RNS Announcement: Preliminary Results
The Schiehallion Fund Limited
Legal Entity Identifier: 213800NQOLJA1JCWXQ56
Regulated Information Classification: Additional regulated information required to be disclosed under applicable laws.
The following is the Preliminary Results Announcement year to 31 January 2021 which was approved by the Board on 18 March 2021.
Chairperson's Statement
It is with pleasure that I present the Annual Report for The Schiehallion Fund Limited (the 'Company' or 'Schiehallion') for the year ended 31 January 2021. During the period, we witnessed the spread of the Covid-19 pandemic which has had a devastating human cost and has also created enormous economic and business disruption. The Board, however, is pleased to be able to report that our Managers have moved seamlessly to working remotely and that both portfolio management and all regulatory and administrative tasks have continued uninterrupted. The Managers continue to execute their long-term investment approach and are focused on identifying exceptional private companies.
Investment Performance
During the financial year to 31 January 2021, the Company's share price and net asset value returned 48.1% and 42.3%, respectively. Over the period from 27 March 2019 (launch date) to 31 January 2021, the Company's share price and net asset value returned 80.0% and 47.5%, respectively. Since shares opened for trading on the London Stock Exchange, they have climbed steadily, on thin trading volume, to a premium of approximately 22.5% at 31 January 2021. Investors should bear in mind that shares bought at a high premium to net asset value can quickly lose substantial value if the premium is eroded.
Deployment of Capital and Capital Raising
When the Company was launched, raising gross proceeds of US$477 million, the Board said it would be reasonable to expect that the Company would be two-thirds invested within the first two years. The Company has exceeded that milestone, with 87.0% of shareholders' funds invested in 27 private companies and two private companies that are now public as at the end of January 2021. There is commentary on these investments in the Investment Manager's Review and Review of Investments below.
As the Company is now substantially invested, the Company is seeking to raise additional capital, by way of a C share issue, which provides investors with the opportunity to subscribe for new shares whilst insulating existing shareholders from the dilutive cash drag effects of deploying additional capital into private companies which will take time to deploy. On 18 March 2021, in connection with this proposed capital raising, shareholders approved the issuance of up to 700 million C shares on a non-pre-emptive basis. This authority expires on 31 December 2021. Further details about the proposed fundraising will be disclosed in a prospectus to be issued by the Company around the end of March.
Share Issuance and Buy-backs
The Company has a general authority to issue further shares if the Directors determine such issues to be in the best interests of shareholders and the Company as a whole. The Company's shares have continued to trade consistently at a premium to their net asset value and the Company has issued a further 3.1 million shares in the year to 31 January 2021 at a weighted average premium to net asset value of approximately 17.9%, raising further proceeds of US$4.7 million.
At 31 January 2021, the Company had authority, which was granted at the initial launch, to issue a further 239.65 million shares. This authority expires at the end of the period concluding immediately prior to the Annual General Meeting to be held in 2024 (or, if earlier, five years from 15 March 2019, the date the special resolution was passed).
The Company also has authority to buy back shares. Although there is no current intention to exercise the authority to purchase the Company's shares, the Company will be seeking to renew the buy-back authority at the forthcoming Annual General Meeting. No shares were bought back during the year ended 31 January 2021.
Earnings and Dividend
The Company's priority is to generate capital growth over the long term. The Company therefore has no dividend target and will not seek to provide shareholders with a particular level of distribution. In this reporting period, the net revenue return per share was a negative 0.33 cents (period to 31 January 2020, a positive 1.33 cents). The Board is recommending that no final dividend be paid.
Annual General Meeting
The Annual General Meeting of the Company has been scheduled to be held at Alter Domus' offices in Guernsey at 14:00 BST on Thursday 6 May 2021, but, given the ongoing uncertainty around when public health concerns will abate, the Board will continue to monitor developments and may decide that no shareholders can attend in person. Accordingly, the Board encourages all shareholders to exercise their votes at the AGM by completing and submitting a form of proxy. We would encourage shareholders to monitor the Company's website at schiehallionfund.com where updates will be posted and market announcements will also be made, as appropriate. Should shareholders have questions for the Board or the Managers or any queries as to how to vote, they are welcome as always to submit those by email to trustenquiries@bailliegifford.com or call +44 (0)800 917 2112.
Information on the resolutions can be on pages 56 and 57 of the Annual Report and Financial Statements. The Directors consider that all resolutions to be put to shareholders are in their, and the Company's, best interests as a whole and recommend that shareholders vote in their favour.
Investment Outlook
The vaccines for Covid-19 have transformed the outlook for society and for the economy. Although considerable uncertainties remain, the Board and the Investment Manager are optimistic about the investment outlook. The Company solely invests in companies with exceptional growth potential which are not widely accessible in public markets. The potential of the companies in our portfolio is generally dependent on their ability to take advantage of opportunities. Despite these uncertain times, the Board is positive about the growth prospects of these companies, and the pipeline of private companies that the Investment Manager has access to. The Board and the Investment Manager are confident in the outlook for the Company.
Linda Yueh
Chairperson
18 March 2021
Past performance is not a guide to future performance.
For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement
Investment Managers' Review
We launched Schiehallion two years ago. Our thesis then was that we could create value for our shareholders in two ways. Firstly, by investing in companies privately and benefiting from value creation up to the point where those businesses choose to list. Secondly, by continuing to own those businesses once they list and in so doing, enjoy the benefit of further growth and compounding returns. In short, creating value by being both early and patient.
Within the portfolio we have already seen some of the benefits of being early. Companies such as Tempus, Oscar, Scopely, ByteDance, SpaceX, among others, have all been growing quickly and as a result earned the right to raise capital at higher valuations. Some holdings exposed to the travel industry, such as Away and FlixMobility, have been negatively impacted by Covid-19. We have now seen our first holdings enter the daunting world of the public markets. Since the Interim Report both Airbnb and Affirm have successfully listed on Nasdaq. We believe both are exceptional companies with world class management teams and deserve the warm reception they have received from the public markets. It is now that we will be tested on whether we can live up to the patience we speak of.
The ability and desire to continue to own businesses for the long term into the public markets is sadly an uncommon attribute in the world of private company investing. And yet it is this attribute which has enabled us to access businesses on behalf of shareholders. Founders and management teams are looking for partners who can provide continuity of ownership into the public markets. Or to put it another way, they are looking for investors whose time horizons are aligned with their own. We are in a fortunate enough position to be such an investor.
When we look at the history of venture backed businesses, we are often surprised that the dogma of the 'exit' post IPO persists. There is no truly great company that has come out of the Venture Capital ecosystem where it would have been the right decision to sell within the first year, or even five years, of a listing. If you had been lucky enough to be a Venture investor in Amazon and sold shares a year after the IPO you would have got about US$7 per share (adjusted for subsequent stock splits). Through much of the subsequent years you might have been kicking yourself if you hadn't sold at the peak of the dotcom boom two years later where perfect timing could have netted you about US$100 per share. But if you had been truly patient and held on until today, your shares would be worth over US$3,000 each, a gain of more than 400x.
Amazon is of course an outlier, but it is outliers we seek. Finding them is hard, but not impossible. Sadly, owning such a business and enjoying the returns within a traditional ten-year limited life structure is impossible. The permanent life of Scheihallion doesn't make finding businesses like Amazon any easier. However, it does mean that if and when we do find the next Amazon, there is nothing to stop us, other than our poor judgement, from owning the business over the necessary time frame to truly enjoy the benefits of exponential growth and value creation.
This is why you should not expect us to rush out and sell Schiehallion's holdings in Affirm and Airbnb the day after the lock ups expire. Both companies will have downs as well as ups as public companies, but so long as we believe there is upside for shareholders we will continue to invest.
Since the interim update we have invested in five new companies; Nuro, Chime, Honor, Jiangxiaobai, and Northvolt. Two of these, Nuro and Northvolt sit at the confluence of forces changing how things and people move. Nuro is a robotics company working on autonomous vehicles customised for delivering goods. Meanwhile, Northvolt is a Swedish battery manufacturer driving down the cost of energy storage and providing much needed supply to the European automotive industry as it begins the inevitable transition to electric drivetrains. What these businesses share is an ability to reduce the marginal cost of moving goods and people, just as the internet reduced the marginal cost of moving information. We have a small but growing hunch that if the first two decades of this millennium were characterised by reducing the cost and friction of the movement of information, then the next 20 years could be defined by changes in how goods and people move.
The last six months has been a fruitful time for building our stakes in businesses, already in the portfolio, that we see delivering and thus want to own more of as our conviction grows. Since the interim period we put additional capital into Oscar, Affirm (both privately and publicly), Scopely, ByteDance, Tempus, SpaceX, and Graphcore. The follow-on investment in ByteDance is particularly noteworthy. Baillie Gifford was one of only a handful of investors globally able to take part in the most recent round. As is well reported, TikTok (which ByteDance owns) has been entangled in a geopolitical web of late, but this does not dim our enthusiasm for the business. We increased our holding and it is now amongst the largest positions in Schiehallion.
As of the year end Schiehallion was 87% invested, providing limited capacity for new investments. Shareholders should therefore expect only a small number of new investments within the existing portfolio. At some point there will be a natural recycling within the portfolio as we realise gains from companies that have maximised their potential. Given our investment horizon is five to ten years and beyond, shareholders should be surprised if this recycling was happening in a meaningful way after just two years. This is one of the reasons the proposed C-share issuance is so important. It will enable shareholders to benefit from the continued flow of opportunities and bridge the portfolio to the point where there might be a more natural recycling of capital from successful investments into new opportunities.
Peter Singlehurst
March 2021
Our Stewardship Principles for Public Companies
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.
Statement of Comprehensive Income
|
|
For the year ended 31 January 2021 |
For the period from 4 January 2019 to 31 January 2020 |
||||
|
|
Revenue US$'000 |
Capital US$'000 |
Total US$'000 |
Revenue US$'000 |
Capital US$'000 |
Total US$'000 |
|
Gains on investments |
- |
209,901 |
209,901 |
- |
11,068 |
11,068 |
|
Currency (losses)/gains |
- |
(1) |
(1) |
- |
10 |
10 |
|
Income (note 2) |
2,764 |
- |
2,764 |
7,747 |
- |
7,747 |
|
Investment management fee (note 3) |
(3,603) |
- |
(3,603) |
(929) |
- |
(929) |
|
Other administrative expenses (note 4) |
(759) |
- |
(759) |
(458) |
- |
(458) |
|
Operating profit before taxation |
(1,598) |
209,900 |
208,302 |
6,360 |
11,078 |
17,438 |
|
Tax on ordinary activities |
- |
- |
- |
- |
- |
- |
|
Profit and total comprehensive income for the year/period |
(1,598) |
209,900 |
208,302 |
6,360 |
11,078 |
17,438 |
|
Earnings per ordinary share (note 5) |
(0.33¢) |
43.94¢ |
43.61¢ |
1.33¢ |
2.32¢ |
3.65¢ |
The total column of this statement represents the Statement of Comprehensive Income of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing operations.
Statement of Financial Position
As at 31 January
|
|
2021 US$'000 |
2021 US$'000 |
2020 US$'000 |
2020 US$'000 |
|
Fixed assets |
|
|
|
|
|
Investments held at fair value through profit or loss (note 7) |
|
614,179 |
|
175,046 |
|
Current assets |
|
|
|
|
|
US Treasury Bills |
77,000 |
|
308,135 |
|
|
Cash and cash equivalents |
16,113 |
|
10,133 |
|
|
Debtors |
426 |
|
271 |
|
|
|
93,539 |
|
318,539 |
|
|
Current liabilities |
|
|
|
|
|
Amounts falling due within one year |
(1,638) |
|
(505) |
|
|
Net current assets |
|
91,901 |
|
318,034 |
|
Net assets |
|
706,080 |
|
493,080 |
|
Capital and reserves |
|
|
|
|
|
Share capital |
|
480,340 |
|
475,642 |
|
Capital reserve |
|
220,978 |
|
11,078 |
|
Revenue reserve |
|
4,762 |
|
6,360 |
|
Shareholders' funds |
|
706,080 |
|
493,080 |
|
Net asset value per ordinary share |
|
146.99¢ |
|
103.32¢ |
|
Ordinary shares in issue (note 8) |
|
480,350,002 |
|
477,250,002 |
Statement of Changes in Equity
For the year to 31 January 2021
|
|
Share capital US$'000 |
Capital reserve* US$'000 |
Revenue reserve US$'000 |
Shareholders' funds US$'000 |
|
Shareholders' funds at 1 February 2020 |
475,642 |
11,078 |
6,360 |
493,080 |
|
Ordinary shares issued (note 8) |
4,698 |
- |
- |
4,698 |
|
Total comprehensive income for the period |
- |
209,900 |
(1,598) |
208,302 |
|
Shareholders' funds at 31 January 2021 |
480,340 |
220,978 |
4,762 |
706,080 |
For the period from 4 January 2019 to 31 January 2020
|
|
Share capital US$'000 |
Capital reserve * US$'000 |
Revenue reserve US$'000 |
Shareholders' funds US$'000 |
|
Shareholders' funds at 4 January 2019 |
- |
- |
- |
- |
|
Ordinary shares issued (note 8) |
475,642 |
- |
- |
475,642 |
|
Total comprehensive income for the period |
- |
11,078 |
6,360 |
17,438 |
|
Shareholders' funds at 31 January 2020 |
475,642 |
11,078 |
6,360 |
493,080 |
The capital reserve includes investment holding gains of US$220,969,000 (2020 - US$11,068,000).
Statement of Cash Flows
|
|
For the year ended 31 January 2021 |
For the period from 4 January 2019 to 31 January 2020 |
|||
|
|
2021 US$'000 |
2021 US$'000 |
2020 US$'000 |
2020 US$'000 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
Operating profit before taxation |
|
208,302 |
|
17,438 |
|
|
US Treasury Bills interest |
|
(2,899) |
|
(7,292) |
|
|
Net gains on investments |
|
(209,901) |
|
(11,068) |
|
|
Currency losses/(gains) |
|
1 |
|
(10) |
|
|
Changes in debtors and creditors |
|
1,231 |
|
234 |
|
|
Net cash from operating activities* |
|
(3,266) |
|
(698) |
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Acquisitions of US Treasury Bills |
(172,625) |
|
(750,726) |
|
|
|
Disposal of US Treasury Bills |
406,659 |
|
449,883 |
|
|
|
Acquisitions of investments |
(229,232) |
|
(163,978) |
|
|
|
Disposals of investments |
- |
|
- |
|
|
|
Net cash used in investing activities |
|
4,802 |
|
(464,821) |
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Ordinary shares issued |
4,446 |
|
475,642 |
|
|
|
Net cash inflow from financing activities |
|
4,446 |
|
475,642 |
|
|
Net increase in cash and cash equivalents |
|
5,982 |
|
10,123 |
|
|
Effect of exchange rate fluctuations on cash and cash equivalents |
|
(2) |
|
10 |
|
|
Cash and cash equivalents at 1 February 2020/4 January 2019 |
|
10,133 |
|
- |
|
|
Cash and cash equivalents at 31 January 2021 |
|
16,113 |
|
10,133 |
|
* Cash from operations includes interest received of US$18,000 (2020 - US$204,000).
|
|
2021 US$'000 |
|
2020 US$'000 |
|
Cash and cash equivalents comprise the following: |
|
|
|
|
Cash at bank |
16,113 |
|
10,133 |
|
|
16,113 |
|
10,133 |
|
List of Investments as at 31 January 2021 |
|
Name |
Business |
Country |
2021 Value US$'000 |
2021 % of net assets |
2020 Value US$'000 |
|
Affirm Holdings Inc* |
Online platform which provides point of sale consumer finance |
United States |
2,508 |
|
- |
|
Affirm Holdings Inc Class A* |
Online platform which provides point of sale consumer finance |
United States |
42,907 |
|
6,305 |
|
Affirm Holdings Inc Class B * |
Online platform which provides point of sale consumer finance |
United States |
42,907 |
|
- |
|
|
|
|
88,322 |
12.5 |
6,305 |
|
Stripe Inc Series G Preferred |
Online payment platform |
United States |
37,476 |
5.3 |
4,894 |
|
ByteDance Limited Series E Preferred |
Social media and news aggregation company |
China |
22,230 |
|
10,000 |
|
ByteDance Limited Series E 1 Preferred |
Social media and news aggregation company |
China |
15,000 |
|
- |
|
|
|
|
37,230 |
5.3 |
10,000 |
|
Warby Parker (JAND Inc) Series A Preferred |
Online and physical corrective eyewear retailer |
United States |
12,065 |
|
6,594 |
|
Warby Parker (JAND Inc) Series C Preferred |
Online and physical corrective eyewear retailer |
United States |
10,198 |
|
5,573 |
|
Warby Parker (JAND Inc) Series F Preferred |
Online and physical corrective eyewear retailer |
United States |
14,754 |
|
- |
|
|
|
|
37,017 |
5.2 |
12,167 |
|
Space Exploration Technologies Corp Series K Preferred |
Designs, manufactures and launches advanced rockets and spacecraft |
United States |
20,587 |
|
10,490 |
|
Space Exploration Technologies Corp Series N Preferred |
Designs, manufactures and launches advanced rockets and spacecraft |
United States |
15,555 |
|
- |
|
|
|
|
36,142 |
5.1 |
10,490 |
|
Scopely Inc Common |
Online gaming company |
United States |
8,813 |
|
- |
|
Scopely Inc Series D Preferred |
Online gaming company |
United States |
22,880 |
|
10,000 |
|
Scopely Inc Series E Preferred |
Online gaming company |
United States |
1,099 |
|
- |
|
|
|
|
32,792 |
4.6 |
10,000 |
|
Tempus Labs Inc Series E Preferred |
Oncological records aggregator and diagnostic testing provider |
United States |
10,159 |
|
6,798 |
|
Tempus Labs Inc Series F Preferred |
Oncological records aggregator and diagnostic testing provider |
United States |
16,203 |
|
10,843 |
|
Tempus Labs Inc Series G Preferred |
Oncological records aggregator and diagnostic testing provider |
United States |
1,494 |
|
- |
|
Tempus Labs Inc Series G 2 Preferred |
Oncological records aggregator and diagnostic testing provider |
United States |
2,500 |
|
- |
|
|
|
|
30,356 |
4.3 |
17,641 |
|
List of Investments as at 31 January 2021 (continued) |
|
Name |
Business |
Country |
2021 Value US$'000 |
2021 % of net assets |
2020 Value US$'000 |
|
TransferWise Limited Ordinary |
Online international money transfer service |
United Kingdom |
15,448 |
|
5,123 |
|
TransferWise Limited Seed Preferred |
Online international money transfer service |
United Kingdom |
3,920 |
|
1,761 |
|
TransferWise Limited Series A Preferred |
Online international money transfer service |
United Kingdom |
5,102 |
|
2,082 |
|
TransferWise Limited Series B Preferred |
Online international money transfer service |
United Kingdom |
1,118 |
|
598 |
|
TransferWise Limited Series C Preferred |
Online international money transfer service |
United Kingdom |
635 |
|
334 |
|
TransferWise Limited Series D Preferred |
Online international money transfer service |
United Kingdom |
171 |
|
92 |
|
TransferWise Limited Series E Preferred |
Online international money transfer service |
United Kingdom |
18 |
|
10 |
|
|
|
|
26,412 |
3.7 |
10,000 |
|
Oscar Health (Mulberry Health Inc) Series A11 Preferred |
Healthcare insurance provider |
United States |
21,465 |
|
- |
|
Oscar Health (Mulberry Health Inc) Series A12 Preferred |
Healthcare insurance provider |
United States |
1,500 |
|
- |
|
|
|
|
22,965 |
3.3 |
- |
|
Epic Games Inc |
Video game developer |
United States |
22,605 |
3.2 |
- |
|
Allbirds Inc Series Seed Preferred |
Sustainable direct-to-customer footwear brand |
United States |
3,248 |
|
2,500 |
|
Allbirds Inc Series D Preferred |
Sustainable direct-to-customer footwear brand |
United States |
7,479 |
|
7,500 |
|
Allbirds Inc Series E Preferred |
Sustainable direct-to-customer footwear brand |
United States |
11,079 |
|
- |
|
|
|
|
21,806 |
3.1 |
10,000 |
|
Tanium Inc Class B Common |
Online security management |
United States |
19,170 |
2.7 |
- |
|
Indigo Agriculture Inc Common |
Microbial seed treatments to increase crop yields and grain marketplace |
United States |
3,316 |
|
1,594 |
|
Indigo Agriculture Inc Series F Preferred |
Microbial seed treatments to increase crop yields and grain marketplace |
United States |
14,925 |
|
14,327 |
|
|
|
|
18,241 |
2.6 |
15,921 |
|
Grail Inc Series D Preferred |
Oncology testing |
United States |
17,306 |
2.5 |
- |
|
List of Investments as at 31 January 2021 (continued) |
|
Name |
Business |
Country |
2021 Value US$'000 |
2021 % of net assets |
2020 Value US$'000 |
|
RigUp Inc Series D Preferred† |
Jobs marketplace for the energy sector |
United States |
13,261 |
|
10,500 |
|
RigUp Inc Series D-1 Preferred† |
Jobs marketplace for the energy sector |
United States |
2,526 |
|
- |
|
|
|
|
15,787 |
2.2 |
10,500 |
|
Airbnb Inc Class B Common# |
Online marketplace for travel accommodation |
United States |
14,120 |
2.0 |
4,566 |
|
Graphcore Limited Series D2 Preferred |
Computer chip developer |
United Kingdom |
12,612 |
|
- |
|
Graphcore Limited Series E Preferred |
Computer chip developer |
United Kingdom |
1,200 |
|
- |
|
|
|
|
13,812 |
2.0 |
- |
|
Carbon Inc Series E Preferred |
Manufactures and develops 3D printers |
United States |
13,671 |
1.9 |
10,000 |
|
Cohesity Inc Series E Preferred |
Data storage |
United States |
12,840 |
1.8 |
- |
|
Convoy Inc Series D Preferred |
Marketplace for truckers and shippers |
United States |
11,898 |
1.7 |
10,000 |
|
Northvolt AB Preference E1 |
Lithium ion battery manufacturer |
Sweden |
10,321 |
1.5 |
- |
|
FlixMobility GmbH Series F2 Preferred |
European mobility provider |
Germany |
10,272 |
1.5 |
11,096 |
|
Chime Financial Inc Series F Preferred |
Digital current account provider |
United States |
10,000 |
1.4 |
- |
|
Nuro Inc series C Preferred |
Developer of autonomous delivery vehicles |
United States |
10,000 |
1.4 |
- |
|
Zymergen Inc |
Synthetic biology |
United States |
10,000 |
1.4 |
- |
|
Jiangxiaobai Holdings Ltd Series C Preferred |
Producer of alcoholic beverages |
China |
9,993 |
1.4 |
- |
|
HeartFlow Inc Series E Preferred |
Develops software for cardiovascular disease diagnosis and treatment |
United States |
9,794 |
1.4 |
9,786 |
|
Away (JRSK Inc) Convertible Promissory Note |
Travel and lifestyle brand |
United States |
2,675 |
|
- |
|
Away (JRSK Inc) Series Seed Preferred |
Travel and lifestyle brand |
United States |
1,963 |
|
4,970 |
|
Away (JRSK Inc) Series D Preferred |
Travel and lifestyle brand |
United States |
4,193 |
|
6,710 |
|
|
|
|
8,831 |
1.3 |
11,680 |
|
Honor Technology Inc Series D Preferred |
Provider of home-care services |
United States |
5,000 |
0.7 |
- |
|
Total securities |
|
|
614,179 |
87.0 |
175,046 |
* Listed security, in line with the conditions of the IPO, investors with holdings prior to the listing are subject to a lock-up period preventing trading of the holding. This expires on 12 July 2021.
† Effective from 1 February 2021 name changed to Workrise Technologies.
# Listed security, in line with the conditions of the IPO, investors with holdings prior to the listing are subject to a lock-up period preventing trading of the holding. This expires on 31 May 2021.
List of Investments as at 31 January 2021 (continued)
|
Name |
|
2021 Value US$'000 |
2021 % of net assets |
2020 Value US$'000 |
|
US Treasury Bill 25/02/2021 |
|
12,642 |
|
|
|
US Treasury Bill 20/05/2021 |
|
14,093 |
|
|
|
US Treasury Bill 17/06/2021 |
|
12,393 |
|
|
|
US Treasury Bill 12/08/2021 |
|
12,692 |
|
|
|
US Treasury Bill 04/11/2021 |
|
12,690 |
|
|
|
US Treasury Bill 27/01/2022 |
|
12,490 |
|
|
|
Total US Treasury Bills |
|
77,000 |
10.9 |
308,135 |
|
Cash |
|
16,113 |
2.3 |
10,133 |
|
Other current assets and liabilities |
|
(1,212) |
(0.2) |
(234) |
|
Net current assets |
|
91,901 |
13.0 |
318,034 |
|
Net assets |
|
706,080 |
100.0 |
493,080 |
|
|
Listed investments % |
Unlisted investments % |
Net current assets % |
Net assets % |
|
31 January 2021 |
14.5 |
72.5 |
13.0 |
100.0 |
|
31 January 2020 |
- |
35.5 |
64.5 |
100.0 |
Distribution of Net Assets
Geographical
|
|
As at 31 January 2021 % |
As at 31 January 2020 % |
|
China |
6.6 |
2.0 |
|
Germany |
1.5 |
2.3 |
|
Sweden |
1.5 |
- |
|
United Kingdom |
5.7 |
2.0 |
|
United States |
71.7 |
29.2 |
|
US Treasury Bills |
10.9 |
62.5 |
|
Net Current Assets |
2.1 |
2.0 |
|
|
100.0 |
100.0 |
Sectoral
|
|
As at 31 January 2021 % |
As at 31 January 2020 % |
|
Communication Services |
5.2 |
2.0 |
|
Consumer Discretionary |
13.2 |
7.8 |
|
Consumer Staples |
4.0 |
3.3 |
|
Financials |
26.2 |
4.3 |
|
Healthcare |
8.9 |
5.6 |
|
Industrials |
11.9 |
8.5 |
|
Information Technology |
16.2 |
4.0 |
|
Materials |
1.4 |
- |
|
US Treasury Bills |
10.9 |
62.5 |
|
Net Current Assets |
2.1 |
2.0 |
|
|
100.0 |
100.0 |
The above sectoral distribution is not derived from any index.
|
Notes to the Financial Statements |
|
|
|
||||
|
1. |
Principal Accounting Policies The Financial Statements for the year to 31 January 2021 have been prepared in accordance with International Financial Reporting Standards ('IFRS'). |
||||
|
2. |
Income |
2021 US$'000 |
2020 US$'000 |
||
|
|
US Treasury Bills interest |
2,899 |
7,292 |
||
|
|
Overseas interest |
(153) |
251 |
||
|
|
Deposit interest |
18 |
204 |
||
|
|
Total income |
2,764 |
7,747 |
||
|
|
|
|
|
||
|
3. |
Investment Management Fee |
2021 US$'000 |
2020 US$'000 |
||
|
|
Investment management fee |
3,603 |
929 |
||
|
|
Details of the Investment Management Agreement are set out on page 21 of the Annual Report and Financial Statements. Under the terms of the Investment Management Agreement and with effect from the date the Company's ordinary shares were admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange, the Investment Manager is entitled to an annual fee (exclusive of VAT, which shall be added where applicable) of: 0.9% on the net asset value excluding cash or cash equivalent assets up to and including US$650 million; 0.8% on the net asset value excluding cash or cash equivalent assets exceeding US$650 million up to and including US$1.3 billion; and 0.7% on the net asset value excluding cash or cash equivalent assets exceeding US$1.3 billion. Management fees are calculated and payable quarterly. |
||||
|
4. |
Other Administrative Expenses |
|
2021 US$'000 |
2020 US$'000 |
|
|
|
General administrative expenses |
|
323 |
184 |
|
|
|
Administrator's fee |
|
83 |
63 |
|
|
|
Auditor's remuneration for audit services |
|
206 |
93 |
|
|
|
Directors' fees |
|
147 |
118 |
|
|
|
|
|
759 |
458 |
|
|
|
In the year to 31 January 2021 there were no fees paid to the Auditor in respect of non-audit services. In the period from 4 January 2019 to 31 January 2020 non-audit fees paid to KPMG Channel Islands Limited amounted to US$74,000 in respect of procedural services related to the initial listing of the Company. As these costs related to the initial listing of the Company, they are capital in nature and included within the costs of issuing shares (see note 11 of the Annual Report and Financial Statements). There were no other non-audit fees incurred during the period from 4 January 2019 to 31 January 2020. |
||||
|
Notes to the Financial Statements (continued) |
|
5. |
Earnings per Ordinary Share |
2021 Revenue |
2021 Capital |
2021 Total |
2020 Revenue |
2020 Capital |
2020 Total |
||||
| Earnings per ordinary share |
(0.33¢) |
43.94¢ |
43.61¢ |
1.33¢ |
2.32¢ |
3.65¢ |
|||||
|
|
Revenue earnings per ordinary share is based on the net revenue loss on ordinary activities after taxation of US$1,598,000 (2020 - net revenue gain of US$6,360,000) and on 477,670,487 (2020 - 477,250,002) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 31 January 2021 and the period from 4 January 2019 to 31 January 2020. Capital earnings per ordinary share is based on the net capital gain for the financial period of US$209,900,000 (2020 - US$11,078,000) and on 477,670,487 (2020 - 477,250,002) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 31 January 2021 and the period from 4 January 2019 to 31 January 2020. Total earnings per ordinary share is based on the total gain for the financial period of US$208,302,000 (2020 - US$17,438,000) and on 477,670,487 (2020 - 477,250,002) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 31 January 2021 and the period from 4 January 2019 to 31 January 2020. There are no dilutive or potentially dilutive shares in issue. |
||||||||||
|
6. |
Ordinary Dividends There were no dividends paid or proposed in respect of the year to 31 January 2021 (2020 - US$nil). |
||||||||||
|
7. |
Financial Instruments |
||||||||||
|
|
Fair Value Hierarchy |
||||||||||
|
|
The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows: Level 1 - using unadjusted quoted prices for identical instruments in an active market; Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and Level 3 - using inputs that are unobservable (for which market data is unavailable). The valuation techniques used by the Company are explained in the accounting policies on page 42 of the Annual Report and Financial Statements. Transfers between levels of the fair value hierarchy take place when the criteria for recognition in another level are met, such as the listing of an investment. |
||||||||||
|
|
As at 31 January 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/warrants |
- |
- |
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 |
614,179 |
|||||||
|
|
|
|
|
|
|||||||
|
Notes to the Financial Statements (continued) |
|
|
As at 31 January 2020 |
Level 1 US$'000 |
Level 2 US$'000 |
Level 3 US$'000 |
Total US$'000 |
|||||
|
Listed equities |
- |
- |
- |
- |
||||||
|
Unlisted ordinary shares/warrants |
- |
- |
10,817 |
10,817 |
||||||
|
Unlisted preference shares* |
- |
- |
149,902 |
149,902 |
||||||
|
Unlisted convertible promissory notes |
- |
- |
14,327 |
14,327 |
||||||
|
Total financial asset investments |
- |
- |
175,046 |
175,046 |
||||||
|
|
* The investments in preference shares are not classified as equity holdings as they include liquidation preference rights that determine the repayment (or multiple thereof) of the original investment in the event of a liquidation event such as a take-over. During the year ended 31 January 2021, investments with a book cost of US$17,886,000 (2020 = US$nil) were transferred from Level 3 to Level 1 on becoming listed. Investments in securities are financial assets held at fair value through profit or loss. In accordance with IFRS 9, the table above provides an analysis of these investments based on the fair value hierarchy described above, which reflects the reliability and significance of the information used to measure their fair value. |
|||||||||
|
8. |
Share Capital |
|
2021 Number |
2021 US$'000 |
2020 Number |
2020 US$'000 |
||||
| Allotted, called up and fully paid ordinary shares of US$1 each |
480,350,002 |
480,340 |
477,250,002 |
475,642 |
||||||
|
|
On incorporation, the share capital of the Company was US$2 represented by two ordinary shares with a nominal value of US$1, which were held by Baillie Gifford & Co Limited and Baillie Gifford Overseas Limited to allow the Company to commence business and to exercise its borrowing powers. On 27 March 2019, the date the Company's ordinary shares were admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange, the Company issued 477,250,000 ordinary shares of US$1 and raised gross proceeds of US$477,250,000 which was used to finance the initial investments of the Company. The issue costs in respect of the initial investment were US$1,608,000, which were made up of set up costs. These costs consisted mainly of legal fees (US$1,190,000) and listing fees (US$247,000). By way of a special resolution dated 15 March 2019 the Directors have a general authority to allot up to 720 million 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). In the year ended 31 January 2021, the Company issued 3,100,000 shares, representing 0.65% of the issued share capital as at 31 January 2021, on a non pre-emptive basis at a premium to net asset value, raising net proceeds of US$4,698,000 (2020 - none). In the period from 31 January 2021 to 17 March 2021 a further 875,000 shares were issued, raising net proceeds of US$1,573,000. By way of an ordinary resolution passed at the Company's AGM held on 19 May 2020 the Directors of the Company have general authority to make market purchases of up to 71,539,775 ordinary shares, being 14.99% of the ordinary shares in issue. This authority will expire at the end of the period concluding immediately prior to the second Annual General Meeting of the Company to be held on 13 May 2021. No shares have been bought back during the year ended 31 January 2021 hence the authority remains at 71,539,775 ordinary shares. |
|||||||||
|
Notes to the Financial Statements (continued) |
|
9. |
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 January 2021 but is derived from those accounts. |
|
10. |
The Annual Report and Financial Statements will be available on the Managers' website www.schiehallionfund.com‡ on or around 23 March 2021. |
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
Total value of all assets held less current liabilities, other than liabilities in the form of borrowings.
Net Asset Value
Also described as shareholder funds, net asset value ('NAV') is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue.
Net Current Assets
Net current assets comprise current assets less current liabilities excluding borrowings.
Premium/(Discount) (APM)
As stockmarkets and share prices vary, the Company's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the 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
|
|
|
2021 NAV |
2020 NAV |
|
Closing NAV per share |
(a) |
146.99¢ |
103.32¢ |
|
Closing share price |
(b) |
180.00¢ |
121.50¢ |
|
Premium ((b - a) ÷ (a) expressed as a percentage) |
|
22.5% |
17.6% |
Ongoing Charges (APM)
The total recurring expenses (excluding the Company's costs of dealing in investments and borrowing costs) incurred by the Company as a percentage of the average net asset value (with debt at fair value).
|
|
|
|
2021 US$'000 |
2020 US$'000 |
|
|
|
Investment management fee* |
|
|
3,603 |
929 |
|
|
Other administrative expenses |
|
|
759 |
458 |
|
|
Total expenses† |
|
|
4,362 |
1,387 |
|
|
Total expenses annualised† |
(a) |
4,362 |
1,633 |
|
|
|
Average net asset value (with borrowings deducted at fair value) |
(b) |
568,242 |
482,220 |
|
|
|
Ongoing charges ((a) ÷ (b) expressed as a percentage) |
|
|
0.77% |
0.34% |
* The investment management fee reflects the initial period during which the Investment Manager did not receive fees on cash or cash equivalent elements of the portfolio.
† The total expenses for 2020 above cover the period 27 March 2019 to 31 January 2020, a period of 310 days.
|
Notes to the Financial Statements (continued) |
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers Directive, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of US dollar cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.
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 wwww.schiehallionfund.com‡
The Schiehallion Fund Limited is managed by Baillie Gifford, the Edinburgh based fund management group with around £325 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 17 March 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.
18 March 2021
For further information please contact:
Alex Blake, Baillie Gifford & Co
Tel: 0131 275 2859
Mark Knight, Director, Four Communications
Tel 0203 697 4200 or 07803 758810
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