During the financial year to 31 May 2021, the Company's share price and net asset value (calculated deducting borrowings at fair value) returned 63.0% and 62.8% respectively. This compares with a total return of 22.4% for the S&P 500 Index * (in sterling terms).
¾ The pandemic has caused an avalanche of structural change.
¾ Breakthrough healthcare technologies such as Moderna's mRNA therapy platform and Teladoc's telemedicine services have been thrust into the mainstream.
¾ Consumers have altered their behaviour and have been making more purchases online from the likes of Wayfair and utilising apps such as DoorDash for meal and snack delivery.
¾ Streaming services like Netflix and Roku have seen significant upticks in subscriber growth.
¾ Employers have been forced to embrace remote working, enabled at least partly thanks to the interconnectivity provided by companies such as Zoom.
¾ We are beginning to see the digital transformation take hold in new areas and have taken new public company holdings in Carvana and Vroom in the second-hand car market, Lemonade in insurance, and Coursera in education.
¾ We made seven additional private company investments over the last twelve months whilst four of our existing private company holdings went public in the period.
¾ At the end of May, we held positions in twenty private companies which collectively comprised 16.5% of total assets.
Baillie Gifford US Growth Trust plc seeks to invest predominantly in listed and unlisted US companies which the Company believes have the potential to grow substantially faster than the average company, and to hold onto them for long periods of time, in order to produce long term capital growth.
You can find up to date performance information about Baillie Gifford US Growth on the US Growth Trust page of the Managers' website at www.bgusgrowthtrust.com ‡
Baillie Gifford US Growth Trust is managed by Baillie Gifford, the Edinburgh based fund management group with around £350 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 9 August 2021).
Investment Trusts are UK public limited companies and are not authorised or regulated by the Financial Conduct Authority.
* Source: Refinitiv and relevant underlying index providers. See disclaimer on page 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.
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.
11 August 2021
The following is the Preliminary Results Announcement for the year to 31 May 2021 which was approved by the Board on 10 August 2021.
Chairman's Statement
It is with pleasure that I present the Annual Report for Baillie Gifford US Growth Trust plc ('the Company') for the year to 31 May 2021. During the period, we have all lived through the twists and turns of the global Covid-19 pandemic, with equity markets experiencing some of the most significant instability in living memory.
The Board is pleased to be able to report that our Managers have continued to largely work from home seamlessly and that both portfolio management and all regulatory and administrative tasks have been uninterrupted. The Managers continue to stick to their long-term investment approach and are focused on identifying the exceptional growth companies in America.
During the financial year to 31 May 2021, the Company's share price and net asset value, calculated by deducting borrowings at fair value, returned 63.0% and 62.8% respectively. This compares with a total return of 22.4% for the S&P 500 Index* (in sterling terms). Over the period from 23 March 2018 (launch date and first trade date), the Company's share price and net asset value, calculated by deducting borrowings at fair value, returned 206.5% and 202.3% respectively compared to a total return of 72.0% for the S&P 500 Index* (in sterling terms).
The Board is encouraged by the net asset value total return that the Managers have been able to deliver over the period since launch. However, we would ask shareholders to judge performance over periods of five years or more. Further information about the Company's portfolio performance is covered by our portfolio managers, Gary Robinson and Kirsty Gibson, in their Managers' Review.
Kirsty Gibson was appointed as co-manager alongside Gary Robinson with effect from 1 March 2021. Kirsty is an investment manager in Baillie Gifford's US Equities Team and a co-manager of the Baillie Gifford American Fund. Kirsty replaced Helen Xiong who joined Baillie Gifford's Global Alpha Team last year.
Share Issuance and Buy-backs
The Company's shares have continued to consistently trade at a premium to their net asset value and the Company has issued a further 45,070,000 shares in the year to 31 May 2021 at an average premium to net asset value of approximately 6.4%, raising further net proceeds of £132.9 million.
The Company published a prospectus in April 2021 and as at 31 May 2021 had authority, which was granted at the initial launch, to issue a further 693.2 million shares. This authority expires in March 2023.
The Company also has authority to buy-back shares. The buy-back facility was sought to allow the Company to buy-back its own shares when the discount is substantial in absolute terms and relative to its peers. The Company will be seeking to renew the buy-back authority at the forthcoming Annual General Meeting.
Gearing
On 23 October 2020, the Company entered into a new US$25 million three year fixed rate facility with ING Bank N.V., London Branch which expires on 23 October 2023. This facility is in addition to the existing US$25 million five year revolving credit facility with ING Bank N.V., London Branch which expires on 1 August 2023. The facilities are available to be used to fund purchases of securities as and when suitable opportunities arise. As at 31 May 2021, US$25 million had been drawn down under the fixed rate facility and US$12.5 million under the revolving credit facility (31 May 2020 – US$18 million under the revolving credit facility).
Earnings and Dividend
The Company's priority is to generate capital growth over the long term. The Company therefore has no dividend target and will not seek to provide shareholders with a level of dividend. The net revenue return per share for the year to 31 May 2021 was a negative 1.78p (year to 31 May 2020, a negative 1.05p). As the revenue account is again running at a deficit, the Board is recommending that no final dividend be paid. Should the level of underlying income increase in future years, the Board will seek to distribute the minimum permissible to maintain investment trust status by way of a final dividend.
Private Company (Unlisted) Investments
As at the Company's year end, the portfolio weighting in private company (unlisted) investments stood at 16.5% of total assets, invested in twenty companies (2020 – 12.2% invested in seventeen companies). There were seven new purchases in the year and four stocks, Affirm, Airbnb, Butterfly Network and Snowflake, listed. There is commentary on the new holdings in the Managers' Review and Review of Investments below. Since the year end further investment has been made in Away (JRSK Inc), Lyra Health and Thumbtack, and a new holding acquired, Faire Wholesale. Your portfolio managers remain alert to further special and high potential opportunities not widely accessible through public markets.
Board Composition
We were delighted to welcome Mr Chris van der Kuyl and Ms Rachael Palmer as non-executive Directors of the Company with effect from 1 June 2021 following a detailed search undertaken with the support of an external recruitment consultant. Chris is one of Scotland's leading entrepreneurs working across the technology, media, gaming and entertainment sectors and Rachael is an experienced strategy, marketing and business development professional with extensive experience working within the technology sector. All Directors are subject to annual re-election at the AGM in September and the two new Directors will be subject to election by the shareholders this year. The Directors' biographies can be found on pages 24 and 25 of the Annual Report and Financial Statements. Board members have a broad range of appropriate skills between them.
Annual General Meeting
The Annual General Meeting ('AGM') of the Company has been scheduled to be held at Baillie Gifford's offices in Edinburgh at 9.30am on Friday, 17 September 2021. In light of continuing Covid-19 restrictions, shareholders will not be able to attend the AGM as the meeting will be held with the minimum number to ensure it is quorate. I encourage shareholders to submit their votes by proxy before the applicable deadline ahead of the meeting and to submit any questions for the Board or Managers in advance by email to trustenquiries@bailliegifford.com or by calling 0800 917 2112 (Baillie Gifford may record your call). Developments with regard to Covid-19 restrictions will be closely monitored and any changes will be announced to the London Stock Exchange regulatory news service and made available at bgusgrowthtrust.com. This year, due to current circumstances, the portfolio managers will record a webcast which will be available to view on the Company's website following the AGM.
Changes to Articles
We have asked our lawyers to undertake a review of the Articles of Association. The principal proposed change is set out below. Further details of the full changes proposed can be found on page 64 of the Annual Report and Financial Statements. Hybrid General Meetings – One consequence of the Covid-19 pandemic has been the impact on the ability of shareholders to attend physical General Meetings. The Company is therefore proposing to make amendments to the Company's Articles to allow shareholders to attend by electronic means as well as in person. These changes will be too late for the 2021 AGM but will allow for more flexibility in future. It is the Board's intention to continue to have a physical element to our General Meetings wherever possible.
Outlook
We continue to live in unusually uncertain times. Whilst we cannot yet predict the long-term impact of the world's response to the pandemic or the ramifications of trade and political tensions in the United States and elsewhere, my Board colleagues and I believe we can be confident that seismic changes will continue in the 'real world' as new business models flourish and innovation impacts countless industries, many as yet not fully disrupted by recent innovations. Significant changes in healthcare, transportation, ecommerce, finance, enterprise software and energy amongst other markets all present an opportunity to identify and support the exceptional growth companies of the future. It is pleasing to note that this growth has been well evidenced over the past year in the results of many of the companies in which we invest. All that being the case, the Board and the Managers remain confident in our outlook.
Tom Burnet
Chairman
10 August 2021