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viewThe Schiehallion Fund

Schiehallion Fund - Half-year Report

RNS Number : 4971Z
Schiehallion Fund Limited (The)
21 September 2020
 

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 2020 which was approved by the Board on 18 September 2020.

 

Summary of Unaudited Results*

 

 

 

31 July

 2020

 

31 January 2020

 

%

change

Shareholders' funds

US$514.65m

US$493.08m

 

Net asset value per ordinary share

107.81¢

103.32¢

4.3

Share price

131.50¢

121.50¢

8.2

Premium

22.0%

17.6%

 

Number of shares in issue

477,350,002

477,250,002

 

Market capitalisation

US$627.72m

US$579.86m

 

 

 

 

Six months

to 31 July 2020

Period from 4 January 2019#

to 31 July 2019

Revenue earnings per share

0.13¢

0.78c

 

 

 

    31 July

 2020

 

 27 March

2019

 

%

change

Performance since inception

 

 

 

Net asset value per ordinary share

107.81¢

99.66¢

8.20

Share price

131.50¢

100.00¢

31.50

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.

# Date of incorporation of the Company.

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.

 

All investment strategies have the potential of profit and loss.

Past performance is not a guide to future performance.

 

Interim Management Report

 

The global spread of COVID-19 has brought about a quantum of societal change that we would normally expect to see over years or decades in just a few monumental months. Baillie Gifford changed overnight from the office-based firm of the last 112 years to being a distributed organisation working from kitchen tables and spare bedrooms. The change was a shock, to be sure!

Surprisingly, then, our transition was seamless. With members in three time zones, the Private Companies team had a head start on adapting to a world of dispersed working and Zoom calls. The team was able to maintain a high standard of investment research and analytical insight despite the disruptions. I want to thank them for all their efforts.

As the world went into lockdown, we reviewed each of the companies held in the portfolio to determine their resiliency. We categorised them as Red, Amber, or Green based on how well placed we thought they were for weathering the storm.

Like many others, we braced ourselves for short term pain. And some companies felt that pain. Holdings in the travel industry in particular saw their revenues decline rapidly. However, most of our holdings did not miss a beat! Those that suffered have now largely bounced back, far quicker than we might have feared back in the dark days of March and April, and during the six months to 31 July 2020, the Company's NAV increased by 4.3%.

We thus find ourselves wondering whether we have not overestimated the near-term impact of COVID-19. As long-term investors, one of the behavioural inefficiencies we seek to exploit is the propensity for humans to overestimate the pace of change in the short-term, but to underestimate it in the long-term. It is thus natural that we now find ourselves pondering what the longer-term and as yet underappreciated ramifications may be.

In the meantime, many of our portfolio companies are flourishing. Scopely and Epic Games, both social gaming companies, are seeing strong user engagement and corresponding revenue growth as we all find new ways to spend time with our friends and families in a world of social distancing. Other companies are thriving for more idiosyncratic reasons. Whether it is Allbirds' successful launch of their new running shoe, The Dasher; or SpaceX's eagerly anticipated Crew Dragon mission to launch people into space, it is reassuring to be reminded that the whole world does not revolve around COVID-19.

Certainly, looking at the flow of new opportunities over recent months, you would never guess that we were operating during a pandemic. Since the end of January, we have invested in seven new companies. The diversity of what these companies do, and by extension the lack of correlation between the success or failure of each, is striking. To pick out a few, Grail is developing blood tests to detect early stage cancer when it is easier to treat and survival rates are higher; Graphcore is developing chips on which to run cutting edge artificial intelligence algorithms; and Epic Games is changing the nature of digital entertainment with Fortnite and the Unreal Engine.

Of equal focus has been supporting existing holdings in the portfolio. In the last six months we have made nine follow-on investments. Many of these were a result of companies bolstering their balance sheets to remove any financing risk given the uncertainty caused by COVID-19. This has enabled us to build on our positions in some exceptional companies such as Stripe, Tempus, TransferWise and Warby Parker, to name but a few. Initial construction of the portfolio has been deliberately flat, with initial holdings in companies being largely the same size. However, this will change as the portfolio matures, with larger positions emerging to reflect both underlying performance and our growing conviction in those opportunities.

As of the end of July, 62% of the capital raised in Schiehallion had been invested in high growth private companies. Over the coming months, we will likely have the opportunity to deploy more capital into some holdings as they enter public markets.

Schiehallion was founded on the belief that we could deliver attractive returns by investing shareholders' capital in great private companies, that we could then own for the long-term once they became public. With Airbnb and Grail both filing to go public, we are likely to get our first taste of this within Schiehallion. We are not approaching the IPOs of these companies as liquidity events. They are merely the next steps on the journeys of great companies that have the potential to grow over decades. The long-term structure of Schiehallion and patience of its shareholders make this possible, and we thank you for your continued support.

 

 

The principal risks and uncertainties facing the Company are set out in note 10.

 

 

Peter Singlehurst

 

 

 

 

 

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.

 

 

 

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

18 September 2020

Statement of Comprehensive Income (unaudited)

 

 

For the six months

 to 31 July 2020

For the period from 4 January 2019 to 31 July 2019

For the period from 4 January 2019 to 31 January 2020

 

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

 

20,809 

20,809 

- 

1,896 

1,896 

- 

11,068 

11,068 

Currency gains

 

24 

24 

- 

7 

7 

- 

10 

10 

Income

2

2,191 

2,191 

4,064 

- 

4,064 

7,747 

- 

7,747 

Investment management fee

3

(1,252)

(1,252)

(203)

- 

(203)

(929)

- 

(929)

Other administrative expenses

4

(331)

(331)

(154)

- 

(154)

(458)

- 

(458)

Operating profit before taxation

608 

20,833 

21,441 

3,707 

1,903 

5,610 

6,360 

11,078 

17,438 

Tax on ordinary activities

Profit and total comprehensive

  income for the period

608 

20,833 

21,441 

3,707 

1,903 

5,610 

6,360 

11,078 

17,438 

Earnings per ordinary share

5

0.13¢

4.37¢

4.50¢

0.78¢

0.40¢

1.18¢

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 (unaudited)

 

 

Notes

At 31 July

2020

   US$'000    

At 31 July

2020

US$'000

At 31 January

2020

   US$'000    

At 31 January

2020

US$'000

Fixed assets

 

 

 

 

 

Investments held at fair value through profit or loss

7

 

320,854 

 

175,046 

Current assets

 

 

 

 

 

US Treasury Bills

 

179,614 

 

308,135 

 

Cash and cash equivalents

 

14,970 

 

10,133 

 

Debtors

 

68 

 

271 

 

 

194,652 

 

318,539 

 

Current liabilities

 

 

 

 

Amounts falling due within one year                                                     

(854)

 

(505)

 

Net current assets

 

193,798 

 

318,034 

Net assets

 

514,652 

 

493,080 

Capital and reserves

 

 

 

 

 

Share capital

8

 

475,773 

 

475,642 

Capital reserve

 

 

31,911 

 

11,078 

Revenue reserve

 

 

6,968 

 

6,360

Shareholders' funds

 

514,652 

 

493,080

Net asset value per ordinary share

 

 

107.81¢

 

103.32¢

Ordinary shares in issue

8

 

477,350,002

 

477,250,002

 

 

 

Statement of Changes in Equity (unaudited)

 

Six months to 31 July 2020

 

 

 

Notes

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                                                                       8

131

-

-

131

Total comprehensive income for the period                       

-

20,833

608

21,441

475,773

31,911

6,968

514,652

 

 

For the period from 4 January 2019 to 31 July 2019 

 

 

 

 

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                                                       

475,642

-

 - 

475,642

Total comprehensive income for the period

-

1,903

3,707

5,610

475,642

1,903

3,707

481,252

 

 

 

Statement of Cash Flows (unaudited)

 

 

Six months to

31 July 2020

Period from 4 January 2019

to 31 July 2019

Notes

US$'000

US$'000

US$'000

US$'000

Cash flows from operating activities

 

 

 

 

Operating profit before taxation

 

21,441 

 

5,610 

US Treasury Bills interest

 

(2,394)

 

(3,936)

Net gains on investments

 

(20,809)

 

(1,896)

Currency gains

 

(24)

 

(7)

Changes in debtors and creditors

 

552 

 

218 

Net cash used in operating activities*

 

(1,234)

 

(11) 

Cash flows from investing activities

 

 

 

 

Acquisitions of US Treasury Bills

(120,028)

 

(583,906)

 

Disposals of US Treasury Bills

250,943 

 

197,825 

 

Acquisitions of investments                                              

(124,999)

 

(80,546)

 

Disposals of investments                                                    

 

 

Net cash from/(used in) investing activities

 

5,916 

 

(466,627)

Cash flows from financing activities

 

 

 

 

Ordinary shares issued             

131 

 

475,643 

 

Net cash from financing activities

 

131 

 

475,643

Net increase in cash and cash equivalents

 

4,813 

 

9,005 

Effect of exchange rate fluctuations on cash and cash   

  equivalents

 

 

24 

 

 

Cash and cash equivalents at start of period

 

10,133 

 

Cash and cash equivalents at 31 July

 

14,970 

 

9,012 

 

*      Cash from operations includes interest received of US$17,000 (2019 - US$194,000)

 

 

List of Investments as at 31 July 2020 (unaudited)

 

 

 

Name

 

 

Business

 

 

Country

2020

Value

US$'000

2020

Value

US$'000

2020

% of net assets*

Warby Parker (JAND Inc) Series A  

  Preferred

Online and physical corrective eyewear

  retailer

 

United States

 

9,930

 

 

Warby Parker (JAND Inc) Series C

  Preferred

Online and physical corrective eyewear

  retailer

 

United States

 

8,393

 

 

Warby Parker (JAND Inc) Series F

   Preferred

Online and physical corrective eyewear

  retailer

 

United States

 

12,143

 

 

 

 

 

 

30,466

5.9

Scopely Inc Common

Online gaming company

United States

6,237

 

 

Scopely Inc Series D Preferred

Online gaming company

United States

16,192

 

 

 

 

 

 

22,429

4.4

TransferWise Limited Ordinary

Online international money transfer

  service

 

United Kingdom

 

12,690

 

 

TransferWise Limited Seed Preferred

Online international money transfer

 service

 

United Kingdom

 

3,220

 

 

TransferWise Limited Series A Preferred

Online international money transfer

 service

 

United Kingdom

 

4,191

 

 

TransferWise Limited Series B Preferred

Online international money transfer

 service

 

United Kingdom

 

918

 

 

TransferWise Limited Series C Preferred

Online international money transfer

  service

 

United Kingdom

 

522

 

 

TransferWise Limited Series D Preferred

Online international money transfer

 service

 

United Kingdom

 

141

 

 

TransferWise Limited Series E Preferred

Online international money transfer

 service

 

United Kingdom

 

15

 

 

 

 

 

 

21,697

4.2

Tempus Labs Inc Series E Preferred

Oncological records aggregator and

   diagnostic testing provider

 

United States

 

7,447

 

 

Tempus Labs Inc Series F Preferred

Oncological records aggregator and

   diagnostic testing provider

 

United States

 

11,877

 

 

Tempus Labs Inc Series G Preferred

Oncological records aggregator and

   diagnostic testing provider

 

United States

 

1,095

 

 

 

 

 

 

20,419

4.0

Epic Games Inc

Video game developer

United States

 

20,000

3.9

Stripe Inc Series G Preferred

Online payment platform

United States

 

19,843

3.9

 

 

 

 

List of Investments as at 31 July 2020 (unaudited)

 

 

 

Name

 

 

Business

 

 

Country

2020

Value

US$'000

2020

Value

US$'000

2020

% of net assets*

Indigo Agriculture Inc Common

Microbial seed treatments to increase

  crop yields and grain marketplace

 

United States

 

1,077

 

 

Indigo Agriculture Inc Warrants March

  2020

Microbial seed treatments to increase

  crop yields and grain marketplace

 

United States

 

1,931

 

 

Indigo Agriculture Inc Series F Preferred

Microbial seed treatments to increase

  crop yields and grain marketplace

 

United States

 

12,979

 

 

Indigo Agriculture Inc Series F Warrants

Microbial seed treatments to increase

  crop yields and grain marketplace

 

United States

 

418

 

 

 

 

 

 

16,405

3.2

Space Exploration Technologies Corp

   Series K Preferred

Designs, manufactures and launches

  advanced rockets and spacecraft

 

United States

 

 

13,235

 

2.6

RigUp Inc Series D Preferred

Jobs marketplace for the energy sector

United States

10,500

 

 

RigUp Inc Series D-1 Preferred

Jobs marketplace for the energy sector

United States

2,000

 

 

 

 

 

 

12,500

2.4

ByteDance Limited Series E Preferred

Social media and news aggregation

  company

 

China

 

 

11,678

 

2.3

Cohesity Inc Series E Preferred

Data storage

United States

 

11,057

2.1

FlixMobility GmbH Series F2 Preferred

European mobility provider

Germany

 

10,694

2.1

Affirm Holdings Inc Convertible  

  Promissory Note

Online platform which provides point of

   sale consumer finance

 

United States

 

4,000

 

 

Affirm Holdings Inc Series A Preferred

Online platform which provides point of

  sale consumer finance

 

United States

 

6,131

 

 

 

 

 

 

10,131

2.0

Graphcore Limited Series D Preferred

Computer chip developer

United Kingdom

 

10,000

1.9

Grail Inc Series D Preferred

Oncology testing

United States

 

10,000

1.9

Mulberry Health Inc Series A11 Preferred

Healthcare insurance provider

United States

 

10,000

1.9

Zymergen Inc

Synthetic biology

United States

 

10,000

1.9

Allbirds Inc Series Seed Preferred

Sustainable direct-to-customer footwear

  brand

 

United States

 

2,817

 

 

Allbirds Inc Series D Preferred

Sustainable direct-to-customer footwear

  brand

 

United States

 

6,984

 

 

 

 

 

 

9,801

1.9

HeartFlow Inc Series E Preferred

Develops software for cardiovascular

  disease diagnosis and treatment

 

United States

 

 

9,794

 

1.9

Convoy Inc Series D Preferred

Marketplace for truckers and shippers

United States

 

9,727

1.9

Carbon Inc Series E Preferred

Manufactures and develops 3D printers

United States

 

9,477

1.8

Tanium Inc Class B Common

Online security management

United States

 

9,166

1.8

List of Investments as at 31 July 2020 (unaudited)

 

 

 

Name

 

 

Business

 

 

Country

2020

Value

US$'000

2020

Value

US$'000

2020

% of net assets*

Away (JRSK Inc) Convertible Promissory

  Note

 

Travel and lifestyle brand

 

United States

 

2,500

 

 

Away (JRSK Inc) Series Seed Preferred

Travel and lifestyle brand

United States

2,012

 

 

Away (JRSK Inc) Series D Preferred

Travel and lifestyle brand

United States

4,227

 

 

 

 

 

 

8,739

1.7

Airbnb Inc Class A Common

Online market place for travel

  accommodation

 

United States

 

3,229

 

 

Airbnb Inc Series D Preferred

Online market place for travel

  accommodation

 

United States

 

238

 

 

Airbnb Inc Series E Preferred

Online market place for travel

  accommodation

 

United States

 

129

 

 

 

 

 

 

3,596

0.7

Total unlisted securities

 

 

 

320,854

62.3

US Treasury Bill 10/09/2020

 

29,810

 

 

US Treasury Bill 03/12/2020

 

29,737

 

 

US Treasury Bill 28/01/2021

 

29,427

 

 

US Treasury Bill 25/02/2021

 

29,819

 

 

US Treasury Bill 20/05/2021

 

31,260

 

 

US Treasury Bill 17/06/2021

 

29,561

 

 

Total US Treasury Bills

 

 

179,614 

34.9 

Cash

 

 

14,970 

2.9 

Other current assets and liabilities

 

 

(786)

(0.1)

Net current assets

 

 

193,798 

37.7 

Net assets

 

 

514,652 

100.0 

 

*      See Glossary of Terms and Alternative Performance Measures at the end of this announcement

 

 

Distribution of Net Assets (unaudited)

 

Geographical

 

 

As at

31 July

2020

%

As at

31 January 2020

%

United States

51.8

29.2

United Kingdom

6.1

2.0

China

2.3

2.0

Germany

2.1

2.3

US Treasury Bills

34.9

62.5

Net Current Assets

2.8

2.0

Total

100.0

100.0

 

 

 

Sectoral

 

 

As at

31 July

 2020

%

As at

31 January 2020

%

Communication Services

2.3

2.0

Consumer Discretionary

10.2

7.8

Consumer Staples

3.2

3.3

Financials

12.0

4.3

Healthcare

7.8

5.6

Industrials

9.0

8.5

Information Technology

15.9

4.0

Materials

1.9

-

US Treasury Bills

34.9

62.5

Net Current Assets

2.8

2.0

Total

100.0

100.0

 

The above sectoral distribution is not derived from any index.

 

 

Notes to the Financial Statements (unaudited)

 

1.    

Basis of Accounting

 

The condensed Financial Statements for the six months to 31 July 2020 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 2020 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements for the period from 4 January 2019 to 31 January 2020.

 

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 below, 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 6 and 7 of the Company's Annual Report and Financial Statements for the period from 4 January 2019 to 31 January 2020 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.

 

2.    

Income

 

 

 

6 months to

31 July 2020

US$'000

Period from 4 January 2019 to 31 July 2019

US$'000

Period from 4 January 2019 to 31 January 2020

US$'000

 

US Treasury Bills interest

2,394 

3,742

7,292

 

Overseas interest

(220)

128

251

 

Deposit interest

17

194

204

 

Total income

2,191 

4,064

7,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the Financial Statements (unaudited) (Ctd)

 

3.

Investment Management Fee               

 

 

6 months to

31 July 2020

US$'000

Period from 4 January 2019 to 31 July 2019

US$'000

Period from 4 January 2019 to 31 January 2020

US$'000

 

Investment Management Fee

1,252

203

929

 

 

 

 

 

 

 

 

 

 

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.

4.

Other Administrative Expenses

 

 

6 months to

31 July 2020

US$'000

Period from 4

January 2019 to 31

July 2019

US$'000

Period from 4 January 2019 to 31 January 2020

US$'000

 

General administrative expenses

168

79

184

 

47

28

63

 

46

-

93

 

Directors' Fees

70

47

118

 

 

331

154

458

 

In the period from 4 January 2019 to 31 July 2019 and 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. There were no non-audit fees incurred during the six months to 31 July 2020.

5.

Earnings per Ordinary Share

 

 

6 months to

31 July 2020

Period from 4

January 2019 to 31

July 2019

Period from 4 January 2019 to 31 January 2020

 

 

US$'000

¢

US$'000

¢

US$'000

¢

 

Revenue return on ordinary activities after taxation

608

0.13

3,707

0.78

6,360

1.33

 

Capital return on ordinary activities after taxation

20,833

4.37

1,903

0.40

11,078

2.32

 

Total net return

21,441

4.50

5,610

1.18

17,438

3.65

 

Weighted average number of shares in issue

477,267,310

277,250,002

277,250,002

 

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.

                     

 

Notes to the Financial Statements (unaudited) (Ctd)

 

6.

Ordinary Dividends

 

There were no dividends paid or proposed in respect of the six months (2019 - none).

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).

 

 

As at 31 July 2020

Level 1

US$'000

Level 2

US$'000

Level 3

US$'000

Total

US$'000

Unlisted ordinary shares/warrants

-

-

64,748

64,748

Unlisted preference shares*

-

-

249,606

249,606

Unlisted convertible promissory notes

-

-

6,500

6,500

Total financial asset investments

-

-

320,854

320,854

 

 

 

 

 

 

 

 

As at 31 January 2020

Level 1

US$'000

Level 2

US$'000

Level 3

US$'000

Total

US$'000

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.

There have been no transfers between levels of fair value hierarchy during the six months to 31 July 2020 or during the period from 4 January 2019 to 31 January 2020.

 

The valuation techniques used by the Company are explained in the accounting policies on page 35 of the Company's Annual Report and Financial Statements for the period from incorporation on 4 January 2019 to 31 January 2020. 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

 

 

 

 

iii)   

 

2020

Number

2020

US$'000

2019

Number

2019

US$'000

 

Allotted, called up and fully paid ordinary shares of US$1 each

477,350,002

475,773

477,250,002

475,642

 

By way of a special resolution dated 15 March 2019 the Directors have a general authority to allot up to 720,000,000 ordinary shares or C shares, such figure to include the ordinary shares issued at the initial placing. 477,250,000 ordinary shares were issued at the Company's initial placing 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 2020 the Company issued 100,000 ordinary shares raising net proceeds of US$131,000. As at 31 July 2020 the Company has the authority to issue 242,650,000 ordinary shares. In the period from 1 August 2020 to 18 September 2020 the Company issued a further 100,000 shares raising net proceeds of US$131,000.

 

By way of an ordinary resolution passed 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 conclusion of the Annual General Meeting of the Company to be held in respect of the year ending 31 January 2021. No shares have been bought back during the six months ended 31 July 2020 (period from 4 January 2019 to 31 July 2019 - nil) hence the authority remains at 71,539,775 ordinary shares.

9.

Transaction Costs

 

During the period the Company incurred transaction costs on purchases of investments of US$nil (period 4 January 2019 to 31 July 2019 - US$50,000; period 4 January 2019 to 31 January 2020 - US$50,000) and transaction costs on sales of US$ nil (period 4 January 2019 to 31 July 2019 - US$nil; period 4 January 2019 to 31 January 2020 - US$nil).

10.

Principal Risk and Uncertainties

 

The principal risks facing the Company are financial risk, investee companies risk, valuation risk, investment strategy risk, discount risk, legal and regulatory risk, custody and depositary risk, operational risk and political and associated economic risk. An explanation of these risks and how they are managed is set out on pages 6 and 7 of the Company's Annual Report and Financial Statements for the period from 4 January 2019 to 31 January 2020 which is available on the Company's website: www.schiehallionfund.com. The principal risks and uncertainties have not changed since the date of the Annual Report and Financial Statements with the exception of the current unprecedented situation surrounding the COVID-19 pandemic.

 

The Board of The Schiehallion Fund Limited and the Investment Manager are actively working together to monitor the effect of COVID-19 on the Company and its investee companies. The Investment Manager has measures in place to safeguard the health of its employees whilst remaining fully operational and providing business continuity to its clients. In particular, the Board and Investment Manager are monitoring closely the following:

- the valuation and liquidity of Schiehallion's portfolio companies;

- the operational arrangements in place at Baillie Gifford & Co; and

- the ability of Schiehallion's third-party service providers to continue to provide contracted services.

 

The Investment Manager and third-party service providers remain fully operational and business continuity plans are working as expected.

 

Political developments are closely monitored and considered by the Board. The Board continues to monitor developments as they occur following the UK's departure from the European Union but believes that the Company's global portfolio, with only a modest exposure to the United Kingdom, positions the Company to be suitably insulated from Brexit-related risks.

11.

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.

 

 

 

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

 

Glossary of Terms and Alternative Performance Measures ('APM')

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 as described below. 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).

Discount/Premium (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.

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).

                 

 

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 £280 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 18 September 2020). 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.

 21 September 2020

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

- ends -

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