3rd Sep 2021 11:43
RNS Announcement
The Schiehallion Fund Limited
Legal Entity Identifier: 213800NQOLJA1JCWXQ56
Regulated Information Classification: Half Yearly Financial Report
The following is the unaudited Interim Financial Report for the six months to 31 July 2021 which was approved by the Board on 2 September 2021.
Summary of Unaudited Results*
Ordinary shares |
31 July 2021 | 31 January 2021 (audited) |
% change |
Shareholders' funds | US$810.66m | US$706.08m | |
Net asset value per ordinary share | 164.19¢ | 146.99¢ | 11.7 |
Share price | 203.00¢ | 180.00¢ | 12.8 |
Premium† | 23.6% | 22.5% | |
Number of shares in issue | 493,730,002 | 480,350,002 | |
Market capitalisation | US$1,002.27m | US$864.63m |
Six months to 31 July 2021 | Six months to 31 July 2020 | |
Revenue earnings per share | (0.75¢) | 0.13¢ |
For the period from 26 April 2021, launch and first day of trading, to 31 July 2021
C shares | 31 July 2021 | 26 April 2021# | % change |
Shareholders' funds | US$698.31m | US$694.788m | |
Net asset value per ordinary share | 99.76¢ | 99.25¢ | 0.5 |
Share price | 125.00¢ | 124.00¢ | 0.8 |
Premium† | 25.3% | 24.9% | |
Number of shares in issue | 700,000,000 | 700,000,000 | |
Market capitalisation | US$875.00m | US$868.00m |
Period from 26 April 2021# to 31 July 2021 | ||
Revenue earnings per share | (0.04¢) |
Notes
* For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.
† Alternative performance measure, see Glossary of Terms and Alternative Performance Measures at the end of this announcement.
# 26 April 2021, the date the Company's C shares were admitted to trading on the Specialist Fund Segment of the Main
Market of the London Stock Exchange.
All investment strategies have the potential of profit and loss.
Past performance is not a guide to future performance.
Summary of Unaudited Results*(Ctd)
Period's High and Low
Six months to 31 July 2021 | Year to 31 January 2021 | |||
Ordinary shares | High | Low | High | Low |
Net asset value per ordinary share | 164.19¢ | 146.57¢ | 146.99¢ | 102.01¢ |
Share price | 203.00¢ | 180.00¢ | 180.00¢ | 121.50¢ |
Premium† | 25.7% | 17.4% | 31.8% | 2.5% |
Period from 26 April 2021# to 31 July 2021 | |||
C shares | High | Low | |
Net asset value per ordinary share | 99.76¢ | 99.23¢ | |
Share price | 125.00¢ | 124.00¢ | |
Premium† | 26.0% | 24.9% | |
Performance Since Inception
Ordinary shares | 31 July 2021 | 27 March 2019‡ | % change |
Net asset value per ordinary share | 164.19¢ | 99.66¢ | 64.8 |
Share price | 203.00¢ | 100.00¢ | 103.0 |
C shares | 31 July 2021 | 26 April 2021# | % change |
Net asset value per C share | 99.76¢ | 99.25¢ | 0.5 |
Share price | 125.00¢ | 124.00¢ | 0.8 |
Notes
* For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.
† Alternative performance measure, see Glossary of Terms and Alternative Performance Measures at the end of this
announcement.
‡ 27 March 2019, the date the Company's Ordinary shares were admitted to trading on the Specialist Fund Segmentof the Main Market of the London Stock Exchange.
# 26 April 2021, the date the Company's C shares were admitted to trading on the Specialist Fund Segment of the Main
Market of the London Stock Exchange.
All investment strategies have the potential of profit and loss.
Past performance is not a guide to future performance.
Investment Objective and Policy
Investment Objective
The Schiehallion Fund Limited seeks to generate capital growth for investors through making long-term minority investments in later stage private businesses that the Company considers to have transformational growth potential and to have the potential to become publicly traded.
Principle and Emerging Risks and Uncertainties
The principal and emerging risks facing the Company are:
- Investment and Strategic Risks - Liquidity of investments; Market, Economic, Political and Environmental Risks; Valuation Risk; Investment Strategy Risk; and Discount Risk.
- External Risks - Political and Associated Economic Risk; Legal and Regulatory Risk; and Covid-19.
- Operational Risks - Performance and Reliance on Third Party Service Providers; Cyber Security Threats; and Key Professionals.
- Emerging Risks - Cyber risk and coronavirus; and Environmental Social and Governance issues (ESG).
An explanation of these risks and how they are managed is set out on pages 5 to 8 of the Company's Annual Report and Financial Statements for the year to 31 January 2021 which is available on the Company's website: schiehallionfund.com. The principal risks and uncertainties have not changed since the date of the Annual Report and Financial Statements.
Responsibility Statement
The Directors of The Schiehallion Fund Limited confirm that to the best of their knowledge:
a) the Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Directors have elected to prepare financial statements that comply with International Financial Reporting Standards as issued by the International Accounting Standards Board;
b) the Interim Management Report includes a fair review of the information required by:
i) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
ii) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the enterprise during that period.
By Order of the Board
Linda Yueh
Chairperson
2 September 2021
Interim Management Report
In April this year, Schiehallion raised US$700m in capital via a conversion or C share issuance. We want to say a deep 'thank you' to everyone who supported and participated in this process, and to welcome our new C shareholders. At the time of the raise, the capital in the Schiehallion ordinary share class was 95% invested.
This raise represents an important bridge. In our long-term portfolio management task, we make no distinction between our ordinary and C shareholders. Whilst in the short term both have exposure to different parts of the Schiehallion portfolio, over the medium to long term, everyone will be a shareholder in the combined portfolio. The capital raised therefore enables Schiehallion ordinary shareholders to benefit from the continued flow of investment opportunities over the medium term until the recycling of capital within the portfolio, from maturing investments to new investments, starts occurring naturally. Given our investment time horizon is five to ten years, and beyond, this is not a process that we expect to start overnight.
Indeed, it remains our thesis that it is possible to gain access to some of the best opportunities in private markets via being a truly long-term and aligned investor. Sadly, many early-stage private investors are constrained to become forced sellers after private companies pass into the listed markets. This necessarily drives an increased investor focus on avoiding short-term tactical missteps that is often frustrating to founders and management teams who remain intent on the seizing the long-term strategic opportunity. The Schiehallion offering, of being a long-term investor for whom listing events are just another step in the journey, is designed to stand out in this context.
We continue to see encouraging signs of this thesis playing out. Our pipeline remains as healthy as ever, with the team continuing to broaden our contacts across industries in North America, as well as engaging more deeply with companies in international geographies that are after many years approaching our investment sweet-spot such as India and Brazil, and working closely with our Shanghai team to engage with a new generation of Chinese local champions. We are also continuing to monitor the evolving regulatory environment in China, with these factors being incorporated into our investment analysis under the 'social license to operate' component of our research framework.
Drawing on this work, the last six months has seen us deploy capital into seven new investee companies: Brex, Faire, Loft, Daily Hunt, Rappi, Masterclass and PsiQuantum. Within their respective spheres - small business finance, wholesale, real estate, social media, delivery, entertainment and computer hardware - each has the clear potential to build a profoundly distinctive and valuable operation.
A couple of these businesses are particularly worth highlighting. Loft, Daily Hunt and Rappi are all companies based in geographies that we've been deepening our understanding of and sourcing work in for many years. In the case of two of them, Daily Hunt and Rappi, our conversations with the businesses have spanned much of that time. However, it's only now that we're finding that the operations and opportunities in these geographies are hitting the sweet spot for us to start deploying capital. We're excited to see great bottom-up investment cases emerging in these and other geographies as their innovation ecosystems ripen. In the case of Daily Hunt, it's perhaps also worth noting that the investment was made entirely from ordinary share capital as it is not possible for the C share pool to access the Indian market.
PsiQuantum also deserves a mention. The vast majority of our investee companies have robust revenue lines and clear unit economics, with the main debate focused on business model advantage and the scope for scale. This is very much our sweet spot. That said, we believe that there is room in the portfolio for a minority of companies with different characteristics. These businesses are typically in industries where value is created less by refinements in product-market fit or distribution, and more via technological innovations. Here we seek to clearly understand the technical abilities of the core team and their track record in reaching key milestones. PsiQuantum, whose work in photonic quantum computing leads the field, is an operation that we have followed over many years; however, we now believe that it has turned a corner in de-risking its approach, and so has become a highly attractive investment opportunity in its own right. As with any holding, there can be no certainty of success.
We have also seen Oscar Health, Wise and Zymergen enter the publicly listed section of the portfolio. Per our philosophy, we are continuing to be patient and long-term supporters of these businesses. Short-term volatility in share prices in the months and quarters immediately following a listing matters less to us than tracking whether fundamental business performance continues to support the long-term investment opportunity. We're lucky to be able to work within the broader Baillie Gifford investment floor, with our public market colleagues adding an extra layer of analysis to our own as these businesses become more widely appreciated within public markets.
Across the portfolio, many of our holdings have continued to perform extremely strongly, the difficulties of the Covid-19 era notwithstanding. In the last six months, we have taken advantage of opportunities to put more capital to work in existing holdings, including Workrise, Tanium, Stripe, SpaceX, Northvolt and Epic Games - all cases where our conviction in the upside has deepened faster than their valuations have risen. Other holdings have had a tougher time of it, with the focus remaining on keeping their organisations and balance sheets stable through the pandemic. Here, as before, our conversations with management teams have focused on the importance of retaining key employees and customer relationships, preserving their ability to grow profitably as economic conditions improve.
The principal risks and uncertainties facing the Company are set out above.
Peter Singlehurst
Robert Natzler
Baillie Gifford Statement on Stewardship
Reclaiming Activism for Long-Term Investors
Baillie Gifford's over-arching ethos is that we are 'actual' investors. We have a responsibility to behave as supportive and constructively engaged long-term investors. We invest in companies at different stages in their evolution, across vastly different industries and geographies and we celebrate their uniqueness. Consequently, we are wary of prescriptive policies and rules, believing that these often run counter to thoughtful and beneficial corporate stewardship. Our approach favours a small number of simple principles which help shape our interactions with companies.
Our Stewardship Principles
Prioritisation of long-term value creation
We encourage company management and their boards to be ambitious and focus their investments on long-term value creation. We understand that it is easy for businesses to be influenced by short-sighted demands for profit maximisation but believe these often lead to sub-optimal long-term outcomes. We regard it as our responsibility to steer businesses away from destructive financial engineering towards activities that create genuine economic value over the long run. We are happy that our value will often be in supporting management when others do not.
A constructive and purposeful board
We believe that boards play a key role in supporting corporate success and representing the interests of minority shareholders. There is no fixed formula, but it is our expectation that boards have the resources, cognitive diversity and information they need to fulfil these responsibilities. We believe that a board works best when there is strong independent representation able to assist, advise and constructively test the thinking of management.
Long-term focused remuneration with stretching targets
We look for remuneration policies that are simple, transparent and reward superior strategic and operational endeavour. We believe incentive schemes can be important in driving behaviour, and we encourage policies which create alignment with genuine long-term shareholders. We are accepting of significant pay-outs to executives if these are commensurate with outstanding long-run value creation, but plans should not reward mediocre outcomes. We think that performance hurdles should be skewed towards long-term results and that remuneration plans should be subject to shareholder approval.
Fair treatment of stakeholders
We believe it is in the long-term interests of companies to maintain strong relationships with all stakeholders, treating employees, customers, suppliers, governments and regulators in a fair and transparent manner. We do not believe in one-size-fits-all governance and we recognise that different shareholder structures are appropriate for different businesses. However, regardless of structure, companies must always respect the rights of all equity owners.
Sustainable business practices
We look for companies to act as responsible corporate citizens, working within the spirit and not just the letter of the laws and regulations that govern them. We believe that corporate success will only be sustained if a business's long-run impact on society and the environment is taken into account. Management and boards should therefore understand and regularly review this aspect of their activities, disclosing such information publicly alongside plans for ongoing improvement.
List of Investments as at 31 July 2021 (unaudited) |
Name |
Business |
Country | 2021 Ordinary Shares Value US$'000 |
2021 C Shares Value US$'000 |
2021 Total Value US$'000 |
2021 % of net assets* |
Wise PLC - Listed | Online international money transfer service | United Kingdom | 61,551 | 20,459 | 82,010 | 5.4 |
ByteDance Limited | Social media and news aggregation company | China | 59,920 | - | 59,920 | 4.0 |
Stripe Inc | Online payment platform | United States | 51,035 | - | 51,035 | 3.4 |
Affirm Holdings Inc - Listed | Online platform which provides point of sale consumer finance | United States | 50,181 | - | 50,181 | 3.3 |
Space Exploration Technologies Corp | Designs, manufactures and launches advanced rockets and spacecraft | United States | 42,322 | - | 42,322 | 2.8 |
Warby Parker (JAND Inc) | Online and physical corrective eyewear retailer | United States | 41,844 | - | 41,844 | 2.8 |
Scopely Inc | Online gaming company | United States | 40,024 | - | 40,024 | 2.7 |
Epic Games Inc | Video game developer | United States | 32,837 | - | 32,837 | 2.2 |
Tempus Labs Inc | Oncological records aggregator and diagnostic testing provider | United States | 30,356 | - | 30,356 | 2.0 |
Daily Hunt (Ver Se Innovation Limited) | Telephone voice, data, text messaging and roaming services | India | 30,058 | - | 30,058 | 2.0 |
Rappi Inc | Provider of an on demand delivery platform designed to connect consumers with local stores | United States | - | 30,000 | 30,000 | 2.0 |
Tanium Inc | Online security management | United States | 28,573 | - | 28,573 | 1.9 |
Northvolt AB | Lithium ion battery manufacturer | Sweden | 24,177 | 3,431 | 27,608 | 1.8 |
FlixMobility GmbH | European mobility provider | Germany | 13,363 | 13,411 | 26,774 | 1.8 |
Workrise Technologies Inc | Jobs marketplace for the energy sector | United States | 26,238 | - | 26,238 | 1.7 |
Allbirds Inc | Sustainable direct-to-customer footwear brand | United States | 23,211 | - | 23,211 | 1.5 |
Zymergen Inc - Listed† | Synthetic biology | United States | 21,193 | - | 21,193 | 1.4 |
Loft Holdings Ltd | Online property platform | Brazil | - | 20,000 | 20,000 | 1.3 |
Indigo Agriculture Inc | Microbial seed treatments to increase crop yields and grain marketplace | United States | 19,579 | - | 19,579 | 1.3 |
Grail Inc | Oncology testing | United States | 17,874 | - | 17,874 | 1.2 |
Graphcore Limited | Computer chip developer | United Kingdom | 15,622 | - | 15,622 | 1.0 |
Chime Financial Inc | Digital current account provider | United States | 15,442 | - | 15,442 | 1.0 |
PsiQuantum Corp | Silicon photonic quantum computing | United States | - | 15,000 | 15,000 | 1.0 |
Cohesity Inc | Data storage | United States | 14,940 | - | 14,940 | 1.0 |
Oscar Health Inc - Listed†† | Healthcare insurance provider | United States | 13,909 | - | 13,909 | 0.9 |
List of Investments as at 31 July 2021 (unaudited)
Name |
Business |
Country | 2021 Ordinary Shares Value US$'000 |
2021 C Shares Value US$'000 |
2021 Total Value US$'000 |
2021 % of net assets* |
Convoy Inc | Marketplace for truckers and shippers | United States | 13,700 | - | 13,700 | 0.9 |
Faire Wholesale Inc | Online wholesale market place | United States | - | 13,333 | 13,333 | 0.9 |
Carbon Inc | Manufactures and develops 3D printers | United States | 12,642 | - | 12,642 | 0.8 |
Away (JRSK Inc) | Travel and lifestyle brand | United States | 12,153 | - | 12,153 | 0.8 |
HeartFlow Inc | Develops software for cardiovascular disease diagnosis and treatment | United States | 11,314 | - | 11,314 | 0.8 |
Jiangxiaobai Holdings Ltd | Producer of alcoholic beverages | China | 11,273 | - | 11,273 | 0.7 |
Airbnb Inc - Listed | Online market place for travel accommodation | United States | 11,069 | - | 11,069 | 0.7 |
Brex Inc | Corporate credit cards for startups | United States | 10,210 | - | 10,210 | 0.7 |
Nuro Inc | Developer of autonomous delivery vehicles | United States | 10,000 | - | 10,000 | 0.7 |
Yanka Industries Inc | Online education platform | United States | 10,000 | - | 10,000 | 0.7 |
Honor Technology Inc | Provider of home-care services | United States | 5,565 | - | 5,565 | 0.4 |
Total investments | 782,175 | 115,634 | 897,809 | 59.5 | ||
US Treasury Bill 12/08/2021 | - | 96,299 | 96,299 | 6.4 | ||
US Treasury Bill 07/10/2021 | - | 96,296 | 96,296 | 6.4 | ||
US Treasury Bill 04/11/2021 | - | 96,296 | 96,296 | 6.4 | ||
US Treasury Bill 24/03/2022 | - | 96,222 | 96,222 | 6.3 | ||
US Treasury Bill 16/06/2022 | - | 96,240 | 96,240 | 6.4 | ||
US Treasury Bill 27/01/2022 | - | 96,237 | 96,237 | 6.4 | ||
Total US Treasury Bills | - | 577,590 | 577,590 | 38.3 | ||
Cash | 29,751 | 5,363 | 35,114 | 2.3 | ||
Other current assets and liabilities | (1,264) | (275) | (1,539) | (0.1) | ||
Net current assets | 28,487 | 582,678 | 611,165 | 2.2 | ||
Net assets | 810,662 | 698,312 | 1,508,974 | 100.0 | ||
* See Glossary of Terms and Alternative Performance Measures at the end of this announcement
† Listed security, in line with the conditions of the IPO, investors with holdings prior to the listing are subject to a lock in
period preventing trading of the holding. This expires on 19 October 2021.
# Subsequent to the period end Illumina announced its acquisition of Grail.†† Listed security, in line with the conditions of the IPO, investors with holdings prior to the listing are subject to a lock in period preventing trading of the holding. This expired on 30 August 2021.
The Company may hold various classes of shares in investee companies, some of which may have a preference on winding up.
Allocation of Net Assets (Unaudited)
Name | 2021 Ordinary Shares Value US$'000 |
2021 C Shares Value US$'000 |
2021 Total Value US$'000 |
2021 % of net assets* | ||
Listed investments | 157,903 | 20,459 | 178,362 | 11.8 | ||
Private company investments† | 624,272 | 95,175 | 719,447 | 47.7 | ||
US Treasury Bills | - | 577,590 | 577,590 | 38.3 | ||
Cash and cash equivalents | 29,751 | 5,363 | 35,114 | 2.3 | ||
Net current assets | (1,264) | (275) | (1,539) | (0.1) | ||
Total | 810,662 | 698,312 | 1,508,974 | 100.0 |
* See Glossary of Terms and Alternative Performance Measures at the end of this announcement
† Includes holdings in preference shares, ordinary shares and convertible promissory notes.
Distribution of Total Investments (unaudited)
Geographical
| As at 31 July 2021 % | As at 31 January 2021 % |
United States | 69.6 | 82.4 |
United Kingdom | 10.9 | 6.5 |
China | 7.9 | 7.7 |
India | 3.3 | - |
Sweden | 3.1 | 1.7 |
Germany | 3.0 | 1.7 |
Brazil | 2.2 | - |
Total | 100.0 | 100.0 |
Sectoral
| As at 31 July 2021 % | As at 31 January 2021 % |
Communication Services | 11.1 | 6.1 |
Consumer Discretionary | 14.4 | 15.0 |
Consumer Staples | 3.4 | 4.6 |
Financials | 24.8 | 30.1 |
Healthcare | 7.3 | 10.2 |
Industrials | 13.3 | 13.7 |
Information Technology | 21.1 | 18.7 |
Materials | 2.4 | 1.6 |
Real Estate | 2.2 | - |
Total | 100.0 | 100.0 |
The above sectoral distribution is not derived from any index.
Income Statement (unaudited)
For the six months to 31 July 2021 | For the six months to 31 July 2020 | For the year to 31 January 2021 | ||||||||
Notes | Revenue US$'000 | Capital US$'000 | Total US$'000 | Revenue US$'000 | Capital US$'000 | Total US$'000 | Revenue US$'000 | Capital US$'000 | Total US$'000 | |
Gains on investments | - | 86,674 | 86,674 | - | 20,809 | 20,809 | - | 209,901 | 209,901 | |
Currency gains/(losses) | - | 338 | 338 | - | 24 | 24 | - | (1) | (1) | |
Income | 2 | 148 | - | 148 | 2,191 | - | 2,191 | 2,764 | - | 2,764 |
Investment management fee | 3 | (3,534) | - | (3,534) | (1,252) | - | (1,252) | (3,603) | - | (3,603) |
Other administrative expenses | 4 | (509) | - | (509) | (331) | - | (331) | (759) | - | (759) |
Operating profit before taxation | (3,895) | 87,012 | 83,117 | 608 | 20,833 | 21,441 | (1,598) | 209,900 | 208,302 | |
Tax on ordinary activities | - | - | - | - | - | - | - | - | - | |
Profit and total comprehensive income for the period | (3,895) | 87,012 | 83,117 | 608 | 20,833 | 21,441 | (1,598) | 209,900 | 208,302 | |
For the six months to 31 July 2021 | For the six months to 31 July 2020 | For the year to 31 January 2021 | |||||||
| Revenue US$'000 | Capital US$'000 | Total US$'000 | Revenue US$'000 | Capital US$'000 | Total US$'000 | Revenue US$'000 | Capital US$'000 | Total US$'000 |
Profit and total comprehensive income for the period analysed as follows: | |||||||||
Attributable to Ordinary shareholders | (3,645) | 83,252 | 79,607 | 608 | 20,833 | 21,441 | (1,598) | 209,900 | 208,302 |
Attributable to C shareholders | (250) | 3,760 | 3,510 | - | - | - | - | - | - |
Profit and total comprehensive income for the period | (3,895) | 87,012 | 83,117 | 608 | 20,833 | 21,441 | (1,598) | 209,900 | 208,302 |
(Loss)/earnings per Ordinary share | (0.75¢) | 17.15¢ | 16.40¢ | 0.13¢ | 4.37¢ | 4.50¢ | (0.33¢) | 43.94¢ | 43.61¢ |
(Loss)/earnings per C share | (0.04¢) | 0.54¢ | 0.50¢ | - | - | - | - | - | - |
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 (unaudited)
Notes | At 31 July 2021 US$'000 | At 31 July 2021 US$'000 | At 31 January 2021 US$'000 | At 31 January 2021 US$'000 | |
Fixed assets | |||||
Investments held at fair value through profit or loss | 7 | 897,809 | 614,179 | ||
Current assets | |||||
US Treasury Bills | 577,590 | 77,000 | |||
Cash and cash equivalents | 35,114 | 16,113 | |||
Debtors | 611 | 426 | |||
613,315 | 93,539 | ||||
Current liabilities | |||||
Amounts falling due within one year | (2,150) | (1,638) | |||
Net current assets | 611,165 | 91,901 | |||
Net assets | 1,508,974 | 706,080 | |||
Capital and reserves | |||||
Share capital | 8 | 1,200,117 | 480,340 | ||
Capital reserve | 307,990 | 220,978 | |||
Revenue reserve | 867 | 4,762 | |||
Shareholders' funds | 1,508,974 | 706,080 | |||
At 31 July 2021
| At 31 January 2021
| ||||
Shareholders' funds per Ordinary share (US$'000) | US$810,662 | US$706,080 | |||
Net asset value per Ordinary share | 164.19¢ | 146.99¢ | |||
Number of Ordinary shares in issue | 493,730,002 | 480,350,002 | |||
Shareholders' funds per C share (US$'000) | US$698,312 | - | |||
Net asset value per C share | 99.76¢ | - | |||
Number of C shares in issue | 700,000,000 | - | |||
Statement of Changes in Equity (unaudited)
Six months to 31 July 2021
Notes | Share capital US$'000 | Capital reserve* US$'000 | Revenue reserve US$'000 | Shareholders' funds US$'000 |
Shareholders' funds at 31 January 2021 | 480,340 | 220,978 | 4,762 | 706,080 |
Ordinary shares issued 8 | 24,975 | - | - | 24,975 |
C shares issued 8 | 694,802 | - | - | 694,802 |
Total comprehensive income for the period - Ordinary shares | - | 83,252 | (3,645) | 79,607 |
Total comprehensive income for the period - C shares | - | 3,760 | (250) | 3,510 |
Shareholders' funds at 31 July 2021 | 1,200,117 | 307,990 | 867 | 1,508,974 |
Six months to 31 July 2020
| Share capital US$'000 | Capital reserve US$'000* | Revenue reserve US$'000 | Shareholders' funds US$'000 |
Shareholders' funds at 31 January 2020 | 475,642 | 11,078 | 6,360 | 493,080 |
Ordinary shares issued | 131 | - | - | 131 |
Total comprehensive income for the period | - | 20,833 | 608 | 21,441 |
Shareholders' funds at 31 July 2020 | 475,773 | 31,911 | 6,968 | 514,652 |
* Includes investment holdings gains of US$307,643,000 (31 July 2020 - US$8,250,000)
Statement of Cash Flows (unaudited)
| Six months to 31 July 2021 | Six months to 31 July 2020 | ||
Notes | US$'000 | US$'000 | US$'000 | US$'000 |
Cash flows from operating activities | ||||
Operating profit before taxation | 83,117 | 21,441 | ||
US Treasury Bills interest | (78) | (2,394) | ||
Net gains on investments | (86,674) | (20,809) | ||
Currency gains | (338) | (24) | ||
Changes in debtors and creditors | 481 | 552 | ||
Net cash used in operating activities* | (3,492) | (1,234) | ||
Cash flows from investing activities | ||||
Acquisitions of US Treasury Bills | (752,036) | (120,028) | ||
Disposals of US Treasury Bills | 251,524 | 250,943 | ||
Acquisitions of investments | (196,956) | (124,999) | ||
Disposals of investments | - | - | ||
Net cash (used in)/from investing activities | (697,468) | 5,916 | ||
Cash flows from financing activities | ||||
Ordinary shares issued | 24,821 | 131 | ||
C shares issued | 694,802 | - | ||
Net cash from financing activities | 719,623 | 131 | ||
Net increase in cash and cash equivalents | 18,663 | 4,813 | ||
Effect of exchange rate fluctuations on cash and cash equivalents |
338 |
24 | ||
Cash and cash equivalents at start of period | 16,113 | 10,133 | ||
Cash and cash equivalents at 31 July | 35,114 | 14,970 | ||
* Cash from operations includes interest received of US$1,000 (2020 - US$17,000)
Notes to the Financial Statements (unaudited) |
1. | Basis of Accounting
The condensed Financial Statements for the six months to 31 July 2021 comprises the statements set out on the previous pages together with the related notes below. They have been prepared in accordance with International Financial Reporting Standards (IFRS). The Financial Statements for the six months to 31 July 2021 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 January 2021. Equity instruments The Ordinary shares and C shares of the Company are classified as equity in accordance with the definition of equity instruments under IAS 32 Financial Instruments: presentation (IAS 32). The proceeds from the issue of shares are recognized in the Statement of Changes in Equity net of incremental issuance costs. Going Concern In accordance with The Financial Reporting Council's guidance on going concern and liquidity risk, including its Covid-19 guidance, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern and specifically in the context of the coronavirus pandemic. Having considered the Company's principal risks and uncertainties, as set out at the beginning of this announcement, together with its current position, investment objective and policy, its assets and liabilities, and projected income and expenditure, it is the Directors' opinion that the Company has adequate resources to continue in operational existence for the foreseeable future. The Directors have considered the Company's principal and emerging risks as detailed on pages 5 to 8 of the Company's Annual Report and Financial Statements for the year to 31 January 2021 and the Investment Manager ensures that the Company holds at all times a proportion of assets that is sufficiently liquid to enable it to discharge its payment obligations. Accordingly, the 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 the Financial Statements.
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2. | Income | ||||
6 months to 31 July 2021 US$'000 | 6 months to 31 July 2020 US$'000 | Year to 31 January 2021 US$'000 | |||
US Treasury Bills interest | 148 | 2,394 | 2,899 | ||
Overseas interest | - | (220) | (153) | ||
Deposit interest | - | 17 | 18 | ||
Total income | 148 | 2,191 | 2,764 | ||
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3. | Investment Management Fee | ||||
| 6 months to 31 July 2021 US$'000 | 6 months to 31 July 2020 US$'000 | Year to 31 January 2021 US$'000 | ||
Investment Management Fee | 3,534 | 1,252 | 3,603 | ||
| The Company has appointed Baillie Gifford & Co Limited as its Investment Manager (the 'Investment Manager'). As the entity appointed to be responsible for risk management and portfolio management, the Investment Manager has also been appointed as the Company's Alternative Investment Fund Manager ('AIFM'). Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford Overseas Limited. The Investment Management Agreement is terminable on not less than six months' notice. Under the terms of the Investment Management Agreement, the Investment Manager will be entitled to an annual fee (exclusive of VAT, which shall be added where applicable) of: 0.9% on the net asset value excluding cash or cash equivalent assets up to and including US$650 million; 0.8% on the net asset value 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$1.3 billion. Management fees are calculated and payable quarterly. | ||||
Notes to the Financial Statements (unaudited) (Ctd) |
4. | Other Administrative Expenses | |||||||
| 6 months to 31 July 2021 US$'000 | 6 months to 31 July 2020 US$'000 | Year to 31 January 2021 US$'000 | |||||
General administrative expenses | 239 | 168 | 323 | |||||
Administrator's fee | 55 | 47 | 83 | |||||
Auditor's remuneration for audit services | 113 | 46 | 206 | |||||
Directors' Fees | 102 | 70 | 147 | |||||
| 509 | 331 | 759 | |||||
5. | Expenses relating directly to a share class are charged to that share class. Expenses pertaining to both Ordinary and C share classes are split equally between these share classes. Each Director received a one-off fee of £5,000 (US$6,953 equivalent) which covered services relating to the initial listing of the Company's C shares. Earnings per Share | |||||||
Ordinary shares | 6 months to 31 July 2021 US$'000 ¢ | 6 months to 31 July 2020 US$'000 ¢ | Year to 31 January 2021 US$'000 ¢ | |||||
Revenue return on ordinary activities after taxation | (3,645) | (0.75) | 608 | 0.13 | (1,598) | (0.33) | ||
Capital return on ordinary activities after taxation | 83,252 | 17.15 | 20,833 | 4.37 | 209,900 | 43.94 | ||
Profit and total comprehensive income for the period |
79,607 |
16.40 |
21,441 |
4.50 |
208,302 |
43.61 | ||
Weighted average number of Ordinary shares in issue |
485,476,079 |
477,267,310 |
477,670,487 | |||||
| Period from 26 April 2021 to 31 July 2021 | |||||||
C shares | US$'000 | ¢ | ||||||
Revenue return on ordinary activities after taxation | (250) | (0.04) |
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Capital return on ordinary activities after taxation | 3,760 | 0.54 |
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Profit and total comprehensive income for the period |
3,510 |
0.50 | ||||||
Weighted average number of C shares in issue | 700,000,000 | |||||||
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Net return per Ordinary share is based on the above totals of revenue and capital and the weighted average number of Ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue. | ||||||||
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6. | Ordinary Dividends | |||||||
There were no dividends paid or proposed in respect of the six months for either the Ordinary shares or for the C shares (2020 - none). | ||||||||
Notes to the Financial Statements (unaudited) (Ctd) |
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7. | Financial Instruments Fair Value Hierarchy The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows: Level 1 - using unadjusted quoted prices for identical instruments in an active market; Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and Level 3 - using inputs that are unobservable (for which market data is unavailable). | |||||
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As at 31 July 2021 | Level 1 US$'000 | Level 2 US$'000 | Level 3 US$'000 | Total US$'000 | |
Listed equities | 178,362 | - | - | 178,362 | ||
Unlisted ordinary shares | - | - | 124,541 | 124,541 | ||
Unlisted preference shares* | - | - | 589,735 | 589,735 | ||
Unlisted convertible promissory notes | - | - | 5,171 | 5,171 | ||
Total financial asset investments | 178,362 | - | 719,447 | 897,809 | ||
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As at 31 January 2021 | Level 1 US$'000 | Level 2 US$'000 | Level 3 US$'000 | Total US$'000 | |
Listed equities | 102,442 | - | - | 102,442 | ||
Unlisted ordinary shares | - | - | 79,352 | 79,352 | ||
Unlisted preference shares* | - | - | 429,710 | 429,710 | ||
Unlisted convertible promissory notes | - | - | 2,675 | 2,675 | ||
| Total financial asset investments | 102,442 | - | 511,737 | 614,719 | |
| * 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 six months to 31 July 2021, investments with a fair value (IPO price) of US$85,165,000 were transferred from Level 3 to Level 1 on becoming listed. During the year ended 31 January 2021, investments with a fair value (IPO price) of US$47,656,000 were transferred from Level 3 to Level 1 on becoming listed. The valuation techniques used by the Company are explained in the accounting policies on page 42 of the Company's Annual Report and Financial Statements for the year to 31 January 2021. Listed investments are categorised as Level 1 if they are valued using unadjusted quoted prices for identical instruments in an active market and as Level 2 if they do not meet all these criteria but are, nonetheless, valued using market data. The Company's holdings in unlisted investments are categorised as Level 3 as unobservable data is a significant input to their fair value measurements. | |||||
Notes to the Financial Statements (unaudited) (Ctd) |
8. | Share Capital | |||||
31 July 2021 Number | 31 July 2021 US$'000 | 31 January 2021 Number | 31 January 2021 US$'000 | |||
Allotted, called up and fully paid Ordinary shares of US$1 each | 493,730,002 | 505,315 | 480,350,002 | 480,340 | ||
Allotted, called up and fully paid C shares of US$1 each | 700,000,000 | 694,802 | - | - | ||
| By way of a special resolution passed on 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 hence the Company has the ability to issue a further 242,750,000 shares under this existing authority which expires at the end of the period concluding immediately prior to the Annual General Meeting of the Company to be held in 2024 (or, if earlier, five years from the date of the resolution). During the six months to 31 July 2021 the Company issued 13,380,000 Ordinary shares raising net proceeds of US$24,974,000. As at 31 July 2021 the Company has the authority to issue 229,370,000 Ordinary shares. In the period from 1 August 2021 to 1 September 2021 the Company issued a further 1,660,000 shares raising net proceeds of US$3,436,000. By way of a special resolution passed on 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 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). By way of an ordinary resolution passed on 6 May 2021 the Directors of the Company have general authority to make market purchases of up to 72,176,850 Ordinary shares, being 14.99% of the Ordinary shares in issue as at 17 March 2021, being the latest practicable date prior to the publication of the Company's Annual report and Financial Statements for the year ended 31 January 2021. This authority will expire at the conclusion of the Annual General Meeting of the Company to be held in respect of the year ending 31 January 2022. No shares have been bought back during the six months ended 31 July 2021 (31 January 2021 - nil) hence the authority remains at 72,176,850 Ordinary shares. 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. Holders of C shares have the right to receive income and capital from assets attributable to such share class, C 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. | Transaction Costs | |||||
| During the period the Company incurred transaction costs on purchases of investments of US$99,000 (31 July 2020 - US$nil; year to 31 January 2021 - US$31,000) and transaction costs on sales of US$nil (31 July 2020 - US$nil; year to 31 January 2021 - US$nil). | |||||
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10. | Transactions with Related Parties and the Investment Manager and Administrator | |||||
| There have been no transactions with related parties during the first six months of the current financial year that have materially affected the financial position or the performance of the Company during that period and there have been no changes in the related party transactions described in the last Annual Report and Financial Statements that could have such an effect on the Company during that period. | |||||
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| None of the views expressed in this document should be construed as advice to buy or sell a particular investment. | |||||
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Glossary of Terms and Alternative Performance Measures ('APM') Total Assets The total value of all assets held less all liabilities (other than liabilities in the form of borrowings). Shareholders' Funds and Net Asset Value Shareholders' Funds is the value of all assets held less all liabilities, with borrowings deducted at book cost. Net Asset Value (NAV) is the value of all assets held less all liabilities, with borrowings deducted at either fair value or par value. Per share amounts are calculated by dividing the relevant figure by the number of Ordinary shares in issue. Net Liquid Assets Net liquid assets comprise current assets less current liabilities (excluding borrowings). Premium/(Discount) (APM) As stock markets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, it is said to be trading at a premium. | ||||
Ordinary shares | 31 July 2021 | 31 January 2021 | ||
Closing NAV per share | (a) | 164.19¢ | 146.99¢ | |
Closing share price | (b) | 203.00¢ | 180.00¢ | |
Premium expressed as a percentage | (b-a) ÷ a | 23.6% | 22.5% | |
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C shares | 31 July 2021 | 26 April 2021 | ||
Closing NAV per share | (a) | 99.76¢ | 99.25¢ | |
Closing share price | (b) | 125.00¢ | 124.00¢ | |
Premium expressed as a percentage | (b-a) ÷ a | 25.3% | 24.9% | |
Ongoing Charges (APM) The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value (with debt at fair value). | ||||
Other Shareholder Information |
Directors
Mr David Chiswell and Mr Richard Holmes were appointed Directors of the Company on 2 September 2021.
Automatic Exchange of Information
In order to fulfil its legal obligations under the Guernsey Common Reporting Standard Legislation relating to the Automatic Exchange of Information, the Company is required to collect and report certain information about certain shareholders. The legislation will require investment companies to provide personal information to the Guernsey authorities on certain investors who purchase shares in investment funds. As an affected company, The Schiehallion Fund Limited will have to provide information annually to the local authority on the tax residencies of non-UK based certificated shareholders and corporate entities.
Other Shareholder Information (Ctd)
Foreign Account Tax Compliance Act
Pursuant to the reciprocal information sharing inter-governmental agreement entered into by the States of Guernsey and the US Treasury, and for the purposes of the US Foreign Account Tax Compliance Act ('FATCA') of the Company registered with the Internal Revenue Service ('IRS') as a Foreign Financial Institution ('FFI') and received a Global Intermediary Identification Number (R2NXXB.9999.SL.831). The Company can be located on the IRS FFI list.
None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
You can find up to date performance information about The Schiehallion Fund on the 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 £356 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 1 September 2021). 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.
2 September 2021
For further information please contact:
Alex Blake, Baillie Gifford & Co
Tel: 0131 275 2859 or 07773 246035
Mark Knight, Four Communications
Tel: 0203 697 4200 or 07803 758810
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Related Shares:
MNTC.LThe Schiehalli.