Annual Report and Financial Statements

31 January 2023

BAILLIE GIFFORD

CHINA GROWTH TRUST PLC

1 Financial Highlights

Strategic Report

2 Chair’s Statement

4 Managers’ Report

7 Review of Investments

9 Managers’ Report on ESG

15 Statement on Stewardship

16 Valuing Private Companies

17 List of Investments

18 Distribution of Total Assets

19 One year Summary

20 Five year Summary

21 Ten year Record

22 Business Review

Governance Report

27 Directors and Management

28 Directors’ Report

31 Corporate Governance Report

35 Audit Committee Report

37 Directors’ Remuneration Report

40 Statement of Directors’ Responsibilities

Financial Report

41 Independent Auditor’s Report

47 Income Statement

48 Balance Sheet

49 Statement of Changes in Equity

50 Cash Flow Statement

51 Notes to the Financial Statements

Shareholder Information

65 Notice of Annual General Meeting

69 Further Shareholder Information

71 Communicating with Shareholders

73 Sustainable Finance Disclosures

Regulation

74 Glossary of Terms and Alternative

Performance Measures

Contents

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 (FCA).

Baillie Gifford China 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 FCA in relation to non-mainstream investment products.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you reside in the UK and you are in any doubt as to the action you should take, you should consult your

stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the

Financial Services and Markets Act 2000 immediately. If you reside outwith the UK, you should consult an

appropriately authorised financial adviser.

If you have sold or otherwise transferred all of your holding in Baillie Gifford China Growth Trust plc, please forward

this document, together with 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.

Investor Disclosure Document

The UK Alternative Investment Fund Managers Regulations requires certain information to be

made available to investors prior to their investment in the Company. The Company’s Investor

Disclosure Document is available for viewing at bailliegiffordchinagrowthtrust.com.

Baillie Gifford China Growth Trust plc 01

Financial Highlights

Financial Highlights – Year to 31 January 2023

The principal investment objective of the Company

is to produce long-term capital growth by investing

edominantly in shares of, or depositary receipts

representing the shares of, Chinese companies.

2022

SONFMA

J A

2023

(15%)

(11%)

(7%)

(3%)

* The benchmark is the MSCI China All Shares Index (in sterling terms).

†

Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

Source: Refinitiv/Baillie Gifford and relevant underlying index providers. See disclaimer on page 72.

Past performance is not a guide to future performance.

2022

SONFMA

J A

2023

125

100

Source: Thomson Reuters Datastream/Baillie Gifford.

Share price

NAV (after deducting borrowings at fair value)

Benchmark

The benchmark is the TOPIX total return (in sterling terms).

NAV, Share Price and

Benchmark Total Return

†

(figures rebased to 100

at 31 January 2022)

Share price

NAV

Benchmark*

(Discount)/Premium

†

to Net Asset Value

per share

(figures plotted on

a weekly basis)

(Discount)/Premium

Share Price

†

(7.9%)

2022 (37.1%)

NAV

†

(5.7%)

2022 (27.0%)

Benchmark* (2.2%)

2022 (20.5%)

Source: Refinitiv/Baillie Gifford. All figures are stated on a total return basis. Total return is an Alternative Performance Measure –

see Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

02 Annual Report 2023

Strategic Report

Chair’s Statement

The Strategic Report, which includes pages 2 to 26 and incorporates the Chair’s

Statement, has been prepared in accordance with the Companies Act 2006.

Strategic Report

Susan Platts-Martin,

Chair

The 12 months under review has been a volatile and disappointing

period for Chinese equities. For the majority of the Company’s

financial year, the Chinese economy struggled with physical

lockdowns resulting from its Zero Covid policy and market

sentiment was negatively impacted by regulatory crackdowns,

as well as politics and geopolitics. In the last quarter of the

Company’s financial year, there has been more positive news

to report as China began to reopen earlier and more quickly

than expected bringing the timing of the economic recovery

forward.

Given travel restrictions to China, in April 2022 the Board met

virtually with the Managers’ team based in Shanghai engaging

with the various individuals on a number of topics relevant to the

Company. The ‘boots on the ground’ in China is a key strength of

the Managers that the Board identified early on when considering

the change of manager in 2020. The Board were impressed with

the calibre of the individuals who are working, alongside the team

based in Edinburgh, to identify the best stocks for the Company’s

portfolio.

During the financial year to 31 January 2023, the Company’s net

asset value total return, calculated by deducting borrowings at

fair value, was -5.7% and the share price total return was -7.9%.

This compares with a total return of -2.2% for the MSCI China

All Shares Index (in sterling terms).

Over the period from 16 September 2020 (the date of the

adoption of the China strategy), the Company’s net asset

value and share price returned -14.2% and -16.4% respectively

compared to a total return of -12.7% for the MSCI China All

Shares Index (in sterling terms).

As I noted in my statement last year, the Managers have a long-term

investment approach, and we would ask shareholders to judge

performance over periods of five years or more. Further information

about the Company’s portfolio performance is covered by our

portfolio managers, Sophie Earnshaw and Roderick Snell, in their

Managers’ Report.

Discount/Premium and Share Issuance

The Company’s share price discount to net asset value at the last

financial year end was 4.1%, the Company’s share price ended

the year at a discount to net asset value of 6.3%.

Unlike the financial year ending 31 January 2022, no shares have

been issued by the Company during the period as the shares

have predominantly traded at a discount to net asset value.

The discount has been 15.5% at its widest but the shares have

also traded at a modest premium of up to 2.9% during the period.

The Company has not bought back any shares over the period,

though the Board keeps its liquidity policy under close review.

Dividend

Since the adoption of the China strategy and the appointment

of Baillie Gifford as Manager in September 2020, the Company’s

long term returns are now expected to be predominantly

generated from capital growth as opposed to income. During

the financial year, the revenue return per share increased by

121% from 0.97p to 2.14p.

Last year, being the first complete financial year since the

adoption of the China mandate, the Board agreed to match

the dividend of the previous financial year and was able to do

so given the sizeable reserves of the Company. This year the

dividend will reset to a level that is in accordance with the

dividend policy of the Company, which is that any dividend paid

will be by way of a final dividend and be not less than the

minimum required for the Company to maintain its investment

trust status.

The Board is proposing a final dividend of 1.7p, which, subject

to shareholder approval, will be paid on 26 July 2023, with the

shares trading ex-dividend on 22 June 2023.

For a definition of terms, see Glossary of Terms and Alternative Performance Measures on pages 74 to 76. See disclaimer on page 72.

Past performance is not a guide to future performance.

Baillie Gifford China Growth Trust plc 03

Strategic Report

Ongoing Costs

The ongoing charges figure for the year is 0.94%. Last year,

the ongoing charges were 0.72% (and without the fee waiver

provided by Baillie Gifford in relation to the first six months of its

appointment in September 2020 it would have been 0.81%).

Gearing

In April 2021, the Company entered into a US$40m revolving

credit facility with The Royal Bank of Scotland International

Limited (‘RBSI’). As at 31 January 2023, US$7.5m has been

drawn down under the facility, and gearing stood at 2.5%.

Unlisted Investments

The Company holds one unlisted investment, ByteDance, which

represented 5.7% of the total assets as at 31 January 2023. The

valuation process, which is based on an independent assessment

by S&P Global, is set out on page 7.

ESG

The consideration of Environmental, Social and Governance (‘ESG’)

factors is an integral part of the Managers’ long-term investment

approach. Further details on the Managers’ approach can be

found on pages 9 to 14.

The Board

The Board welcomed Jonathan Silver to the Board in September

2022 following a search undertaken with the support of an

external recruitment consultant. Jonathan is a chartered accountant

who has held a number of senior financial positions and sits on

other boards including another investment trust.

Andrew Robson is to retire from the Board at the AGM in 2023.

The Board extends its thanks to Andrew for his valued contribution.

Andrew has been an exemplary Chair of the Audit Committee

since his appointment in July 2014 and has acted as senior

independent director since June 2021. Jonathan Silver

will take up the position as Chair of the Audit Committee and

Magdalene Miller will take over as Senior Independent Director.

As Andrew and I both complete our nine year tenure this summer,

the Board considered that it would be appropriate for me to stay

on as Chair until 2024 in the interest of continuity given recent

changes to the Company’s mandate, manager and a number of

other Board changes. Our next hire will be for my successor as

Chair as I plan to step down in the first half of next year after a

suitable handover period. A search is underway supported by an

external recruitment consultant and a new appointment to the

Board will be announced in due course.

All Directors are subject to annual re-election at the AGM in June.

Biographies of each of the Directors can be found on page 27.

Annual General Meeting

The AGM will be held at 4pm on Thursday, 15 June 2023 at the

Institute of Directors, 116 Pall Mall, London. The meeting will be

followed by a presentation from the Managers and all

shareholders are invited to attend.

I would remind shareholders that they are able to submit proxy

voting forms before the applicable deadline on Tuesday, 13 June

2023, and also to direct any questions to the Board or Managers

in advance by email to trustenquiries@bailliegifford.com or

calling 0800 917 2112 (Baillie Gifford may record your call).

Outlook

China’s macroeconomic, regulatory and pandemic policies are

looking to align with a pro-growth stance, for the first time in three

years. China is likely to be one of the very few major economies

where growth could accelerate in 2023, enjoying a re-opening like

much of the rest of the world experienced in 2022. In addition and

unlike the majority of the world, China is experiencing extremely

low inflation (averaging approximately 2% at December 2022).

The rapid re-opening from Zero Covid, the increased household

savings and clear domestic policy support for growth for 2023 all

point towards the ‘need’ for a strong recovery. China has a very

different development model from the West and it is important to

understand the context of the changes happening in China. The

Managers Report details the principles to be borne in mind when

investing in China. There are several risks, not least geopolitical,

where misjudgements notably in respect of Taiwan could lead to

severe market disruption. However, whilst China is a market

where there is likely to be ongoing short term volatility, the

prospects for significant long term growth remain.

Susan Platts-Martin

Chair

4 April 2023

04 Annual Report 2023

Managers’ Report

This has been another volatile year for Chinese growth equities;

one of significant change and, perhaps, under-appreciated continuity.

Market sentiment, as ever, has proven fickle. Headlines announcing

the demise of the asset class have been replaced by frantic calls

to reposition oneself for the great re-opening.

At Baillie Gifford, we think it’s important to remain level-headed in

all market environments. We aim to look through the noise and

identify long-term structural trends and the companies that benefit

from them. As such, we’ll highlight a number of broadly positive

changes that have occurred in the second half of last year,

followed by a number of factors that are likely to remain

consistent.

So, what’s changed? In October we witnessed the 20th

National Congress of the Chinese Communist Party (‘CCP’) in

which the constitution was changed to allow Xi Jinping to serve

a third term as President. Membership of the seven-person

Politburo Standing Committee also changed significantly. The

market’s reaction to this news was overwhelmingly negative and,

as we noted at the time, discounted a number of significant

positives. The most important of which, in our view, was the

government’s ability, post consolidation of power, to act decisively

and swiftly to counter severe economic weakness. Fast forward a

couple of months and this is exactly what we have witnessed.

Rather than a sharp ideological turn to the left, the CCP put

forward a markedly pro-growth agenda whilst dismantling two of

the biggest detractors to economic growth, namely Zero Covid

and the ‘Three Red Lines’, (which set caps on leverage for

property developers). Support for the private sector has been

reiterated in numerous forums and the regulatory environment has

remained stable as was promised in May. Economic growth is

rebounding and market sentiment has improved.

From afar these changes might appear bewildering. But they

result from a set of principles that are under-appreciated in their

continuity and are important to bear in mind when building a

conceptual framework for investing in China. These are as follows:

— The CCP has a longstanding commitment to wealth creation

and this continues under Xi. Let’s not forget that the principle

contradiction, or the most important problem identified by the

CCP to solve under Xi’s reign, is ‘uneven and unbalanced

growth and the people’s desire for a better life’.

— This ‘desire for a better life’ will be delivered in a uniquely

Chinese way, one that attempts to harness the benefits

whilst rectifying some of the biggest excesses of capitalism.

Common prosperity, or the attempt to rectify severe income

inequality, is key here. But contrary to popular belief, it is not

new. Instead, one can trace it back to the founder

of the socialist market economy, Deng Xiaoping, and his oft

repeated but truncated quote: ‘Let some people get rich first’.

The second half of this quote is well-known in China but

largely forgotten in the West: ‘for the purpose of achieving

common prosperity faster’.

— As Xi’s report to the 20th National Congress made clear, both

the state and the private sector are vital to China achieving its

goal of becoming a prosperous society by 2049. The private

sector is crucial in that it creates the majority of GDP growth,

technological innovation and job creation. But its investment

priorities will continue to be guided by the state and by a

regulatory framework that prioritises wealth creation for all,

rather than wealth creation for the few.

— Whilst China’s unique brand of authoritarianism has not

precluded economic growth or innovation as many thought

it would, it does present challenges to investors that are likely

to persist. We should expect periods in the future where the

balance between market versus state becomes unstable.

We should expect periods of volatility caused by abrupt

changes to regulatory norms. But we should also expect

continued pragmatism and a willingness to roll back policies

that do not contribute to China’s long-term goals; goals which

are, in the main, conducive to investment returns.

Reminding ourselves of these underlying principles and the

conceptual framework that results is important during periods of

volatile performance. It allows us to keep our heads when everyone

around us is losing theirs. Put another way, being cognisant that

China’s development model is markedly different to our own and

likely to remain so helps us to take advantage of the opportunities

of investing there, whilst also being fully aware of the risks.

In our view, the opportunities open to growth investors in China

have remained remarkably consistent throughout this period

of volatility. Indeed, our analysis of company fundamentals over

time continues to point to China as a place to find high growth

companies. For example, over the last five years, over 10% of

Chinese companies with a starting market cap of US$2bn or

more have grown their profits by over five fold. That compares

to around 6% for global markets and 6% for the US.

In addition, the type of growth company on offer continues to

expand. We have companies such as Li Ning or Proya that are

poised to benefit both from China’s growing middle class, but

also from a shift in brand preferences amongst younger Chinese

consumers; we have companies like Longi and CATL that have

helped China build out almost two thirds of the world’s solar

capacity and two thirds of the world’s battery capacity with the

goal of helping China achieve net zero by 2060; we have companies

such as Inovance and Estun that continue to move up the value

chain in robotics and automation and thereby contribute to

broader productivity growth; we have companies such as

Sinocera and SG Micro that are helping China develop expertise

and self-sufficiency in materials science and semi-conductors…

The list goes on.

Strategic Report

Baillie Gifford China Growth Trust plc 05

Strategic Report

As noted above, the opportunities within China have remained

remarkably consistent. But so have the risks. This is an asset

class in which drawdowns and periods of market volatility are

the norm rather than the exception. Indeed, the propensity for

volatility has likely been heightened by the increasingly competitive

relationship between China and the US, and tensions with Taiwan

as noted more fully in our Interim Management Report published

in October 2022. As such, this remains an asset class with big

risks and big opportunities, and one that is only suitable for those

with the appropriate risk tolerance and long-term time horizon.

Portfolio Positioning and Recent Activity

The current portfolio represents a selection of the best and most

innovative public and private Chinese growth companies. As one

would expect for a long-term growth manager, the themes that

we are excited about within the Company remain largely

consistent with those discussed in last year’s Managers’ Report.

These include our investments in companies exposed to the

green revolution both in China and abroad; companies that

contribute to China’s ambition to advance its manufacturing

capabilities in robotics and automation; ‘little giants’ that have

developed significant expertise in relatively niche but strategically

important industries such as semiconductors; software related

companies that are helping traditional industries upgrade; leading

domestic brands that have the scope to challenge foreign brands

within China and abroad; long duration growth companies within

the platform economy that continue to add value to consumers’

lives; in short, companies that we believe at the broadest level are

likely to contribute to China’s economic, societal and

environmental development over the next decade.

In terms of new purchases, we bought holdings in Centre Testing

and Dongguan Yiheda, both of which are contributing to the

upgrading of traditional industries in China. Centre Testing is

a company that provides testing, inspection and certification

services to a broad range of companies and industries. Our first

in-depth report on the company was written in early 2020. Whilst

we admired the growth potential of the business and the quality of

the management team, we were less convinced by the valuation.

Since then, the shares have substantially de-rated providing us

with a good opportunity to make an attractive investment. Centre

Testing is a leading private player within an industry dominated

by state-owned enterprises and foreign companies. It has a scale

and reputation advantage over smaller domestic competitors

and a service edge over global companies and state-owned-

enterprises. This should allow it to take share. It is also able

to supplement this organic growth via acquisitions of smaller

competitors in new verticals. As such, we believe it is likely to

grow at a double-digit rate for a very long time, an outcome that

is not reflected in the current valuation.

Dongguan Yiheda makes a wide variety of parts used in factory

automation equipment. It offers a product catalogue to design

engineers of non-standard, customisable parts. It then

manufacturers these parts quickly and at scale thereby saving

time and reducing costs for its design engineer customers. The

opportunity for Yiheda is to increase the number and type of parts

it offers within its catalogue and thereby gain a greater share

of wallet within factory automation equipment. The overall

addressable market in machine parts is large and growing and the

founder believes it can treble its share. The growth runway for the

company is therefore very long and the business itself is profitable

and cash generative.

As noted in our Interim Report, we also made investments in

Jiangsu Azure, a leading small form battery maker in the power

tools market, and Kinlong, a hardware provider to the building

industry. For Jiangsu Azure, the electrification of the power tools

market is a strong structural growth driver, whilst the company

also has longer term opportunities in batteries for vacuum

cleaners and e-bikes. Its focus on these relatively niche markets

and its willingness to invest also gives it scope to take further

share from global competitors such as LG and Samsung. Kinlong

has a strong reputation for quality amongst its building industry

customers. It is the number one player in a number of the segments

in which it operates with c.10% share. Its growth opportunity is a

function of continued growth in end markets, the expansion of its

product portfolio, and continued market share gains. This is

another good quality, long-term growth company that we were

able to buy at a time of share price weakness.

We have also made additions to a number of stocks throughout

the year on valuation grounds. These include Alibaba, China’s

leading ecommerce business; KE Holdings, an online real estate

portal; China Merchant’s Bank, China’s leading wealth

management and high-end banking business; and Ping An Bank,

a leading retail bank and part of the Ping An group of companies.

In order to fund the above, we sold a number of our lower

conviction, smaller holdings. These include both Tencent Music

and Bilibili. Tencent Music was bought due to its potential in

on-demand music streaming. However, both the regulatory

backdrop and the competitive environment deteriorated markedly

post-purchase. The regulator’s anti-monopoly ruling impacted the

viability of Tencent Music’s exclusivity contracts with labels and

has made it much easier for competitors to add popular songs to

their portals. ByteDance has also entered the market and is

increasingly seen as a platform via which new artists can be

incubated. As such, we believe the company’s growth outlook

and longer term profitability are likely to be lower than we initially

thought and that investment returns from here are unlikely to be

attractive. Bilibili is a media and entertainment company popular

with generation Z. We sold the holding during the period due to

unexpectedly strong competition from ByteDance and Kuaishou,

and markedly weaker operational performance as a result. The

company appeared overly reliant on subsidies for growth and as

such we became less convinced by its long-term business model.

In the healthcare space, we sold BGI, Zai Labs, and Hutchison

China Meditech, partly due to weaker than expected operational

performance, and partly to reduce our healthcare overweight

given concerns around sanctions risk within this sector. We also

sold small holdings in Lufax, an SME lender, and Yatsen, a

cosmetics company.

06 Annual Report 2023

Performance

Over the twelve months to the end of January 2023, the

Company’s net asset value total return was -5.7%. Over

the same period, the benchmark total return was -2.2%.

Our underperformance was largely due to allocation including

lack of exposure to energy and consumer staples, and an

overweight position in communication services. Whilst we

acknowledge that short-term underperformance is painful,

we would hope that shareholders judge our investment returns

over a period of five years or longer, the same period over which

we judge our companies’ performance.

In terms of the net asset value, notable negative contributors at

stock level included Tencent, Bilibili and ByteDance all of which

are classified as communication services. Tencent’s operational

performance was severely hampered by the lack of game approvals

during the first nine months of the year, in addition to cyclical

weakness in its advertising and social media businesses. The outlook

for the company, however, is much brighter with game approvals

having restarted and the rebound in the Chinese economy likely to

feed through to Tencent’s advertising business. ByteDance is the

Company’s only private holding. In response to the decline in peer

valuations, Baillie Gifford also made negative adjustments to our

internal valuation. That being said, ByteDance’s operational

performance has remained exceptionally strong, both domestically

and overseas, despite a very challenging macroeconomic

backdrop. The company has also been buying back shares at

prior valuations implying confidence in the business’s future

development. As such, we continue to believe that the current

valuation does not reflect the company’s very sizeable growth

opportunity. In addition, relative performance was also hurt by our

lack of exposure to Pinduoduo, a leading ecommerce company

that mainly operates in lower tier cities.

Other negative contributors to performance included Sunny

Optical, a manufacturer of lenses and modules that go into

smartphones and autos, CATL, China’s largest electric vehicle

(‘EV’) battery manufacturer, Asymchem, a leading contract

manufacturing organisation in the healthcare space, and Jiangsu

Azure, a leading small form battery manufacturer. As noted in our

Interim Report, Sunny Optical was experiencing a price war in its

core smartphone business which was started by a new entrant to

the market. We think this increase in competition will not persist

as the new entrant is loss making and unable to make an

economic return. More positively, we think the growth potential in

Sunny’s auto business is underappreciated and therefore remain

holders of the stock.

CATL’s shares were weak in line with other EV names globally.

Importantly, operational performance remains strong with the

company pre-announcing almost treble digit earnings growth in

2022. NEV penetration remains low globally and the company’s

strength in energy storage provides an additional growth driver

for the next decade.

Asymchem has been weak along with the broader healthcare

space as concerns around the regulators attitude to drug pricing

have weighed on sentiment. We believe the sell-off in Asymchem

is unjustified given it has significant scope to take volume share

within the industry due to its globally innovative manufacturing

processes for small molecule drugs. Operationally, the company

is firing on all cylinders and recently reported over 200% earnings

growth in 2022. That being said, this is one of the few holdings

in the Company with significant revenue exposure to the US and,

as such, it comes with added geopolitical risk.

In terms of notable positive contributors, these are varied. Sanhua

Intelligent Controls, a heat pump manufacturer for air conditioners

and electric vehicles, was our top contributor. It delivered significant

operational performance with 33% growth in sales and 26%

growth in earnings for the year to September. Autos account for

around a third of its business. Here, its industry leading technology

and manufacturing scale allow it to fully benefit from the electric

vehicle boom in China. Its air-conditioning business accounts for

the remainder of its business and here it is expanding capacity

overseas and taking share.

Zijin Mining is another top contributor. We own this company

due to its significant exposure to copper, one of the metals that

is likely to experience significant demand as a result of the green

revolution globally, and limited supply.

Beigene, a biotech firm specializing in cancer treatment, was also

a top performer. It published phase 3 trial results for one of its

drugs, demonstrating superior efficacy and safety versus the

competition. This led to earnings upgrades for the company.

We continue to believe that its growth potential is underappreciated

and that its internal pipeline plus its attractiveness to global

pharmaceutical companies looking to enter China, sets it apart.

Ping An, China’s leading private insurance company, also

contributed strongly to relative performance. The company had

been disproportionately hit by China’s Zero Covid policy which

impacted its agents’ ability to sell their products, whilst the

company’s internal restructuring also hurt short term revenue

growth. Internal restructuring is almost complete and we believe

the company’s productivity and profitability are likely to benefit

going forward. Its sales agents have also been able to resume

face to face meetings as Zero Covid has been overturned. This is

one of our largest overweights and a stock that we believe has

significant upside potential ahead of it.

Outlook

We continue to believe that China offers an attractive mix of

substantial risk but also substantial reward for long-term

investors. Indeed, the big picture opportunities within China

remain incredibly compelling. That being said, this is a volatile

market and one must be comfortable with this volatility before

investing. In terms of the Company’s underlying holdings, we

remain confident in the companies in which we invest and believe

that, over time, their continued strong operational performance

will be matched by strong share price returns.

Roderick Snell

Sophie Earnshaw

Baillie Gifford & Co

4 April 2023

For a definition of terms, see Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

Past performance is not a guide to future performance.

Strategic Report

Baillie Gifford China Growth Trust plc 07

ByteDance

ByteDance is a social media and short form video company

and it represents the Company’s first private investment. It was

founded in 2012 by Yiming Zhang and the company has grown

to rank amongst the world’s largest companies of its kind. Its

short form video app, Douyin, is market leader in China with over

1.7 billion daily active users, and TikTok, its global equivalent,

is dominating the format globally. ByteDance benefits from a

technological edge in machine learning which it uses to bring out

new applications tailored to different media forms and different

demographics. The company’s ability to innovate in this space

is exceptional and we believe one of the key drivers of its likely

future success. We believe ByteDance has the potential to be

a generation defining media company.

Ping An Insurance

Ping An Insurance is one of China’s leading financial services

groups. It is China’s second largest life insurer, a market with

multi-decade growth potential driven by China’s emerging middle

class and rising disposable income. It also has a leading position

in property and casualty insurance where it has consistently

delivered strong returns. In addition, it has consistently invested in

artificial intelligence and machine learning in order to increase the

efficiency and long-term viability of its core business. Again, this is

a company with a long-term, growth mind-set that we believe will

deliver substantial returns to shareholders.

Kweichow Moutai

Kweichow Moutai is one of the most important and iconic

Chinese brands. It manufactures premium baijiu (white alcohol)

which has a heritage and respect embedded within Chinese

culture. Its unique brewing conditions and process provide a core

competitive advantage. When combined with supply scarcity and

limited competition in the very high-end market, Moutai is able to

price at a premium and maintain a loyal customer base. It is an

extremely profitable business. We believe in the strength and

heritage of the brand, the sustainability of revenue growth, and

the longevity of its core competitive advantage.

Alibaba

Alibaba is a leading online retailer. Its ecommerce business

continues to grow strongly driven by increasing online penetration

in segments such as grocery and Fast Moving Consumer Goods,

whilst the integration of live streaming and social media to the

platform has materially strengthened its appeal to customers and

merchants alike. In addition, Alibaba has a strong position in

infrastructure as a service, or the cloud, where it has a similar

business to Amazon Web Services and significant growth potential.

Alibaba’s partnership structure and its capable and experienced

management team are well-aligned with shareholders and continue

to offer a long-term and compelling vision for the company.

Tencent.

Tencent

Tencent is a leading social media and entertainment platform.

It has a dominant position in online gaming and an ecosystem

in WeChat that we believe is one of the strongest in China.

Monetisation of WeChat’s over one billion monthly active users

has only just begun and represents a transformational growth

opportunity for the company. Further growth opportunities are

provided by Tencent’s strong positions in cloud infrastructure and

consumer and SME lending, along with its portfolio of investee

companies which span online music streaming, ecommerce, and

short form video. Pony Ma, the founder and Chairman of the

company, is indelibly focused on the long term and has executed

exceptionally well in one of China’s fastest moving industries.

Strategic Report

Kweichow Moutai.

Review of Investments

08 Annual Report 2023

China Merchants Bank

China Merchants Bank is a leading consumer bank in China with

a lengthy track record and solid market share. It has outcompeted

its state-owned rivals via a relentless focus on the consumer.

As such, it has built up an enviable position in consumer lending

and in wealth management, both segments with strong growth

potential. In terms of lending quality, this has been strong through

the cycle and we believe this is a bank that will continue to offer

attractive returns to shareholders.

JD.com

JD.com is the second largest ecommerce player in China

after Alibaba, with particular strengths in logistics and delivery.

The growth opportunity remains large and we believe that JD’s

competitive edge is being sustained, despite operating in a very

competitive environment. The management team has taken some

proactive steps to ensure decision making is more devolved and

we have been encouraged by the openness at recent discussions

regarding future strategy and governance improvements.

We believe that there is an excellent chance that JD remains one

of the go-to ecommerce businesses in China.

Zhejiang Sanha Intelligent Controls

Zhejiang Sanhua is one of the world’s largest manufacturers

of controls and components for heating, ventilation and air

conditioning (HVAC) systems, electric vehicles and home appliances.

Sanhua has a global customer base of top tier manufacturers,

with half of their revenues generated from China and half from

overseas. The company has over 50% market share in its key

products. Sanhua’s ability to produce quality at scale is a key

competitive advantage. This is a founder-owned company whose

global position has been underappreciated in a China context.

We expect Sanhua to benefit from consumption growth in

general, as well as growth in the electric vehicle market,

and an industry shift in home appliances towards stricter

environmental standards.

Strategic Report

Li Ning.

Meituan

Meituan is an online marketplace for the local service industry in

China. It operates in an expanding range of categories and cities

with strong market shares in on-demand restaurant delivery,

in-store dining, hotel booking and film ticketing. These verticals

are each in an early stage of development, leading to strong

growth expectations for many years to come. Additionally, the

company is cementing its position as a key partner for merchants

in all of these segments by offering value-added services such as

software and back-end solutions. Wang Xing, the founder and

CEO, continues to invest heavily for growth. Indeed, his vision

for the company is that it becomes the default means by which

Chinese consumers access the local services industry.

China Merchants Bank.

Li Ning

Li Ning is China’s second-largest domestic sportswear company

(and takes its name from the founder who – as some may

remember – won 6 gymnastics medals for China at the 1984

Summer Olympics). It remains something of a turnaround story,

having run into problems between 2010 and 2015 as the model

shifted from wholesale distribution to direct stores. These

problems now look to have been largely remedied, and although

Li Ning’s returns remain lower than many of its local and

international peers, we are optimistic that improvements in the

supply chain and distribution channels will continue under the

well-regarded new CEO, Kosaka Takeshi, who joined in

September 2019. More broadly, we are intrigued by indications

that the company’s brands – especially ‘China Li Ning’, which

blends traditional Chinese embroidery styles into their products –

is gaining traction among a younger and more affluent

demographic, perhaps reflecting the possibility that national pride

is beginning to play a greater part in patterns of consumption. Is it

conceivable that Li Ning – with a national market share of around

8% at present – could even start to chip away at the 35–40% of

the market currently controlled by premium foreign brands like

Adidas and Nike?

Baillie Gifford China Growth Trust plc 09

Managers’ Report on ESG

China’s economy has high state ownership and a large industrial

base. Coupled with decades of high growth under an evolving

legal and regulatory system, this results in an index in which many

companies score poorly on ESG data metrics. This can be

compounded by a lack of disclosure and the difficulties of

language and reporting. Herein lies the opportunity.

We believe that ESG has a material impact on companies’ growth

opportunities, competitive advantages and, ultimately, long term

share price performance. As such, key ESG matters are routinely

considered as part of the investment case and are built into the

research framework that we use for the Baillie Gifford China

Growth Trust (‘the Company’). Indeed, the first question that we

ask of all potential investments is, ‘does this company contribute

to or benefit from China’s economic, societal or environmental

development, and what is the global context?’ This question

encourages us to think broadly about various stakeholders,

including the government, that materially impact companies’

long-term success. This is supplemented by our due diligence

checklist which includes a consideration of corporate governance,

executive remuneration and board structure, sustainability of

business practices, and environmental and social impact (extract

in Box 1).

Where companies are found lacking, engagement is our preferred

approach. Indeed, we believe that investors, companies and

society stand to benefit if we can play a role in pushing

businesses towards improved standards of governance,

behaviour and performance. As such, we seek to engage with

the companies in which we invest in order to help them towards

industry best practice. We seek a commitment from these

companies to constantly improve their standards and we hold

them to account.

Data

Given the meteoric rise of ESG-influenced investing, you’d be

forgiven for thinking there was already enough relevant data to

guide decisions. But this is far from the truth, particularly in China.

Despite decades of research into corporate responsibility, growing

interest in sustainable finance, and an entire industry devoted to

churning out ESG data, there are still significant gaps in our

knowledge.

To start to overcome this, our investment approach draws on a

broad range of sources of insight, from company visionaries to

academic experts to data providers. They help us to meaningfully

inform, support or challenge our contentions about the long-term

prospects of companies, including their governance and

sustainability. We are mindful of the adage ‘not everything that

can be counted counts, and not everything that counts can be

counted’. Investors are increasingly faced with a barrage of ESG

data and ratings which are often inconsistent, incomplete, and

incomparable. We view data not as a checklist of boxes to be

mechanically ticked off, but instead as the starting points for

meaningful conversations with companies and stakeholders.

Recognising the intangible nature of corporate character, our

approach must be more nuanced and qualitative.

The following selected data points illustrate the importance of

such nuance and the questions that we seek to explore through

our broader analysis and company engagement. Data points are

shown in relation to the index (MSCI China All Share) for the

period from 1 February 2022 to 31 January 2023. It should be

noted that there are some gaps in data and particularly for the

private companies included in the Company’s portfolio.

Box 1

Environmental and Social Due Diligence Checklist for Baillie Gifford China Growth Trust

Does this company contribute to or benefit from China’s cultural, economic or societal development, and what is the global

context?

— What are the material ESG topics the company identifies for themselves?

— Does the company disclose carbon emissions and set a carbon target?

— Is the company compliant with the United Nations Global Compact? If not, why?

— How is the company rated by external research providers? Do we agree with these ratings? If not, why not?

— Are there any red flags and/or areas for company engagement?

Strategic Report

10 Annual Report 2023

Board Membership

What it is – We look to company boards to provide effective

oversight. Typical data points on board composition are shown

below in relation to the index (MSCI China All Share).

What does the data tell us – Board independence is particularly

nuanced given the bias of this portfolio to founder firms (such

as Kingsoft, Longi, Alibaba) along with the presence of some

state-owned enterprises (including Kweichou Moutai). A lack

of independence with no extenuating context is a cause for

engagement and further investigation.

In 2022, the number of female directors on boards has increased

both in our portfolio and across the index. Average figures still

mask differences at stock level. While there are nine companies

in the portfolio (for which data is available) who all have at least

30 percent female board members, (Alibaba, Medlive, Minth,

Netease, JD.com, Hangzhou Tigermed, Asymchem Laboratories

(Tianjin), SG Micro, Dada Nexus), there are still six companies with

all male boards. We will be looking for this to improve as well as

looking at other important indicators of board diversity.

Board

Independence

Percentage

of Female

Directors

Company

Index

Average

Board

Tenure

55.6

(2022 – 54.9)

57.9

(2022 – 55.1)

20.6

(2022 – 14.8)

16.1

(2022 – 13.0)

9.5

(2022 – 9.8)

8.2

(2022 – 8.4)

0 20 50 7010 4030 60

Ownership

What it is – The table below highlights the range and concentrations

of different ownership structures held within the public companies

in the portfolio. An explanation of the definitions is included below

the table. Data for 13 companies is missing so the totals showing

for the Company only add up to 80.3%.

What does the data tell us – Whereas the index is heavily invested

in state-owned enterprises, more than two thirds of our portfolio is

invested in companies that are founder or family owned. This can

be important for many reasons, including allowing companies to

take decisions against the grain of short term demands of many

market participants. It often takes influential and visionary leadership,

backed by aligned and patient shareholders, for a company to

spearhead disruptive change while remaining focused on its

long-term mission. However, the data doesn’t tell us about the

founder’s other business activities, the depth of the management

team, or attitudes towards shareholder rights and other stakeholders.

Our focus is therefore on the fundamental research and ongoing

engagement to determine what works in practice for each company.

Owner Type

Index

Company

Controlled 22.8 5.8

Principal 9.8 4.8

Founder Firm 50.0 64.2

Family Firm 3.1 5.5

Widely Held 1.5 –

Controlled

A Controlled company is one where the largest shareholder or

shareholder group holds 30% or more of the voting rights.

Principal Shareholder

A company with a Principal Shareholder is one where the largest

shareholder or shareholder group holds between 10% and 30%

of the voting rights.

Founder Firm

Founder serves as Chairman or CEO or retains significant influence

at the company.

Family Firm

Family holds 10% or more of the voting rights and maintains at

least one board seat.

Widely Held

A Widely Held company has no identified shareholder or

shareholder group holding greater than 10% of the voting rights.

Strategic Report

Baillie Gifford China Growth Trust plc 11

UN Global Compact Alignment

What it is – This indicator uses company alignment with the ten

UN Global Compact (UNGC) Principles as a proxy for social

performance and exposure to corporate controversies. The chart

shows the percentage of the portfolio assessed by a third party

data provider as ‘compliant’.

What does the data tell us – The data suggests that the majority

of holdings are compliant and conduct themselves responsibly in

regard to society and the planet. One is assessed as non-compliant

by a third party and two are on the watchlist. There is no data for

six of our holdings, (9.7% of the portfolio).

Zijin Mining was non-compliant due to historic human rights

incidents across multiple operations and poor environmental

practices but moved to the third party data providers’ watchlist.

We have been engaging with the company over the last eight

months on these issues and will continue to do so. Li Ning also

flags for the third party watchlist assessment due to an alleged

relationship with a particular factory. We have spoken to the

company in 2022 on supply chains and labour standards and

they confirmed to us that they do not use the factory in question.

We have encouraged further disclosure on these issues.

Tencent was recently assessed by one of the third party data

providers as moving from a watch list to non-compliant with

Principle 2 of the UN Global Compact for allegations of complicity

in human rights abuses. Based on our current research and

engagement with Tencent on data privacy, the company appears

to be taking action to ensure compliance with the law in PRC as

well as alignment with international norms. We are engaging with

the company and will continue to keep this on our watchlist for

enhanced due diligence.

Our expectation for all companies we hold is that they will

respect internationally accepted human rights and labour rights

throughout their business operations and value chain.

This includes the management of exposure to labour and

human rights risks and encouraging positive relationships

with local communities.

Carbon Performance

Addressing climate change is one of the most significant

challenges of our time. From shifting weather patterns that threaten

food production and disrupt supply chains, to rising sea levels

that increase the risk of catastrophic flooding, the impacts of

climate change are global in scope and unprecedented in scale.

Growing societal pressure and regulatory action are combining with

the physical impacts of climate change to create new risks and

opportunities for companies. As long-term investors, we must

take cognisance of these to understand the implications for

long-term value creation.

What it is – Carbon footprint analysis identifies the largest

direct emitters and helps to prioritise research and engagement

activities. The relative carbon footprint compares the total

carbon emissions of the portfolio with the index per $1 million

invested. Weighted Average Carbon Intensity is the sum product

of the portfolio constituent weights and intensities of Carbon

Intensity ( the total carbon emissions per $1 million of revenue

generated and shows the efficiency of the portfolio in terms of

emissions per unit of financial output). These intensity measures

allow comparison of emissions across companies of different

sizes and in different industries. We recognise that carbon

footprinting and emissions intensity analysis is imperfect. Beyond

simple concerns about data accuracy and availability, this analysis

can only tell us where a company is – not where it is going. This is

why we see it as a starting point and not the end.

Strategic Report

100

Company

Index

Passed UN Global Compact Compliance

78.7

85.1

100

200

300

Company

Index

Weighted Average

Carbon Intensity

-tCo

e/USD Million

revenue

Relative

Carbon Footprint

-tCo

e/USD Million

invested

36.4

247.6

9.4

129.0

All metrics in the chart above refer to Scope 1 and 2 emissions

only. Scope 1 emissions are those deriving directly from company

activities (i.e. stack emissions and fuel use); Scope 2 emissions

arise indirectly as a result of electricity use. Emissions within these

scopes are reasonably under the control of the company and can

be expected to be calculated by all companies. We are continuing

to engage with companies and research providers on the

12 Annual Report 2023

availability, comparability and robustness of Scope 3 emissions –

those that result from activities of assets not owned or controlled

by the reporting organisation, but that the organisation indirectly

impacts in its value chain.

Based on current information for the portfolio’s material Scope 3

emissions (i.e oil, gas and mining) the Weighted Average Carbon

Intensity tCO2e/USD Million Revenue for Scope 1, 2 and those

material Scope 3 emissions would still be below benchmark

(84 vs 515 tCO2e/USD Million Revenue).

What does the data tell us – The data demonstrates lower

carbon intensity and relative carbon than the index (MSCI China

All Share). Some companies in the portfolio will be providing

minerals required for the global energy transition but are energy

intensive in their own operations, others will be providing the

components and technology for renewable energy. Four companies

are contributing approx. 70 percent of the portfolio weighted

average carbon emissions (Zijin Mining, Shandong Sinocera,

Yunnan Energy and Longi Green Energy) if we include Scope,

1,2 and material Scope 3. Longi Green Energy is a particularly

interesting case study from a range of sustainability issues as their

purpose supports a low carbon transition yet their production is

energy intensive. Across the portfolio, our duty remains to ensure

these companies are implementing best practice and doing all

they can to address any negative environmental impacts.

Box 2

Engaging with State-Owned Enterprises – Kweichow Moutai

Kweichow Moutai is an iconic Chinese brand and its premium baijiu (white alcohol) has a heritage and respect embedded within

Chinese culture. Being a State-owned Enterprise (SoE) controlled by the Guizhou Provincial government, brings a layer of

governance risk. In such cases, investment managers are less likely to find a consistent leader or team to talk with and

management may change for political reasons.

Last year we reported on our engagement via the Shanghai Stock Exchange and with other shareholders when the 2020 proposals

for local government donations were out of step with good governance and financial responsibility. As a result of the discussions,

Moutai subsequently cancelled their proposed donations, citing the influence of minority shareholders in an announcement in

October 2020. We are aware our influence is limited and go into this with our eyes open, balancing Moutai’s unique position in the

consumer space as one of very few domestic aspirational and luxury brands in China and its significant competitive advantages, but

this does come with the need for a greater focus on developments to governance structures and ongoing SoE reform. In the long

term, SoE reforms could be very positive for Moutai, enabling it to boost its efficiency, profitability and build an improved corporate

culture. We continue to watch.

In 2022 we continued our engagement and recently met with the board secretary and Chief Financial Officer to begin a conversation

on Moutai’s overall ESG management. Moutai has increased disclosure which was reflected in a recent third party upgrade and they

recently increased diversity on their board. We discussed climate reporting, water management, government relations, and external

donations. The company is keen to improve dialogue with us and proposed that representatives from Moutai have a follow-up

meeting with us in order to learn more about how we look at ESG issues of holding companies. The meeting established connections

with senior management and staff from Moutai in charge of ESG governance and disclosure. This will support further engagement

on ESG issues in the future.

ESG: It’s Case-by-Case

We believe that governance really matters with respect to long-

term investment performance. Good governance is linked to good

environmental and social performance. Our ongoing assessment

of corporate governance issues may change our view on buying,

selling or resizing our clients’ holdings. It also determines how we

choose to vote at company meetings and how we engage with

management, the two principal levers we have for influencing

change. Just as there is no universally ‘right’ way to invest in the

stock market, or to manage a pension fund, there is no ‘one-size-

fits all’ step-by-step approach to corporate governance. We are

open minded about what is the most appropriate way to govern

and manage a company, and we are pragmatic about the

significant differences in what is expected and the options available

to companies across the world. The following three examples

highlight our approach to engagement.

Strategic Report

Baillie Gifford China Growth Trust plc 13

Box 3

Engaging on social and environmental performance – Zijin Mining

Zijin Mining is a large state-owned metals and mining company. The historic focus has been on gold, but increasingly the growth is

coming from copper. Most recently there are aspirations to move into battery materials more widely, with an initial foray into lithium.

In January 2022 we set out priorities for engagement with Zijin. Our initial objectives were: to improve our understanding of the

historic incidents highlighted within ESG reports, including the remedial action taken and any ongoing issues; discuss the positive

trajectory which was recently recognised in third party assessments and the roadmap for improved preparedness and reporting;

ensure our concerns were noted, and that the company is aware of our internal divestment rules should that positive trajectory

not be maintained.

In April 2022, the company reported additional disclosures on non-technical delays at mines as well as grievance mechanisms and

tailings (waste) management. The company established community grievance mechanisms at all sites and reported zero days of

non-technical delays in 2021. In addition, they have highlighted their commitment to following the 15 principles of the Global

Industry Standards on Tailings Management. In April we wrote to the company to ask about: their plans for human rights impact

assessments (for Bisha, Aurora, Buritica, Kolwezi and Porgera Mines); community engagement in Peru; water quality; and the

recent allegations regarding illegal mining in Inner Mongolia. We received detailed answers to our questions and in October 2022

we met with the company. During the meeting, we learned more about the company’s community relations management systems

and environmental practices. The company highlighted differences between the company’s practices and how these are assessed

by third party rating providers. We encouraged the company to provide more detailed updates on human rights due diligence work

and discussed wider stakeholder engagement including with rating agencies.

We were pleased with the transparency and openness of the company to discuss these issues. It was helpful to learn more about

the approach to ESG management. We will look to hear more about the ESG assessment being planned which would include

human rights assessment and will follow up further with the company on these topics in 2023.

Box 4

Being a supportive investor to improve overall ESG strategy and disclosure – Proya Cosmetics

Proya is a skin care and cosmetics company. Its end markets are growing at an attractive rate as Chinese consumers become

wealthier and per capita spend on personal care increases. Proya is growing at a multiple of the overall market driven by its exposure

to consumers in lower tier cities and millennials who are increasingly choosing domestic brands, like Proya, over mid-range foreign

brands. Over the next ten years, we think this trend is likely to accelerate. Proya is well placed to benefit. It is currently a fast follower

with an integrated supply chain, innovative marketing and the beginnings of a platform/multi-brand model. Its probability of success

is also enhanced by an ambitious management team with a highly adaptable culture and willingness to experiment.

In 2022 we engaged with the company to encourage greater disclosure and to broaden diversity on the board. We were made

aware that the company had ranked poorly in a third party assessment and spoke to the company about this issue, as we hold

the belief to do our own research rather than using exclusionary screens based on ESG ratings to understand the true risks and

opportunities. Based on an in-person visit and direct conversations with the company, we noticed a gap in real ESG practices and

disclosure, and thus raised a few suggestions on topics such as climate target setting and chemical management. The company

appreciated our engagement and improved its disclosure publishing ESG criteria and a Sustainable Development Strategic Plan.

The enhanced disclosure helped the company upgrade its ESG rating by three levels.

Improvements could also be observed from its Sustainable Development Strategic Plan 2022-2025, in which quantitative climate

goals clarify a path to achieve net zero emissions on operations by 2030 and carbon neutrality across the entire value chain by 2045.

The progress makes Proya one of the first four movers towards net zero in our portfolio.

Strategic Report

14 Annual Report 2023

How Are We Voting?

Thoughtful voting of our clients’ holdings is an integral part of our

commitment to stewardship. We believe that voting should be

investment led, because how we vote is an important part of the

long-term investment process, which is why our strong preference

is to be given this responsibility by our clients. The ability to vote

our clients’ share also strengthens our position when engaging

with investee companies.

We look for high quality management teams and governance

structures supportive of long-term investment opportunities.

The graph on the right shows our voting for the Baillie Gifford

China Growth Trust in 2022 (January 2022 to December 2022).

It is no surprise that as long-term owners, seeking to invest in a

relatively small number of exceptional companies, we are generally

supportive of management. Where we disagree or where our

engagement has been unsuccessful, there are cases where we

will vote against management. For example, in 2022 we opposed

the appointment of auditors because the company did not rotate

the main audit partner, contrary to the market requirements and

we opposed the provision of a guarantee to a subsidiary, as the

proposed arrangement may disproportionately affect the

company’s shareholders.

The Data

All data is pulled from MSCI, Sustainalytics, ISS and BoardEx,

via the Factset platform along with some internal sources. It is fact

checked by our ESG analysts and is considered correct at the

time of writing.

For more detail, please see bailliegifford.com/en/uk/about-us/

literature-library/miscellaneous/investment-stewardship-

activities-report/

Baillie Gifford China Growth Trust

Proxy Voting Record 2022

Total votes: 1,201

Proposed by management: 1,199

Proposed by Shareholder: 2

Source: Baillie Gifford Data for 2022.

No vote 0% (3)

For 94% (1,130)

Against 2% (28)

Abstain 4% (40)

Total Votes

1,201

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any

MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial

products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment

advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

Strategic Report

Baillie Gifford China Growth Trust plc 15

Baillie Gifford Statement on Stewardship

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

run counter to thoughtful and beneficial corporate stewardship. Our approach favours a small number of simple principles which help

shape our interactions with companies.

Our Stewardship Principles

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

it is easy to be influenced by short-sighted demands for profit

maximisation but believe these often lead to sub-optimal

long-term outcomes. We regard it as our responsibility to steer

holdings away from destructive financial engineering towards

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 don’t.

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.

There is no fixed formula, but it is our expectation that boards

have the resources, information, cognitive and experiential

diversity they need to fulfil these responsibilities. We believe

that good governance works best when there are diverse skillsets

and perspectives, paired with an inclusive culture and strong

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 accepting of significant

payouts to executives if these 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.

Fair Treatment of Stakeholders

We believe it is in the long-term interests of enterprises to maintain

strong relationships with all stakeholders – employees, customers,

suppliers, regulators and the communities they exist within. We do

not believe in one-size-fits-all policies and recognise 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

regulations 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

and ‘net-zero’ aligned climate strategies as a matter of priority.

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

16 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

operational areas of the firm, and the portfolio managers only

receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle,

with one-third of the holdings reassessed each month.

For investment trusts, the prices are also reviewed twice per year

by the respective investment trust boards and are subject to the

scrutiny of external auditors in the annual audit process.

Baillie Gifford – Valuing Private Companies

Beyond the regular cycle, the valuations group also monitors the

portfolio for certain ‘trigger events’. These may include: changes in

fundamentals; a takeover approach; an intention to carry out an

Initial Public Offering (‘IPO’); company news which is identified by

the valuation team or by the portfolio managers or changes to the

valuation of comparable public companies. Any ad-hoc change to

the fair valuation of any holding is implemented swiftly and reflected

in the next published net asset value (‘NAV’). There is no delay.

The valuations group 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. When market volatility is particularly pronounced

the team undertakes these checks daily. More information specific

to the valuation of ByteDance, the unlisted holding held by Baillie

Gifford China Growth Trust can be found in note 9.

The Independent Auditor’s Report on page 41 explains the

procedures carried out by the external auditor on the private

companies (unquoted investments) as part of their audit.

Strategic Report

Baillie Gifford China Growth Trust plc 17

List of Investments at 31 January 2023

Name

Business

Value

£’000

of total

assets

Alibaba Online retailer, payments and cloud business 13,819 6.6

Tencent Social media and entertainment company 12,694 6.0

ByteDance

Social media and entertainment company 11,953 5.7

Ping An Insurance Life and health insurance 9,559 4.6

Kweichow Moutai Luxury baijiu maker 9,436 4.5

Meituan Online food delivery company 7,977 3.8

Li Ning Domestic sportswear manufacturer 7,692 3.7

China Merchants Bank Consumer lending and wealth management 7,631 3.6

JD.com Online retailer 5,074 2.4

Zhejiang Sanhua Intelligent Controls Heating and cooling component manufacturer 4,946 2.4

BeiGene Immunotherapy biotechnology company 4,929 2.3

Zijin Mining Renewable energy enabler 4,580 2.2

CATL Electric vehicle battery maker 4,268 2.0

Estun Automation Robotics and factory automation company 4,158 2.0

Shandong Sinocera Functional Material Advanced materials manufacturer 4,156 2.0

Ping An Bank SME and consumer lender 4,134 2.0

Proya Cosmetics Cosmetics and personal care company 3,991 1.9

SG Micro Corp Semiconductor designer 3,881 1.8

Shenzhen Inovance Technology Factory automation company 3,659 1.7

ENN Energy Gas distributor and provider 3,482 1.7

Guangzhou Kingmed Diagnostics Diagnostics company 3,430 1.6

Midea White goods and robotics manufacturer 3,223 1.5

NetEase Gaming and entertainment business 3,082 1.4

Centre Testing International Testing and inspecting services provider 3,037 1.4

Fuyao Glass Industry Automotive glass manufacturer 2,877 1.4

Shenzhen Megmeet Electrical Power electronics manufacturer 2,827 1.3

Glodon Software provider to the construction industry 2,762 1.3

Yonyou Network Technology Software for SMEs and corporates 2,760 1.3

Shenzhou International Garment manufacturer 2,651 1.3

Geely Automobile Domestic automotive manufacturer 2,626 1.3

Beijing United Information Tec Industrial ecommerce platform 2,620 1.2

Asymchem Laboratories (Tianjin) Life sciences contract research organisation 2,476 1.2

Kingdee International Software Software for SMEs and corporates 2,472 1.2

Weichai Power Construction machinery and heavy duty trucks 2,438 1.2

Longi Solar energy provider 2,279 1.1

Hangzhou Tigermed Consulting Clinical trial contract research organisation 2,267 1.1

HUAYU Automotive Systems Automotive parts manufacturer 2,196 1.0

Kingsoft Software for SMEs and corporates 2,090 1.0

Sunny Optical Technology Electronic components for smartphones and autos 2,083 1.0

Brilliance China Automotive Automotive makers and BMW partner 2,051 1.0

WuXi AppTec Life sciences contract research organisation 2,045 1.0

KE Holdings

†

Online real estate 1,969 0.9

Sinocare Diagnostics and diabetes company 1,889 0.9

Topchoice Medical Dental services provider 1,766 0.8

Sungrow Power Supply Component supplier to renewables industry 1,736 0.8

Jiangsu Azure Air Freight & Logistics 1,590 0.8

Robam Appliances White goods manufacturer 1,580 0.8

Minth Automotive parts manufacturer 1,505 0.7

Hua Medicine (Shanghai) Diabetes drug manufacturer 1,503 0.7

Dongguan Yiheda Automation Co Factory automation equipment manufacturer 1,426 0.7

Yunnan Energy New Material Component supplier to renewables industry 1,381 0.7

Strategic Report

18 Annual Report 2023

Distribution of Total Assets

‡

Sectoral 2023 (2022)

Healthcare

11% (11%)

Materials

5% (4%)

Net Liquid Assets

Nil (1%)

Consumer Staples

7% (6%)

Information Technology

9% (9%)

Communication

Services

13% (19%)

Utilities 2% (1%)

Industrials

16% (13%)

Real Estate

1% (1%)

Consumer

Discretionary

26% (25%)

Financials

10% (10%)

‡

Total assets represent total net assets before deduction of borrowings.

Name

Business

Value

£’000

of total

assets

Yifeng Pharmacy Chain Drug retailer 1,375 0.7

Kinlong Building Products 1,262 0.6

Pop Mart Toy and collectibles maker 1,210 0.5

Medlive Technology Medical dictionary and marketing organisation 1,036 0.5

New Horizon Health Early cancer detection 838 0.4

Dada Nexus

†

Logistics and warehousing provider 745 0.3

Burning Rock Biotech

†

Liquid biopsy cancer testing company 377 0.2

Total investments 209,499 99.7

Net liquid assets

* 533 0.3

Total assets

* 210,032 100.0

Borrowings (6,092) (2.9)

Shareholders’ funds 203,940 97.1

* For a definition of terms used, see Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

Denotes unlisted holding (private company).

†

Includes investments in American Depositary Receipts (‘ADRs’).

Listed

equities

Unlisted

securities

Net liquid

assets

Total

assets

31 January 2023 94.0 5.7 0.3 100.0

31 January 2022 93.0 5.7 1.3 100.0

Figures represent percentage of total assets.

Strategic Report

Baillie Gifford China Growth Trust plc 19

Past performance is not a guide to future performance.

31 January

2023

31 January

2022 % change

Total assets (before deduction of bank loans) £210.0m £224.9m

Bank loans £6.1m £5.6m

Shareholders’ funds £203.9m £219.3m

Net asset value per ordinary share 328.87p 353.70p (7.0)

Share price 308.00p 339.25p (9.2)

Benchmark

‡

(4.3)

Revenue earnings per ordinary share 2.14p 0.97p 120.6

Dividends paid and payable in respect of the year

1.70p 7.15p (76.2)

Ongoing charges

†#

0.94% 0.72%

Discount

(6.3%) (4.1%)

Active share

* 72% 69%

Year to 31 January 2023 2022

Total returns (%)*

Net asset value per ordinary share

(5.7) (27.0)

Share price

(7.9) (37.1)

Benchmark

‡

(2.2) (20.5)

Year to 31 January 2023 2023 2022 2022

Year’s high and low High Low High Low

Net asset value per ordinary share 359.06p 238.91p 554.25p 348.62p

Share price 355.00p 208.50p 640.00p 330.50p

Premium/(discount)

2.9% (15.5%) 16.3% (7.4%)

31 January

2023

31 January

2022

Net return per ordinary share

Revenue 2.14p 0.97p

Capital (22.37p) (138.22p)

Total (20.23p) (137.25p)

Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

†

Without the management fee waiver (see page 75), the ongoing charges for the year to 31 January 2022 would have been 0.81%.

See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

Key Performance Indicator.

‡

The benchmark is the MSCI China All Shares Index (in sterling terms).

Source: Refinitiv/Baillie Gifford and relevant underlying index providers. See disclaimer on page 72.

One Year Summary

Strategic Report

20 Annual Report 2023

Past performance is not a guide to future performance.

The following charts indicate how an investment in the Company has performed

relative to its benchmark and its underlying net asset value over the five year period

to 31 January 2023.

(Discount)/Premium

to Net Asset Value

(figures plotted on a monthly basis)

Five Year Total Return

Performance

(figures rebased to 100 at 31 January 2018)

Source: Refinitiv/Baillie Gifford and relevant underlying index providers

†

(Discount)/Premium

The (discount)/premium is the difference between Baillie Gifford China Growth Trust’s

quoted share price and its underlying net asset value per share expressed as a

percentage of net asset value per share.

2018

Years to 31 January

2020 2021

2022

2023

2019

(20%)

20%

(10%)

10%

Annual Net Asset Value and Share Price Total Returns

(relative to the benchmark

total returns)

Source: Refinitiv/Baillie Gifford and relevant underlying index providers

†

NAV return

Share price return

2019

Years to 31 January

2020 2021

2022

2023

(20%)

20%

40%

60%

-40

Source: Refinitiv/Baillie Gifford and relevant underlying index providers

†

NAV return

Share price return

2019

Years to 31 January

2020 2021

2022

2023

(40%)

40%

80%

2018

Cumulative to 31 January

2020 2021

2022

2023

2019

Source: Refinitiv/Baillie Gifford and relevant underlying index providers

†

Share price

NAV

Benchmark

180

140

100

* See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

†

See disclaimer on page 72.

The benchmark is the MSCI China All Shares Index (in sterling terms), prior to 16 September 2020 the benchmark was MSCI AC Asia ex

Pacific Index. Data is chain-linked from 16 September 2020 to form a single comparative index.

Five Year Summary

Strategic Report

Baillie Gifford China Growth Trust plc 21

Past performance is not a guide to future performance.

Ten Year Record

Revenue Gearing Ratios

Year to

31 January

Gross

revenue

£’000

Available

for ordinary

shareholders

£’000

Revenue

earnings per

ordinary share

Ordinary

dividends paid

and proposed

per share

Ongoing

charges

ratio

Gearing

‡

Potential

gearing

2013 5,108 3,162 4.8 4.3 1.3 4 5

2014 4,978 2,910 4.4

4.5 0.9 3 5

2015 4,464 2,628 4.0

4.6 1.1 – –

2016 4,782 2,836 4.3

4.7 1.1 – –

2017 5,004 2,880 4.4

4.8 1.0 – –

2018 5,740 4,141 6.5

5.5 1.0 – –

2019 6,577 4,954 7.9

7.0 1.0 – –

2020 6,073 4,412 7.2

7.2 1.1 – –

2021 3,600 2,329 4.5

7.2 0.7 – –

2022 1,599 592 1.0

7.2 0.7 1 3

2023 2,047 1,325 2.1 1.7 0.9 3 3

Source: Baillie Gifford.

Total operating costs (excluding performance fees) divided by average net asset value. Without the management fee waiver (see page 75), the ongoing charges for the year

to 31 January 2022 would have been 0.8%. See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

‡

Borrowings at book value less all cash and cash equivalents divided by shareholders’ funds. See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

Borrowings at book value divided by shareholders’ funds. See Glossary of Terms and Alternative Performance Measures on pages 74 and 76.

Capital

31 January

Total

assets

£’000

Borrowings

£’000

Shareholders’

funds

£’000

Net asset value

per share

price

(Discount)/

Premium

†

2013 182,134 8,500 173,634 262.9 229.3 (12.8)

2014 168,246 8,500 159,746 241.9 213.5 (11.7)

2015 184,280 – 184,280 279.5 244.0 (12.7)

2016 170,388 – 170,388 259.3 231.0 (10.9)

2017 217,035 – 217,035 333.9 286.0 (14.3)

2018 244,455 – 244,455 386.6 344.0 (11.0)

2019 219,929 – 219,929 352.5 303.0 (14.1)

2020 222,208 – 222,208 363.5 333.0 (8.4)

2021 271,424 – 271,424 492.7 548.0 11.2

2022 224,931 5,590 219,341 353.7 339.3 (4.1)

2023 210,032 6,092 203,940 328.9 308.0 (6.3)

Source: Baillie Gifford/Refinitiv. See disclaimer on page 72.

* Net asset value per ordinary share has been calculated after deducting borrowings. See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

†

(Discount)/Premium is the difference between the Company’s quoted share price and its underlying net asset value per share expressed as a percentage of net asset value

per share.

See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

Cumulative Performance (taking 2013 as 100)

31 January

Net asset

value

per share

Net asset

value total

return

price

price total

return

* Benchmark

Benchmark

total return

2013 100 100 100 100 100 100

2014 92 93 93 95 98 100

2015 106 110 106 111 111 117

2016 99 104 101 107 102 110

2017 127 136 125 134 134 149

2018 147 159 150 164 154 176

2019 134 147 132 147 142 167

2020 138 155 145 165 150 181

2021 187 214 239 278 179 221

2022 135 156 148 175 140 176

2023 125 147 134 161 134 172

Compound annual returns

5 year (3.2%) (1.6%) (2.2%) (0.4%) (2.7%) (0.5%)

10 year 2.3% 3.9% 3.0% 4.9% 3.0% 5.6%

Source: Baillie Gifford/Refinitiv and relevant underlying providers. See disclaimer on page 72.

* See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

The benchmark is the MSCI China All Shares Index (in sterling terms), prior to 16 September 2020 the benchmark was MSCI AC Asia ex Pacific Index. Data is chain-linked

from 16 September 2020 to form a single comparative index.

Strategic Report

22 Annual Report 2023

Business Model

Business and Status

Baillie Gifford China Growth Trust plc (‘the Company’) is a public

company limited by shares and is incorporated in England.

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 London Stock

Exchange. They invest in a portfolio of assets in order to spread

risk. The Company has a fixed share capital, although, subject to

shareholder approval sought annually, 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.

Investment Objective

To produce long-term capital growth by investing predominantly

in shares of, or depositary receipts representing the shares of,

Chinese companies.

Investment Policy

The Company invests predominantly in shares of, or depositary

receipts representing the shares of, Chinese companies.

Chinese companies are companies that have their headquarters

in China or that the Investment Manager deems to have a

significant part of their operations in China. They may be listed,

quoted, or traded on any market, or unlisted. The Company will

be actively managed and may invest in companies of any size

and in any sector. In furtherance of the Investment Policy the

portfolio will normally consist principally of quoted equity securities

although unlisted companies, fixed interest holdings or other non

equity investments may be held.

The portfolio will comprise between 40 and 80 listed and unlisted

securities. No individual investment will represent a greater weight

in the portfolio than, (i) 20%, or (ii) its weight in the MSCI China All

Shares Index (in sterling terms) plus 7.5%, whichever is lower as

measured at the time of investment.

The maximum amount which may be invested in unlisted

securities shall not exceed 20% of the gross asset value of the

Company, measured at the time of investment.

The Company will at all times be invested in several sectors.

While there are no specific limits placed on exposure to any one

sector, the Company will at all times invest and manage the

portfolio in a manner consistent with spreading investment risk.

The Company intends to employ gearing in the normal course

of events. The Company may in aggregate borrow amounts

equaling up to 25% of gross asset value, although the Board

expects that borrowings will typically not exceed 20% of gross

asset value, in both cases calculated at the time of drawdown.

With prior approval of the Board, the Company may use

derivatives for the purposes of efficient portfolio management

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 Company does not

intend to enter into derivative or hedging transactions to mitigate

against general currency or interest rate risk.

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. There is no restriction on the amount of

cash or cash equivalent instruments that the Company may hold.

The Company may invest no more than 10%, in aggregate, of gross

asset value at the time of acquisition in other listed closed-ended

investment funds, but this restriction will not apply to investments

in such funds which themselves have stated investment policies

to invest no more than 15% of their gross asset value in other

closed-ended investment funds. In this case, the limit is 15%.

No material change will be made to the Company’s Investment

Policy without the prior approval by ordinary resolution of the

shareholders.

Culture

As an externally managed investment company with no

employees, Baillie Gifford China Growth Trust’s culture is

expressed through its Board and its third party service providers,

in particular its Managers, in their interactions with shareholders

and other stakeholders. The Board’s assessment of its own

interactions is described in its Section 172 Statement on pages

25 and 26, and the Baillie Gifford Statement on Stewardship,

which describes the Managers’ culture of constructive

engagement, is set out on page 15.

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 total

return relative to the benchmark;

— the movement in the share price total return relative to the

benchmark;

— the premium/discount of the share price to the net asset value

per share; and

— ongoing charges.

An explanation of these measures can be found in the Glossary of

Terms and Alternative Performance Measures on pages 74 to 76.

A historical record of the KPIs is shown on pages 19 to 21.

The Board has an ongoing charges target of 1% or less.

The ongoing charges for the year ended 31 January 2023

was 0.94%.

Business Review

Strategic Report

Baillie Gifford China Growth Trust plc 23

The one, five and ten year records of the KPIs can be found on pages 19, 20 and 21. Further discussion is included in the Chair’s

Statement on pages 2 and 3.

In addition to the above, the Board considers peer group comparative performance.

Borrowings

The Company employs gearing, as set out in the Investment Policy. The Company has in place a two year revolving credit facility for

US$40 million with RBSI which expires on 13 April 2024.

Principal and Emerging Risks

As explained on page 33 there is an ongoing process for identifying, evaluating and managing the risks faced by the Company on a

regular basis. The Directors have undertaken a robust assessment of the principal and emerging risks facing the Company, including

those that would threaten the business model, future performance, solvency or liquidity. There have been no significant changes to the

principal risks during the year other than cyber security risk having moved from emerging to principal risks. A description of these risks

and how they are being managed or mitigated is set out below:

Risk Mitigation

Inappropriate business strategy and/or changes in the financial

services market leads to lack of demand for the Company’s shares

and its shares trading at a persistent and anomalous discount to

the NAV.

The Board reviews its strategy at an annual strategy meeting.

It considers investor feedback, consults with its broker and reviews

its marketing strategy. It regularly reviews its buy back and issuance

policy. The strategy is considered in the context of developments in

the wider financial services industry.

Adverse market conditions, particularly in equities and currencies,

lead to a fall in NAV.

The Company’s exposure to equity market risk and foreign currency

risk is an integral part of its investment strategy. Adverse markets

may be caused by a range of factors including economic conditions,

political change, geopolitical events, natural disasters and health

epidemics. Volatility in markets from such factors can be higher in

less developed markets including China. Market risk is mitigated to

a degree by appropriate portfolio diversification.

Poor investment performance, including through inappropriate

asset allocation, leads to value loss for shareholders in comparison

to the benchmark or the peer group.

The performance of the Manager is reviewed at each Board meeting

and compared against the benchmark and peer group. Exposures

are reviewed against benchmark exposures to identify the highest

risk exposures. The Board regularly reviews and monitors the

Company’s objective and investment policy and strategy.

Operational Risk, failure of Baillie Gifford’s systems or those

of other third party service providers could lead to an inability to

provide accurate reporting and monitoring or a misappropriation

of assets.

The Manager 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. In the year under review,

the other key third party service providers have not experienced

significant operational difficulties affecting their respective services

to the Company.

Tax and regulatory change or breach leads to the loss of

investment trust status and, as a consequence, the loss of the

exemption from taxation of capital gains. Change in tax, regulation

or laws could make the activities of the Company more complicated,

more costly or even not possible. Other regulatory breaches

(including breaching the listing rules, market abuse regulations and

UK AIFM Regulations) could result in reputational damage and

costs. Regulatory change can also increase the costs of operating

the Company.

Compliance with investment trust status regulations is regularly

reviewed by the Board. The Board reviews compliance with other

regulatory, tax and legal requirements and is kept informed of

forthcoming regulatory changes.

Strategic Report

24 Annual Report 2023

Risk Mitigation

Single country risk. The Company invests predominantly in equities

of companies which are incorporated or domiciled, or which conduct

a significant portion of their business, in China. Investing in a single

country is generally considered a higher risk investment strategy

than investing more widely, as it exposes the investor to the

fluctuations of a single geographical market, in this case the

Chinese market.

The Company’s exposure to a single country, China, is an integral

part of its investment strategy. Risk is mitigated to a degree by

appropriate portfolio diversification and careful analysis of

investment opportunities.

Emerging market risk. Investing in an emerging market such as

China subjects the Company to a higher level of market risk than

investment in a more developed market. This is due, among other

things, to the existence of greater market volatility, lower trading

volumes, the risk of political and economic instability, legal and

regulatory risks, risks relating to accounting practices, disclosure and

settlement, a greater risk of market shut down, standards of corporate

governance and more governmental limitations on foreign investment

than are typically found in developed markets. Geopolitical tensions

between the US and China, in particular relating to Taiwan, remain

heightened with the potential for further sanctions to be imposed.

Investing in China is often through contractual structures, such as

Variable Interest Entities (‘VIEs’, see Glossary of Terms and

Alternative Performance Measures on 76) that are complex and

could be open to challenge.

The Managers are cognisant of the risks associated with investing in

emerging markets such as China, and they shape their investment

strategy and due diligence accordingly. The Board is kept informed

of political and regulatory issues impacting China and the portfolio.

The Board monitors the risks associated with any complex

investment structures, including the proportion of investments held

in VIEs (estimated to be 31% as at 31 January 2023).

Unlisted securities. The Company may invest in unlisted securities,

which are not readily realisable and are more difficult to value given

the absence of a quoted price. There may be less available

information and there will be less regulation in respect of disclosures

and corporate governance.

Baillie Gifford conducts appropriate due diligence in respect of all

unlisted investments, and has an established valuation approach

(as described on page 51), which is carefully reviewed by the Board.

Gearing. The Company may utilise borrowings in order to increase

its investment exposure. While such leverage presents opportunities

for increasing total returns, it can also have the opposite effect of

increasing losses. If income and capital appreciation on investments

acquired with borrowed funds are less than the costs of the leverage,

the Company’s net asset value will decrease. The use of leverage

also increases the investment exposure, which means that if the

market moves adversely, the resulting loss to capital would be

greater than if leverage were not used.

Under the Investment Policy, the maximum gearing is 25% of gross

assets, though the Company does not expect borrowing to be in

excess of 20% of gross assets. All borrowing facilities are approved

by the Board and gearing levels are discussed by the Board and the

Managers at every meeting. Covenant levels are monitored regularly.

Cyber security risk. A cyber-attack on Baillie Gifford’s network or

that of a third party service provider could impact the confidentiality,

integrity or availability of data and systems.

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 Gifford on third party

service providers which includes a review of crisis management and

business continuity frameworks.

Climate and Governance risk. As investors place increased

emphasis on climate change and other Environmental, Social and

Governance (ESG) issues, perceived problems with these matters

in an investee company could lead to that company’s shares being

less attractive to investors, adversely affecting its share price.

In addition, potential valuation issues could arise from any direct

impact of the failure to address the ESG weakness on the

operations or management of the investee company (for example in

the event of an industrial accident or spillage). Repeated failure by

the Investment Manager to identify climate/ESG weaknesses in

investee companies could lead to the Company’s own shares being

less attractive to investors, adversely affecting its own share price.

As described on pages 9 to 14, the consideration of ESG (including

climate change) is a core component of Baillie Gifford’s investment

process, with the Board overseeing and challenging Baillie Gifford

on ESG matters. The Board meet with the Investment Manager

and discuss the investment portfolio, including the application of

Baillie Gifford’s ESG framework. Baillie Gifford’s Governance and

Sustainability team undertake specific ESG reviews on investment

portfolios.

Strategic Report

Baillie Gifford China Growth Trust plc 25

Emerging Risks – The Audit Committee 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 global economies and the related

exposure of the investment portfolio to emerging threats such

as the societal and financial implications of escalation of the

Russia-Ukraine military conflict and pandemic or similar public

health threats. The Board considers the impact of such threats on

both markets globally and also more specifically on the Chinese

market. These risks are mitigated by the Investment Manager’s

close links to the investee companies and their ability to ask

questions on contingency plans. The Investment Manager believes

the impact of such events may be to impact growth rather than to

invalidate the investment rationale over the long term.

The Company also monitors its service providers to ensure there

is adequate business continuity.

Viability Statement

Having regard to provision 31 of the UK Corporate Governance

Code, the Directors have assessed the prospects of the

Company over a five year period. The Directors continue to

believe this period to be appropriate as it reflects the Company’s

longer term investment strategy and to be a period during which,

in the absence of any material adverse change to the regulatory

environment in the UK and/or China and to the tax treatment

afforded to UK investment trusts, they do not expect there to be

any significant change to the current principal and emerging risks

facing the Company nor to the effectiveness of the controls

employed to mitigate those risks. Furthermore, the Directors do

not reasonably envisage any change in strategy or any events

which would prevent the Company from operating over a period

of five years.

In considering the viability of the Company, the Directors have

conducted a robust assessment of each of the principal and

emerging risks and uncertainties, including Climate Change,

detailed on pages 23 and 25, in particular the impact of market

risk where a significant fall in Chinese equity markets would

adversely impact the value of the investment portfolio. The

Directors have also considered the Company’s leverage and

liquidity in the context of the revolving credit facility which expires

in April 2024 with specific leverage and liquidity stress testing

conducted during the year, including consideration of the risk of

further market deterioration resulting from a pandemic such as

Covid-19 and increasing geopolitical tensions. The stress testing

did not indicate any matters of concern. Although the Directors

do not envisage difficulty refinancing this facility, the majority of the

Company’s investments are listed at present and readily realisable

and can be sold to meet its liabilities as they fall due. Borrowings

may not exceed 25% of gross asset value, and are not expected

to exceed 20% of gross asset value. In addition, all of the key

operations required by the Company are outsourced to third party

service providers and it is reasonably considered that alternative

providers could be engaged at relatively short notice where

necessary.

Based on the Company’s processes for monitoring revenue

projections and operating costs, share price discount/premium,

the Managers’ compliance with the investment objective, asset

allocation, the portfolio risk profile, leverage, counterparty

exposure, liquidity risk, financial controls and the Managers’

operational resilience, 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

five years.

Section 172 Statement

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

benefit of its members as a whole, and in doing so have regard

(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;

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.

In this context and having regard to the Company being an

externally-managed investment company with no employees,

the Board considers that the Company’s key stakeholders are

its existing and potential shareholders, its externally-appointed

Managers and Secretaries (Baillie Gifford), other professional

service providers (corporate broker, registrar, auditors and

depositary), lenders, wider society and the environment when

applicable.

Great importance is placed by the Board on communication with

shareholders and the Annual General Meeting provides the key

forum for the Board and Managers to present to shareholders on

the performance of the Company and on the future plans and

prospects for the Company. It also allows shareholders the

opportunity to meet with the Board and Managers and to raise

questions and concerns. The Chair and Senior Independent

Director are available to meet with shareholders, independently

of the Managers’ representatives, as appropriate and the

Managers communicate regularly with shareholders and their

respective representatives, reporting back on views to the Board.

Shareholders may also communicate with the Board at any time

by writing to them at the Company’s registered office or to the

Company’s broker (see contact details on back cover). Such

communication helps inform the Board when considering how

best to promote the success of the Company for the benefit of

all stakeholders in aggregate, but particularly shareholders, over

the long term.

Strategic Report

26 Annual Report 2023

The Board seeks to engage with its Managers and Secretaries

and other service providers in a collaborative and collegiate

manner, with open and respectful discussion and debate being

encouraged, whilst also ensuring that appropriate and regular

challenge is brought and evaluation is conducted. The aim of

this approach is to enhance service levels and strengthen

relationships with the Company’s providers with a view to ensuring

the interests of the Company are best served by keeping cost

levels proportionate and competitive, by maintaining the highest

standards of business conduct and by upholding the Company’s

values.

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 environment. The

Board considers that its oversight of environmental, social and

governance (ESG) matters is an important part of its responsibility

to all stakeholders and that consideration of ESG factors sits

naturally within Baillie Gifford’s investment philosophy and process

and with the Company’s aim of providing shareholders with

capital growth.

The Board monitors the Managers’ response to the current and

anticipated impact of climate change on its investment strategy.

Further details on the Managers’ engagement on these matters

can be found on pages 9 to 14.

The Board recognises the importance of keeping the interests of

the Company’s shareholders, and of acting fairly between them,

firmly front of mind in its key decision making and Baillie Gifford

& Co Limited, the Company 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 have required the Directors to have regard to

applicable section 172 factors included the following:

— arranging a two year US$40 million revolving credit facility

from The Royal Bank of Scotland International Limited,

providing a borrowing capacity in order to generate improved

returns to shareholders through the deployment of gearing;

— as part of ongoing Board succession and refreshment,

the appointment and induction of Jonathan Silver to the Board,

with effect from September 2022. The Board believes his

considerable knowledge and experience will be a great benefit

to the Company. Details of his relevant skills and experience

are provided on page 27; and

— the Board’s decision to declare a final dividend of 1.7p.

Strategic Report

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. Further information on the Company’s approach to

Environmental, Social and Governance (ESG) matters are

provided below.

Gender Representation

At 31 January 2023, and at the date of this report, the

Board comprised five Directors, three male and two female.

The Company has no employees. The Board’s policy on

diversity is set out on 32.

Environmental, Social and Governance Policy

Details of the Company’s policy on socially responsible investment

can be found under Corporate Governance and Stewardship on

34 and the Managers’ approach to stewardship is set out on 15.

The Company considers that it does not fall within the scope of

the Modern Slavery Act 2015 and it is not, therefore, obliged to

make a slavery and human trafficking statement. In any event,

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 12 months is set out in

the Chair’s Statement on pages 2 and 3 and the Managers’

Report on pages 4 to 6.

The Strategic Report, which includes pages 2 to 26 was approved

by the Board of Directors and signed on its behalf on 4 April 2023.

Susan Platts-Martin

Chair

Baillie Gifford China Growth Trust plc 27

Susan Platts-Martin (Chair) was appointed to the Board in

July 2014 and brings to the Board considerable knowledge of

investment companies and investment management generally

and was appointed Chair in 2017. Susan spent 26 years in a

broad range of roles at Fidelity International, including several

years as the Head of Investment Trusts. She is a qualified

chartered accountant and currently sits on the board of

BlackRock Smaller Companies Trust plc.

Tim Clissold was appointed to the Board in October 2021.

Tim qualified as a Chartered Accountant and has worked in

Australia, Hong Kong and extensively in China, where he was

co-founder of one of the first private equity groups in the country.

He later ran Goldman Sachs China’s distressed investment

business in Beijing. He co-founded another business to originate

UN carbon offsets from GHG emission reduction projects in

China. Tim is chief resolution officer at Peony Advisors Limited,

a company which helps foreign investors recover value after being

disenfranchised by Chinese companies and is a non-executive

director of Henderson Far East Income Limited. He was a

member of the Strategic Advisory Board of Braemar Energy

Ventures, a New York venture capital fund focused on energy

efficiency technologies. He is the author of Mr China and Chinese

Rules and speaks, reads and writes Mandarin Chinese.

Magdalene Miller was appointed to the Board in November 2020.

Magdalene is a former investment director with Aberdeen Standard

Investments’ global emerging market team. Based in London and

Edinburgh, she spent 32 years managing listed equity portfolios,

investing in Japanese, Asian Pacific and UK markets. In the 10 years

before her retirement in 2018, she ran the Standard Life China

Sicav, one of the top performing funds in its sector. A native of

Hong Kong, Magdalene is fluent in Cantonese and Mandarin and

has travelled extensively in China and Asia over the course of her

career. She is a non-executive director of Templeton Emerging

Markets Investment Trust plc. She also currently serves as a

trustee for an educational endowment fund and participates in

volunteering work.

Andrew Robson (Audit Committee Chairman, Senior

Independent Director) was appointed to the Board in July 2014.

Andrew is a qualified chartered accountant with over 15 years of

corporate finance experience, including with Asian companies,

gained at Robert Fleming & Co Limited and SG Hambros. He has

considerable experience as a finance director and as chairman of

audit committees. Andrew took over the role of Chairman of the

Audit Committee in June 2015. Andrew is currently non-executive

director of BlackRock Energy and Resources Income Trust and

non-executive director and chairman of the audit committee of

Aberdeen New India Investment Trust PLC. He was also a

non-executive director of Shires Income PLC and JP Morgan

Smaller Companies Investment Trust plc until 2020.

Directors

The members of the Board come from a broad variety of backgrounds. The Board can

draw on an extensive pool of knowledge and experience.

Directors and Management

Jonathan Silver was appointed to the Board in September 2022.

Jonathan is a qualified accountant and member of the Institute of

Chartered Accountants of Scotland. Jonathan has held various

senior financial positions throughout his career, including 21 years

as Chief Financial Officer on the main Board of Laird plc from

1994 until 2015. Jonathan was the chairman of the audit committee

at Invesco Income and Growth Trust plc from 2007 until 2021.

Jonathan is a non-executive director and chairman of the audit

and risk committee of Henderson High Income Trust plc, a position

he has held since 2019 and is also a non-executive director and

chairman of the audit committee of Spirent Communications plc,

a position he has held since 2015. Since 2017 Jonathan has been

a non-executive director of East and North Hertfordshire NHS Trust.

All of the Directors are members of the Audit Committee.

Managers and Secretaries

The Company has appointed Baillie Gifford & Co Limited, a wholly

owned subsidiary of Baillie Gifford & Co, as its Alternative Investment

Fund Manager (‘AIFM’) and Company Secretary. Baillie Gifford &

Co Limited has delegated investment management services to

Baillie Gifford & Co. Baillie Gifford & Co is an investment management

firm formed in 1927 out of the legal firm Baillie Gifford, 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 twelve investment trusts.

Baillie Gifford also manages unit trusts 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 £232 billion as at

4 April 2023. Based in Edinburgh, it is one of the leading privately

owned investment management firms in the UK, with 51 partners

and a staff of around 1,840.

The Managers of Baillie Gifford China Growth Trust are Roderick

Snell and Sophie Earnshaw. Roderick joined Baillie Gifford in 2006

and is an Investment Manager in the Emerging Markets Equity

Team. He has managed the Baillie Gifford Pacific Fund since 2010

and has been Manager of Pacific Horizon Investment Trust since

2021 (he was deputy from 2013). Since March 2020, he has also

been a manager on the China strategy. He spent time in the UK

and European Equity teams prior to joining the Emerging Markets

Equity Team in 2008. Roderick graduated BSc (Hons) in Medical

Biology from the University of Edinburgh in 2006.

Sophie joined Baillie Gifford in 2010 and is an Investment Manager

in the Emerging Markets and China A-share Teams. She has also

been co-manager of the China Fund and a member of the

International Focus Portfolio Construction Group since 2014.

Sophie is a CFA Charter holder. She graduated MA in English

Literature from the University of Edinburgh in 2008 and MPhil in

Eighteenth Century and Romantic Literature from the University

of Cambridge in 2009.

Baillie Gifford & Co and Baillie Gifford & Co Limited are both

authorised and regulated by the Financial Conduct Authority.

Governance Report

28 Annual Report 2023

The Directors present their Report together with the audited

Financial Statements of the Company for the year to 31 January 2023.

Corporate Governance

The Corporate Governance Report is set out on pages 31 to 34

and forms part of this Report.

Managers and Company Secretaries

Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie

Gifford & Co, was appointed as the Company’s Alternative

Investment Fund Manager (‘AIFM’) and Company Secretary

on 16 September 2020. 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 three

months’ notice or on shorter notice in certain circumstances.

Compensation would only be payable if termination occurred

prior to the expiry of the notice period. The annual management

fee is (i) 0.75% of the first £50 million of net asset value; plus

(ii) 0.65% of net asset value between £50 million and £250 million;

plus (iii) 0.55% of net asset value in excess of £250 million,

calculated and payable quarterly.

The Board considers the Company’s investment management

and secretarial arrangements on an ongoing basis and a

formal review is conducted annually. The Board considered,

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;

investment performance; the administrative services provided

by the Secretaries and the quality of information provided; the

marketing efforts undertaken by the Managers; the relationship

with the Managers; and comparative peer group charges and fees.

Following the most recent review, the Board concluded that the

continuing appointment of Baillie Gifford & Co Limited as

AIFM

and the delegation of investment management services to Baillie

Gifford & Co, on the terms agreed, is in the interests of shareholders

as a whole.

Depositary

In accordance with the UK Alternative Investment Fund

Managers Regulations, The Bank of New York Mellon

(International) Limited has been appointed as Depositary to

the Company. The Depositary’s responsibilities include cash

monitoring, safe keeping of the Company’s financial instruments,

verifying ownership and maintaining a record of other assets and

monitoring the Company’s compliance with investment limits and

leverage requirements. Custody services are provided by The

Bank of New York Mellon (International) Limited (as a delegate

of the Depositary) (the ‘Custodian’).

Directors

Information about the Directors, including their relevant

experience, can be found on page 27.

Jonathan Silver was appointed to the Board on 1 September 2022

and is required to seek election by shareholders at the Annual

General Meeting. Details of his relevant skills and experience are

provided on page 27. All other Directors will retire at the Annual

General Meeting and offer themselves for re-election with the

exception of Andrew Robson, who will stand down from the

Board on 15 June 2023. Following a formal performance evaluation,

the Chair confirms that the Board considers that each Director’s

performance continues to be effective and that each Director

remains committed to the Company and capable of devoting

sufficient time to their roles. The Board recommends their

re-election to shareholders.

Director Indemnification and Insurance

To the extent permitted by law and by the Company’s Articles,

the Company has entered into deeds of indemnity for the benefit

of each Director of the Company in respect of liabilities which

may attach to them in their capacity as Directors of the Company.

These pr

ovisions, which are qualifying third party indemnity

provisions as defined by section 234 of the Companies Act 2006,

were in place throughout the year and as at the date of approval

of the Financial Statements.

The Company maintains Directors’ and Officers’ Liability

Insurance.

Conflicts of Interest

Each Director submits a list of potential conflicts of interest to the

Board for consideration and approval at each meeting. The Board

considers these carefully, taking into account the circumstances

surrounding them prior to authorisation. Having considered the

lists of potential conflicts there were no situations which gave rise

to a direct or indirect interest of a Director which conflicted with

the interests of the Company.

Dividend

The Board recommends a final dividend of 1.7p per ordinary share

(2022 – 4.60p). No interim dividend was declared (2022 – 2.55p).

Dividends will be by way of a final dividend and be not less than the

minimum required for the Company to maintain its investment trust

status.

If approved by shareholders at the Annual General Meeting,

the recommended final dividend per ordinary share will be paid

on 26 July 2023 to shareholders on the register at the close of

business on 23 June 2023. The ex-dividend date is 22 June 2023.

Share Capital

Capital Structure

The Company’s capital structure at 31 January 2023 consists of

68,348,151 ordinary shares of 25p each (2022 – 68,348,151) of

which 62,012,982 (2022 – 62,012,982) are allotted and fully paid

and 6,335,169 (2022 – 6,335,169) are 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.

Directors’ Report

Governance Report

Baillie Gifford China Growth Trust plc 29

Dividend

The ordinary shares carry a right to receive dividends. Interim

dividends, if any, are determined by the Directors, whereas the

proposed final dividend is subject to shareholder approval.

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

Each ordinary shareholder present in person or by proxy is

entitled 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

66 and 67.

Major Interests in the Company’s Shares

The Company has received notifications in accordance with the

Financial Conduct Authority’s Disclosure and Transparency Rule

5.1.2R of the following interests in 3% or more of the voting rights

attached to the Company’s issued share capital.

Name

No of ordinary

25p shares held at

31 January 2023

% of

issue *

City of London Investment Management 3,536,943 5.70%

Rathbone Nominees 3,076,669 5.00%

There have been no other changes to the major interests in the

Company’s shares intimated up to 4 April 2023.

* Ordinary shares in issue excluding treasury shares.

Annual General Meeting

The details of this year’s AGM, including the proposed resolutions

and information on the deadlines for proxy appointments, can be

found on pages 65 to 68.

Shareholders who hold shares in their own name on the main

through a share platform or other nominee, the Board would

encourage you to contact these organisations directly as soon as

possible to arrange for you to vote at the AGM. The resolutions

relating to the renewal of the Directors’ authorities to issue and

buy back shares are explained in more detail below.

Share Issuance Authority

Resolution 11 in the Notice of Annual General Meeting seeks

to renew the Directors’ general authority to issue shares up to

an aggregate nominal amount of £5,167,748. This amount

represents one third of the Company’s total ordinary share capital

currently in issue and meets institutional guidelines. No issue of

ordinary shares will be made pursuant to the authorisation of

Resolution 11 which would effectively alter the control of the

Company without the prior approval of shareholders in General

Meeting.

Resolution 12, which is being proposed as a special resolution,

seeks to renew the Directors’ authority to issue shares or sell

shares held in treasury on a non pre-emptive basis for cash up

to an aggregate nominal amount of £1,550,325 (representing

10% of the issued ordinary share capital of the Company as at

4 April 2023). This authority 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 resolution, if earlier.

The authority proposed to be granted by Resolution 12 will only

be used to issue shares or sell shares from treasury at, or 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.

During the year to 31 January 2023, the Company did not issue

any shares.

Market Purchases of Own Shares

At the last Annual General Meeting the Company was granted

authority to purchase up to 9,295,746 ordinary shares (equivalent

14.99

% of its issued share capital), such authority to expire at

the 2023 Annual General Meeting.

The Directors are seeking

shareholders’ approval at the Annual General Meeting to renew

the authority to make market purchases up to 14.99% of the

Company’s ordinary shares in issue (excluding treasury shares)

at the date of passing of the resolution, such authority to expire

at the Annual General Meeting of the Company to be held in

2024. Such purchases will only be made at a discount to the

prevailing net asset value.

During the year to 31 January 2023, no shares (2022 – no shares)

were bought back under the buy-back authority.

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 resold from treasury at a premium to the net

asset value per ordinary share.

Treasury shares do not receive distributions and the Company will

not be entitled to exercise the voting rights attaching to them.

In accordance with the Listing Rules of the FCA, 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

Exchange of an ordinary share over the five business days

immediately preceding the date of purchase; and

(ii) the higher of the price of the last independent trade and

the highest current independent bid on the London Stock

Exchange as stipulated by Article 5(1) of Commission

Regulation (EC) 22 December 2003 implementing the Market

Abuse Directive as regards exemptions for buy back

programmes and stabilisation of financial instruments

(No. 2273/2003).

Governance Report

30 Annual Report 2023

The minimum price (exclusive of expenses) that may be paid will

be the nominal value of an ordinary share. Purchases of ordinary

shares will be made within guidelines established, from time to

time, by the Board. Your attention is drawn to Resolution 13 in

the Notice of Annual General Meeting. This authority, if conferred,

will only be exercised if to do so would result in an increase in net

asset value per ordinary share for the remaining shareholders and

if it is considered in the best interests of shareholders generally.

Articles of Association

The Company’s Articles of Association may only be amended by

special resolution at a General Meeting of shareholders.

Financial Instruments

The Company’s financial instruments comprise its investment

portfolio, cash balances, bank borrowings and debtors and

creditors that arise directly from its operations such as sales and

purchases awaiting settlement and accrued income. The financial

risk management objectives and policies arising from its financial

instruments and the exposure of the Company to risk are

disclosed in note 18 to the Financial Statements.

Disclosure of Information to Auditor

The Directors confirm that, so far as each of the Directors is

aware, there is no relevant audit information of which the

Company’s Auditor is unaware and the Directors have taken

all the steps that they might reasonably be expected 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.

Independent Auditor

The Auditor, Ernst & Young LLP, is willing to continue in office,

and in accordance with section 489 and section 491(1) of the

Companies Act 2006, resolutions concerning Ernst & Young

LLP’s reappointment and remuneration will be submitted to the

Annual General Meeting.

Post Balance Sheet Events

The Directors confirm that there have been no significant post

Balance Sheet events which require adjustment to, or disclosure

in, the Financial Statements or notes up to 4 April 2023.

Stakeholder Engagement

Although the Company has no employees, trade suppliers or

customers, the Directors give regular consideration to the need to

foster the Company’s business relationships with its stakeholders,

in particular with shareholders, its externally appointed Managers,

other professional service providers and lenders. The effect of this

consideration upon the key decisions taken by the Company

during the financial year is set out in further detail in the Strategic

Report on pages 25 and 26.

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 same reasons as set out above, the Company considers

itself to be a low energy user under the SECR regulations and has

no energy and carbon information to disclose.

Bribery Act

The Company has a zero tolerance policy towards bribery and is

committed to carrying out business fairly, honestly and openly.

The Managers also adopt a zero tolerance approach and have

policies and procedures in place to prevent bribery.

Criminal Finances Act 2017

The Company has a commitment to zero tolerance towards the

criminal facilitation of tax evasion.

Recommendation

The Directors unanimously recommend you vote in favour of the

resolutions to be proposed at the Annual General Meeting as it is

their view that the resolutions are in the best interests of

shareholders as a whole.

On behalf of the Board

Susan Platts-Martin

Chair

4 April 2023

Governance Report

Baillie Gifford China Growth Trust plc 31

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 relevant

principles of the Association of Investment Companies Code of

Corporate Governance (the ‘AIC Code’) were applied throughout

the financial year. The AIC Code provides a framework of best

practice for investment companies and can be found at

theaic.co.uk.

Compliance

The Board confirms that the Company has complied throughout

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 specific to the

Company has been addressed on 36). Details of the Board’s view

on Directors who have served on the Board for more than nine

years can be found within the Independence of Directors section

of this Report.

The FRC has confirmed that AIC member companies who report

against the AIC Code will be meeting their obligations in relation

to the UK Code (the AIC Code can be found at theaic.co.uk).

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, gearing, share buy-back

and issuance policy, treasury matters, dividend and corporate

governance policy. The Board seeks to contribute to the delivery

of the Company’s strategy by engaging with the Managers in a

collaborative and collegiate manner with open and respectful

discussion and debate being encouraged, whilst also ensuring

that appropriate and regular challenge is brought and evaluation

is conducted. 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 it to function effectively and to allow Directors to discharge

their responsibilities.

The Board comprises five Directors, all of whom are non-executive.

The Chair is responsible for organising the business of the Board,

ensuring its effectiveness and setting its agenda.

The executive

responsibility for investment management has been delegated to

the Company’s Alternative Investment Fund Manager (‘AIFM’),

Baillie Gifford & Co Limited, and, in the context of a Board

comprising only non-executive Directors, there is no chief

executive officer. The Senior Independent Director is Andrew

Robson, Magdalene Miller will become Senior Independent

Director when Andrew Robson retires after the AGM on

15 June 2023.

The Directors believe that the Board has a balance of skills and

experience that enables it to provide effective strategic leadership

and proper governance of the Company. Information about the

Directors, including their relevant experience, can be found on

page 27.

There is an agreed procedure for Directors to seek independent

professional advice, if necessary, at the Company’s expense.

Appointments to the Board

As noted in the Chair’s Statement on page 2 the Board undertook

a recruitment process to appoint a non-executive Director to the

Board. Cornforth Consulting was engaged to help identify

a potential new Director. Cornforth Consulting has no other

connection with the Company or any of the Directors. The Board

identified the skills and experience that would be required, having

due regard for the benefits of diversity on the Board, and candidates

were interviewed from a shortlist provided by Cornforth Consulting.

Jonathan Silver was identified as the preferred candidate and was

appointed to the Board on 1 September 2022 and his relevant

skills and experience are provided on page 27. Andrew Robson is

to retire from the Board at the AGM in June 2023. As explained in

the Chair’s statement on page 2, as Andrew Robson and Susan

Platts-Martin both complete their nine year tenure in July 2023,

the Board considered that it would be appropriate for Susan

Platts-Martin to stay on as Chair until 2024 in the interest of

continuity given recent changes to the Company’s mandate,

manager and a number of other Board changes. The next hire

will be for a successor to the Chair and Susan Platts-Martin plans

to step down in the first half of 2024 after a suitable handover

period. A search is underway supported by Cornforth Consulting

and a new appointment to the Board will be announced in due

course.

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,

Directors are subject to election by shareholders at the first AGM

after their appointment. Thereafter, all Directors will retire at each

Annual General Meeting and, if appropriate, offer themselves for

re-election.

Independence of Directors

All 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 review 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

be a benefit to the Board.

Corporate Governance Report

Governance Report

32 Annual Report 2023

Meetings

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, marketing, revenue budgets,

dividend policy and communication with shareholders. The Board

considers that it meets sufficiently regularly to discharge its duties

effectively. The table below shows the attendance record for the

Board and Committee meetings held during the year. The Annual

General Meeting was attended by all Directors serving at that date.

Directors’ Attendance at Meetings

Board

Nominations

Committee Strategy

Audit

Committee

Number of meetings

4 3 1 2

Susan Platts-Martin 4 3 1 2

Tim Clissold 4 3 1 2

Magdalene Miller 4 3 1 2

Andrew Robson 4 3 1 2

Jonathan Silver

* 2 1 1 1

* Jonathan Silver was appointed as a Director on 1 September 2022.

Policy on Board and Chair’s Tenure

The Board’s policy is that all Directors, including the Chair,

shall normally have tenure limited to nine years from their first

appointment to the Boar

d. Exceptions may be made in

exceptional circumstances, particularly in respect of the Chair for

example to facilitate effective succession planning or if the

Company were in the middle of a corporate action, when an

extension may be appropriate. However, the Board believes that

long serving Directors should not be prevented from forming part

of an independent majority and that the length of a Director’s

tenure does not necessarily reduce his or her ability to act

independently.

Performance Evaluation

An appraisal of the Chair, each Director and a performance

evaluation and review of the Board as a whole and the Audit

Committee was carried out during the year. Each Director and

the Chair responded to an evaluation questionnaire. The Chair’s

appraisal was led by Andrew Robson, the Senior Independent

Director. 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 the Audit

Committee. Following this process it was concluded that there

was a diverse range of skills within the Board, and the

performance of each Director, the Chair, the Board and the Audit

Committee continues to be effective and that each Director and

the Chair remain committed to the Company.

A review of the Chair’s and the other Directors’ commitments was

carried out and the Board is satisfied that they are capable of

devoting sufficient time to the Company. There were no significant

changes to the Chair’s other commitments during the year.

Diversity

Appointments to the Board are made on merit and based on

objective criteria, including the promotion of diversity of gender,

social and ethnic backgrounds, and cognitive and personal

strengths. The priority in succession planning and appointing new

Directors is to identify candidates with the best range of skills and

experience to complement those of the existing Directors, with a

view to ensuring that the Board remains well placed to help the

Company achieve its investment and governance objectives.

The Company has chosen to disclose compliance with the targets

outlined in the FCA Listing Rules ahead of the deadline which will

come into effect for the financial year ending 31 January 2024.

The breakdown of gender diversity and ethnic background on the

Board is shown below.

The Board has resolved that the Company’s year end date be the

most appropriate date for disclosure purposes. There have been

no changes since 31 January 2023.

Number of

Board Members

Percentage of

the Board

Number of

senior positions

on the Board

Men 3 60% 2

Women 2 40% 1

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% 3

Asian/Asian British 1 20% –

he Board meets the FCA Listing Rules diversity targets that at

least 40% of the individuals on the Board are women, at least one

of the senior positions on the Board is held by a woman and that

there is at least one Director of an ethnic minority background.

* As an externally managed investment company with no chief

executive officer (CEO) or chief financial officer (CFO), the Board

considers the Chair of the Audit Committee to be a senior role in

addition to the roles of Senior Independent Director and Board Chair

identified as such by the FCA.

Induction and Training

New Directors are provided with an induction programme which

is tailored to the particular circumstances of the appointee.

Regular briefings were provided during the year on industry and

regulatory matters. 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

with the Chair’s fees considered by the Board in the absence of

the Chair. The Company’s policy on remuneration is set out in the

Directors’ Remuneration Report on pages 37 to 39.

Governance Report

Baillie Gifford China Growth Trust plc 33

Management Engagement Committee

The Directors have considered that a separate Management

Engagement Committee is not required given the small size of

the Board.

Audit Committee

The report of the Audit Committee is set out on pages 35 and 36.

Internal Controls and Risk Management

The Directors acknowledge their responsibility for the Company’s

risk management and internal control systems and for reviewing

their effectiveness, including with regard to preparation of the

Company’s Annual Report and Financial Statements. 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 Board confirms that there is an ongoing process for

identifying, evaluating and managing the significant risks faced by

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 Regulations

(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 are defined and formalised within a service level

agreement. Baillie Gifford & Co conducts an annual review of its

system of internal controls which is documented within an internal

controls report which complies with ISAE 3402 and Technical

Release AAF 01/06 – Assurance Reports on Internal 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 been identified during the year they also provide a

mechanism to assess whether further action is required to

manage these risks.

The Directors confirm that they have reviewed the effectiveness

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

on a regular basis. No significant weaknesses were identified in

the year under review and up to the date of this Report.

The Board confirms that these procedures have been in place

throughout the Company’s financial year and continue to be in

place up to the date of approval of this Report.

To comply with the UK Alternative Investment Fund Managers

Regulations, 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, safe

keeping of the Company’s financial instruments, verifying 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 of financial

instruments held in custody. The Company’s Custodian is The

Bank of New York Mellon (International) Limited. The Custodian

prepares reports on its key controls and safeguards which are

independently reviewed by 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

Board, take into account the objectives, strategy and risk profile

of the portfolio. These limits, including leverage (see 72),

are monitored and the sensitivity of the portfolio to key risks is

undertaken periodically as appropriate to ascertain the impact

of changes in key variables in the portfolio. Exceptions from

limits 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.

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.

An explanation of the Company’s principal and emerging risks

and how they are managed is on pages 23 to 25 and contained

in note 1 to the Financial Statements. The Board has, in particular,

considered the impact of heightened market volatility since the

Covid-19 pandemic and over recent months due to the

macroeconomic and geopolitical concerns, including rising inflation

and interest rates and the Russian invasion of Ukraine, and specific

leverage and liquidity stress testing 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 significantly.

All borrowings require the prior approval of the Board. Gearing

levels and compliance with borrowing covenants are reviewed

Governance Report

34 Annual Report 2023

by the Board on a regular basis. 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.

The Company’s primary third party suppliers, including its Managers

and Secretaries, Custodian, Depositary, Registrar, Auditor and

Corporate Broker, are not experiencing significant operational

difficulties affecting their respective services to the Company.

Accordingly, the Financial Statements have been prepared on

the going concern basis as it is the Directors’ opinion, having

assessed the principal risks and other matters as set out in the

Viability Statement on page 25, that the Company will continue in

operational existence until 30 April 2024, which is for a period

of at least 12 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 communicate regularly

with shareholders and their representatives. The Chair also

meets shareholders independently of the Managers, from time to

time, and reports shareholders’ views to the Board. Shareholders

wishing to communicate with any members of the Board may do

so by writing to them at the Company’s registered office or

through the Company’s broker, J.P. Morgan Cazenove (see

contact details on back cover). All correspondence addressed to

the Chair is dealt with directly by the Chair.

The Company’s Annual General Meeting provides a further forum

for communication with all shareholders. The level of proxies

lodged for each resolution is announced at the Meeting and is

published at bailliegiffordchinagrowthtrust.com subsequent to

the meeting. The notice period for the Annual General Meeting is

at least 21 clear days. Shareholders and potential investors may

obtain up-to-date information on the Company from the

Managers’ website at bailliegiffordchinagrowthtrust.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 their actions are reported at Board meetings.

The Company believes that it is in the shareholders’ interests to

consider environmental, social and governance (‘ESG’) factors

when selecting and retaining investments and has asked the

Managers to take these issues into account. The Managers do

not exclude companies from their investment universe purely on

the grounds of ESG factors 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 Managers to consider how ESG factors

could impact long-term investment returns. The Managers’ Report

on ESG on pages 9 to 14 provides more detail. The Managers’

Stewardship Principles are set out on page 15 and the statement

of compliance with the UK Stewardship Code can be found on

the Managers’ website at bailliegifford.com. Baillie Gifford & Co,

the Managers, has considered the Sustainable Finance Disclosure

Regulation (‘SFDR’) and further details can be found on page 73.

The Managers are signatories to the United Nations Principles for

Responsible Investment and the Carbon Disclosure Project and

are also members of the of the Asian Corporate Governance

Association and the International Corporate Governance Network.

Climate Change

The Board recognises that climate change poses a serious threat

to our environment, our society and to economies and companies

around 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 Manager has engaged an external provider to map the

carbon footprint of the equity portfolio using the information

to prioritise engagement and understand what higher emitting

companies are doing to manage climate risk better. The carbon

intensity of the Company is provided in the Managers’ Report

on ESG on pages 11 and 12.

Baillie Gifford’s Task Force on Climate-Related Financial

Disclosures (‘TCFD’) Climate Report is available on the Managers’

Website at bailliegifford.com. Baillie Gifford will provide a TCFD

climate report for the Company by 30 June 2023. The Managers,

Baillie Gifford & Co, are signatories to the Carbon Disclosure

Project.

On behalf of the Board

Susan Platts-Martin

Chair

4 April 2023

Governance Report

Baillie Gifford China Growth Trust plc 35

The Audit Committee consists of all Directors. With reference to the guidance from the 2019 AIC Code of Corporate Governance and

given the size of the Board it is considered appropriate for Ms Platts-Martin, the Chair of the Board, to be a member of the Audit

Committee. The Chair of the Board is a qualified accountant and brings a valuable contribution to the Committee’s deliberations.

The members of the Committee consider that they have the requisite financial skills and experience to fulfil the responsibilities of the

Committee. Andrew Robson is the Chairman of the Committee. Jonathan Silver will become Chairman of the Audit Committee when

Andrew Robson retires after the AGM on 15 June 2023. The Committee’s authority and duties are clearly defined within its written

Terms of Reference which are available on request from the Company and on the Company’s page of the Managers’ website:

bailliegiffordchinagrowthtrust.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 (see page 32).

At least once a year the Committee meets with the external Auditor without any representative of the Manager being present.

Main Activities of the Committee

The Committee met twice during the year to 31 January 2023. Ernst & Young LLP, the external Auditor, attended one meeting and Baillie

Gifford 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.

The following significant issues have been considered in relation to the Annual Report and Accounts for the year ended

31 January 2023:

Audit Committee Report

Other Matters Considered During the Year

During the year, the Audit Committee also considered the following:

— Independent Auditor Ernst & Young (‘EY’) were re-appointed as Independent Auditor for the year ended 31 January 2023.

Details are provided on page 36 in the section External Auditor.

— Compliance with section 1158 of the Corporation Tax Act 2010 The Directors regularly receive updates from the Managers

on the Company’s compliance with the requirements of investment trust status. There were no significant matters during the year

to report.

— Cyber security The threat of a cyber attack is a concern for all organisations. The Audit Committee considered the principal risks,

and reviewed information from relevant service providers on their cyber security arrangements.

— Service providers The Audit Committee reviewed the performance and internal controls of its major operational service providers.

The Committee also reviewed the arrangements in place within Baillie Gifford & Co whereby their staff may, in confidence, raise

concerns about possible improprieties in matters of financial reporting or other matters.

Significant Issue How the Issue was Addressed

Valuation and existence

of investments

The prices of all the listed investments at 31 January 2023 were agreed to external price sources.

The Committee reviewed the Manager’s valuation policy for investments in unlisted companies (as

described on pages 51 and 52) and approved the valuation of the unlisted investment following a detailed

review of the valuation of the investment and relevant challenge where appropriate. The listed portfolio

holdings were agreed to confirmations from the Company’s custodian. The unlisted holding in ByteDance

was agreed to external confirmations.

Recognition of income Income received is accounted for in line with the Company’s accounting policy. There were no significant

matters during the year to report. The Audit Committee reviews the treatment of any special dividends

received during the year, and also reviews total income against both prior year income and forecast

income.

Risk review and emerging risks The Committee regularly reviews the Company’s Risk Matrix and keeps the key strategic risks facing the

Company under particular scrutiny. Please see the discussion of principal risks on pages 23 and 24.

In addition, the Audit Committee considered its processes for identifying and monitoring emerging risks.

It was agreed that at each Audit Committee meeting there should be a discussion on emerging risks,

and any identified emerging risks should be recorded in the Risk Matrix.

Going concern and Viability

Statement

The Committee considered the factors, including the impact of Covid-19 and increasing geopolitical

tensions, that might affect the Company’s viability over a period of five years and its ability to continue as

a going concern for at least twelve months from the date of signing of the Financial Statements. It has

also reviewed the reports from the Managers on the cash position and income projections of the Company,

the liquidity of the investment portfolio, compliance with debt covenants and the Company’s ability to

meet its obligations as they fall due. The Committee also reviewed the Viability Statement on page 25 and

the statement on Going Concern on pages 33 and 34 including the potential impact of Covid-19 and

increasing geopolitical tensions. Following this assessment, the Committee recommended to the Board

the appropriateness of the Going Concern basis in preparing the Financial Statements and confirmed the

accuracy of the Viability Statement and statement on Going Concern.

Governance Report

36 Annual Report 2023

To fulfil its responsibility for oversight of the external audit process

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.

Ernst & Young LLP has been engaged as the Company’s Auditor

since 2020. The audit partners responsible for the audit are

rotated at least every five years in accordance with professional

and regulatory standards in order to protect independence and

objectivity and to provide fresh challenge to the business.

Caroline Mercer is the lead audit partner and has held the role

since 2020.

Ernst & Young LLP has confirmed that 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 process described above, the

Committee is satisfied that the Auditor has remained independent

and effective.

There are no contractual obligations restricting the Committee’s

choice of external Auditor.

The Audit Committee has put in place a non-audit services policy,

which ensures that any work outside the scope of the standard

audit work requires prior approval by the Audit Committee or the

Board. This enables the Committee to ensure that the external

Auditor remains fully independent.

Accountability and Audit

The respective responsibilities of the Directors and the Auditor in

connection with the Financial Statements are set out on page 40.

On behalf of the Board

Andrew Robson

Audit Committee Chairman

4 April 2023

— Allocation of costs The Audit Committee reviewed the

Company’s policy on the allocation of certain costs (principally

management fees and interest costs) between capital and

revenue and recommended to the Board that there should be

no change in the following proportion: capital 75%; revenue

25%. This split reflected the Board’s view of the expected

long-term split of returns, in compliance with the SORP.

The recommendation was accepted by the Board.

— Fair, balanced and understandable The Audit Committee

reviewed the integrity of financial statements and ensured

that, taken as a whole, they presented fair, balanced and

understandable assessment of the Company’s position

and prospects.

Internal Audit

The Committee continues to believe that the compliance and

internal control systems and the internal audit function in place

within the Managers provide sufficient assurance that a sound

system of internal control, which safeguards shareholders’

investment and the Company’s assets, is maintained. An internal

audit function, specific to the Company, is therefore considered

unnecessary.

Internal Controls and Risk Management

The Committee reviewed the effectiveness of the Company’s

risk management and internal controls systems as described on

page 33. No significant weaknesses were identified in the year

under review.

External Auditor

To fulfil its responsibility regarding the independence and

objectivity of the external Auditor, the Committee reviewed:

— the audit plan for the current year;

— a report from the Auditor describing its arrangements to

manage auditor independence and received confirmation of

its independence; and

— the extent of non-audit services provided by the external

Auditor. There were no non-audit fees for the year to

31 January 2023.

To assess the effectiveness of the external Auditor, the

Committee reviewed and considered:

— the Auditor’s fulfilment of the agreed audit plan;

— the Audit Quality Inspection Report from the FRC; and

— detailed discussion with audit personnel to challenge audit

processes and deliverables.

Governance Report

Baillie Gifford China Growth Trust plc 37

Directors’ Remuneration Report

This report has been prepared in accordance with the

requirements of the Companies Act 2006.

Statement by the Chair

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 approved at the Annual General Meeting in June 2020

and no changes are proposed to the policy to be approved at

the Annual General Meeting to be held on 15 June 2023.

The Board reviewed the level of fees during the year and it was

agreed that with effect from 1 February 2023, the Chair’s fee

should increase by £1,500 to £43,000 and the Non-executive

Director fee should increase by £1,000 to £26,000, there were

no changes to the additional fee for the Chairman of the Audit

Committee or the Senior Independent Director.

Directors’ Remuneration Policy

The Company’s policy is that the remuneration of non-executive

Directors should reflect the experience of the Board as a whole

and be determined with reference to the Company’s peer group

and the investment trust industry generally. Directors are not

eligible for bonuses, pension benefits, share options, long-term

incentive schemes or other performance-related benefits as the

Board does not believe that this is appropriate for non-executive

Directors.

The Board has set four levels of fees: one for the Chair, one for

the other non-executive Directors, an additional fee that is paid to

the Director who chairs the Audit Committee and an additional fee

paid to the Senior Independent Director. Fees are reviewed

annually in accordance with the policy. The fee for any new

Director appointed will be determined on the same basis.

Any changes to Directors’ fees are considered by the Board

as a whole.

Any views expressed by shareholders on the fees being paid to

Directors will be taken into consideration by the Board when

reviewing the Directors’ Remuneration Policy and in the annual

review of Directors’ fees.

Under the Articles of Association, Directors are entitled to be paid

all reasonable travel, hotel and incidental expenses incurred in or

about the performance of their duties as Directors, including

expenses incurred in attending Board or shareholder meetings.

If any Director is called upon to perform extra or special services

of any kind, under the Articles of Association, they shall be

entitled to receive such extra remuneration as the Board may

decide in addition to any remuneration they may be entitled to

receive.

The Company does not enter into service contracts with its

Directors. Instead, the Company has a policy of entering into a

letter of appointment with each of its Directors, copies of which

are available on request from the Company Secretary. Under the

Directors’ letters of appointment, there is a notice period of one

month and no compensation is payable to a Director on leaving

office. No compensation is payable in the event of a takeover bid.

The terms of their appointment requires all Directors to retire and

be subject to election at the first Annual General Meeting after

their appointment. Thereafter all Directors will seek annual

re-election at the Company’s AGMs.

Limits on Directors’ Remuneration

The fees paid to the non-executive Directors are determined

within the limit set out in the Company’s Articles of Association

which is currently £200,000 per annum in aggregate. Any change

to this limit requires shareholder approval.

The fees for the non-executive Directors are payable monthly

in arrears and the fees paid in respect of the year ended

31 January 2023 together with the expected fees payable in

respect of the year ending 31 January 2024 are set out in the

table below. The fees payable to the Directors in the subsequent

financial years will be determined following an annual review of

the Directors’ fees.

Expected

fees for

year ending

31 January

2024

Fees paid for

the year to

31 January

2023

Chair’s Fee 43,000 41,500

Non-executive Director Fee 26,000 25,000

Additional fee for the Chairman

of the Audit Committee 5,000 5,000

Additional fee for Senior Independent

Director 1,000 1,000

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 200,000 200,000

Governance Report

38 Annual Report 2023

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 the Independent Auditor’s Report on pages 41 to 46.

Directors’ Remuneration for the Year (audited)

The Directors who served during the year received the following remuneration in the form of fees and taxable benefits. This represents

the entire remuneration paid to the Directors.

Name

2023

Fees

2023

Taxable

benefits **

2023

Total

2022

Fees

2022

Taxable

benefits **

2022

Total

Susan Platts-Martin 41,500 1,688 43,188 41,500 1,011 42,511

Tim Clissold

* 25,000 986 25,986 8,333 146 8,479

Dermot McMeekin

†

– – – 10,436 – 10,436

Magdalene Miller 25,000 1,326 26,326 25,000 854 25,854

Chris Ralph

9,487 1,266 10,753 25,000 1,269 26,269

Andrew Robson 31,000 982 31,982 30,660 756 31,416

Jonathan Silver

‡

10,417 128 10,545 – – –

142,404 6,376 148,780 140,930 4,036 144,966

** Comprises expenses incurred by Directors in the course of travel to attend Board and Committee meetings.

Annual Percentage Change in Remuneration

This represents the annual percentage change in the entire remuneration paid to the Directors.

Name

From 2022

to 2023

From 2021

to 2022

From 2020

to 2021

Susan Platts-Martin

2 (17) 24

Tim Clissold

* 206 – –

Dermot McMeekin

†

– (61) –

Magdalene Miller 2 492 –

Chris Ralph

(59) 7 –

Andrew Robson 2 12 –

Jonathan Silver

‡

– – –

Mr Clissold was appointed as a Director on 1 October 2021.

†

Mr McMeekin retired as a Director on 16 June 2021.

Mr Ralph retired as a Director on 16 June 2022.

‡

Mr Silver was appointed as a Director on 1 September 2022.

The Chair was paid an additional £10,000 for the year to 31 January 2021 to reflect exceptional work done in relation to the selection

of new Managers.

Governance Report

Baillie Gifford China Growth Trust plc 39

Directors’ Interests (audited)

The Directors at the end of the year under review, and their interests

in the Company, are shown in the following table. There is no

requirement under the Company’s Articles of Association for

Directors to hold shares in the Company. There have been no

changes intimated in the Directors’ interests up to 4 April 2023.

Name

Nature

of interest

Ordinary 25p

shares held at

31 January

2023

Ordinary 25p

shares held at

31 January

2022

Susan Platts-Martin Beneficial 14,694 14,694

Tim Clissold Beneficial 50,000 50,000

Magdalene Miller Beneficial 2,300 2,300

Andrew Robson Beneficial 13,000 13,000

Jonathan Silver* Beneficial 25,000 –

Jonathan Silver was appointed to the Board on 1 September 2022.

Statement of Voting at Annual General Meeting

At the last Annual General Meeting, of the proxy votes received in

respect of the Directors’ Remuneration Report, 98.9% were in

favour, 0.8% were against and votes withheld were 0.3%. At the

last Annual General Meeting at which the Directors’ Remuneration

Policy was considered (June 2020), 99.2% of the proxy votes

received were in favour, 0.1% were against and 0.7% votes were

withheld.

Relative Importance of Spend on Pay

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 149 145 3

Dividends 1,054 4,434 (76)

2013

Cumulative to 31 January

2015

2016

2020

20232022

2014

Source: Refinitiv and relevant underlying index providers. See disclaimer on page 72.

Baillie Gifford China Growth Trust’s share price

The benchmark is the MSCI China All Shares Index (in sterling terms),

prior to 16 September 2020 the benchmark was MSCI AC Asia ex

Pacific Index.

All figures are total returns (assuming net dividends are reinvested).

See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

2017 2018 2019 2021

300

200

100

150

250

Governance Report

Company Performance

The following graph compares the share price total return

(assuming all dividends are reinvested) to ordinary shareholders

compared with the total shareholder return on a notional

investment made up of shares in the component parts of the

benchmark. The benchmark is the MSCI China All Shares Index

(in sterling terms), prior to 16 September 2020 the benchmark

was MSCI AC Asia ex Pacific Index. The benchmark was chosen

for comparison purposes as it is the index against which the

Company measures its performance.

Performance Graph

(figures rebased to 100 at 31 January 2013)

Past performance is not a guide to future performance.

Approval

The Directors’ Remuneration Report on pages 37 to 39 was

approved by the Board of Directors and signed on its behalf on

4 April 2023.

Susan Platts-Martin

Chair

40 Annual Report 2023

The Directors are responsible for preparing the Annual Report

and Financial Statements in accordance with applicable law and

regulations.

Company law requires the Directors to prepare Financial

Statements for each financial year. Under that law they have

elected to prepare the Financial Statements in accordance with

applicable law and United Kingdom Accounting Standards,

comprising Financial Reporting Standard 102 the ‘Financial

Reporting Standard Applicable in the UK and Republic of Ireland’

(FRS 102). Under company law, the Directors must not approve

the Financial Statements unless they are satisfied that they give

a true and fair view of the state of affairs of the Company and of

its profit or loss for that year. In preparing these Financial

Statements, the Directors are required to:

— select suitable accounting policies and then apply them

consistently;

— state whether applicable United Kingdom Accounting

Standards, comprising FRS 102, have been followed,

subject to any material departures disclosed and explained

in the Financial Statements;

— make judgements and accounting estimates that are

reasonable and prudent; and

— prepare the Financial Statements on the going concern basis

unless it is inappropriate to presume that the Company will

continue in business.

The Directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the Company’s

transactions and disclose with reasonable accuracy at any time

the financial position of the Company and enable them to ensure

that the Financial Statements and the Directors’ Remuneration

Report 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 are also

responsible for safeguarding 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 Financial Statements

Under applicable laws and regulations, the Directors are also

responsible for preparing a Strategic Report, Directors’ Report,

Directors’ Remuneration Report and Corporate Governance

Statement that complies with those laws and regulations.

The Directors are responsible for ensuring that the Annual Report

and the Financial Statements are made available on a website.

Financial Statements are published on the Company’s website

in accordance with legislation in the United Kingdom governing

the preparation and dissemination of Financial Statements, which

may vary from legislation in other jurisdictions. The maintenance

and integrity of the Company’s page of the Managers’ website is

the responsibility of the Directors. The Directors’ responsibility

also extends to the ongoing integrity of the Financial Statements

contained therein. The Directors have delegated responsibility to

the Managers for the maintenance and integrity of the Company’s

page of the Managers’ website.

Responsibility Statement of the Directors in Respect

of the Annual Financial Report

We confirm that, to the best of our knowledge:

— the Financial Statements, prepared in accordance with the

applicable set of accounting standards, give a true and fair

view of the assets, liabilities, financial position and net return

of the Company;

— the Strategic Report includes 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 it faces; and

— 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.

On behalf of the Board

Susan Platts-Martin

Chair

4 April 2023

Governance Report

Baillie Gifford China Growth Trust plc 41

Financial Report

Opinion

We have audited the financial statements of Baillie Gifford China

Growth Trust plc (the ‘Company’) for the year ended 31 January

2023 which comprise the Income Statement, Balance Sheet,

Statement of Changes in Equity, Cash Flow Statement, and the

related notes 1 to 18, including a summary of significant

accounting policies. The financial reporting framework that has

been applied in their preparation is applicable law and United

Kingdom Accounting Standards including FRS 102 ‘The Financial

Reporting Standard applicable in the UK and Republic of Ireland’

(United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

— give a true and fair view of the Company’s affairs as at

31 January 2023 and of its loss for the year then ended;

— have been properly prepared in accordance with United

Kingdom Generally Accepted Accounting Practice; 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

under those standards are further described in the Auditor’s

responsibilities for the audit of the financial statements section of

our report. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the

ethical requirements that are relevant to our audit of the financial

statements in the UK, including the FRC’s Ethical Standard as

applied to public interest entities, and we have fulfilled our other

ethical responsibilities in accordance with these requirements.

The non-audit services prohibited by the FRC’s Ethical Standard

were not provided to the Company and we remain independent

of the Company in conducting the audit.

Independent Auditor’s Report

to the members of Baillie Gifford China Growth Investment Trust plc

Conclusions Relating to Going Concern

In auditing the financial statements, we have concluded that the

Directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate. Our

evaluation of the Directors’ assessment of the Company’s ability

to continue to adopt the going concern basis of accounting

included:

— Confirmation of our understanding of the Company’s going

concern assessment process by engaging with the Directors

and the Company Secretary to determine if all key factors

were considered in their assessment.

— Inspection of the Directors’ assessment of going concern,

including the forecast and considerations around the

continuation of the revolving credit facility, for the period to

30 April 2024 which is at least 12 months from the date these

financial statements were authorised for issue. In preparing

the forecast, the Company has concluded that it is able to

continue to meet its ongoing costs as they fall due.

— Review of the factors and assumptions, including the impact

of the current economic environment, as applied to the

forecast and the liquidity assessment of the investments.

We considered the appropriateness of the methods used to

calculate the forecast and the liquidity assessment and

determined, through testing of the methodology and

calculations, that the methods, inputs and assumptions

utilised were appropriate to be able to make an assessment

for the Company.

— Consideration of the mitigating factors included in the

revenue forecast that are within the control of the Company.

We reviewed the Company’s assessment of the liquidity of

investments held and evaluated the Company’s ability to sell

those investments to cover the working capital requirements

should revenue decline significantly.

— Inspection of the Directors’ assessment of the risk of

breaching the debt covenants as a result of a reduction

in the value of the Company’s portfolio. We recalculated the

Company’s compliance with debt covenants in the scenarios

assessed by the Directors and reviewed the Directors’ reverse

stress testing in order to identify what factors would lead to

the Company breaching the financial covenants.

— Review of the Company’s going concern disclosures included

in the annual report in order to assess that the disclosures

were appropriate and in conformity with the reporting

standards.

42 Annual Report 2023

Financial Report

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually

or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period assessed by the

Directors, being the period to 30 April 2024, which is at least 12 months from the financial statements are authorised for issue.

In relation to the Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add

or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it

appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this

report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s

ability to continue as a going concern.

Overview of Our Audit Approach

Key audit matters Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends as

revenue or capital items in the Income Statement.

Risk of incorrect valuation or ownership of the investment portfolio.

Materiality Overall materiality of £2.04m which represents 1% of shareholders’ funds.

An Overview of the Scope of Our Audit

Tailoring the Scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the

Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the

Company and effectiveness of controls, the potential impact of climate change and changes in the business environment when assessing

the level of work to be performed. All audit work was performed directly by the audit engagement team and relevant specialists.

Climate Change

There has been increasing interest from stakeholders as to how climate change will impact companies. The Company has determined

that the impact of climate change may impact the Company’s investments and their valuations. This is explained in the principal and

emerging risks section, which form part of the ‘Other information’, rather than the audited financial statements. Our procedures on these

disclosures therefore consisted solely of considering whether they are materially consistent with the financial statements or our

knowledge obtained in the course of the audit or otherwise appear to be materially misstated.

Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements as

set out in note 1(a) and conclusion there was no further impact of climate change to be taken into account other than unlisted

investment as the listed investments are valued based on market pricing as required by FRS102. Unlisted investments are fair valued

using IPEV Guidelines which require fair value to be assessed for implications related to climate change. We also challenged the

Directors’ considerations of climate change in their assessment of viability and associated disclosures.

Baillie Gifford China Growth Trust plc 43

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements

of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we

identified. These matters included 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. These matters were addressed in the context of our audit of the financial

statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Risk Our response to the risk

Key observations

communicated

to the Audit Committee

Incomplete or inaccurate revenue recognition,

including the classification of special

dividends as revenue or capital in the income

statement (as described on page 35 in the Audit

Committee’s Report and as per the accounting

policy set out on page 52).

The total revenue for the year to 31 January 2023

was £2.41m (2022 – £1.60m), consisting of

dividend income from listed investments.

The Company received two special dividends

amounting to £0.22m (2022 – £0.007m), which

were classified as revenue.

There is a risk of incomplete or inaccurate

recognition of revenue through the failure to

recognise proper income entitlements or to apply

an appropriate accounting treatment.

In addition to the above, the Directors may be

required to exercise judgment in determining

whether income receivable in the form of special

dividends should be classified as ‘revenue’ or

‘capital’ in the Income Statement.

We performed the following procedures:

We obtained an understanding of the processes and

controls surrounding revenue recognition and

classification of special dividends by performing

walkthrough procedures.

For all dividends received, we recalculated the dividend

income by multiplying the investment holdings at the

ex-dividend date, traced from the accounting records,

by the dividend per share, which was agreed to an

independent data vendor. We also agreed all exchange

rates to an external source and, for a sample of

dividends received, we agreed the amounts to bank

statements.

To test completeness of recorded income, we tested

that dividends had been recorded for all investments

with reference to announcements obtained from an

independent data vendor.

For all listed investments held during the year, we

reviewed the type of dividends paid with reference to an

external data source to identify those which were

‘special’.

We identified two special dividends and checked the

appropriateness of classification as revenue by reviewing

the underlying circumstances of the special dividends

received.

The results of our procedures

identified no material

misstatements in relation to the

risk of incomplete or inaccurate

revenue recognition, including

classification of special dividends

as revenue or capital in the

Income Statement.

Financial Report

44 Annual Report 2023

Financial Report

Risk Our response to the risk

Key observations

communicated

to the Audit Committee

Incorrect valuation or ownership of the

investment portfolio (as described on page 35

in the Audit Committee’s Report and as per the

accounting policy set out on pages 51 and 52).

The valuation of the investment portfolio at 31

January 2023 was £209.50m (2022 – £222.02m)

consisting listed equities with an aggregate value

of £197.55m (2022 – £207.68m) and unlisted

equity investment amounting to £11.95m

(2022 – £14.34m).

The valuation of the assets held in the investment

portfolio is the key driver of the Company’s net

asset value and total return. Incorrect investment

pricing, or failure to maintain proper legal title of

the investments held by the Company could have

a significant impact on the portfolio valuation and

the return generated for shareholders.

The fair value of listed investments is determined

using quoted market bid prices at close of

business on the reporting date.

The unlisted investment is valued at fair value by

the Directors following a detailed review and

appropriate challenge of the valuations proposed

by the Investment Manager. The unlisted

investment policy applies methodologies

consistent with the International Private Equity

and Venture Capital Valuation guidelines (‘IPEV’).

The valuation of the unlisted investment, and the

resultant impact on the unrealised gains/(losses),

is the area requiring the most significant

judgement and estimation in the preparation of

the financial statements.

We performed the following procedures:

We obtained an understanding of the Manager’s

processes and controls surrounding investment

valuation and legal title, including an understanding of

the operation of the Investment Manager’s Unlisted

Valuation Securities Group and the Directors’ process

for review of the unlisted investment valuations, by

performing walkthrough procedures.

For all listed investments in the portfolio, we compared

the market prices and exchange rates applied to an

independent pricing vendor and recalculated the

investment valuations as at the year end.

We inspected the stale price reports produced by the

Administrator to identify prices that have not changed

and verified whether the listed price is a valid fair value.

We did not identify any listed investments with stale

prices.

For the unlisted investment held as at the year-end we

utilised our specialist Valuations team to review and

challenge the valuation. This included:

— Reviewing the valuation papers prepared by the

Manager as at the year end;

— Assessing whether the valuation has been

performed in line with the IPEV guidelines;

— Assessing whether the valuation has been

performed in accordance with the accounting policy;

— Assessing the appropriateness of the data inputs

and challenging the assumptions used to support

the valuations; and

— Assessing other facts and circumstances, such as

market movement and comparative Company

information, that have an impact on the fair market

value of the unlisted investment.

We recalculated the unrealised gains/losses on

investments as at the year-end using the book-cost

reconciliation.

We compared the Company’s investment holdings as at

31 January 2023 to an independent confirmation

received directly from the Company’s Custodian.

The results of our procedures

identified no material

misstatements in relation to the

risk of incorrect valuation or

ownership of the investment

portfolio.

Our Application of Materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit

and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the

economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our

audit procedures.

We determined materiality for the Company to be £2.04 million (2022 – £2.19 million), which is 1% (2022 – 1%) of shareholders funds.

We believe that shareholders’ funds provides us with materiality aligned to the key measurement of the Company’s performance.

Baillie Gifford China Growth Trust plc 45

Performance Materiality

The application of materiality at the individual account or balance

level. It is set at an amount to reduce to an appropriately low level

the probability that the aggregate of uncorrected and undetected

misstatements exceeds materiality.

On the basis of our risk assessments, together with our

assessment of the Company’s overall control environment,

our judgement was that performance materiality was 75%

(2022

– 75%) of our planning materiality, namely £1.53m

(2022

– £1.64m). We have set performance materiality at this

percentage due to our past experience of the audit that indicates

a lower risk of misstatements, both corrected and uncorrected.

Given the importance of the distinction between revenue and

capital for investment trusts, we also applied a separate testing

threshold for the revenue column of the Income Statement of

£0.10m (2022

– £0.11m), being the reporting threshold.

Reporting Threshold

An amount below which identified misstatements are considered

as being clearly trivial.

We agreed with the Audit Committee that we would report to

them all uncorrected audit differences in excess of £0.11m

(2022 – £0.11m), which is set at 5% of planning materiality, as

well as differences below that threshold that, in our view,

warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the

quantitative measures of materiality discussed above and in light

of other relevant qualitative considerations in forming our opinion.

Other Information

The other information comprises the information included in the

annual report, other than the financial statements and our

auditor’s report thereon. The Directors are responsible for the

other information contained within the annual report.

Our opinion on the financial statements does not cover the other

information and, except to the extent otherwise explicitly stated in

this report, we do not express any form of assurance conclusion

thereon.

Our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent

with the financial statements or our knowledge obtained in the

course of the audit or otherwise appears to be materially

misstated. If we identify such material inconsistencies or apparent

material misstatements, we are required to determine whether this

gives rise to a material misstatement in the financial statements

themselves. If, based on the work we have performed, we

conclude that there is a material misstatement of the other

information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on Other Matters Prescribed by the Companies

Act 2006

In our opinion the part of the Directors’ remuneration report to be

audited has been properly prepared in accordance with the

Companies Act 2006.

In our opinion, based on the work undertaken in the course of the

audit:

— the information given in the strategic report and the Directors’

report for the financial year for which the financial statements

are prepared is consistent with the financial statements; and

— the strategic report and Directors’ reports have been prepared

in accordance with applicable legal requirements.

Matters on Which we are Required to Report by Exception

In the light of the knowledge and understanding of the Company

and its environment obtained in the course of the audit, we have

not identified material misstatements in the Strategic Report or

Directors’ Report.

We have nothing to report in respect of the following matters in

relation to which the Companies Act 2006 requires us 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

Corporate Governance Statement

We have reviewed the Directors’ statement in relation to going

concern, longer-term viability and that part of the Corporate

Governance Statement relating to the Company’s compliance

with the provisions of the UK Corporate Governance Code

specified for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have

concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial

statements or our knowledge obtained during the audit:

— Directors’ statement with regards to the appropriateness of

adopting the going concern basis of accounting and any

material uncertainties identified set out on pages 33 and 34;

— Directors’ explanation as to its assessment of the Company’s

prospects, the period this assessment covers and why the

period is appropriate set out on page 25;

— Director’s statement on whether it has a reasonable

expectation that the group will be able to continue in

operation and meets its liabilities set out on page 25;

— Directors’ statement on fair, balanced and understandable set

out on page 40;

Financial Report

46 Annual Report 2023

— Board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks set out on

pages 23 to 25;

— The section of the annual report that describes the review of

effectiveness of risk management and internal control systems

set out on page 33; and

— The section describing the work of the audit committee set

out on pages 35 and 36.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement

set out on page 40, the Directors are responsible for the

preparation of the financial statements and for being satisfied that

they give a true and fair view, and for such internal control as the

Directors determine is necessary to enable the preparation of

financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the Directors are responsible

for 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

the Directors either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for The Audit of the

Financial Statements

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 an

auditor’s report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a 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

the aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of these

financial statements.

Explanation as to What Extent the Audit was

Considered Capable of Detecting Irregularities,

Including Fraud

Irregularities, including fraud, are instances of non-compliance

with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect irregularities, including

fraud. The risk of not detecting a material misstatement due to

fraud is higher than the risk of not detecting one resulting from

error, as fraud may involve deliberate concealment by, for

example, forgery or intentional misrepresentations, or through

collusion. The extent to which our procedures are capable of

detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and

detection of fraud rests with both those charged with governance

of the Company and management.

— We obtained an understanding of the legal and regulatory

frameworks that are applicable to the Company and

determined that the most significant are FRS 102, the

Companies Act 2006, the Listing Rules, the UK Corporate

Governance Code, the Association of Investment Companies’

Code and Statement of Recommended Practice and Section

1158 of the Corporation Tax Act 2010.

— We understood how the Company is complying with those

frameworks through discussions with the Audit Committee

and Company Secretary, and review of Board minutes and

the Company’s documented policies and procedures related

to controls over the financial reporting process.

— We assessed the susceptibility of the Company’s financial

statements to material misstatement, including how fraud

might occur by considering the key risks impacting the

financial statements. We identified a fraud risk with respect to

incomplete or inaccurate revenue recognition through

incorrect classification of special dividends as revenue or

capital items in the Income Statement and incorrect valuation

of the unquoted investment and the resultant impact on

unrealised losses. Further discussion of our approach is set

out in the key audit matters above.

— Based on this understanding we designed our audit

procedures to identify non-compliance with such laws and

regulations. Our procedures involved review of the reporting

to the Directors with respect to the application of the

documented policies and procedures related to controls over

the financial reporting process, and review of the financial

statements to ensure compliance with the reporting

requirements of the Company.

A further description of our responsibilities for the audit of the

financial statements is located on the Financial Reporting Council’s

website at frc.org.uk/auditorsresponsibilities. This description

forms part of our auditor’s report.

Other Matters we are Required to Address

— Following the recommendation from the audit committee, we

were appointed by the Company on 12 June 2019 to audit

the financial statements for the year ending 31 January 2020

and subsequent financial periods.

The period of total uninterrupted engagement including

previous renewals and reappointments is four years, covering

the years ending 31 January 2020 to 31 January 2023.

— The audit opinion is consistent with the additional report to the

audit committee.

Use of Our Report

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. 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 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.

Caroline Mercer (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

Edinburgh

4 April 2023

Financial Report

Baillie Gifford China Growth Trust plc 47

Income Statement

For the year ended 31 January

Notes

2023

Revenue

£’000

2023

Capital

£’000

2023

Total

£’000

2022

Revenue

£’000

2022

Capital

£’000

2022

Total

£’000

Net (losses)/gains on investments 9 – (12,378) (12,378) – (82,850) (82,850)

Currency losses 13 – (216) (216) – (68) (68)

Income 2 2,407 – 2,407 1,599 – 1,599

Investment management fee 3 (311) (932) (1,243) (363) (1,089) (1,452)

Other administrative expenses 4 (550) – (550) (479) (20) (499)

Net return before finance costs and

taxation 1,546 (13,526) (11,980) 757 (84,027) (83,270)

Finance costs of borrowings 5 (116) (347) (463) (46) (138) (184)

Net return on ordinary activities before

taxation 1,430 (13,873) (12,443) 711 (84,165) (83,454)

Tax on ordinary activities

(105) – (105) (119) – (119)

Net return on ordinary activities after

taxation 1,325 (13,873) (12,548) 592 (84,165) (83,573)

Net return per ordinary share 7 2.14p (22.37p) (20.23p) 0.97p (138.22p) (137.25p)

Dividends declared in respect of the financial year ended 31 January 2023 amount to 1.70p (2022 – 7.15p). Further information on dividend

distributions can be found in note 8 on page 54.

The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns

are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

The accompanying notes on pages 51 to 64 are an integral part of the Financial Statements.

Financial Report

48 Annual Report 2023

Balance Sheet

The accompanying notes on pages 51 to 64 are an integral part of the Financial Statements.

* See Glossary of Terms and Alternative Performance Measures on pages 74 to 76.

As at 31 January

Notes

2023

£’000

2023

£’000

2022

£’000

2022

£’000

Fixed assets

Investments held at fair value through profit or loss 9 209,499 222,015

Current assets

Debtors 10 26 100

Cash and cash equivalents 15 1,000 5,496

1,026 5,596

Creditors

Amounts falling due within one year 11 (6,585) (8,270)

Net current (liabilities)/assets (5,559) (2,674)

Total assets less current liabilities 203,940 219,341

Capital and reserves

Share capital 12 17,087 17,087

Share premium account 13 31,780 31,780

Capital redemption reserve 13 41,085 41,085

Capital reserve 13 107,748 121,621

Revenue reserve 13 6,240 7,768

Shareholders’ funds 203,940 219,341

Net asset value per ordinary share

* 14 328.87p 353.70p

The Financial Statements of Baillie Gifford China Growth Trust plc (Company registration number 91798) were approved and authorised for issue

by the Board and were signed on 4 April 2023.

Susan Platts-Martin

Chair

Financial Report

Baillie Gifford China Growth Trust plc 49

Statement of Changes in Equity

The accompanying notes on pages 51 to 64 are an integral part of the Financial Statements.

For the year ended 31 January 2023

Notes

capital

£’000

premium

account

£’000

Capital

redemption

reserve

£’000

Capital

reserve

£’000

Revenue

reserve

£’000

Shareholders’

funds

£’000

Shareholders’ funds at 1 February 2022 17,087 31,780 41,085 121,621 7,768 219,341

Dividends paid during the year

8 – – – – (2,853) (2,853)

Net return on ordinary activities after taxation 7 – – – (13,873) 1,325 (12,548)

Shareholders’ funds at 31 January 2023 17,087 31,780 41,085 107,748 6,240 203,940

For the year ended 31 January 2022

Notes

capital

£’000

premium

account

£’000

Capital

redemption

reserve

£’000

Capital

reserve

£’000

Revenue

reserve

£’000

Shareholders’

funds

£’000

Shareholders’ funds at 1 February 2021 16,486 13,182 41,085 189,061 11,610 271,424

Dividends paid during the year 8 – – – – (4,434) (4,434)

Ordinary shares sold from treasury – 8,043 – 16,725 – 24,768

Ordinary shares issued 601 10,555 – – – 11,156

Net return on ordinary activities after taxation

7 – – – (84,165) 592 (83,573)

Shareholders’ funds at 31 January 2022 17,087 31,780 41,085 121,621 7,768 219,341

Financial Report

50 Annual Report 2023

The accompanying notes on pages 51 to 64 are an integral part of the Financial Statements.

Cash Flow Statement

For the year ended 31 January

2023

£’000

2023

£’000

2022

£’000

2022

£’000

Cash flows from operating activities

Net return on ordinary activities before taxation (12,443) (83,454)

Net losses on investments 12,378 82,850

Currency losses 216 68

Finance costs of borrowings 463 184

Overseas withholding tax suffered (181) (119)

Overseas withholding tax reclaims received 76 –

Changes in debtors 74 (45)

Changes in creditors (25) 328

Cash from operations

* 558 (188)

Interest paid (451) (178)

Net cash inflow/(outflow) from operating activities 107 (366)

Cash flows from investing activities

Acquisitions of investments (27,760) (81,766)

Disposals of investments 25,723 43,362

Net cash outflow from investing activities (2,037) (38,404)

Cash flows from financing activities

Ordinary shares issued – 37,216

Bank loans drawdown – 5,427

Equity dividends paid (2,853) (4,434)

Net cash (outflow)/inflow from financing activities (2,853) 38,209

Decrease in cash and cash equivalents

(4,783) (561)

Exchange movements 287 95

Cash and cash equivalents at start of year 5,496 5,962

Cash and cash equivalents at end of year 1,000 5,496

Comprising:

Cash at bank 1,000 5,496

* Cash from operations includes dividends received of £2,402,000 (2022 – £1,599,000) and interest received of £5,000 (2022 – £nil).

Financial Report

Baillie Gifford China Growth Trust plc 51

1 Principal Accounting Policies

The Financial Statements for the year to 31 January 2023 have been

prepared in accordance with FRS 102 ‘The Financial Reporting

Standard applicable in the UK and Republic of Ireland’ on the basis

of the accounting policies set out below which are consistent with

those applied for the year ended 31 January 2022.

(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 the historical cost convention, modified to include the

revaluation of fixed asset investments and on the 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

since the Covid-19 pandemic and over recent months due to

macroeconomic and geopolitical concerns, including rising

inflation and interest rates but does not believe the Company’s

going concern status is affected. The Company’s assets, which

at present are mainly investments in quoted securities which are

readily realisable, exceed its liabilities significantly. All borrowings

require the prior approval of the Board. Gearing levels and

compliance with borrowing covenants are reviewed by the Board

on a regular basis. 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.

The Company’s primary third party suppliers, including its

Managers and Secretaries, Custodian, Depositary, Registrar,

Auditor and Corporate Broker, are not experiencing significant

operational difficulties affecting their respective services to the

Company. Accordingly, the Financial Statements have been

prepared on the going concern basis as it is the Directors’

opinion, having assessed the principal risks and other matters,

including the impact of the Covid-19 pandemic set out in the

Viability Statement on page 25, that the Company will continue

in operational existence until 4 April 2024, which is for a period

of at least 12 months from the date of approval of these Financial

Statements.

In preparing these Financial Statements the Directors have

considered the impact of climate change risk as a principal risk

as set out on page 24, and have concluded that it does not have

a material impact on the Company’s investments. We have

considered the impact of climate change on the value of both

the listed and unlisted investments included in the Financial

Statements. The listed investments should already include the

impact in their prices as quoted on the relevant exchange and

consistent with that view, we do not believe the impact on the

unlisted investments would be material.

The Financial Statements have been prepared in accordance with

the Companies Act 2006, applicable UK Accounting Standards

and with the AIC’s Statement of Recommended Practice

‘Financial Statements of Investment Trust Companies and Venture

Capital Trusts’ issued in November 2014 and updated in July 2022

with consequential amendments. In order to reflect better the

activities of the Company and in accordance with guidance

issued by the AIC, supplementary information which analyses the

Income Statement between items of a revenue and capital nature

has been presented.

Financial assets and financial liabilities are recognised in the

Company’s Balance Sheet when it becomes a party to the

contractual provisions of the instrument.

The Directors consider the Company’s functional currency to be

sterling as the entity is listed on a sterling stock exchange in the

UK, the Company’s share capital and dividends paid are denominated

in sterling, Company’s shareholders are predominantly based in

the UK and the Company and its Investment Manager, who are

subject to the UK’s regulatory environment, are also UK based.

(b) Significant Accounting Estimates and Judgements

The preparation of the Financial Statements requires the use

of estimates, assumptions and judgements. These estimates,

assumptions and judgements affect the reported amounts of

assets and liabilities, at the reporting date. While estimates are

based on best judgement using information and financial data

available, the actual outcome may differ from these estimates.

The key sources of estimation and uncertainty relate to the

assumptions used in the determination of the fair value of the

unlisted investment, which are detailed in note 9 on pages 56

and 57.

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 and suspended investments.

The key judgements in the fair valuation process are:

(i) the Managers’ determination of the appropriate application of

the International Private Equity and Venture Capital Guidelines

2018 (‘IPEV Guidelines’) 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

for determining the fair value of each unlisted investment can

have a significant impact upon the valuation.

Estimates

The key estimate in the Financial Statements is the determination

of the fair value of the unlisted investment by the Managers for

consideration by the Directors. This estimate is key as it significantly

impacts the valuation of the unlisted investment 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 historic or forecast);

(iii) the application of an appropriate discount factor to reflect

the reduced liquidity of unlisted companies versus their listed

peers;

Notes to the Financial Statements

Financial Report

52 Annual Report 2023

(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).

The Company’s investments are classified as held at fair value

through profit and loss in accordance with sections 11 and 12

of FRS 102. Purchases and sales of investments are recognised

on a trade date basis. Expenses incidental to the purchase and

sale of investments are recognised in the Income Statement as

capital items.

Investments are designated as held at fair value through profit

or loss on initial recognition and are measured at subsequent

reporting dates at fair value. The fair value of listed security

investments is bid price or last traded price. The fair value of

suspended investments is the last traded price, adjusted for the

estimated impact on the business of the suspension. 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

policy applies methodologies consistent with IPEV Guidelines.

These methodologies can be categorised as follows (a) market

approach (multiples, industry valuation benchmarks and available

market prices); (b) income approach (discounted cash flows); and

recognises also, as stated in the IPEV Guidelines, that the price of

a recent investment may be an appropriate starting point for

estimating fair value, however it should be evaluated using the

techniques described above.

(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) 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) Special dividends are treated as repayments of capital or

income depending on the facts of each particular case.

(iii) Interest receivable/payable on bank deposits is recognised

on an accruals basis.

(iv) Overseas dividends include the taxes deducted at source.

(v) If scrip is taken in lieu of dividends in cash, the net amount of

the cash dividend declared is credited to the revenue account.

Any excess in the value of the shares received over the amount

of the cash dividend foregone is recognised as capital.

(vi) Interest from fixed interest securities is recognised on an

effective yield basis.

(f) Expenses

All expenses are accounted for on an accruals basis. Expenses

are charged through the revenue account except:

(i) where 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 these expenses are commonly referred to as transaction

costs and comprise brokerage commission and stamp duty.

(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.

The management fee is allocated 25% to revenue and 75% to

capital in line with the Board’s expected long-term split of revenue

and capital return from the Company’s investment portfolio.

The Board reviews the expense allocation policy on a yearly

basis and considers whether it remains appropriate.

(g) Borrowings and Finance Costs

Bank loans and overdrafts are classified as loans and are

measured at amortised cost. They are initially recorded at the

proceeds received net of direct costs. Finance costs are

accounted for on an accruals basis and on an effective interest

basis and are allocated 25% to revenue and 75% to capital in line

with the Board’s expected long-term split of revenue and capital

return from the Company’s investment portfolio. The Board

reviews the expense allocation policy on a yearly basis and

considers whether it remains appropriate.

(h) Taxation

The taxation charge represents the sum of current tax and the

movement in the provision for deferred taxation during the year.

Current taxation represents non-recoverable overseas taxes

which is charged to the revenue accounts where it relates to

income received and to capital where it relates to items of a

capital nature. Deferred taxation is provided on all timing

differences which have originated but not reversed by the Balance

Sheet date, calculated on a non-discounted basis at the tax rates

expected to apply when the timing differences reverse, based on

what has been enacted or substantively enacted, relevant to the

benefit or liability. Deferred tax assets are recognised only to the

extent that it is more likely than not that there will be taxable

profits from which underlying timing differences can be deducted.

(i) Dividend Distributions

Interim dividends are recognised in the year in which they are

paid and final dividends are recognised in the year in which the

dividends are approved by the Company’s shareholders in a

General Meeting.

(j) Foreign Currencies

Transactions involving foreign currencies are converted at the rate

ruling at the time of the transaction. Monetary assets and liabilities

and fixed asset investment 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 Income Statement as capital or revenue as appropriate.

Financial Report

Baillie Gifford China Growth Trust plc 53

(k) Capital Reserve

Gains and losses on disposal of investments, changes in the fair

value of investments held, exchange differences of a capital

nature and the amount by which other assets and liabilities valued

at fair value differ from their book cost are dealt with in the capital

reserve. Purchases of the Company’s own shares are also funded

from this reserve and the weighted average purchase price paid

to purchase the shares is credited to this reserve if the shares are

subsequently sold from treasury. The nominal value of such

shares is transferred from share capital to the capital redemption

reserve if the shares are subsequently cancelled.

(l) Share Premium

The share premium reserve represents:

— the proceeds of sales of shares held in treasury in excess of

the weighted average purchase price paid by the Company

to repurchase the shares; and

— the excess of the proceeds of issuance of new shares over

the nominal value.

(m) Capital Redemption Reserve

The nominal value of ordinary share capital purchased and

cancelled is transferred out of called-up share capital and into

the capital redemption reserve on the relevant trade date.

(n) Revenue Reserve

The revenue profit or loss for the year is taken to or from this

reserve. The revenue reserve may be distributed by way of a

dividend.

(o) Single Segment Reporting

The Company is engaged in a single segment of business,

being investment business, consequently no business segmental

analysis is provided.

2 Income

2023

£’000

2022

£’000

Income from investments

Overseas dividends 2,402 1,599

Other income

Bank interest 5 –

Total income 2,407 1,599

Total income comprises:

Dividends from financial assets designated at fair value through profit or loss 2,402 1,599

Interest from financial assets not at fair value through profit or loss 5 –

2,407 1,599

3 Investment Management Fee

2023

Revenue

£’000

2023

Capital

£’000

2023

Total

£’000

2022

Revenue

£’000

2022

Capital

£’000

2022

Total

£’000

Investment management fee 311 932 1,243 363 1,089 1,452

Details of the Investment Management Agreement are disclosed on page 27. Baillie Gifford & Co Limited’s annual management fee is

(i) 0.75% of the first £50 million of net asset value; plus (ii) 0.65% of net asset value between £50 million and £250 million; plus

(iii) 0.55% of net asset value in excess of £250 million, calculated and payable quarterly.

Financial Report

54 Annual Report 2023

4 Other Administrative Expenses

2023

£’000

2022

£’000

General administrative expenses 187 206

Directors’ fees (see Directors’ Remuneration Report on page 38) 142 141

Depositary and custodian fees 102 91

Marketing 75 6

Auditor’s remuneration – statutory audit of Company’s Annual Financial Statements 44 35

550 479

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. The Manager waived any contribution to the marketing programme for the Company from appointment on 16 September

2020 to 31 December 2021.

5 Finance Costs of Borrowings

2023

Revenue

£’000

2023

Capital

£’000

2023

Total

£’000

2022

Revenue

£’000

2022

Capital

£’000

2022

Total

£’000

Interest on bank loans 116 347 463 46 138 184

6 Tax on Ordinary Activities

2023

£’000

2022

£’000

Analysis of charge in year

Overseas withholding tax 105 119

Factors affecting tax charge for year

The tax charge for the year is lower than the standard rate of corporation tax in the UK

of 19% (2022 – 19%)

The differences are explained below:

Net return before taxation 1,430 711

Net return on ordinary activities multiplied by the standard rate of corporation tax in the UK

of 19% (2022 – 19%) 272 135

Effects of:

Income not taxable (457) (304)

Taxable losses in year not utilised 185 169

Overseas withholding tax incurred 105 119

Tax charge for the year 105 119

As an investment trust, the Company’s capital gains are not taxable.

Factors that may affect future tax charges

At 31 January 2023 the Company had a potential deferred tax asset of £6,000,000 (2022 – £5,442,000) on taxable losses which is available

to be carried forward and offset against future taxable profits. A deferred tax asset has not been recognised on these losses as it is considered

unlikely that the Company will make taxable revenue profits in the future and it is not liable to tax on its capital gains. The potential deferred

tax asset has been calculated using a corporation tax rate of 25% (2022 – 25%).

Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in

the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal

of investments.

Financial Report

Baillie Gifford China Growth Trust plc 55

6 Tax on Ordinary Activities (continued)

The Company has filed protective claims with HMRC in order to seek recovery of potentially overpaid taxes from HMRC in relation to the

UK’s pre-2009 dividend tax rules. The claims cover accounting periods ending 2005–2007 and accounting periods ending 2008 and 2009

in which the Company paid UK tax under Schedule D Case V. In such periods, the Company is seeking recovery of the tax paid together

with interest.

Following the decision in the lead case, HMRC issued a Brief stating it will now consider and determine each claim individually. The decision

in the Post Prudential case was issued in December 2021 and was largely in favour of the claimants. HMRC have been granted permission

to appeal this decision and therefore the value, timing and probability of the claim’s success for the accounting periods ending 2005–2007

remain uncertain.

Contingent asset

HMRC have indicated they will repay overpaid taxes for the accounting periods ending 2008 and 2009 of £1.1 million plus interest. As the

repayment is probable, but not virtually certain, the Company is disclosing £1.1 million as a contingent asset.

7 Net Return per Ordinary Share

2023

Revenue

2023

Capital

2023

Total

2022

Revenue

2022

Capital

2022

Total

Net return per ordinary share 2.14p (22.37p) (20.23p) 0.97p (138.22p) (137.25p)

Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £1,325,000 (2022 – £592,000),

and on 62,012,982 (2022 – 60,888,553) ordinary shares, being the weighted average number of ordinary shares in issue during each year.

Capital return per ordinary share is based on the net capital loss for the financial year of £13,873,000 (2022 – loss £84,165,000) and on

62,012,982 (2022 – 60,888,553) ordinary shares, being the weighted average number of ordinary shares in issue during each year.

There are no dilutive or potentially dilutive shares in issue.

8 Ordinary Dividends

2023 2022 2023

£’000

2022

£’000

Amounts recognised as distributions in the year:

Previous year’s final dividend (paid 27 July 2022) 4.60p 4.60p 2,853 2,853

Interim dividend – 2.55p – 1,581

4.60p 7.15p 2,853 4,434

Also set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements

of section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividends for the year is

£1,325,000 (2022 – £592,000).

2023 2022 2023

£’000

2022

£’000

Dividends paid and payable in respect of the year:

Interim dividend per ordinary share – 2.55p – 1,581

Proposed final dividend per ordinary share (payable 26 July 2023) 1.70p 4.60p 1,054 2,853

1.70p 7.15p 1,054 4,434

Financial Report

56 Annual Report 2023

9 Investments

As at 31 January 2023

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Securities

Listed equities 197,546 – – 197,546

Unlisted ordinary shares – – 11,953 11,953

Total financial asset investments 197,546 – 11,953 209,499

As at 31 January 2022

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Securities

Listed equities 207,678 – – 207,678

Suspended ordinary shares – – 1,482 1,482

Unlisted ordinary shares – – 12,855 12,855

Total financial asset investments 207,678 – 14,337 222,015

Investments in securities are financial assets designated at fair value through profit or loss on initial recognition. In accordance with FRS 102

the tables above provide an analysis of these investments based on the fair value hierarchy described below which reflects the reliability and

significance of the information used to measure their fair value.

Fair Value Hierarchy

The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair

value measurement for the individual investment in its entirety as follows:

Level 1 – using unadjusted quoted prices for identical instruments in an active market;

Level 2 – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and

Level 3 – using inputs that are unobservable (for which market data is unavailable).

The valuation techniques used by the Company are explained in the accounting policies on page 52. The Company’s unlisted ordinary share

investment at 31 January 2023 was valued using the market approach using comparable traded multiples. A sensitivity analysis of the

unlisted security is on page 63. During the year, a suspended investment with a fair value at 31 January 2022 of £1,482,000 was transferred

from Level 3 to Level 1 when the shares re-listed.

Financial Report

Baillie Gifford China Growth Trust plc 57

9 Investments (continued)

Listed

equities

£’000

Suspended

£’000

Unlisted

equities *

£’000

Total

£’000

Cost of investments at 1 February 2022 241,989 2,977 8,212 253,178

Investment holding (losses)/gains at 1 February 2022 (34,311) (1,495) 4,643 (31,163)

Value of investments at 1 February 2022 207,678 1,482 12,855 222,015

Movements in year:

Purchases at cost 25,585 – – 25,585

Sales proceeds received (25,723) – – (25,723)

Realised losses on sales (17,050) – – (17,050)

Gains and losses on investments 4,079 1,495 (902) 4,672

Changes in categorisation 2,977 (2,977) – –

Value of investments at 31 January 2023 197,546 – 11,953 209,499

Cost of investments at 31 January 2023 227,778 – 8,212 235,990

Investment holding (losses)/gains at 31 January 2023 (30,232) – 3,741 (26,491)

Value of investments held at 31 January 2023 197,546 – 11,953 209,499

* The unlisted security investment represents a holding in ByteDance.

The purchases and sales proceeds figures above include transaction costs of £21,000 (2022

–

£76,000) and £37,000 (2022

–

£52,000)

respectively. The Company received £25,723,000 (2022

–

£43,362,000) from investments sold during the year. The book cost of these

investments when they were purchased was £42,773,000 (2022

–

£46,869,000). 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.

2023

£’000

2022

£’000

Net (losses)/gains on investments designated at fair value through profit or loss on

initial recognition

Losses on sales (17,050) (3,507)

Changes in investment holding gains 4,672 (79,343)

(12,378) (82,850)

Significant Holdings Disclosure Requirements – AIC SORP

Details are disclosed below in accordance with the requirements of paragraph 82 of the AIC Statement of Recommended Practice ‘Financial

Statements of Investment Trust Companies and Venture Capital Trusts’ (updated in July 2022) in relation to unlisted investments included in

the ten largest holdings disclosed on page 17. As required, this disclosure includes turnover, pre-tax profits and net assets attributable to

investors, as reported within the most recently audited financial statements of the investee companies where possible.

As at 31 January 2023

Latest Financial

Statements

Book

cost

£’000

Market

value

£’000

Income recognised

from holding in

the period

(’000)

Turnover

(’000)

Pre-tax

profit/(loss)

(’000)

Net assets

attributable to

shareholders

(’000)

Name Business

ByteDance Social Media

Not applicable 8,212 11,953 Nil Information not publicly available

As at 31 January 2022

Latest Financial

Statements

Book

cost

£’000

Market

value

£’000

Income recognised

from holding in

the period

(’000)

Turnover

(’000)

Pre-tax

profit/(loss)

(’000)

Net assets

attributable to

shareholders

(’000)

Name Business

ByteDance Social Media

Not applicable 8,212 12,855 Nil Information not publicly available

Financial Report

58 Annual Report 2023

10 Debtors

2023

£’000

2022

£’000

Due within one year:

Accrued income and prepaid expenses 26 100

26 100

None of the above debtors are financial assets designated at fair value through profit or loss. The carrying amount of debtors is a reasonable

approximation of fair value.

Creditors – amounts falling due within one year

2023

£’000

2022

£’000

The Royal Bank of Scotland (International) Limited loan 6,092 5,590

Purchases for subsequent settlement – 2,175

Investment management fee 344 367

Other creditors and accruals 149 138

6,585 8,270

None of the above creditors are financial liabilities held at fair value through profit or loss. During the year the Company entered into a

two year US$40 million revolving credit facility with The Royal Bank of Scotland (International) Limited which expires on 13 April 2024.

At 31 January 2023 borrowings of £6.1 million (US$7.5 million) were drawn down under the facility at a margin of 1.3% over the US Dollar

Relevant Reference Rate with a maturity date of 17 April 2023. At 31 January 2022 borrowings of £5.6 million (US$7.5 million) were drawn

down under a US$40m revolving credit facility with The Royal Bank of Scotland (International) Limited which expired on 15 April 2022.

The main covenants relating to the current facility are:

(i) The consolidated gross borrowings shall not exceed 30% of the Company’s adjusted portfolio value; and

(ii) The Company’s adjusted portfolio value is not less than £75,000,000.

Share Capital

2023

Number

2023

£’000

2022

Number

2022

£’000

Allotted, called up and fully paid ordinary shares of 25p each 62,012,982 15,503 62,012,982 15,503

Treasury shares of 25p each 6,335,169 1,584 6,335,169 1,584

Total 68,348,151 17,087 68,348,151 17,087

In the year to 31 January 2023 no shares were issued from Treasury (in the year to 31 January 2022 – 2,404,151 shares were issued from

Treasury). The Company’s shareholder authority permits it to hold shares bought back in treasury. Under such authority, treasury shares

may be subsequently either sold for cash (at a premium to net asset value per ordinary share) or cancelled. At 31 January 2023 the

Company had authority to buy back 9,295,746 ordinary shares. During the year to 31 January 2023, no ordinary shares (2022 – nil) were

bought back for cancellation and no ordinary shares (2022 – nil) were bought back into treasury. Under the provisions of the Company’s

Articles of Association share buy-backs are funded from the capital reserve.

Financial Report

Baillie Gifford China Growth Trust plc 59

13 Capital and Reserves

capital

£’000

premium

account

£’000

Capital

redemption

reserve

£’000

Capital

reserve

realised

£’000

Capital

reserve

unrealised

£’000

Revenue

reserve

£’000

Shareholders’

funds

£’000

At 1 February 2022 17,087 31,780 41,085 152,947 (31,326) 7,768 219,341

Net losses on sales

of investments – – – (17,050) – – (17,050)

Changes in investment

holding gains – – – – 4,672 – 4,672

Exchange differences – – – 287 – – 287

Exchange differences

on bank loans – – – (719) 216 – (503)

Investment management

fee charged to capital – – – (932) – – (932)

Finance costs of borrowings

charged to capital – – – (347) – – (347)

Dividends paid in year – – – – – (2,853) (2,853)

Revenue return after taxation – – – – – 1,325 1,325

At 31 January 2023 17,087 31,780 41,085 134,186 (26,438) 6,240 203,940

capital

£’000

premium

account

£’000

Capital

redemption

reserve

£’000

Capital

reserve

realised

£’000

Capital

reserve

unrealised

£’000

Revenue

reserve

£’000

Shareholders’

funds

£’000

At 1 February 2021 16,486 13,182 41,085 140,881 48,180 11,610 271,424

Net losses on sales

of investments – – – (3,507) – – (3,507)

Changes in investment

holding gains – – – – (79,343) – (79,343)

Other exchange differences – – – 95 – – 95

Exchange differences on

bank loans – – – – (163) – (163)

Ordinary shares sold from

treasury – 8,043 – 16,725 – – 24,768

Ordinary shares issued 601 10,667 – – – – 11,268

Cost of share issuances – (112) – – – – (112)

Investment management fee

charged to capital – – – (1,089) – – (1,089)

Change of Manager and tender

costs charged to capital – – – (20) – – (20)

Finance costs of borrowings

charged to capital – – – (138) – – (138)

Dividends paid in year – – – – – (4,434) (4,434)

Revenue return after taxation – – – – – 592 592

At 31 January 2022 17,087 31,780 41,085 152,947 (31,326) 7,768 219,341

The capital reserve (unrealised) includes investment holding losses of £26,491,000 (2022 – losses of £31,163,000) as disclosed in note 9.

Under the terms of the Company’s Articles of Association, sums standing to the credit of the Capital Reserve are available for distribution

only by way of redemption, purchase of any of the Company’s own shares or by way of dividend. The Revenue reserve and the Capital

reserve (to the extent it constitutes realised profits) are distributable.

Financial Report

60 Annual Report 2023

Net Asset Value per Ordinary Share

The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end were as follows:

2023 2022 2023

£’000

2022

£’000

Ordinary shares 328.87p 353.70p 203,940 219,341

Net asset value per ordinary share is based on the net assets as shown above and 62,012,982 (2022 – 62,012,982) ordinary shares, being

the number of ordinary shares in issue at the year end, excluding shares held in treasury. At 31 January 2023 all borrowings were in the form

of short term floating rate borrowings and their fair value is considered equal to their book value, hence there is no difference in the net asset

value per share between including debt at book, or fair value, in the calculation.

15 Analysis of Change in Net Debt

1 February

2022

£’000

Cash flows

£’000

Exchange

movement

£’000

31 January

2023

£’000

Cash and cash equivalents 5,496 (4,783) 287 1,000

Loans due within one year (5,590) – (502) (6,092)

(94) (4,783) (215) (5,092)

1 February

2021

£’000

Cash flows

£’000

Exchange

movement

£’000

31 January

2022

£’000

Cash and cash equivalents 5,962 (561) 95 5,496

Loans due within one year – (5,427) (163) (5,590)

5,962 (5,988) (68) (94)

16 Contingent Liabilities, Guarantees and Financial Commitments

There were no contingent liabilities, guarantees or financial commitments at either year end.

17 Transactions with Related Parties and the Managers

The Directors’ fees for the year and interests in the Company’s shares at the end of the year are detailed in the Directors’ Remuneration

Report on page 38. No Director has a contract of service with the Company. During the years reported, no Director was interested in any

contract or other matter requiring disclosure under section 412 of the Companies Act 2006.

The Management fee due to Baillie Gifford & Co Limited is set out in note 3 on page 53 and the amount accrued is set out in note 11 on

page 58. Details of the Investment Management Agreement are set out on page 28.

18 Financial Instruments

The Company invests in equities for the long term so as to achieve its investment objective of long-term capital growth with the aim of

providing a total return in excess of the MSCI China All Share Index. The Company borrows money when the Managers have sufficient

conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its investment

objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests

and could result in a reduction in the Company’s net assets and/or a reduction in the profits available for dividend.

These risks are categorised here 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.

The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting year.

Market Risk

The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in

market prices. This market risk comprises three elements – currency, interest rate risk and market price risk. The Board of Directors reviews

and agrees policies for managing these risks and the Company’s Investment Manager assesses the exposure to market risk when making

individual investment decisions as well as monitoring the overall level of market risk across the investment portfolio on an ongoing basis.

Details of the Company’s investment portfolio are shown on pages 17 and 18.

Financial Report

Baillie Gifford China Growth Trust plc 61

18 Financial Instruments (continued)

Currency Risk

The Company’s assets, liabilities and income are denominated in currencies other than sterling (the Company’s functional currency and that

in which it reports its results). Consequently, movements in exchange rates may affect the sterling value of those items.

The Investment Manager monitors the Company’s exposure to foreign currencies and reports to the Board on a regular basis. The Investment

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. However,

the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings

may have a more significant impact upon a company’s valuation than a simple translation of the currency in which the company is quoted.

Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted,

or, for unlisted investments, denominated, is shown below.

At 31 January 2023

Investments

£’000

Cash and

deposits

£’000

Bank loans

£’000

Debtors

and creditors

£’000

Net

exposure

£’000

US dollar 13,676 254 (6,092) (18) 7,820

Hong Kong dollar 109,313 – – – 109,313

Chinese renminbi 86,510 726 – – 87,236

Total exposure to currency risk 209,499 980 (6,092) (18) 204,369

Sterling – 20 – (449) (429)

209,499 1,000 (6,092) (467) 203,940

At 31 January 2022

Investments

£’000

Cash and

deposits

£’000

Bank loans

£’000

Debtors

and creditors

£’000

Net

exposure

£’000

US dollar 21,749 12 (5,590) (590) 15,581

Hong Kong dollar 123,347 – – – 123,347

Chinese renminbi 76,919 1,138 – (1,590) 76,467

Total exposure to currency risk 222,015 1,150 (5,590) (2,180) 215,395

Sterling – 4,346 – (400) 3,946

222,015 5,496 (5,590) (2,580) 219,341

Currency Risk Sensitivity

At 31 January 2023, if sterling had strengthened by 10% in relation to all currencies, with all other variables held constant, total net assets

and total return on ordinary activities would have decreased by the amounts shown below. A 10% weakening of sterling against all currencies,

with all variables held constant, would have had an equal but opposite effect on the Financial Statement amounts. The analysis is performed

on the same basis for 2022.

2023

£’000

2022

£’000

US dollar 782 1,558

Hong Kong dollar 10,931 12,335

Chinese renminbi 8,724 7,647

20,437 21,540

Interest Rate Risk

Interest rate movements may affect the level of income receivable and payable on cash deposits and interest payable on variable rate

borrowings. They may also impact upon the market value of the Company’s investments as the effect of interest rate movements upon

the earnings of a company may have a significant impact upon the valuation of that company’s equity.

The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when making investment

decisions and when entering borrowing agreements.

The Board reviews on a regular basis the amount of investments in cash and the income receivable on cash deposits.

The Company has the ability to finance part of its activities through borrowings at approved levels. The amount of such borrowings and

the approved levels are monitored and reviewed regularly by the Board.

During the year to 31 January 2023, the majority of the Company’s assets were non-interest bearing. Some of the Company’s cash at bank

and short-term deposits were subject to a negative interest charge and there was exposure to interest bearing liabilities through the loan agreement.

Financial Report

62 Annual Report 2023

18 Financial Instruments (continued)

Financial Assets

Cash deposits generally comprise overnight call or short-term money market deposits and earn interest at floating rates based on

prevailing bank base rates.

Financial Liabilities

The interest risk profile of the Company’s financial liabilities and the maturity profile of the undiscounted future cash flows in respect of the

Company’s contractual financial liabilities at 31 January are shown below:

Interest Rate Risk Profile

2023

£’000

2022

£’000

The interest rate risk profile of the Company’s financial liabilities at 31 January was:

Floating rate – US$ denominated 6,092 5,590

6,092 5,590

Maturity Profile

2023

£’000

2022

£’000

The maturity profile of the Company’s financial liabilities at 31 January was:

In less than three months

– repayment of loans 6,092 5,590

– interest on loan 18 6

6,110 5,596

Interest Rate Risk Sensitivity

An increase of 1.0% in interest rates, with all other variables being held constant, would have decreased the Company’s net assets for the

year to 31 January 2023 by £55,000 (year to 31 January 2022 – £44,000). A decrease of 1.0% would have had an equal but opposite effect.

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 Company’s exposure to changes in market prices relates to the fixed asset investments as disclosed in note 9.

The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information

from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance, the investment portfolio

and the rationale for the current investment positioning to ensure consistency with the Company’s objectives and investment policies.

The portfolio does not seek to reproduce the 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 shown on pages 17 and 18.

96.9% (2022 – 94.7%) of the Company’s net assets are invested in Level 1 quoted equities. A 25% increase in quoted equity valuations

at 31 January 2023 would have increased total net assets and net return on ordinary activities after taxation by £49,387,000

(2022 – £51,920,000). A decrease of 25% would have had an equal but opposite effect.

0% (2022 – 0.7%) of the Company’s net assets are invested in a suspended investment, fair valued at a discount to the last traded price.

A 25% increase in the fair value at 31 January 2023 would have increased total net assets and net return on ordinary activities after taxation

by £nil (2022 – £371,000). A decrease of 25% would have had an equal but opposite effect.

Financial Report

Baillie Gifford China Growth Trust plc 63

18 Financial Instruments (continued)

5.9% (2022 – 5.9%) of the Company’s net assets are invested in an unlisted security. The fair valuation of the unlisted investment is

influenced by the estimates, assumptions and judgements made in the fair valuation process (see 1(b) on pages 51 and 52). A sensitivity

analysis is provided below which recognises that the valuation methodologies employed involve subjectivity in their significant unobservable

inputs and illustrates the sensitivity of the valuations to these inputs. The inputs have been flexed by +/-10% with the exception of the

Recent Transaction Price valuation approach as it does not involve significant subjectivity. The table also provides the range of values for the

key unobservable inputs.

As at 31 January 2023 Significant unobservable inputs*

Valuation technique

Fair value as at

31 January 2023

£’000

Key

unobservable

inputs

Other

unobservable

inputs Range

Sensitivity

Sensitivity to changes

in significant

unobservable inputs

Market approach

using comparable

trading multiples

11,953 EV/LTM revenue multiple a,b,c,d 2.2x – 7.3x 10 If EV/LTM multiples changed

by +/-10%, the fair value

would change by £1,136,313

and (£1,136,313)

Discount for lack

of liquidity

a,b,c,d,e -10% 10 If the illiquidity discount is

changed by +/-10%, the fair

value would change by

£132,816 and (£132,816)

As at 31 January 2022 Significant unobservable inputs*

Valuation technique

Fair value as at

31 January 2022

£’000

Key

unobservable

inputs

Other

unobservable

inputs Range

Sensitivity

Sensitivity to changes

in significant

unobservable inputs

Market approach

using comparable

trading multiples

12,855 EV/LTM revenue multiple a,b,c,d,e 2.2x – 8.5x 10 If EV/LTM multiples changed

by +/-10%, the fair value

would change by £1,236,459

and (£1,236,753)

* Significant Unobservable Inputs

The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private

company valuation. An explanation of each of the key variable inputs is provided below. The assumptions made in the production of the

inputs are described in note 1(c) on page 52.

(a) Application of valuation basis

Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each investment.

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

appropriate for the investment, and where a suitable correlation can be identified with the comparable companies then a regression analysis

will be performed. Discounted cash flows will also be considered where appropriate forecasts are available.

(b) Probability estimation of liquidation events

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 where a company is underperforming expectations significantly and therefore deemed very unlikely to pursue an IPO.

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

many relevant comparable companies are identified. The resultant revenue or earnings multiples or share price movements derived will vary

depending on the companies selected and the industries they operate in.

Financial Report

64 Annual Report 2023

Financial Report

18 Financial Instruments (continued)

(d) Estimated sustainable earnings

The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and where it is 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,

or by application of a specific discount. The discount applied where a calibration is not appropriate is typically 10%, reflecting that the

majority of the investments held are substantial companies with some secondary market activity.

Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities as they fall due. Liquidity

risk is not significant as the majority of the Company’s assets are in investments that are readily realisable. The Company’s holding in an

unlisted investment, which is not considered to be readily realisable, amounts to 5.9% of net assets at 31 January 2023.

The Company has the power to take out borrowings, which give it access to additional funding when required. The maturity profile of the

Company’s financial liabilities is on page 62.

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 Investment Manager makes 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 Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates

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. The Investment Manager monitors the Company’s risk by reviewing the custodian’s internal control reports and reporting its

findings to the Board;

— investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Investment Manager.

Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian 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;

— 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, is subject to rigorous

assessment by the Investment Manager; and

— cash is only held at banks that are regularly reviewed by the Investment Manager.

Credit Risk Exposure

The exposure to credit risk at 31 January was:

2023

£’000

2022

£’000

Debtors 26 100

Cash and cash equivalents 1,000 5,496

1,026 5,596

None of the Company’s financial assets are past due or impaired.

Fair Value of Financial Assets and Financial Liabilities

The Company’s investments are stated at fair value and the Directors are of the opinion that the reported values of the Company’s other

financial assets and liabilities approximate to fair value.

Capital Management

The objective of the Company is to maximise the total return to its equity shareholders through an appropriate capital structure. Its borrowings

are set out in note 11 on page 58. The Company does not have any externally imposed capital requirements other than the covenants on its

loan which are detailed in note 11. The capital of the Company is the ordinary share capital as detailed in note 12. It is managed in

accordance with its Investment Policy in pursuit of its investment objective, both of which are detailed on page 22, and shares may be

repurchased or issued as explained on page 29.

Baillie Gifford China Growth Trust plc 65

Shareholder Information

Notice of Annual General Meeting

Notice is hereby given that an Annual General Meeting of

Baillie Gifford China Growth Trust plc will be held at the Institute

of Directors, 116 Pall Mall, London SW1Y 5ED on Thursday

15 June 2023, at 4.00pm for the following purposes.

To consider and, if thought fit, to pass the following Resolutions

as Ordinary Resolutions.

1. To receive and adopt the Financial Statements of the

Company for the year to 31 January 2023 with the Reports

of the Directors and of the Independent Auditor thereon.

2. To approve the Directors’ Remuneration Policy.

3. To receive and approve the Directors’ Annual Report on

Remuneration for the year to 31 January 2023.

4. To declare a final dividend of 1.7p per ordinary share.

5. To re-elect Susan Platts-Martin as a Director of the Company.

6. To re-elect Magdalene Miller as a Director of the Company.

7. To re-elect Tim Clissold as a Director of the Company.

8. To elect Jonathan Silver as a Director of the Company.

9. To re-appoint Ernst & Young LLP as Independent Auditor

of the Company to hold office from the conclusion of this

meeting until the conclusion of the next Annual General

Meeting at which the Financial Statements are laid before

the Company.

10. To authorise the Directors to determine the remuneration

of the Independent Auditor of the Company.

11. That, in substitution for 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 shares in the

Company and to grant rights to subscribe for or to convert any

security into shares in the Company (‘Securities’) provided that

such authority shall be limited to the allotment of shares and the

grant of rights in respect of shares with an aggregate nominal

value of up to £5,167,748, 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 Securities to be allotted

or granted after the expiry of such authority and the Directors

shall be entitled to allot or grant Securities in pursuance of such

an offer or agreement as if such authority had not expired.

To consider and, if thought fit, to pass Resolutions 12 and 13 as

Special Resolutions.

12. That, subject to the passing of Resolution 11 above, and in

substitution for any existing power but without prejudice to

the exercise of any such power 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), for cash

pursuant to the authority given by Resolution 11 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 or treasury shares to be sold after such

expiry and the Directors may allot equity securities or

sell treasury shares 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 £1,550,325, being approximately 10% of the nominal

value of the issued share capital of the Company, as at

4 April 2023.

Piccadilly

Pall Mall

Haymarket

Regent Street

St. James’s Street

Piccadilly

Circus

The Mall

Charing

Cross

Whitehall

Strand

King St

St James Sq

Pall Mall East

A400

INSTITUTE OF

DIRECTORS

Trafalgar

Square

The Board encourages all shareholders to submit proxy voting forms

as soon as possible and, in any event, by no later than 4.00pm on

13 June 2023.

Should shareholders have questions for the Board or the Managers

or any queries as to how to vote or how to attend the meeting they

are welcome as always to submit them by email to

trustenquiries@bailliegifford.com or call 0800 917 2112.

Baillie Gifford may record your call.

66 Annual Report 2023

13. 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 and is hereby generally and

unconditionally authorised, pursuant to and 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 25 pence each in

the capital of the Company (‘ordinary shares’) (either for

retention as treasury shares for future reissue, resale, transfer

or cancellation), provided that:

(a) the maximum aggregate number of ordinary shares

hereby authorised to be purchased is 9,295,746, or,

if less, the number representing approximately 14.99%

of the issued ordinary share capital 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;

paid for each ordinary share shall not be more than the

higher of:

(i) 5% above the average closing price on the London

Stock Exchange of an ordinary share over the five

business days immediately preceding the date of

purchase; and

(ii) the higher of the last independent trade and the

highest current independent bid on the London Stock

Exchange as stipulated by Article 5(1) of Commission

Regulation (EC) 22 December 2003 implementing the

Market Abuse Directive as regards exemptions for

buy back programmes and stabilisation of financial

instruments (No. 2273/2003); 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 Annual

General Meeting of the Company to be held in respect

of the year ending 31 January 2024, 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.

By order of the Board

Baillie Gifford & Co Limited

Managers and Secretaries

4 April 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 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

under which it is signed or a certified copy thereof, must be

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 2 days (excluding non-working days) before the

time of the meeting or any adjourned meeting.

3. CREST members who wish to appoint a proxy or proxies

through the CREST electronic proxy appointment service

may do so by using the procedures described in the CREST

Manual and/or by logging on to the website

euroclear.com/CREST. CREST personal members

or other CREST sponsored members, and those CREST

members who have appointed a voting service provider(s),

should refer to their CREST sponsor or voting service

provider(s), who will be able to take the appropriate action

on their behalf.

4. In order for a proxy appointment or instruction made using the

CREST service to be valid, the appropriate CREST message

(a ‘CREST Proxy Instruction’) must be properly authenticated

in accordance with Euroclear UK & International Limited’s

specifications, and must contain the information required for

such instruction, as described in the CREST 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, in order to be valid, be

transmitted so as to be received by the Company’s registrar

(ID 3RA50) no later than 2 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 timestamp applied to the message by the

CREST Application Host) from which the Company’s registrar

is able to retrieve the message by enquiry to CREST in the

manner prescribed by CREST. After this time any change of

instructions to proxies appointed through CREST should be

communicated to the appointee through other means.

Shareholder Information

Baillie Gifford China Growth Trust plc 67

5. CREST members and, where applicable, their CREST

sponsors, or voting service providers should note that

Euroclear UK & International Limited does not make available

special procedures in CREST for any particular message.

Normal system timings and limitations will, therefore, apply

in relation to the input of CREST Proxy Instructions. It is the

responsibility of the CREST member concerned to take

(or, if the CREST member is a CREST personal member,

or sponsored member, or has appointed a voting service

provider(s), to procure that his/her CREST sponsor or voting

service provider(s) take(s)) such action as shall be necessary

to ensure that a message is transmitted by means of the

CREST system by any particular time. In this connection,

CREST members and, where applicable, their CREST

sponsors or voting system providers are referred, in particular,

to those sections of the CREST Manual concerning practical

limitations of the CREST system and timings.

6. The Company may treat as invalid a CREST Proxy Instruction

in the circumstances set out in Regulation 35(5)(a) of the

Uncertificated Securities Regulations 2001.

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.

8. Pursuant to Regulation 41 of the Uncertificated Securities

Regulations 2001 and section 311 of the Companies Act

2006 the Company specifies that to be entitled to attend and

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 2 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. Under section 338 of the Companies Act 2006, members

meeting the qualification criteria set out in note 14 below may,

subject to certain conditions, require the Company to circulate

to members notice of a resolution which may properly be

moved and is intended to be moved at that meeting. The

conditions are that:

(a) the resolution must not, if passed, be ineffective (whether

by reason of inconsistency with any enactment or the

Company’s constitution or otherwise);

(b) the resolution must not be defamatory of any person,

frivolous or vexatious; and

(i) may be in hard copy form or in electronic form;

(ii) must identify the resolution of which notice is to be

given by either setting out the resolution in full or,

if supporting a resolution sent by another member,

clearly identifying the resolution which is being

supported;

(iii) must be authenticated by the person or persons

making it; and (iv) must be received by the Company

not later than Thursday 4 May 2023.

12. Under section 338A of the Companies Act 2006, members

meeting the qualification criteria set out at note 14 below may

require the Company to include in the business to be dealt

with at the Annual General Meeting a matter (other than a

proposed resolution) which may properly be included in the

business (a matter of business). The request must have been

received by the Company not later than Thursday 4 May 2023.

The conditions are that the matter of business must not be

defamatory of any person, frivolous or vexatious. The request

must identify the matter of business by either setting it out in

full or, if supporting a statement sent by another member,

clearly identify the matter of business which is being supported.

The request must be accompanied by a statement setting out

the grounds for the request. Members seeking to do this

should write to the Company providing their full name and

address.

13. Under section 527 of the Companies Act 2006, members

meeting the qualification criteria set out in note 14 below 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. Such requests must be made in writing

and must state your full name and address.

14. In order to be able to exercise the members’ rights in notes

11 to 13, the relevant request must be made by:

(a) members representing at least 5% of the total voting rights

of all the members who have a right to vote on the

resolution to which the requests relate; or

(b) at least 100 members who have a right to vote on the

resolution to which the requests relate and hold shares in

the Company on which there has been paid up an average

sum, per member, of at least £100.

Such requests should be sent to the Company at Calton

Square, 1 Greenside Row, Edinburgh, EH1 3AN. Electronic

requests permitted under section 338 (see note 11) should be

sent to trustenquiries@bailliegifford.com.

Shareholder Information

68 Annual Report 2023

15. 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 bailliegiffordchinagrowthtrust.com.

16. All shareholders are strongly encouraged to exercise your

votes in respect of the AGM in advance, and to appoint the

Chair of the Meeting as your proxy, to ensure that your votes

are counted. Furthermore, the Board always welcomes

questions from the Company’s shareholders at the AGM and

shareholders are invited to submit their questions to the Board

in advance. The answers to these questions will be posted on

the Company’s page of the Managers’ website after the AGM.

Shareholders should submit any questions they may have to

trustenquiries@bailliegifford.com before 8 June 2023.

17. As at 4 April 2023 (being the last practicable day prior to

the publication of this notice) the Company’s issued share

capital consisted of 62,012,982 ordinary shares, carrying one

vote each. Therefore, the total voting rights in the Company

as at 4 April 2023 were 62,012,982 votes.

18. Any person holding 3% or more of the total voting rights of

the Company who appoints a person other than the Chair

of the meeting as his/her proxy will need to ensure that

both he/she and his/her proxy complies with their respective

disclosure obligations under the UK Disclosure and

Transparency Rules.

19. No Director has a contract of service with the Company.

Shareholder Information

Baillie Gifford China Growth Trust plc 69

Baillie Gifford China Growth Trust is an investment

trust. Investment trusts offer investors the following:

— participation in a diversified portfolio of shares;

— constant supervision by experienced professional managers; and

— the Company is free from capital gains tax on capital profits

realised within its portfolio, although investors are still liable

for capital gains tax on profits when selling their investment.

How to Invest

The Company’s shares are traded on the London Stock Exchange.

They can be bought by placing an order with a stockbroker, or by

asking a professional adviser to do so. If you are interested in

investing directly in Baillie Gifford China Growth Trust, 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 price of shares is quoted daily in the Financial Times and

can also be found on the Company’s page of the Managers’

website at

bailliegiffordchinagrowthtrust.com, Trustnet at

trustnet.co.uk and on other financial websites. Company

factsheets are also available on the Baillie Gifford website and

are updated monthly. These are available from Baillie Gifford

on request.

Baillie Gifford China Growth Trust Identifiers

ISIN GB0003656021

Sedol 0365602

Ticker BGCG

Legal Entity Identifier 213800KOK5G3XYI7ZX18

The ordinary shares of the Company are listed on the London

Stock Exchange.

Key Dates

Ordinary shareholders normally receive a final dividend in respect

of each financial year, paid in July. The Annual Report and Financial

Statements ar

e normally issued in April and the AGM is normally

held in June.

Share Register Enquiries

Computershare Investor Services PLC maintains the share

regarding shares registered in your own name, please contact

the Registrars on 0370 707 1410.

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;

— confirm your current share holding balance; and

— order Change of Address and Stock Transfer forms.

You can also check your holding on the Registrars’ 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

on your share certificate).

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 1410.

CREST Proxy Voting

If you are a user of the CREST system (including a CREST Personal

Member), you may appoint one or more proxies or give an

instruction to a proxy by having an appropriate CREST message

transmitted. For further information please refer to the CREST

Manual.

Analysis of Shareholders at 31 January

2023

Number of

shares held

2023

2022

Number of

shares held

2022

Institutions 9,577,929 15.5 6,351,010 10.2

Intermediaries/

Retail Savings

Platforms 47,207,778 76.1 49,898,568 80.5

Individuals 5,046,445 8.1 5,232,773 8.4

Marketmakers 180,830 0.3 530,631 0.9

62,012,982 100.0 62,012,982 100.0

Data Protection

The Company is committed to ensuring the confidentiality and

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

bailliegiffordchinagrowthtrust.com

Risks

Past performance is not a guide to future performance.

Baillie Gifford China Growth Trust is a listed UK company. The

value of its shares and any income from those shares can fall as

well as rise and investors may not get back the amount invested.

Baillie Gifford China Growth Trust will be exposed to market risks,

principally in the form of equity securities price risk, including as a

result of investments in unlisted securities that the Company

continues to hold after the relevant unlisted companies are listed

on a stock exchange.

Further Shareholder Information

Shareholder Information

70 Annual Report 2023

Baillie Gifford China Growth Trust may utilise borrowings in order

to increase its investment exposure. While such leverage presents

opportunities for increasing total returns, it can also have the

opposite effect of increasing losses. If income and capital

appreciation on investments acquired with borrowed funds are

less than the costs of the leverage, the Company’s net asset

value will decrease. The use of leverage also increases the

investment exposure, which means that if the market moves

adversely, the resulting loss to capital would be greater than

if leverage were not used.

Baillie Gifford China Growth Trust may engage in derivative

transactions in limited circumstances for the purposes of hedging

against interest rate risks, for currency hedging purposes to the

extent applicable, or for the purposes of efficient portfolio

management (in order to reduce, transfer or eliminate investment

risk in the Company’s Portfolio). Derivative transactions may be

volatile and involve various risks different from, and in certain

cases, greater than the risks presented by other instruments.

The primary risks related to derivative transactions include

counterparty, correlation, illiquidity, leverage, volatility and OTC

trading risks. A small investment in derivatives could have a large

potential impact on the Company’s performance, effecting a form

of investment leverage on the Company’s Portfolio.

The aim of Baillie Gifford China Growth Trust is to achieve capital

growth. You should not expect a significant, or steady, annual

income from the Company.

You should note that tax rates and reliefs may change at any time

and their value depends on your circumstances.

The Company is listed on the London Stock Exchange and is not

authorised or regulated by the Financial Conduct Authority.

The staff of Baillie Gifford & Co and Baillie Gifford China Growth

Trust Directors may hold shares in Baillie Gifford China Growth

Trust and may buy or 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

bailliegiffordchinagrowthtrust.com or by calling Baillie Gifford

on 0800 917 2112.

The information and opinions expressed within this Annual Report

and Financial Statements are subject to change without notice.

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.

Baillie Gifford China Growth Trust will invest predominantly in

equities of companies which are incorporated or domiciled, or

which conduct a significant portion of their business, in China.

Investing in a single country is generally considered a higher risk

investment strategy than investing more widely, as it exposes the

investor to the fluctuations of a single geographical market and

currency, in this case the Chinese market and Chinese renminbi.

Baillie Gifford China Growth Trust will have investments

denominated in currencies other than sterling, particularly Chinese

renminbi and US dollars. The Company will therefore be exposed

to foreign exchange risk. Changes in the rates of exchange

between sterling and the other currency will cause the value of

any investment denominated in that currency, and any income

arising out of the relevant investment, to go down or up in sterling

terms.

Investing in an emerging market such as China subjects the

Company to a higher level of market risk than investment in a

more developed market. This is due, among other things, to the

existence of greater market volatility, lower trading volumes, the

risk of political and economic instability (such as the ongoing

geopolitical tensions between China and the US) legal and

regulatory risks, risks relating to accounting practices, disclosure

and settlement, a greater risk of market shut down, standards of

corporate governance and more governmental limitations on

foreign investment than are typically found in developed markets.

Investing in China is often through contractual structures that are

complex and could be open to challenge.

Changes in economic conditions (including, for example, changes

in interest rates, rates of inflation, industry and trade conditions

and competition), political, diplomatic, social and demographic

events and trends, tax laws and other factors such as the

Covid-19 pandemic could substantially and adversely affect the

value of the Company’s portfolio and the Company’s investment

performance, share price and prospects.

Valuation of investments in unlisted securities is inherently

subjective and uncertain. A material proportion of the Company’s

investments from time to time may be in unlisted securities, which

are more difficult to value than listed securities. This exacerbates

the risk of variation between the Company’s estimated valuations

and the realisable values of investments. Accordingly, net asset

value figures issued by the Company should be regarded as

indicative only and investors should be aware that the realisable

net asset value per share may be materially different from those

figures.

Baillie Gifford China Growth Trust may suffer a delay in realising

some of its returns because the Company may not be able to

exit from its investments in unlisted securities.

The unlisted securities in which the Company invests may not

provide sufficient information for ongoing monitoring by the AIFM,

which may impair the Company’s ability to adequately assess, or

if necessary mitigate, the risks associated with an investment.

Shareholder Information

Baillie Gifford China Growth Trust plc 71

Trust Magazine

Trust is the Baillie Gifford investment trust magazine which is

published twice a year. It provides an insight to our investment

approach by including interviews with our fund managers, as well

as containing investment trust news, investment features and

articles about the trusts managed by Baillie Gifford, including

Baillie Gifford China Growth Trust. Trust plays an important role

in helping to explain our products so that readers can really

understand them. For a copy of Trust, please contact the Baillie

Gifford Client Relations Team (see contact details opposite).

Baillie Gifford China Growth Trust on the Web

Up-to-date information about Baillie Gifford China Growth Trust

is available on the Company’s page of the Managers’ website at

bailliegiffordchinagrowthtrust.com. You will find full details on

the Company, including recent portfolio information and

performance information.

Electronic Communications from the Company

Shareholders now have the opportunity to be notified by email

when the Company’s Annual Reports, Interim Reports and other

formal communications are available on the website, instead of

receiving printed copies by post. This has environmental benefits

in the reduction of paper, printing, energy and water usage,

as well as reducing costs to the Company.

If you have not already elected to receive electronic communications

from the Company and wish to do so, please contact the

Registrar using the details shown on page 71. Please have your

Shareholder Reference Number to hand.

Suggestions and Questions

Any suggestions on how communications with shareholders can

be improved are welcomed, so please contact the Baillie Gifford

Client Relations Team and give them your suggestions. They will

also be very happy to answer questions that you may have about

Baillie Gifford China Growth Trust.

Client Relations Team Contact Details

You can contact the Baillie Gifford Client Relations Team by

telephone, email or post:

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

Edinburgh EH1 3AN

An online version of Trust can be found at

bailliegifford.com/trust

Trust Magazine

Communicating with Shareholders

A China Growth web page at bailliegiffordchinagrowthtrust.com

Shareholder Information

72 Annual Report 2023

In accordance with the UK AIFM 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.

AIFM Remuneration

In accordance with the Regulations, the AIFM remuneration policy

is available at bailliegifford.com or on request (see contact details

on the back cover). The numerical remuneration disclosures in

respect of the AIFM’s reporting period are available at

bailliegifford.com.

UK Alternative Investment Fund Managers (AIFM) Regulations

Leverage

The Company’s maximum and actual leverage (see Glossary

of Terms and Alternative Performance Measures on pages 74

to 76) levels at 31 January 2023 are shown below:

Gross method Commitment method

Maximum limit 2.50:1 2.00:1

Actual 1.03:1 1.03:1

In order to fulfil its obligations under UK Tax Legislation relating to

the automatic exchange of information, the Company is required

to collect and report certain information about certain

shareholders.

The legislation will require investment trust companies to provide

personal information to HMRC on certain investors who purchase

shares in investment trusts. As an affected company, Baillie Gifford

China Growth Trust plc will have to provide information annually to

the local tax authority on the tax residencies of a number of

non-UK based certificated shareholders and corporate entities.

Automatic Exchange of Information

Shareholders, excluding those whose shares are held in CREST,

who come on to the share register will be sent a certification form

for the purposes of collecting this information.

For further information, please see HMRC’s Quick Guide:

Automatic Exchange of Information – information for account

holders gov.uk/government/publications/exchange-of-

information-account-holders.

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.

Third Party Data Provider Disclaimer

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.

Source: MSCI. The MSCI information may only be used for your

internal use, may not be reproduced or redisseminated in any

form and may not be used as a basis for or a component of any

financial instruments or products or indices. None of the MSCI

information is intended to constitute investment advice or a

recommendation to make (or refrain from making) any kind of

investment decision and may not be relied on as such. Historical

data and analysis should not be taken as an indication or

guarantee of any future performance analysis, forecast or

prediction. The MSCI information is provided on an ‘as is’ basis

and the user of this information assumes the entire risk of any use

MSCI Index Data

made of this information. MSCI, each of its affiliates and each

other person involved in or related to compiling, computing or

creating any MSCI information (collectively, the ‘MSCI Parties’)

expressly disclaims all warranties (including, without limitation,

any warranties of originality, accuracy, completeness, timeliness,

non-infringement, merchantability and fitness for a particular

purpose) with respect to this information. Without limiting any

of the foregoing, in no event shall any MSCI Party have any liability

for any direct, indirect, special, incidental, punitive, consequential

(including, without limitation, lost profits) or any other damages

(msci.com).

Shareholder Information

Baillie Gifford China Growth Trust plc 73

The EU Sustainable Finance Disclosure Regulation (‘SFDR’)

does not have a direct impact in the UK due to Brexit, however,

it applies to third-country products marketed in the EU. As Baillie

Gif

ford China Growth Trust is marketed in the EU by the AIFM,

BG & Co Limited, via the National Private Placement Regime

(NPPR) the following disclosur

es have been provided to comply

with the high-level requirements of SFDR.

The AIFM has adopted Baillie Gifford & Co’s Governance and

Sustainable Principles and Guidelines as its policy on integration

of sustainability risks in investment decisions.

Baillie Gif

ford & Co’s approach to investment is based on identifying

and holding high quality growth businesses that enjoy sustainable

competitive advantages in their marketplace. To do this it looks

beyond current financial performance, undertaking proprietary

research to build up an in-depth knowledge of an individual

company and a view on its long-term prospects. This includes the

consideration of sustainability factors (environmental, social and/or

governance matters) which it believes will positively or negatively

influence the financial returns of an investment.

More detail on the Investment Manager’s approach to

sustainability can be found in the Governance and Sustainability

Principles and Guidelines document, available publicly on the

Baillie Gifford website (bailliegifford.com).

Sustainable Finance Disclosure Regulation (‘SFDR’)

Taxonomy Regulation

The Taxonomy Regulation establishes an EU-wide framework or

criteria for environmentally sustainable economic activities in

respect of six environmental objectives. It builds on the disclosure

requirements under the SFDR by introducing additional disclosure

obligations in respect of Alternative Investment Funds (‘AIFs’) that

invest in an economic activity that contributes to an environmental

objective.

The Company does not commit to make sustainable investments

as defined under SFDR. As such, the underlying investments do

not take into account the EU criteria for environmentally

sustainable economic activities.

Shareholder Information

74 Annual Report 2023

Total Assets

This is the Company’s definition of Adjusted Total Assets, being the total of all assets less current liabilities, before deduction of all borrowings.

Net Asset Value

Net Asset Value (‘NAV’) is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this

amount by the number of ordinary shares in issue (excluding treasury shares).

Net Liquid Assets

Net liquid assets comprise current assets less current liabilities, excluding borrowings.

Discount/Premium (APM)

As stockmarkets and share prices vary, an investment trust’s share price is rarely the same as its NAV. When the share price is lower

than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from

the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share,

it is said to be trading at a premium.

2023 2022

Closing NAV per share 328.87p 353.70p

Closing share price 308.00p 339.25p

(Discount)/Premium (6.3%) (4.1%)

Total Return (APM)

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

2023

NAV

2023

price

2022

NAV

2022

price

Closing NAV per share/share price (a) 328.87p 308.00p 353.70p 339.25p

Dividend adjustment factor

* (b) 1.014030 1.014557 1.016038 1.015984

Adjusted closing NAV per share/share price (c = a x b) 333.48p 312.48p 395.37p 344.67p

Opening NAV per share/share price (d) 353.70p 339.25p 492.66p 548.00p

Total return (c ÷ d)-1 (5.7%) (7.9%) (27.0%) (37.1%)

The dividend adjustment factor is calculated on the assumption that the dividend of 4.60p (2022 – 7.15p) paid by the Company during the year

was reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.

Ongoing Charges (APM)

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value. The ongoing

charges have been calculated on the basis prescribed by the Association of Investment Companies.

A reconciliation from the expenses detailed in the Income Statement on page 47 is provided below.

2023 2022

Investment management fee £1,243,000 £1,452,000

Other administrative expenses

£550,000 £479,000

Total expenses (a) £1,793,000 £1,931,000

Average daily cum-income net asset value (b) £190,419,970 £267,217,990

Ongoing charges ((a) ÷ (b) expressed as a percentage) 0.94% 0.72%

Glossary of Terms and Alternative Performance Measures (‘APM’)

Shareholder Information

Baillie Gifford China Growth Trust plc 75

Ongoing Charges (APM) (continued)

Baillie Gifford & Co Limited was appointed on 16 September 2020 and agreed to waive its management fee for six months from the

date of its appointment. The calculation for 2022 above is therefore not representative of future management fees. The reconciliation below

shows the ongoing charges figure if the management fee waiver had not been in place.

2022

Investment management fee £1,452,000

Investment management fee waiver £223,000

Other administrative expenses

£479,000

Total expenses (a) £2,154,000

Average daily cum-income net asset value (b) £267,217,990

Ongoing charges ((a) ÷ (b) expressed as a percentage) 0.81%

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional

investments for its portfolio. The effect of the borrowing on the shareholders’ assets is called ‘gearing’. If the Company’s assets grow,

the shareholders’ assets grow proportionately more because the debt remains the same. But if the value of the Company’s assets falls,

the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling

markets.

Equity gearing is the Company’s borrowings adjusted for cash and cash equivalents expressed as a percentage of shareholders’ funds.

Potential gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds.

2023 2022

Gearing

£’000

Potential

Gearing

†

£’000

Gearing *

£’000

Potential

Gearing

†

£’000

Borrowings (a) 6,092 6,092 5,590 5,590

Cash and cash equivalents (b) 1,000 – 5,496 –

Sales for subsequent settlement (c) – – 2,175 –

Shareholders’ funds (d) 203,940 203,940 219,341 219,341

2.5% 3.0% 1.0% 2.5%

* Gearing: ((a)–(b)+(c)) divided by (d), expressed as a percentage.

†

Potential gearing: (a) divided by (d), expressed as a percentage.

Leverage (APM)

For the purposes of the UK Alternative Investment Fund Managers (AIFM) Regulations, leverage is any method which increases the

Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s

exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure

represents the sum of the Company’s positions after the deduction of sterling cash balances, without taking into account any hedging

and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and

after certain hedging and netting positions are offset against each other.

Active Share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index.

It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100

indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Shareholder Information

76 Annual Report 2023

Unlisted (Private) Company

An unlisted (private) company means a company whose shares are not available to the general public for trading and not listed on a

stock exchange.

Participatory Notes (or P-Notes)

A P-Note is a certificate-based instrument that can be issued by a counterparty bank and provides a synthetic stock exposure to an

underlying equity instrument. The synthetic exposure results in the P-Note having the same performance as the underlying stock but

carries an additional currency exposure due to the P-Note being denominated in US$. P-Notes are unleveraged instruments.

Variable Interest Entity (‘VIE’)

VIE structures are used by some Chinese companies to facilitate access to foreign investors in sectors of the Chinese domestic

economy which prohibit foreign ownership. The purpose of the VIE structure is to give the economic benefits and operational control

of ownership without direct equity ownership itself. The structures are bound together by contracts and foreign investors are not

directly invested in the underlying company.

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.

Shareholder Information

Directors

Chair:

Susan Platts-Martin

Tim Clissold

Magdalene Miller

Andrew Robson

Jonathan Silver

Alternative Investment

Fund Managers,

Secretaries and

Registered Office

Baillie Gifford & Co Limited

Grimaldi House

28 St James’s Square

London

SW1Y 4JH

Tel: 0131 275 2000

bailliegifford.com

Registrar

Computershare

Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

Tel: 0370 707 1410

Company Broker

JP Morgan Cazenove

25 Bank Street

Canary Wharf

London

E14 5JP

Independent Auditor

Ernst & Young LLP

Chartered Accountants and

Statutory Auditors

Atria One

144 Morrison Street

Edinburgh

EH3 8EX

Company Details

bailliegiffordchinagrowthtrust.com

Company Registration

No. 91798

ISIN GB0003656021

Sedol 0365602

Ticker BGCG

Legal Entity Identifier:

213800KOK5G3XYI7ZX18

Depositary

Bank of New York Mellon

(International) Limited

160 Queen Victoria Street

London

EC4V 4LA

Further Information

Client Relations Team

Calton Square

1 Greenside Row

Edinburgh

EH1 3AN

Tel: 0800 917 2112

Email:

trustenquiries@bailliegifford.com