry & Associates Provider of software and IT services for banks 11,691 1.2
Texas Instruments Semiconductor supplier 10,931 1.1
Home Depot Home improvement retailer 10,880 1.1
Valmet Manufacturer of pulp and paper machinery 10,741 1.1
Starbucks Coffee retailer 10,300 1.0
T. Rowe Price Fund manager 10,264 1.0
AVI Staple foods manufacturer 8,914 0.9
Paychex HR, payroll and benefits outsourcer 8,898 0.9
Coloplast Manufacturer of medical products 8,367 0.8
Arthur J Gallagher Insurance broker 8,277 0.8
Diageo International drinks company 8,079 0.8
SAP Business software developer 7,421 0.7
Kuehne + Nagel Worldwide freight forwarder 7,264 0.7
Albemarle Producer of speciality and fine chemicals 6,594 0.7
Eurofins Laboratory testing provider 6,255 0.6
Man Wah Sofa designer and manufacturer 5,759 0.6
Fevertree Drinks Producer of premium mixer drinks 5,045 0.5
Cognex Industrial automation 4,709 0.5
Pernod Ricard Global spirits manufacturer 4,560 0.5
Medtronic Medical devices company 4,401 0.4
Total global equities 870,127 86.1
Infrastructure equities
Greencoat UK Wind UK wind farms 10,187 1.0
Terna Electricity grid operator 7,334 0.7
Transurban Group Tollroad operator 6,265 0.6
Jiangsu Expressway Tollroad operator 4,559 0.5
Assura Primary healthcare property group 3,959 0.4
Exelon Grid and utility operator 879 0.1
Total Infrastructure equities 33,183 3.3
Direct Property See table below 92,250 9.1
Issue Currency 30 June 2025 30 June 2025
Value % of total
£'000 assets
Bonds
Brazil CPI Linked 15/05/2045 Brazilian real denominated 2,350 0.2
Nestlé Finance Intl 5.125% 2038 Sterling denominated 2,094 0.2
Tesco Corp Treasury Services 5.5% 2035 Sterling denominated 2,088 0.2
Indonesia 9% 15/03/2029 Indonesian rupiah denominated 1,837 0.2
Indonesia 7.375% 15/05/2048 Indonesian rupiah denominated 1,792 0.2
Ivory Coast 6.625% 2048 Euro denominated 1,408 0.1
Dominican Republic 9.75% 06/06/2026 US dollar denominated 670 0.1
Total Bonds 12,239 1.2
Total Investments 1,007,799 99.7
Net Liquid assets 2,849 0.3
Total Assets (before deduction of borrowings) 1,010,648 100.0
Property portfolio
Location Type Tenant 2025 2025 2025 2024
EPC (#) Value % of total Value
Rating £'000 assets £'000
Crawley(†) Motorway Services Moto Hospitality Limited B 20,000 2.0 19,700
RPIlinked annual increase (uncapped till May 2025, then collar 2% cap 4%)
Denbigh Supermarket Aldi Stores Limited B 4,800 0.5 4,800
Fixedincreases 5yearly (2.5% compounded)
Earley Public House Spirit Pub Company (Managed) C 2,500 0.2 2,500
Limited (Greene King plc)
5yearly open market review
Gosport Supermarket Aldi Stores Limited A 5,550 0.5 5,550
RPIlinked collar 1% cap 2.75%
Holyhead Hotel Premier Inn Hotels Limited A 6,500 0.6 6,500
CPIlinked with 4% cap
New Romney Holiday Village Park Resorts Limited C 19,250 1.9 19,250
RPIlinked collar 3% cap 7% p.a. + turnoverrelated top up 5yearly
Otford Public House Spirit Pub Company (Managed) C 1,700 0.2 1,700
Limited (Greene King plc)
5yearly open market review
Ringwood Hotel Premier Inn Hotels Limited B 8,350 0.8 8,350
CPIlinked with 4% cap
Southend-on-Sea Warehouse Booker Limited C 8,900 0.9 8,500
Fixed increases 5yearly
(2.5% compounded)
Taunton* Bowling Alley Mitchells & Butlers Retail (No.2) A - - 3,900
Limited (sublet to Hollywood
RPIlinked until 2024, then 5yearly open market
Bowl Group plc)
Witney Industrial James Donaldson Group Limited A 14,700 1.5 14,700
RPIlinked collar 2% cap 4%
92,250 9.1 95,450
* Sold during the year.
# See glossary of terms and alternative performance measures on at the end
of this announcement.
Income statement (unaudited)
For the six months ended 30 june 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024 (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments - securities - (6,084) (6,084) - 37,823 37,823 - 28,654 28,654
Gains/(losses) on investments - property - 638 638 - (11) (11) - 1,887 1,887
Currency gains/(losses) - 151 151 - 81 81 - (26) (26)
Income 18,571 - 18,571 17,404 - 17,404 32,387 - 32,387
Management fees 3 (523) (1,568) (2,091) (547) (1,640) (2,187) (1,091) (3,271) (4,362)
Other administrative expenses (737) - (737) (685) - (685) (1,349) - (1,349)
Net return before finance costs and taxation 17,311 (6,863) 10,448 16,172 36,253 52,425 29,947 27,244 57,191
Finance costs of borrowings (354) (1,061) (1,415) (354) (1,061) (1,415) (711) (2,134) (2,845)
Net return on ordinary activites before taxation 16,957 (7,924) 9,033 15,818 35,192 51,010 29,236 25,110 54,346
Tax on ordinary activities (1,814) 363 (1,451) (1,861) 468 (1,393) (3,414) 940 (2,474)
Net return on ordinary activites after taxation 15,143 (7,561) 7,582 13,957 35,660 49,617 25,822 26,050 51,872
Net return per ordinary share 4 8.79p (4.39p) 4.40p 7.83p 20.00p 27.83p 14.50p 14.62p 29.12p
Note: 5 7.375p 7.00p 14.875p
Dividends paid and payable per share
The accompanying notes below are an integral part of the Financial Statements.
The total column of this statement is the profit and loss account of the
Company. The supplementary revenue and capital columns are prepared under
guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing
operations.
A Statement of Comprehensive Income is not required as all gains and losses of
the Company have been reflected in the above statement
Balance sheet (unaudited)
As at 30 June 2025 (with comparatives as at 31 December 2024 audited)
Notes At 30 June At 31 December
2025 2024
£'000 £'000
Non-current assets
Investments - securities 915,545 948,345
Investments - property 92,250 95,450
1,007,795 1,043,795
Current assets
Debtors 3,873 4,474
Cash and cash equivalents 3,958 2,818
7,831 7,292
Creditors
Amounts falling due within one year:
Other creditors and accruals (4,982) (3,652)
Net current assets 2,849 3,640
Total assets less current liabilities 1,010,644 1,047,435
Creditors
Amounts falling due after more than one year: (94,749) (94,742)
Net assets 915,895 952,693
Capital and reserves
Share capital 44,579 44,579
Share premium account 186,100 186,100
Capital redemption reserve 22,781 22,781
Capital reserve 643,952 681,413
Revenue reserve 18,483 16,820
Shareholders' funds 915,895 952,693
Net asset value per ordinary share* 536.8p 539.3p
Ordinary shares in issue 8 170,614,545 176,650,758
* See Glossary of terms and Alternative Performance Measures at the end of
this announcement.
The accompanying notes below are an integral part of the Financial Statements.
Statement of changes in equity (unaudited)
For the six months ended 30 June 2025
Notes Share Share Capital Capital Revenue Shareholders'
capital premium redemption reserve * reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 January 2025 44,579 186,100 22,781 682,413 16,820 952,693
Net return on ordinary activities after taxation - - - (30,904) (30,904)
Net return on ordinary activities after taxation - - - (7,557) 15,143 7,586
Dividends paid 5 - - - - (13,480) (13,480)
Shareholders' funds at 30 June 2025 44,579 186,100 22,781 643,952 18,483 915,895
For the six months ended 30 June 2024
Notes Share Share Capital Capital Revenue Shareholders'
capital premium redemption reserve * reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 January 2024 44,579 186,100 22,781 664,892 16,832 935,184
Net return on ordinary activities after taxation - - - 35,660 13,957 49,617
Dividends paid 5 - - - - (12,928) (12,928)
Shareholders' funds at 30 June 2024 44,579 186,100 22,781 700,552 17,861 971,873
* The Capital Reserve balance at 30 June 2025 includes unrealised
investment holding gains of £268,947,000 (30 June 2024 - gains of
£351,681,000).
The accompanying notes below are an integral part of the Financial Statements.
Condensed cash flow statement (unaudited)
Six months to Six months to
30 June 2025 30 June 2024
£'000 £'000
Net return on ordinary activities before taxation 9,033 51,010
Adjustments to reconcile company profit before tax to net cash flow from
operating activities
Net losses/(gains) on investments - securities 6,084 (37,823)
Net (gains)/losses on investments - property (638) 11
Currency (gains) (151) (81)
Finance costs of borrowings 1,415 1,415
Other capital movements
Changes in debtors 659 (537)
Changes in creditors (699) (704)
Other non-cash changes 16 29
Taxation
Overseas withholding tax (1,511) (1,383)
Cash from operations 14,208 11,937
Interest paid (1,415) (1,415)
Net cash inflow from operating activities 12,793 10,522
Cash flows from investing activities
Acquisitions of investments - securities (81,223) (48,888)
Acquisitions of investments - property (8) (32,865)
Disposals of investments - securities 107,921 75,355
Disposals of investments - property 3,846 5,654
Net cash inflow/(outflow) from investing activities 30,536 (744)
Cash flows from financing activities
Equity dividends (13,480) (12,928)
Shares issued - -
Shares bought back (28,860) -
Net cash outflow from financing activities (42,340) (12,928)
Increase/(decrease) in cash and cash equivalents 989 (3,150)
Exchange movements 151 81
Cash and cash equivalents at start of year 2,818 7,340
Cash and cash equivalents at end of period 3,958 4,271
* Cash and cash equivalents represent cash at bank.
The accompanying notes below are an integral part of the Financial Statements.
Notes to the condensed Financial Statements (unaudited)
01 Basis of Accounting
The condensed Financial Statements for the six months to 30
June 2025 comprise the statements set out above together with the related
notes below. They have been prepared in accordance with FRS 104 'Interim
Financial Reporting' and the AIC's Statement of Recommended Practice issued in
November 2014 and updated in July 2022 with consequential amendments.
They have not been audited or reviewed by the Auditor pursuant to the
Auditing Practices Board Guidance on 'Review of Interim Financial
Information'. The Financial Statements for the six months to 30 June 2025 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 December 2024.
Going concern
The Directors have considered the nature of the Company's
principal risks and uncertainties, as set out on the inside front cover,
together with its current position. The Board has, in particular, considered
heightened geopolitical tensions and conflicts and macroeconomic concerns,
including the potential impact on the global economy of rising tariffs and
barriers to trade, but does not believe the Company's going concern status is
affected. In addition, the Company's investment objective and policy, its
assets and liabilities and projected income and expenditure, together with the
Company's dividend policy, have been taken into consideration and it is the
Directors' opinion that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Company's assets, the
majority of which are investments in quoted securities which are readily
realisable, exceed its liabilities significantly. All borrowings require the
prior approval of the Board. Gearing levels and compliance with borrowing
covenants are reviewed by the Board on a regular basis. The Company has no
short term borrowings. The redemption dates for the Company's loan notes are
June 2036, April 2045 and April 2049. Accordingly, the Directors consider it
appropriate to adopt the going concern basis of accounting in preparing these
Financial Statements and confirm that they are not aware of any material
uncertainties which may affect the Company's ability to continue to do
so over a period of at least twelve months from the date of approval of
these Financial Statements.
02 Financial Information
The financial information contained within this Interim
Financial Report does not constitute statutory accounts as defined in sections
434 to 436 of the Companies Act 2006. The financial information for the year
ended 31 December 2024 has been extracted from the statutory accounts
which have been filed with the Registrar of Companies. The Auditor's Report
on those accounts was not qualified, and did not contain statements under
sections 498(2) or (3) of the Companies Act 2006.
03 Investment Manager
Baillie Gifford & Co Limited, a wholly owned subsidiary
of Baillie Gifford & Co, has been appointed by the Company as its
Alternative Investment Fund Manager (AIFM) and Company Secretary. The
investment management function has been delegated to Baillie Gifford & Co.
The management agreement can be terminated on six months' notice. The annual
management fee, calculated quarterly, is 0.45% on the first £500m of total
assets and 0.35% on the remaining total assets, where 'total assets' is
defined as the total value of the assets held, excluding the value of the
property portfolio, less all liabilities (other than any liability in the
form of debt intended for investment purposes).
As AIFM, Baillie Gifford & Co Limited has delegated the
management of the property portfolio to OLIM Property Limited. OLIM receives
an annual fee from SAINTS of 0.5% of the value of the property portfolio,
subject to a minimum quarterly fee of £6,250. The agreement can be terminated
on three months' notice.
04 Net return per ordinary share
Six months to Six months to
30 June 2025 30 June 2024
£'000 £'000
Revenue return on ordinary activities after taxation 15,143 13,957
Capital return on ordinary activities after taxation (7,561) 35,660
Total net return 7,582 49,617
Weighted average number of ordinary shares in issue 172,301,322 178,315,943
05 Dividends
Six months to Six months to
30 June 2025 30 June 2024
£'000 £'000
Amounts recognised as distributions in the period:
Previous year's final of 4.175p (2024 - 3.80p), paid 11 April 2025 7,265 6,776
First interim of 3.625p (2024 - 3.45p), paid 19 June 2025 6,215 6,152
13,480 12,928
Dividends paid and payable in respect of the year:
First interim of 3.625p (2024 - 3.45p), paid 19 June 2025 6,215 6,152
Second interim of 3.75p (2024 - 3.55p) 6,398 6,330
12,613 12,482
The second interim dividend was declared after the period
end date and therefore has not been included as a liability in the Balance
sheet. It is payable on 18 September 2025 to shareholders on the register at
the close of business on 15 August 2025. The ex-dividend date is 14 August
2025. The Company's Registrar offers a Dividend Reinvestment Plan and the
final date for elections for this dividend is 28 August 2025.
06 Fair value hierarchy
The fair value hierarchy used to analyse the basis on which
the fair values of financial instruments held at fair value through the profit
or loss account are measured is described below. Fair value measurements are
categorised on the basis of the lowest level input that is significant to the
fair value measurement.
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).
An analysis of the Company's financial asset investments
based on the fair value hierarchy described above is shown below.
Level 1 Level 2 Level 3 Total
As at 30 June 2025 £'000 £'000 £'000 £'000
Securities
Listed equities* 903,305 - - 903,305
Bonds - 12,240 - 12,240
Property
Freehold - - 92,250 92,250
Total financial asset investments 903,305 12,240 92,250 1,007,795
Level 1 Level 2 Level 3 Total
As at 31 December 2024 £'000 £'000 £'000 £'000
Securities
Listed equities* 937,287 - - 937,287
Bonds - 11,058 - 11,058
Property
Freehold - - 95,450 95,450
Total financial asset investments 937,287 11,058 95,450 1,043,795
* This includes £4,712,000 (2024 - £4,335,000) of Albemarle 7.25% 2027
preference shares.
There have been no transfers between levels of the fair
value hierarchy during the period. The fair value of listed investments is bid
value or, in the case of holdings on certain recognised overseas exchanges,
last traded price. They are categorised as Level 1 if they are valued using
unadjusted quoted prices for identical instruments in an active market and
Level 2 if they do not meet all these criteria but are, nonetheless, valued
using market data. The fair value of unlisted investments is determined using
valuation techniques, determined by the Directors, based upon observable
and/or non-observable data such as latest dealing prices, stockbroker
valuations, net asset values and other information, as appropriate. The
Company's holdings in unlisted investments are categorised as Level 3 as the
valuation techniques applied include the use of non-observable data.
07 Bank loans
At 30 June 2025, the book value of the borrowings was
£94,749,000 (31 December 2024 - £94,742,000) and the fair value was
£61,951,000 (31 December 2024 - £62,053,000). The debt comprises long-term
private placement loan notes: £15 million with a coupon of 2.23% issued in
2021 which mature in 2036, £40 million with a coupon of 3.12% issued in 2022
which mature in 2045 and £40 million with a coupon of 3.12% issued in 2022
which mature in 2049.
08 Share capital
At 30 June 2025, the Company had the authority to buy back
24,679,565 ordinary shares and to issue 17,482,575 ordinary shares without
application of pre-emption rights in accordance with the authorities granted
at the AGM in April 2025. During the six months to 30 June 2025, no ordinary
shares were issued (year to 31 December 2024 - no ordinary shares were
issued). During the six months to 30 June 2025, 6,036,213 ordinary shares were
bought back into treasury at a cost of £30,904,000 (year to 31 December 2024
- 1,665,185 ordinary share were bought back into treasury at a cost of
£8,529,000).
09 Related party transactions
There have been no transactions with related parties during
the first six months of the current financial year that have materially
affected the financial position or the performance of the Company during that
period and there have been no changes in the related party transactions
described in the last Annual Report and Financial Statements that could have
had such an effect
on the Company during that period.
10 The Interim Financial Report will be available on the SAINTS page
of the Managers' website: saints-it.com (http://www.saints-it.com/) ‡ on or
around 15 August 2025.
Principal risks and uncertainties
The principal risks facing the Company are financial risk, investment strategy
risk, discount risk, climate and governance risk, regulatory risk, custody and
depositary risk, operational risk, leverage risk, political risk, cyber
security risk and emerging risks. An explanation of these risks and how they
are managed is set out on pages 45 to 49 of the Company's Annual Report and
Financial Statements for the year to 31 December 2024 which is available on
the Company's website: saints-it.com. The principal risks and uncertainties
have not changed since the date of that report.
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 assets
This is the Company's definition of Adjusted Total Assets, being the total
value of all assets held less all liabilities (other than liabilities in the
form of borrowings).
Net Asset Value ('NAV')
Also described as shareholders' funds, net asset value is the value of total
assets less liabilities (including borrowings). Net asset value can be
calculated on the basis of borrowings stated at book value and fair value. An
explanation of each basis is provided below. The net asset value per share is
calculated by dividing this amount by the number of ordinary shares in issue
excluding any shares held in treasury.
Net Asset Value (borrowings at book value)
Borrowings are valued at adjusted net issue proceeds. Book value approximates
amortised cost.
Net Asset Value (borrowings at fair value) (APM)
Borrowings are valued at an estimate of their market worth. This indicates the
cost to the Company of repaying its borrowings under current market
conditions. It is a widely reported measure across the investment trust
industry.
Net Asset Value
30 June 2025 31 December 2024
Shareholders' funds (borrowings at book value) 915,895,000 952,693,000
Add: book value of borrowings 94,749,000 94,742,000
Less: fair value of borrowings (61,951,000) (62,053,000)
Shareholders' funds (borrowings at fair value) 948,693,000 985,382,000
Shares in issue 170,614,545 176,650,758
Net Asset Value per ordinary share (borrowings at fair value) 556.0p 557.8p
Ongoing Charges (APM)
The total expenses (excluding borrowing costs) incurred by the Company as a
percentage of the average net asset value (with borrowings at fair value). The
ongoing charges have been calculated on the basis prescribed by the
Association of Investment Companies.
Performance Attribution (APM)
Analysis of how the Company achieved its performance relative to its
benchmark.
Premium/(discount) (APM)
As stockmarkets and share prices vary, an investment trust's share price is
rarely the same as its NAV. When the share price is lower than the NAV per
share it is said to be trading at a discount. The size of the discount is
calculated by subtracting the share price from the NAV per share and is
usually expressed as a percentage of the NAV per share. If the share price is
higher than the NAV per share, this situation is called a premium.
30 June 2025 30 June 2025 31 December 2024 31 December 2024
NAV (book) NAV (fair) NAV (book) NAV (fair)
Closing NAV per share 536.8p 556.0p 539.3p 557.8p
Closing share price 509.0p 509.0p 498.5p 498.5p
Premium/(discount) (5.2%) (8.5%) (7.6%) (10.6%)
Total Return (APM)
The total return is the return to shareholders after reinvesting the net
dividend on the date that the share price goes ex-dividend.
30 June 30 June 30 June 31 December 31 December 31 December
2025 2025 2025 2024 2024 2024
NAV (book) NAV (fair) share price NAV (book) NAV (fair) share price
Opening NAV per share/share price (a) 539.3p 557.8p 498.5p 524.5p 539.4p 535.0p
Closing NAV per share/share price (b) 536.8p 556.0p 509.0p 539.3p 557.8p 498.5p
Dividend adjustment factor* (c) 1.014952 1.014397 1.016109 1.026922 1.026106 1.028650
Adjusted closing NAV per share/share price (d)=(b)x(c) 544.8p 564.1p 517.2p 553.8p 572.4p 512.8p
Total return (d)÷(a) -1 1.0% 1.1% 3.8% 5.6% 6.1% (4.2%)
* The dividend adjustment factor is calculated on the assumption that the
dividends paid out by the Company are reinvested into the shares of the
Company at the cum income NAV/share price, as appropriate, at the ex-dividend
date.
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other public company, an
investment trust can borrow money to invest in additional investments for its
portfolio. The effect of the borrowing on the shareholders' assets is called
'gearing'. If the Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the value of
the Company's assets falls, the situation is reversed. Gearing can therefore
enhance performance in rising markets but can adversely impact performance in
falling markets.
Potential gearing is the Company's borrowings expressed as a percentage of
shareholders' funds.
Equity gearing is the Company's borrowings adjusted for cash, bonds and
property expressed as a percentage of shareholders' funds.
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers (AIFM)
Regulations, leverage is any method which increases the Company's exposure,
including the borrowing of cash and the use of derivatives. It is expressed as
a ratio between the Company's exposure and its net asset value and can be
calculated on a gross and a commitment method. Under the gross method,
exposure represents the sum of the Company's positions after the deduction of
sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the
deduction of sterling cash balances and after certain hedging and netting
positions are offset against each other.
Active Share (APM)
Active share, a measure of how actively a portfolio is managed, is the
percentage of the listed equity portfolio that differs from its comparative
index. It is calculated by deducting from 100 the percentage of the portfolio
that overlaps with the comparative index. An active share of 100 indicates no
overlap with the index and an active share of zero indicates a portfolio that
tracks the index.
‡ 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.
SAINTS' objective is to deliver real dividend growth by increasing capital and
growing income. Its policy is to invest mainly in equity markets, but other
investments may be held from time to time including bonds, property and other
asset classes.
Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford
& Co, is appointed as investment managers and secretaries to SAINTS.
Baillie Gifford & Co, the Edinburgh based fund management group has around
£209 billion under management and advice as at 4 August 2025.
Past performance is not a guide to future performance. SAINTS is a listed UK
company. As a result, the value of its shares and any income from those shares
is not guaranteed and could go down as well as up. You may not get back the
amount you invested. As SAINTS invests in overseas securities, changes in the
rates of exchange may also cause the value of your investment (and any income
it may pay) to go down or up. You can find up to date performance information
about SAINTS on the SAINTS page of the Managers' website saints-it.com
(http://www.saints-it.com/) . Neither the contents of the Company's website
nor the contents of any website accessible from hyperlinks on the Company's
website (or any other website) is incorporated into, or forms part of, this
announcement.
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
FTSE Index data
London Stock Exchange Group plc and its group undertakings (collectively, the
'LSE Group'). © LSE Group 2025. FTSE Russell is a trading name of certain of
the LSE Group companies. 'FTSE®' 'Russell®', 'FTSE Russell®', is/are a
trade mark(s) of the relevant LSE Group companies and is/are used by any
other LSE Group company under license. All rights in the FTSE Russell indexes
or data vest in the relevant LSE Group company which owns the index or the
data. Neither LSE Group nor its licensors accept any liability for any errors
or omissions in the indexes or data and no party may rely on any indexes or
data contained in this communication. No further distribution of data from the
LSE Group is permitted without the relevant LSE Group company's express
written consent. The LSE Group does not promote, sponsor or endorse the
content of this communication.
Third party data provider disclaimer
No third party data provider ('Provider') makes any warranty, express or
implied, as to the accuracy, completeness or timeliness of the data contained
herewith nor as to the results to be obtained by recipients of the data. No
Provider shall in any way be liable to any recipient of the data for any
inaccuracies, errors or omissions in the index data included in this document,
regardless of cause, or for any damages (whether direct or indirect) resulting
therefrom.
No Provider has any obligation to update, modify or amend the data or to
otherwise notify a recipient thereof in the event that any matter stated
herein changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have any liability
whatsoever to you, whether in contract (including under an indemnity),
in tort (including negligence), under a warranty, under statute or otherwise,
in respect of any loss or damage suffered by you as a result of or in
connection with any opinions, recommendations, forecasts, judgements, or any
other conclusions, or any course of action determined, by you or any third
party, whether or not based on the content, information or materials contained
herein.
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 SAINTS 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 ESG Principles and Guidelines
as its policy on integration of sustainability risks in investment decisions.
Baillie Gifford & Co believes that a company cannot be financially
sustainable in the long run if its approach to business is fundamentally out
of line with changing societal expectations. It defines 'sustainability' as a
deliberately broad concept which encapsulates a company's purpose, values,
business model, culture, and operating practices.
Baillie Gifford & Co's approach to investment is based on identifying and
holding high quality growth businesses that enjoy sustainable competitive
advantages in their marketplace. To do this it looks beyond current financial
performance, undertaking proprietary research to build up an in-depth
knowledge of an individual company and a view on its long-term prospects. This
includes the consideration of sustainability factors (environmental, social
and/or governance matters) which it believes will positively or negatively
influence the financial returns of an investment. The likely impact on the
return of the portfolio from a potential or actual material decline in the
value of investment due to the occurrence of an environmental, social or
governance event or condition will vary and will depend on several factors
including but not limited to the type, extent, complexity and duration of an
event or condition, prevailing market conditions and existence of any
mitigating factors.
Whilst consideration is given to sustainability matters, there are no
restrictions on the investment universe of the Company, unless otherwise
stated within in its Investment Objective & Policy. Baillie Gifford &
Co can invest in any companies it believes could create beneficial long-term
returns for investors. However, this might result in investments being made in
companies that ultimately cause a negative outcome for the environment or
society.
More detail on the Investment Managers' approach to sustainability can be
found in the ESG Principles and Guidelines document, available publicly on the
Baillie Gifford website bailliegifford.com and by scanning the QR code below.
The underlying investments do not take into account the EU criteria for
environmentally sustainable economic activities established under the EU
Taxonomy Regulation.
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