Annual Report and Financial Statements
31 May 2023
BAILLIE GIFFORD
US GROWTH TRUST plc
In search of
exceptional growth
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.
Notes
None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
Investment trusts are UK public listed companies and as such comply with the requirements of the Financial Conduct
Authority. They are not authorised or regulated by the Financial Conduct Authority.
Baillie Gifford US Growth Trust plc currently conducts its affairs, and intends to continue to conduct its affairs, so
that the Company’s ordinary shares can qualify to be considered as a mainstream investment product and can be
recommended by Independent Financial Advisers to ordinary retail investors in accordance with the rules of the
Financial Conduct Authority in relation to non-mainstream investment products.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to the action you should take you should consult your stockbroker, bank manager, solicitor,
If you have sold or otherwise transferred all of your ordinary shares in Baillie Gifford US Growth Trust plc, please
forward this document, together with any accompanying documents, but not your personalised Form of Proxy, as
soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale
or transfer was or is being effected for delivery to the purchaser or transferee.
Strategic Report
Summary of Results
Chairman’s Statement
Business Review
Managers’ Review
Valuing Private Companies
Investment Principles
Baillie Gifford Statement on Stewardship
and Stewardship Principles
Purposeful Company Conversations
Review of Investments
List of Investments
Distribution of Total Assets
Private Companies Summary
Five Year Summary
Summary of Results Since Inception
Governance Report
Directors and Management
Directors’ Report
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
in Respect of the Annual Report and
Financial Statements
Financial Report
Independent Auditor’s Report
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Shareholder Information
Notice of Annual General Meeting
Further Shareholder Information
Analysis of Shareholders
Communicating with Shareholders
Sustainable Finance Disclosures
Regulation (‘SFDR’)
Alternative Investment Fund Managers
Regulations
Automatic Exchange of Information
Third Party Data Provider Disclaimer
Glossary of Terms and Alternative
Performance Measures
Contents
Investor Disclosure Document
The UK Alternative Investment Fund Managers Regulations requires certain information to be
made available to investors prior to their making an investment in the Company. The Company’s
Investor Disclosure Document is available for viewing at bgusgrowthtrust.com.
Baillie Gifford US Growth Trust plc 01
31 May 2023 31 May 2022 % change
Shareholders’ funds* £568.6m £584.2m
Gearing
‡
6% 6%
Net asset value per ordinary share (after deducting borrowings at fair value)
‡
186.48p 191.63p (2.7)
Net asset value per ordinary share (after deducting borrowings at book value)
*
186.33p 191.44p (2.7)
Share price
144.80p 168.00p (13.8)
Comparative index (in sterling terms)
†#
4.7
Ongoing charges
‡
0.69% 0.62%
Discount (after deducting borrowings at fair value)
‡
22.4% 12.3%
Discount (after deducting borrowings at book value)
‡
22.3% 12.2%
Active share (relative to S&P 500 Index)
‡
92% 93%
Number of shares in issue 305,153,700 305,153,700
Market capitalisation £441.9m £512.7m
For the
year ended
31 May 2023
For the
year ended
31 May 2022
Revenue earnings per share (1.55p) (1.88p)
Year to 31 May 2023 Year to 31 May 2022
Period’s high and low
High Low High Low
Share price 197.00p 132.80p 358.00p 146.00p
Net asset value per ordinary share
(after deducting borrowings at fair value)
‡
223.16p 169.35p 360.20p 179.40p
Net asset value per ordinary share
(after deducting borrowings at book value)
* 222.91p 169.09p 360.19p 179.19p
Premium/(discount) (after deducting borrowings at fair value)
‡
(9.7%) (23.7%) 7.5% (18.9%)
Premium/(discount) (after deducting borrowings at book value)
‡
(9.5%) (23.6%) 7.4% (18.8%)
31 May 2023 23 March 2018
¶
% change
Performance since inception
¶
Share price 144.80p 100.50p 44.1
Net asset value per ordinary share (after deducting borrowings at fair value)
‡
186.48p 97.96p 90.4
Net asset value per ordinary share (after deducting borrowings at book value)
* 186.33p 97.96p 90.2
Comparative index (in sterling terms) 102.0
The following information illustrates how Baillie Gifford US Growth Trust plc performed over
the year to 31 May 2023 and over the period from inception to 31 May 2023.
Summary of Results
*
*
†
S&P 500 Index total return (in sterling terms). See disclaimer on page 75.
#
‡
Alternative performance measure, see Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
¶
Past performance is not a guide to future performance.
Strategic Report
Strategic Report
This Strategic Report, which includes pages 1 to 28 and incorporates the Chairman’s
Statement, has been prepared in accordance with the Companies Act 2006.
02 Annual Report 2023
Strategic Report
Dear Shareholders
price and net asset value total return, calculated by deducting
borrowings at fair value, were -13.8% and -2.7% respectively.
This compares with a total return of 4.7% for the S&P 500 Index
*
(in sterling terms). Over the period from 23 March 2018 (launch
asset value total return, calculated by deducting borrowings at fair
value, returned 44.1% and 90.4% respectively compared to a
total return of 102.0% for the S&P 500 Index
* (in sterling terms).
Information about the Company’s portfolio performance is covered
by our portfolio managers, Gary Robinson and Kirsty Gibson,
in their Managers’ Review.
Share Issuance and Buy-backs
The Company’s shares moved from a discount of 12.3% last year
to a discount of 22.4% at 31 May 2023 as sentiment continued to
turn against the Company’s growth investing style. Having bought
back 2,206,300 shares, to be held in treasury, at a total cost of
£3.6 million in May 2022 with limited impact on the discount, the
Board took the decision to use the capital to invest in new growth
opportunities instead. The Company issued no shares during the
year to 31 May 2023.
The Board regularly reviews the Company’s liquidity policy
and it is a key discussion point at Board meetings. The Board
acknowledges the discount is a challenge to many shareholders
but notes that, from the data provided to the Board, there
continues to be natural buyers of the Company’s shares in
the market.
As at 31 May 2023, the Company had authority, which was
granted at the 2022 Annual General Meeting, to issue a further
30.5 million shares and to buy-back a further 45.7 million shares.
These authorities expire in September 2023. The Company will be
seeking to renew both the issuance and buy-back authorities at
the forthcoming Annual General Meeting.
Tom Burnet, Chairman
Chairman’s Statement
*
Past performance is not a guide to future performance.
Since the year end and as we enter our sixth year of business,
the Board concluded it would be timely to review our broking
have agreed that we will be best supported by the specialist team
at Panmure Gordon (UK) Limited going forward. We are grateful
to Investec for their work on our behalf since IPO.
Gearing
The Company had two loan facilities in place with ING Bank N.V.,
expired on 31 July 2023 and the second is a US$25 million
The facilities are available to be used to fund purchases of
securities as and when suitable opportunities arise. As at 31 May
2023, the facilities had been drawn down in full (31 May 2022
– US$50 million). Net gearing stayed at 6% over the course of
the year. Subsequent to the year end on, 26 July 2023 the
a US$25 million three-year revolving credit facility from ING Bank
N.V., London Branch.
Earnings and Dividend
The Company’s priority is to generate capital growth over the long
term. The Company therefore has no dividend target and will not
seek to provide shareholders with a particular level of dividend.
The net revenue return per share for the year to 31 May 2023
was a negative 1.55p (year to 31 May 2022 – a negative 1.88p).
underlying income increase in future years, the Board will seek to
distribute the minimum permissible to maintain investment trust
Private Company (Unlisted) Investments
As at the Company’s year end, the portfolio weighting in private
company (unlisted) investments stood at 34.5% of total assets,
twenty-four companies). There was one new private company
purchase in the year, Oddity. There is commentary on the new
and existing holdings in the Managers’ Review and Review of
Investments on pages 10 to 20. Your portfolio managers remain
alert to further special and high potential opportunities not widely
accessible through public markets. In respect of the valuation
process, the private company (unlisted) investments continue
to be revalued on a three-month rolling cycle which is overseen
by the valuations group at Baillie Gifford who take advice from
an independent third party, S&P Global. As a Board we continue
to scrutinise and challenge the Managers on the valuation of the
private company (unlisted) investments. They are also subject to
the scrutiny of the external auditor on an annual basis. More detail
on this process can be found on page 14.
Baillie Gifford US Growth Trust plc 03
Strategic Report
The Company’s Managers believe that sustainability is inextricably
linked to being a long-term investor, and their thoughts on this topic
are set out in more detail on pages 16 and 17. The Managers’
pursuit of long-term growth opportunities typically involves
investment in entrepreneurial, disruptive and technology-driven
businesses. These companies are often capital-light with a low
carbon footprint.
The Annual General Meeting of the Company will be held at
18 September 2023. All shareholders are invited to attend,
and the Board looks forward to welcoming you. The meeting
will be followed by a presentation from the Managers.
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). In order to increase the
accessibility of the Annual General Meeting the Board plan to
hold the 2024 Annual General Meeting in London. Details of
how shareholders can watch this year’s Annual General Meeting
online can be found in the Notice of Annual General Meeting on
page 69.
Outlook
on both the opportunity and risks of growth investing against the
turbulent global backdrop that we have all been living through.
As I wrote last year’s statement, I’m certain that the optimist in
me was hoping that the market for growth companies would
have stabilised over the coming twelve months, but in general the
valuations of more predictable assets have fared better than the
My inner optimist remains, though I fear this coming year will
be equally hard to predict. That is not to say that our Managers
have not been able to make good progress – not least in getting
back to face-to-face engagement with the leadership of those
companies already held and those they have decided to research.
The Board continues to believe that the companies we hold are
very well placed to generate extremely attractive returns to
in our outlook.
Tom Burnet
Chairman
9 August 2023
04 Annual Report 2023
Business and Status
Baillie Gifford US Growth Trust plc (‘the Company’) is a public
Wales. The Company is an investment company within the
meaning of section 833 of the Companies Act 2006 and carries
on business as an investment trust. Investment trusts are UK
public listed companies and their shares are traded on the
although, subject to shareholder approval, it may purchase its
own shares or issue shares. The price of the Company’s shares
is determined, like other listed shares, by supply and demand.
The Company has been approved as an investment trust by
HM Revenue & Customs subject to the Company continuing to
meet the eligibility conditions. The Directors are of the opinion that
the Company has continued to conduct its affairs so as to enable
it to comply with the ongoing requirements of section 1158 of the
Corporation Tax Act 2010 and the Investment Trust (Approved
Company) (Tax) Regulations 2011.
The Company is an Alternative Investment Fund for the purposes
of the UK Alternative Investment Fund Managers Regulations.
Purpose
Baillie Gifford US Growth aims to deliver above average long-term
returns for shareholders by keeping fees and costs low and
harnessing the long-term growth potential of companies.
Objective and Policy
The Company’s investment objective is to produce long-term
capital growth.
The Company invests predominantly in equities of companies which
of their business, in the United States and which the Company
believes have the potential to grow substantially faster than the
average company over the long term. Such investment is typically
direct, but may be indirect, including through investment in funds.
The maximum direct investment in any one company or fund is
limited to 10% of the Company’s total assets measured at the
time of investment.
The portfolio consists of direct holdings in listed securities and
unlisted securities in up to a combined maximum of 90 companies
or funds, typically with 30 or more listed security holdings.
The maximum amount which may be invested directly in unlisted
securities shall not exceed 50% of the total assets of the Company,
measured at the time of investment.
The Company will at all times be invested in several sectors.
sector, the Company will at all times invest and manage the
portfolio in a manner consistent with spreading investment risk.
Business Review
With prior approval of the Board, the Company may use
(in order to reduce, transfer or eliminate investment risk in the
Company’s portfolio). Derivative instruments in which the
Company may invest may include foreign exchange forwards,
exchange-listed and over-the-counter options, futures, options
on futures, swaps and similar instruments. The Board, however,
currently does not expect to enter into derivative or hedging
transactions to mitigate against currency or interest rate risk.
The Board intends to employ gearing in the normal course of
events. The Company may in aggregate borrow amounts
equalling up to 30% of the net asset value of the listed securities
held by the Company, calculated at the time of drawdown,
although the Board expects that borrowings will typically
represent an amount in the range of 10% to 20% of the net
asset value of the listed securities held by the Company.
While it is intended that the Company will be fully invested
in normal market conditions, the Company may hold cash
on deposit or invest on a temporary basis in a range of cash
equivalent instruments. The Board does not expect that the
Company will hold cash or cash equivalent instruments,
but there is no restriction on the amount of cash or cash
equivalent instruments that the Company may hold.
Culture and Values
In the context of a company with no employees, culture and
values are expressed by the Company’s Directors and the
service providers with whom shareholders and other stakeholders
interact, and through the relationships between the Board and
those service providers, including the Managers. As noted in
more detail in the section 172 statement on pages 8 and 9 the
Board seeks to engage with its Managers and other service
providers in a collaborative and collegiate manner, and to
maintain the highest standards of business conduct.
Dividend Policy
The Company’s priority is to produce capital growth over the
long term. The Company therefore has no dividend target and
will not seek to provide shareholders with a particular level of
distribution. However, the Company intends to comply with the
requirements for maintaining investment trust status for the
purposes of section 1158 of the UK Corporation Tax Act 2010
(as amended) regarding distributable income. The Company
will therefore distribute amounts such that it does not retain, in
respect of an accounting period, an amount greater than 15%
of its income (as calculated for UK tax purposes) for that period.
Strategic Report
Baillie Gifford US Growth Trust plc 05
Strategic Report
Liquidity Policy
The Board recognises the need to address any sustained and
lead to shares trading at a material discount or premium to net
asset value per share. While it has not adopted any formal discount
or premium targets which would dictate the point at which the
Company would seek to purchase shares or issue further shares,
the Board is committed to utilising its share purchase and share
issuance authorities where appropriate in such a way as to mitigate
the effects of any such imbalance. In considering whether buy-back
or issuance might be appropriate in any particular set of
circumstances, the Board will take into account, inter alia: the
prevailing market conditions; whether the discount is substantial
relative to the Company’s peers; the degree of net asset value
accretion that will result from the buy-back or issuance; the
cash resources readily available to the Company; the immediate
pipeline of investment opportunities open to the Company;
the level of the Company’s existing borrowings; and the working
capital requirements of the Company. The Board, having assessed
the impact of the shares bought back during the year to 31 May
2022, are of the view that in the current market environment it is
not in the best interests of shareholders to continue buying back
the Company’s shares. The Board believes allowing the Managers
to use the capital to invest in exciting growth opportunities is a
more successful method of enhancing long term returns for
shareholders. The Board will continue to monitor the discount and
will amend the approach to discount management as and when
market conditions require it and when it is in the Company’s best
interests to do so. The Board will keep shareholders appraised,
on a regular and ongoing basis, of the approach which it has
adopted in implementing this liquidity policy, principally through
commentary in its Annual and Interim Reports.
Share Buy-backs
– at the Annual General Meeting held on
16 September 2022 the Company was granted a general authority
to make pur
chases of up to 45,742,539 shares, being approximately
14.99% of the issued ordinary share capital as at 5 August 2022.
This authority expires at the forthcoming Annual General Meeting.
In exercising the Company’s power to buy back shares, the Board
has complete discretion as to the timing, price and volume of shares
so purchased. If the Company does purchase its own shares it may
hold them in treasury rather than purchase them for cancellation.
Shares may only be reissued from treasury at a price which, after
issue costs, is not less than the net asset value per share at the
relevant time.
All share repurchases are conducted in accordance with the
Companies Act 2006 and the Listing Rules applicable to closed-
ended investment funds from time to time and are announced to
the market via a Regulatory Information System on the same
or the following day.
No shares were bought back during the year under review.
At 31 May 2023 2,206,300 shares were held in treasury.
The Directors are seeking shareholders’ approval at the Annual
General Meeting to renew the authority to purchase up to 14.99%
of the ordinary shares in issue as at 4 August 2023, being the
latest practicable date prior to the publication of this document
or, if less, up to 14.99% of the ordinary shares in issue (excluding
treasury shares) on the date on which the authority is granted,
such authority to expire at the date of the Annual General Meeting
in 2024. Such purchases will only be made at a discount to the
prevailing net asset value. Any such shares which are bought
back may be held in treasury and may subsequently then either
be sold for cash or cancelled.
Share Issuance
– the Directors will again be seeking authorities
at the forthcoming Annual General Meeting for issuance and
disapplication of pr
e-emption rights to sell any shares held in
treasury and allot new shares at a premium to the net asset value
per share with debt valued at fair value.
These authorities will expire
at the conclusion of the 2024 Annual General Meeting or on the
expiry of 15 months from the passing of the resolutions, whichever
is earlier. Should shareholder approval be granted it will allow the
Directors to issue new ordinary shares at a premium to net asset
value or C shares convertible into ordinary shares, in order to
satisfy investor demand over the year should the Company be
in a position to do so.
No new ordinary shares will be issued at a price which (after costs
and expenses) is less than the net asset value per existing ordinary
share at the time of the issue of the new shares, unless the new
basis. C shares will be issued at a price of £1 per C share.
As mentioned above, the Company has the authority to raise
further funds through the issue of C shares rather than ordinary
shares. C shares are designed to overcome the potential
shares for cash. These disadvantages relate primarily to the effect
that an injection of uninvested cash may have on the net asset
value per ordinary share performance of an otherwise fully
invested portfolio (commonly referred to as ‘cash drag’).
During the year to 31 May 2023, the Company issued no shares.
Between 1 June 2023 and 4 August 2023 no shares were issued.
Performance
At each Board meeting, the Directors consider a number
of performance measures to assess the Company’s success
in achieving its objectives.
Key Performance Indicators
The key performance indicators (‘KPIs’) used to measure the
progress and performance of the Company over time are
established industry measures and are as follows:
— the movement in the net asset value per ordinary share;
— the movement in the share price;
— the movement of the net asset value and share price
performance compared to the comparative index;
— the premium/discount of the share price to the net asset value
per share; and
— the ongoing charges ratio.
06 Annual Report 2023
Strategic Report
An explanation of these measures can be found in the Glossary of
Terms and Alternative Performance Measures on pages 76 and 77.
The KPIs for the year to 31 May 2023 and since inception,
28 March 2018, are shown on pages 1, 27 and 28.
In addition to the above, the Board considers peer group
comparative performance.
Borrowings
At 31 May 2023 the drawings were US$25 million under the
Branch which expires on 31 July 2023 and US$25 million under
Branch which expires on 23 October 2023 (31 May 2022 –
notes 11 and 12 on page 60 for the sterling equivalent at each
period end). Subsequent to the year end on 26 July 2023, the
expiring US$25 million revolving credit facility with ING Bank N.V.
US$25 million from ING Bank N.V., London Branch.
Principal and Emerging Risks
As explained on page 36 there is an ongoing process for
identifying, evaluating and managing the risks faced by the
Company on a regular basis. The Directors have carried out a
robust assessment of the principal and emerging risks facing the
Company, including those that would threaten its business model,
future performance, regulatory compliance, solvency or liquidity.
during the year. A description of these risks and how they are
being managed or mitigated is set out below:
The Board considers the heightened macroeconomic and
geopolitical concerns to be factors which exacerbate existing
risks, rather than discrete risks, within the context of an investment
trust. Their impact is considered within the relevant risks.
Financial Risk
– the Company’s assets consist mainly of listed
market related and include market risk (comprising currency risk,
interest rate risk and other price risk), liquidity risk and credit risk.
An explanation of those risks and how they are managed is
contained in note 19 to the Financial Statements on pages
62 to 68. The Board has, in particular, considered the impact
of heightened market volatility over recent months due to
As oversight of this risk, the Board considers at each meeting
various metrics including industrial sector weightings, top and
bottom stock contributors to performance and sales and
purchases of investments. Individual investments are discussed
with the portfolio managers together with general views on the
investment market and sectors. A strategy meeting is held annually.
Private Company Investments
– the Company’s risk could be
increased by its investment in private company securities. These
prices may be greater than for listed investments. To mitigate this
risk, the Board considers the private company securities in the
context of the overall investment strategy and provides guidance
to the Managers on the maximum exposure to private company
securities. The investment policy limits the amount which may be
invested in private company securities to 50% of the total assets
of the Company, measured at the time of investment.
Investment Strategy Risk
– pursuing an investment strategy to
unattractive or inappropriate, or the ineffective implementation of
an attractive or appropriate strategy, may lead to reduced returns
for shareholders and, as a result, a decreased demand for the
Company’s shares. This may lead to the Company’s shares
trading at a widening discount to their net asset value. To mitigate
this risk, the Board regularly reviews and monitors the Company’s
objective and investment policy and strategy, the investment
portfolio and its performance, the level of discount/premium to net
asset value at which the shares trade and movements in the share
register, and raises any matters of concern with the Managers.
Environmental, Social and Governance Risk
– as investors
place increased emphasis on environmental, social and
in an investee company could lead to that company’s shares being
less attractive to investors, adversely af
fecting its share price, in
addition to potential valuation issues arising from any direct impact
management of the investee company (for example a failure to
identify a pathway to Net Zero or poor employment practices).
in investee companies could lead to the Company’s own shares
being less attractive to investors, adversely af
fecting its own share
and engagement policies which are available to view on the
Managers’ website: bailliegifford.com and have been reviewed
and endorsed by the Board, and which are fully integrated into the
investment process as well as the extensive up-front and ongoing
due diligence which the Manager undertakes on each investee
company. This due diligence includes assessment of the risks
inherent in climate change as well as ongoing positive engagement
Discount Risk
– the discount/premium at which the Company’s
shares trade relative to its net asset value can change. The risk of
the Company. The Board monitors the level of discount/premium at
which the shares trade and the Company has authority to buy back
its existing shares, when deemed by the Board to be in the best
interests of the Company and its shareholders. The Liquidity Policy
is set out on page 5.
Baillie Gifford US Growth Trust plc 07
Strategic Report
Regulatory Risk
– failure to comply with applicable legal and
regulatory requirements such as the tax rules for investment trust
companies, the FCA Listing Rules and the Companies Act could
subject to tax on capital gains. To mitigate this risk, Baillie Gifford’s
Business Risk, Internal Audit and Compliance Departments provide
regular reports to the Audit Committee on Baillie Gifford’s monitoring
programmes. Major regulatory change could impose disproportionate
compliance burdens on the Company. In such circumstances
representation is made to ensure that the special circumstances
of investment trusts are recognised. Shareholder documents and
announcements, including the Company’
s published Interim
Report and Annual Report and Financial Statements, are subject
to stringent review processes and procedures are in place to
ensure adherence to the Transparency Directive and the Market
Abuse Directive with reference to inside information.
Custody and Depositary Risk
– safe custody of the Company’s
assets may be compromised through control failures by the
Depositary, including breaches of cyber security. To monitor
potential risk, the Audit Committee receives half yearly reports
assets held by the Custodian. Cash and portfolio holdings are
independently reconciled to the Custodian’s records by the
Managers. The Custodian’s assured internal controls reports
are reviewed by Baillie Gifford’s Business Risk Department and
a summary of the key points is reported to the Audit Committee
and any concerns investigated.
Operational Risk
– failure of Baillie Gifford’s systems or those
of other third party service providers could lead to an inability to
pr
ovide accurate reporting and monitoring or a misappropriation
of assets. To mitigate this risk, Baillie Gifford has a comprehensive
business continuity plan which facilitates continued operation of
the business in the event of a service disruption or major disaster
.
The Audit Committee reviews Baillie Gifford’s Report on Internal
Controls and the reports by other key third party providers are
reviewed by Baillie Gifford on behalf of the Board and a summary
of the key points is reported to the Audit Committee and any
concerns investigated. The other key third party service providers
their respective services to the Company.
Cyber Security Risk –
a cyber attack on Baillie Gifford’s network
integrity or availability of data and systems. To mitigate this risk,
the Audit Committee reviews Reports on Internal Controls
published by Baillie Gifford and other third party service providers.
Baillie Gifford’s Business Risk Department report to the Audit
Committee on the effectiveness of information security controls
in place at Baillie Gifford and its business continuity framework.
Cyber security due diligence is performed by Baillie Gif
ford on
third party service providers which includes a review of crisis
management and business continuity frameworks.
Leverage Risk
– the Company may borrow money for investment
purposes (sometimes known as ‘gearing’ or ‘leverage’). If the
investments fall in value, any borrowings will magnify the extent of
this loss. If borrowing facilities are not renewed, the Company may
have to sell investments to repay borrowings. The Company can
also make use of derivative contracts. All borrowings require the
prior approval of the Board and leverage levels are discussed by
the Board and Managers at every meeting. Covenant levels are
monitored regularly. The majority of the Company’s investments are
in quoted securities that are readily realisable. Further information
on leverage can be found on page 75 and the Glossary of Terms
and Alternative Performance Measures on pages 76 and 77.
Capital constraints and other macroeconomic factors could
result in banks being unwilling to lend, preventing the Company
fr
om making use of leverage to enhance long-term returns for
shareholders.
Political and Associated Economic Risk – the Board is of the
view that political change in areas in which the Company invests
or may invest may have practical consequences for the Company.
Political developments are closely monitored and considered
by the Board. The Board continues to assess the potential
consequences for the Company’s future activities including those
that may arise from geopolitical tensions. The Board remains
watchful of broader global political tensions and the associated
Emerging Risks – as explained on pages 6 and 7 the Board has
regular discussions on principal risks and uncertainties, including
any risks which are not an immediate threat but could arise in the
longer term. The Board considers that the key emerging risks
arise from the interconnectedness of the global economy
(including factors such as supply chain constraints, economic
sanctions and lending associated capital constraints) and the
related exposure of the investment portfolio to external and
intelligence, new infectious diseases or similar public health
threats. This is mitigated by the Manager’s close links to the
investee companies and their ability to ask questions on
contingency plans. The Manager believes the impact of such
events may be to slow growth rather than to invalidate the
investment rationale over the long term.
Viability Statement
In accordance with provision 31 of the UK Corporate Governance
Code, that the Directors assess the prospects of the Company
strategy of the Company, and to be a period during which, in the
absence of any adverse change to the regulatory environment and
to the favourable tax treatment afforded to UK investment trusts,
principal risks facing the Company nor to the adequacy of the
mitigating controls in place. Furthermore, the Directors do not
reasonably envisage any change in strategy or objectives or any
events that would prevent the Company from continuing to
operate over that period.
08 Annual Report 2023
In considering the viability of the Company, the Directors have
conducted a robust assessment of each of the Company’s
principal and emerging risks and uncertainties as detailed on
pages 6 and 7 and in particular the impact of market risk where a
the value of the Company’s investment portfolio. The Directors
have also considered the Company’s leverage and liquidity in the
expire in October 2023, the income and expenditure projections
and the fact that the Company’s investments comprise mainly
readily realisable quoted equity securities which can be sold to
liquidity stress testing was conducted during the year, including
consideration of the risk of further market deterioration.
range of market conditions that may adversely impact the portfolio.
assets that can be liquidated within one month that would result in
the value of those assets falling below the value of the borrowings.
The stress testing did not indicate any matters of concern.
In addition, as substantially all of the essential services required
by the Company are outsourced to third party service providers,
this allows key service providers to be replaced at relatively short
notice where necessary.
Based on the Company’s processes for monitoring operating
costs, share price discount/premium, the Managers’ compliance
with the investment objective, asset allocation, the portfolio risk
controls, the Directors have concluded that there is a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the next
Promoting the Success of the Company
Under section 172 of the Companies Act 2006, the directors of a
company must act in the way they consider, in good faith, would
be most likely to promote the success of the company for the
(amongst other matters and to the extent applicable) to:
a) the likely consequences of any decision in the long term;
b) the interests of the company’s employees;
c) the need to foster the company’s business relationships
with suppliers, customers and others;
d) the impact of the company’s operations on the community
and the environment;
e) the desirability of the company maintaining a reputation for
high standards of business conduct; and
f) the need to act fairly as between members of the company.
Strategic Report
In this context, having regard to Baillie Gifford US Growth being
an externally managed investment company with no employees,
the Board considers the Company’s key stakeholders to be: its
existing and potential new shareholders; its externally-appointed
Managers (Baillie Gifford); other professional service providers
(Corporate Broker, Registrar, Auditor and Depositary); lenders;
wider society and the environment.
The Board considers that the interests of the Company’s key
stakeholders are aligned, in terms of wishing to see the Company
deliver sustainable long-term growth, in line with the Company’s
stated objective and strategy, and meet the highest standards
of legal, regulatory, and commercial conduct, with the differences
between stakeholders being merely a matter of emphasis on
those elements. The Board’s methods for assessing the Company’s
progress in the context of its stakeholders’ interests are set
out below.
The Board places great importance on communication with
shareholders. The Annual General Meeting provides the key
forum for the Board and Managers to present to shareholders
on the Company’s performance, future plans and prospects.
The Chairman is available to meet with shareholders as
appropriate. The Managers meet regularly with shareholders
and their representatives, reporting their views back to the Board.
Directors are available to attend certain shareholder presentations,
may also communicate with members of the Board at any
or to the Company’s broker and by emailing the Managers
at trustenquiries@bailliegifford.com. These communication
opportunities help inform the Board when considering how best
shareholders over the long term.
The Board seeks to engage with its Managers and other service
providers in a collaborative and collegiate manner, encouraging
open and constructive discussion and debate, whilst also
ensuring that appropriate and regular challenge is brought and
evaluation conducted. This approach aims to enhance service
levels and strengthen relationships with the Company’s providers,
with a view to ensuring the interests of the Company’s shareholders
and other stakeholders are best served by keeping cost levels
proportionate and competitive, and by maintaining the highest
standards of business conduct.
Whilst the Company’s operations are limited, as third party service
providers conduct all substantive operations, the Board is aware
of the need to consider the impact of the Company’s investment
strategy and policy on wider society and the envir
onment. The
Board considers that its oversight of environmental, social and
Baillie Gifford US Growth Trust plc 09
sits naturally with Baillie Gifford US Growth’s longstanding aim of
providing a sustainable basis for adding value for shareholders.
The Board’s review of the Managers includes an assessment
decisions. The Board supports the Managers’ long-term perspective
as set out in their Investment Principles on page 15 and regularly
included on page 17.
The Board recognises the importance of keeping the interests of
the Company’s shareholders, and of acting fairly between them,
Secretaries are at all times available to the Board to ensure that
suitable consideration is given to the range of factors to which the
Directors should have regard. In addition to ensuring that the
Company’s stated investment objective was being pursued, key
decisions and actions during the year which required the Directors
to have regard to applicable section 172 factors included:
— the appointment of Panmure Gordon (UK) Limited with effect
from 1 June 2023 as the corporate broker following the
completion of a tender process. The Board believes that the
appointment of Panmure Gordon will continue to support the
and potential shareholders and provide the Board with
access to its market expertise;
— replacing the expiring revolving credit facility from ING Bank
N.V. subsequent to the year end on 26 July with a three-year
US$25 million unsecured revolving credit facility from ING
Bank N.V., for the purpose of investing in exciting growth
opportunities, which the Board believes will enhance long
term returns for shareholders; and
— following a formal tender process, the Board proposes the
year commencing 1 June 2023.
Employees, Human Rights and Community Issues
The Board recognises the requirement to provide information
about employees, human rights and community issues. As the
Company has no employees, all its Directors are non-executive
and all its functions are outsourced, there are no disclosures to
be made in respect of employees, human rights and community
issues.
Strategic Report
Gender Representation
and two female. The Company has no employees. The Board’s
policy on diversity is set out on page 35.
Environmental, Social and Governance Policy
Details of the Company’s policy on socially responsible investment
can be found under Corporate Governance and Stewardship on
page 37.
The Company considers that it does not fall within the scope of
the Modern Slavery Act 2015 and it is not, therefore, obliged to
the Company considers its supply chains to be of low risk as its
suppliers are typically professional advisers. A statement by the
Managers under the Act has been published on the Managers’
website at bailliegifford.com.
Future Developments of the Company
The outlook for the Company for the next twelve months is set
out in the Chairman’s Statement on pages 2 and 3 and the
Managers’ Review on pages 10 to 13.
10 Annual Report 2023
In 2018, Shopify, the commerce platform for merchants and the
largest public investment in the Company, had gross merchandise
value (‘GMV’) of ~US$40 billion, a 2.6% take rate, and revenue
had just crossed the one-billion-dollar mark. Fast forward to
2023, and GMV sits at close to US$200 billion, the company’s
take rate in quarter one was over 3.0% and FY22 revenue was
close to US$3 billion. Additionally, the company launched
numerous products, including Shop Pay Instalments in 2021
and Audiences (an advertising tool) in 2022. With net cash of
US$3.9 billion, there is plenty of scope for innovation and new
product launches.
made successful ground landings. In 2022 the company launched
61 orbital missions, nearly doubling its previous single-year record
average, every six days from one of three sites. It is driving the
launch market, taking two-thirds market share. It has achieved this
by making its service much cheaper, driven by reusable rockets.
is leveraging this cost advantage to move into the communications
sector with Starlink, a low earth orbit satellite constellation to
deliver fast broadband to rural areas. It already has over one million
publicly that the internet business “will make money” in 2023,
joining the core launch business which already “makes money”.
date, to 31 May 2023, the Company’s share price and net asset
value total return (after deducting borrowings at fair value)
returned 44.1% and 90.4%, respectively. This compares with a
total return of 102.0% for the S&P 500 Index
* (in sterling terms).
We are disappointed. We asked you to judge us over the long
term, and as shareholders and managers of the Baillie Gifford US
These are not the numbers we looked to deliver at the Company’s
It has been a volatile period. We have experienced multiple
once-in-a-generation events since the Company was founded:
a global pandemic, war, and supply shocks. With such turbulence,
it is easy to overlook the fundamental progress the underlying
companies we invest your capital in have made.
We launched Baillie Gifford US Growth Trust in March 2018
could invest in the most exceptional public and private growth
businesses in the US, brought something different to the market
to believe that to be the case. When we began, 0% of the
portfolio was invested in private companies. At the end of May
2023, that number stands at 34.5%. We now have two private
companies in the top ten and six in the top twenty. We believe
this is something to be celebrated, not feared. We are delighted
considerable contributions to the Company’s future performance.
We believe these companies are among the most important
forces behind future progress.
Whilst share prices have been volatile since inception, the
fundamental progress of the companies within the Company
has been phenomenal.
investment. Today it represents 2.3% of total assets. In 2018,
Zipline’s operations were predominantly in Rwanda, where its
autonomous drones played a pivotal role in delivering medical
forward to 2023, and Zipline serves 3,400 hospitals and health
facilities globally and is contracted to serve more than 10,000 by
the end of the year. While initially focusing on medical supplies,
the company has expanded into ecommerce, animal, and
agricultural products. Zipline is now the largest autonomous
commercial, autonomous miles, and is on track to make twice as
many deliveries this year as all previous years combined. And with
Zipline’s home delivery system launching two months ago in the
US, it is just getting started.
Strategic Report
Managers’ Review
© Joerg Boethling/Alamy Stock Photo.
*
Past performance is not a guide to future performance.
Baillie Gifford US Growth Trust plc 11
billion in 2018 to US$80 billion today. Wayfair, the online homeware
business, has more than doubled its top line since 2018, seen
gross margin expansion of more than 700 basis points and nearly
doubled its active customer base from 13 million to over 21 million.
CoStar, the commercial and residential real estate company, has
increased its revenue 126%, adding over US$1 billion, since the
Company’s launch, expanded margins and reduced them again as
it invests counter-cyclically in new growth opportunities. Watsco,
the heating, ventilation and air conditioning (‘HVAC’) distribution
business, has improved gross margins by 410 basis points, built
an ecommerce business which is now over 33% of sales and
Of course, the progress of companies in the Company’s portfolio
has not been a linear journey; there have been highs and lows.
However, when surrounded by noise and volatility, it is easy to
forget how far many of the companies we invest in on behalf of
the Company have come. The fundamental progress on a
Opportunity Remains
In nature, there exists a mushroom: the matsutake. Matsutake
are wild mushrooms that emerge in some of the most disturbed
environments in the world. However, matsutake is not considered
a pest; it is a gourmet treat: the most valuable mushroom in the
world.
Nature shows us that valuable products can emerge even within
the most disturbed environments. The same applies to companies;
tenets of long-run success. While the term disturbance has
negative connotations, disturbance can renew as well as destroy.
forget the potential and opportunity that lies beneath. The pull
toward the safety of established trees or, in our world, companies,
threatens to overwhelm.
Patience is key: the most impactful innovations may lie dormant
of innovations arrive before their time. Dormancy can result from
inertia, powerful incumbency, and resistance to change. Idea
creation is the easy task; creating success is where the hard work
begins. Disturbance creates opportunities for innovation because
it enables heterogeneity – it opens the possibility of alternative
landscapes and new ways of doing things. As the pull toward
convention and homogeneity continues, disturbance can create
lasting transformations that enable exuberant growth and
progress.
The rapidly changing macro environment over the past year is
the stock market equivalent of disturbance. While uncomfortable
to experience, it may be that periodic disturbance is necessary
to separate the wheat from the chaff and to help the landscape
damage has been done. For some companies, the damage,
whether the consequence of unsustainable business models
or an overreliance on cheap access to capital, will be fatal.
For some, the damage is painful but survivable, for others,
Like fungi, companies evolve in response to the environment in
to invest in the future, but they are cognisant that the path of
progress is less likely to be funded by others.
expectations have been reset. Those who over-invested in
their cost bases during the pandemic years must readjust now.
Companies such as Wayfair, Twilio, Shopify and Snap have
announced layoffs which bring about cultural challenges but also
while continuing to invest in the long-run opportunity. Cloud
experiencing slower growth rates as their underlying customers
look for ways to reduce costs. Still the structural opportunity for
Jassy has suggested around 90% of IT spend is still on-premise.
app, and The Trade Desk, the programmatic advertising platform,
which are earlier still in their structural opportunity, have seen
limited impact from the macroeconomic environment. Duolingo
has recently seen its seventh straight quarter of accelerating user
growth, and revenue increase 34% year on year in 2022. It has
shifted the number of paying users from around 4% at IPO in
2021 to around 8% today and continues to innovate with the
launch of Duolingo Max, its AI-powered offering which enables
roleplay and personalised feedback. The Trade Desk has grown
its share of the global advertising market from 0.6% to 1.0% since
2020; its revenues have grown over 20% annually since March
upfront advertising product this year.
Companies which survive and adapt to the macroeconomic
shocks of the past year can emerge stronger than before, and
like the matsutake mushroom, those that do are likely to be far
more valuable in future.
Portfolio Changes
in the companies we own. Having revisited the upside cases for
most of the Company’s holdings, we continue to believe in the
underlying investment opportunities.
de-rating. When performance is challenged, it is easy to be drawn
into focusing on the underperforming stocks and those where
your conviction is waning. We believe new ideas and enthusiasms
should drive portfolio changes. Thus, we have spent time on
new ideas and underwriting the Company’s investments. Bringing
new ideas, or a new perspective on a current holding, to the table
and comparing them to our existing portfolio enables constructive
discussion of ideas, moving the conversation beyond short-term
challenges to whether a stock merits a position in the portfolio
and at what scale.
Strategic Report
12 Annual Report 2023
Strategic Report
There have been some changes to the top ten over the last
All have become larger holdings because of solid share price
since the beginning of this year. A reduction in Illumina moved it
out of the top ten. The ability to read DNA remains foundational
for advances in healthcare, but the competitive landscape is
evolving rapidly, and the company’s execution has disappointed.
We added several new listed holdings to the portfolio over the
last year: Roblox, Sweetgreen and Doximity. Roblox is an online
gaming and game creation platform with a strong market share
in the 9–12-year-old demographic. We began researching the
company before its IPO and were excited at its opportunity to
‘age up’ its user base and broaden the experiences available on
the platform. We used share price weakness to initiate a holding.
We also bought a small holding in Sweetgreen, a salad restaurant
chain. Again, we have followed the business for some time. The
company is early in its store rollout. Still, its strong brand, positive
store economics, creative management team and clear plan to
self-sustainability led us to take a position. Doximity’s vision is to
become the ‘Bloomberg of Medicine’. The company has created
free-to-use products which improve quality and productivity within
a social network for doctors and monetises by selling hyper-
targeted, unobtrusive advertising to pharmaceutical companies.
With only 20% of pharmaceutical marketing budgets allocated
to digital advertising compared to around 80% for Fortune 100
and First Republic during the period. Abiomed was acquired by
succeed, we felt the probability of doing so was diminishing, and
we sold the holding. Our most recent sale was Carvana, the
online used car dealership. While the opportunity for the business
Roblox is built by a global community of millions of developers and
creators making new experiences for users to explore.
remains large, we concluded that it had become constrained by
ability to compete effectively.
We sold First Republic as the bank grappled with a run on its
deposits in the wake of the Silicon Valley Bank collapse. We have
long admired First Republic’s service model, deep customer
relationships, conservative lending culture and management team,
but these features did not provide protection when panic set in.
Given the existential risk in the near term posed by deposit
withdrawals and the higher cost of replacement funding depressing
We made one additional unlisted investment over the last twelve
months: Oddity. We have included a description of this business
on page 20. Given the market environment, none of our existing
private company holdings went public during the period. The net
result was that, at the end of May, we held 25 private company
investments which comprised 34.5% of total assets. Considering
companies that were previously private company investments, but
Investment Principles
As we have done for the last three years, we have included our
investment principles again, unaltered. We hope that by publishing
our investment framework in this and future communications we
provide shareholders with a useful reminder of our philosophy and
a yardstick with which to measure us.
Our second principle begins: ‘Short-term volatility is an inevitable
feature of the market, and we will not manage the portfolio to
reduce volatility at the expense of long-term gain.’ In recognising
the inescapability of volatility up front, we can be better prepared
for it when it happens. The last few years have been particularly
volatile and challenging. However, our philosophy and process
and the Company’s underlying holdings has not weakened.
© Bloomberg/Getty Images.
Sweetgreen has a clear plan to self-sustainability and are
Baillie Gifford US Growth Trust plc 13
Strategic Report
Outlook
When surrounded by noise and volatility, taking a step back and
barrier between what is and what could be has never felt lower.
software code as medicine and biology’s power to solve the
imagination. The Company owns companies addressing each:
Bioworks. The future feels closer than it has ever been before,
and that is indicative of a world ripe with opportunity.
It is true that success does not happen in a vacuum; more than
creativity and innovation is needed. Success also depends upon
the environment into which an idea is born. We are long-term
investors, but we cannot lose sight of the fact that companies
have to face their current circumstances as they are today, not
as they will look in the future. Still, those businesses that can
have the opportunity to emerge from this environment stronger
than they went in.
As managers of the Baillie Gifford US Growth Trust, the worst
thing we could do right now is to go against the philosophy that
on the short term at the expense of the long term. Performance
has been poor, and we are disappointed. No one sets out to
inevitable for a long-term growth investor, it does not make it
easier. However, given the opportunities in front of the companies
the Company invests in, we cannot panic and pro-cyclically turn
defensive. We will not get every investment right. But we have
underwritten the investment cases for the companies held in the
portfolio and are excited about their long-term potential. The
14 Annual Report 2023
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
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 12-month period.
For 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 committee 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
or meaningful changes to the valuation of comparable public
companies. Any ad hoc change to the fair valuation of any holding
asset value (‘NAV’). There is no delay.
The valuations committee 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.
Continued market volatility has meant that recent pricing has
moved much more frequently than would have been the case with
revaluations carried out during the year to 31 May 2023, however
portfolio that has not resulted in a change in valuation.
Baillie Gifford US Growth Trust*
Percentage of portfolio revalued up to 4 times
#
30%
Percentage of portfolio revalued up to 6 times 80%
Percentage of portfolio revalued up to 7 times 20%
*
Company’s reporting period.
#
Includes additions in the year.
Year to date, most revaluations have been decreases, with a small
number of companies raising capital at an increased valuation.
The average movement in company valuations and share prices
for those are shown below.
Average
movement
in company
valuation
Average
movement in
share price
Baillie Gifford US Growth Trust* -15.5% -18.6%
*
reporting period.
During the year to 31 May 2023, as we continued to write down
some of the valuations of the investments in the portfolio, the
economic reality of the liquidation preferences having been
reviewed, leading to a less pronounced divergence in the valuation
decreases across the various share classes held in the portfolio
and the underlying company valuations.
Strategic Report
Valuing Private Companies
Baillie Gifford US Growth Trust plc 15
Strategic Report
To our shareholders
Our core task is to invest in the exceptional growth businesses in
America. Over the full course of time, these companies will develop
unusually high shareholder returns. We endeavour to generate
returns for our clients by helping in the creation and improvement
of such useful enterprise. To the extent that we are successful in
identifying these companies, we believe that we can multiply the
wealth of our clients over the long term.
Managing shareholders’ money is a huge privilege, and not one we
take lightly. It is a relationship, not a transaction. Relationships can
only be built on a foundation of trust and understanding. It is with
this in mind that we seek to lay out the fundamental principles by
which we will manage your money and the framework for how we
make decisions so that you, our shareholders, can decide whether
it aligns with your investment philosophy.
— We believe the fundamental measure of our success will be
the value we create for our shareholders over the long term.
characteristics we look for in businesses become apparent.
We ask that our shareholders measure our performance over
similar periods.
— Short-term volatility is an inevitable feature of the market,
and we will not manage the portfolio to reduce volatility at the
expense of long-term gain. Many managers are risk-averse
and fear loss more than they value gain. Therefore, they
accept smaller, more predictable risks rather than the larger
and less predictable ones. We believe that this is harmful to
long-term returns, and we will not shy away from making
investments that are perceived to be risky if we believe that
the potential payoffs are worthwhile. This means that our
performance may be lumpy over the short term.
— We believe, and academic work has shown, that long-term
equity returns are dominated by a small handful of exceptional
do not matter for long-term equity returns, and investors
will be poorly served by owning them. In our search for
exceptional growth companies, we will make mistakes. But the
asymmetry inherent in equity markets, where we can make far
more in a company if we are right than lose if we are wrong,
tells us that the costliest of mistakes is excessive risk aversion.
— We do not believe that the index is the right starting point for
portfolio construction. The index allocates capital based on
marginal return and the ability to grow at those rates of return.
Big companies are not immune to disruption. We do not
manage the portfolio to an active share target, but we expect
the active share of this fund to be high.
— The role of capital markets has changed, and we have
evolved with it. As companies are remaining private for longer,
so too have we broadened our search for exceptional growth
companies into private companies. We are largely indifferent
to a company’s private or public status. We will conduct
diligent analysis and allocate capital to where the highest
returns are likely to be.
— We may discuss long-term trends and themes present in
the portfolio, but we do not plan on discussing short-term
performance. We believe our duty is to maximise the long-
term wealth of our shareholders, and that creating narratives
around short-term performance serves our shareholders
poorly.
and economical way possible. That means keeping our
management fees and ongoing costs low. We recognise that
even modest amounts, when allowed to compound over long
periods of time, add up to staggering sums, and we do not
wish to dilute the compounding of returns with the
compounding of costs.
With this foundation, we hope to build Baillie Gifford US Growth
into a world class savings vehicle. We are grateful that you have
joined us on this journey, and we look forward to a long and
hopefully prosperous relationship with you
.
Investment Principles
16 Annual Report 2023
Prioritisation of Long-term Value Creation
We encourage our holdings to be ambitious and focus their
investments on long-term value creation. We understand that
maximisation but believe these often lead to sub-optimal
long-term outcomes. We regard it as our responsibility to steer
activities that create genuine economic and stakeholder value
over the long run. We are happy that our value will often be in
supporting management when others do not.
A Constructive and Purposeful Board
We believe that boards play a key role in supporting corporate
success and representing the interests of all capital providers.
have the resources, information, cognitive and experiential
that good governance works best when there are diverse
skillsets and perspectives, paired with an inclusive culture and
str
ong independent representation able to assist, advise and
constructively challenge the thinking of management.
Long-term Focused Remuneration with
Stretching Targets
We look for remuneration policies that are simple, transparent
and reward superior strategic and operational endeavour.
We believe incentive schemes can be important in driving
behaviour, and we encourage policies which create genuine
long-term alignment with external capital providers. We are
commensurate with outstanding long-run value creation, but
plans should not reward mediocre outcomes. We think that
performance hurdles should be skewed towards long-term
results and that remuneration plans should be subject to
shareholder approval.
Baillie Gifford Statement on Stewardship
Our Stewardship Principles
Fair Treatment of Stakeholders
We believe it is in the long-term interests of all enterprises to
maintain strong relationships with all stakeholders – employees,
customers, suppliers, regulators and the communities they exist
that operating policies, governance and ownership structures may
need to vary according to circumstance. Nonetheless, we believe
the principles of fairness, transparency and respect should be
prioritised at all times.
Sustainable Business Practices
We believe an entity’s long-term success is dependent on
maintaining its social licence to operate and look for holdings
to work within the spirit and not just the letter of the laws and
r
egulations that govern them. We expect all holdings to consider
how their actions impact society, both directly and indirectly, and
encourage the development of thoughtful environmental practices
Climate change, environmental impact, social inclusion, tax and
fair treatment of employees should be addressed at board level,
with appropriately stretching policies and targets focused on the
relevant material dimensions. Boards and senior management
should understand, regularly review and disclose information
relevant to such targets publicly, alongside plans for ongoing
improvement.
Strategic Report
Baillie Gifford’s over-arching ethos is that we are ‘actual’ investors. We have a responsibility to behave as supportive and constructively
engaged long-term investors. We invest in companies at different stages in their evolution, across vastly different industries and
geographies and we celebrate their uniqueness. Consequently, we are wary of prescriptive policies and rules, believing that these often
shape our interactions with companies.
Baillie Gifford US Growth Trust plc 17
Purposeful Company Conversations
Strategic Report
Duolingo
We met with Duolingo, an online education business, in its
company’s use of AI. The company had shifted its product
development focus towards generative AI earlier that year, and
by the time we met with it every engineer in its organisation was
using it. W
e discussed its content generation capabilities and the
possibilities this might unlock. The founder Luis Von Ahn believes
education universally available. We discussed how the high quality
of its free product both furthers its mission and acts as an edge
growth do not just align with shareholder returns, they reinforce
the company’s potential. This is an exciting combination.
Shopify
platform Shopify in London in late 2022. Shopify’s platform helps
competition and greater consumer choice. Having enjoyed strong
demand for their services during the Covid-19 pandemic, the
company has had to readjust to a much tougher environment.
Shopify has made staff redundant and discontinued some of its
investment projects. These choices present serious challenges to
a growth business, but the discussion highlighted the considered
approach that Shopify is taking as well as its efforts to maintain the
pace of innovation at the projects it considers most important to
its merchants.
Twilio
Twilio is a cloud-based software platform. It provides software
that developers use when adding communication capabilities
into their applications, allowing businesses to communicate
with their customers in ways that were not possible until recently.
T
wilio has grown its sales substantially but has made little progress
environment, making staff redundant and renegotiating
compensation. We spoke with the company’s Chief Operating
their stock-based compensation agreements. We followed up with
Twilio’s newly formed business divisions. Twilio still has serious
challenges to address, but we believe that the stage is set for a
Ginkgo Bioworks
The synthetic biology business has only been a public company
since 2021, though the Company has invested in Ginkgo since
2019. Ginkgo designs, tests and ferments programmed cells
for a wide range of end uses; from healthcare to chemicals
manufacturing. It is a complicated and nascent business,
and during the year we discussed with the company how it
communicates its pr
ogress to public market participants. We
disclosure about the potential value of its projects. Ginkgo often
retains a right to participate in the future success of a product it
develops via milestones, royalties or ownership. We think this is
poorly understood. Improving awareness here could put the
company on the strongest possible footing as it grows.
Solugen
Solugen is a synthetic biology company that has remained private.
It has been held in the Company’s portfolio since 2021. Solugen
aims to bring greener, cleaner and safer chemical production
raising costs. It does this by developing processes that harness
commercial scale serving the oil and gas sector; an important
validation of the concept. It is a highly ambitious, and potentially
transformational business. We accepted the offer of a board
observer position at the company. This has helped to deepen our
understanding of how this innovative business is governed. It has
also broadened our network of contacts who are experts in this
space, providing valuable additional opportunities to learn more
about this fast-developing industry.
© Ginkgo Bioworks.
Ginkgo designs, tests and ferments programmed cells for a wide
range of end uses.
We talk often with the boards, managers and staff of the companies we invest in. These conversations are central to our research and
monitoring. Gaining an insight into the motivations and abilities of the people running each company makes us more effective owners.
We are both grateful for, and mindful of, the time that is made available to us.
W
e use that time as effectively as we can. We monitor every holding against our key investment contentions, which include statements
on the broader societal impact of growth for each business. These frameworks help us to prioritise our questions when we meet with
companies.
In r
eturn we communicate our reasons for owning the shares clearly to our holdings as a minimum. Simply knowing that you have a
shareholder on the books who will support you if you make choices that enhance the long-term return opportunity can help management
teams to be ambitious. More directly, we can provide capital support on occasion too, particularly for the private companies
in the Company’s portfolio.
It is far fr
om a one-way street. We are not afraid to provide thoughtful challenge to the companies we invest in. We are clear about our
views on topics we see as being key to each investment case. Some examples of the discussions we have found most useful this year
are noted below.
18 Annual Report 2023
Strategic Report
Review of Investments
A review of the Company’s ten largest investments and additions to the private company
securities as at 31 May 2023 is given below and on the following two pages.
Top Ten Holdings
Space Exploration Technologies
*
launches advanced rockets and spacecraft. By fully embracing
innovation and vertical integration, the company has opened
up a series of cost and capability improvements which are
transforming the space industry. These improvements have
unlocked a diverse range of revenue generating opportunities
in areas such as global satellite connectivity and space logistics.
Shopify
*
Shopify provides software tools which allow merchants to easily
set-up and manage their businesses across an increasingly complex
and fragmented retail landscape. Shopify’s software helps to make
operations (e.g. marketing, inventory management, payments,
order processing, shipping) thus allowing them to focus on product
run by an impressive founder who has built a distinctive merchant-
focused culture.
The Trade Desk
*
The advertising industry is undergoing a wholesale shift in the
way that advertising is bought and sold. Whereas in the past
advertising was bought and sold in bundles, in the digital world,
advertising can be transacted on a one to one basis, targeting
only the audiences that are relevant. The Trade Desk provides
the technology that enables this targeted buying of advertising
through real-time auctions. Its platform connects media buyers
to a wide range of digital inventory and provides a set of tools
to help buyers determine what price to pay for those ad
opportunities. This is known as programmatic advertising – the
buying of advertising using data. Programmatic advertising is still
and a tangible demonstration of return on investment. As the
programmatic industry becomes mainstream, it will consolidate
around a handful of buying platforms, and we believe that The
Trade Desk will emerge as the leading buying platform for the
independent internet.
Space Exploration Technologies has unlocked a diverse range of revenue generating opportunities.
* Total assets less current liabilities, before deduction of borrowings. See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Baillie Gifford US Growth Trust plc 19
Strategic Report
Stripe
*
Stripe is a payments technology company. Founded in 2010 by
Irish brothers Patrick and John Collison, the company is in the
process of developing a platform for sending money seamlessly
and compliantly between any two internet-connected nodes in
the world. The company processes massive volumes of payments
from a broad customer base, ranging from US start-ups to global
giants. Stripe’s long-term ambition is to make entrepreneurship
conducted online.
Stripe is a private company investment.
Tesla
*
Tesla makes electric cars, battery storage and solar power systems.
The company has proven that cars can be environmentally friendly
without compromising on style, safety, or performance. We are
in the early stages of a major shift in the transportation industry
on this. It is an innovative and mission-driven company whose
success is aligned with the interests of the planet.
Amazon
*
global retail and global IT spending. In retail, it competes on
price, selection and convenience and is improving all three as
is less mature than its retail business, but it is no less exciting.
turn out to be one of the largest and most important market shifts
of our time. Both opportunities are outputs of what is perhaps
optimises for customer delight. The company is run with a
uniquely long-term perspective. It is willing to be bold and scale
its experiments (and failures) as it grows. These cultural
combination of scale and immaturity.
*
class of medicines that leverage the body’s natural protein-
production apparatus to treat diseases. It is known for its
Covid-19 vaccine, but its long-term growth opportunity is far
broader. mRNA is a foundational technology that theoretically has
the potential to induce the production of just about any protein –
human or non-human – inside our cells. This versatility opens up
a wide range of therapeutic opportunities for mRNA. Furthermore,
mRNA, like DNA, is, in a sense, digital, and is therefore
programmable. In moving from one drug to the next, the delivery
mechanism and building blocks remain the same. The only thing
that changes is the code. Because of this, Moderna’s mRNA
platform ought to be more scalable than past drug development
approaches. Indeed, Moderna may have more in common with a
software company than a traditional biotech business.
* Total assets less current liabilities, before deduction of borrowings. See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
© NVIDIA.
NVIDIA designs and manufactures graphics processing units for the
gaming and professional markets.
NVIDIA
*
NVIDIA designs and manufactures graphics processing units
(GPUs) for the gaming and professional markets. They are highly
specialised semiconductor chips that can be used for a range
intelligence (‘AI’). After years of investment into both hardware
of generative AI, as its chips form the infrastructure layer to power
large language models. NVIDIA is using its scale to further reinvest
in its opportunity; designing new hardware to make data centres
help companies adopt AI more quickly.
20 Annual Report 2023
Oddity
Oddity is a cosmetics and skincare holding company, focused on
launching online-only direct-to-consumer brands. Fundamentally,
the company believes the western beauty industry has failed to
make the transition to online and remains stuck in a paradigm of
online replenishment purchases rather than customer acquisition.
Oddity’s brands present customers with high quality products in
high-retention categories, at prestige price points (foundation at
US$45 vs US$8–16 for mass market) and take away the primary
frictions of online purchasing through a returns guarantee and
product matching. The promise and ambition is to use the
common data-driven backbone to iteratively launch brands with
US$1 billion plus sales potential and form a new type of
Consumer Packaged Goods (‘CPG’) company.
Strategic Report
*
and distribution media brand. Its base of more than 230 million
subscribers allows it to invest in building a strong customer
proposition through its library of exclusive and desirable content.
This in turn attracts more subscribers, creating a powerful
shift from linear TV to on-demand streaming is still in the early
CoStar Group
*
CoStar provides information, analytics and online marketplaces
to the commercial real estate industry in the US. The market for
transaction has numerous participants and copious information
requirements and, to facilitate transactions, participants must
have accurate and current information. CoStar provides this
information through its CoStar Suite, a dataset that has been built
up over three decades. It aims to provide industry professionals
with the knowledge to research and complete transactions, price
optimally and stay up to date with market changes. The company
has leveraged its position to expand into online marketplaces in
both commercial real estate, apartment listings and most recently
residential real estate. The company is led by its ambitious
founder, Andy Florance, who has shown himself to be a shrewd
long-term growth.
© Francis Vachon / Alamy Stock Photo.
and distribution media brand.
© Shutterstock/DCStockPhotography.
Oddity’s brands present customers with high quality products
in high-retention categories.
* Total assets less current liabilities, before deduction of borrowings. See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Baillie Gifford US Growth Trust plc 21
List of Investments as at 31 May 2023
Name Business
2023
Value
£’000
% of
total
assets
*
2022
Value
£’000
Rocket and spacecraft company 2,374 0.4 2,122
Rocket and spacecraft company 732 0.1 655
Rocket and spacecraft company 20,041 3.3 17,917
Rocket and spacecraft company 4,568 0.8 4,083
Rocket and spacecraft company 11,505 1.9 10,285
39,220 6.5 35,062
Shopify Class A Cloud-based commerce platform provider 33,135 5.4 19,215
The Trade Desk Advertising technology company 32,448 5.3 26,818
Stripe Class B Common
Online payment platform 2,281 0.4 4,452
Stripe Series G Preferred
Online payment platform 11,110 1.8 21,678
Stripe Series H Preferred
Online payment platform 1,430 0.2 1,865
Stripe Series I Preferred
Online payment platform 10,860 1.8 –
25,681 4.2 27,995
Tesla
24,967 4.1 30,401
NVIDIA Graphics chips 24,334 4.0 12,481
Online retailer and cloud computing provider 22,361 3.7 21,988
Moderna Therapeutic messenger RNA 21,025 3.5 25,556
Subscription service for TV shows and movies 17,247 2.8 9,620
CoStar Group Commercial property information provider 15,817 2.6 12,610
Brex Class B Common
Corporate credit cards for start-ups
8,050 1.3 10,922
Brex Series D Preferred
Corporate credit cards for start-ups 7,574 1.3 10,276
15,624 2.6 21,198
Zipline International Series C Preferred
Drone-based medical delivery 8,771 1.4 5,995
Drone-based medical delivery 4,970 0.8 3,695
Zipline International Series F Preferred
Drone-based medical delivery 807 0.1 –
14,548 2.3 9,690
Workday 13,548 2.2 10,155
Faire Wholesale
Online wholesale marketplace 4,546 0.7 7,590
Faire Wholesale Series F Preferred
Online wholesale marketplace 5,114 0.9 7,886
Faire Wholesale Series G Preferred
Online wholesale marketplace 3,789 0.6 4,569
13,449 2.2 20,045
Cloud-based provider of network services 12,589 2.1 9,551
Duolingo Mobile learning platform 11,944 2.0 3,162
Doordash Online local delivery 11,482 1.9 7,065
Watsco Air conditioning, heating and refrigeration
equipment distributor 11,076 1.8 10,024
Alnylam Pharmaceuticals Therapeutic gene silencing 11,066 1.8 7,650
Discord Series I Preferred
Communication software 11,006 1.8 11,740
Solugen Series C-1 Preferred
to make chemicals 7,257 1.2 7,010
Solugen Series D Preferred
to make chemicals 3,487 0.6 –
10,744 1.8 7,010
Digital mental health platform for enterprises 6,688 1.1 7,101
Lyra Health Series F Preferred
Digital mental health platform for enterprises 1,591 0.3 1,656
8,279 1.4 8,757
Datadog IT monitoring and analytics platform 8,193 1.3 7,645
Roblox User generated content game company 8,115 1.3 –
Databricks Series H Preferred
Data and AI platform 7,974 1.3 8,193
Developer of a SaaS-based cloud data
warehousing platform 7,598 1.3 6,124
Twilio Cloud-based communications platform 7,399 1.2 9,969
Novocure 7,182 1.2 8,406
Strategic Report
22 Annual Report 2023
Name Business
2023
Value
£’000
% of
total
assets
*
2022
Value
£’000
Convoy Common Marketplace for truckers and shippers 557 0.1 –
Convoy Series D Preferred
Marketplace for truckers and shippers 2,962 0.5 4,834
Marketplace for truckers and shippers 2,792 0.5 3,967
Convoy Convertible Loan Note
Marketplace for truckers and shippers 403 0.1 –
6,714 1.2 8,801
Snyk Ordinary Shares
Developer of security software 2,424 0.4 1,659
Snyk Series F Preferred
Developer of security software 4,061 0.6 3,889
6,485 1.0 5,548
Illumina Gene sequencing equipment and consumables 6,183 1.0 14,453
Chewy Online pet supplies retailer 6,168 1.0 4,868
Video game platform and software developer 6,060 1.0 10,555
Workrise Technologies Series D Preferred
Jobs marketplace for the energy sector 2,662 0.4 3,595
Workrise Technologies Series D-1 Preferred
Jobs marketplace for the energy sector 592 0.1 799
Jobs marketplace for the energy sector 2,741 0.5 3,531
5,995 1.0 7,925
Denali Therapeutics Clinical stage neurodegeneration company 5,803 1.0 4,590
Pinterest Image sharing and social media company 5,698 0.9 3,550
Penumbra Medical tools to treat vascular diseases 5,696 0.9 4,847
Oddity Tech Ltd Class A
Online cosmetics and skincare company 5,648 0.9 –
Zoom Video Communications Remote conferencing service provider 5,385 0.9 9,006
MarketAxess Holdings 5,071 0.9 5,475
BillionToOne Series C Preferred
Molecular diagnostics technology platform 3,438 0.6 3,662
BillionToOne Promissory Note
Molecular diagnostics technology platform 1,614 0.3 –
5,052 0.9 3,662
Away (JRSK) Series D Preferred
Travel and lifestyle brand 1,698 0.3 1,327
Away (JRSK) Convertible Promissory Note 2021
Travel and lifestyle brand 1,075 0.2 1,085
Away (JRSK) Convertible Promissory Note
Travel and lifestyle brand 1,075 0.2 1,085
Away (JRSK) Series Seed Preferred
Travel and lifestyle brand 1,165 0.2 617
5,013 0.9 4,114
Roku Online media player 4,895 0.8 8,337
Wayfair Online furniture and homeware retailer 4,831 0.8 7,430
HashiCorp Open source infrastructure software 4,709 0.8 3,549
2,116 0.3 4,466
2,373 0.4 4,467
4,489 0.7 8,933
Single cell sequencing company 4,361 0.7 4,441
Coursera Online educational services provider 4,176 0.6 5,824
Tanium Class B Common
Online security management 3,814 0.6 6,737
Nuro Series C Preferred
Self-driving vehicles for local delivery 2,040 0.3 3,930
Nuro Series D Preferred
Self-driving vehicles for local delivery 1,645 0.3 3,201
3,685 0.6 7,131
PsiQuantum Series D Preferred
Silicon photonic quantum computing 3,535 0.6 3,770
Snap Class A Camera and social media company 3,399 0.6 4,889
Ginkgo Bioworks
Bioengineering company developing microorganisms
that produce various proteins 2,946 0.5 5,842
Airbnb Class B Common
Online marketplace for travel accommodation 2,725 0.4 2,951
Doximity
medical professionals 2,680 0.4 -
Niantic Series C Preferred
Augmented reality games 2,608 0.4 3,841
Warby Parker
Online and physical glasses retailer 2,406 0.4 3,846
Indigo Agriculture Common
Agricultural technology company 11 <0.1 42
Agricultural technology company 1,415 0.2 1,414
Indigo Agriculture Series F Preferred
Agricultural technology company 398 0.1 416
Indigo Agriculture Series G Preferred
Agricultural technology company 551 0.1 592
2,375 0.4 2,464
Strategic Report
Baillie Gifford US Growth Trust plc 23
Listed
equities
%
Unlisted
securities
†
%
Net liquid
assets
#
%
Total
assets
*
%
31 May 2022 63.2 36.4 0.4 100.0
Figures represent percentage of total assets. See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
†
Includes holdings in ordinary shares, preference shares and convertible promissory notes.
#
See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Name Business
2023
Value
£’000
% of
total
assets
*
2022
Value
£’000
Lemonade Insurance company 2,335 0.4 3,111
Capsule Series 1-D Preferred
Digital pharmacy 1,305 0.2 –
Digital pharmacy 807 0.1 –
2,112 0.3 –
Recursion Pharmaceuticals Drug discovery platform 2,111 0.3 1,340
2,048 0.3 2,136
Thumbtack Class A Common
Online directory service for local businesses 810 0.1 1,108
Thumbtack Series A Preferred
Online directory service for local businesses 58 <0.1 79
Thumbtack Series B Preferred
Online directory service for local businesses 4 <0.1 5
Thumbtack Series C Preferred
Online directory service for local businesses 17 <0.1 23
Thumbtack Series I Preferred
Online directory service for local businesses 1,113 0.2 1,135
2,002 0.3 2,350
Chegg Online education company 1,777 0.3 4,987
Rivian Automotive Developer of security platform 1,560 0.3 3,472
Sweetgreen Salad fast food chain 1,212 0.2 –
Aurora
Self-driving technology 368 0.1 1,003
Aurora Innovation Class B Common
Self-driving technology 785 0.1 1,767
1,153 0.2 2,770
Blockstream Series B-1 Preferred
Bitcoin and digital asset infrastructure 1,140 0.2 2,254
Sana Biotechnology Gene editing technology 929 0.2 825
Honor Technology Series D Preferred
Home care provider 609 0.1 2,451
Home care provider 264 <0.1 1,037
873 0.1 3,488
Total Investments
Net Liquid Assets
#
3,033 0.5
Total Assets*
*
Total assets less current liabilities, before deduction of borrowings. See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Denotes security in listed company previously held in the portfolio as an unlisted (private company) investment.
Denotes unlisted (private company) security.
#
See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Strategic Report
Contributors Absolute Performance % *
Shopify Class A 2.6
NVIDIA 2.4
1.5
The Trade Desk 1.3
Duolingo 1.0
*
Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Denotes unlisted (private company) security.
Denotes listed security previously held in the portfolio as an unlisted (private company) security.
#
First Republic Bank was sold during the period.
Detractors Absolute Performance % *
Stripe
(2.7)
First Republic Bank
#
(1.2)
Faire Wholesale
(1.2)
Brex
(1.1)
Tesla (0.9)
24 Annual Report 2023
(31 May 2022)
Consumer
Discretionary
18.8% (20.7%)
Communication
Services 11.7% (4.2%)
Net Liquid Assets 0.5% (0.4%)
Information
Technology
31.3% (33.8%)
Materials 2.3% (1.1%)
Industrials
16.2% (14.8%)
Financials
3.9% (6.1%)
Healthcare
13.7% (18.2%)
Consumer Staples
1.3% (0.4%)
Real Estate 0.3% (0.3%)
* Total assets less current liabilities before deduction of borrowings.
See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Distribution of Total Assets*
Distribution of Total Assets by Growth Drivers
Cultural outliers
#
represents 0.5% of total assets
*
.
*
Total assets less current liabilities, before deduction of borrowings. See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
#
See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
INNOVATIVE
HEALTHCARE
13.7%
CHANGE IN
EDUCATION
2.9%
Duolingo
Coursera
Chegg
THERAPIES
(DEVELOPMENT
STAGE)
1.2%
Sana Biotechnology
Denali Therapeutics
THERAPIES
(COMMERCIAL
STAGE)
5.3%
Moderna
Alnylam
Pharmaceuticals
DATA MEETS
HEALTHCARE
5.2%
DEVICES
2.0%
Illumina
10x Genomics
Doximity
Lyra Health
Novocure
Honor
Capsule
Penumbra
BillionToOne,Inc.
Recursion
Pharmaceuticals
DIGITISATION
OF FINANCE
9.0%
Brex
Lemonade
Blockstream
MarketAxess
Stripe
COMMERCIALISATION
OF SPACE
6.5%
SpaceX
INDUSTRIALISATION
OF BIOLOGY
2.7%
Solugen
Indigo Agriculture
Ginkgo
Bioworks
EVOLUTION OF
TRANSPORTATION
8.6%
Zipline
Aurora
Nuro
Convoy
Rivian
Tesla Inc
BATTLE FOR
OUR ATTENTION
11.3%
Discord
Roku
Niantic
Epic Games
CAPITAL
ALLOCATORS
3.1%
Watsco
FUTURE OF COMMERCE
24.6%
Roblox
Faire Wholesale
Pinterest
Snap
CoStar
Shopify
Oddity
DoorDash
Airbnb
Chewy
Warby Parker (JAND)
Away (JRSK)
The Trade Desk
Workrise
Wayfair
Sweetgreen
Thumbtack
NEW
ENTERPRISE
17.1%
PsiQuantum
Twilio
Tanium
Datadog
Databrick
Zoom Snyk
HashiCorp
NVIDIA
Workday
Amazon.com
for individual companies not playing out, rather than how index providers choose to classify companies.
Strategic Report
Baillie Gifford US Growth Trust plc 25
3 Listed – SPAC
Private Companies Summary
Transaction value
Showing all transactions prior to report date (£’000).
Concentration
At 31 May 2023 we held 25 private companies which equated to 34.5% of total assets.
— Five companies account for 51.6% of the private company exposure.
— Ten companies account for 73.3% of the private company exposure.
New buys Follow on funding rounds
Oddity Tech Ltd BillionToOne Solugen
Convoy Stripe
Capsule Zipline
No private companies listed or were taken-over during the year.
Historical snapshot
£24.8m of new capital deployed in private companies during the year.
7 Listed
25 Currently held
202320222021202020192018
0
200,000
160,000
40,000
120,000
80,000
Buy
Follow on Listed-SPAC Listed
Private exposure
(31 May 2023)
Space Exploration
Technologies
6.5%
Stripe
4.2%
Brex
2.6%
Zipline International
2.3%
Faire Wholesale
2.2%
Others
16.7%
Total private company exposure
Top 10 – 25.3%
Top 5 – 17.8%
34.5%
Strategic Report
26 Annual Report 2023
May
2023
Aug
2018
Mar
2023
Mar
2018
Mar
2019
Aug
2019
Mar
2020
Aug
2020
Mar
2021
Aug
2021
Mar
2022
Aug
2022
£m
50
0
40
30
%
20
10
1,200
400
1,000
600
800
200
0
Sour
ce:
Baillie Gifford.
Total assets in sterling (left hand axis)
Private company securities as a % of total assets (right hand axis)
Private company securities and listed securities previously held in the portfolio as private comany securities as a % of total assets (right hand axis)
#
See Glossary of Terms and Alternative Performance Measures on pages 76 to 77.
Warby Parker
Snowflake
Ginkgo Bioworks
Airbnb
Aurora
Affirm
400 5000-100 200 300100
Absolute performance from initial investment to initial public offering
Absolute performance from initial public offering to 31 May 2023
Total absolute performance from initial investment to 31 May 2023
Note: Absolute performance r
eturns cannot be added together as they are geometric.
Sour
ce: StatPro/Baillie Gifford.
(absolute performance in sterling terms %)
Private company securities and listed securities previously held as private company securities
as a percentage of total assets
#
(plotted quarterly from March 2018)
Strategic Report
Cap Total equity value (USD)
% of total
assets * Number of holdings
Micro <$300m 0.1 1
Small $300m–$2bn 8.5 11
Medium $2bn–$10bn 11.1 8
Large >$10bn 14.8 5
* Total assets less current liabilities before deduction of all borrowings. See Glossary of Terms and Alternative Performance Measures on pages 76 to 77.
As at 31 May 2023.
Size
Our private company exposure tends to be weighted to the upper end of the maturity curve, focused on late stage private
Baillie Gifford US Growth Trust plc 27
The following charts indicate how an investment in Baillie Gifford US Growth Trust has
performed relative to its comparative index and its underlying net asset value over the
Premium/(Discount) to Net Asset Value
#
Five Year Active Share Relative to the Benchmark
Five Year Performance
Annual Net Asset Value and Share Price Returns Annual Net Asset Value and Share Price Returns
(relative to the benchmark total returns)
Ongoing Changes*
2018
Cumulative to 31 May
2020 2021
2022
2023
2019
Source:
Refinitiv
and relevant underlying index providers
#
Share price return
NAV (after deducting borrowings at fair value) return
*
Comparative index
†
50
400
350
300
100
150
250
200
Source: Refinitiv/Baillie Gifford
#
Baillie Gifford US Growth Trust premium/(discount)
The premium/(discount) is the difference between Baillie Gifford US Growth’s quoted
share price and its underlying net asset value (after deducting borrowings at fair value).
2018
Years to 31 May
2020 2021
2022
2023
2019
(25%)
(20%)
(15%)
15%
10%
5%
(5%)
0%
(10%)
Source: Baillie Gifford and relevant underlying index providers
#
Active share
*
2018
Years to 31 May
2020 2021
2022
2023
2019
0%
100%
80%
60%
20%
40%
Source: Refinitiv
#
NAV (
after deducting borrowings at fair value
) return
*
Share price return
2019
Y
ears to 31 May
2020 2021
2022
2023
(60%)
(20%)
0%
20%
80%
60%
40%
(40%)
Source: Refinitiv
and relevant underlying index providers
#
NAV (
after deducting borrowings at fair value
) return relative to the
comparative index
†
Share price return relative to the comparative index
†
2019
Years to 31 May
2020 2021
2022
2023
(80%)
(60%)
(40%)
20%
60%
40%
(20%)
0%
Source: Baillie Gifford
Ongoing charges are calculated as total operating costs divided
by average net asset value (after deducting borrowings at fair value).
2019
Years to 31 May
2020 2021
2022
2023
0.0%
0.6%
1.0%
0.8%
0.2%
0.4%
Five Year Summary
†
S&P 500 Index total return (in sterling terms). See disclaimer on page 75.
#
See disclaimer on page 75.
* See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
Strategic Report
28 Annual Report 2023
The Strategic Report which incorporates pages 1 to 28 was approved by the Board on 9 August 2023.
Tom Burnet
Chairman
Summary of Results Since Inception
*
Capital
At 31 May
Total
assets
£’000
Borrowings
£’000
Shareholders’
funds
£’000
Shareholders’
funds/net asset
value (book)
per share
p
Net asset
value per
share (fair)
†
p
Share
price
p
Premium/
(discount)
(book)
†
%
Premium/
(discount)
(fair)
†
%
23 March 2018
#
169,466 – 169,466 97.96 97.96 100.50 2.6 2.6
2019 301,830 11,901 289,929 126.17 126.17 129.00 2.2 2.2
2020 490,762 14,560 476,202 181.92 181.92 189.00 3.9 3.9
2021 935,222 26,339 908,883 296.21 296.12 308.00 4.0 4.0
2022 623,860 39,674 584,186 191.44 191.63 168.00 (12.2) (12.3)
Revenue Gearing Ratios
Period/year
to 31 May
Income
£’000
Net return
after tax
£’000
Revenue earnings
per ordinary share
p
‡
Ongoing
charges
†
%
Gearing
†
%
Gross
gearing
†
%
2019
¶
699 (2,054) (1.09) 0.77 2 4
2020 595 (2,555) (1.05) 0.75 (1) 3
2021 648 (5,066) (1.78) 0.68 1 3
2022 568 (5,781) (1.88) 0.62 6 7
At 31 May Net asset value total return (fair)
†
Share price total return
†
Comparative index total return
§
23 March 2018
#
100 100 100
2019 129 128 122
2020 186 188 141
2021 302 306 172
2022 196 167 193
*
†
Alternative Performance Measure. See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
#
‡
The calculation of revenue earnings per share is based on the revenue from ordinary activities after taxation and the weighted average number of ordinary shares in issue
(see note 7 on page 57).
¶
For the period 7 February 2018, date of incorporation of the Company, to 31 May 2019.
§
Past performance is not a guide to future performance.
Strategic Report
Baillie Gifford US Growth Trust plc 29
Governance Report
Members of the Board come from a broad variety of backgrounds. The Board can draw
on a very extensive pool of knowledge and experience.
Directors and Management
Directors
Sue Inglis
Sue Inglis was appointed a Director on 5 March 2018 and is the
Senior Independent Director.
She has a wealth of experience from
more than 30 years advising listed investment companies and
her executive roles included managing director – Corporate Finance
services group, at Shepherd & Wedderburn, a leading Scottish law
investment company sectors, which was acquired by Canaccord
Genuity in 2009. Sue is currently the chairman of ThomasLloyd
Managed Portfolio Trust PLC, Momentum Multi-Asset Value Trust plc
and Seraphim Space Investment Trust PLC.
Tom Burnet – Chairman
Tom Burnet was appointed a Director and Chairman on 5 March
2018 and is also Chairman of the Nomination Committee.
He is
chairman of Kainos Group plc, a London listed IT services business
Tom is also chairman of two privately owned technology businesses.
Previously, Tom was managing director of Serco’s Defence Services
Watch (R.H.R.), having graduated with an MBA from the University
Graham Paterson
Graham Paterson was appointed a Director on 5 March 2018 and
is Chairman of the Audit Committee.
He is an investment and
private equity industry. A chartered accountant, Graham was one of
the founding partners of SL Capital Partners LLP (formerly Standard
board member until 2010. During his 13 years at SL Capital, he was
was a member of the advisory boards to a number of leading private
equity fund managers. In 2013, Graham co-founded TopQ Software
Ltd, a technology company which develops software for the private
equity industry. TopQ Software was acquired by eVestment Inc
(now part of NASDAQ Inc) in 2015, where Graham was a director of
the private markets data and analytics business until early 2018. Graham
is currently Chairman of Mobeus Income & Growth 4 VCT plc and a
non-executive director of Invesco Perpetual UK Smaller Companies
Investment Trust plc.
Chris van der Kuyl
Chris van der Kuyl was appointed a Director on 1 June 2021.
He is one of Scotland’s leading entrepreneurs working across the
technology, media, gaming and entertainment sectors. Chris is most
notably co-founder and chairman of multiple award-winning games
developer 4J Studios, best known for developing Minecraft for
Microsoft, Sony and Nintendo games consoles. He and fellow
co-founder, Paddy Burns, launched Chroma Ventures, the investment
arm of 4J Studios, in 2021. Chris is also chairman of Puny Astronaut,
Broker Insights, Stormcloud Games, Ace Aquatec and Parsley Box
Plc and sits on the boards of Blippar, Ant Workshop and Chroma
Developments. Alongside his commercial roles, he was the founding
multiple advisory and local charity boards.
30 Annual Report 2023
Governance Report
Rachael Palmer
Rachael Palmer was appointed a Director on 1 June 2021.
She is an experienced strategy, marketing and business development
professional with extensive experience working within the technology
sector. Currently, Rachael leads Google’s VC and Startup Partnerships
consulted to numerous start-ups and led marketing and business
Microsoft where she held various product, marketing and business
development roles. Rachael received her MBA from The Wharton
University of Pennsylvania.
All Directors are members of the Nomination and Audit Committees.
The Company has appointed Baillie Gifford & Co Limited, a wholly
owned subsidiary of Baillie Gifford & Co, as its Alternative Investment
Fund Manager and Company Secretaries. 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. Baillie Gifford & Co is an investment
WS, which had been involved in investment management since 1908.
Baillie Gifford is one of the largest investment trust managers in
the UK and currently manages thirteen closed-ended companies.
Baillie Gifford also manages a listed investment company and
open-ended investment companies, together with investment
portfolios on behalf of pension funds, charities and other institutional
clients, both in the UK and overseas. Funds under the management
or advice of Baillie Gifford totalled around £230 billion at 8 August 2023.
staff of around 1,900.
Gary Robinson and Kirsty Gibson are the co-portfolio managers.
Team and named managers of the Baillie Gifford American Fund.
Baillie Gifford & Co Limited and Baillie Gifford & Co are both
authorised and regulated by the Financial Conduct Authority.
Baillie Gifford US Growth Trust plc 31
Directors’ Report
The Directors present their Report together with the Financial
Statements of the Company for the year to 31 May 2023.
Corporate Governance
The Corporate Governance Report is set out on pages 34 to 37
and forms part of this Report.
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 Secretaries.
Baillie Gifford & Co Limited has delegated portfolio management
services to Baillie Gifford & Co. Dealing activity and transaction
reporting has 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 on not less than six
months’ notice. Compensation fees would only be payable in
respect of the notice period if termination by the Company were
to occur within a shorter notice period.
of net assets, 0.55% on the next £900 million of net assets
and 0.50% on the remaining net assets. Management fees are
calculated and payable quarterly. The Board is of the view that
calculating the fee with reference to performance would be
investment management and secretarial arrangements on a
continuing basis and a formal review is conducted at least
annually.
The Board considers, amongst others, the following topics
in its review:
— the quality of the personnel assigned to handle the
Company’s affairs;
— the investment process and the results achieved to date;
— the administrative services provided by the Secretaries; and
— the marketing effort undertaken by the Managers.
Following the most recent review, it is the opinion of the Directors
that the continuing appointment of Baillie Gifford & Co Limited
as AIFM and Company Secretaries and the delegation of the
investment management services to Baillie Gifford & Co, and the
further sub-delegation of dealing activity and transaction reporting
to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong
Kong) Limited, on the terms agreed, is in the interests of the
Company and the shareholders as a whole due to the strength
of the investment management team, the Managers’ commitment
to the investment trust sector, the quality of the secretarial and
administrative functions and the marketing efforts undertaken
by the Managers.
Depositary
In accordance with the Alternative Investment Fund Managers
Directive, the AIFM must appoint a Depositary to the Company.
The Bank of New York Mellon (International) Limited has been
appointed as the Company’s Depositary.
The Depositary’s responsibilities include cash monitoring, safe
and maintaining a record of other assets and monitoring the
Company’s compliance with investment limits and leverage
requirements. The custody function is also undertaken by The
Bank of New York Mellon (International) Limited (‘the Custodian’).
Directors
The names and biographical details of the Board members who
served on the Board as at the year end and up to the date the
Financial Statements were signed can be found on pages 29 and 30.
Meeting and offer themselves for re-election.
Following formal performance evaluation, the Board concluded
that the performance of the Directors continues to be effective
and each remains committed to the Company. Their contribution
to the Board is greatly valued and the Board recommends their
re-election to shareholders.
The Company has entered into qualifying third party deeds of
indemnity in favour of each of its Directors. The deeds, which
were in force during the year to 31 May 2023 and up to the date
of approval of this Report, cover any liabilities that may arise to
a third party, other than the Company, for negligence, default
respect of liabilities to the Company, any regulatory or criminal
in which the Director is convicted or civil proceedings brought
by the Company in which judgement is given against him or her.
In addition, the indemnity does not apply to any liability to the
extent that it is recovered from another person.
the Nomination Committee on an annual basis. The Committee
considers these carefully, taking into account the circumstances
surrounding them and makes a recommendation to the Board
Board authorisation is for a period of one year.
no situations which gave rise to a direct or indirect interest of
Share Capital
Capital Structure
The Company’s capital structure (excluding treasury shares) as at
31 May 2023 consisted of 305,153,700 ordinary shares of 1p each,
see note 13. At 31 May 2023, 2,206,300 shares were held in
treasury. There are no restrictions concerning the holding or
transfer of the Company’s ordinary shares and there are no special
rights attached to any of the shares.
Governance Report
32 Annual Report 2023
Dividends
The ordinary shares carry a right to receive dividends. Interim
dividends are determined by the Directors, whereas any proposed
objective is to produce capital growth and the policy is only to
to maintain investment trust status. No dividends were declared
during the period.
Capital Entitlement
On a winding up, after meeting the liabilities of the Company, the
surplus assets will be paid to ordinary shareholders in proportion
to their shareholdings.
Voting
to one vote on a show of hands and, on a poll, to one vote for
every share held.
Information on the deadlines for proxy appointments can be
found on pages 70 and 71.
Name
No. of ordinary
1p shares held at
31 May 2023
% of
issue
Quilter plc (indirect) 30,492,080 10.0
Brewin Dolphin Limited (indirect) 27,039,346 8.9
Tilney Smith & Williamson Limited (indirect) 15,368,104 5.0
15,273,156 5.0
There have been no other changes to the major interests in the
Company’s shares intimated up to 4 August 2023.
Issuance of Shares
At the last Annual General Meeting, the Directors were granted
shareholders’ approval for a general authority to allot shares and
also an authority to issue shares or sell shares held in treasury
to existing shareholders pro-rata to their existing holdings). No
shares were issued during the year (2022 – 525,000 were issued
at a premium to net asset value, raising proceeds of £1,812,000).
Both authorities expire at the forthcoming Annual General Meeting
and the Directors are seeking shareholders’ approval to renew
them for a further year, as detailed below.
Resolution 10 in the Notice of Annual General Meeting seeks
a general authority in substitution to the Company’s existing
authorities for the Directors to issue ordinary shares or C shares
up to an aggregate nominal amount of £1,017,179.00. This
amount represents one-third of the Company’s total ordinary
share capital in issue (excluding treasury shares) at 4 August
2023 and meets institutional guidelines. This authority would be
in substitution for the existing authority and will continue until the
conclusion of the Annual General Meeting to be held in 2024 or
on the expiry of 15 months from the passing of the resolutions,
if earlier.
Resolution 11, which is proposed as a special resolution, seeks
authority for the Directors to allot equity securities or sell treasury
shares on a non pre-emptive basis for cash up to an aggregate
nominal amount of £305,153.70 (representing 10% of the issued
ordinary share capital of the Company as at 4 August 2023).
This authority would be in substitution for the existing authority and
will continue until the conclusion of the Annual General Meeting to
be held in 2024 or on the expiry of 15 months from the passing of
the resolutions, if earlier.
The Directors consider that the authorities proposed to be granted
by Resolutions 10 and 11 continue to be advantageous when the
Company’s shares trade at a premium to net asset value and the
level of natural liquidity in the market is unable to meet demand.
The Directors do not intend to use these authorities to sell or
issue ordinary shares on a non pre-emptive basis at a discount
to net asset value.
Such authorities will only be used to issue ordinary shares or
sell ordinary shares from treasury at a premium to net asset value
and only when the Directors believe that it would be in the best
interests of the Company to do so. The Directors believe that the
ability to buyback shares at a discount and re-sell them or issue
new ordinary shares at a premium are useful tools in smoothing
supply and demand.
2,206,300 shares were held in treasury as at 4 August 2023.
At the last Annual General Meeting the Company was granted
authority to purchase up to 45,742,539 ordinary shares
(equivalent to approximately 14.99% of its issued share capital
as at 5 August 2022). This authority expires at the forthcoming
Annual General Meeting.
No shares were bought back during the year under review (2022
– 2,206,300) and 2,206,300 shares are held in treasury. Between
1 June and 4 August 2023, no shares were bought back.
Share buy-backs may be made principally:
(i) to enhance net asset value for continuing shareholders by
purchasing shares at a discount to the prevailing net asset
value; and
(ii) to address any imbalance between the supply of and the
demand for the Company’s shares that results in a discount
of the quoted market price to the published net asset value
per share.
The Company may hold bought back shares in treasury and then:
(i) sell such shares (or any of them) for cash (or its equivalent
under the Companies Act 2006); or
(ii) cancel the shares (or any of them).
Shares will only be re-sold from treasury at a premium to net
asset value per ordinary share.
Governance Report
Baillie Gifford US Growth Trust plc 33
The Directors are seeking shareholders’ approval at the Annual
General Meeting to renew the authority to purchase up to
45,742,539 ordinary shares, equivalent to approximately 14.99%
of the Company’s ordinary shares in issue as at 4
August 2023,
being the latest practicable date prior to publication of this
document, or, if less, up to 14.99% of the ordinary shares in issue
(excluding treasury shares) on the date on which the resolution is
passed), such authority to expire at the Annual General Meeting
of the Company to be held in 2024.
In accordance with the Listing Rules the maximum price
(excluding expenses) that may be paid on the exercise of the
authority must not exceed the higher of:
(i) 5% above the average closing price on the London Stock
immediately preceding the date of purchase; and
(ii) the higher of the price of the last independent trade and
the highest current independent bid as stipulated by
2003 implementing the Market Abuse Directive as regards
exemptions for buy-back programmes and stabilisation
The minimum price (exclusive of expenses) that may be paid will
be the nominal value of an ordinary share. Purchases of shares
will be made within guidelines established, from time to time,
by the Board. Your attention is drawn to Resolution 12 in the
Notice of Annual General Meeting.
Recommendation
The Board considers each resolution being proposed at the Annual
General Meeting to be in the best interests of the Company and its
shareholders as a whole and it unanimously recommends that all
shareholders vote in favour of them, as each Director intends to do
Articles of Association
The Company’s Articles of Association may only be amended
by special resolution at a General Meeting of shareholders.
Financial Instruments
portfolio, cash balances, bank borrowings and debtors and
creditors that arise directly from its operations such as sales and
instruments and the exposure of the Company to risk are
disclosed in note 19 to the Financial Statements.
Disclosure of Information to Auditor
there is no relevant audit information of which the Company’s
Auditor is unaware and the Directors have taken all the steps that
they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that the
Company’s Auditor is aware of that information.
Governance Report
Independent Auditor
A formal tender process was carried out by the Company’s Audit
Committee. Following this process, the Board has approved the
has expressed its willingness to be appointed Auditor to the
Company. The appointment is subject to shareholder approval
at the Annual General Meeting to be held on 18 September 2023
remuneration will be submitted to the Annual General Meeting.
The Board extends its appreciation to KPMG LLP for its services
as Auditor.
Post Balance Sheet Events
Sheet events up to 4 August 2023 other than those noted in
note 20 on page 68.
Greenhouse Gas Emissions and Streamlined Energy
& Carbon Reporting (‘SECR’)
All of the Company’s activities are outsourced to third parties.
The Company therefore has no greenhouse gas emissions to
report from its operations, nor does it have responsibility for any
other emissions producing sources under the Companies Act
2006 (Strategic Report and Directors’ Reports) Regulations 2013.
For the reasons set out above, the Company considers itself to
be a low energy user and therefore is not required to disclose
Bribery Act
is committed to carrying out business fairly, honestly and openly.
policies and procedures in place to prevent bribery.
criminal facilitation of tax evasion.
On behalf of the Board
Tom Burnet
Chairman
9 August 2023
34 Annual Report 2023
Corporate Governance Report
The Board is committed to achieving and demonstrating high
standards of corporate governance. This statement outlines
how the principles of the 2018 UK Corporate Governance Code
(the ‘Code’) which can be found at frc.org.uk and the principles
of the Association of Investment Companies Code of Corporate
Governance (the ‘AIC Code’) were applied throughout the
practice for investment companies and can be found at
theaic.co.uk.
Compliance
the year under review with the relevant provisions of the Code
and the recommendations of the AIC Code. The Code includes
provisions relating to the role of the chief executive, executive
directors’ remuneration and the need for an internal audit
function. Given that the Company is an externally managed
investment trust, the Board considers these provisions are not
relevant to the Company (the need for an internal audit function
against the AIC Code will be meeting their obligations in relation to
the UK Code.
The Board
The Board has overall responsibility for the Company’s affairs. It has
a number of matters formally reserved for its approval including
strategy, investment policy, currency hedging, gearing, treasury
matters, dividend and corporate governance policy. A separate
strategy session is held annually. The Board also reviews the
Financial Statements, investment transactions, revenue budgets
and performance of the Company. Full and timely information is
provided to the Board to enable the Board to function effectively
and to allow Directors to discharge their responsibilities.
are non-executive.
The Chairman, Mr TJW Burnet, is responsible for organising the
business of the Board, ensuring its effectiveness and setting its
agenda.
The executive responsibilities for investment management have
been delegated to the Company’s Alternative Investment Fund
Manager (‘AIFM’), Baillie Gifford & Co Limited, and in the context
of a Board comprising entirely non-executive Directors, there is
Ms SP Inglis.
The Directors 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. Information
about the Directors, including their relevant experience, can be
found on pages 29 and 30.
There is an agreed procedure for Directors to seek independent
professional advice if necessary at the Company’s expense.
No such advice was sought in the year to 31 May 2023 or
31 May 2022.
Appointments to the Board
The terms and conditions of Directors’ appointments are set out
in formal letters of appointment which are available for inspection
on request.
Under the provisions of the Company’s Articles of Association,
a Director appointed during the period is required to retire
and seek election by shareholders at the next Annual General
Meeting. In accordance with the Code, all Directors will retire
offer themselves for re-election.
The reasons why the Board supports the re-election are set out
on page 31.
Directors are not entitled to any termination payments in relation
to their appointment.
Chairman and Directors’ Tenure
The Nomination Committee has considered the question of
tenure for Directors and has concluded that there should not
be a set maximum time limit for a Director or Chairman to serve
on the Board. The Nomination Committee keeps under review
the balance of skills, knowledge, experience, performance and
length of service of the Directors ensuring the Board has the
right combination of skills and preservation of knowledge and
experience balanced with the appointment of new Directors
bringing in fresh ideas and perspective.
Independence of Directors
All of the Directors are considered by the Board to be independent
of the Managers and free of any business or other relationship which
could interfere with the exercise of their independent judgement.
The Directors recognise the importance of succession planning
for company boards and reviews the Board composition annually.
The Board is of the view that length of service will not necessarily
compromise the independence or contribution of Directors of an
investment trust company, where continuity and experience can
Following formal performance evaluation the Board considers
that each Director continues to be independent in character and
to the Board.
There is an annual cycle of Board meetings which is designed to
address, in a systematic way, overall strategy, review of investment
policy, investment performance, gearing, premium/discount,
marketing, revenue budgets, dividend policy and communication
regularly to discharge its duties effectively. The following table shows
the attendance record for the Board and Committee meetings held
during the year, excluding ancillary and sub-committee meetings.
The Annual General Meeting was attended by all of the Directors.
Governance Report
Baillie Gifford US Growth Trust plc 35
Board
Audit
Committee
Nomination
Committee
Number of meetings
TJW Burnet 4 2 1
SP Inglis 4 2 1
GD Paterson 4 2 1
CRD van der Kuyl 4 2 1
RL Palmer 4 2 1
Nomination Committee
The Nomination Committee consists of the whole Board due to
of the Committee. The Committee meets on an annual basis
and at such other times as may be required. The Committee
has written terms of reference which include reviewing the
composition of the Board, identifying and nominating new
candidates for appointment to the Board, Board appraisal, Board
independence, succession planning and training. The Committee
also considers whether Directors should be recommended for
re-election by shareholders. The Committee is responsible for
recommendations to the Board on whether or not the potential
The Committee’s terms of reference are available on request from
the Company and on the Company’s page on the Managers’
website: bgusgrowthtrust.com.
Board Diversity
Board Diversity Policy
Appointments to the Board are made on merit with due regard
backgrounds and cognitive and personal strengths. The priority in
appointing new Directors is to identify the candidate with the best
range of skills and experience to complement existing Directors,
with a view to ensuring that the Board remains well placed to help
the Company achieve its investment and governance objectives.
The following disclosures are provided in respect of the FCA
Listing Rules targets that: i) 40% of a board should be women;
ii) at least one senior role should be held by a woman; and
iii) at least one board member should be from a non-white ethnic
criteria.
The breakdown of gender diversity and ethnic background on
the Board is shown below.
Gender
Number
of Board
Members
Percentage
of the Board
Number
of Senior
Positions on
the Board
Men 3 60% 1 *
Women 2 40% 1
* The Board Chairman, being a senior position in accordance with the FCA Listing
Rules. The Board also considers the Nomination Committee and Audit Committee
Chairs to be senior positions. The Nomination Committee Chair is also the Board
Chairman. The Audit Committee Chair is a man.
Ethnic Background
Number
of Board
Members
Percentage
of the Board
Number
of Senior
Positions on
the Board
White British or other White
(including minority white groups) 4 80% 2
*
Black/African/Caribbean/Black
British 1 20% –
* The Board Chairman and SID, being senior positions in accordance with the FCA
Listing Rules. The Board also considers the Nomination Committee and Audit
Committee Chairs to be senior positions. The Nomination Committee Chair is also
the Board Chairman. The Audit Committee Chair’s ethnic background is White.
As at 31 May 2023, the Board did comply with the FCA Listing
Rule target with respect to ethnic background and the 40% target
for women. The Board also meets the FCA Listing Rules target for
a woman holding a senior role on the Board (Ms SP Inglis is the
Senior Independent Director). As an externally managed
Committee and Nomination Committee to be senior roles in
addition to the roles of Senior Independent Director and Board
Board Composition
of having a range of skilled and experienced Directors, balancing
with the desirability of ensuring regular refreshment of the Board.
The Board reviewed the composition of the Board during the year
in consideration of succession planning and developing a diverse
pipeline.
In line with the AIC Corporate Governance Code principle that
‘a successful company is led by an effective Board, whose role
is to promote the long-term sustainable success of the company,
generating value for shareholders and contributing to wider
society’ the Board will be undertaking a recruitment process
in the coming years to allow time for an appropriate transition
period. The intention of the Board is that any Director retirements
will be staggered ensuring the experience and diversity of the
Board is maintained and effective succession planning occurs.
Performance Evaluation
An appraisal of the Chairman, each Director and a performance
evaluation and review of the Board as a whole and its Committees
was carried out during the year. After completing an evaluation
questionnaire the results were discussed and reviewed by the
Board. The appraisal of the Chairman was led by Ms SP Inglis,
the Senior Independent Directo
r.
The appraisals and evaluations considered, amongst other criteria,
the balance of skills of the Board, training and development
requirements, the contribution of individual Directors and the overall
effectiveness of the Board and its Committees. Following this
process it was concluded that the performance of each Director,
the Chairman, the Board and its Committees continues to be
ef
fective and each Director and the Chairman remains committed
to the Company.
Governance Report
36 Annual Report 2023
A review of the Chairman’s and other Directors’ commitments
commitments during the year.
there is no requirement for the Board to use external consultants
to assist with the evaluation process. The Board acknowledges the
the current review process provides the appropriate level of rigour
external performance evaluation is kept under review.
Induction and Training
New Directors are provided with an induction programme which
is tailored to the particular circumstances of the appointee.
were provided to the Board by the Managers and Secretaries.
The Directors receive other relevant training as necessary.
Remuneration
As all the Directors are non-executive, there is no requirement
for a separate Remuneration Committee. Directors’ fees are
considered by the Board as a whole within the limits approved
by shareholders. The Company’s policy on remuneration is set
out in the Directors’ Remuneration Report on pages 41 and 42.
Audit Committee
The report of the Audit Committee is set out on pages 38 to 40.
The Directors acknowledge their responsibility for the Company’s
risk management and internal controls systems and for reviewing
their effectiveness. The systems are designed to manage rather
than eliminate the risk of failure to achieve business objectives
and can only provide reasonable but not absolute assurance
against material misstatement or loss.
the Company in accordance with the FRC guidance ‘Guidance
on Risk Management, Internal Control and Related Financial and
Business Reporting’.
The practical measures in relation to the design, implementation
and maintenance of control policies and procedures to safeguard
the Company’s assets and to manage its affairs properly, including
the maintenance of effective operational and compliance controls,
have been delegated to the Managers and Secretaries.
The Board oversees the functions delegated to the Managers and
Secretaries and the controls managed by the AIFM in accordance
with the UK Alternative Investment Fund Managers Directive (as
detailed below). Baillie Gifford & Co’s Internal Audit and Compliance
Departments and the AIFM’s permanent risk function provide
the Audit Committee with regular reports on their monitoring
programmes. The reporting procedures for these departments
Gifford & Co conducts an annual review of its system of internal
controls which is documented within an internal controls report
Controls of Service Organisations made available to Third Parties.
This report is independently reviewed by Baillie Gifford & Co’s
Auditor and a copy is submitted to the Audit Committee.
A report identifying the material risks faced by the Company and
the key controls employed to manage these risks is reviewed by
the Audit Committee.
These procedures ensure that consideration is given regularly
to the nature and extent of risks facing the Company and that
they are being actively monitored. Where changes in risk have
assess whether further action is required to manage these risks.
of the Company’s risk management and internal controls systems
which accord with the FRC ‘Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting’
and they have procedures in place to review their effectiveness
the year under review and up to the date of this Report.
place up to the date of approval of this Report.
To comply with the UK Alternative Investment Fund Managers
Directive, The Bank of New York Mellon (International) Limited
acts as the Company’s Depositary and Baillie Gifford & Co Limited
as its AIFM.
The Depositary’s responsibilities include cash monitoring,
ownership and maintaining a record of other assets and
monitoring the Company’s compliance with investment limits
and leverage requirements. The Depositary is liable for the loss
ensure that any delegate segregates the assets of the Company.
The Company’s Depositary also acts as the Company’s
Custodian. The Custodian prepares reports on its key controls
and safeguards which are independently reviewed by its
appointed auditor, KPMG LLP. The reports are reviewed by
Baillie Gifford’s Business Risk Department and a summary
of the key points is reported to the Audit Committee and any
concerns are investigated.
The Depositary provides the Audit Committee with a report on its
monitoring activities.
The AIFM has established a permanent risk management function
to ensure that effective risk management policies and procedures
are in place and to monitor compliance with risk limits. The AIFM
has a risk management policy which covers the risks associated
with the management of the portfolio, and the adequacy and
effectiveness of this policy is reviewed and approved at least
annually. This review includes the risk management processes
and systems and limits for each risk area.
The risk limits, which are set by the AIFM and approved by the
of the portfolio. These limits, including leverage (see page 75)
are monitored and the sensitivity of the portfolio to key risks is
undertaken periodically as appr
opriate to ascertain the impact
monitoring and stress testing undertaken by Baillie Gifford’s
Business Risk Department are escalated to the AIFM and reported
to the Board along with any remedial measures being taken.
No exceptions occurred during the year.
Governance Report
Baillie Gifford US Growth Trust plc 37
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.
The Company’s principal risks are market related and include
market risk, liquidity risk and credit risk. An explanation of these
risks and how they are managed is set out on pages 6 and 7 and
contained in note 19 to the Financial Statements.
The Board has, in particular, considered the impact of heightened
market volatility due to macroeconomic and geopolitical concerns,
but does not believe the Company’s going concern status is
affected
.
The Company’s assets, the majority of which are investments in
quoted securities which are readily realisable, exceed its liabilities
Gearing levels and compliance with borrowing covenants are
reviewed by the Board on a regular basis. As at 31 May 2023,
the Company had a net current liability of £37.3 million primarily
with ING Bank N.V., London Branch, which matured on 31 July
Bank N.V., London Branch, due to mature on 23 October 2023.
Subsequent to the year end on 26 July 2023, a new unsecured
US$25 million three-year revolving credit facility was drawn
down from ING Bank N.V., London Branch. The Company has
continued to comply with the investment trust status requirements
of section 1158 of the Corporation Tax Act 2010 and the
Investment Trust (Approved Company) (Tax) Regulations 2011.
Accordingly, the Financial Statements have been prepared on
the going concern basis as it is the Directors’ opinion, having
assessed the principal and emerging risks and other matters set
out in the Viability Statement on pages 7 and 8 which assesses the
Company will continue in operational existence for a period of at
least twelve months from the date of approval of these Financial
Statements.
Relations with Shareholders
The Board places great importance on communication with
shareholders. The Company’s Managers meet regularly with
shareholders and their representatives and report shareholders’
views to the Board. The Chairman is available to meet with
shareholders as appropriate. Shareholders wishing to
communicate with any member of the Board may do so by
the Company’s broker, Panmure Gordon (UK) Limited (see
contact details on the back cover).
The Company’s Annual General Meeting provides a forum for
communication with all shareholders. The level of proxies lodged
for each resolution will be announced at the Meeting and is
published on the Company’s page of the Managers’ website
bgusgrowthtrust.com subsequent to the meeting.
The notice period for the Annual General Meeting is at least
twenty working day
s.
Shareholders and potential investors may obtain up-to-date
information on the Company at bgusgrowthtrust.com.
Corporate Governance and Stewardship
The Company has given discretionary voting powers to Baillie
Gifford & Co. The Managers vote against resolutions they
consider may damage shareholders’ rights or economic interests
and report their actions to the Board.
The Company believes that it is in the shareholders’ interests to
including climate change, when selecting and retaining
investments and has asked the Managers to take these issues
into account as long as the investment objectives are not
compromised. The Managers do not exclude companies from
but adopt a positive engagement approach whereby matters
are discussed with management with the aim of improving the
relevant policies and management systems and enabling the
investment returns. The Managers’ statement of compliance
with the UK Stewardship Code can be found on the Managers’
website at bailliegifford.com. The Managers’ policy has been
reviewed and endorsed by the Board.
Baillie Gifford & Co has
considered the Sustainable Finance Disclosure Regulation (‘SFDR’)
and further details can be found on page 75.
Climate Change
The Board recognises that climate change poses a serious threat
to our environment, our society and to economies and companies
ar
ound the globe. Addressing the underlying causes is likely to
result in companies that are high emitters of carbon facing greater
societal and regulatory scrutiny and higher costs to account for the
true environmental impact of their activities. The Managers pursuit
of long-term growth opportunities typically involves investment in
entrepreneurial, disruptive and technology-driven businesses.
These companies are often capital-light with a low carbon footprint.
The Manager has engaged an exter
nal provider to map the
carbon footprint of the portfolio, using the information to prioritise
engagement and understand what higher emitting companies ar
e
doing to manage climate risk better. This analysis estimates that
the carbon intensity of Baillie Gifford US Growth’s portfolio is 89.3%
lower than the index (S&P 500 Index). This analysis estimate is
based on the 65% of the value of the Company’s portfolio
which reports on carbon emissions and other carbon related
of the portfolio per unit of output and assesses the portfolio’s
exposur
e to carbon-intensive companies.
Baillie Gifford’s Task Force on Climate-Related Financial Disclosures
(‘TCFD’) Climate Report is available on the Managers’ website at
bailliegifford.com. A TCFD climate report for Baillie Gifford US
Growth is available on the Company’s page of the Managers’
website at bgusgrowthtrust.com.
The Managers, Baillie Gifford & Co, are signatories to the Principles
for Responsible Investment, the Net Zero Asset Managers initiative
and the Carbon Disclosure Project and are also members of the
Asian Corporate Governance Association and the International
Corporate Governance Network.
On behalf of the Board
Tom Burnet
Chairman
9 August 2023
Governance Report
38 Annual Report 2023
The Audit Committee consists of all the independent Directors.
The 2019 AIC Code of Corporate Governance permits the
Chairman of the Board to be a member of the Audit Committee.
The Board believes that Mr TJW Burnet’s knowledge, experience
The members of the Committee consider that they have the
of the Committee. Mr GD Paterson, Chairman of the Committee,
is a Chartered Accountant.
its written terms of reference which are available on request
from the Company Secretaries and at bgusgrowthtrust.com.
The terms of reference are reviewed annually.
The Committee’s effectiveness is reviewed on an annual basis
as part of the Board’s performance evaluation process.
At least once a year the Committee meets with the external
Auditor without any representative of the Managers being present.
The Committee met twice during the year, and the external
Auditor, KPMG LLP, attended both meetings. Baillie Gifford &
Co’s Internal Audit and Compliance Departments and the AIFM’s
permanent risk function provided reports on their monitoring
programmes for these meetings. In addition, the external Auditor
met with the Audit Committee Chairman on an ad hoc basis to
discuss matters pertinent to the Committee as they arose.
The matters considered, monitored and reviewed by the
Committee during the course of the year included the following:
— the results announcement and the Annual and Interim Reports;
— the Company’s accounting policies and practices and the
implementation of the Managers’ valuation policy for
investments in unquoted companies;
— the regulatory changes impacting the Company;
— the fairness, balance and understandability of the Annual
Report and Financial Statements and whether it provided
the information necessary for shareholders to assess the
Company’s performance, business model and strategy;
— the effectiveness of the Company’s internal control
environment;
— the audit tender process and appointment, remuneration and
terms of engagement of the external Auditor;
— the policy on the engagement of the external Auditor to
supply non-audit services;
— the independence and objectivity of the external Auditor
and the effectiveness of the external audit process;
— the need for the Company to have its own internal audit
function;
— internal controls reports received from the Managers and
Custodian; and
— the arrangements in place within Baillie Gifford & Co whereby
Internal Audit
The Committee continues to believe that the compliance and
internal controls systems and the internal audit function in place
system of internal control, which safeguards shareholders’
investment and the Company’s assets, is maintained. An internal
unnecessary.
Financial Reporting
risk likely to impact the Financial Statements is the existence,
ownership and valuation of investments as they represent
99.5% of total assets.
Unlisted (Private Company) Investments
The Committee reviewed the Managers’ valuation approach for
investments in unquoted companies (as described on pages 14,
54 and 55) and approved the valuations of the unlisted investments
following a detailed review of the valuation of each investment and
relevant challenge where appropriate.
relevant investee companies.
Listed Investments
The majority of the investments are in quoted securities and
market prices are readily available from independent external
pricing sources. The Committee reviewed Baillie Gifford’s Report
on Internal Controls which details the controls in place regarding
the recording and pricing of investments.
The Managers agreed the prices of all the listed investments at
31 May 2023 to external price sources and the holdings were agreed
FRC Review
The Financial Reporting Council (‘FRC’) reviewed the Company’s
Annual Report and Financial Statements for the year to 31 May
2022.
analysis disclosed to demonstrate the sensitivity of private
company investments to changes in the assumptions
underpinning the calculation of their fair value (see note 19 on
pages 65 to 67). Additional detail was provided and a number of
improvements have been made to the disclosure enhancing its
understandability.
The FRC notes that its review does not provide assurance that the
Annual Report and Financial Statements are correct in all material
respects and that its role is not to verify the information provided
but to consider compliance with reporting requirements.
Audit Committee Report
Governance Report
Baillie Gifford US Growth Trust plc 39
The Committee reviewed the Managers’ Report on Internal Controls
which details the controls in place regarding completeness and
accurate recording of investment income. The accounting treatment
of special dividends received or receivable during the year is
reviewed by the Managers as they arise.
The Committee considered the factors that might affect the
to continue as a going concern for at least twelve months from
the date of signing of the Financial Statements, together with
projections of the Company, the liquidity of its investment portfolio,
compliance with debt covenants, availability of borrowing facilities,
and the Company’s ability to meet its obligations as they fall due.
The Committee also reviewed the Viability Statement on pages
7 and 8 and statement on Going Concern on page 37. Following
this assessment, the Committee recommended to the Board the
appropriateness of the Going Concern basis in preparing the
Statement and statement on Going Concern.
were not aware of any material misstatements in the context of the
Financial Statements as a whole and that the Financial Statements
are in accordance with applicable law and accounting standards.
The Committee reviewed the effectiveness of the Company’s
risk management and internal controls systems as described on
under review.
External Auditor
external Auditor, the Committee reviewed:
— the Auditor’s audit strategy for the year to 31 May 2023
which included a report from the Auditor describing their
arrangements to manage auditor independence and received
— the extent of non-audit services provided by the external
Auditor. There were no non-audit fees paid to KPMG LLP
in the year to 31 May 2023 or the year to 31 May 2022.
To assess the effectiveness of the external Auditor, the Committee
reviewed and considered:
— the Audit Quality Inspection Report on KPMG LLP issued
by the FRC’s Audit Quality Review team (‘AQRT’); and
— detailed discussion with audit personnel to challenge audit
processes and deliverables.
Non-audit service requests are considered on a case by case basis.
the Committee considered and reviewed:
— the Auditor’s engagement letter;
— the Auditor’s proposed audit strategy;
— the audit fee; and
— a report from the Auditor on the conclusion of the audit.
KPMG LLP was appointed as the Company’s Auditor, by the
Directors, on 23 April 2018. The audit partner responsible for
with professional and regulatory standards in order to protect
independence and objectivity and to provide fresh challenge to
the business. Mr John Waterson, the current audit partner, has
it believes it is independent within the meaning of regulatory and
professional requirements and that the objectivity of the audit
partner and staff is not impaired.
Having carried out the review described above, the Committee is
for the purposes of this year’s audit.
There are no contractual obligations restricting the Committee’s
choice of external Auditor.
Audit Tender
The Committee acknowledges its responsibility to monitor and,
at suitable junctures, to test the external audit market in order
to ensure that the provision of external audit services to the
Company remains of a high quality as well as cost proportionate,
by reference to developing industry practice and expectations.
The Committee is aware that the scope, complexity and
associated cost of external audit engagements continues
to increase across the market, driven by a number of factors
including growing regulatory expectations, new auditing
a high-quality audit and a challenging audit labour market.
The Audit Committee undertook a formal audit tender process
onwards. In March 2023, invitations to tender were sent out to
to tender. KPMG LLP, the current auditor, was included in that list
and invited to tender.
The invitations to tender included selection criteria including
industry experience, credentials and relevant experience of the
proposed audit team, audit approach, quality assurance,
independence and governance and fees. The invitations included
proposal documents and presentations.
Governance Report
40 Annual Report 2023
Governance Report
Audit Committee meeting. Following the presentations the
& Young LLP is being put to shareholders at the Annual General
Meeting being held on 18 September 2023 (see Notice of Annual
General Meeting on page 69).
Regulatory Compliance
with the requirements of the Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee Responsibilities) Order
2014, which relates to the frequency and governance of tenders
for the appointment of the external auditor and the setting of
policy on the provision of non-audit services.
Accountability and Audit
The respective responsibilities of the Directors and the Auditor
in connection with the Financial Statements are set out on pages
43 to 49.
On behalf of the Board
Graham Paterson
Audit Committee Chairman
9 August 2023
Baillie Gifford US Growth Trust plc 41
Directors’ Remuneration Report
This report has been prepared in accordance with the
requirements of the Companies Act 2006.
Statement by the Chairman
The Directors’ Remuneration Policy is subject to shareholder
approval every three years or sooner if an alteration to the policy
is proposed. The Remuneration Policy which is set out below was
last appr
oved at the Annual General Meeting in September 2022
and no changes to the policy are proposed.
For the year to 31 May 2023 the Directors’ remuneration was set
at £
29,290
per annum for each Director other than the Chairman,
who received an additional £11,110 per annum, Chairman of the
Audit Committee, who received an additional £5,050 per annum,
and the Senior Independent Director who received an additional
£1,515 per annum.
The Board reviewed the level of fees during the year and agreed
that, with effect from 1 June 2023 the fee for the Chairman would
increase to £42,420, the Directors’ fees would increase to
£30,755, the additional fee for the Chairman of the Audit
Committee would increase to £7,000 and the additional fee for the
Senior Independent Director would increase to £1,590. The fees
were last increased on 1 June 2022.
Directors’ Remuneration Policy
The Board is composed wholly of non-executive Directors, none
of whom has a service contract with the Company. There is no
separate r
emuneration committee and the Board as a whole
considers changes to Directors’ fees from time to time.
The Board’s policy is that the remuneration of Directors should be
set at a reasonable level that is commensurate with the duties and
responsibilities of the role and consistent with the requirement to
attract and retain Directors of the appropriate quality and experience.
The Board believes that the fees paid to the Directors should
take account of the level of fees paid by comparable investment
trusts. Any views expressed by shareholders on the fees being
paid to Directors will be taken into consideration by the Board
when reviewing the Board’s policy on remuneration.
Baillie Gifford
& Co Limited, the Company Secretaries, provides comparative
information when the Board considers the level of Directors’ fees.
apart from the reimbursement of allowable expenses. There are
no performance conditions relating to Directors’ fees and there are
no long term incentive schemes or pension schemes. Ther
e is no
Limits on Directors’ Remuneration
The fees for the non-executive Directors are payable monthly
in arrears and are determined within the limit set out in the
Company’s Articles of Association which is currently £300,000
per annum in aggregate. Any change to this limit requires
shareholder approval.
The basic and additional fees payable to Directors in respect of the
year ended 31 May 2023 and the fees payable in respect of the
year ending 31 May 2024 are set out in the table below. The fees
determined following an annual review of the Directors’ fees.
Expected
fees for the
year ending
31 May
2024
£
Fees for the
year ended
31 May
2023
£
Chairman’s fee 42,420 40,400
Non-executive Director fee 30,755 29,290
Additional fee for Chairman
of the Audit Committee 7,000 5,050
Additional fee for the Senior
Independent Director 1,590 1,515
Total aggregate annual fees that can be
paid to the Directors in any year under the
Directors’ Remuneration Policy, as set out in
the Company’s Articles of Association 300,000 300,000
Annual Report on Remuneration
An ordinary resolution for the approval of this report will be put to
the members at the forthcoming Annual General Meeting.
The law requires the Company’s Auditor to audit certain of the
disclosures provided in this report. Where disclosures have been
audited, they are indicated as such. The Auditor’s opinion is
included in KPMG LLP’s report on pages 44 to 49.
For the year ended 31 May 2023 For the year ended 31 May 2022
Name
Fees
£
Taxable
benefits
£
Total
£
Fees
£
Taxable
benefits
£
Total
£
TJW Burnet
(Chairman)
40,400 – 40,400 40,000 – 40,000
GD Paterson
(Audit Committee Chairman)
34,340 – 34,340 34,000 – 34,000
SP Inglis (Senior Independent Director)
30,805 77 30,882 30,500 – 30,500
CRD van der Kuyl
29,290 157 29,447 29,000 – 29,000
RL Palmer
29,290 6,288 35,578 29,000 2,838 31,838
Directors’ Remuneration for the Year (audited)
the entire remuneration paid to the Directors.
Governance Report
42 Annual Report 2023
Annual Percentage Change in Remuneration
This represents the annual percentage change in the total
remuneration paid to the Directors.
Name
% change
from 2022
to 2023
% change
from 2021
to 2022
% change
from 2020
to 2021
TJW Burnet
1.0 15.9 –
SP Inglis 1.3 24.5
#
–
GD Paterson 1.0 17.2 –
CRD van der Kuyl
(appointed 1 June 2021) 1.5 –
* n/a
RL Palmer
(appointed 1 June 2021) 11.7 –
* n/a
*
#
When the Board reviewed the level of fees during the year to 31 May 2021 an
additional fee of £1,500 for the Senior Independent Director was introduced for the
due to the increase in private company holdings.
Directors’ Interests (audited)
Company, were as shown below. There have been no changes
intimated in the Directors’ interests up to 4 August 2023.
Name
Nature
of interest
Ordinary 1p
shares held at
31 May 2023
Ordinary 1p
shares held at
31 May 2022
TJW Burnet
126,040 126,040
SP Inglis 50,000 50,000
GD Paterson 80,000 80,000
CRD van der Kuyl 285,314 285,314
RL Palmer – –
At the Annual General Meeting held on 16 September 2022, of
the proxy votes received in respect of the Directors’ Remuneration
Policy, 99.77% were in favour, 0.20% were against and votes
withheld were 0.03%. At the Annual General Meeting held
on 16 September 2022, of the proxy votes received in respect
of the Directors’ Remuneration Report, 99.77% were in favour,
0.19% were against and, votes withheld were 0.04%.
Relative Importance of Spend on Pay
As the Company has no employees, the Directors do not consider
it appropriate to present a table comparing remuneration paid
to employees with distributions to shareholders. The Directors’
remuneration for the year and the expected fees for the year
to 31 May 2024 are set out on the previous page. The table
below shows the actual expenditure during the year in relation
to Directors’ remuneration and distributions to shareholders.
2023
£’000
2022
£’000
Change
%
Directors’ remuneration
171 165 3.6
Share buy-backs – 3,599 n/a
Source: Refinitiv/Baillie Gifford and relevant underlying index providers.
See disclaimer on page 75.
Baillie Gifford US Growth share price
FTSE All-Share Index
Comparative Index
*
(in sterling terms)
All figures are total return (assuming all dividends reinvested) (See Glossary of Terms
and Alternative Performance Measures on pages 76 and 77).
*
S&P 500 Index total return (in sterling terms). See disclaimer on page 75.
Mar
18
Sep
Sep Sep
May
23
Mar
19
Mar
23
SepMar
22
Mar
20
Sep
Mar
21
50
200
400
100
150
350
300
250
Directors’ Service Details
Name
Date of
appointment
Due date for
re-election
TJW Burnet
5 March 2018 AGM in 2023
SP Inglis 5 March 2018 AGM in 2023
CRD van der Kuyl 1 June 2021 AGM in 2023
RL Palmer 1 June 2021 AGM in 2023
GD Paterson 5 March 2018 AGM in 2023
Company Performance
The following graph compares, for the period from 23 March 2018,
price total return (assuming all dividends are reinvested) to the
Company’s ordinary shareholders compared to the total shareholder
return on a notional investment made up of shares in the component
comparison purposes as it is a widely used measure of
performance for UK listed companies. Comparative Index
provided for information purposes only.
Performance Graph
Comparative Index
*
Past performance is not a guide to future performance.
Approval
The Directors’ Remuneration Report on pages 41 and 42 was
approved by the Board of Directors and signed on its behalf on
9 August 2023
.
Tom Burnet
Chairman
Governance Report
Baillie Gifford US Growth Trust plc 43
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Financial Statements
prepare the Financial Statements in accordance with applicable
law and United Kingdom Accounting Standards including FRS
102 ‘The Financial Reporting Standard applicable in the UK and
Republic of Ireland’.
Under company law the Directors must not approve the Financial
loss of the Company for that period. In preparing these Financial
Statements, the Directors are required to:
— select suitable accounting policies and then apply them
consistently;
— make judgements and accounting estimates that are
reasonable and prudent;
— state whether applicable United Kingdom Accounting
Standards have been followed, subject to any material
departures disclosed and explained in the Financial
Statements;
— assess the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and
— use the going concern basis of accounting unless they
either intend to liquidate the company or to cease operations,
or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
transactions and disclose with reasonable accuracy at any time
that its Financial Statements comply with the Companies Act 2006.
They are responsible for such internal control as they determine is
necessary to enable the preparation of Financial Statements that
are free from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company
and to prevent and detect fraud and other irregularities.
Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial Statements
Under applicable laws and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
a Directors’ Remuneration Report and a Corporate Governance
Statement that complies with that law and those regulations.
The Directors have delegated responsibility to the Managers
information included on the Company’s page of the Managers’
website. Legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements may
differ from legislation in other jurisdictions.
Responsibility Statement of the Directors in Respect
of the Annual Financial Report
— the Financial Statements, which have been prepared in
accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted
Accounting Practice) including FRS 102 ‘The Financial
Reporting Standard applicable in the UK and Republic
of Ireland’, give a true and fair view of the assets, liabilities,
— the Annual Report and Financial Statements taken as a
whole is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Company’s performance, business model and strategy; and
— the Strategic Report and Directors’ Report include a fair
review of the development and performance of the business
and the position of the Company, together with a description
of the principal risks and uncertainties that it faces.
On behalf of the Board
Tom Burnet
Chairman
9 August 2023
Governance Report
44 Annual Report 2023
1. Our opinion is unmodified
We have audited the financial statements of Baillie
Gifford US Growth Trust plc (“the Company”) for the
year ended 31 May 2023 which comprise the Income
Statement, Balance Sheet, Statement of Changes in
Equity, Cash Flow Statement and the related notes,
including the accounting policies in note 1.
In our opinion the financial statements:
— give a true and fair view of the state of the
Company’s affairs as at 31 May 2023 and of its
return for the year then ended;
— have been properly prepared in accordance with UK
accounting standards, including FRS 102 The
Financial Reporting Standard applicable in the UK
and Republic of Ireland; and
— have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report
to the audit committee.
We were first appointed as auditor by the Directors on
23 April 2018. The period of total uninterrupted
engagement is for the five financial periods ended 31
May 2023. We have fulfilled our ethical responsibilities
under, and we remain independent of the Company in
accordance with, UK ethical requirements including the
FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that
standard were provided.
Independent
auditor’s report
to the members of Baillie Gifford US Growth Trust plc.
Overview
Materiality:
Financial
statements as a
whole
£6.1m (2022:£6.2m)
1% (2022: 1%) of Total Assets
Key audit matter vs 2022
Recurring risk
Valuation of certain specific
unlisted investments
Financial Report
Baillie Gifford US Growth Trust plc 45
6. Fraud and breaches of laws and regulations – ability to detect
(continued)
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations (continued)
Secondly, the Company is subject to many other indirect laws and
regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such
an effect: money laundering, data protection, bribery and corruption
legislation and certain aspects of company legislation recognising
the financial and regulated nature of the Company’s activities and its
legal form. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the Directors and the Administrator and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law
or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
7. We have nothing to report on the other information in the
Annual Report and financial statements
The Directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the other
information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the Directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether there
is a material inconsistency between the Directors’ disclosures in
respect of emerging and principal risks and the viability
statement, and the financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
— the Directors’ confirmation within the Viability Statement on
pages 7 and 8 that they have carried out a robust assessment
of the emerging and principal risks facing the Company,
including those that would threaten its business model,
future performance, solvency and liquidity;
— the Principal and Emerging Risks disclosures describing these
risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
— the Directors’ explanation in the Viability Statement of how
they have assessed the prospects of the Company, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Viability Statement, set out
on pages 7 and 8 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
2. Key audit matters: including our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. We summarise below the key audit matter, in arriving at our audit opinion above, together with our
key audit procedures to address the matter and our findings from those procedures in order that the Company's members, as a body,
may better understand the process by which we arrived at our audit opinion. This matter was addressed, and our findings are based on
procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming
our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter.
The risk Our response
Valuation of
certain specific
unlisted
investments
(Certain specific
investments within
the total unlisted
investment
balance of £209.6
million; (2022:
£227.4 million)
Refer to page 38
(Audit Committee
Report), page 55
(accounting policy)
and note 9 on
pages 58 and 59
and note 19 on
pages 62 to 68
(financial
disclosures).
Subjective valuation:
Certain of the unlisted investments
within the total unlisted
investments balance of £209.6
million are subject to significant
inherent estimation uncertainty in
determining their valuation.
The factors considered in assessing
which unlisted investments were
subject to significant risk included
the quantum of the individual
investment, time since funding
round, performance of the
investment, nature of the
investment held as well as the
estimation uncertainty of the
methodology and inputs used.
Unlisted investments are
measured at fair value, which is
established in accordance with the
International Private Equity and
Venture Capital Valuation
Guidelines, by using
measurements of value such as
prices of recent orderly
transactions, earnings multiples,
and net assets.
We assessed that there is a
significant risk associated with this
matter due to the quantum of the
balance, and the level of
judgement associated with certain
unobservable inputs. Therefore
this is one of the key areas that our
audit has focused on.
The financial statements (note 19)
disclose the sensitivity estimated
by the Company in respect of all
the unlisted investments held.
We performed the tests below rather than seeking to rely on any of the Company’s
controls, because the nature of the balance is such that we would expect to obtain
audit evidence primarily through the detailed procedures described below:
Our procedures included:
— Historical comparisons: Assessment of investment valuations, comparing
current period valuations and movements to prior period valuations in the
absence of any sales or listings, to understand the reasons for significant
variances and determine whether they are indicative of bias or error in the
Company’s approach to valuations;
— Methodology choice: In the context of observed industry best practice and the
provisions of the International Private Equity and Venture Capital Valuation
Guidelines, we challenged the appropriateness of the valuation basis selected;
— Our valuation experience: Challenging the investment manager on key
judgements affecting investee company valuations, such as the choice of
benchmark and calibration to latest funding rounds. We compared key
underlying financial data inputs to external sources, investee company audited
accounts where available and management information as applicable. Our
work included consideration of events which occurred subsequent to the
period end until the date of this audit report;
— Our corporate finance expertise: Utilising the expertise of KPMG Corporate
Finance specialists to assist the audit team in assessing specific areas, such as
evaluating the appropriateness of comparable companies for a selection of
unlisted investments;
— Comparing valuations: Where a recent transaction has been used to value a
holding, we obtained an understanding of the circumstances surrounding the
transaction and whether it was considered to be on an arms-length basis and
suitable as an input into a valuation; and
— Assessing transparency: Consideration of the appropriateness, in accordance
with relevant accounting standards, of the disclosures in respect of unlisted
investments and the effect of changing one or more inputs to reasonably
possible alternative valuation assumptions.
Our findings:
— We found the Company’s valuation of certain specific unlisted investments to
be balanced (2022: slightly cautious) and the related disclosures to be
proportionate (2022: proportionate).
We continue to perform procedures over the carrying amount of quoted investments, however we have not assessed this as one of the most
significant risks in our current year audit, or to be subject to a significant level of judgement because they comprise liquid, quoted
investments valued using readily available market data and, therefore, it is not separately identified as a key audit matter in our report this
year.
3. Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at £6.1m
(2022: £ 6.2m), determined with reference to a benchmark of total
assets, of which it represents 1% (2022: 1%). In line with our audit
methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a
whole.
Performance materiality was set at 75% (2022: 75%) of materiality for
the financial statements as a whole, which equates to £4.6m (2022: £
4.6m). We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £307k (2022: £ 310k),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above and was performed by a single audit team.
The scope of the audit work performed was fully substantive as we did
not rely upon the Company’s internal control over financial reporting.
Total Assets
£610.0m (2022: £ 624.9m)
Materiality
£6.1m (2022: £ 6.2m)
Total Assets
£6.1m
Whole financial
statements materiality
(2022: £6.2m)
£4.6m
Performance materiality
(2022: £4.6m)
£307k
Misstatements reported to
the audit committee (2022:
£310k)
4. The impact of climate risk on our audit
In planning our audit we have considered the potential impacts
of climate change on the Company’s financial statements.
We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit.
Level 1 quoted investments make up 65.1% of the Company’s
total assets, for which fair value is determined as the quoted
market price. Therefore, we assessed that the financial
statement estimate that is primarily exposed to climate risk is the
unquoted investment portfolio, for which the valuation
assumptions and estimates may be impacted by physical or legal
climate risks, such as an increase in climate related compliance
expenditure. We made enquiries of management to understand
the extent of the potential impact of climate change risk on the
unquoted investment portfolio.
We assessed that, whilst climate change posed a risk to the
determination of investment valuations in the current year, this
risk was not significant when considering the nature of the
underlying investment portfolio. Therefore there was no
significant impact of this on our key audit matter.
We have read the disclosure of climate related narrative in the
front half of the financial statements and considered consistency
with the financial statements and our audit knowledge.
5. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded
that the Company’s financial position means that this is realistic.
They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company’s available financial
resources and metrics relevant to debt covenants over this
period were:
— the impact of a significant reduction in the valuation of
investments and the implications for the Company’s debt
covenants;
— the liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall
due; and
— the operational resilience of key service organisations.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the degree of downside assumption that, individually
and collectively, could result in a liquidity issue, taking into
account the Company’s liquid investments.
Financial Report
46 Annual Report 2023
6. Fraud and breaches of laws and regulations – ability to detect
(continued)
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations (continued)
Secondly, the Company is subject to many other indirect laws and
regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such
an effect: money laundering, data protection, bribery and corruption
legislation and certain aspects of company legislation recognising
the financial and regulated nature of the Company’s activities and its
legal form. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the Directors and the Administrator and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law
or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
7. We have nothing to report on the other information in the
Annual Report and financial statements
The Directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the other
information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the Directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether there
is a material inconsistency between the Directors’ disclosures in
respect of emerging and principal risks and the viability
statement, and the financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
— the Directors’ confirmation within the Viability Statement on
pages 7 and 8 that they have carried out a robust assessment
of the emerging and principal risks facing the Company,
including those that would threaten its business model,
future performance, solvency and liquidity;
— the Principal and Emerging Risks disclosures describing these
risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
— the Directors’ explanation in the Viability Statement of how
they have assessed the prospects of the Company, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Viability Statement, set out
on pages 7 and 8 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
3. Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at £6.1m
(2022: £ 6.2m), determined with reference to a benchmark of total
assets, of which it represents 1% (2022: 1%). In line with our audit
methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a
whole.
Performance materiality was set at 75% (2022: 75%) of materiality for
the financial statements as a whole, which equates to £4.6m (2022: £
4.6m). We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £307k (2022: £ 310k),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above and was performed by a single audit team.
The scope of the audit work performed was fully substantive as we did
not rely upon the Company’s internal control over financial reporting.
Total Assets
£610.0m (2022: £ 624.9m)
Materiality
£6.1m (2022: £ 6.2m)
Total Assets
£6.1m
Whole financial
statements materiality
(2022: £6.2m)
£4.6m
Performance materiality
(2022: £4.6m)
£307k
Misstatements reported to
the audit committee (2022:
£310k)
4. The impact of climate risk on our audit
In planning our audit we have considered the potential impacts
of climate change on the Company’s financial statements.
We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit.
Level 1 quoted investments make up 65.1% of the Company’s
total assets, for which fair value is determined as the quoted
market price. Therefore, we assessed that the financial
statement estimate that is primarily exposed to climate risk is the
unquoted investment portfolio, for which the valuation
assumptions and estimates may be impacted by physical or legal
climate risks, such as an increase in climate related compliance
expenditure. We made enquiries of management to understand
the extent of the potential impact of climate change risk on the
unquoted investment portfolio.
We assessed that, whilst climate change posed a risk to the
determination of investment valuations in the current year, this
risk was not significant when considering the nature of the
underlying investment portfolio. Therefore there was no
significant impact of this on our key audit matter.
We have read the disclosure of climate related narrative in the
front half of the financial statements and considered consistency
with the financial statements and our audit knowledge.
5. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded
that the Company’s financial position means that this is realistic.
They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company’s available financial
resources and metrics relevant to debt covenants over this
period were:
— the impact of a significant reduction in the valuation of
investments and the implications for the Company’s debt
covenants;
— the liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall
due; and
— the operational resilience of key service organisations.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the degree of downside assumption that, individually
and collectively, could result in a liquidity issue, taking into
account the Company’s liquid investments.
3. Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at £6.1m
(2022: £ 6.2m), determined with reference to a benchmark of total
assets, of which it represents 1% (2022: 1%). In line with our audit
methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a
whole.
Performance materiality was set at 75% (2022: 75%) of materiality for
the financial statements as a whole, which equates to £4.6m (2022: £
4.6m). We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £307k (2022: £ 310k),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above and was performed by a single audit team.
The scope of the audit work performed was fully substantive as we did
not rely upon the Company’s internal control over financial reporting.
Total Assets
£610.0m (2022: £ 624.9m)
Materiality
£6.1m (2022: £ 6.2m)
Total Assets
£6.1m
Whole financial
statements materiality
(2022: £6.2m)
£4.6m
Performance materiality
(2022: £4.6m)
£307k
Misstatements reported to
the audit committee (2022:
£310k)
4. The impact of climate risk on our audit
In planning our audit we have considered the potential impacts
of climate change on the Company’s financial statements.
We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit.
Level 1 quoted investments make up 65.1% of the Company’s
total assets, for which fair value is determined as the quoted
market price. Therefore, we assessed that the financial
statement estimate that is primarily exposed to climate risk is the
unquoted investment portfolio, for which the valuation
assumptions and estimates may be impacted by physical or legal
climate risks, such as an increase in climate related compliance
expenditure. We made enquiries of management to understand
the extent of the potential impact of climate change risk on the
unquoted investment portfolio.
We assessed that, whilst climate change posed a risk to the
determination of investment valuations in the current year, this
risk was not significant when considering the nature of the
underlying investment portfolio. Therefore there was no
significant impact of this on our key audit matter.
We have read the disclosure of climate related narrative in the
front half of the financial statements and considered consistency
with the financial statements and our audit knowledge.
5. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded
that the Company’s financial position means that this is realistic.
They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company’s available financial
resources and metrics relevant to debt covenants over this
period were:
— the impact of a significant reduction in the valuation of
investments and the implications for the Company’s debt
covenants;
— the liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall
due; and
— the operational resilience of key service organisations.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the degree of downside assumption that, individually
and collectively, could result in a liquidity issue, taking into
account the Company’s liquid investments.
Financial Report
Baillie Gifford US Growth Trust plc 47
6. Fraud and breaches of laws and regulations – ability to detect
(continued)
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations (continued)
Secondly, the Company is subject to many other indirect laws and
regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such
an effect: money laundering, data protection, bribery and corruption
legislation and certain aspects of company legislation recognising
the financial and regulated nature of the Company’s activities and its
legal form. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the Directors and the Administrator and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law
or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
7. We have nothing to report on the other information in the
Annual Report and financial statements
The Directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the other
information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the Directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether there
is a material inconsistency between the Directors’ disclosures in
respect of emerging and principal risks and the viability
statement, and the financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
— the Directors’ confirmation within the Viability Statement on
pages 7 and 8 that they have carried out a robust assessment
of the emerging and principal risks facing the Company,
including those that would threaten its business model,
future performance, solvency and liquidity;
— the Principal and Emerging Risks disclosures describing these
risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
— the Directors’ explanation in the Viability Statement of how
they have assessed the prospects of the Company, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Viability Statement, set out
on pages 7 and 8 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
3. Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at £6.1m
(2022: £ 6.2m), determined with reference to a benchmark of total
assets, of which it represents 1% (2022: 1%). In line with our audit
methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a
whole.
Performance materiality was set at 75% (2022: 75%) of materiality for
the financial statements as a whole, which equates to £4.6m (2022: £
4.6m). We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £307k (2022: £ 310k),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above and was performed by a single audit team.
The scope of the audit work performed was fully substantive as we did
not rely upon the Company’s internal control over financial reporting.
Total Assets
£610.0m (2022: £ 624.9m)
Materiality
£6.1m (2022: £ 6.2m)
Total Assets
£6.1m
Whole financial
statements materiality
(2022: £6.2m)
£4.6m
Performance materiality
(2022: £4.6m)
£307k
Misstatements reported to
the audit committee (2022:
£310k)
4. The impact of climate risk on our audit
In planning our audit we have considered the potential impacts
of climate change on the Company’s financial statements.
We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit.
Level 1 quoted investments make up 65.1% of the Company’s
total assets, for which fair value is determined as the quoted
market price. Therefore, we assessed that the financial
statement estimate that is primarily exposed to climate risk is the
unquoted investment portfolio, for which the valuation
assumptions and estimates may be impacted by physical or legal
climate risks, such as an increase in climate related compliance
expenditure. We made enquiries of management to understand
the extent of the potential impact of climate change risk on the
unquoted investment portfolio.
We assessed that, whilst climate change posed a risk to the
determination of investment valuations in the current year, this
risk was not significant when considering the nature of the
underlying investment portfolio. Therefore there was no
significant impact of this on our key audit matter.
We have read the disclosure of climate related narrative in the
front half of the financial statements and considered consistency
with the financial statements and our audit knowledge.
5. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded
that the Company’s financial position means that this is realistic.
They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company’s available financial
resources and metrics relevant to debt covenants over this
period were:
— the impact of a significant reduction in the valuation of
investments and the implications for the Company’s debt
covenants;
— the liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall
due; and
— the operational resilience of key service organisations.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the degree of downside assumption that, individually
and collectively, could result in a liquidity issue, taking into
account the Company’s liquid investments.
5. Going concern (continued)
We considered whether the going concern disclosure in note 1 to
the financial statements gives a full and accurate description of
the Directors’ assessment of going concern, including the
identified risks and related sensitivities.
Our conclusions based on this work:
— We consider that the Directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
— We have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, may
cast significant doubt on the Company's ability to continue
as a going concern for the going concern period;
— We have nothing material to add or draw attention to in
relation to the Directors’ statement in note 1 to the
financial statements on the use of the going concern basis of
accounting with no material uncertainties that may cast
significant doubt over the Company’s use of that basis for
the going concern period, and we found the going concern
disclosure in note 1 to be acceptable; and
— The related statement under the Listing Rules set out on
page 37 is materially consistent with the financial
statements and our audit knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee that
the Company will continue in operation.
6.
Fraud and breaches of laws and regulations – ability to
detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
— enquiring of Directors as to the Company’s policies and
procedures to prevent and detect fraud, as well as whether
they have knowledge of any actual, suspected or alleged
fraud;
— assessing the segregation of duties in place between the
Directors, the Administrator and the Company’s Investment
Manager; and
— reading Board and Audit Committee minutes.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit.
As required by auditing standards, we perform procedures to
address the risk of management override of controls, in particular
to the risk that management may be in a position to make
inappropriate accounting entries and the risk of bias in
accounting estimates and judgements such as the valuation of
unlisted investments.
On this audit we do not believe there is a fraud risk related to
revenue recognition because the revenue is non-judgemental
and straightforward, with limited opportunity for manipulation.
We evaluated the design and implementation of the controls
over journal entries and other adjustments and made inquiries of
the Administrator about inappropriate or unusual activity relating
to the processing of journal entries and other adjustments. We
selected journal entries for testing, which included material post-
closing journal entries and compared any identified entries to
supporting documentation.
We did not identify any additional fraud risks.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the Directors, the Investment Manager and the
Administrator (as required by auditing standards) and discussed
with the Directors the policies and procedures regarding
compliance with laws and regulations. As the Company is
regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout
our team and remained alert to any indications of non-
compliance throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Company is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies legislation),
distributable profits legislation, and its qualification as an
Investment Trust under UK taxation legislation, any breach of
which could lead to the Company losing various deductions and
exemptions from UK corporation tax, and we assessed the extent
of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
Financial Report
48 Annual Report 2023
6. Fraud and breaches of laws and regulations – ability to detect
(continued)
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations (continued)
Secondly, the Company is subject to many other indirect laws and
regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such
an effect: money laundering, data protection, bribery and corruption
legislation and certain aspects of company legislation recognising
the financial and regulated nature of the Company’s activities and its
legal form. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the Directors and the Administrator and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law
or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
7.
We have nothing to report on the other information in the
Annual Report and financial statements
The Directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the other
information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the Directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether there
is a material inconsistency between the Directors’ disclosures in
respect of emerging and principal risks and the viability
statement, and the financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
— the Directors’ confirmation within the Viability Statement on
pages 7 and 8 that they have carried out a robust assessment
of the emerging and principal risks facing the Company,
including those that would threaten its business model,
future performance, solvency and liquidity;
— the Principal and Emerging Risks disclosures describing these
risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
— the Directors’ explanation in the Viability Statement of how
they have assessed the prospects of the Company, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Viability Statement, set out
on pages 7 and 8 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
3. Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at £6.1m
(2022: £ 6.2m), determined with reference to a benchmark of total
assets, of which it represents 1% (2022: 1%). In line with our audit
methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a
whole.
Performance materiality was set at 75% (2022: 75%) of materiality for
the financial statements as a whole, which equates to £4.6m (2022: £
4.6m). We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £307k (2022: £ 310k),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above and was performed by a single audit team.
The scope of the audit work performed was fully substantive as we did
not rely upon the Company’s internal control over financial reporting.
Total Assets
£610.0m (2022: £ 624.9m)
Materiality
£6.1m (2022: £ 6.2m)
Total Assets
£6.1m
Whole financial
statements materiality
(2022: £6.2m)
£4.6m
Performance materiality
(2022: £4.6m)
£307k
Misstatements reported to
the audit committee (2022:
£310k)
4. The impact of climate risk on our audit
In planning our audit we have considered the potential impacts
of climate change on the Company’s financial statements.
We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit.
Level 1 quoted investments make up 65.1% of the Company’s
total assets, for which fair value is determined as the quoted
market price. Therefore, we assessed that the financial
statement estimate that is primarily exposed to climate risk is the
unquoted investment portfolio, for which the valuation
assumptions and estimates may be impacted by physical or legal
climate risks, such as an increase in climate related compliance
expenditure. We made enquiries of management to understand
the extent of the potential impact of climate change risk on the
unquoted investment portfolio.
We assessed that, whilst climate change posed a risk to the
determination of investment valuations in the current year, this
risk was not significant when considering the nature of the
underlying investment portfolio. Therefore there was no
significant impact of this on our key audit matter.
We have read the disclosure of climate related narrative in the
front half of the financial statements and considered consistency
with the financial statements and our audit knowledge.
5. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded
that the Company’s financial position means that this is realistic.
They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company’s available financial
resources and metrics relevant to debt covenants over this
period were:
— the impact of a significant reduction in the valuation of
investments and the implications for the Company’s debt
covenants;
— the liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall
due; and
— the operational resilience of key service organisations.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the degree of downside assumption that, individually
and collectively, could result in a liquidity issue, taking into
account the Company’s liquid investments.
Financial Report
Baillie Gifford US Growth Trust plc 49
7. We have nothing to report on the other information in the
Annual Report and financial statements (continued)
Disclosures of emerging and principal risks and longer-term
viability (continued)
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements is
not a guarantee as to the Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there
is a material inconsistency between the Directors’ corporate
governance disclosures and the financial statements and our
audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements
and our audit knowledge:
— the Directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy;
— the section of the annual report describing the work of the
Audit Committee, including the significant issues that the
audit committee considered in relation to the financial
statements, and how these issues were addressed; and
— the section of the annual report that describes the review of
the effectiveness of the Company’s risk management and
internal control systems.
We are required to review the part of Corporate Governance
Statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified by
the Listing Rules for our review. We have nothing to report in this
respect.
8.
We have nothing to report on the other matters on which we
are required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
— adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
— the financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
— certain disclosures of Directors’ remuneration specified by
law are not made; or
— we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 43, the
Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend to
liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
.
10. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006 and the terms of our engagement by the Company. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report, and the further matters we are
required to state to them in accordance with the terms agreed
with the Company, and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
John Waterson (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor Chartered
Accountants
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EG
9 August 2023
3. Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at £6.1m
(2022: £ 6.2m), determined with reference to a benchmark of total
assets, of which it represents 1% (2022: 1%). In line with our audit
methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a
whole.
Performance materiality was set at 75% (2022: 75%) of materiality for
the financial statements as a whole, which equates to £4.6m (2022: £
4.6m). We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £307k (2022: £ 310k),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above and was performed by a single audit team.
The scope of the audit work performed was fully substantive as we did
not rely upon the Company’s internal control over financial reporting.
Total Assets
£610.0m (2022: £ 624.9m)
Materiality
£6.1m (2022: £ 6.2m)
Total Assets
£6.1m
Whole financial
statements materiality
(2022: £6.2m)
£4.6m
Performance materiality
(2022: £4.6m)
£307k
Misstatements reported to
the audit committee (2022:
£310k)
4. The impact of climate risk on our audit
In planning our audit we have considered the potential impacts
of climate change on the Company’s financial statements.
We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit.
Level 1 quoted investments make up 65.1% of the Company’s
total assets, for which fair value is determined as the quoted
market price. Therefore, we assessed that the financial
statement estimate that is primarily exposed to climate risk is the
unquoted investment portfolio, for which the valuation
assumptions and estimates may be impacted by physical or legal
climate risks, such as an increase in climate related compliance
expenditure. We made enquiries of management to understand
the extent of the potential impact of climate change risk on the
unquoted investment portfolio.
We assessed that, whilst climate change posed a risk to the
determination of investment valuations in the current year, this
risk was not significant when considering the nature of the
underlying investment portfolio. Therefore there was no
significant impact of this on our key audit matter.
We have read the disclosure of climate related narrative in the
front half of the financial statements and considered consistency
with the financial statements and our audit knowledge.
5. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded
that the Company’s financial position means that this is realistic.
They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company’s available financial
resources and metrics relevant to debt covenants over this
period were:
— the impact of a significant reduction in the valuation of
investments and the implications for the Company’s debt
covenants;
— the liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall
due; and
— the operational resilience of key service organisations.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the degree of downside assumption that, individually
and collectively, could result in a liquidity issue, taking into
account the Company’s liquid investments.
Financial Report
50 Annual Report 2023
Income Statement
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 the Company does not have any other comprehensive income and the net return after
The accompanying notes on pages 54 to 68 are an integral part of the Financial Statements.
Notes
2023
Revenue
£’000
2023
Capital
£’000
Total
2022
Revenue
£’000
2022
Capital
£’000
Total
Losses on investments 9 – (10,169) – (314,153)
Currency losses 14 – (700) – (2,976)
Income 2 850 – 568 –
Investment management fee 3 (3,345) – (4,865) –
Other administrative expenses 4 (670) – (676) –
and taxation (3,165) (10,869) (4,973) (317,129)
Finance costs of borrowings 5 (1,482) – (741) –
Net return before taxation (4,647) (10,869) (5,714) (317,129)
Tax 6 (71) – (67) –
Net return after taxation
Net return per ordinary share 7
Financial Report
Baillie Gifford US Growth Trust plc 51
Balance Sheet
* See Glossary of Terms and Alternative Performance Measures on pages 76 and 77.
The accompanying notes on pages 54 to 68 are an integral part of the Financial Statements.
Notes
2023
£’000
2023
£’000
2022
£’000
2022
£’000
Fixed assets
9 605,908 621,587
Current assets
Debtors 10 657 359
Cash and cash equivalents 19 3,440 3,007
4,097 3,366
Creditors
Amounts falling due within one year 11 (41,406) (20,930)
Net current liabilities (37,309) (17,564)
Total assets less current liabilities 568,599 604,023
Creditors
Amounts falling due after more than one year 12 – (19,837)
Net assets
Capital and reserves
Share capital 13 3,073 3,073
Share premium account 14 250,827 250,827
Special distributable reserve 14 168,942 168,942
Capital reserve 14 165,931 176,800
Revenue reserve 14 (20,174) (15,456)
Shareholders’ funds
Net asset value per ordinary share
(after deducting borrowings at book value
*) 15
The Financial Statements of Baillie Gifford US Growth Trust plc (Company Registration number 11194060) were approved and authorised for
issue by the Board and were signed on 9 August 2023.
Tom Burnet
Chairman
Financial Report
52 Annual Report 2023
Statement of Changes in Equity
Notes
Share
capital
£’000
Share
premium
account
£’000
Special
distributable
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
Shareholders’ funds at 1 June 2022 3,073 250,827 168,942 176,800 (15,456)
Net return after taxation – – – (10,869) (4,718)
Notes
Share
capital
£’000
Share
premium
account
£’000
Special
distributable
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
Shareholders’ funds at 1 June 2021 3,068 249,020 168,942 497,528 (9,675)
Ordinary shares issued 13 5 1,807 – – –
Ordinary shares bought back into treasury 13 – – – (3,599) –
Net return after taxation – – – (317,129) (5,781)
The accompanying notes on pages 54 to 68 are an integral part of the Financial Statements.
Financial Report
Baillie Gifford US Growth Trust plc 53
The accompanying notes on pages 54 to 68 are an integral part of the Financial Statements.
Cash Flow Statement
2023
£’000
2023
£’000
2022
£’000
2022
£’000
Net return before taxation (15,516) (322,843)
Net losses on investments 10,169 314,153
Currency losses 700 2,976
Finance costs of borrowings 1,482 741
Overseas withholding tax incurred (71) (67)
Changes in debtors and creditors (308) (387)
Cash from operations
* (3,544) (5,427)
Finance costs paid (1,481) (745)
(5,025) (6,172)
Acquisitions of investments (63,894) (146,903)
Disposals of investments 69,383 129,027
5,489 (17,876)
Ordinary shares issued – 1,812
Ordinary shares bought back into treasury and stamp duty thereon – (3,599)
Bank loans drawn down
#
– 9,082
Bank loans repaid
#
– –
– 7,295
Increase/(decrease) in cash and cash equivalents 464 (16,753)
(31) 1,276
Cash and cash equivalents at start of the period 3,007 18,484
* Cash from operations includes dividends received in the period of £472,000 (2022 – £448,000) and interest received of £154,000 (2022 – £1,000).
#
Financial Report
54 Annual Report 2023
Baillie Gifford US Growth Trust plc (the ‘Company’) was incorporated
company with registered number 11194060. The Company is an
investment company within the meaning of section 833 of the
Companies Act 2006 and carries on business as an investment trust.
The Financial Statements for the year to 31 May 2023 have been
prepared in accordance with FRS 102 ‘The Financial Reporting Standard
applicable in the UK and Republic of Ireland’ and on the basis of the
accounting policies set out below which are unchanged from the prior
year and have been applied consistently.
(a) Basis of Accounting
All of the Company’s operations are of a continuing nature and the
Financial Statements are prepared on a going concern basis under
assumption that approval as an investment trust under section 1158
of the Corporation Tax Act 2010 and the Investment Trust (Approved
Company) (Tax) Regulations 2011 will be retained. The Board has,
in particular, considered the impact of heightened market volatility due
to macr
oeconomic and geopolitical concerns, including rising interest
Company’s going concern status is affected. The Company’s assets,
the majority of which are investments in quoted securities which
require the prior approval of the Board. Gearing levels and
compliance with borrowing covenants are reviewed by the Board
on a regular basis. As at 31 May 2023, the Company had a net
curr
ent liability of £37.3 million primarily as a result of the US$25
Branch, which matured on 31 July 2023 and the US$25 million
due to mature on 23 October 2023. Subsequent to the year end on
26 July 2023, a new unsecur
ed US$25 million three-year revolving
credit facility was drawn down from ING Bank N.V., London Branch.
The Company has continued to comply with the investment trust
status requirements of section 1158 of the Corporation Tax Act 2010
and the Investment Trust (Approved Company) (Tax) Regulations
2011. Accordingly, the Financial Statements have been prepared
on the going concern basis as it is the Directors’ opinion, having
assessed the principal and emerging risks and other matters set
out in the Viability Statement on pages 7 and 8 which assesses
Company will continue in operational existence for a period of at
least twelve months from the date of approval of these Financial
Statements.
The Financial Statements have been prepared in accordance with
the Companies Act 2006, applicable UK Accounting Standards,
the Association of Investment Companies (‘AIC’) Statement of
Recommended Practice ‘Financial Statements of Investment T
rust
Companies and Venture Capital Trusts’ issued in November 2014
and updated in July 2022 with consequential amendments. In order to
guidance issued by the AIC, supplementary information which
and capital nature has been presented in the Income Statement.
Although the Company invests in US dollar investments, the Directors
consider the Company’s functional currency to be sterling, as the
Company’s share capital is denominated in sterling, the entity is listed
on a sterling stock exchange in the UK, the Company’s shareholders
are predominantly based in the UK and the Company and its
Manager, who are subject to the UK’s regulatory environment,
are also UK based.
Company’s Balance Sheet when it becomes a party to the
contractual provisions of the instrument.
(b) Accounting Estimates, Assumptions and Judgements
The preparation of the Financial Statements requires the use
of estimates, assumptions and judgements. These estimates,
assumptions and judgements af
fect the reported amounts of assets
and liabilities at the reporting date. While estimates are based on best
outcome may differ from these estimates. The key sources of estimation
and uncertainty relate to the fair valuation of the unlisted investments.
Judgements
The Directors consider that the preparation of the Financial
Statements involves the following key judgements:
(i) the determination of the functional currency of the Company
as sterling (see rationale in 1(a) above); and
(ii)
the fair valuation of the unlisted investments.
The key judgements in the fair valuation process are:
(i) the Managers’ determination of the appropriate application of the
Guidelines 2018 along with the Special Guidelines issued in
March 2020 to each unlisted investment; and
(ii) the Directors’ consideration of whether each fair value is
appropriate following detailed review and challenge. The
judgement applied in the selection of the methodology used
(see 1(c) below) for determining the fair value of each unlisted
Estimates
The key estimate in the Financial Statements is the determination
of the fair value of the unlisted investments by the Managers for
impacts the valuation of the unlisted investments at the Balance
Sheet date. The fair valuation process involves estimation using
subjective inputs that are unobservable (for which market data is
unavailable). The main estimates involved in the selection of the
valuation process inputs are:
(i) the selection of appropriate comparable companies in order to
derive revenue multiples and meaningful relationships between
enterprise value, revenue and earnings growth. Comparable
companies are chosen on the basis of their business
characteristics and growth patterns;
(ii) the selection of a revenue metric (either historical or forecast);
reduced liquidity of unlisted companies versus their listed peers;
(iv) the estimation of the probability assigned to an exit being
through an initial public offering (‘IPO’) or a company sale;
(v) the selection of an appropriate industry benchmark index to
assist with the valuation validation or the application of valuation
adjustments, particularly in the absence of established earnings
or closely comparable peers; and
(vi) the calculation of valuation adjustments derived from milestone
analysis (i.e. incorporating operational success against the plan/
forecasts of the business into the valuation).
Fair value estimates are cross-checked to alternative estimation
methods where possible to improve the robustness of the estimates.
As the valuation outcomes may differ from the fair value estimates a
price sensitivity analysis is provided in Other Price Risk Sensitivity in
note 19 on pages 64 to 67 to illustrate the effect on the Financial
Statements of an over or under estimation of fair values. The risk of
an over or under estimation of fair values is greater when methodologies
are applied using more subjective inputs.
Notes to the Financial Statements
Financial Report
Baillie Gifford US Growth Trust plc 55
Assumptions
The determination of fair value by the Managers involves key
assumptions dependent upon the valuation technique used.
As explained in 1(c) below, the primary technique applied under
approach is used the valuation process recognises also, as stated in
appropriate starting point for estimating fair value. The Multiples
approach involves subjective inputs and therefore presents a greater
risk of over or under estimation and particularly in the absence of a
recent transaction.
The key assumptions for the Multiples approach are that the
selection of comparable companies provides a reasonable basis
for identifying relationships between enterprise value, revenue and
gr
owth to apply in the determination of fair value. Other assumptions
include:
(i) the discount applied for reduced liquidity versus listed peers;
(ii) the probabilities assigned to an exit being through either an
IPO or a company sale; and
(iii)
that the application of milestone analysis and industry
benchmark indices are a reasonable basis for applying
appropriate adjustments to the valuations.
Valuations are cross-checked for reasonableness to alternative
Multiples-based approaches or benchmark index movements
as appropriate.
(c)
Investments
sections 11 and 12 of FRS 102. Changes in fair value of investments
and gains and losses on disposal are recognised as capital items in
the Income Statement.
Recognition and Initial Investment
Purchases and sales of investments are accounted for on a trade
to capital at the time of acquisition or disposal. All investments are
recognition and are measured at subsequent reporting dates at
fair value.
Measurement and Valuation
Listed Investments
The fair value of listed security investments is the last traded price
on recognised overseas exchanges.
Unlisted Investments
Unlisted investments are valued at fair value by the Directors following
a detailed review and appropriate challenge of the valuations proposed
by the Managers. The Managers’ unlisted investment valuation policy
The techniques applied are predominantly market-based
set out below and are followed by an explanation of how they are
applied to the Company’s unlisted portfolio:
— Multiples;
— Industry Valuation Benchmarks; and
— Available Market Prices.
valuation technique applied. The valuation approach recognises that,
resulting from an orderly transaction, generally represents fair value
as at the transaction date and may be an appropriate starting point
for estimating fair value at subsequent measurement dates. However,
consideration is given to the facts and circumstances as at the
subsequent measurement date, including changes in the market or
performance of the investee company. Milestone analysis is used
where appropriate to incorporate the operational progress of the
investee company into the valuation. Additionally, the background
to the transaction must be considered. As a result, various Multiples-
based techniques ar
e employed to assess the valuations particularly
are used where appropriate. An absence of relevant industry peers
may preclude the application of the Industry Valuation Benchmarks
technique and an absence of observable prices may preclude the
Available Market Prices approach. All valuations are cross-checked
for reasonableness by employing relevant alternative techniques.
The unlisted investments are valued according to a three monthly
cycle of measurement dates. The fair value of the unlisted
investments will be reviewed before the next scheduled three
monthly measurement date on the following occasions:
— at the year end and half year end of the Company; and
Gains and Losses
Gains and losses on investments, including those arising from
foreign currency exchange differences, are recognised in the Income
Statement as capital items.
The Managers monitor the investment portfolio on a fair value basis
and uses the fair value basis for investments in making investment
(d) Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and deposits
repayable on demand. Deposits are repayable on demand if they
can be withdrawn at any time without notice and without penalty
or if they have a maturity or period of notice of not more than one
working day
.
(e) Financial Liabilities
at amortised cost. They are initially recorded at the proceeds
received net of direct costs.
(f) Income
(i) Income from equity investments is brought into account on the
date on which the investments are quoted ex-dividend or, where
no ex-dividend date is quoted, when the Company’s right to
receive payment is established.
(ii) If scrip dividends are taken in lieu of dividends in cash, the net
amount of the cash dividend declared is credited to the revenue
account. Any excess or shortfall in the value of the shares
received over the amount of the cash dividend foregone is
recognised as capital.
(iii) Special dividends are treated as repayments of capital or income
depending on the facts of each particular case.
(iv) Overseas dividends include the taxes deducted at source.
(v) Interest receivable on bank deposits and underwriting
commission are recognised on an accruals basis.
(g) Expenses
charged through the revenue column of the Income Statement
except where:
(i) they relate directly to the acquisition or disposal of an investment
(transaction costs), in which case they are recognised as capital
within losses/gains on investments; and
(ii) they relate directly to the buy-back/issuance of shares, in which
case they are added to the buy-back cost or deducted from the
share issuance proceeds.
(h) Finance Costs
Finance costs are accounted for on an accruals basis and on an
effective interest rate basis and are charged through the revenue
account.
Financial Report
56 Annual Report 2023
2023
£’000
2022
£’000
Income from investments
Overseas dividends 472 448
Overseas interest 224 119
696 567
Other income
Deposit interest 154 1
Total income
2023
£’000
2022
£’000
Investment management fee
Details of the Investment Management Agreement are set out on page 31. With effect from 1 September 2021 the annual management
fees are calculated and payable quarterly.
2023
£’000
2022
£’000
Director’s fees (see Directors’ Remuneration Report on page 41) 164 163
Auditor’s remuneration for audit services 135 105
General administrative expenses 287 345
Marketing
* 84 63
There were no non-audit fees paid to KPMG LLP in the year to 31 May 2023 or 2022.
* The Company is part of a marketing programme which includes all the investment trusts managed by the Manager. The marketing strategy
has an ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy is borne in partnership by the
Company and the Manager. The Manager matches the Company’s marketing contribution and provides the resource to manage and run
the programme.
(i) Ta
x
ation
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to taxation authorities.
The tax rates and tax laws used to compute the amount are
those enacted or substantively enacted at the reporting date.
Deferred taxation is provided on an undiscounted basis on all timing
differences which have originated but not reversed by the Balance
Sheet date, calculated at the tax rates expected to apply when the
timing differences reverse, based on what has been enacted or
assets are recognised only to the extent that it is more likely than not
differences can be deducted.
(j) Foreign Currencies
Transactions involving foreign currencies are converted at the rate
ruling at the time of the transaction. Assets and liabilities in foreign
currencies are translated at the closing rates of exchange at the
Balance Sheet date. Any gain or loss arising from a change in exchange
rate subsequent to the date of the transaction is included as an
exchange gain or loss in the capital reserve or revenue reserve as
appropriate. Foreign exchange movements on investments are
included in the Income Statement within gains or losses on investments.
(k) Special Distributable Reserve
The special distributable reserve can be used for the repurchase
of shares and may be distributed by way of dividend.
(l) Capital Reserve
Gains and losses on disposal of investments, changes in the fair
value of investments held and realised and unrealised foreign
exchange differences of a capital nature are dealt with in this reserve
after being recognised in the Income Statement. Purchases of the
Company’s own shares may be funded from this reserve.
(m) Revenue Reserve
The revenue reserve, when in surplus, may be distributed by way of
a dividend.
(n) Single Segment Reporting
The Company is engaged in a single segment of business, being
investment business, consequently no business segmental analysis
is provided.
Financial Report
Baillie Gifford US Growth Trust plc 57
2023
£’000
2022
£’000
Interest on bank loans (see notes 11 and 12)
Finance costs include the initial amortised arrangement fee and non-utilisation fees.
2023
£’000
2022
£’000
Analysis of charge in the year
Overseas withholding taxation 71 67
Factors affecting the tax charge for the year
The tax charge for the year is higher (2022 – higher) than the UK corporation tax rate
of 20% for the period (2022 – 19%). The differences are explained below:
Net return before taxation (15,516) (322,843)
Net return before taxation multiplied by the UK corporation tax rate
of 20% for the period (2022 – 19%) (3,103) (61,340)
Capital returns not taxable 2,174 60,255
Overseas dividends not taxable (95) (86)
1,024 1,171
Overseas withholding tax incurred 71 67
Tax charge for the year
As an investment trust, the Company’s capital gains are not taxable.
Factors that may affect future tax charges
At 31 May 2023, the Company had a potential deferred tax asset of £5,599,000 (2022 – £4,319,000) in respect of tax losses which are
The potential deferred tax asset has been calculated using a corporation tax rate of 25% (2022 – 25%).
2023
Revenue
2023
Capital
2023
Total
2022
Revenue
2022
Capital
2022
Total
Net return after taxation
Revenue return per ordinary share is based on the net revenue loss after taxation of £4,718,000 (2022 – net revenue loss after taxation
of £5,781,000) and on 305,153,700 (2022 – 307,185,443) ordinary shares, being the weighted average number of ordinary shares in issue
(excluding treasury shares) during each period.
£317,129,000) and on 305,153,700 (2022 – 307,185,443) ordinary shares, being the weighted average number of ordinary shares in issue
(excluding treasury shares) during each period.
on 305,153,700 (2022 – 307,185,443) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury
shares) during each period.
There are no dilutive or potentially dilutive shares in issue.
way of dividend for the year to 31 May 2023 due to the revenue loss of £4,718,000 in the year (2022 – revenue loss of £5,781,000).
Financial Report
58 Annual Report 2023
As at 31 May 2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
Listed securities 396,272 – –
Unlisted ordinary shares – – 37,307
Unlisted preference shares
* – – 168,162
Unlisted convertible promissory notes – – 4,167
–
As at 31 May 2022
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
Listed securities 394,228 – –
Unlisted ordinary shares – – 45,842
Unlisted preference shares
* – – 179,347
Unlisted convertible promissory notes – – 2,170
–
*
repayment (or multiple thereof) of the original investment in the event of a liquidation event such as a take-over.
During the year to 31 May 2023 no investments (31 May 2022 – investments with a book cost of £10,542,000) were transferred from Level 3
to Level 1 on becoming listed.
Fair Value Hierarchy
in its entirety as follows:
Level 1 – using unadjusted quoted prices for identical instruments in an active market;
Level 2 – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and
Level 3 – using inputs that are unobservable (for which market data is unavailable).
The valuation techniques used by the Company are explained in the accounting policies on pages 54 and 55. A sensitivity analysis by
valuation technique of the unlisted securities is on pages 64 to 67.
Listed
securities
£’000
Unlisted
securities *
£’000
Total
Cost of investments at 31 May 2022 430,175 178,247
Investment holding gains and losses at 31 May 2022 (35,947) 49,112
Value of investments at 31 May 2022 394,228 227,359
Analysis of transactions in the year:
Purchases at cost 39,140 24,754
Sales proceeds received (69,383) –
Gains and losses on investments 32,287 (42,477)
Value of investments at 31 May 2023
Cost of investments at 31 May 2023 376,349 203,001
Investment holding gains and losses at 31 May 2023 19,923 6,635
Value of investments at 31 May 2023
* Includes holdings in ordinary shares, preference shares and convertible promissory notes.
Financial Report
Baillie Gifford US Growth Trust plc 59
(continued)
The Company received £69,383,000 from investments sold in the year (31 May 2022 – £126,118,000). The book cost of these investments
when they were purchased was £92,966,000 (2022 – £76,648,000). These investments have been revalued over time and until they were
sold any unrealised gains/losses were included in the fair value of the investments.
Transaction costs of £12,000 (2022 – £29,000) and £14,000 (2022 – £25,000) were suffered on purchases and sales respectively.
2023
2022
Net losses on investments
(Losses)/gains on sales (23,583) 49,470
Changes in investment holding gains and losses 13,393 (363,602)
Provision for Stripe put right 21 (21)
Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (updated in July 2022),
in relation to unlisted investments included in the twenty largest holdings within the List of Investments disclosed on pages 21 to 23.
As at 31 May 2023 Income
Name Business
Latest
Financial
Statements
Proportion
of
capital
owned
%
Book
cost
£’000
Market
value
£’000
recognised
from
holding in
the period
£’000
Turnover
(US$’000)
Pre-tax
profit/(loss)
(US$’000)
Net assets
attributable
to
shareholders
(US$’000)
Technologies
Rocket and spacecraft
company n/a 0.02 11,225 39,220 Nil Information not publicly available
Stripe Online payment platform
n/a 0.05 25,463 25,681 Nil Information not publicly available
Brex Corporate credit cards
for start-ups n/a 0.23 14,536 15,624 Nil Information not publicly available
Zipline Drone-based medical
delivery n/a 0.45 6,131 14,548 Nil Information not publicly available
Faire Wholesale Online wholesale
marketplace n/a 0.23 17,699 13,449 Nil Information not publicly available
Discord Communication software n/a 0.10 11,551 11,006 Nil Information not publicly available
As at 31 May 2022 Income
Name Business
Latest
Financial
Statements
Proportion
of
capital
owned
%
Book
cost
£’000
Market
value
£’000
recognised
from
holding in
the period
£’000
Turnover
(US$’000)
Pre-tax
profit/(loss)
(US$’000)
Net assets
attributable
to
shareholders
(US$’000)
Technologies
Rocket and spacecraft
company n/a 0.02 11,225 35,062 Nil Information not publicly available
Stripe Online payment platform
n/a 0.04 14,375 27,995 Nil Information not publicly available
Brex Corporate credit cards
for start-ups n/a 0.24 14,536 21,198 Nil Information not publicly available
Faire Wholesale Online wholesale
marketplace n/a 0.23 17,699 20,045 Nil Information not publicly available
Discord Communication software
n/a 0.11 11,551 11,740 Nil Information not publicly available
Video game platform and
software developer n/a 0.04 7,315 10,555 Nil Information not publicly available
Zipline Drone-based medical
delivery n/a 0.50 5,322 9,690 Nil Information not publicly available
Financial Report
60 Annual Report 2023
2023
£’000
2022
£’000
Amounts falling due within one year:
Income accrued (net of withholding taxes) 472 171
Other debtors and prepayments 185 188
N
approximation of fair value. There were no debtors that were past due or impaired at 31 May 2023 or 31 May 2022.
Amounts falling due within one year
2023
£’000
2022
£’000
40,342 19,837
Investment management fee 819 841
Other creditors and accruals 245 231
Provision for Stripe put right – 21
Borrowing facilities
from ING Bank N.V., London Branch.
At 31 May 2023 there were drawings of US$25 million at an interest rate of 6.87017% (2022 – US$25 million at an interest rate of 3.09786%).
The main covenants relating to the loan are that borrowings should not exceed 30% of the Company’s adjusted net asset value and the
Company’s minimum adjusted net asset value shall be £140 million. The adjusted net asset value calculation includes the deduction of 100%
of any unlisted
securities
. There were no breaches in the loan covenants during the year to 31 May 2023 (31 May 2022 – none).
Amounts falling due in more than one year
2023
£’000
2022
£’000
–
Borrowing facilities
At 31 May 2023 and 31 May 2022 there were drawings of US$25 million at an interest rate of 1.902%.
The main covenants relating to the loan are that borrowings should not exceed 30% of the Company’s adjusted net asset value and the
Company’s minimum adjusted net asset value shall be £140 million. The adjusted net asset value calculation includes the deduction of
100% of any unlisted securities. There were no breaches in the loan covenants during the year to 31 May 2023 (31 May 2022 – none).
Financial Report
Baillie Gifford US Growth Trust plc 61
2023
Number
2023
£’000
2022
Number
2022
£’000
Allotted, called up and fully paid ordinary shares of 1p each 305,153,700 3,051 305,153,700 3,051
Treasury shares of 1p each 2,206,300 22 2,206,300 22
In the year to 31 May 2023, the Company issued no shares (in the year to 31 May 2022, the Company issued a total of 525,000 shares
with nominal value £5,250 representing 0.2% of the issued share capital at 31 May 2021, raising net proceeds of £1,812,000, which was
invested in accordance with the Company’s investment policy).
Over the period from 31 May 2023 to 4 August 2023 the Company has issued no shares.
The Company’s authority to buy back shares up to a maximum of 14.99% of the Company’s issued share capital was renewed at the
Annual General Meeting held on 16 September 2022. In the year to 31 May 2023 no shares were bought back (2022 – 2,206,300 shares
with a nominal value of £22,063 were bought back at a total cost of £3,599,000 and held in treasury). At 31 May 2023 the Company had
authority to buy back 45,742,539 ordinary shares.
Over the period from 31 May 2023 to 4 August 2023 the Company bought back no shares.
Share
capital
£’000
Share
premium
account
£’000
Special
distributable
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
At 31 May 2022 3,073 250,827 168,942 176,800 (15,456)
Net losses on sales of investments – – – (23,583) –
Changes in investment holding gains and losses – – – 13,393 –
Provision for Stripe put right released – – – 21 –
– – – (669) –
– – – (31) –
Revenue return after taxation
– – – –
(4,718)
At 31 May 2023
The capital reserve includes investments holding gains of £26,558,000 (2022 – £13,165,000) as disclosed in note 9.
by way of dividend.
The special distributable reserve and the capital reserve can be used for the repurchase of shares.
The net asset value per ordinary share and the net asset value attributable to the ordinary shareholders at the year end calculated
in accordance with the Articles of Association were as follows:
2023
Net asset value
per share
2023
Net assets
attributable
£’000
2022
Net asset value
per share
2022
Net assets
attributable
£’000
Ordinary shares
The movements during the period of the assets attributable to the ordinary shares are shown in note 14.
Net asset value per ordinary share is based on the net assets as shown above and on 305,153,700 (2022 – 305,153,700) ordinary shares,
being the number of ordinary shares in issue (excluding treasury shares) at 31 May 2023 and 31 May 2022.
Financial Report
62 Annual Report 2023
At 31 May
2022
£’000
Cash
flows
£’000
Exchange
movement
£’000
Other
non-cash
changes
At 31 May
2023
£’000
Cash and cash equivalents 3,007 464 (31) –
Loans due within one year (19,837) – (669) (19,836)
Loans due within two to three years (19,837) – – 19,837 –
The Directors’ fees and shareholdings are detailed in the Directors’ Remuneration Report on pages 41 and 42. No Director has a contract
of service with the Company. During the period no Director was interested in any contract or other matter requiring disclosure under
section 412 of the Companies Act 2006.
Baillie Gifford & Co Limited has been appointed as the Company’s Alternative Investment Fund Manager and Company Secretaries.
Details of the terms of the Investment Management Agreement are set out on page 31 and details of the fees during the period and the
balance outstanding at the period end are shown in notes 3 and 11 respectively.
The Company has an investment in Stripe, which had a right, but not an obligation, to sell to the Company, on or prior to 30 September 2022,
Series H Preferred shares up to a maximum cost of US$6.73 million. A provision of £21,000 was recognised as at 31 May 2022 in relation to
this put right. During the year to 31 May 2023 Stripe chose to call the put option but agreed to write off US$1 of the option for every US$2
option. The provision of £21,000 has consequently been removed.
As an investment trust, the Company invests in listed and unlisted securities and makes other investments so as to achieve its investment
objective of maximising capital appreciation from a focussed and actively managed portfolio of investments predominantly in listed and
by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its investment objective, the Company is exposed
These risks are categorised as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk.
The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood of a permanent loss
of capital rather than to minimise short-term volatility. Risk provides the potential for both losses and gains. In assessing risk, the Board
encourages the Managers to exploit the opportunities that risk affords.
in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board of Directors
reviews and agrees policies for managing these risks and the Company’s Managers both assess the exposure to market risk when making
individual investment decisions and monitor the overall level of market risk across the investment portfolio on an ongoing basis.
Details of the Company’s investment portfolio are shown in note 9. The Company may, from time to time, enter into derivative transactions
entered into. The Company’s Managers may not enter into derivative transactions without the prior approval of the Board.
(i) Currency Risk
The Company’s assets, liabilities and income are principally denominated in US dollars. The Company’s functional currency and that in which
it reports its results is sterling. Consequently, movements in the US dollar/sterling exchange rate will affect the sterling value of those items.
The Manager monitors the Company’s US dollar exposure (and any other overseas currency exposure) and reports to the Board on a regular
basis. The Manager assesses the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset
value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed.
US dollar borrowings can limit the Company’s exposure to anticipated future changes in exchange rates which might otherwise adversely
affect the value of the portfolio of investments.
Financial Report
Baillie Gifford US Growth Trust plc 63
(continued)
(i) Currency Risk (continued)
is shown below.
At 31 May 2023
Investments
£’000
Cash and
deposits
£’000
Loans
£’000
Other debtors
and creditors *
£’000
Net
exposure
US dollar 605,908 3,074 (40,342) (556)
Total exposure to currency risk 605,908 3,074 (40,342) (556)
Sterling – 366 – 149
* Includes non-monetary assets of £172,000.
At 31 May 2022
Investments
£’000
Cash and
deposits
£’000
Loans
£’000
Other debtors
and creditors *
£’000
Net
exposure
US dollar 621,587 2,633 (39,674) (866)
Total exposure to currency risk 621,587 2,633 (39,674) (866)
Sterling – 374 – 132
* Includes non-monetary assets of £176,000.
Currency Risk Sensitivity
At 31 May 2023, if sterling had strengthened by 5% against the US dollar, with all other variables held constant, total net assets and total
return would have decreased by £28,404,000 (2022 – £29,184,000). A 5% weakening of sterling against the US dollar, with all other
variables held constant, would have had an equal but opposite effect on the Financial Statement amounts. The analysis is performed on the
same basis as it was for 2022.
A change of 5% in foreign currency rates has been considered to be a reasonably plausible change.
(ii) Interest Rate Risk
Interest rate movements may affect directly the level of income receivable on cash deposits and the interest payable on any variable rate
borrowings.
They may also impact upon the market value of investments as the effect of interest rate movements upon the earnings of a company may
investment decisions and when entering into borrowing agreements.
The Board reviews on a regular basis the amount of investments in cash and the income receivable on cash deposits.
approved levels are monitored and reviewed regularly by the Board.
Financial Assets
2023
Fair value
£’000
2023
Weighted
average
interest rate
2023
Weighted
average period
until maturity *
2022
Fair value
£’000
2022
Weighted
average
interest rate
2022
Weighted
average period
until maturity *
Cash:
US dollar 3,074 2.3% n/a 2,633 0.2% n/a
Sterling 366 1.1% n/a 374 <0.1% n/a
* Based on expected maturity date.
prevailing bank base rates.
Financial Report
64 Annual Report 2023
(continued)
(ii) Interest Rate Risk (continued)
Financial Liabilities
2023
Book value
£’000
2023
Weighted
average
interest rate
2023
Weighted
average period
until maturity
2022
Book value
£’000
2022
Weighted
average
interest rate
2022
Weighted
average period
until maturity
Bank loans:
Floating rate – US$ denominated 20,171 5.2% 61 days 19,837 3.1% 92 days
Fixed rate – US$ denominated 20,171 1.9% 145 days 19,837 1.9% 510 days
Financial Assets
Fixed asset investments are valued at bid prices which equate to their fair value. A full list of the Company’s investments is given
on pages 21 to 23. In addition, an analysis of the investment portfolio by broad industrial or commercial sector is shown on page 24.
Interest Rate Risk Sensitivity
An increase of 100 basis points in interest rates, with all other variables being held constant, would have decreased the Company’s total
net assets and total return for the year to 31 May 2023 by £146,000 (31 May 2022 decreased by £119,000). This is mainly due to the
an equal but opposite effect.
(iii) Other Price Risk
Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s
net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant
information from the Manager. The Company’s portfolio of unlisted Level 3 investments is not necessarily affected by market performance,
however the valuations are affected by the performance of the underlying securities in line with the valuation criteria in note 1(c). The Board
meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment
portfolio positioning to ensure consistency with the Company’s objectives and investment policies. The portfolio does not seek to reproduce
the comparative index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge
from the comparative index.
Other Price Risk Sensitivity
A full list of the Company’s investments is given on pages 21 to 23. In addition, an analysis of the investment portfolio by broad industrial
or commercial sector is shown on page 24.
69.7% (2022 – 67.5%) of the Company’s net assets are invested in quoted equities. A 5% increase in quoted equity valuations at 31 May 2023
would have increased total assets and total return by £19,814,000 (2022 – £19,711,000). A decrease of 5% would have had an equal but
opposite effect.
36.7% (2022 – 38.9%) of the Company’s net assets are invested in private company investments. The fair valuation of the private company
Financial Report
Baillie Gifford US Growth Trust plc 65
(continued)
(iii) Other Price Risk (continued)
Other Price Risk Sensitivity (continued)
of values for the key unobservable inputs.
As at 31 May
2023 Significant unobservable inputs*
Sensitivity to changes
in significant unobservable
inputs
Valuation
Approach
Fair value of
investments
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range **
Sensitivity
%
†
Market
approach using
comparable
traded multiples
30,526
#
a,b,c,d 1.9x–6.9x 4.8x 10.0%
fair value would change
by £1,418,080 and
-£1,390,974.
‡
a,b,c,d 4.4x–4.9x 4.6x 10.0%
fair value would change
by £715,920 and
-£715,110.
Illiquidity discounts e (10.0%) (10.0%) 10.0% If the transaction implied
premium/discount is
fair value would change
by £241,009 and
-£237,884.
Transaction implied
premiums and
discounts
^^
g n/a n/a n/a n/a
Benchmark
performance
83,399 Selection of comparable
companies and relevant
indices
¶
a,b,c,f (36.3%)–
21.2%
(9.8%) 10.0% If input comparable
company performance
fair value would change
by £5,463,779 and
-£5,331,196.
Recent
transaction
price
95,711 n/a
^
a,b n/a n/a n/a n/a
Total
†
See explanation for other unobservable inputs on pages 66 and 67 (sections ‘a’ to ‘g’ as relevant).
**Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer
indication of the typical multiple or adjustment being applied across the portfolio.
#
‡
^^
Due to fewer transactions in the last 12 months and to avoid stale valuations, there were no transaction implied premiums or discounts
directly impacting the valuations.
¶
in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the
last assessed.
^
Whilst a recent transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor
in the unobservable inputs noted in the above table. However, the transaction price itself is observable.
*
The unobservable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each
unlisted company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range
in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(b) on pages 54 and 55.
Financial Report
66 Annual Report 2023
(continued)
(iii) Other Price Risk (continued)
Other Price Risk Sensitivity (continued)
As at 31 May
2022 Significant unobservable inputs*
Sensitivity to changes
in significant unobservable
inputs
Valuation
Approach
Fair value of
investments
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range **
Sensitivity
%
†
Market
approach using
comparable
traded multiples
59,307
#
a,b,c,d 2.9x–8.8x 7.7x 10.0%
fair value would change
by £4,863,047 and
-£4,609,401.
‡
a,b,c,d 2.3x–4.7x 3.1x 10.0%
fair value would change by
£151,582 and -£151,583.
Illiquidity discounts e (10.0%) (10.0%) 10.0% If the illiquidity discount is
fair value would change
by -£333,236 and
£338,440.
Transaction implied
premiums and discounts
g (16.5%)–
51.8%
(0.7%) 10.0% If the transaction implied
premium/discount is
fair value would change
by -£202,281 and
£194,422.
Benchmark
performance
109,971 Selection of comparable
companies and relevant
indices
¶
a,b,c,f (58.2%)–
(8.8%)
(25.3%) 10.0% If input comparable
company performance
fair value would change
by £4,986,147 and
-£4,812,024.
Recent
transaction
price
58,081 n/a
^
a,b n/a n/a n/a
Total
†
See explanation for other unobservable inputs on pages 66 and 67 (sections ‘a’ to ‘g’ as relevant).
**Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer
indication of the typical multiple or adjustment being applied across the portfolio.
#
‡
¶
See explanation for the selection of comparable companies on page 67 section ‘c’.
in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the
last assessed.
^
Whilst a recent transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor
in the unobservable inputs noted in the above table. However, the transaction price itself is observable.
*
The unobservable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each
unlisted company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range
in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(b) on pages 54 and 55.
(a) Application of Valuation Basis
When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement of key
milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks and companies.
For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as
Financial Report
Baillie Gifford US Growth Trust plc 67
(continued)
(iii) Other Price Risk (continued)
Other Price Risk Sensitivity (continued)
(b) Probability Estimation of Liquidation Event
The probability of a liquidation event such as a company sale, or alternatively an initial public offering (‘IPO’), is a key variable input in the
Transaction-based and Multiples-based valuation techniques. The probability of an IPO versus a company sale is typically estimated from the
outset to be 50:50 if there has been no indication by the company of pursuing either of these routes. If the company has indicated an intention
to IPO, the probability is increased accordingly to 75% and if an IPO has become a certainty the probability is increased to 100%. Likewise,
in a scenario where a company is pursuing a trade sale the weightings will be adjusted accordingly in favour of a sale scenario, or in a situation
(c) Selection of Comparable Companies
The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance of the
comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable companies are
the industry sector in which they operate, the geography of the company’s operations, the respective revenue and earnings growth rates
and the operating margins. Typically, between 4 and 10 comparable companies will be selected for each investment, depending on how
depending on the companies selected and the industries they operate in.
(d)
Estimated Sustainable Earnings
not then revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months
of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has reliably
forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward
estimated revenue or earnings may be used instead.
(e) Application of Illiquidity Discount
The application of an illiquidity discount will be applied either through the calibration of a valuation against the most recent transaction,
(f) Selection of Appropriate Benchmarks
The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of each company
are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used for comparison.
(g) Transaction Implied Premium and Discount
Where there is an implied company valuation available as a result of an external arm’s length transaction, the ongoing valuation will be
calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable companies and
comparing this to a transaction implied valuation, and could result in an implied premium or discount compared to comparable companies at
the point of transaction. This discount or premium will be considered in future valuations, and may be reduced due to factors such as period
of time since the transaction and company performance. Where a calibrated approach is not appropriate, a discount for illiquidity will be
applied as noted in (e) above.
Liquidity Risk
readily realisable. The Board provides guidance to the Managers as to the maximum exposure to any one holding and to the maximum
aggregate exposure to substantial holdings.
The Company has the power to take out borrowings, which give it access to additional funding when required. The Company’s current
borrowing facilities are detailed in notes 11 and 12. Under the terms of the borrowing facility, borrowings are repayable on demand at their
current carrying value.
Credit Risk
This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company
suffering a loss. This risk is managed as follows:
— where the Managers make an investment in a bond or other security with credit risk, that credit risk is assessed and then compared
to the prospective investment return of the security in question;
—
the assets of the Company. The Depositary has delegated the custody function to The Bank of New York Mellon (International) Limited.
Bankruptcy or insolvency of the custodian may cause the Company’
s rights with respect to securities held by the custodian to be delayed.
— investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Managers.
Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian bank ensures that the
counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities
away from the Company is completed;
Financial Report
68 Annual Report 2023
(continued)
(iii) Other Price Risk (continued)
Credit Risk (continued)
— the creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein
the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject
to rigorous assessment by the Managers; and
— cash is only held at banks that are regularly reviewed by the Managers. At 31 May 2023 and 31 May 2022 all cash deposits were
held with the custodian bank.
There are no material amounts past due in relation to these securities. As these instruments (alongside the ordinary share securities) have
Credit Risk Exposure
The exposure to credit risk at 31 May was:
2023
£’000
2022
£’000
Fixed interest investments 4,167 2,170
Cash and short-term deposits 3,440 3,007
Debtors and prepayments 657 359
The maximum exposure in cash during the year to 31 May 2023 was £23,049,000 (31 May 2022 – £28,330,000) and the minimum was
Fair Value of Financial Assets and Financial Liabilities
exception of long-term borrowings. The fair values of the Company’s borrowings are shown below.
2023 2022
Book Value
£’000
Fair Value
£’000
Book Value
£’000
Fair Value
£’000
Floating rate multi-currency loan* 20,171 20,171 19,837 19,837
Fixed rate multi-currency loan 20,171 19,733 19,837 19,244
*
revolving credit facilities.
The capital of the Company is its share capital and reserves as set out in notes 13 and 14 together with its borrowings (see notes 11 and 12).
The objective of the Company is to invest predominantly in listed and unlisted US companies in order to achieve capital growth. The Company’s
investment policy is set out on page 4. In pursuit of the Company’s objective, the Board has a responsibility for ensuring the Company’s ability
to continue as a going concern and details of the related risks and how they are managed are set out on pages 6 and 7. The Company has the
authority to issue and buy back its shares and changes to the share capital during the period are set out in notes 13 and 14. The Company
does not have any externally imposed capital requirements other than the covenants on its loans which are detailed in notes 11 and 12.
Subsequent to the year end investment valuations have continued to increase through underlying investment performance since the year
end valuation which has resulted in an increase in investment valuation of 3.6% and a related movement in net asset value of 4.3% to
194.45p as at 4 August 2023.
As at 4 August 2022 the share price was 160.80p, 11.0% higher than as at 31 May 2023. As all movements relate to post year end activity
these will be reported within the Annual Report for the year ended 31 May 2024.
Private Company Investments
Since 31 May 2023 up to 4 August 2023 there have been no further investments in private companies.
On 19 July 2023, Oddity Tech Ltd went public on the Nasdaq stock exchange. Oddity Tech Ltd priced its initial public offering
at US$35 per share, 18.0% higher than the value as at 31 May 2023.
Financial Report
Baillie Gifford US Growth Trust plc 69
JOHN
LEWIS
A8 PRINCES STREET
GE
ORGE STREET
CALTON SQUARE
BUS
STATION
OMNI
CENTRE
BALMORAL
HOTEL
L
E
I
T
H
S
T
R
E
E
T
QUEEN STREET
W
A
T
E
R
L
O
O
P
L
A
C
E
C
A
L
T
O
N
H
I
L
L
CA
L
T
O
N
R
O
A
D
ST ANDREW SQUARE
EDINBURGH
WAVERLEY
STATION
LEITH
WALK
A7 NORTH BRIDGE
YORK PLACE
G
R
E
E
NS
IDE ROW
TRAM
STOP
ST ANDREW SQUARE
ST ANDREW SQUARE
TRAM
STOP
The Board encourages all shareholders to submit proxy voting forms as soon as possible and, in any event, by no later than 9.30am on
14 September 2023. Should you or, if appointed, your proxy, wish to watch the Annual General Meeting electronically please get in touch
with the Managers at trustenquiries@bailliegifford.com, who will be able to provide you with details and instructions for doing so. Please note
you will not be able to vote and you will not be counted as part of the quorum but you will have the opportunity to watch the Managers’
presentation. You will also be able to submit questions in advance to the Board and Managers by email to trustenquiries@bailliegifford.com
or call 0800 917 2112.
Baillie Gifford may record your call.
By Rail:
By Bus:
Lothian Buses local services include:
1, 5, 7, 8, 10, 12, 14, 15, 15A, 16, 22, 25, 34
By Tram:
Stops at St Andrew Square and York Place
Access to Waverley Train Station on foot
Shareholder Information
Notice of Annual General Meeting
of Baillie Gifford US Growth Trust plc (the ‘Company’) will be held at
following resolutions, of which Resolutions 1 to 10 will be
proposed as Ordinary Resolutions and Resolutions 11 and 12 will
be proposed as Special Resolutions:
1. To receive and adopt the Annual Report and Financial
31 May 2023 together with the Reports of the Directors
and of the Independent Auditor thereon.
2. To approve the Directors’ Annual Report on Remuneration
3. To re-elect Mr TJW Burnet as a Director of the Company.
4. To re-elect Ms SP Inglis as a Director of the Company.
5. To re-elect Mr GD Paterson as a Director of the Company.
6. To re-elect Mr CRD van der Kuyl as a Director of the
Company.
7. To re-elect Ms RL Palmer as a Director of the Company.
General Meeting at which the Financial Statements are laid
before the Company.
9. To authorise the Directors to determine the remuneration
of the Independent Auditor of the Company.
10. That, in substitution to any existing authority but without
prejudice to the exercise of any such authority prior to the
date hereof, the Directors of the Company be and they are
hereby generally and unconditionally authorised in accordance
with section 551 of the Companies Act 2006 (the ‘Act’) to
exercise all the powers of the Company to allot ordinary
shares in the capital of the Company, or C shares convertible
into ordinary shares, provided that such authority shall be
limited to the allotment of ordinary shares and grant of rights
in respect of ordinary shares with an aggregate nominal value
of up to £1,017,179.00 (representing approximately one-third
of the nominal value of the issued share capital excluding
treasury shares as at 4 August 2023), such authority to expire
at the conclusion of the next Annual General Meeting of the
Company after the passing of this resolution or on the expiry
of 15 months from the passing of this resolution, whichever is
the earlier, unless previously revoked, varied or extended by
the Company in a general meeting, save that the Company
may at any time prior to the expiry of this authority make an
offer or enter into an agreement which would or might require
ordinary shares or C shares to be allotted or granted after the
expiry of such authority and the Directors shall be entitled to
allot or grant ordinary shares or C shares in pursuance of such
an offer or agreement as if such authority had not expired.
The Annual General Meeting of the Company will be held at the
70 Annual Report 2023
Shareholder Information
11. That, subject to the passing of Resolution 10 above, and in
substitution to any existing authorities but without prejudice to
the exercise of any such authority prior to the date hereof, the
Directors of the Company be and they are hereby generally
empowered, pursuant to sections 570 and 573 of the
Companies Act 2006 (the ‘Act’) to allot equity securities
(within the meaning of section 560(1) of the Act, and including
ordinary shares and C shares) for cash pursuant to the authority
given by Resolution 10 above and to sell treasury shares for
cash as if section 561(1) of the Act did not apply to any such
allotment or sale, provided that this power:
(a) expires at the conclusion of the next Annual General
Meeting of the Company after the passing of this
Resolution or on the expiry of 15 months from the passing
of this Resolution, whichever is the earlier, save that the
Company may, before such expiry, make an offer or
agreement which would or might require equity securities
to be allotted after such expiry and the Directors may allot
equity securities in pursuance of any such offer or
agreement as if the power conferred hereby had not
expired; and
(b) shall be limited to the allotment of equity securities or the
sale of treasury shares up to an aggregate nominal value
of £305,153.70 (representing approximately 10% of the
nominal value of the issued share capital excluding
treasury shares of the Company as at 4 August 2023).
12.
That, in substitution for any existing authority but without
prejudice to the exercise of any such authority prior to the
date hereof, the Company be generally and unconditionally
authorised, in accordance with section 701 of the Companies
Act 2006 (the ‘Act’) to make market purchases (within the
meaning of section 693(4) of the Act) of fully paid ordinary
shares of 1p each in the capital of the Company (‘
ordinary
shares
’) (either for retention as treasury shares for future
reissue, resale or transfer or for cancellation) provided that:
(a) the maximum aggregate number of
ordinary shares
hereby
authorised to be purchased is 45,742,539, or, if less, the
number representing approximately 14.99% of the issued
ordinary share capital (excluding treasury shares) of the
Company as at the date of the passing of this Resolution;
(b) the minimum price (excluding expenses) which may be
paid for each ordinary share shall be the nominal value
of that share;
(c) the maximum price (excluding expenses) which may be
paid for any ordinary share purchased pursuant to this
authority shall not be more than the higher of:
(i) 5% above the average closing price on the London
business days immediately preceding the day of
purchase; and
(ii) the higher of the price of the last independent trade
and the highest current independent bid for an ordinary
share in the Company on the trading venues where
the market purchases by the Company pursuant to the
authority conferred by this Resolution 12 will be carried
out; and
(d) unless previously varied, revoked or renewed by the
Company in a general meeting, the authority hereby
conferred shall expire at the conclusion of the next Annual
General Meeting, save that the Company may, prior to such
expiry, enter into a contract to purchase
ordinary shares
under such authority which will or might be completed or
executed wholly or partly after the expiration of such
authority and may make a purchase of ordinary shares
pursuant to any such contract or contracts.
By Order of the Board
Baillie Gifford & Co Limited
Managers and Secretaries
17 August 2023
Notes:
1. As a member you are entitled to appoint a proxy or proxies to
exercise all or any of your rights to attend, speak and vote at
the AGM. A proxy need not be a member of the Company but
must attend the AGM to represent you. You may appoint
more than one proxy provided each proxy is appointed to
exercise rights attached to different shares. You can only
appoint a proxy using the procedure set out in these notes
and the notes to the proxy form. You may not use any
electronic address provided either in this notice or any related
documents (including the Financial Statements and proxy
form) to communicate with the Company for any purpose
other than those expressly stated.
2. To be valid any proxy form or other instrument appointing a
proxy, together with any power of attorney or other authority
received by post or (during normal business hours only) by
hand at the Registrars of the Company at Computershare
Investor Services PLC, The Pavilions, Bridgwater Road,
Bristol, BS99 6ZY or eproxyappointment.com no later than
two days (excluding non-working days) before the time of the
meeting or any adjourned meeting.
Manual and/or by logging on to the website
euroclear.com/CREST
who have appointed a voting service provider(s), should refer
be able to take the appropriate action on their behalf.
4. In order for a proxy appointment or instruction made using
Manual. The message, regardless of whether it constitutes
the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must,
Baillie Gifford US Growth Trust plc 71
in order to be valid, be transmitted so as to be received by
the Company’s registrar (ID 3RA50) no later than 9.30am
two days (excluding non-working days) before the time of the
meeting or any adjournment. For this purpose, the time of
receipt will be taken to be the time (as determined by the
Host) from which the Company’s registrar is able to retrieve
to the appointee through other means.
sponsors, or voting service providers should note that
Normal system timings and limitations will, therefore, apply
or sponsored member, or has appointed a voting service
voting service provider(s) take(s)) such action as shall be
necessary to ensure that a message is transmitted by
in the circumstances set out in Regulation 35(5)(a) of the
7. The return of a completed proxy form or other instrument
of proxy will not prevent you attending the AGM and voting
in person if you wish.
Regulations 2001 and section 311 of the Companies Act
vote at the Annual General Meeting (and for the purpose of
the determination by the Company of the votes they may cast),
shareholders must be registered in the Register of Members
of the Company no later than 9.30am two days (excluding
non-working days) prior to the commencement of the AGM or
any adjourned meeting. Changes to the Register of Members
after the relevant deadline shall be disregarded in determining
the rights of any person to attend and vote at the meeting.
9. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a ‘Nominated Person’) may, under an
agreement between him/her and the shareholder by whom
he/she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual
General Meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to
the shareholder as to the exercise of voting rights.
10. The statement of the rights of shareholders in relation to the
appointment of proxies in Notes 1 and 2 above does not
apply to Nominated Persons. The rights described in those
Notes can only be exercised by shareholders of the Company.
11. The members of the Company may require the Company to
publish, on its website, (without payment) a statement (which
is also passed to the Auditor) setting out any matter relating
to the audit of the Company’s Financial Statements, including
the Auditor’s report and the conduct of the audit. The Company
will be required to do so once it has received such requests
from either members representing at least 5% of the total
voting rights of the Company or at least 100 members who
have a relevant right to vote and hold shares in the Company
on which there has been paid up an average sum per
member of at least £100. Such requests must be made in
writing and must state your full name and address and be
sent to the Company at Calton Square, 1 Greenside Row,
12. Information regarding the Annual General Meeting, including
information required by section 311A of the Companies Act
2006, is available from the Company’s page of the Managers’
website at bgusgrowthtrust.com.
13. Members have the right to ask questions at the meeting in
accordance with section 319A of the Companies Act 2006.
14. Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all
of its powers as a member provided that they do not do so in
relation to the same shares.
15. As at 4 August 2023 (being the last practicable date prior to
the publication of this notice) the Company’s issued share
capital (excluding treasury shares) consisted of 305,153,700
ordinary shares of 1p each, carrying one vote each. Therefore,
the total number of voting rights in the Company as at 4 August
2023 were 305,153,700 votes.
16. Any person holding 3% or more of the total voting rights of the
Company who appoints a person other than the Chairman of
the meeting as his or her proxy will need to ensure that both
he/she and his/her proxy complies with their respective
disclosure obligations under the UK Disclosure Guidance and
Transparency Rules.
17. No Director has a contract of service with the Company.
Shareholder Information
72 Annual Report 2023
Baillie Gifford US Growth Trust plc (‘Baillie Gifford
US Growth’) is an investment trust. Investment trusts
offer investors the following:
— constant supervision by experienced professional managers;
and
realised within its portfolio although investors are still liable
How to Invest
The Company’s shares are traded on the London Stock
stockbroker or by asking a professional adviser to do so. If you
are interested in investing directly in Baillie Gifford US Growth,
you can do so online. There are a number of companies offering
real time online dealing services. Find out more by visiting the
investment trust pages at
bailliegifford.com
.
Sources of Further Information on the Company
The ordinary shares of the Company are listed on the London
The price of shares can also be found on the Company’s page on
Baillie Gifford’s website at bgusgrowthtrust.com, Trustnet at
trustnet.co.uk
factsheets are also available on the Baillie Gifford website and are
updated monthly. These are available from Baillie Gifford on request.
ISIN GB00BDFGHW41
Sedol BDFGHW4
Ticker USA
Key Dates
dividend and no interim dividend. If a dividend was payable
this would be due soon after the Annual General Meeting.
Share Register Enquiries
Computershare Investor Services PLC maintains the share
register on behalf of the Company. In the event of queries
regarding shares registered in your own name, please contact
the Registrars on 0370 707 1711.
This helpline also offers an automated self-service functionality
(available 24 hours a day, 7 days a week) which allows you to:
— hear the latest share price;
— order Change of Address and Stock Transfer forms.
you can check your holding on the Registrar’s website at
investorcentre.co.uk.
They also offer a free, secure, share management website service
which allows you to:
— view your share portfolio and see the latest market price
of your shares;
— calculate the total market price of each shareholding;
— view price histories and trading graphs;
— register to receive communications from the Company,
including the Annual Report and Financial Statements,
in electronic format;
— change address details; and
— use online dealing services.
To take advantage of this service, please log in at
investorcentre.co.uk and enter your Shareholder Reference
Number and Company Code (this information can be found
Electronic Proxy Voting
If you hold stock in your own name you can choose to vote by
returning proxies electronically at eproxyappointment.com.
If you have any questions about this service, please contact
Computershare on 0370 707 1711.
CREST Proxy Voting
Personal Member), you may appoint one or more proxies or
message transmitted. For further information please refer to
Where this has been received in a country where the provision
of such a service would be contrary to local laws or regulations,
this should be treated as information only.
2023
Number of
shares held
2023
%
2022
Number of
shares held
2022
%
Institutions 45,557,960 14.9 53,807,542 17.6
Intermediaries 240,643,562 78.9 248,309,862 81.4
Individuals 1,552,388 0.5 1,162,411 0.4
Marketmakers 17,399,790 5.7 1,873,885 0.6
Data Protection
security of any personal data provided to it. Further details on how
personal data is held and processed on behalf of the Company can
be found in the privacy policy available on the Company’s website
bgusgrowthtrust.com
.
Further Shareholder Information
Shareholder Information
Baillie Gifford US Growth Trust plc 73
Trust
Trust
published twice a year. It provides an insight to Baillie Gifford’s
investment approach by including interviews with Baillie Gifford’s
fund managers, as well as containing investment trust news,
investment features and articles about the trusts managed by
Baillie Gifford, including Baillie Gifford US Growth. Trust plays an
important role in helping to explain Baillie Gifford’s products so
that readers can really understand them.
Baillie Gifford US Growth on the Web
Up-to-date information about
Baillie Gifford US Growth
can be
found on the Company’s page of the Managers’ website at
bgusgrowthtrust.com
Baillie Gifford
US Growth
, including recent portfolio information and performance
Suggestions and Questions
Any suggestions on how communications with shareholders can
be improved are welcomed. Please contact the Baillie Gifford
Client Relations Team (see contact details below) and give them
your suggestions. They will also be very happy to answer
questions that you may have about
Baillie Gifford US Growth
.
Client Relations Team Contact Details
Telephone: 0800 917 2112
Your call may be recorded for training or monitoring purposes.
Email: trustenquiries@bailliegifford.com
Website:
bailliegifford.com
Baillie Gifford Client Relations Team
Calton Square
1 Greenside Row
Please note that Baillie Gifford is not permitted to give
financial advice. If you would like advice, please ask an
authorised intermediary.
You can subscribe to Trust
bailliegifford.com/trust.
Communicating with Shareholders
Baillie Gifford US Growth Trust web page at bgusgrowthtrust.com
Shareholder Information
Trust
74 Annual Report 2023
Risk Warnings
Past performance is not a guide to future performance.
Baillie Gifford US Growth Trust plc (‘Baillie Gifford US Growth’) is a
listed UK company. The value of its shares, and any income from
them, can fall as well as rise and you may not get back the
amount invested.
Baillie Gifford US Growth invests in overseas securities.
Changes in the rates of exchange may also cause the value of
your investment (and any income it may pay) to go down or up.
Baillie Gifford US Growth has borrowed money to make further
investments (sometimes known as ‘gearing’ or ‘leverage’).
The risk is that when this money is repaid by the Company,
the value of the investments may not be enough to cover the
borrowing and interest costs, and the Company will make
a loss. If the Company’s investments fall in value, any invested
borrowings will increase the amount of this loss.
Baillie Gifford US Growth can buy back its own shares. The risks
from borrowing, referred to above, are increased when a company
buys back its own shares.
may not be readily available and there can be no assurance that
price the Company might receive upon their sale.
Baillie Gifford US Growth can make use of derivatives which may
impact on its performance. Currently the Company does not
make use of derivatives.
Investments in smaller companies is generally considered higher
risk as changes in their share prices may be greater and the
shares may be harder to sell. Smaller companies may do less
well in periods of unfavourable economic conditions.
Baillie Gifford US Growth’s exposure to a single market and
currency may increase risk.
companies. The Company’s risk could be increased as these
may be greater.
Share prices may either be below (at a discount) or above (at a
premium) the net asset value (‘NAV’). The Company may issue
new shares when the price is at a premium which may reduce the
share price. Shares bought at a premium may have a greater risk
of loss than those bought at a discount.
Charges are deducted from income. Where income is low, the
expenses may be greater than the total income received and the
capital value would be reduced.
The aim of Baillie Gifford US Growth is to achieve capital growth
and it is unlikely that the Company will provide steady, or indeed
any, income.
You should note that tax rates and reliefs may change at any time
and their value depends on your circumstances.
Baillie Gifford US Growth is a UK public listed company and as
such complies with the requirements of the Financial Conduct
Authority but is not authorised or regulated by the Financial
Conduct Authority.
The information and opinions expressed within the Annual Report
and Financial Statements are subject to change without notice.
The staff of Baillie Gifford & Co and
Baillie Gifford
US Growth
Directors may hold shares in
Baillie Gifford
US Growth and may
buy and sell such shares from time to time.
Further details of the risks associated with investing in the
Company, including a Key Information Document and how
charges are applied, can be found at bgusgrowthtrust.com,
or by calling Baillie Gifford on 0800 917 2112. Your call may be
recorded for training or monitoring purposes.
This information has been issued and approved by Baillie Gifford
& Co Limited, the Managers and Secretaries, and does not in any
way constitute investment advice.
Shareholder Information
not have a direct impact in the UK due to Brexit, however, it
BG & 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
on integration of sustainability risks in investment decisions. 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
research to build 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
Sustainable Finance Disclosure Regulation (‘SFDR’)
detail on the Managers’ approach to sustainability can be found
on the Baillie Gifford website bailliegifford.com.
Taxonomy Regulation
or criteria for environmentally sustainable economic activities in
respect of six environmental objectives. It builds on the disclosure
requirements under SFDR by introducing additional disclosure
obligations in respect of alternative investment funds that invest
in an economic activity that contributes to an environmental
objective. The Company does not commit to make sustainable
environmentally sustainable economic activities.
Baillie Gifford US Growth Trust plc 75
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.
Third Party Data Provider Disclaimer
S&P Index Data
The S&P 500 Index (‘Index’) is a product of S&P Dow Jones Indices
Poor’s® and S&P® are registered trademarks of Standard & Poor’s
Financial Services LLC, a division of S&P Global (‘S&P’); Dow Jones®
is a registered trademark of Dow Jones Trademark Holdings LLC
(‘Dow Jones’). Neither S&P Dow Jones Indices LLC, Dow Jones
make any representation or warranty, express or implied, as to the
ability of any index to accurately represent the asset class or market
sector that it purports to represent and neither S&P Dow Jones
nor their third party licensors shall have any liability for any errors,
omissions, or interruptions of any index or the data included therein.
FTSE Index Data
for any errors or omissions in the indexes or data and no party
may rely on any indexes or data contained in this communication.
of this communication.
In accordance with the Alternative Investment Fund Managers
Regulations, information in relation to the Company’s leverage and
the remuneration of the Company’s AIFM, Baillie Gifford & Co
Limited, is required to be made available to investors.
In accordance with the Regulations, the AIFM’s remuneration policy
is available at
bailliegifford.com
or on request (see contact details
on the back cover) and the numerical remuneration disclosures in
respect of the AIFM’s relevant reporting period are also available
at
bailliegifford.com
.
Alternative Investment Fund Managers (AIFM) Regulations
Leverage
The Company’s maximum and actual leverage levels (see Glossary
of Terms and Alternative Performance Measures on pages 76 and
77) at 31 May 2023 are shown below:
Gross method Commitment method
Maximum limit 2.50:1 2.00:1
Actual 1.07:1 1.07:1
the automatic exchange of information, Baillie Gifford US Growth
Trust plc is required to collect and report certain information about
certain shareholders.
The legislation requires investment trust companies to provide
personal information to HMRC on certain investors who purchase
shares in investment trusts. Accordingly, Baillie Gifford US Growth
Trust plc must provide information annually to the local tax
authority on the tax residencies of a number of non-UK based
Automatic Exchange of Information
New shareholders, excluding those whose shares are held in
For further information, please see HMRC’s Quick Guide: Automatic
gov.uk/government/publications/exchange-of-information-
account-holders.
Shareholder Information
76 Annual Report 2023
The APM’s noted below are commonly used measures within
the investment trust industry and serve to improve comparability
between investment trusts.
Total Assets
the total value of all assets held less all liabilities (other than
liabilities in the form of borrowings).
Shareholders’ Funds and Net Asset Value
Shareholders’ funds is the value of all assets held less all liabilities,
with borrowings deducted at book cost. Net asset value (‘NAV’)
is the value of all assets held less all liabilities, with borrowings
deducted at either fair value or book value as described below.
by the number of ordinary shares in issue.
Borrowings at Book Value
Borrowings are valued at adjusted net issue proceeds. The value
of the borrowings at book is set out on page 68.
Borrowings are valued at an estimate of their market worth.
The value of the borrowings at fair is set out on page 68.
Net Asset Value (Reconciliation of NAV at Book Value
to NAV at Fair Value)
31 May
2023
31 May
2022
Net asset value per ordinary
share (borrowings at book value) 186.33p 191.44p
Shareholders’ funds (borrowings
at book value) £568,599,000 £584,186,000
Add: book value of borrowings £40,342,000 £39,674,000
Less: fair value of borrowings (£39,904,000) (£39,081,000)
Net Asset Value (borrowings
at fair value) £569,037,000 £584,779,000
Number of shares in issue
Net asset value per ordinary share
(borrowings at fair value)
Net Liquid Assets
Net liquid assets comprise current assets less current liabilities
(excluding borrowings).
Glossary of Terms and Alternative Performance Measures (‘APM’)
As stock markets and share prices vary, an investment trust’s
share price is rarely the same as its NAV. When the share price is
lower than the NAV per share it is said to be trading at a discount.
price from the NAV per share and is usually expressed as a
percentage of the NAV per share. If the share price is higher than
the NAV per share, this situation is called a premium.
31 May
2023
31 May
2022
Net asset value per ordinary share
(after deducting borrowings at
fair value) (a) 186.48p 191.63p
Share price (b) 144.80p 168.00p
Discount (borrowings
at fair value) ((b)-(a)) ÷ (a)
31 May
2023
31 May
2022
Net asset value per ordinary share
(after deducting borrowings at
book value) (a) 186.33p 191.44p
Share price (b) 144.80p 168.00p
Discount (borrowings
at book value) ((b)-(a)) ÷ (a)
The total return is the return to shareholders after reinvesting
any dividend on the date that the share price goes ex-dividend.
The Company does not pay a dividend, therefore, the one year
and since inception total returns for the share price and NAV per
share at book and fair value are the same as the percentage
movements in the share price and NAV per share at book and
fair value as detailed on pages 1 and 28.
The total recurring expenses (excluding the Company’s cost of
dealing in investments and borrowing costs) incurred by the
Company as a percentage of the average net asset value (with
debt at fair value).
Ongoing Charges Calculation
31 May
2023
£’000
31 May
2022
£’000
Investment management fee 3,345 4,865
Other administrative expenses 670 676
Total expenses (a)
Average daily cum-income net
asset value (b) 578,722 898,007
Ongoing charges ((a)÷(b))
Shareholder Information
Baillie Gifford US Growth Trust plc 77
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.
Gearing is the Company’s borrowings at book value less cash and
cash equivalents (including any outstanding trade settlements)
expressed as a percentage of shareholders’ funds.
31 May
2023
31 May
2022
Borrowings (at book cost) £40,342,000 £39,674,000
Less: cash and cash equivalents (£3,440,000) (£3,007,000)
Adjusted borrowings (a) £36,902,000 £36,667,000
Shareholders’ funds (b) £568,599,000 £584,186,000
Gearing: (a) as a percentage of (b) 6% 6%
Gross gearing is the Company’s borrowings at par expressed as
a percentage of shareholders’ funds.
31 May
2023
31 May
2022
Borrowings (at book cost) (a) £40,342,000 £39,674,000
Shareholders’ funds (b) £568,599,000 £584,186,000
Gross gearing:
(a) as a percentage of (b) 7% 7%
For the purposes of the Alternative Investment Fund Managers
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.
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
Treasury Shares
The Company has the authority to make market purchases of its
ordinary shares for retention as treasury shares for future reissue,
resale, transfer, or for cancellation. Treasury shares do not receive
distributions and the Company is not entitled to exercise the
voting rights attaching to them.
Private (Unlisted) Company
An unlisted or private company means a company whose shares
are not available to the general public for trading and are not listed
on a stock exchange.
Shareholder Information
KPMG LLP
Tel +44 (0) 20 7311 1000
Audit
Fax +44 (0) 20 7311 3311
15 Canada Square
London E14 5GL
United Kingdom
KPMG LLP, a UK limited liability partnership and a member firm of the
KPMG global organisation of independent member firms affiliated with
KPMG International Limited, a private English company
limited by
guarantee.
Registered in England No OC301540
Registered office: 15 Canada Square, London, E14 5GL
For full details of our professional regulation please refer to
‘Regulatory information’ under ‘About’ at www.kpmg.com/uk
Reference - AR-1858
Document Classification - KPMG Highly Confidential
Private & confidential
Baillie Gifford US Growth Trust Plc
28 St James's Square
Grimaldi House
London
SW1Y 4JH
7 August 2023
Our ref
AR-1858
Contact
John Waterson
John.Waterson@KPMG.co.uk
Dear Sir/Madam,
Statement to Baillie Gifford US Growth Trust Plc (no. 11194060) on ceasing to
hold office as auditors pursuant to section 519 of the Companies Act 2006
The reason connected with our ceasing to hold office is the holding of a competitive
tender for the audit, in which we were unsuccessful in retaining the audit
Yours faithfully,
KPMG LLP
Audit registration number: 9188307
Audit registration address:
15 Canada Square
Canary Wharf, London E14 5GL
Directors
Chairman:
TJW Burnet
SP Inglis
CRD van der Kuyl
RL Palmer
GD Paterson
Baillie Gifford & Co Limited
Grimaldi House
London
Alternative Investment
Fund Manager and
Company Secretaries
Baillie Gifford & Co Limited
Calton Square
Edinburgh
bailliegifford.com
Registrar
Computershare
Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
Depositary
(International) Limited
London
Company Broker
Panmure Gordon (UK) Limited
London
Independent Auditor
Saltire Court
Edinburgh
Company Details
bgusgrowthtrust.com
Company Registration
Ticker USA
Further Information
Baillie Gifford Client Relations Team
Calton Square
Email:
trustenquiries@bailliegifford.com