Baillie Gifford UK Growth Trust plc
Legal Entity Identifier:
549300XX386SYWX8XW22
Results for the year to 30 April 2024
For
the year to 30 April 2024, the Company's net asset value ('NAV')
total return (capital and income) was 0.6% compared to 7.5% for the
FTSE All-Share Index total return. The share price total return for
the same period was negative 0.5%.
¾
The largest detractors to relative performance
were: St James's Place, a UK wealth manager; Burberry, a luxury
goods retailer; and Genus, a leading animal genetics company. Not
holding HSBC was also a notable detractor. Abcam, an online
platform selling antibodies to life science researchers, and
4imprint, the direct marketer of promotional merchandise, were the
notable positive contributor to relative performance.
¾
One new position was initiated in the period:
online greetings card and gifting platform, Moonpig. Four positions
were exited: Abcam, which was taken over in the year; Boohoo.com,
an online fashion retailer; Farfetch, an online luxury fashion
retailer; and Naked Wines, an online wine retailer.
¾
The net revenue return for the year was 5.68p per
share (2023: 4.05p). A final dividend of 5.60p per share is being
recommended (2023: 3.60p). The dividend is paid by way of a single
final payment.
¾
Over the year a total of 3,841,977 shares were
bought back into treasury. Since period end to 12 June 2024, a
further 635,000 shares have been bought back into
treasury.
¾
The Board and Managers believe that the portfolio
is populated with exciting growth businesses, with large market
opportunities, strong competitive positions, and importantly, the
cultural adaptability to succeed in a rapidly changing world. Once
style headwinds abate, the portfolio should be well placed to
benefit.
¾
At this year's Annual General Meeting ('AGM'), the
Directors are proposing, in accordance with the Company's Articles,
that the life of the Company be extended for a further five
years.
¾
Should the life of the Company be extended, the
Board is making the following commitments: 1) The Board will
introduce a one-off 5-year performance triggered exit opportunity
whereby, in the event the Company's NAV per share total return over
the 5-year period from 30 April 2024 to 30 April 2029 does not
equal or exceed the total return on the Company's benchmark (FTSE
All-Share Index), the Company will provide shareholders with the
opportunity to realise their investment in full at close to NAV per
share; and 2) The Company will put forward a resolution at the
Company's Annual General Meeting to be held in 2027 for the
continuation of the Company. This is in addition to the five-yearly
continuation votes in the Company's Articles of
Association.
¾
As highlighted in last year's Chairman's
Statement, Ms Carolan Dobson will not be standing for re-election
at this year's Annual General Meeting and has decided to stand down
from the Board on 14 June 2024. Mr Neil Rogan was appointed to the
Board on 1 January 2024 and takes over as Chairman on 14 June
2024.
Total return information is sourced
from Baillie Gifford/LSEG. See disclaimer at the end of this
announcement. For a definition of terms see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
Baillie Gifford UK Growth Trust plc
invests to achieve capital growth predominantly from investment in
UK equities with the aim of providing a total return in excess of
the FTSE All-Share Index.
The Company is managed by Baillie
Gifford & Co, an Edinburgh based fund management group with
around £224 billion under management and advice as at 12 June
2024.
Past performance is not a guide to
future performance. Baillie Gifford UK Growth Trust plc is a listed
UK company. The value of its shares and any income from them can
fall as well as rise and investors may not get back the amount
invested. The Company is listed on the London Stock Exchange and is
not authorised or regulated by the Financial Conduct Authority. You
can find up to date performance information about Baillie Gifford
UK Growth Trust plc at bgukgrowthtrust.com.‡ See disclaimer at
the end of this announcement.
‡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.
For further information please
contact:
Anzelm Cydzik, Baillie Gifford &
Co
Tel: 0131 275 2000
Jonathan Atkins, Director, Four
Communications
Tel: 0203 920 0555 or 07872
495396
The following is the results
announcement for the year to 30 April 2024 which was approved by
the Board on 13 June 2024.
Chairman's statement
Performance
In this, my final period as
Chairman, it is disappointing to report on a period of
underperformance. For the year to 30 April 2024, the Company's net
asset value ('NAV') total return (capital and income) was 0.6%
compared to 7.5% for the FTSE All-Share Index total return. The
Company's share price total return declined 0.5% and the shares
ended the period at a 15.3% discount to the Company's NAV compared
to 14.1% a year earlier.
In 2018 when the Board took the
decision to appoint Baillie Gifford to manage the Company's assets,
it was in the expectation that a growth-focussed UK equity mandate
would deliver positive absolute and relative returns over the long
term. Since then, whilst there have been periods of good
performance, the longer-term results have not been as expected.
Over five years to 30 April 2024, the Company's NAV total return
was only 3.0% at a time when the FTSE All-Share Index total return
was 30.1%.
Board Composition
As highlighted in my report last
year, I will not be standing for re-election to the Board at the
upcoming AGM as I will have completed ten years of service and I am
standing down from the Board on 14 June 2024. Earlier this year our
Chair of the Audit Committee, Andrew Westenberger, led a
recruitment process supported by an external recruitment
consultant, Trust Associates, to find my successor. Mr Neil Rogan
was appointed to the Board on 1 January 2024 and will take over as
Chairman on 14 June 2024. Neil is an experienced Investment Trust
Chairman and non-executive director. He also spent 30 years as an
investment manager with Touche Remnant, Flemings and most recently
Gartmore/Henderson where he was Head of Global Equities.
Subject to the outcome of the
Company's continuation vote, I leave knowing that the Company has a
strong Board dedicated to operating in the best interests of
shareholders.
Board review
In February, the Board conducted a
rigorous review of the services Baillie Gifford provides to the
Company to inform the Board as to what it should recommend to
shareholders for the continuation vote due at this year's Annual
General Meeting ('AGM').
The Board reviewed the Managers'
provision of company services, third party oversight, internal risk
controls, marketing, shareholder support, quality of staff and
overall commitment to our Company and the investment trust sector
and found these to be of an excellent quality, provided with
commitment and integrity.
Turning to our Company's investment
performance, the Board reviewed the Managers' investment philosophy
and processes, the portfolio risk analysis, the largest stock
contributors to positive and negative performance, the quality of
the companies held in the portfolio, turnover levels and style
tilts. The Board found these to be in line with the Managers'
committed growth style and that predicted risk of investments was
set appropriately for a committed growth-orientated long-term fund.
The Board examined the quality of the Managers' research before
stock purchase and thereafter and found it very thorough and
informed.
There has been much press comment
about the difficulties the UK stock market is facing, the lack of
traditional buyers for UK equities and the pressure that companies
feel to move their listings to the US to achieve higher ratings.
The Board examined these issues with the support of their corporate
brokers and Baillie Gifford and found that whilst these problems
were real, they were not overwhelming. There are several brokers
providing research on each of our companies, and none of our
portfolio companies, that are currently held, have moved their
listing. The UK equity market is now generally considered to be
inexpensive. That view is supported by the number of takeover
approaches appearing for UK listed companies both from private
equity buyers and international companies.
Over this five-year period the
macroeconomic backdrop of sluggish economic growth, rising interest
rates and a spike in inflation has not been conducive to Baillie
Gifford's growth investment style. In addition, the UK benchmark
index has a significant exposure to resource and financial
companies whose profits tend to be cyclical with limited long term
sustainable growth and as such are not areas that meet the
Managers' long term growth requirements.
These broader style and
macroeconomic factors explain a significant amount of the
investment underperformance but not all. The balance between
successful and unsuccessful individual stock investments over this
period has not been in the Company's favour.
The Managers' report below provides
further detail on the investment performance of the
portfolio.
Unquoted Investments
In January 2022 we made our first
investment in an unquoted company by investing into the shares of
Wayve, a UK software company developing an AI system that allows
vehicles to learn whilst driving. This is an extremely competitive
area with many companies operating in it and it is a tribute to
Wayve's technology excellence that a recent funding round has
raised more than $1billion from Softbank, Microsoft and
Nvidia.
Following how we valued this company
since investment is a good example of how we approach unquoted
valuations. We initially invested £1,516,000 but when similar
listed companies' share prices fell, we lowered our valuation to
£582,000 on 31 October 2023. Now this recent funding valuation has
established a deal price, we have revalued the shares to the deal
price, and they are now valued at £3,338,000.
A handsome uplift on our purchase
price of 120% and a good reflection of how long-term growth
investing with commitment and analysis can bear rewards.
Continuation votes and
performance-triggered exit opportunity
In accordance with the Company's
Articles of Association, shareholders have the right to vote on the
continuation of the Company every five years, the next vote being
at this year's Annual General Meeting in September.
Having concluded its review of
Baillie Gifford's ability to deliver on the Company's investment
objective, the Board continues to believe firmly in the Company's
mandate and has confidence that over the longer term the portfolio
managers, through application of Baillie Gifford's investment
process, have the capacity to outperform. Accordingly, the Board is
recommending that shareholders vote in favour of continuation at
the Annual General Meeting.
The Board believes that the current
style headwinds will not last forever and growth will resume its
historical outperformance. The Board is reassured that the current
portfolio is populated with exciting growth businesses with strong
competitive positions and large market opportunities. The
fundamentals of the portfolio look strong, with 97% of the
portfolio having positive earnings or cashflows and 1-year forward
sales growth and earnings better than the index (6.0% and 7.6%
1-year forward sales and earnings growth compared to 2.7% and 5.6%
for the FTSE All-Share Index).
However, the Board recognises
shareholders' patience will have been tested by the last three
years of underperformance and, following consultation with
shareholders representing a material proportion of the Company's
share capital, if the continuation vote is passed at the Annual
General Meeting the Board makes the following commitments, which it
believes will provide greater certainty for shareholders in the
event that underperformance were to continue:
1. The Board will
introduce a one-off 5-year performance triggered exit opportunity
whereby, in the event the Company's NAV per share total return over
the 5-year period from 30 April 2024 to 30 April 2029 does not
equal or exceed the total return on the Company's benchmark (FTSE
All-Share Index), the Company will provide shareholders with the
opportunity to realise their investment in full at close to NAV per
share.
2. The Company will put
forward a resolution at the Annual General Meeting to be held by
the Company in 2027 for the continuation of the Company. This is in
addition to the five-yearly continuation votes in the Company's
Articles of Association and, as such, a continuation vote is
expected to be held in 2029 as well.
The Board believes these commitments
are in the best interests of shareholders as a whole.
Share Issuance and
Buy-backs
Since issuing shares in 2021 and
2022, the Company's shares have de-rated and moved to trading at a
discount to NAV. Over the course of the year to 30 April, the
Company has bought back on 67 occasions, buying into treasury
3,841,977 shares, which represents 2.6% of the Company's issued
share capital as at 30 April 2023. Since the financial year end, a
further 635,000 shares have been bought back. The Company currently
has 14,873,677 shares held in treasury.
The Company's share buy-back policy
seeks to operate in the best interests of shareholders by taking
into account the relative level of the Company's share price
discount to NAV when compared with peer group trusts, the absolute
level of discount, volatility in the level of discount and the
impact from share buy-back activity on the long-term liquidity of
the Company's issued shares.
The Board recognises the importance
to shareholders that the Company's shares should not persistently
trade at a significant discount to NAV in absolute terms or
relative to the peer group and, while the Board does not believe it
is appropriate to publish a specific discount target, the Board
would expect to be more active in buying back shares, when
appropriate.
The Company benefits from the
flexibility of being able to issue new shares or to re-issue any
shares that might be held in treasury when there is sufficient
demand at a premium to NAV as this helps to improve trading
liquidity and reduces ongoing costs by being asset accretive. The
Company is seeking to renew the annual issuance authority at its
AGM. To avoid any dilution to existing investors, shares held in
treasury and any new shares would only be re-issued/issued at a
premium to NAV and after associated costs.
Gearing
During the year, the Company renewed
its one-year £30 million revolving credit facility with The Royal
Bank of Scotland International Limited. Drawn and invested gearing
stood at 6% and 5% of shareholders' funds as at the Company's
year-end compared to 5% and 3% respectively a year
earlier.
The Board sets internal guidelines
for the portfolio managers' use of gearing which are altered from
time to time but are subject to net effective gearing not
representing more than 20% of shareholders' funds.
Earnings and Dividends
The net revenue return per share for
the year was 5.68p, versus 4.05p in 2023. The year-on-year increase
was largely a consequence of increased dividends received as well
as special dividends from Lancashire Holdings and 4imprint. A final
dividend of 5.60p per share, payable on 13 September 2024 to
shareholders on the register as at 16 August 2024, is being
recommended to shareholders.
The Company's priority is capital
growth so shareholders should not rely on receiving a regular or
growing level of income from their investment in this
Company.
Sustainability Disclosure
Requirements ('SDR')
In November 2023, the Financial
Conduct Authority ('FCA') published its sustainability disclosure
requirements and investment labels regime ('SDR') to address
concerns about misleading sustainability claims. SDR includes an
opt-in labelling regime for sustainable investment products,
additional disclosure requirements and restrictions on the use of
sustainability terms. It also establishes anti-greenwashing ('AGW')
rules. Investment trusts and their Managers are in scope of the
SDR. Although investment trusts are not directly in scope of the
AGW requirements, the rules apply indirectly to them, mostly via
obligations imposed on their Managers.
Although Environmental, Social and
Governance ('ESG') factors are taken into consideration by our
portfolio managers as part of their investment analysis, the
Company itself does not have an explicit sustainability objective
and so under SDR is potentially going to be categorised as
'Non-labelled' rather than 'Labelled' or 'Other'.
Annual General Meeting
It is intended that the Company's
AGM will be held on Wednesday 4 September 2024 at 12.00 noon at the
Leonardo Royal Hotel London City, 8-14 Cooper's Row, London, EC3N
2BQ. Shareholders are warmly invited to attend however regular
attendees should note that this is a different venue to the one
used in recent years. To accurately reflect the views of
shareholders of the Company, the Board intends to hold the AGM
voting on a poll, rather than on a show of hands.
The meeting will include a
presentation by the portfolio managers on the prospects for UK
equities and the positioning of the portfolio. They and the Board
will be available to answer any questions. Light refreshments will
be available.
Outlook
The portfolio managers and the Board
believe that the portfolio's current valuations fail to adequately
reflect the value of the progress being made by the investee
companies. If this observation is correct, once the macro backdrop
becomes more favourable for growth investors, for example lower
interest rates and reduced levels of inflation and/or a more stable
geopolitical backdrop, then the significantly higher growth
expectations for the portfolio against the broader market should
act as a catalyst for long-term share price
appreciation.
The current portfolio is comprised
of exciting growth businesses with large market opportunities,
strong competitive positions and, importantly, the cultural
adaptability to succeed in a rapidly changing world. Having the
nerve and patience to continue holding them through turbulent times
is likely to be key in realising their long-term
potential.
Carolan Dobson
Chairman
13 June 2024
Managers' report
This year we have segmented our
Managers' report so that it starts with a summary of the drivers of
shorter term performance before then reflecting on performance over
the past five years and the factors behind this. It ends with some
commentary on the outlook for the portfolio and the companies
held.
Performance
We discussed the disappointing
short-term performance of the first half of the Company's financial
year in the interim report. In the second half of the year, the
Company's NAV total return broadly matched the index, the FTSE
All-share total return, so the result for the year remained
unsatisfactory (over the six months to 30 April 2024, the Company's
NAV per share total return was 14.2% compared to 14.2% for the FTSE
All-Share total return). There are a number of strands to this:
while the absolute performance of the index over the year was
respectable, the performance of individual holdings in the
portfolio was much more dispersed, reflecting in particular a slant
to the downside with the stockmarket displaying displeasure at any
unexpected bad news, particularly with growth businesses. For
example, a further unexpected charge against profits led to a
further lurch down in the share price of wealth manager St James's
Place, while concerns about the health of the Chinese economy
notably impacted the shares of pig breeder Genus, life insurer
Prudential and to some extent the luxury goods retailer Burberry.
While painful in the short term, we believe in all these cases
there remains a long term growth investment case in and we are
patiently sticking with them. For example with Prudential, the
growth case involves its exposure to a wide variety of fast growing
Asian life insurance markets where it has strong competitive
positions that allows it to weather the shorter term vagaries of
the GDP growth in one country. Moreover, an impressive new
management team have articulated a clear and simple strategy that
they are beginning to execute on. This is not meant to be
dismissive of possible China risks for Prudential but as bottom up
stock pickers we see this is an example of a business that is
growing and getting stronger even if the share price appears
disconnected to these fundamentals.
Although some other businesses that
had guided to softer short-term trading fared better, such as the
leader in UK kitchens Howden Joinery and IT services business
Softcat, a greater number in the portfolio simply marked time as
the market appeared to place more emphasis on the cloudy near term
economic and geopolitical outlook, rather than the long term
opportunities for the businesses. We did see particularly strong
operational performance rewarded in the strong share price
performance of specialist marketer 4imprint and the foreign
exchange payment disruptor Wise. Lastly, Wayve, our sole unquoted
investment, which is an autonomous driving technology business, was
written up substantially following its latest funding round where a
significant sum of new investment was raised at a higher
valuation.
5-Year
Review
It is five years since the
Company's last Continuation Vote. When we took over the management
of the Company from Schroders, we asked shareholders to judge us
over five years. The results are not what we, the Board or you as a
fellow shareholder would have hoped for, having underperformed by
4.8% p.a.. We were therefore asked by the Board to examine the
data, offer our perspectives and explain why we feel confident
about the portfolio being in good shape from here, despite the
disappointing outcome so far.
A recap of how we
invest
Our investment philosophy is anchored around a core belief that
share prices will follow fundamentals over the long term. We try to
identify companies that will deliver superior earnings growth and
hold onto them long enough for their unique competitive and
cultural strengths to emerge as the dominant influence on share
prices. The following chart provides some evidence to support this
approach as it shows the striking correlation between superior
long-term earnings growth and stock price returns for the FTSE
All-Share. However, the path is not always a smooth one and there
will be periods when our style of investing will be out of
favour.
Delivered median total returns by earnings growth
quintile
http://www.rns-pdf.londonstockexchange.com/rns/4040S_1-2024-6-13.pdf
Why hasn't our investment
approach worked recently?
Since taking over the management of
Baillie Gifford UK Growth Trust, we believe that the macroeconomic
backdrop has had an unusually dominant influence on investment
outcomes. For example, if we consider calendar year NAV
performance, as detailed in the table below, we can see that the
portfolio delivered robust relative returns during the initial
shock of COVID-19 in 2020 as many of the high-margin,
capital-light, well-capitalised companies held were better able to
weather the pandemic and, in some cases, directly benefited from
global lockdowns. However, relative performance started to struggle
in 2021 as economies re-opened and supply chains struggled to
operate smoothly.
Discrete Annual Performance
to 31 December each year
|
2019
|
2020
|
2021
|
2022
|
2023
|
Share price
|
28.7%
|
12.7%
|
8.2%
|
-29.9%
|
2.3%
|
NAV
|
25.3%
|
4.6%
|
12.1%
|
-22.0%
|
4.2%
|
Index
|
19.2%
|
-9.8%
|
18.3%
|
0.3%
|
7.9%
|
Source: Morningstar, FTSE, Total
return in sterling. Index: FTSE All-Share Index
In 2022, the conflict in Ukraine put
still greater upward pressure on prices and interest rates rose
sharply. It was at this point in 2022 that our performance was most
challenged in both absolute and relative terms. Why? The stock
market had to process the imperative to discount future cash flows
at a higher rate. Conventional wisdom dictates that the multiples
applied to future earnings streams should compress in a more
inflationary environment, so the market had to grapple with the
right 'new normal' multiple to attach to equities. Growth
businesses, which are valued on the premise of long-duration
earnings streams projected out into the future, underwent a sharp
decline in their share prices. To put it simply, the market
backdrop over the past few years has given rise to an environment
where the share prices of growth companies have been hit
indiscriminately, regardless of the fundamental operational
progress they are making. We believe that much of the recent
underperformance of the portfolio has been down to this - our
investment style being out of favour - rather than too many poor
investment decisions. To be clear, we have made individual mistakes
that have hurt performance, and we have learnt from these
experiences, but the magnitude of the underperformance cannot be
explained by these.
Could we have mitigated
the underperformance?
We asked the investment risk team at
Baillie Gifford to undertake analysis to identify whether we could
have done anything different from 2021 when performance turned
down. The short answer is that after looking at various scenarios,
the only way we could have achieved an outcome aligned with the
index would have been to significantly change the portfolio by
taking large new positions in some of the largest businesses in the
UK, such as Shell, BP and HSBC. Many of these companies in our view
do not have obvious long term growth potential but they have been
beneficiaries of the macroeconomic turmoil described above because
of their near term earnings certainty. Owning many of these large
'value' stocks would have mitigated underperformance, however, it
would have also undermined our active, bottom up, long-term growth
investment style. We consider it imperative to stick to our
long-term growth investment philosophy because the alternative is
trying to second guess, and trade around, short term swings in
"style" in stock markets. Attempting to do so in our view could
make things far worse for shareholders.
Why do we believe that
performance will improve over the next five
years?
With a high inflationary and
interest rate environment, we understand why our style of growth
investing has been out of favour with the market. However, we
believe that current valuations fail to adequately reflect the
value of the progress we are seeing in the businesses we invest in;
they underestimate the adaptability of the management teams running
these businesses, and they overlook the resilient financial
characteristics that the portfolio possesses. Rather than a cause
for despondency, this disconnect between share prices and
fundamentals is a key reason why we remain confident in the
long-term outlook for the performance of the portfolio.
The three charts below illustrate
the superior quality and resiliency characteristics of the
portfolio relative to the index. While we would urge caution in
relying too heavily on spuriously precise earnings forecasts, it is
encouraging that the portfolio is invested in companies with higher
growth expectations than the broader market.
Why does this matter? As we noted
earlier, our investment philosophy is anchored around a core belief
that share prices will follow fundamentals over the long term.
Enduring growth should act as a catalyst for long-term share price
appreciation.
We continue to believe the portfolio
is populated with exciting growth businesses, with large market
opportunities, strong competitive positions, and importantly, the
cultural adaptability to succeed in a rapidly changing world.
Having the nerve and patience to continue holding them through
turbulent times is key to realising their long-term
potential.
Characteristics of the portfolio
http://www.rns-pdf.londonstockexchange.com/rns/4040S_1-2024-6-13.pdf
Outlook for the
portfolio
We see an abundance of significant
and unrecognised potential within the current portfolio. We see it
in long-standing holdings like Auto Trader, Experian and Ashtead
which have been working successfully to expand their already
substantial market opportunities, are embedding themselves ever
more deeply into their customers' businesses and whose competitive
advantages are now deeper than they have ever been. We also see it
in relatively more recent purchases like IT service providers
Kainos and Softcat which enjoy multi-decade growth tailwinds from
the adoption of technology by both enterprises and the public
sector, and where the market fails to appreciate unique cultural
strengths which make both stand out from competitors and be most
trusted advisors to customers.
Despite all the doom and gloom
surrounding the state of innovation in the UK, we look to
long-standing holdings like Renishaw and Genus whose commitment to
research and development spending, we believe, will yield
significant results in the coming decade by enabling manufacturers
and farmers across the globe to solve some of their most pressing
productivity and sustainability challenges.
Earlier in their lifecycles are
companies like AI autonomous driving start-up Wayve, the surgical
endoscopy business Creo Medical, and next generation sequencing
company Oxford Nanopore. All three are at the vanguard of progress
in their respective fields and are true world leaders.
We invest in companies for decades,
so trust in management is of great importance for us. We are
fortunate to be invested alongside some of the most accomplished
leadership teams such as those at Games Workshop and 4imprint whose
long-term mindset and dedication to doing the right thing have been
a crucial ingredient in the enormous success both businesses have
achieved over time.
Your portfolio managers work in an
investment firm which allocates capital to some of the most
promising public and private enterprises across the world. We can
both say, with some confidence, that the companies in this
portfolio can hold their own across that global investment
stage.
Iain McCombie and Milena Mileva
Baillie Gifford & Co
13 June 2024
The
managers' core investment principles
Investment philosophy
The following are the three core
principles underpinning our investment philosophy. We have a
consistent, differentiated long-term investment approach to
managing UK equities that should stand investors in the Company in
good stead:
Growth
We search for the few companies which have the potential to grow
substantially and profitably over many years. Whilst we have no
insight into the short- term direction of a company's share price,
we believe that, over the longer term, those companies which
deliver above average growth in cash flows will be rewarded with
above average share price performance and that the power of
compounding is often under-appreciated by investors. Successful
investments will benefit from a rising share price and also from
income accumulated over long periods of time.
Patience
Great growth
companies are not built in a day. We firmly believe that investors
need to be patient to fully benefit from the scale of the
potential. Our investment time horizon, therefore, spans decades
rather than quarters and our portfolio turnover is significantly
below the UK industry average. This patient, long-term approach
affords a greater chance for the superior growth and competitive
traits of companies to emerge as the dominant influence on their
share prices and allows compounding to work in the investors'
favour.
Active investment management
It is our observation that too much
attention is paid to the composition of market indices and active
managers should make meaningful investments in their best ideas
regardless of the weightings of the index. As a result,
shareholders should expect the composition of the portfolio to be
significantly different from the benchmark and hence the outcome in
returns (in both good and bad periods) will also be significantly
different from the benchmark. This differentiation is a necessary
condition for delivering superior returns over a long-term time
horizon.
Portfolio construction flows from
the investment beliefs stated above.
Baillie Gifford's stewardship principles
Baillie Gifford's overarching ethos
is that we are 'Actual' investors. That means we seek to invest for
the long term. Our role as an engaged owner is core to our mission
to be effective stewards for our clients. As an active manager, we
invest in companies at different stages of their evolution across
many industries and geographies, and focus on their unique
circumstances and opportunities. Our approach favours a small
number of simple principles rather than overly prescriptive
policies. This helps shape our interactions with holdings and
ensures our investment teams have the freedom and retain the
responsibility to act in clients' best interests.
Long-term value creation
We believe that companies that are
run for the long term are more likely to be better investments over
our clients' time horizons. We encourage our holdings to be
ambitious, focusing on long-term value creation and capital
deployment for growth. We know events will not always run according
to plan. In these instances we expect management to act
deliberately and to provide appropriate transparency. We think
helping management to resist short-term demands from shareholders
often protects returns. We regard it as our responsibility to
encourage holdings away from destructive financial engineering
towards activities that create genuine value over the long run. Our
value will often be in supporting management when others don't.
Alignment in vision and practice
Alignment is at the heart of our
stewardship approach. We seek the fair and equitable treatment of
all shareholders alongside the interests of management. While
assessing alignment with management often comes down to intangible
factors and an understanding built over time, we look for clear
evidence of alignment in everything from capital allocation
decisions in moments of stress to the details of executive
remuneration plans and committed share ownership. We expect
companies to deepen alignment with us, rather than weaken it, where
the opportunity presents itself.
Governance fit for purpose
Corporate governance is a
combination of structures and behaviours; a careful balance between
systems, processes and people. Good governance is the essential
foundation for long-term company success. We firmly believe that
there is no single governance model that delivers the best
long-term outcomes. We therefore strive to push back against
one-dimensional global governance principles in favour of a deep
understanding of each company we invest in. We look, very simply,
for structures, people and processes which we think can maximise
the likelihood of long-term success. We expect to trust the boards
and management teams of the companies we select, but demand
accountability if that trust is broken.
Sustainable business practices
A company's ability to grow and
generate value for our clients relies on a network of
interdependencies between the company and the economy, society and
environment in which it operates. We expect holdings to consider
how their actions impact and rely on these relationships. We
believe long-term success depends on maintaining a social licence
to operate and look for holdings to work within the spirit and not
just the letter of the laws and regulations that govern them.
Material factors should be addressed at the board level as
appropriate.
List of investments as at 30 April 2024
Name
|
Business
|
Fair value
£'000
|
% of
total
assets
|
Basic materials
|
|
|
|
Rio Tinto
|
Metals and mining company
|
6,174
|
2.0
|
Victrex
|
Speciality high-performance
chemicals manufacturer
|
1,712
|
0.6
|
|
|
7,886
|
2.6
|
Consumer discretionary
|
|
|
|
Games Workshop
|
Toy
manufacturer and retailer
|
14,735
|
4.9
|
Howden Joinery
|
Manufacturer and distributor of kitchens to trade
customers
|
12,600
|
4.2
|
4imprint
|
Direct marketer of promotional merchandise
|
11,918
|
4.0
|
RELX
|
Professional publications and
information provider
|
5,871
|
2.0
|
Burberry
|
Luxury goods retailer
|
4,595
|
1.5
|
Moonpig
|
Online greetings card and gifting
platform
|
3,565
|
1.2
|
|
|
53,284
|
17.8
|
Consumer staples
|
|
|
|
Diageo
|
International drinks company
|
7,894
|
2.6
|
|
|
7,894
|
2.6
|
Financials
|
|
|
|
AJ
Bell
|
UK
wealth manager
|
9,533
|
3.2
|
Legal & General
|
Insurance and investment management company
|
9,206
|
3.1
|
Just Group
|
Provider of retirement income products and
services
|
8,113
|
2.7
|
Lancashire Holdings
|
General insurance
|
7,399
|
2.5
|
Prudential
|
International life
insurer
|
6,463
|
2.1
|
Hiscox
|
Property and casualty
insurance
|
5,954
|
2.0
|
IntegraFin
|
Provides platform services to
financial clients
|
5,891
|
2.0
|
St. James's Place
|
UK wealth manager
|
4,668
|
1.5
|
Hargreaves Lansdown
|
UK retail investment
platform
|
4,355
|
1.4
|
Molten Ventures
|
Technology focused venture capital
firm
|
3,633
|
1.2
|
IG Group
|
Spread betting website
|
3,217
|
1.1
|
|
|
68,432
|
22.8
|
Healthcare
|
|
|
|
Genus
|
World leading animal genetics company
|
7,165
|
2.4
|
Creo Medical
|
Designer and manufacturer of medical
equipment
|
749
|
0.2
|
Exscientia
|
Biotech company
|
518
|
0.2
|
Oxford Nanopore
|
Novel DNA sequencing
technology
|
305
|
0.1
|
|
|
8,737
|
2.9
|
Industrials
|
|
|
|
Experian
|
Global provider of credit data and analytics
|
14,798
|
4.9
|
Ashtead
|
Construction equipment rental company
|
14,059
|
4.7
|
Volution Group
|
Supplier of ventilation products
|
13,946
|
4.7
|
Renishaw
|
World leading metrology company
|
10,590
|
3.5
|
Wise
|
Online platform to send and receive money
|
10,577
|
3.5
|
Bunzl
|
Distributor of consumable products
|
7,923
|
2.7
|
Inchcape
|
Car
wholesaler and retailer
|
7,832
|
2.6
|
Halma
|
Specialist engineer
|
7,079
|
2.4
|
Bodycote
|
Heat treatment and materials
testing
|
6,463
|
2.2
|
PageGroup
|
Recruitment consultancy
|
4,871
|
1.6
|
FDM Group
|
Provider of professional services
focusing on information technology
|
2,701
|
0.9
|
|
|
100,839
|
33.7
|
Real Estate
|
|
|
|
Rightmove
|
UK's leading online property
portal
|
5,477
|
1.8
|
Helical
|
Property developer
|
3,702
|
1.3
|
|
|
9,179
|
3.1
|
Technology
|
|
|
|
Auto Trader Group
|
Advertising portal for second hand cars in the
UK
|
15,065
|
5.0
|
Softcat
|
IT
reseller and infrastructure solutions provider
|
9,720
|
3.2
|
Kainos Group
|
IT
services and implementer
|
8,954
|
3.1
|
Wayve Technologies Ltd Series B
Pref u
|
Developer of full autonomous driving
systems
|
3,338
|
1.1
|
First Derivatives
|
IT consultant and software
developer
|
3,262
|
1.1
|
|
|
40,339
|
13.5
|
|
|
|
|
Total Equities
|
|
296,590
|
99.0
|
Net Liquid Assets
|
|
2,913
|
1.0
|
Total Assets
|
|
299,503
|
100.0
|
u Denotes unlisted
(private company) investment.
Stocks in bold are the 20 largest investments.
Income statement
For
the year ended 30 April 2024 (with comparatives for the year ended
20 April 2023)
|
2024 Revenue
£'000
|
2024
Capital
£'000
|
2024
Total
£'000
|
2023
Revenue
£'000
|
2023
Capital
£'000
|
2023
Total
£'000
|
Losses on investments
|
-
|
(6,288)
|
(6,288)
|
-
|
(2,542)
|
(2,542)
|
Currency losses
|
-
|
(93)
|
(93)
|
-
|
-
|
-
|
Income
|
9,787
|
-
|
9,787
|
7,260
|
-
|
7,260
|
Investment management fee
|
(421)
|
(982)
|
(1,403)
|
(432)
|
(1,009)
|
(1,441)
|
Other administrative
expenses
|
(568)
|
-
|
(568)
|
(533)
|
-
|
(533)
|
Net
return before finance costs
and taxation
|
8,798
|
(7,363)
|
1,435
|
6,295
|
(3,551)
|
2,744
|
Finance costs of
borrowings
|
(314)
|
(732)
|
(1,046)
|
(150)
|
(349)
|
(499)
|
Net
return on ordinary activities before taxation
|
8,484
|
(8,095)
|
389
|
6,145
|
(3,900)
|
2,245
|
Tax on ordinary
activities
|
-
|
-
|
-
|
-
|
-
|
-
|
Net
return on ordinary activities after taxation
|
8,484
|
(8,095)
|
389
|
6,145
|
(3,900)
|
2,245
|
Net
return per ordinary share (Note 4)
|
5.68p
|
(5.42p)
|
0.26p
|
4.05p
|
(2.57p)
|
1.48p
|
Dividends declared in respect of the
financial year ended 30 April 2024 amount to 5.60p (2023 -
3.60p).
The total column of this statement
is the profit and loss account of the Company. The supplementary
revenue and capital return columns are prepared under guidance
published by the Association of Investment Companies.
All revenue and capital items in
this statement derive from continuing operations.
A Statement of Comprehensive Income
is not required as all gains and losses of the Company have been
reflected in the above statement.
The accompanying notes below are an
integral part of the Financial Statements.
Balance sheet
As
at 30 April 2024 (with comparatives as at 30 April
2023)
|
2024
£'000
|
2024
£'000
|
2023
£'000
|
2023
£'000
|
Fixed assets
|
|
|
|
|
Investments held at fair value
through profit or loss
|
|
296,590
|
|
302,536
|
Current assets
|
|
|
|
|
Debtors
|
2,242
|
|
1,479
|
|
Cash and cash equivalents
|
1,917
|
|
5,512
|
|
|
4,159
|
|
6,991
|
|
Creditors
|
|
|
|
|
Amounts falling due within one
year
|
(17,596)
|
|
(15,105)
|
|
Net
current liabilities
|
|
(13,437)
|
|
(8,114)
|
Net
assets
|
|
283,153
|
|
294,422
|
Capital and reserves
|
|
|
|
|
Share capital
|
|
40,229
|
|
40,229
|
Share premium account
|
|
11,664
|
|
11,664
|
Capital redemption
reserve
|
|
19,759
|
|
19,759
|
Warrant exercise reserve
|
|
417
|
|
417
|
Share purchase reserve
|
|
49,380
|
|
55,628
|
Capital reserve
|
|
143,508
|
|
151,603
|
Revenue reserve
|
|
18,196
|
|
15,122
|
Shareholders' funds
|
|
283,153
|
|
294,422
|
Net
asset value per ordinary share*
|
|
193.0p
|
|
195.6p
|
Ordinary shares in issue (note 8)
|
|
146,678,507
|
|
150,520,484
|
* See
Glossary of terms and Alternative Performance Measures at the end
of this announcement.
The accompanying notes below are an
integral part of the Financial Statements.
Statement of changes in equity
For
the year ended 30 April 2024
|
Notes
|
Share capital
£'000
|
Share premium account
£'000
|
Capital redemption reserve
£'000
|
Warrant
exercise
reserve
£'000
|
Share
purchase
reserve
£'000
|
Capital
reserve
£'000
|
Revenue
reserve
£'000
|
Shareholders'
funds
£'000
|
Shareholders' funds at 1 May
2023
|
|
40,229
|
11,664
|
19,759
|
417
|
55,628
|
151,603
|
15,122
|
294,422
|
Ordinary shares bought back into
treasury
|
8
|
-
|
-
|
-
|
-
|
(6,248)
|
-
|
-
|
(6,248)
|
Dividends paid during the
year
|
5
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,410)
|
(5,410)
|
Net return on ordinary activities
after taxation
|
4
|
-
|
-
|
-
|
-
|
-
|
(8,095)
|
8,484
|
389
|
Shareholders' funds at 30 April 2024
|
|
40,229
|
11,664
|
19,759
|
417
|
49,380
|
143,508
|
18,196
|
283,153
|
For
the year ended 30 April 2023
|
Notes
|
Share capital
£'000
|
Share premium account
£'000
|
Capital redemption reserve
£'000
|
Warrant
exercise
reserve
£'000
|
Share
purchase
reserve
£'000
|
Capital
reserve
£'000
|
Revenue
reserve
£'000
|
Shareholders'
funds
£'000
|
Shareholders' funds at 1 May
2022
|
|
40,229
|
11,664
|
19,759
|
417
|
60,433
|
155,503
|
14,928
|
302,933
|
Ordinary shares bought back into
treasury
|
8
|
-
|
-
|
-
|
-
|
(4,805)
|
-
|
-
|
(4,805)
|
Dividends paid during the
year
|
5
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,951)
|
(5,951)
|
Net return on ordinary activities
after taxation
|
4
|
-
|
-
|
-
|
-
|
-
|
(3,900)
|
6,145
|
2,245
|
Shareholders' funds at 30 April 2023
|
|
40,229
|
11,664
|
19,759
|
417
|
55,628
|
151,603
|
15,122
|
294,422
|
The accompanying notes below are an
integral part of the Financial Statements.
Cash flow statement
For
the year ended 30 April 2024 (with comparatives for the year ended
30 April 2023)
|
2024
£'000
|
2024
£'000
|
2023
£'000
|
2023
£'000
|
Cash flows from operating activities
|
|
|
|
|
Net return on ordinary activities
before taxation
|
389
|
|
2,245
|
|
Adjustments to reconcile company profit before tax to next
cash flow from operating activities
|
Net losses on investments
|
6,288
|
|
2,542
|
|
Currency losses
|
93
|
|
-
|
|
Finance costs of
borrowings
|
1,046
|
|
499
|
|
Other capital movements
|
|
|
|
|
Changes in debtors
|
(171)
|
|
344
|
|
Changes in creditors
|
31
|
|
(3)
|
|
Cash from operations*
|
|
7,676
|
|
5,627
|
Interest paid
|
|
(897)
|
|
(357)
|
Net
cash inflow from operating activities
|
|
6,779
|
|
5,270
|
Cash flows from investing activities
|
|
|
|
|
Acquisitions of
investments
|
(24,185)
|
|
(24,014)
|
|
Disposals of investments
|
23,251
|
|
25,521
|
|
Net
cash (outflow)/inflow from investing activities
|
|
(934)
|
|
1,507
|
Cash flows from financing activities
|
|
|
|
|
Bank loan drawn down
|
1,900
|
|
8,000
|
|
Equity dividends paid
|
(5,410)
|
|
(5,951)
|
|
Ordinary shares bought back into
treasury and stamp duty thereon
|
(5,837)
|
|
(4,805)
|
|
Net
cash outflow from financing activities
|
|
(9,347)
|
|
(2,756)
|
(Decrease)/increase in cash and cash
equivalents
|
|
(3,502)
|
|
4,021
|
Exchange movements
|
|
(93)
|
|
-
|
Cash and cash equivalents at start
of year
|
|
5,512
|
|
1,491
|
Cash and cash equivalents at end of
year†
|
|
1,917
|
|
5,512
|
* Cash from operations includes
dividends received of £9,539,000 (2023 - £7,523,000) and £82,000
deposit interest (2023 - £77,000).
† Cash and cash
equivalents represents cash at bank and short-term deposits
repayable on demand.
The accompanying notes below are an
integral part of the Financial Statements.
Notes to the Financial Statements
1. The Financial
Statements for the year to 30 April 2024 have been prepared in
accordance with FRS 102 'The Financial Reporting Standard
applicable in the UK and Republic of Ireland' on the basis of the
accounting policies set out below which are consistent with those
applied for the year ended 30 April 2023.
2. Income
|
2024
£'000
|
2023
£'000
|
Income from Investments
|
|
|
UK dividends
|
9,705
|
7,183
|
Other income
|
|
|
Deposit interest
|
82
|
77
|
Total Income
|
9,787
|
7,260
|
Special dividends received in the
year amounted to £1,491,000 (2023 - £311,000) with £1,491,000 (2023
- £311,000) classified to revenue and nil (2023 -nil) classified to
capital.
3. Investment management fee
|
2024
Revenue
£'000
|
2024
Capital
£'000
|
2024
Total
£'000
|
2023
Revenue
£'000
|
2023
Capital
£'000
|
2023
Total
£'000
|
Investment Management Fee
|
421
|
982
|
1,403
|
432
|
1,009
|
1,441
|
Baillie Gifford & Co Limited, a
wholly owned subsidiary of Baillie Gifford & Co, has been
appointed as the Company's Alternative Investment Fund Manager
('AIFM') and Company Secretary. Baillie Gifford & Co Limited
has delegated portfolio management services to Baillie Gifford
& Co. Dealing activity and transaction reporting have been
further sub-delegated to Baillie Gifford Overseas Limited and
Baillie Gifford Asia (Hong Kong) Limited.
The Investment Management Agreement
between the AIFM and the Company sets out the matters over which
the Managers have authority in accordance with the policies and
directions of, and subject to restrictions imposed by, the Board.
The Investment Management Agreement is terminable by the Managers
on not less than six months' notice or on shorter notice in certain
circumstances. With effect from 6 June 2024, the Investment
Management Agreement is terminable by the Company on not less than
three months' notice or on shorter notice in certain circumstances.
Prior to this, the Investment Management Agreement was terminable
by the Company on not less than six months' notice or on shorter
notice in certain circumstances. Compensation would only be payable
if termination occurred prior to the expiry of the notice period.
The annual management fee is 0.5% of net assets, calculated and
payable quarterly.
4. Net return per ordinary
share
|
2024
Revenue
|
2024
Capital
|
2024
Total
|
2023
Revenue
|
2023
Capital
|
2023
Total
|
Net return per ordinary
share
|
5.68p
|
(5.42p)
|
0.26p
|
4.05p
|
(2.57p)
|
1.48p
|
Revenue return per ordinary share is
based on the net revenue return on ordinary activities after
taxation of £8,484,000 (2023 - £6,145,000), and on 149,401,543
(2023 - 151,603,018) ordinary shares, being the weighted average
number of ordinary shares in issue during each year.
Capital return per ordinary share is
based on the net capital loss for the financial year of £8,095,000
(2023 - net capital loss of £3,900,000), and on 149,401,543 (2023 -
151,603,018) ordinary shares, being the weighted average number of
ordinary shares in issue during each year.
There are no dilutive or potentially
dilutive shares in issue.
5. Ordinary dividends
|
2024
|
2023
|
2024
£'000
|
2023
£'000
|
Amounts recognised as distributions in the
year:
|
|
|
|
|
Previous year's final dividend (paid
15 September 2023)
|
3.60p
|
3.91p
|
5,410
|
5,951
|
Also set out below are the total
dividends paid and proposed in respect of the financial year, which
is the basis on which the requirements of section 1158 of the
Corporation Tax Act 2010 are considered. The revenue available for
distribution by way of dividend for the year is £8,484,000 (2023 -
£6,145,000).
|
2024
|
2023
|
2024
£'000
|
2023
£'000
|
Dividends paid and payable in respect of the
year:
|
|
|
|
|
Proposed final dividend (payable 13
September 2024)
|
5.60p
|
3.60p
|
8,214
|
5,410
|
If
approved, the final dividend of 5.60p will be paid on 13 September
2024 to all shareholders on the register at the close of business
on 16 August 2024. The ex-dividend date is 15 August
2024.
6. At 30
April 2024, the Company had a one year £30 million unsecured
revolving credit loan facility with The Royal Bank of Scotland
International Limited which expires in July 2024. At 30 April 2024,
£16,350,000 was drawn down under this facility. At 30 April 2023,
the Company had a one year £30 million unsecured revolving credit
loan facility with The Royal Bank of Scotland International Limited
which expired in July 2023. At 30 April 2023, £14,450,000 was drawn
down under this facility.
The main covenant relating to the
above loan is that total borrowings shall not exceed 30% of
adjusted portfolio value. There were no breaches of loan covenants
during the year.
7. Transaction costs of £118,000 (2023 - £115,000) and £9,000
(2023 - £10,000) were suffered on purchases and sales
respectively.
8. The
Company's shareholder authority permits it to hold shares bought
back 'in treasury'. Under such authority, treasury shares may be
subsequently either sold for cash (at a premium to net asset value
per ordinary share) or cancelled. At 30 April 2024 the Company had
authority to buy back 19,001,576 ordinary shares. During the year
to 30 April 2024, 3,841,977 shares were bought back into treasury
at a total cost of £6,248,000 (2023 - 2,975,000 shares were bought
back into treasury at a total cost of £4,805,000).
In the year to 30 April 2024, no
shares were sold from treasury (2023 - no shares were sold from
treasury). At 30 April 2024 the Company had authority to issue or
sell from treasury 15,041,548 ordinary shares.
9. The
financial information set out above does not constitute the
Company's statutory accounts for the year ended 30 April 2024 or
2023. The financial information for 2023 is derived from the
statutory accounts for 2023 which have been delivered to the
Registrar of Companies. The Auditor has reported on the 2023
accounts, their report was (i) unqualified, (ii) did not include a
reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying their report; and (iii) did not
contain a statement under sections 498(2) or (3) to 497 of the
Companies Act 2006.
10. The Annual
Report and Financial Statements will be available on the Company's
website bgukgrowthtrust.com
on or around 4 July 2024. None of the view expressed in this
document should be construed as advise to buy or sell a particular
investment.
Glossary of terms and Alternative Performance Measures
('APM')
An alternative performance measure
('APM') 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. The APMs noted below are commonly used
measures within the investment trust industry and serve to improve
comparability between investment trusts.
Total assets
This is the Company's definition of
Adjusted Total Assets, being the total value of all assets held
less all liabilities (other than liabilities in the form of
borrowings).
Net Asset Value
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 (excluding treasury shares).
Net Liquid
Assets
Net liquid assets comprise current
assets less current liabilities, excluding borrowings.
Discount/premium ('APM')
As stockmarkets and share prices
vary, an investment trust's share price is rarely the same as its
NAV. When the share price is lower than the NAV per share it is
said to be trading at a discount. The size of the discount is
calculated by subtracting the share price from the NAV per share
and is usually expressed as a percentage of the NAV per share. If
the share price is higher than the NAV per share, it is said to be
trading at a premium.
|
2024
|
2023
|
Closing NAV per share
|
193.0p
|
195.6p
|
Closing share price
|
163.5p
|
168.0p
|
Discount
|
(15.3%)
|
(14.1%)
|
Total return
(APM)
The total return is the
return to shareholders after reinvesting the net dividend on the
date that the share price goes ex-dividend.
|
|
2024
NAV
|
2024
share price
|
2023
NAV
|
2023
share price
|
Closing NAV per share/share
price
|
(a)
|
193.0p
|
163.5p
|
195.6p
|
168.0p
|
Dividend adjustment
factor*
|
(b)
|
1.0197
|
1.0226
|
1.0204
|
1.0232
|
Adjusted closing NAV per share/share
price
|
(c=a x
b)
|
196.8p
|
167.2p
|
199.6p
|
171.9p
|
Opening NAV per share/share
price
|
(d)
|
195.6p
|
168.0p
|
197.4p
|
174.2p
|
Total return
|
(c ÷ d)-1
|
0.6%
|
(0.5%)
|
1.1%
|
(1.3%)
|
* The dividend adjustment factor is
calculated on the assumption that the dividend of 3.60p (2023 -
3.91p) paid by the Company during the year were reinvested into
shares of the Company at the cum income NAV per share/share price,
as appropriate, at the ex-dividend date.
Ongoing charges (APM)
The total expenses (excluding
borrowing costs) incurred by the Company as a percentage of the
average net asset value. The ongoing charges have been calculated
on the basis prescribed by the Association of Investment
Companies.
A reconciliation from the expenses
detailed in the Income statement above is provided
below:
|
|
2024
|
2023
|
Investment management fee
|
|
£1,403,000
|
£1,441,000
|
Other administrative
expenses
|
|
£568,000
|
£533,000
|
Total expenses
|
(a)
|
£1,971,000
|
£1,974,000
|
Average net asset value
|
(b)
|
£280,829,000
|
£283,920,000
|
Ongoing charges ((a) ÷ (b) expressed as a
percentage)
|
0.70%
|
0.70%
|
Gearing (APM)
At its simplest, gearing is
borrowing. Just like any other public company, an investment trust
can borrow money to invest in additional investments for its
portfolio. The effect of the borrowing on the shareholders' assets
is called 'gearing'. If the Company's assets grow, the
shareholders' assets grow proportionately more because the debt
remains the same. But if the value of the Company's assets falls,
the situation is reversed. Gearing can therefore enhance
performance in rising markets but can adversely impact performance
in falling markets.
Invested gearing is the Company's
borrowings adjusted for cash and cash equivalents expressed as a
percentage of shareholders' funds.
|
2024
|
2023
|
Borrowings
|
£16,350,000
|
£14,450,000
|
Less: cash and cash
equivalents
|
(£1,917,000)
|
(£5,512,000)
|
Adjusted borrowings
|
£14,433,000
|
£8,938,000
|
Shareholders' funds
|
£283,153,000
|
£294,422,000
|
Invested gearing
|
5%
|
3%
|
Drawn gearing is the Company's
borrowings expressed as a percentage of shareholders'
funds.
|
2024
|
2023
|
Borrowings
|
£16,350,000
|
£14,450,000
|
Shareholders' funds
|
£283,153,000
|
£294,422,000
|
Drawn gearing
|
6%
|
5%
|
Leverage (APM)
For the purposes of the Alternative
Investment Fund Managers (AIFM) Regulations, leverage is any method
which increases the Company's exposure, including the borrowing of
cash and the use of derivatives. It is expressed as a ratio between
the Company's exposure and its net asset value and can be
calculated on a gross and a commitment method. Under the gross
method, exposure represents the sum of the Company's positions
after the deduction of sterling cash balances, without taking into
account any hedging and netting arrangements. Under the commitment
method, exposure is calculated without the deduction of sterling
cash balances and after certain hedging and netting positions are
offset against each other. The Company's maximum and actual
leverage as at the year end are set out on page 103 of the Annual
Report and Financial Statements.
Active share
(APM)
Active share, a measure of how
actively a portfolio is managed, is the percentage of the portfolio
that differs from its comparative index. It is calculated by
deducting from 100 the percentage of the portfolio that overlaps
with the comparative index. An active share of 100 indicates no
overlap with the index and an active share of zero indicates a
portfolio that tracks the index.
Unlisted (Private) Company
An unlisted (private) company means
a company whose shares are not available to the general public for
trading and not listed on a stock exchange.
Sustainable Finance Disclosure Regulation
('SFDR')
The EU Sustainable Finance Disclosure
Regulation ('SFDR') does not have a direct impact in the UK due to
Brexit, however, it applies to third-country products marketed in
the EU. As Baillie Gifford UK Growth Trust plc is marketed in the
EU by the AIFM, Baillie Gifford & Co Limited, via the National
Private Placement Regime ('NPPR') the following disclosures have
been provided to comply with the high-level requirements of
SFDR.
The AIFM has adopted Baillie Gifford
& Co's stewardship principles and guidelines as its policy on
integration of sustainability risks in investment
decisions.
Baillie Gifford & Co believes
that a company cannot be financially sustainable in the long run if
its approach to business is fundamentally out of line with changing
societal expectations. It defines 'sustainability' as a
deliberately broad concept which encapsulates a company's purpose,
values, business model, culture, and operating
practices.
Baillie Gifford & Co's approach
to investment is based on identifying and holding high quality
growth businesses that enjoy sustainable competitive advantages in
their marketplace. To do this it looks beyond current financial
performance, undertaking proprietary research to build up an
in-depth knowledge of an individual company and a view on its
long-term prospects. This includes the consideration of
sustainability factors (environmental, social and/or governance
matters) which it believes will positively or negatively influence
the financial returns of an investment.
The likely impact on the return of
the portfolio from a potential or actual material decline in the
value of investment due to the occurrence of an environmental,
social or governance event or condition will vary and will depend
on several factors including but not limited to the type, extent,
complexity and duration of an event or condition, prevailing market
conditions and existence of any mitigating factors.
Whilst consideration is given to
sustainability matters, there are no restrictions on the investment
universe of the Company, unless otherwise stated within in its
investment objective and policy. Baillie Gifford & Co can
invest in any companies it believes could create beneficial
long-term returns for investors. However, this might result in
investments being made in companies that ultimately cause a
negative outcome for the environment or society.
More detail on the Manager's approach
to sustainability can be found in the stewardship principles and
guidelines document, available publicly on the Baillie Gifford
website bailliegifford.com.
The underlying investments do not
take into account the EU criteria for environmentally sustainable
economic activities established under the EU Taxonomy
Regulation.
Automatic exchange of information
In order to fulfil its obligations
under UK Tax 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 trust companies to provide personal information to HMRC
on certain investors who purchase shares in investment trusts. As
an affected company, Baillie Gifford UK Growth Trust plc will have
to provide information annually to the local tax authority on the
tax residencies of a number of non-UK based certificated
shareholders and corporate entities.
Shareholders, excluding those whose
shares are held in CREST, who come on to the share register will be
sent a certification form for the purposes of collecting this
information.
For further information, please see
HMRC's Quick Guide: Automatic Exchange of Information - information
for account holders gov.uk/government/publications/exchange-of-information-account-holders.
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