RNS Number : 0306E
Schiehallion Fund Limited (The)
13 September 2024
 

RNS Announcement

The Schiehallion Fund Limited

Legal Entity Identifier: 213800NQOLJA1JCWXQ56

Regulated Information Classification: Interim Financial Report

The following is the unaudited Interim Financial Report for the six months to 31 July 2024 which was approved by the Board on 12 September 2024.

Board update

David Chiswell resigned as non-executive Director of the Company in April 2024 due to ongoing health issues and has sadly since passed away. David made a significant contribution to the Board during his tenure and was an effective and widely admired Director who will be much missed by the Board and the Managers. David held positions across the biotechnology industry and his contributions to the field were recognised in 2006 when he was awarded the OBE by The Queen for services to the industry.

The Directors recognise the importance of succession planning and review the Board composition annually. The Board is committed to maintaining the Board's depth and breadth of knowledge, experience and professional expertise. The Board will communicate future succession plans in due course.

During the period, the Board engaged with the relevant shareholder following the significant number of votes against the re-appointment of Dr Yueh at the Annual General Meeting on 10 May 2024. The shareholder's concerns related to the number of simultaneous directorships. A review of the Chair's and other Directors' commitments was carried out and the Nomination Committee remains satisfied that Dr Yueh is capable of devoting sufficient time to the Company. There have been no significant changes to Dr Yueh's other commitments since 31 January 2024. Her total number of mandates from her directorships continues to comply with the UK Corporate Governance Code. The Directors continue to believe that the Board has a balance of skills and experience which enable it to provide effective strategic leadership and proper governance of the Company.  

Summary of unaudited results*

Ordinary shares

31 July 2024

31 January 2024

(audited)

% change

Shareholders' funds

US$1,178.17m

US$1,219.14m


Net asset value per Ordinary share

114.61¢

118.37¢

(3.2%)

Share price

103.00¢

71.50¢

44.1%

Discount†

10.1%

39.6%


Number of shares in issue

1,027,973,907

1,029,898,907


Market capitalisation

US$1,058.81m

US$736.38m


 


Six months to
31 July 2024

Six months to
31 July 2023

Revenue earnings per Ordinary share

(0.04¢)

(0.30¢)

Period's high and low


Six months to 31 July 2024

For the period 1 February 2023 to 8 September 2023

For the period 9 September 2023 to 31 January 2024

Ordinary shares

High

Low

High

Low

High

Low

Net asset value per Ordinary share

120.57¢

114.61¢

117.98¢

103.94¢

118.66¢

103.40¢

Share price

103.00¢

57.00¢

92.50¢

59.00¢

74.00¢

45.00¢

Discount†

(11.66%)

(51.23%)

(22.53%)

(44.93%)

(36.29%)

(56.48%)

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.

All investment strategies have the potential for profit and loss. Past performance is not a guide to future performance.

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.

Principal risks and uncertainties

The principal and emerging risks facing the Company are:

Investment and strategic risks - liquidity of investments; market, economic, political and environmental risks; valuation risk; investment strategy risk; discount risk; and Environmental, Social and Governance ('ESG') risk.

External risks - political and associated economic risk; legal and regulatory risk.

Operational risks - performance and reliance on third party service providers; cyber security threats; and key professionals.

Emerging risks - geopolitical tensions, including the Russia-Ukraine conflict and US-China tensions, high energy prices, inflation and interest rates; cyber risk; and the proliferation of AI technology.

An explanation of these risks and how they are managed is set out on pages 39 to 44 of the Company's Annual Report and Financial Statements for the year to 31 January 2024 which is available on the Company's website: schiehallionfund.com

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.

On behalf of the Board

Dr Linda Yueh CBE

Chairperson

12 September 2024

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, and for the preparation and dissemination of financial statements. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.

Interim management report

The six months to 31 July 2024 saw NAV total return down 3.2%. However, the share price increased by 44.1% over the period, causing the discount to narrow to 10.1%.

Both private and public holdings contributed to the NAV decrease. On the public side, key negative contributors were buy-now pay-later provider Affirm and foreign exchange platform Wise. Affirm's share price dropped 42% and Wise's dropped 17%. Underlying operational performance at both companies was still strong. Affirm saw 51% revenue growth and achieving over one million users of its Affirm Card product, whilst Wise grew revenues 23% and more than tripled profits. Over the life of the fund, both stocks remain strong net contributors to performance. On the private side, German real estate broker McMakler was the main negative contributor, as it continues to battle macroeconomic headwinds in the domestic property market.

Positive contributors included Italian consumer digital application company Bending Spoons and American expense management and credit card company Brex. Bending Spoons has continued to deliver strong operational performance and show signs of having successfully integrated its recent acquisitions. We added more to our position reflecting growing conviction in the investment case. Brex has posted stronger operational results and improved margins as it gains efficiency following a difficult workforce reduction exercise.

Across the portfolio, operating performance remains broadly strong. Portfolio-weighted revenue growth was 41% over the period, with 39% of the companies by portfolio weighting being EBITDA-positive, and nearly 50% of companies in total being cash generative. The vast majority of the companies within the portfolio have cash balances greater than a year, with just under 5% having less than 12 months cash runway.

Portfolio management

Over the six months to 31 July, we made one new investment and completed two sales.

The new investment was in Tekever. Tekever is a Portuguese aerial intelligence company. It produces software-defined autonomous surveillance drones for both non-lethal military and civilian use cases.

The sales were of public company Allbirds and private company Graphcore. Footwear company Allbirds had struggled to expand its customer base and product reach since its IPO, with a couple of false starts into apparel and high-performance footwear. We felt the capital could be better used elsewhere in our opportunity set. AI semiconductor design company Graphcore was acquired by Softbank. Despite having had setbacks in customer contracts and chip developments, at the sale price we were able to recoup the majority of our initial investment. Nonetheless, neither of these sales represent the kinds of outcomes that we seek.

We had one holding IPO in the period. Tempus AI, owner of one of the world's biggest libraries of clinical and molecular data, listed at a 20% premium to its end-of-May carrying valuation. The period also saw further private capital raising activity, with autonomous driving software company Wayve receiving a large investment from Softbank, Nvidia and Microsoft. We first took a position in Wayve for the fund in January 2022.

We have continued to execute on the share buyback program announced in November 2023. To 31 July 2024, the fund has bought back 4,526,000 shares. We will continue to allocate the remaining 12% of capital across new private opportunities, supporting existing companies and buying back shares.

Private company valuations

Over the reporting period, there were 170 revaluation events, with ~45% of the portfolio being revalued three times or more. The average movement at the private company level was -6.3%.

The gradual uptick in private markets activity over the past twelve months have given us opportunities to compare our carrying valuations with external price discovery moments. Over the last year, we have seen eleven such price discovery events. On nine occasions we needed to revalue our holdings up, with a median upwards revaluation of 18%. On two occasions we needed to revalue our holdings down, with a median downwards revaluation of 2%.

As a reminder of our valuation process, we aim for a targeted +/- 20% range to the new valuation, with some balance of being over and under - neither consistently conservative nor consistently bullish. The overall median movement over the twelve months has been an increase of 16%, giving us comfort over the fair value positions and their proximity to eventual transaction events.

Looking forward

We continue to see causes for optimism in the underlying holdings. The companies within the fund have reacted well to a tough couple of years in private markets, and we believe are well positioned to continue to take advantage of their competitive positions in the years ahead. We have been continuing to invest in our capability at Baillie Gifford, with four more investors joining our team during the period.

More and more excellent companies are coming back to the market to organise rounds - if not for their own primary capital needs, then to facilitate liquidity for their early venture backers, who are coming under pressure for liquidity from their own clients. The result is a much healthier crop of interesting companies raising capital than we have seen for the last couple of years. We believe the share price appreciation over the last six months hints at an improved sentiment in general towards growth equity in the markets. If so, it is a sentiment we share.

Peter Singlehurst

Robert Natzler

Portfolio executive summary

Performance


6 months

%

1 year

%

3 years

%

Since inception

% *

Share price

44.1%

56.1%

(49.3%)

(8.4%)

NAV

(3.2%)

4.7%

(30.2%)

15.0%

*        Inception date: 27 March 2019.

All figures are stated on a total return basis† for periods to 31 July 2024.

†        Alternative Performance Measure - see Glossary of terms and Alternative Performance Measures at the end of this announcement.

Source: Baillie Gifford/LSEG. See disclaimer at the end of this announcement.

Key contributors to and detractors from Company performance - six months to 31 July 2024

Contributors†

Absolute return *

(%)

Tempus AI§

32.6

Bending Spoons

13.7

Space Exploration Technologies

7.8

Brex

15.0

HeartFlow

57.2

 

Detractors†

Absolute return *

(%)

McMakler GmbH

(96.9)

Affirm§

(30.2)

Northvolt

(21.9)

Flix SE

(22.9)

Wise§

(10.8)

*        Absolute performance (in US$ terms) has been calculated on a total return basis (including reinvestment of any dividends paid by portfolio holdings) over the period 1 February 2024 to 31 July 2024.

†        The contributors to and detractors from Company performance are listed in descending order.

§        Denotes listed investment previously held in the portfolio as a private company investment.

Source: Revolution.

Distribution of total net assets (unaudited)

Geographical as at 31 July 2024


Geographical

% at

31 July

2024

% at

31 January

2024

Number of

investments

at 31 July

2024

1

United States

54.2

50.7

30

2

China

8.0

7.7

3

3

United Kingdom

7.6

8.4

2

4

Italy

5.7

4.0

1

5

India

3.0

3.4

1

6

Germany

2.3

5.8

2

7

Sweden

2.1

2.7

1

8

Portugal

1.8

-

1

9

Australia

1.6

1.8

1

10

Brazil

0.8

0.9

1

11

Canada

<0.1

0.2

1

12

Net current assets

12.9

14.4


Sectoral as at 31 July 2024


Sectoral

% at

31 July

2024

% at

31 January

2024

Number of

investments

at 31 July

2024

1

Information technology

25.8

21.3

13

2

Industrials

15.4

13.0

6

3

Financials

15.3

18.0

5

4

Consumer discretionary

9.5

10.1

6

5

Communication services

8.9

8.8

3

6

Healthcare

4.7

3.6

4

7

Consumer staples

3.8

4.2

4

8

Materials

2.8

2.6

1

9

Real estate

0.9

4.0

2

10

Net current assets

12.9

14.4


The above sectoral distribution is not derived from any index.

Baillie Gifford - valuing private companies

We aim to hold our private company investments at 'fair value', i.e. the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations group at Baillie Gifford, which takes advice from an independent third party (S&P Global). The valuations group is independent from the investment team with all voting members being from different operational areas of the firm, and the investment managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. During stable market conditions, and assuming all else is equal, each investment would be valued four times in a twelve-month period. For Schiehallion and our investment trusts, the prices are also reviewed twice per year by the respective boards and are subject to the scrutiny of external auditors in the annual audit process.

Beyond the regular cycle, the valuations team also monitors the portfolio for certain 'trigger events'. These may include changes in fundamentals, a takeover approach, an intention to carry out an Initial Public Offering ('IPO'), company news which is identified by the valuation team or by the portfolio managers, or meaningful changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value ('NAV'). There is no delay.

The valuations team also monitors relevant market indices on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate.

Generally speaking, public markets have continued to be less volatile in the six months to 31 July 2024, and overall, an improvement in market conditions has led to an increase in private market deal activity. The data below quantifies the revaluations carried out during the six months to 31 July 2024, however, it does not reflect the ongoing monitoring of the private investment portfolio which has not resulted in a change in valuation.

The Schiehallion Fund*


Instruments held

68

Percentage of portfolio revalued up to 2 times

55.9%

Percentage of portfolio revalued 3+ times

44.1%

*        Data reflecting period 1 February 2024 to 31 July 2024.

List of investments

as at 31 July 2024 (unaudited)

Name

Business

Country

2024

Total value US$'000

2024

% of net
assets *

Space Exploration Technologies

Designs, manufactures and launches advanced rockets and spacecraft

United States

 95,248

8.1

ByteDance

Social media and news aggregation company

China

 68,518

5.8

Bending Spoons

Mobile application software developer

Italy

 66,970

5.7

Wise§

Online platform to send and receive money

UK

 55,336

4.7

Brex

Corporate credit cards for startups

United States

 46,251

3.9

Affirm§

Online platform which provides point of sale consumer finance

United States

 36,717

3.1

Dailyhunt (VerSe Innovation)

Telephone voice, data, text messaging, and roaming services

India

 35,636

3.0

Tempus AI§

Oncological records aggregator and diagnostic testing provider

United States

 35,029

3.0

Wayve Technologies

AI based software for self-driving cars

UK

 34,297

2.9

Solugen

Combines enzymes and metal catalysts to make chemicals

United States

 33,030

2.8

Stripe

Online payment platform

United States

 32,618

2.7

Databricks

Data software solutions

United States

 30,488

2.6

Chime Financial

Digital current account provider

United States

 27,314

2.4

Faire Wholesale

Online wholesale marketplace

United States

 27,153

2.3

Flix SE

European mobility provider

Germany

 25,435

2.2

Northvolt

Lithium ion battery manufacturer

Sweden

 24,147

2.1

Grammarly

Online platform for checking grammar, spelling and improving written communication

United States

 23,521

2.0

Kepler Computing

Semiconductor company

United States

 23,137

2.0

Epic Games

Video game developer

United States

 22,263

1.9

Rappi

Provider of an on-demand delivery platform designed to connect consumers with local stores

United States

 22,091

1.9

Tekever

Unmanned systems technology and services manufacturer

Portugal

 21,641

1.8

Warby Parker§

Online and physical corrective eyewear retailer

United States

 21,199

1.8

Pet Circle (Millell Pty Ltd)

Pet food and accessories

Australia

 18,881

1.6

Oddity§

Direct to consumer cosmetics

United States

 18,804

1.6

Genki Forest Technology Group

Non-alcoholic beverages

China

 18,700

1.6

HeartFlow

Develops software for cardiovascular disease diagnosis and treatment

United States

 16,055

1.3

PsiQuantum

Silicon photonic quantum computing

United States

 14,985

1.3

Tanium

Online security management

United States

 14,649

1.2

Merlin Labs

Autonomous flight technology

United States

 14,625

1.2

Oscar Health§

Healthcare insurance provider

United States

 14,534

1.2

Nuro

Developer of autonomous delivery vehicles

United States

 14,287

1.2

Cohesity

Data storage

United States

 11,302

1.0

Workrise Technologies

Jobs marketplace for the energy sector

United States

 10,967

0.9

Airbnb§

Online market place for travel accommodation

United States

 10,730

0.9

Loft

Online property platform

Brazil

 9,078

0.8

AWAY (JRSK Inc)

Travel and lifestyle brand

United States

 8,567

0.8

Jiangxiaobai

Producer of alcoholic beverages

China

 7,000

0.6

Carbon

Manufactures and develops 3D printers

United States

 6,516

0.6

Honor Technology

Provider of home-care services

United States

 4,754

0.4

MasterClass (Yanka Industries)

Online education subscription platform 

United States

 1,387

0.1

McMakler GmbH

Real estate services

Germany

 1,166

0.1

Illumina CVR

Gene sequencing equipment and consumables

United States

 407

<0.1

Indigo Agriculture

Microbial seed treatments to increase crop yields and grain marketplace

United States

 380

<0.1

Blockstream

Financial software developer

Canada

 316

<0.1

Total investments

 

 

 1,026,129

87.1

 

2024

Total value US$'000

2024
% of net
assets*

US Treasury Bill 20/03/2025

 22,556

2.0

US Treasury Bill 15/05/2025

 22,537

1.9

US Treasury Bill 05/09/2024

 22,536

1.9

US Treasury Bill 23/01/2025

 22,513

1.9

US Treasury Bill 29/11/2024

 22,510

1.9

US Treasury Bill 31/10/2024

 22,504

1.9

Total US Treasury Bills

 135,156

11.5

Cash

 19,293

1.6

Other current assets and liabilities

(2,061)

(0.2)

Capital gains tax provision†

(346)

<0.0

Net current assets less capital gains tax provision

152,042

12.9

Total net assets less capital gains tax provision

1,178,171

100.0

§        Denotes listed investment previously held in the portfolio as a private company investment.

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

†        The tax liability provision at 31 July 2024 relates to a potential liability for Indian capital gains tax that may arise on the Company's Indian investments should they be sold in the future, based on the net unrealised taxable capital gain at the period end and on enacted Indian tax rates.

Name

Listed

investments

%

Private

company

investments

%

Net current

assets *

%

Net assets *

%

31 July 2024

16.3

70.8

12.9

100.0

31 January 2024

14.3

71.3

14.4

100.0

Allocation of net assets (unaudited)

2024

Total value US$'000

2024
% of net
assets *

Listed investments

192,349

16.3

Private company investments

833,373

70.8

Contingent value rights

407

<0.1

US Treasury Bills

135,156

11.5

Cash and cash equivalents

19,293

1.6

Net current assets

(2,407)

(0.2)

Total net assets

1,178,171

100.0

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

The Company may hold various classes of shares in investee companies, some of which may have a preference on winding up.

Statement of comprehensive income (unaudited)



For the six months to 31 July 2024

For the six months to 31 July 2023

For the year to 31 January 2024


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

(Losses)/gains on investments


-

(39,662)

(39,662)

 -

(46,896)

(46,896)

-

69,768

69,768

Currency gains/(losses)


-

27

27

 -

(9)

(9)

-

75

75

Income

2

4,670

-

4,670

 3,512

 -

 3,512

8,211

-

8,211

Investment management fee

3

(4,471)

-

(4,471)

(3,937)

 -

(3,937)

(8,152)

-

(8,152)

Other administrative expenses

4

(577)

-

(577)

(637)

 -

(637)

(1,263)

-

(1,263)

Operating (loss)/profit before finance costs and taxation


(378)

(39,365)

(40,013)

(1,062)

(46,905)

(47,967)

(1,204)

69,843

68,639

Finance cost of borrowings


-

-

-

 -

 -

 -

-

-

-

Operating (loss)/profit before taxation


(378)

(39,635)

(40,013)

(1,062)

(46,905)

(47,967)

(1,204)

69,843

68,639

Tax on ordinary activities


-

486

486

-

 -

-

-

(834)

(834)

(Loss)/profit and total comprehensive (loss)/income for the period


(378)

(39,149)

(39,527)

(1,062)

(46,905)

(47,967)

(1,204)

69,009

67,805



For the six months to 31 July 2024

For the six months to 31 July 2023

For the year to 31 January 2024


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

Total comprehensive (loss)/income for the period analysed as follows:




 



 



 

Attributable to Ordinary shareholders

5

(378)

(39,149)

(39,527)

(1,483)

(48,168)

(49,651)

(1,204)

69,009

67,805

Attributable to C shareholders*

5



 

421

 1,263

1,684



 

(Loss)/profit and total comprehensive (loss)/profit for the period


(378)

(39,149)

(39,527)

(1,062)

(46,905)

(47,967)

(1,204)

69,009

67,805

(Loss)/earnings per Ordinary share

5

(0.04¢)

(3.81¢)

(3.85¢)

 (0.30¢)

(9.62¢)

(9.92¢)

(0.12¢)

6.69¢

6.57¢

(Loss)/earnings per C share*

5



 

 0.06¢

0.18¢

0.24¢



 

*        The Company's C shares converted into Ordinary shares on 8 September 2023 and therefore there is no C shares income/(loss) to report for the six months to 31 July 2024 and the year to 31 January 2024.

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.

The accompanying notes below are an integral part of the Financial Statements.

Statement of financial position (unaudited)


Notes

At

31 July

2024

US$'000

At

31 July

2024

US$'000

At 31 January
2024
US$'000

At 31 January

2024

US$'000

Fixed assets






Investments held at fair value through profit or loss

7


1,026,129


 1,043,781

Current assets






US Treasury Bills


135,156


 167,522


Cash and cash equivalents


19,293


11,306


Debtors


2,257


1,743




156,706


180,571


Current liabilities






Amounts falling due within one year


(4,318)


(4,381)


Net current assets



152,388

 

176,190

Non-current liabilities






Amounts falling due after more than one year:






Provision for tax liability§



(346)


(834)

Net assets



1,178,171

 

1,219,137

Capital and reserves






Share capital

8


1,211,978


1,213,903

Capital reserve



(24,967)


15,621

Capital redemption reserve



4,526


2,601

Revenue reserve



(13,366)


(12,988)

Shareholders' funds



1,178,171

 

1,219,137

The accompanying notes below are an integral part of the Financial Statements.

§        The tax liability provision at 31 July 2024 relates to a potential liability for Indian capital gains tax that may arise on the Company's Indian investments should they be sold in the future, based on the net unrealised taxable capital gain at the period end and on enacted Indian tax rates. The amount of any future tax amounts payable may differ from this provision, depending on the value and timing of any future sales of such investments and future Indian tax rates.

 

Statement of changes in equity (unaudited)

Six months to 31 July 2024


Notes

Share

capital

US$'000

Capital

reserve *

US$'000

Capital

redemption

reserve

US$'000

Revenue

reserve

US$'000

Shareholders'

funds

US$'000

Shareholders' funds at 1 February 2024


1,213,903

15,621

2,601

(12,988)

1,219,137

Ordinary shares bought back and cancelled

8

(1,925)

(1,439)

1,925

-

(1,439)

Total comprehensive loss for the period - Ordinary shares


-

(39,149)

-

(378)

(39,527)

Shareholders' funds at 31 July 2024

 

1,211,978

(24,967)

4,526

(13,366)

1,178,171

Six months to 31 July 2023



Share

capital

US$'000

Capital

reserve *

US$'000

Capital

redemption

reserve

US$'000

Revenue

reserve

US$'000

Shareholders'

funds

US$'000

Shareholders' funds at 1 February 2023


 1,216,503

(51,536)

-

(11,784)

 1,153,183

Total comprehensive loss for the period - Ordinary shares


 -

(48,168)

-

(1,483)

(49,651)

Total comprehensive income for the period - C shares†


 -

1,263

-

421

 1,684

Shareholders' funds at 31 July 2023

 

 1,216,503

 (98,441)

-

(12,846)

 1,105,216

*        Includes investment holdings gains of US$1,188,000 (31 July 2023 - losses of US$113,452,000).

†        The C shares converted to Ordinary shares on 8 September 2023 and therefore there is no C share (loss)/income to report for the six months to 31 July 2024.

The accompanying notes below are an integral part of the Financial Statements.

Statement of cash flows (unaudited)


Six months to
31 July 2024

Six months to
31 July 2023


US$'000

US$'000

US$'000

US$'000

Cash flows from operating activities





Operating loss before taxation


(40,013)


(47,967)

US Treasury Bills interest


(3,958)


(2,236)

Net losses on investments


39,662


 46,896

Currency (gains)/losses


(27)


 9

Changes in debtors and creditors


(525)


(592)

Net cash outflow in operating activities*

 

(4,861)

 

(3,890)

Cash flows from investing activities





Acquisitions of US Treasury Bills

(78,936)


(53,111)


Disposals of US Treasury Bills

115,206


 118,826


Acquisitions of investments

(31,782)


(45,621)


Disposals of investments

9,772


 48,555


Net cash inflow from investing activities

 

14,260

 

 68,649

Cash flows from financing activities





Ordinary shares bought back and cancelled

(1,439)


-


Net cash outflow from financing activities


(1,439)

 

-

Net increase in cash and cash equivalents


7,960

 

 64,759

Effect of exchange rate fluctuations on cash and cash equivalents


27


(9)

Cash and cash equivalents at 1 February


11,306


 45,799

Cash and cash equivalents at 31 July


19,293

 

 110,549

*        Cash from operations includes interest received of US$263,000 (2023 - US$878,000).

The accompanying notes below are an integral part of the Financial Statements.

Notes to the Financial Statements (unaudited)

01      Basis of accounting

The condensed Financial Statements for the six months to 31 July 2024 comprises the statements set out above 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 2024 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 January 2024.

Equity investment

The ordinary shares and C shares of the Company are classified as equity in accordance with the definition of equity instruments under IAS 32 Financial Instruments: presentation (IAS 32). The proceeds from the issue of shares are recognised in the Statement of Changes in Equity net of incremental issuance costs.

Going concern

In accordance with The Financial Reporting Council's guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern.

In undertaking this review, the Board has considered the Company's principal risks and uncertainties, as set out on the inside front cover, and in particular considered the impact of heightened market volatility due to macroeconomic and geopolitical concerns, including the Russia-Ukraine war and heightened tensions between China and both the USA and Taiwan. Liquidity stress testing has been carried out and having done so the Board does not believe the Company's going concern status is affected. The Company maintains sufficient cash balances to enable it to meet its liabilities as they fall due.

In managing the Company's assets, the Investment Manager will seek to ensure 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 Financial Statements have been prepared on the going concern basis as it is the Directors' opinion, having assessed the principal risks and uncertainties, that the Company will continue in operational existence for a period of at least 12 months from the date of approval of these Financial Statements.

02      Income


Six months to 31 July 2024

US$'000

Six months to 31 July 2023

US$'000

Year to
31 January 2024

US$'000

US Treasury Bills interest

3,958

2,236

5,305

Overseas interest

449

398

862

Deposit interest

263

878

2,044

Total income

4,670

3,512

8,211

03      Investment management fee


Six months to 31 July 2024

US$'000

Six months to 31 July 2023

US$'000

Year to
31 January 2024

US$'000

Investment management fee

4,471

3,937

8,152

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 of the Company 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.

Cash equivalents include US Treasury Bills.

04      Other administrative expenses


Six months to

31 July 2024

US$'000

Six months to

31 July 2023

US$'000 *

Year to

31 January 2024

US$'000

General administrative expenses

172

228

412

Administrator's fee

48

28

105

Auditor's remuneration for audit services

151

154

296

Directors' fees

206

227

450

 

577

637

1,263

*        Expenses relating directly to a share class were charged directly to that share class. Expenses pertaining to both Ordinary and C shares were split equally between the share classes.

05      Earnings per share


Six months to
31 July 2024

Six months to
31 July 2023

Year to
31 January 2024

Ordinary shares

US$'000

¢

US$'000

¢

US$'000

¢

Revenue return on ordinary activities after taxation

(378)

(0.04)

(1,483)

(0.30)

(1,204)

(0.12)

Capital return on ordinary activities after taxation

(39,149)

(3.81)

(48,168)

(9.62)

69,009

6.69

Loss/(profit) and total comprehensive (loss)/income for the period

(39,527)

(3.85)

(49,651)

(9.92)

67,805

6.57

Weighted average number of Ordinary shares in issue

1,028,445,885

500,430,002

1,032,208,365

 


Six months to

31 July 2023

C shares*

US$'000

¢

Revenue return on ordinary activities after taxation

421

0.06

Capital return on ordinary activities after taxation

1,263

0.18

Profit and total comprehensive income for the period

1,684

0.24

Weighted average number of C shares in issue

700,000,000

Net return per share is based on the above totals of revenue and capital and the weighted average number of shares in issue during each period. There are no dilutive or potentially dilutive shares in issue.

*        The Company's C shares were converted into Ordinary shares on 8 September 2023 and therefore there were no C shares in issue at 31 January 2024 and 31 July 2024 and no allocable (loss)/income to report for those periods.

06      Ordinary dividends

There were no dividends paid or proposed in respect of the six months to 31 July 2024 (2023 - nil).

07      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 2024

Level 1 US$'000

Level 2 US$'000

Level 3 US$'000

Total
US$'000

Listed equities

192,349

-

-

192,349

Private company ordinary shares

-

-

209,837

209,837

Private company preference shares*

-

-

610,144

610,144

Private company convertible promissory notes

-

-

13,392

13,392

Contingent value rights†

-

-

407

407

Total financial asset investments

192,349

-

833,780

1,026,129

 

As at 31 January 2024

Level 1 US$'000

Level 2 US$'000

Level 3 US$'000

Total
US$'000

Listed equities

173,665

-

-

173,665

Private company ordinary shares

-

-

172,693

172,693

Private company preference shares*

-

-

684,298

684,298

Private company convertible promissory notes

-

-

12,718

12,718

Contingent value rights†

-

-

407

407

Total financial asset investments

173,665

-

870,116

1,043,781

*        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.

†        See Glossary of terms and Alternative Performance Measures below.

During the six months to 31 July 2024, the investment in Tempus AI with a fair value (IPO price) of US$32,553,000 was transferred from Level 3 to Level 1 on becoming listed.

During the year to 31 January 2024, the investment in Oddity with a fair value (IPO price) of US$11,800,000 was transferred from Level 3 to Level 1 on becoming listed.

The valuation techniques used by the Company are explained in the accounting policies on pages 85 and 86 of the Company's Annual Report and Financial Statements for the year to 31 January 2024. 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 unobservable data is a significant input to their fair value measurements.

08      Share capital


31 July

2024

Number

31 July

2024

US$'000

31 January

2024

Number

31 January

2024

US$'000

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

1,027,973,907

1,211,978

1,029,898,907

1,213,903

By way of a Special Resolution passed on 10 May 2024 the Directors of the Company were granted a general authority to allot or sell from treasury, without regard to the pre-emption rights contained in the Articles of Incorporation of the Company, up to 102,882,390 Ordinary shares or C shares (as defined in the Articles of Incorporation). This authority will expire at the end of the period concluding immediately prior to the Annual General Meeting of the Company to be held in 2029 (or, if earlier, five years from the date of the passing of the resolution).

During the six months to 31 July 2024 the Company did not issue any Ordinary shares or C shares. In the period from 1 August 2024 to 10 September 2024 the Company issued no Ordinary shares or C shares.

By way of a Special Resolution passed on 10 May 2024 the Directors of the Company have general authority to make market purchases of up to 154,145,753 Ordinary shares, being 14.99% of the Ordinary shares in issue as at 10 May 2024, being the date of the passing of the resolution. 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 2025.

1,925,000 Ordinary shares were bought back during the six months to 31 July 2024 (31 July 2023 - nil). In the period from 1 August 2024 to 10 September 2024 200,000 Ordinary shares were bought back.

Holders of Ordinary shares have the right to receive income and capital from assets attributable to such share class. Ordinary shareholders have the right to receive notice of general meetings of the Company and have the right to attend and vote at all general meetings.

09      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.

Further shareholder information

Automatic Exchange of Information

In order to fulfil its legal obligations under the Guernsey Common Reporting Standard Legislation relating to the Automatic Exchange of Information, the Company is required to collect and report certain information about certain shareholders.

The legislation will require investment companies to provide personal information to the Guernsey authorities on certain investors who purchase shares in investment funds. As an affected company, The Schiehallion Fund Limited will have to provide information annually to the local authority on the tax residencies of non-UK based certificated shareholders and corporate entities.

Foreign Account Tax Compliance Act

Pursuant to the reciprocal information sharing inter-governmental agreement entered into by the States of Guernsey and the US Treasury, and for the purposes of the US Foreign Account Tax Compliance Act ('FATCA') of the Company registered with the Internal Revenue Service ('IRS') as a Foreign Financial Institution ('FFI') and received a Global Intermediary Identification Number (R2NXXB.9999.SL.831). The Company can be located on the IRS FFI list.

Third party data providers disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.

No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

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

An alternative performance measure is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.

Shareholders' funds and Net Asset Value

Shareholders' Funds is the value of all assets held less all liabilities, with borrowings deducted at book cost. Net Asset Value (NAV) is the value of all assets held less all liabilities, with borrowings deducted at either fair value or par value. Per share amounts are calculated by dividing the relevant figure by the number of ordinary shares in issue.

Total Return

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. The Company does not pay a dividend, therefore, the total returns for the share price and NAV per share are the same as the percentage movements in the share price and NAV per share as detailed above.

Capital deployed (APM)

Capital deployed reflects cumulative amounts invested since inception of the Company.

Contingent value rights

'CVR' after an instrument name indicates a security, usually arising from a corporate action such as a takeover or merger, which represents a right to receive potential future value, should the continuing company achieve certain milestones.

Total net assets

Total value of all assets held less current liabilities, other than liabilities in the form of borrowings.

Net current assets

Net current assets comprise current assets less current liabilities (excluding borrowings).

(Discount)/premium (APM)

As stock markets and share prices vary, an investment company's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, it is said to be trading at a premium.

Ordinary shares


31 July

2024

31 January

2024

Closing NAV per share

(a)

114.61¢

118.37¢

Closing share price

(b)

103.00¢

71.50¢

Discount expressed as a percentage

(b - a) ÷ a

(10.1%)

(39.6%)

 

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 Company website at schiehallionfund.com

The Schiehallion Fund Limited is managed by Baillie Gifford, the Edinburgh based fund management group with around £207.8 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 10 September 2024). 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.

13 September 2024

For further information please contact:

Alex Blake, Baillie Gifford & Co

Tel: 0131 275 2000

Jonathan Atkins, Four Communications

Tel: 0203 920 0555 or 07872 495396

- ends -

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