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Project: BG China Growth Annual Report
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Job. no: 3620
Annual Report and
Financial Statements
Baillie Gifford
China Growth
Trust plc
31 January 2025
Investor Disclosure Document
The UK Alternative Investment Fund Managers Regulations require
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.
Notes
None of the views expressed in this document should be construed
asadvice to buy or sell a particular investment.
Investment trusts are UK public listed companies and as such
complywith the requirements of the Financial Conduct Authority
(‘FCA’). They are not authorised or regulated by the FCA.
BaillieGifford 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 United Kingdom 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 United Kingdom, you should
consult an appropriately authorised financial adviser.
If you have sold or otherwise transferred all of your holding in
BaillieGifford 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.
01
Baillie Gifford China Growth Trust plc
Introduction
Financial highlights 02
BaillieGifford – philosophy and process 04
Strategic report
Chair’s statement 07
Managers’ report 12
Review of investments 20
Key performance indicators 24
One year summary 26
Five year summary 28
Ten year record 30
Business review 32
Managers’ report on environmental, social and governance engagement 45
BaillieGifford – proxy voting 52
BaillieGifford – statement on stewardship 53
BaillieGifford – valuing private companies 55
List of investments 56
Distribution of total assets 59
Governance report
Directors and management 61
Directors’ report 64
Corporate governance report 70
Audit Committee report 77
Directors’ remuneration report 80
Statement of Directors’ responsibilities 84
Financial report
Independent Auditor’s report 87
Income statement 96
Balance sheet 97
Statement of changes in equity 98
Cash flow statement 99
Notes to the Financial Statements 100
Shareholder information
Notice of Annual General Meeting 116
Further shareholder information 123
Communicating with shareholders 125
Insights 126
Third party data provider disclaimer 127
Sustainable Finance Disclosure Regulation 128
Glossary of terms and alternative performance measures 129
Company information 132
Contents
Introduction
Annual Report and Financial Statements 2025
02
Financial highlights
Year to 31 January 2025
Share price
*
29.4%
NAV
*
†
35.4%
Comparative
index
*
#
32.4%
* Source: LSEG/BaillieGifford and relevant underlying index providers. See disclaimer on page 127. All figures are stated on a total return basis.
Total return and discount are alternative performance measures – see Glossary of terms and alternative performance measures on pages 129 to 131.
†
Net asset value per share (‘NAV’).
#
The benchmark is the MSCI China All Shares Index (in sterling terms).
Past performance is not a guide to future performance.
The principal investment objective of the
Company is to produce long-term capital
growth by investing predominantly in shares
of, or depositary receipts representing the
shares of, Chinese companies.
NAV, share price and benchmark total return
*
(figures rebased to 100 at 31 January 2024)
Discount to net asset value
*
(figures plotted on a weekly basis)
J
2025
J
2024
F MAMJJAS N
OD
● Share price*
●
NAV*
†
●
Benchmark*
#
90
100
140
130
120
110
20252024
JJFMAMJJAS N
OD
● Discount*
●
Average discount*
(20%)
(5%)
(15%)
(10%)
Baillie Gifford China Growth Trust plc
03
Introduction
Annual Report and Financial Statements 2025
04
BaillieGifford –
philosophy and process
Our philosophy and competitive edges
Our goal is to use our global perspectives and local
knowledge to identify the next generation of exciting
growth companies and build a portfolio of 40–80 of
the best ideas. We seek to identify mispricing
relative to fundamentals and accept that it can take
time for this to be reflected properly in company
valuations.
We believe that long-term returns are derived from
investing in disruptive and secular trends which play
out over years not months or quarters. We are looking
for businesses that enjoy sustainable competitive
advantages and have the potential to grow their
earnings significantly ahead of the market average
over the long term. As growth investors, we are
focused on identifying the innovative companies
with competitive advantages that position
themselves to benefit from, and contribute to,
China’s economic, societal and cultural development
over the long-term.
We believe fundamental research focused on the
five-year prospects for companies makes for a
differentiated approach to managing Chinese
equities, in an asset class where impatience and
short-termism abound. We think our approach
delivers an active edge in three key areas:
timehorizons, perspectives and insights.
Time horizon
Companies grow over time. The true value of a
business is rarely determined by what will happen
inthe next few quarters, but by what will happen
inthe many years ahead. It is over years that
deepchanges in industries and behaviours occur,
and that competitive advantage and management
excellence are recognised. Being able to think
andact independently of the structures and
short-term incentives of traditional finance
isanimportant advantage.
A long-term focus also embeds the consideration of
ESG factors at its heart. We believe this is vital in a
country like China, given the role of the state, lower
levels of disclosure, and the need for engagement
with companies. It allows us to mitigate the risks of
getting Chinese companies wrong, but importantly,
ithelps us discover where the best opportunities lie.
Fighting the instinct to involve ourselves in conventional
market short termism requires important behavioural
and cultural traits. Our partnership structure allows
usto think differently and independently, and that
provides our opportunity.
Baillie Gifford China Growth Trust plc
05
Perspective
We believe that balancing on-the-ground insights
with a global perspective gives us an important
edge. An open and collaborative culture allows
ustounderstand Chinese companies not just in
theirown market, but in a global context too.
Having investment managers and analysts on-the-
ground in Shanghai enables us to deepen our
long-standing relationships with existing holdings,
identify the next generation of exceptional companies
at an earlier stage, better understand societal and
cultural developments, and forge partnerships with
academics and industry specialists in the region.
When added to the global perspectives derived
across BaillieGifford, we can gain far deeper
insights into companies and sectors of interest.
Thebenefit from our global perspectives is
multi-fold: BaillieGifford’s long history of
researching growth companies globally,
well-established trust with global companies as
long-term, patient investors, as well as our strong
academic connections, not only deepens our
understanding of the industry trends and the
competitive environment that Chinese companies
operate in, but also provides checks and balances
when assessing Chinese companies in a global
context, including an assessment of the geopolitical
environment and ESG standards.
Relationships and insight
Given our investment time horizons, we prioritise
meeting with academics, industry specialists and
owners of businesses who think about their strategy,
not financial analysts who think about the next
quarter’s earnings.
With three decades of experience investing in
China,we have built relationships as a patient and
supportive shareholder and developed strong
accessto some of the largest and most influential
companies. Relationships take time to build but they
have been critical in helping us understand China’s
ongoing development and the future direction of
Chinese businesses.
These relationships, often built on trust and
reputation over many years, provide access to a
range of interesting companies, ensure management
teams are aware of our approach and philosophy,
and in doing so, help position us and our thinking in
a different light to much of the market. This has
provided an advantage in our understanding of
companies early in their growth stages, and insight
into the future challenges and opportunities for
companies we hold.
The Strategic report,
whichincludes pages 07 to 59
and incorporates the Chair’s
statement, has been prepared in
accordance with the Companies
Act 2006.
Strategic
report
07
Baillie Gifford China Growth Trust plc
Chair’s
statement
For a definition of terms, see Glossary of terms and alternative performance measures on pages 129 to 131. See disclaimer on page 127.
Past performance is not a guide to future performance.
Introduction
It is a privilege to succeed Susan Platts-Martin
as Chair of BaillieGifford China Growth Trust plc
(the ‘Company’). Susan retired on 30 April 2024
after seven years as Chair and ten years as a Non
Executive Director. The Board is grateful for Susan’s
significant contribution. Following the recruitment
of Sarah MacAulay in May 2024, the Board has
now been completely refreshed since the change in
mandate to reflect the skills and experience needed
to oversee the China strategy.
The Company’s performance in the financial year
to 31 January 2025 was positive, with a NAV total
return of 35.4%, outperforming the benchmark
by 3%. Government stimulus was a catalyst for a
substantial rally in China equities, the renaissance
of the growth style and outperformance by the
Company, partially reversing the disappointing
performance since the mandate change.
Thispositive performance has continued since
the financial year-end driven by the launch of
DeepSeek and President Xi’s meeting with the tech
entrepreneurs. Whilst BaillieGifford’s investment
time horizon is five to ten years, it is encouraging
that the Manager has capitalised when conditions
for growth investing are more favourable.
The Board’s agenda has been resolutely focussed
onenhancing shareholder value: an in depth analysis
of the Company’s strategy, a 4.5% share buyback,
introduction of a performance related Conditional
Tender Offer for 100% of the share capital in 2028
(the ‘CTO’), renewal of the loan facility, enhanced
marketing of the Company and a visit to China to
meet portfolio companies and analysts that work
within Baille Gifford’s Shanghai office.
Nicholas Pink
Chair
Appointed to
theBoard in 2023
andas Chair in 2024
Strategic report
Annual Report and Financial Statements 2025
08
Further details regarding the KPIs can be found on
page 24 of the Annual Report.
Investment Performance
The rebound in the Company’s performance in
absolute and relative terms during the financial
period was striking. In the first half of the period the
Net Asset Value (‘NAV’) per share rose 10%, lagging
the benchmark by 2%. In the second half, NAV per
share rose 23%, outperforming the benchmark
by 5%. As the year progressed, the Company’s
growth style began to outperform value, providing
a tail wind for BaillieGifford’s management style
for the first time in four years. Whilst insufficient to
offset the preceding three years underperformance,
the financial year to 31 January 2025 may mark a
tipping point if China equity market gains can be
sustained. Further details of portfolio performance
can be found in the Investment Manager review on
pages 12 to 19.
Since assuming the role as Investment Manager in
September 2020, BaillieGifford has consistently
emphasised that the period to measure performance
for the Company’s strategy is five to ten years.
Notwithstanding the rally in the financial year to
31 January 2025, the Board is conscious that
September 2024 marked the fourth anniversary of
the mandate change and to date returns both in
absolute terms and relative to the benchmark have
been disappointing.
Equally, the four-year period has been unusual
relative to the history of MSCI China. At the nadir
of the China equity market in January 2024, it was
only the second period in the 30-year history of
MSCI China where the market had fallen for three
consecutive years, accompanied by the typical
pattern of underperformance of growth relative
to value in a falling market. This was a significant
headwind for a China growth strategy.
The Board reviewed investment performance since
assuming the mandate in September 2020. This was
conducted in tandem with the fund managers and
the BaillieGifford Investment Risk team. The review
concluded that the portfolio had been managed
consistent with the growth style, outperforming
the MSCI China growth index but underperforming
the benchmark. In the period September 2020 to
December 2024 the only sub-sectors to outperform
the benchmark were the MSCI China value and FTSE
The Board believe that the Company has a unique
investment strategy. There is no other open or
closed end equity fund offering a China growth
style, investment in unlisted companies, prudent
gearing, a competitive cost and a commitment to
discount management via a buyback and a 100%
performance related Conditional Tender Offer.
Key Performance Indicators (‘KPIs’)
The Company has four KPIs:
•
Net Asset Value per share total return (‘NAV TR’)
relative to the benchmark
•
Share price total return relative to the benchmark
• the discount of the share price to Net Asset Value
(‘the discount’)
•
the Ongoing Charges Ratio (‘OCR’)
In the financial year to 31 January 2025 NAV TR
outperformed the benchmark by 3%. The share
price total return slightly underperformed the
benchmark due to a widening of the discount.
In November 2024 the Company announced a
performance related Conditional Tender Offer,
detailed below. In the short period from 1 December
to 31 January 2025 the NAV TR and share price total
return outperformed the benchmark by 0.1% and
2.9% respectively.
From the mandate change to BaillieGifford in
September 2020 until 31 January 2025, the
Company NAV TR and share price total return has
underperformed the Benchmark by 11.7% and
16.3% respectively.
Total Return Performance
*
Year to
31 January
2025
Since
announcement
of Conditional
Tender Offer
†
to 31 January
2025
Since
Mandate
change
#
31 January
2025
NAV TR (%) 35.4 3.6 -31.4
Share price TR (%) 29.4 6.4 -36.0
Benchmark TR
‡
(%) 32.4 3.5 -19.7
The discount widened to an average of 11.6% in
the financial year to 31 January 2025 (11.3% in
2023/24).
The OCR slightly increased to 1.1% (1.0% in
2023/24).
* Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 127. All figures are stated on a total return basis. Total
return and discount are alternative performance measures - see Glossary of terms and alternative performance measures on pages 129 to 131.
†
The Company announced the introduction of a performance related tender offer (the `Conditional Tender Offer’) from 29 November 2024.
#
Baillie Gifford & Co Limited were appointed as Managers and Company Secretaries on 16 September 2020.
‡
The benchmark is the MSCI China All Shares Index (in sterling terms).
09
Baillie Gifford China Growth Trust plc
SoE (‘State Owned Enterprise’) indices, consistent
with a flight to safety in a bear market but neither a
natural home for growth stocks. Whilst the process
of selecting growth stocks was functioning well,
BaillieGifford has enhanced the investment process
via better discipline around valuation when buying
a new stock, selling losers earlier and enhanced
analysis of regulatory and political change. Going
forward, BaillieGifford has put in place refinements
to the investment process related to these factors.
Dividend
During the financial year, the revenue return per
share increased by 4.5% from 2.42p to 2.53p.
Thedividend policy of the Company 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 2.20p,
anincrease of 10%, which, subject to shareholder
approval, will be paid on 25 July 2025 to
shareholders on the register at the close of business
on 20 June 2025, with the shares trading ex dividend
on 19 June 2025.
The increased income partly reflects the improvement
in dividend pay-out ratios for portfolio companies
because of improved capital discipline. Whilst a
positive, BaillieGifford’s focus is on managing the
portfolio for total return and most future total returns
are expected to be from capital gains.
Company Strategy
In the financial year to 31 January 2025 the Board
reviewed the key aspects of the Company’s strategy:
the objective, gearing, unlisted investments, Ongoing
Charges Ratio (‘OCR’) and discount management.
Objective
The Board has evaluated the Company’s objective
to ‘produce long-term capital growth by investing
in China equities’ and believes it remains relevant.
China equities represent 3% of a typical global
equity index
†
and deserve a place in a global
investor’s portfolio. An allocation to China is a
source of diversification for investors, especially
given the historic inverse correlation to the dominant
US equity market.
In addition, the Board believes that an active
manager should be an advantage relative to a
passive index investment in the long term given
scope to differentiate using fundamental analysis,
including Environmental, Social and Governance
Issues (‘ESG’). For more information on how ESG is
integrated by BaillieGifford see page 45.
Gearing
A prudent level of gearing is advantageous given
the long-term returns forecast in China equities
by BaillieGifford. The Board therefore replaced
the loan facility but reduced the size of the facility
to US$25m, in April 2024 for a term of two years.
The Board sets a gearing limit consistent with
maintaining prudent liquidity and its loan covenants,
mindful that China equities annualised volatility is
high. BaillieGifford reports quarterly to the Board on
the proposed use of gearing. On 31st January 2025
net gearing was 3%.
Unlisted Investments
The Board considers that the ability to own unlisted
investments is a benefit to shareholders given the
Company’s closed end status and the expertise of
BaillieGifford in sourcing and understanding private
investments via its close relationships with founders.
The Company owns one private investment,
ByteDance, which was 9% of NAV as at 31 January
2025. The valuation process is undertaken by
BaillieGifford and supplemented by independent
input from S&P Global and overseen by the Board
at the interim and annual results. Although the
valuation of an unlisted investment is an estimate
based on peer multiples and ByteDance revenues,
the Board takes additional comfort that the
ByteDance current valuation is slightly above recent
prices in the secondary market where privates are
traded and lower than the valuation used in the
most recent annual buy-back by ByteDance in
November2024.
In the period since acquisition to 31 January 2025,
ByteDance has increased in value 74% in sterling
terms and is the largest single contributor to
outperformance. Whilst the ByteDance IPO is not
imminent, it is an indication of the value offered by
private investment. A summary of the investment
case is provided on page 18.
†
Source: MSCI ACWI Index (USD)
Strategic report
Annual Report and Financial Statements 2025
10
Ongoing Charges Ratio
The OCR was 1.1% (1.0% in the financial year to
31 January 2024). The main cause of the slight
increase in costs was the lower average level of net
assets during the period. The principal contributor
to costs is 0.7% for the management fee, which
has the benefit that it is tiered and reduces as
NAV grows. The Board has closely scrutinised
costs, which are competitive with open and closed
endpeers.
Discount and Premium Management
The Board recognises the need to address any
sustained and significant imbalance of buyers and
sellers which might otherwise lead to shares trading
at an anomalous discount or premium to NAV. The
Board is committed to utilising its share purchase
and share issuance authorities where appropriate
to mitigate such an imbalance. Details of the
Discount/premium policy is on page 33.
In the financial year to 31 January 2025 the
Company bought back 2.76m shares representing
4.5% of share capital excluding shares held
in Treasury on 31 January 2024. The buyback
was conducted at an average discount of 11%.
Thebuyback enhanced NAV per share by 0.5%.
100% Performance Related Conditional
Tender Offer
In November 2024 the Board announced the
introduction of a performance related tender offer
(the ‘Conditional Tender Offer’).
If the Company’s NAV total return does not exceed
the benchmark TR over the period beginning from
the NAV announcement in relation to 29November
2024 to the NAV announcement in relation to 30
November 2028, then the Conditional Tender Offer
will be held as soon as practicable thereafter. The
Board believes that a Conditional Tender Offer
in December 2028 will allow the Company and
BaillieGifford appropriate time to outperform
against its benchmark and in the event it does not,
to offer shareholders a liquidity event.
The Conditional Tender Offer, if implemented,
willbe for 100% of the issued share capital of the
Company. The Conditional Tender Offer will be
priced close to the prevailing NAV at the time of
repurchase (adjusted for the costs associated with
the tender offer).
The introduction of the Conditional Tender Offer will
not change the Board’s current approach to discount
management.
China Risks
Risks related to investing in China are difficult to
diversify given the single country mandate and
could adversely affect companies held within the
portfolio. These comprise the economic outlook
and geopolitical risks, including the potential impact
of sanctions. The Board evaluates the risks with
BaillieGifford and, where appropriate, with input
from external advisers and experts. A summary of
Principal Risks is on page 35.
Marketing
The Board co-funds marketing with
BaillieGifford. This includes the website
(bailliegiffordchinagrowthtrust.com) and digital
content from BaillieGifford. In addition, during the
period, the Board decided to fund a programme of
marketing targeting wealth managers and this was
undertaken via its broker. If you would like to receive
updates from the Company, please scan the QR
code on the rear cover of the Annual Report.
Share Premium Account Cancellation
The Board is proposing the cancellation of the
Company’s share premium account at this year’s
AGM. The Company has a substantial share premium
account which is non-distributable. Thecancellation
of the share premium account, subject to the
confirmation of the Court, will be credited to a
distributable reserve.
The cancellation of the share premium account
(asexplained in more detail on pages 121 to 122) to
create distributable reserves provides the Board with
flexibility to use such distributable reserves should it
wish to do so for shareholder distributions (such as
share buybacks or dividends) in the future.
The Board
In line with the succession plan in the 2024 Annual
Report, we welcomed Sarah MacAulay to the Board
on 1 May 2024. I succeeded Susan Platts-Martin as
Chair on 1 May 2024. The Board continues to meet
all the relevant diversity criteria for a London listed
investment company.
In February 2025 the Board travelled to China with
the fund managers to meet companies, independent
experts and the BaillieGifford investment team
in Shanghai. The Board was impressed with
the growth opportunities outlined by portfolio
companies, driven by innovation in sectors such as
electric vehicles, e-commerce, the development
of local consumer brands, semiconductors and
11
Baillie Gifford China Growth Trust plc
high-end manufacturing. The trip also demonstrated
BaillieGifford’s depth of investment expertise and
strong company relationships in China.
Annual General Meeting (the ‘AGM’)
The AGM will be held at 1 Moorgate Pl, City of London,
London, EC2R 6EA on Thursday 19June 2025,
at 10am. The meeting will include a presentation
from BaillieGifford and all shareholders are invited
to attend. The Board encourages all shareholders
to exercise their votes on the AGM resolutions by
completing and submitting the form of proxy elections
in advance of the meeting and submitting any
questions by emailing enquiries@bailliegifford.com or
by calling 0800 917 2113. BaillieGifford may record
your call..
Outlook
The headlines are filled with uncertainty regarding
the outlook for China. Commentators debate
whether ‘de-coupling’ between the US and China
will accelerate and include higher trade barriers
or even economic sanctions; alternatively, there is
an opportunity for a ‘grand bargain’ to be struck,
reducing tensions. Experts discuss whether the
China stimulus in September 2024 was a ‘whatever it
takes’ moment to boost consumption and structural
reform is an inexorable process; alternatively, it is
piecemeal and insufficient. Corporate governance
reform at Chinese companies drove a record
dividend payout and share buybacks in 2024,
implying higher valuations. However, this is offset by
uncertainty over the costs of ‘serving the country’
and ensuring that companies support China’s
national strategy.
Uncertainty will mean volatility in the Company’s
share price and NAV. In a typical year volatility in
Chinese equities is nearly 30% per annum, amongst
the highest of any equity market. The Board will
monitor and mitigate the risks and evaluate with
the Manager what steps can allow shareholders to
benefit from the volatility.
Whilst these debates continue, recent developments
suggest there are opportunities for BaillieGifford,
agrowth orientated stock picker.
•
Taking consumption, the ‘secure middle class’
in China is now around a third of the population
(upfrom 10% in 2010) and would represent
the third largest ‘country’ market in the world
measured by population. One third of retail sales
are online fostering innovation in e-commerce.
•
In manufacturing China now produces one-third
of global manufacturing output and according to
a respected Australian think tank has the leading
position in 37/44 critical global technologies,
ahead of the US. DeepSeek symbolises that China
rivals the US in the deployment of one critical
technology, cost efficient AI. This is driving market
share gain domestically and now overseas for
leading Chinese companies.
•
President Xi’s meeting with entrepreneurs in
February 2025 is viewed in China as an important
signal that the government views private capital
as a key contributor to the development of the
economy. This is an important reassurance for
investors in private companies.
Collectively, these snapshots suggest that there
are opportunities for BaillieGifford to own founder
or family-owned businesses with structural growth
prospects that can weather the uncertainty over
China’s year to year growth and still prosper.
Neither BaillieGifford nor the Board can forecast
China’s economic growth or relationship with the
West with certainty, but valuation does offer comfort
that some of the uncertainties may be in the price.
Looking forward to the end of 2028 – eight
years after the mandate change – the Board
therefore believes the Company offers attractive
prospects. In the best case there is opportunity
for outperformance relative to the benchmark and
possible matching scope for a narrowing discount
in the share price relative to NAV; in the worst case
an opportunity to redeem capital at close to NAV via
the performance related Conditional Tender Offer
if the Company’s NAV total return falls short of its
benchmark by 2028. The Board has confidence that
the Manager can deliver the former but believes the
latter protects shareholders in the event it does not.
Nicholas Pink
Chair
31 March 2025
Strategic report
Annual Report and Financial Statements 2025
12
Managers’
report
For a definition of terms see Glossary of terms and alternative performance measures on pages 129 to 131.
Past performance is not a guide to future performance.
In 2024, after three years of decline, the Chinese
market delivered a markedly positive return, with our
index rising by 32.4%. The Company’s NAV rose
by 35.4%, outperforming the benchmark. Returns
for the period were driven by a number of factors
including a range of stabilisation and stimulus
measures announced by the government; strong
growth in areas such as high-tech manufacturing
and exports; and an improvement in sentiment
towards the private sector. With regard to the
Trust’s NAV, company fundamentals also played a
strong role with most of our major listed holdings
demonstrating operational resilience and pleasing
earnings growth.
Looking back on 2024: the Chinese Economy
In 2024, China’s economy delivered a mixed
recovery. Export and industrial output growth
remained strong, with exports rising by 7.1% and
industrial production increasing by 5.8%, driven by
high-tech sectors such as integrated circuits and
electric vehicles. However, domestic consumption
was weak, with retail sales growing only 3.5%,
reflecting consumer caution, modest wage growth,
and the lingering effects of the property market
downturn.
China remains the world’s largest exporter,
contributing 30% of global manufacturing value-
added and accounting for 18% of global trade.
Export growth in 2024 was particularly strong in
high-tech sectors such as integrated circuits (IC)
and electric vehicles (EVs). The surge in IC exports
(up 26%) was primarily fuelled by global demand for
lagging-edge semiconductors (typically 28nm and
above). Indeed, it is here in mature process nodes
(mass market applications that use older rather
than cutting edge technology) that Chinese firms
already have a competitive advantage. In 2024, we
saw Chinese companies such as Will Semi, SMIC
and Hua Hong double down on this advantage and
expand capacity aggressively resulting in significant
share gains globally in industries such as automotive
and consumer.
In 2024, total car exports from China were up 25%
to 4.8 million units. A quarter of these exports were
electric cars and plug-in hybrids with key markets
including Europe, ASEAN and Latin America.
Indeed, China’s lead in advanced battery technology,
and its cost advantages brought about by scale
in its domestic market, have resulted in success
for its products overseas. Chinese EVs are high
quality, affordable and are increasingly popular with
consumers around the globe as a result. Indeed,
two of the Trust’s holdings are accelerating China’s
dominance in EVs with CATL retaining its status as
the world’s top battery manufacturer globally, and
BYD surpassing Tesla to become the global leader in
EV sales.
China’s trade relationships continue to expand
globally. Indeed, exports to ASEAN and BRICS
nations increased by 13% and are now equal in
value to China’s exports to the US and the EU
combined (26% in total). Additionally, China’s trade
with countries participating in the belt and road
initiative (BRI) grew by 6.4%, accounting for more
than half the nation’s total foreign trade for the first
time. Therefore, while US tariffs on Chinese products
can present challenges to some companies, the
macro impact is somewhat contained as exports
to the US account for only 15% of China’s total
exports, or 3% of GDP.
13
Baillie Gifford China Growth Trust plc
However, domestic consumption remained relatively
weak in 2024, with retail sales growing by only
3.5%, reflecting ongoing challenges such as the
continuing property market downturn and modest
wage growth. Household excess savings peaked
at RMB 6tn in Q3 2024, equating to 15% of total
consumption. The high level of household excess
savings presents both an opportunity for future
growth and a challenge if consumer confidence
remains weak. Whether these savings are spent or
continue to be hoarded will be a key determinant of
China’s economic trajectory in the coming years.
As we know, the property market is deeply
intertwined with consumer confidence in China.
Housing accounts for more than 70% of Chinese
household wealth, making it the primary store of
value. Fortunately, towards the end of the year,
the property market showed some early signs of
stabilisation as a result of government interventions
aimed at restoring confidence. By December 2024,
sales in major cities increased 35%, with second-
hand transactions in Beijing reaching a 19-month
high. Mortgage rate cuts, relaxed downpayment
rules, and a housing support programme providing
low-cost funding to local state-owned enterprises
(SOEs) for the purchase of completed, unsold
properties helped improve market sentiment.
While policy measures have laid the groundwork
for a recovery, the pace of consumer sentiment
improvement remains uncertain. Monitoring
employment trends and discretionary spending will
be key to assessing a sustained recovery in 2025.
The meaning of September 2024: Policy
The Chinese government’s decisive policy shift
in September 2024 was a key turning point for
the market. Here, the government unveiled a
comprehensive economic package to stabilise key
sectors and reignite growth after years of cautious
policymaking. As part of this initiative, authorities
introduced a 50-basis point interest rate cut,
which spurred credit growth of 15%, and launched
targeted liquidity injections of RMB 300bn, directly
benefiting the property sector by helping reverse
a 30% decline in transactions and fuelling a 10%
rebound in sales.
In addition, new measures encouraged listed
companies to conduct share buybacks – up to 5%
of their profits – to boost market confidence. Tax
breaks and R&D subsidies were also strengthened.
Beyond financial stimulus, Beijing took meaningful
steps to restore confidence in the private sector,
particularly in internet and technology industries,
signalling a renewed focus on their roles as key
engines of growth and innovation.
Following the September announcement, the market
saw one of its sharpest rallies in years, with the CSI
300 index surging over 30% in just two weeks.
However, the sustainability of this momentum
hinges on effective policy execution and its impact
on long-term economic fundamentals. Despite the
rally, investor sentiment remains cautious, with
close attention being paid to indicators such as
consumer spending, credit growth, and property
market activity in order to assess the true depth
and speed of recovery. Whileretail participation has
Strategic report
Annual Report and Financial Statements 2025
14
surged, signalling short-term optimism, we would
note that a meaningful rebalancing of the economy
from an infrastructure and debt driven model to
one which is fuelled by innovation and domestic
consumption will take time. The transition is likely to
remain uneven and patience is likely to be required.
What matters more for the Company?
It is important to note, however, that looking solely
at GDP figures can be misleading. Despite the
well-documented challenges in China’s property
sector, the country continues to grow at a decent
pace. The reason? A new generation of growth
drivers including technology, industrial upgrading,
and the digital economy are stepping up to fill the
gap. Economic transitions of this magnitude never
proceed in a straight line, but they can create
opportunities for long-term, high-quality growth
investors, like ourselves. To illustrate this point,
China’s stock market accounts for 3% of the MSCI
World Index. Yet, when filtering for companies
expected to grow revenues by more than 20%
per annum over the next three years, over 35%
are Chinese. No other country is demonstrating
such a radical shift at this sort of scale. Indeed,
the transformation is already producing some very
exciting growth companies which are captured
within the Trust portfolio.
Overall, therefore, we retain a relatively positive
outlook on China’s internal growth engines which are
supported by strong policy measures, advancements
in high-end technology, and manufacturing
innovation. While consumer confidence remains
fragile, targeted stimulus efforts, gradual income
growth, and market adjustments are expected to
stabilise domestic consumption over time. Structural
trends indicate that China’s internal momentum
remains on a steady path, but a sustained recovery
in consumer demand will be key to unlocking the
full potential of economic resilience. Given its
critical role in China’s long-term growth, consumer
sentiment remains a key area of focus.
Geopolitical Risks: Is the elephant still in
theroom?
Geopolitics remained a major headwind in 2024,
with increasing US regulatory scrutiny on Chinese
technology companies, including the proposed
forced divestiture of TikTok’s US operations,
sanctions on some companies and tighter AI export
controls. The re-election of President Trump led
to heightened uncertainty, with new 10% tariffs
on Chinese imports raising concerns over broader
traderelations.
However, with regard to tariffs, it is important to
bear in mind the following: the 25% tariffs imposed
during Trump’s first term on many Chinese goods
had only a limited impact on China’s economy and
did not exert significant pressure on China. While
China’s exports to the US declined from 19% in
2017 to 15% last year, Chinese companies adapted
by expanding into other markets. As a result, China’s
share of global exports increased from 13% in 2017
to 18% in 2024.
The US also further tightened its stance on Chinese
tech, culminating in the Supreme Court upholding
legislation mandating that the Trust’s holding,
ByteDance, sell its US business by January 2025
or face an outright ban. After re-election, President
Trump proposed, instead, that the US government
take a 50% stake in ByteDance’s US business in
order to address security concerns whilst keeping
the platform operational. Currently, TikTok remains
available due to Trump’s executive order extending
the divestment deadline, while negotiations continue
to find a long-term solution balancing national
security and platform accessibility.
The sanctioning of individual Chinese companies
by the US administration also remains a risk.
Sanctions, as a tool, were used increasingly by the
Biden administration with China responding in kind
with its ‘unreliable entity list’ for foreign companies
operating in China. It is unclear if sanctions will be
used as frequently under the Trump administration,
which so far appears to have favoured broader trade
tariffs. Whilst we continue to employ a range of
internal and third-party sources to help us manage
the sanction risk, we would highlight the difficulty of
prediction here.
15
Baillie Gifford China Growth Trust plc
Meanwhile, the rise of DeepSeek, China’s latest
AI breakthrough, intensified geopolitical tensions.
DeepSeek is more than a fleeting trend. It represents
a pivotal force reshaping the global AI landscape.
DeepSeek quickly became the most downloaded
AIapp in the US and was seen as a direct challenge
to western AI dominance, drawing comparisons
to the TikTok story. Concerns over data security,
algorithmic influence, and Chinese technological
leadership sparked debates in Washington, with
Trump offering mixed signals – criticising Chinese
AI while simultaneously expressing interest in
DeepSeek’s potential. These flashpoints reinforced
broader anxieties about China’s technological rise.
While additional US tariffs and enhanced
technological export controls present challenges
to some of the businesses in the Trust portfolio,
wewould note that the vast majority of our holdings
are generating most of their revenue domestically
in China and outside of the US. Given China’s focus
on self-sufficiency in AI, its investments in building
a local supply chain in semiconductors, and its
growth potential domestically in a range of industries
from robotics to renewable energy to autonomous
vehicles, we remain enthused about the opportunity
set and the growth outlook for the Trust’s holdings.
Where does that leave us as growth
investors in China?
Whilst there is no paucity of growth companies in
China, we need to make sure that the potential share
price return on offer is large enough to compensate
shareholders for the inevitable risk and volatility
that comes with investing in this complex country.
Despite the recent rally, valuations remain below
long-term averages. As of 31 January, 2025, the
Chinese stock market’s price-to-earnings (P/E) ratio
is approximately 12 times, a 15% discount to its
long-term average and a 45% discount to global
equity markets. This is at a time when regulatory
overhauls in key sectors are behind us, policy
direction has become clearer, and several industries
are emerging from cyclical lows. We believe,
therefore, that our starting point today is optimistic
with many high quality growth companies trading at
attractive valuations.
At the firm level, we would also like to highlight
BaillieGifford’s continued support for our Chinese
equities business. January 2025 marks the 1 year
anniversary of our dedicated China team, the
6year anniversary of our Shanghai office, and the
19year anniversary of our All China Product. Indeed,
as a firm, our original investments in China date
back to the early 1990s. During this time, we have
continually invested in our ability to spot the next
decade’s exceptional growth businesses, whilst also
trying to strengthen our ability to manage risk.
In 2024, we commissioned an analysis by our
Risk team of our performance track record since
BaillieGifford won the Company’s mandate in
2020. This analysis highlighted that, during
the performance period, value significantly
outperformed growth as domestic investors sought
refuge from the regulatory crackdown and weak
economic environment in high-dividend yield,
low growth stocks. The Trust’s focus on growth
companies was therefore a significant headwind.
The Risk team did, however, highlight valuation
discipline as an area that could be improved.
Inresponse, we have added a number of risk tools
to help us retain our valuation discipline at time
of purchase, and to keep track of, and respond
promptly to, valuation anomalies as they occur
across the portfolio. In addition, we also continued
to strengthen our roster of independent research
providers with a particular focus on domestic policy
and regulatory change.
Portfolio positioning and recent activity
We believe that the current portfolio represents a
selection of the best and most innovative listed and
unlisted Chinese growth companies. Indeed, out of
an investment universe of c. 6000 stocks, the Trust
invests in only c. 40–80 of the most attractive growth
companies on offer in China. At portfolio level, we
retain exposure to some of the biggest structural
growth trends via our large overweight positions in
consumer discretionary, communication services and
industrials. Here, one finds China’s leading growth
and private sector companies in areas such as the
platform economy, domestic consumer brands,
high end manufacturing, and the energy transition.
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Annual Report and Financial Statements 2025
16
Thesetypes of companies account for approximately
90% of the Trust’s portfolio. Our largest underweight
positions are in sectors where we have struggled
to find attractive growth opportunities such as
financials, real estate and utilities. The Trust has less
than 10% of the portfolio in these sectors versus our
index with approximately 30%.
Portfolio turnover during the year was 19.1%
representing a marked pick up from the previous
year. Valuations in China this year have fluctuated
significantly due to swings in market sentiment.
We have taken advantage of these dislocations –
reducing exposure to companies facing structural
headwinds/irrationally high valuations while adding
to those poised for strong, sustainable growth at
attractive valuations.
Over the year, we increased our exposure to
high
-growth technology and consumer businesses
via additions to Meituan, PDD, Tencent and CATL.
Wealso bought new holdings in semiconductor
leaders Naura and AMEC. At the same time, we
exited positions impacted by regulatory or structural
risks, including WuXi Apptec (US Biosecure Act risk),
Asymchem Laboratories (geopolitical pressure on
biotech outsourcing), and LONGi Green Energy (solar
industry oversupply). This selective approach reflects
our focus on high-conviction opportunities that align
with long-term, policy-supported growthareas.
01.
Technology and internet (‘platform economy’)
China’s technology and internet platform economy
has undergone significant regulatory scrutiny since
2021, with anti-monopoly measures reshaping the
industry. Now, with regulatory pressure behind us,
leading platform companies are stabilising and
regaining investor confidence. AI is proving to be
a gamechanger for Chinese platform companies,
reshaping the landscape with efficiency gains, new
revenue streams, deeper user engagement and
improving margins. Companies in the portfolio such
as Tencent, Alibaba, PDD, Meituan, and ByteDance
are integrating AI into their businesses in order to
optimise services, enhance the user experience,
and expand market dominance. Notably, DeepSeek,
a rising AI player, is driving breakthroughs in
large language models (LLMs) and enterprise AI
solutions, strengthening China’s self-sufficiency in
AI innovation. As China accelerates AI investment,
we believe these portfolio holdings are best
positioned to capture long-term value creation
from the AI revolution, reinforcing their leadership
in social media, ecommerce, local services, and
cloudcomputing.
02.
Consumer and domestic champions
China’s domestic consumption remains central to its
economic transformation. As 2024 unfolded, China’s
consumer market was at a crossroads. After years
of pandemic-driven uncertainty, spending habits
are still evolving, shaped by economic pressures,
government policies, and shifting consumer
mindsets. While some households remain cautious,
others are embracing new trends, creating distinct
investment opportunities.
At one end, wealthy consumers continue to indulge
in luxury, keeping brands like Kweichow Moutai in
high demand. Meanwhile, price-sensitive shoppers
are flocking to value-driven platforms and brands
such as Luckin Coffee, which is quickly establishing
itself as the dominant coffee brand in China, and
PDD (which owns and operates Temu), which
continues to deliver sector leading growth within
ecommerce. The government’s decision to boost
consumption via a massive trade-in programme
for home appliances and electric vehicles gave
holdings such as Midea and Haier a boost, whilst
tax incentives in EVs drove an even bigger surge in
clean-energy adoption. Indeed, now over half of new
cars sold in China are electric.
At the same time, experience-based spending
is making a comeback. Families are returning to
Haidilao, a hot-pot restaurant and new holding for
the Trust, and Meituan’s travel volume is picking
up strongly. As the economy steadies and stimulus
efforts begin to take hold, China’s consumption-led
recovery isn’t just a possibility – it’s a transformation
in motion, paving the way for compelling investment
opportunities.
03.
Industrial upgrading and manufacturing
For decades, China was known as the world’s low-
cost manufacturing hub. But today, a transformation
is underway, one that is shifting the country toward
advanced industrial innovation and technological
self-sufficiency. At the heart of this evolution are
companies driving breakthroughs in semiconductors,
AI computing, and strategic resource extraction,
where we see significant long-term opportunity.
17
Baillie Gifford China Growth Trust plc
Two new holdings, AMEC and Naura, leading
semiconductor equipment manufacturers, are
stepping up to fill the gaps left by US technology
restrictions. With China’s access to foreign
semiconductors increasingly constrained, these
companies are rapidly expanding their capabilities,
ensuring that China can build and scale its own
semiconductor supply chain – a fundamental step
toward technological self-sufficiency. Indeed,
despite export restrictions on leading-edge chips,
China has ramped up domestic semiconductor
manufacturing, producing 340 billion IC units in
2024. Government initiatives, including $30bn
in new funding, have accelerated research and
development (R&D) and fab expansion, reinforcing
China’s position as the world’s largest IC consumer,
accounting for 60% of global semiconductor
demand. The opportunity for AMEC and Naura is
exceptionally large.
Horizon Robotics, a new holding bought in October,
is a rising force in AI-driven chipmaking. As
autonomous driving and AI computing gain traction
globally, Horizon is emerging as China’s answer to
NVIDIA. It has been developing cutting-edge AI chips
and software systems to power the next generation
of smart mobility and artificial intelligence
applications in Chinese cities.
China’s shift toward high-end manufacturing and
industrial innovation is not just about catching
up. It’s about leading. We believe that this wave
of industrial upgrading will unlock immense
long-term opportunities, as the country reduces its
dependence on foreign technology and develops its
own world-class manufacturing capabilities.
Performance
The portfolio’s performance was positive in both
absolute and relative terms. The NAV returned
35.4% for the period while the benchmark returned
32.4%. The Trust’s share price increased by 29.4%
as the discount to NAV widened over the period,
along with discounts across the whole investment
trust sector. Our stock selection and overweight
positions in consumer discretionary, communication
services and industrials contributed positively to
our relative performance. These sectors delivered
strong share price performance as the economy
stabilised and expectations improved on the back of
pro-growth policy announcements from the Chinese
Communist Party (CCP). The main detractors at
sector level were our stock selection in information
technology and our underweight position in
financials. Regarding financials, our lack of exposure
to state-owned banks was a key driver.
Stock specific contributors to relative performance
were varied. One of the largest was Shenzhen
Megmeet. Megmeet makes power supply and
electric automation products for both industrial
and consumer electronics clients. The company
is exposed to several exciting end markets that
include industrial automation, new energy vehicles,
smart home appliances and advanced intelligent
manufacturing. Recently, the company announced
that it had been selected as a supplier to NVIDIA.
Share prices more than doubled on the back of
this news. Whilst the news is supportive of our
investment hypothesis for the company in that it
demonstrates, yet again, the ability of its R&D-
heavy culture to expand product lines and win new
customers, we believe the market reaction had
overshot the potential operational impact. As such,
we took this opportunity to reduce the position size.
Pop Mart, a toy designer and distributor, was
another top contributor to performance. Pop Mart
has a unique position in the market. While the final
product presented is trendy toys, its overall concept
is focusing on serving emotions: connections, self-
expression, and bringing joy to people’s lives through
an innovative approach to collectible toys. Pop
Mart’s toys focus on creating emotional experiences
rather than just physical products. The company
has delivered strong operational performance over
the year: net profit almost doubled in the first half
of 2024, and in Q3 2024 it reported positive 120%
year-over-year revenue growth. While the domestic
business continues to grow strongly (50%-plus), the
company has been aggressively expanding overseas
and has gained traction. The overseas business is
now contributing 30% of the total revenue, and
Pop Mart expects the revenue split between eastern
and western markets to reach a near 50:50 ratio in
the next three to four years. It plans to open 200
stores in the US. We reduced the holding after a very
positive share price performance.
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Annual Report and Financial Statements 2025
18
Our holding in Meituan was also a key contributor
to returns. In the first three quarters of 2024,
Meituan’s total revenue grew around 26% year-
over-year, while net profit surged by around 373%
year-over-year. The core local commerce segment
saw a roughly 22% year-over-year increase, driven
by strong food delivery and ‘instashopping’ demand,
while new initiatives expanded by around 33%
year-over-year, led by community group-buying and
travel services. Meituan maintained its 69% market
share in food delivery and pursued international
expansion, including the launch of Keeta in HK and
Saudi Arabia. With AI-driven efficiencies boosting
profitability, the company remains well-positioned,
despite rising competition from Douyin and others.
Other positive contributors to our relative return
included Brilliance China, ByteDance, and gearing.
Brilliance China is a JV partner to BMW. The
shares responded strongly during the year to the
management team’s decision to return excess
cash to shareholders in the form of a number of
extraordinary dividends. ByteDance was also a
positive absolute contributor. It delivered a return
of c. 38% following another year of exceptional
operational performance. Revenue grew 36%
during the last twelve months to September 2024,
well ahead of most of its peer group and in spite
of weakness in the overall Chinese economy. In
addition to its strong revenue growth, the valuation
multiple applied to the company also increased in
line with the multiple expansion experienced by its
peer group. Gearing for the year averaged 4.3% and
contributed positively to returns in the context of a
rising market.
The main stock-specific detractors to performance
were also varied. Xiaomi, a leading mobile phone
manufacturer, was one of the best performing
stocks in 2024 as the market reacted positively
to its entrance into the EV market. Not owning
shares in the company was a large detractor to our
relative performance and a key factor in our weak
performance in the information technology sector as
noted above.
Our second largest detractor to relative performance
was Guangzhou Kingmed. Kingmed is a leading
player in China’s independent clinical laboratory
(ICL) industry. There was a sharp decline in its
share price due to weak revenue growth, collapsing
profit margins, and financial concerns. In Q3 2024,
revenue remained flat at CNY 2.02bn, but net
income plunged 99% to just CNY 4.19m, with profit
margins shrinking from 15% to 0.2%. Additionally,
rising concerns over accounts receivable and
slowing non-Covid-related revenue further
dampened investor confidence, contributing to the
stock’s weak performance. We are in the process
of reviewing the company to understand if the long
term thesis remains intact. As a reminder, Kingmed
was purchased due to the belief that testing
volumes were likely to increase as prices fell and as
preventative medicine was increasingly utilised in
order to reduce healthcare system costs. Additional
kickers to growth were likely to come from increased
outsourcing of testing and via the potential
monetisation of Kingmed’s data assets through the
use of AI.
Zhongji Innolight was also a detractor to relative
performance. Innolight manufactures optical
transceivers, crucial components in AI chip-training
clusters used in datacentres and training large
language models. This is a relatively new purchase
for the portfolio. The investment case is based on
the growth in global AI-related capex and datacentre
buildout, as well as the potential uptick in Chinese
AI capex. Innolight’s technological edge has been
verified by leading global customers such as
Amazon and Google. The stock weakened in Q4
following Q3 2024 financial results which missed
analysts’ forecasts. We are aware that growth in
semiconductor-related businesses rarely comes in a
straight line and are therefore happy to look through
this short-term hiccup.
Kweichow Moutai and Yifeng Pharmacy were also
detractors to relative performance. Whilst Moutai’s
operational performance remained strong with
revenue continuing to grow at a double digit rate, the
shares were weak as market sentiment was cautious
on high-end consumption. Yifeng Pharmacy’s shares
were also weak after it failed to meet ambitious
store opening targets. We believe this is likely to be
a shorter-term headwind in an industry with strong
growth ahead of it. Pharmacy store penetration is
still low and the market is very fragmented. Yifeng,
as one of the leaders in the industry, is likely to
act as a consolidator and therefore deliver above
industry level growth. We remain happy holders of
the shares.
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Baillie Gifford China Growth Trust plc
The outlook for 2025
While uncertainties persist, China’s economic
transition towards an innovation-led model is
taking shape, with encouraging progress in 2024.
Policy measures to stabilize the property sector
are gradually restoring consumer confidence, while
technological and industrial advances continue to
drive new growth opportunities. Sectors such as
semiconductors, renewable energy, electric vehicles,
and AI are at the forefront of this transformation,
reinforcing China’s position as a global leader in
high-tech industries.
Beyond its domestic evolution, China’s global
influence is expanding, with increasing capital
flows into south-east Asia, the Middle East, and
other developing regions. This international reach is
creating new opportunities for Chinese businesses,
particularly in high-end manufacturing, automation
and advanced computing. The resilience and
adaptability of our portfolio companies reflects
these shifts, with strong earnings growth and global
competitiveness continuing to emerge.
Market sentiment toward China is showing early
signs of stabilisation, with foreign fund flows turning
net positive in Q4 2024 for the first time in two
years, following a period of sustained outflows.
Recent policy clarity and valuation support have
led to renewed interest from global investors,
with increased allocations from Asian and Middle
Eastern sovereign funds. Domestically, retail
investor participation surged, with over four million
new A-share accounts opened in October alone,
driven by government-led financial market reforms
and buyback incentives. However, institutional
investor participation remains subdued, reflecting
ongoingcaution.
While foreign capital remains selective, China’s 45%
valuation discount to global equities and resilient
earnings trajectory suggests that long-term capital
allocation may gradually improve, particularly
if policy execution continues to deliver tangible
economic recovery.
The investment landscape is evolving, with broader
interest from both regional and global capital
sources. We remain committed to identifying and
supporting China’s most innovative businesses.
While challenges remain, there are significant
opportunities. With structural tailwinds in place, we
see 2025 as a year of renewed potential for long-
term investors. As the Chinese proverb says:
长风破浪会有时，直挂云帆济沧海
“There will be times when the strong winds break
through waves, and with sails as high as clouds,
we can cross even the vast ocean.”
While these trends demonstrate resilience,
challenges such as global trade uncertainties and
evolving geopolitical risks remain key considerations
for sustaining growth in 2025.
Linda Lin
Sophie Earnshaw
BaillieGifford & Co
31 March 2025
Strategic report
Annual Report and Financial Statements 2025
20
Review of
investments
A review of the Company’s
ten largest investments as
at31January 2025.
ByteDance
ByteDance is a social media and short
form video company and it represents
theCompany’s first private investment.
Itwas founded in 2012 by Yiming Zhang
and the company has grown to rank
amongst the world’s largest companies
ofits kind. Its short form video app,
Douyin, is a market leader in China, 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.
Thecompany’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.
Valuation at
31 January 2025 (‘000)
£14,429
% of total investments
at 31 January 2025
9.1
Valuation at
31 January 2024 (‘000)
£10,551
% of total investments
at 31 January 2024
8.4
Net purchases/(sales) in year
to 31 January 2025 (‘000)
Nil
© AFP/Getty Images
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 represents one growth
driver 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.
Valuation at
31 January 2025 (‘000)
£19,013
% of total investments
at 31 January 2025
11.9
Valuation at
31 January 2024 (‘000)
£9,330
% of total investments
at 31 January 2024
7. 4
Net purchases/(sales) in year
to 31 January 2025 (‘000)
£3,765
© Alamy Stock Photo
21
Baillie Gifford China Growth Trust plc
Alibaba
Alibaba is a leading online retailer. Its
ecommerce business is returning to growth
after a period of intensified competition
and share loss. Steadily increasing online
penetration in segments such as grocery
and Fast Moving Consumer Goods remains
a long term driver for the business, whilst
the company’s efforts to integrate live
streaming and social media into the
platform aim to revitalise the platform
following stiff competition for customers
and merchants attention from competitors.
In addition, Alibaba retains a strong
position in infrastructure as a service, or
the cloud, where it has a similar business to
Amazon Web Services. The company has
taken the decision to focus on profitable
growth as opposed to growth at any cost.
Alibaba’s partnership structure and its
capable and experienced management
team are well-aligned with shareholders.
Valuation at
31 January 2025 (‘000)
£9,679
% of total investments
at 31 January 2025
6.1
Valuation at
31 January 2024 (‘000)
£9,249
% of total investments
at 31 January 2024
7. 4
Net purchases/(sales) in year
to 31 January 2025 (‘000)
(£7,358)
© China News Service/Getty Images
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.
Valuation at
31 January 2025 (‘000)
£6,268
% of total investments
at 31 January 2025
3.9
Valuation at
31 January 2024 (‘000)
£7,447
% of total investments
at 31 January 2024
5.9
Net purchases/(sales) in year
to 31 January 2025 (‘000)
(£673)
© VCG/Getty Images
Valuation at
31 January 2025 (‘000)
£8,150
% of total investments
at 31 January 2025
5.1
Valuation at
31 January 2024 (‘000)
£2,759
% of total investments
at 31 January 2024
2.2
Net purchases/(sales) in year
to 31 January 2025 (‘000)
(£325)
Meituan
Meituan is the largest online marketplace
for the local service industry in China,
committed to enabling citizens to “eat better
and live better”. In China, mobile technology
is an essential means of navigating life,
particularly within its numerous megacities.
Meituan’s mobile online one-stop shop
operates across more than 200 categories in
around 2,800 cities. It is especially dominant
in on-demand restaurant delivery, in-store
dining, hotel and travel booking, and film
ticketing. It has been known to process
over 50 million orders in a single day. There
is no comparison outside China, given its
home country’s size, and the sheer scale of
the opportunity underscored by the urban
density of China’s megacities. Meituan
has built the largest intra-city on-demand
delivery network in the country, using
cutting-edge big data and AI technology
to reduce delivery times dramatically. It is
scarcely possible to cross the street in China
without a Meituan delivery driver buzzing by.
The company is already helping to change
food consumption patterns in China, with
millions of people ordering two to three
meals a day over the platform.
Strategic report
Annual Report and Financial Statements 2025
22
Valuation at
31 January 2025 (‘000)
£5,315
% of total investments
at 31 January 2025
3.3
Valuation at
31 January 2024 (‘000)
£2,263
% of total investments
at 31 January 2024
1.8
Net purchases/(sales) in year
to 31 January 2025 (‘000)
£1,089
CATL
CATL is a Chinese manufacturer of lithium-
ion battery cells with dominant market
share both in cathode chemistries (LFP)
and form factors (prismatic) batteries
which are poised to grow through electric
vehicle (EV) uptake and energy storage.
The company is a national champion in
China, which is the world’s largest EV and
electricity generation market, and it is well
aligned with the state’s decarbonisation
objectives and emphasis on Chinese
self-sufficiency in the hard sciences and
technology. Beyond its home market,
CATL’s future growth could be further
fuelled by its operations in Europe where it
already has a manufacturing presence and
its presence in other emerging markets.
We like the magnitude and duration of the
growth opportunity combined with CATL’s
market leadership, which we believe can
prove defensible thanks to the company’s
partnerships with a wide variety of
automakers who are making the shift to
electric vehicles and relying on CATL’s cell-
to-pack battery technology to do so.
Valuation at
31 January 2025 (‘000)
£5,129
% of total investments
at 31 January 2025
3.2
Valuation at
31 January 2024 (‘000)
£2,354
% of total investments
at 31 January 2024
1.9
Net purchases/(sales) in year
to 31 January 2025 (‘000)
£3,020
PDD Holdings
PDD is an innovative ecommerce platform
providing buyers with value-for-money
merchandise and fun and interactive
shopping experiences. The company was
founded with the aim of targeting the
hundreds of millions of Chinese consumers
who live in more rural provinces, but PDD’s
reach has now extended well beyond that
to wealthier consumers in the coastal
cities and to developed market consumers
around the world. PDD is a relatively young
company with a very differentiated culture.
It has firmly established itself as the value
option in the Chinese consumer’s mind,
owning and operating Temu. PDD built its
platform to resemble a `virtual bazaar’
where buyers browse and explore a full
spectrum of products while interacting
with one another. Buyers can share
product information on popular social
networks and invite their friends and family
to purchase together, through which they
enjoy not only the fun of discovery and
shopping but a comprehensive selection of
value-for-money products.
China Merchants Bank
China Merchants Bank is a leading
consumer bank in China with a lengthy
track record and solid market share.
Ithasoutcompeted 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
willcontinue to offer attractive returns
toshareholders.
Valuation at
31 January 2025 (‘000)
£5,057
% of total investments
at 31 January 2025
3.2
Valuation at
31 January 2024 (‘000)
£4,133
% of total investments
at 31 January 2024
3.3
Net purchases/(sales) in year
to 31 January 2025 (‘000)
(£1,299)
23
Baillie Gifford China Growth Trust plc
Valuation at
31 January 2025 (‘000)
£4,984
% of total investments
at 31 January 2025
3.1
Valuation at
31 January 2024 (‘000)
£3,741
% of total investments
at 31 January 2024
3.0
Net purchases/(sales) in year
to 31 January 2025 (‘000)
(£365)
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 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
webelieve will deliver substantial returns
to shareholders.
Valuation at
31 January 2025 (‘000)
£3,781
% of total investments
at 31 January 2025
2.4
Valuation at
31 January 2024 (‘000)
£3,077
% of total investments
at 31 January 2024
2.5
Net purchases/(sales) in year
to 31 January 2025 (‘000)
(£157)
Midea
Midea is the world’s largest home appliance
business, listed in Shenzhen. It is a great
quality business, investing for growth and
appears very cheap. Home appliance
businesses are dull yet make great returns
(28-29% return on equity), require little
capital, have brand equity and throw off a
healthy level of cash, some of which is
returned to Midea shareholders via a 4%
dividend yield. This company stands out
given its category leadership and desire to
grow the business in a meaningful way. It is
investing in technology, is at the forefront of
innovation (22,000 patents and counting), is
expanding its product range and geographic
reach and also buying in additional brands at
good prices. The move into robotics though
the acquisition of Kuka, a world leader, could
be particularly interesting, not least due to
efficiency gains likely in its own business.
Strategic report
Annual Report and Financial Statements 2025
24
* Alternative performance measure – see Glossary of terms and alternative performance measures on pages129 to 131.
Past performance is not a guide to future performance.
-30
-25
-20
-15
-10
-5
0
5
● NAV total return relative
to benchmark
● Share price total return
relative to benchmark
1 year 5 years 10 years
%
Net asset value total return relative to the benchmark
*
The total return is the return to shareholders after reinvesting the netdividend
on the date that theshare price goes ex-dividend.
Share price total return relativeto the benchmark
*
The total return is the return to shareholders after reinvesting the netdividend
on the date that theshare price goes ex-dividend.
Share price (discount)/premium
*
As stock markets and share prices vary, an investment trust’s share price is
rarely the same as its NAV. When the share price is lower than the NAV it is
said to be trading at a discount. If the share price is higher than the NAV, this
situation iscalledapremium.
-15
-10
-5
0
● Average (discount)/premium
of share price to NAV
1 year 5 years 10 years
%
Ongoing charges ratio
*
The ongoing charges ratio is the total recurring expenses (excluding the
Company’s cost of dealing in investments and borrowing costs) incurred by the
Company as a percentage of the daily average NAV. Without the management fee
waiver (see page30) the ongoing charges ratio for 2021 would have been 1.0%
and in 2022 0.8%. The Board has an ongoing charges target of 1.0% or less.
The Board is satisfied that the ongoing charges ratio is competitive.
0.0
0.5
1.0
1.5
● Ongoing charges ratio
%
2015 2025
Key performance indicators
The Board uses key performance indicators (‘KPIs’) to measure the progress and performance of the Company
over time when discharging its duties as set out on page 70. These KPIs are established industry measures.
The one, five and ten year records of the KPIs can be found on pages 24 to 31. Further discussion is included in
the Chair’s statement on pages 07 to 11.
In addition to the above, the Board considers peer group comparative performance.
Across these measures, the Board looks for relative outperformance over the long term, while remaining mindful
that the nature of the Investment Policy and the growth characteristics of the portfolio investments may entail
periods of underperformance over the short and medium term.
BaillieGifford & Co Limited were appointed as Managers and Company Secretaries on 16 September 2020.
Before16September 2020, the Trust was able to invest across the Asia Pacific region rather than solely in
China, andhad a different comparative index.
The Board believes that KPI performance in the financial year to 31 January 2025 was mixed. The NAV
total return outperformance relative to benchmark was a key positive. Share price performance relative to
the benchmark was slightly negative due to the widening in the discount of the share price relative to the
NAV. The ongoing charges ratio was stable at around 1%. The Board assesses the KPIs over longer periods,
including since the mandate change in September 2020 and since the commencement of the performance
related CTO period on 29 November 2024.
25
Baillie Gifford China Growth Trust plc
Strategic report
Annual Report and Financial Statements 2025
26
One year
summary
The following information
illustrates how BaillieGifford
China Growth Trust has
performed over the year to
31January 2025
* For a definition of terms see Glossary of terms and alternative performance measures on pages 129 to 131.
†
Key Performance Indicator.
#
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 129 to 131.
Source: LSEG/BaillieGifford and relevant underlying index providers. See disclaimer on page 127.
Past performance is not a guide to future performance.
31 January
2025
31 January
2024 % change
Total adjusted assets
(before deduction of bank loans)*
£159.2m £125.3m
Bank loans £6.1m £5.9m
Shareholders’ funds* £153.1m £119.4m
Net asset value per ordinary share* 259.07p 193.06p 34.2%
Share price 232.00p 181.00p 28.2%
MSCI China All Shares Index
(in sterling terms)
#
28.2%
Revenue earnings per ordinary share 2.53p 2.42p
Dividends paid and payable in respect
of the year
2.20p 2.00p
Ongoing charges
†¶
1.12% 0.97%
Discount
†¶
(10.4%) (6.2%)
Active share
¶
68% 72%
Year to 31 January 2025 2024
Total return
¶
Net asset value per ordinary share
35.4% (40.9%)
Share price 29.4% (40.8%)
Benchmark
#
32.4% (30.5%)
27
Baillie Gifford China Growth Trust plc
* For a definition of terms see Glossary of terms and alternative performance measures on pages 129 to 131.
†
Key Performance Indicator.
#
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 129 to 131.
Source: LSEG/BaillieGifford and relevant underlying index providers. See disclaimer on page 127.
Past performance is not a guide to future performance.
Year to 31 January 2025 2025 2024 2024
Year’s high and low High Low High Low
Net asset value per
ordinary share
285.19p 193.64p 334.82p 193.06p
Share price 253.00p 176.00p 325.00p 176.00p
(Discount)/
premium
†¶
(6.3%) (15.7%) (2.6%) (15.5%)
Year to 31 January 2025 2024
Net return per ordinary share
Revenue 2.53p 2.42p
Capital 64.39p (136.61p)
Total 66.92p (134.19p)
Strategic report
Annual Report and Financial Statements 2025
28
(Discount)/premium* to NAV
(figures plotted on a monthly basis)
20252020 2021 2022 2023 2024
Years to 31 January
●
(Discount)/premium
*
Source:
LSEG/Baillie Gifford.
(15%)
(10%)
20%
10%
15%
5%
(5%)
0%
* Alternative performance measure – see Glossary of terms and alternative performance measures on pages 129 to 131.
†
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.
#
See disclaimer on page 127.
Past performance is not a guide to future performance.
Five year total return* performance
(figures rebased to 100 at 31 January 2020)
20252020 2021 2022 2023 2024
Cumulative to 31 January
● NAV total return
*
●
Share price total return
*
● Benchmark
†#
Source:
LSEG/Baillie Gifford and relevant underlying index providers
#.
50
200
150
100
Five year
summary
The following charts indicate
how an investment in
BaillieGifford China Growth
Trust has performed relative
toits benchmark
†
and its
underlying NAV over the
fiveyear period to
31January2025.
BaillieGifford & Co Limited
were appointed as Managers
and Company Secretaries on
16 September 2020.
Before 16 September 2020,
the Trust was able to invest
across the Asia Pacific region
rather than solely in China,
andhad a different
comparativeindex.
29
Baillie Gifford China Growth Trust plc
20252021 2022 2023 2024
Years to 31 January
Source: LSEG/Baillie Gifford and relevant underlying index providers
#
.
●
NAV total return
*
● Share price total return
*
(40%)
(20%)
60%
40%
20%
0%
Annual NAV and share price total returns*(relative to the benchmark
#
total returns)
* Alternative performance measure – see Glossary of terms and alternative performance measures on pages129 to 131.
†
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.
#
See disclaimer on page127.
Past performance is not a guide to future performance.
Annual NAV and share price total returns*
2025
2021
2022 2023 2024
Years to 31 January
●
NAV total return
*
● Share price total return
*
Source: LSEG/Baillie Gifford.
(60%)
(40%)
80%
60%
40%
20%
(20%)
0%
Strategic report
Annual Report and Financial Statements 2025
30
Capital
At
31 January
Total
assets
£’000
Borrowings
£’000
Shareholders’
funds *
£’000
NAV *
p
Share
price
p
(Discount)/
premium *
%
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)
2024 125,301 5,890 119,411 193.1 181.0 (6.2)
2025 159,193 6,094 153,099 259.1 232.0 (10.4)
Ten year
record
BaillieGifford & Co Limited were appointed as Managers and Company Secretaries on 16 September 2020. Before 16 September 2020, the Trust was able
to invest across the Asia Pacific region rather than solely in China, and had a different comparative index.
* For a definition of terms see Glossary of terms and alternative performance measures on pages 129 to 131.
†
Total operating costs (excluding performance fees) divided by average net asset value. BaillieGifford was appointed on 16 September 2020 and agreed
to waive its management fee for six months from the date of appointment. Without the management fee waiver the ongoing charges for the year to
31 January 2021 would have been 1.0% and the year to 31 January 2022 would have been 0.8%.
Past performance is not a guide to future performance.
Revenue Gearing ratios
Year to
31 January
Gross
revenue
£’000
Available
for ordinary
shareholders
£’000
Revenue
earnings per
ordinary
share
p
Ordinary
dividends paid
and proposed
per share
p
Ongoing
charges
ratio
†
%
Gearing *
%
Gross
gearing *
%
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
2024 2,599 1,498 2.4 2.0 1.0 4 5
2025 2,718 1,529 2.5 2.2 1.1 3 4
31
Baillie Gifford China Growth Trust plc
BaillieGifford & Co Limited were appointed as Managers and Company Secretaries on 16 September 2020. Before 16 September 2020, the Trust was able
to invest across the Asia Pacific region rather than solely in China, and had a different comparative index.
Source: LSEG and underlying index providers. See disclaimer on page 127.
* For a definition of terms see Glossary of terms and alternative performance measures on pages 129 to 131.
†
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.
Past performance is not a guide to future performance.
Cumulative performance (taking 2015 as 100)
At
31 January
Net asset
value per
share
Net asset
value total
return *
Share
price
Share price
total return * Benchmark
†
Benchmark
total
return *
†
2015 100 100 100 100 100 100
2016 93 94 95 96 92 94
2017 119 123 117 122 121 127
2018 138 145 141 149 138 150
2019 126 134 124 133 127 142
2020 130 141 136 150 135 154
2021 176 195 225 251 161 188
2022 127 142 139 158 126 150
2023 118 134 126 146 121 146
2024 69 79 74 86 82 102
2025 93 107 95 112 105 135
Compound annual returns (%)
3 year (10%) (9%) (12%) (11%) (6%) (3%)
5 year (7%) (5%) (7%) (6%) (5%) (3%)
10 year (1%) 1% (1%) 1% 0% 3%
Strategic report
Annual Report and Financial Statements 2025
32
Business model
Business and status
BaillieGifford 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. TheCompany has a fixed share capital,
although, subject to shareholder approval sought
annually, itmay purchase its own shares or issue
shares. Theprice of the Company’s shares is
determined, like other listed shares, by supply and
demand. TheCompany 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
(‘AIF’) 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,
orunlisted. 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
willrepresent 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
thetime 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 equalling up to 25%
ofgross 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
Business
review
33
Baillie Gifford China Growth Trust plc
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
withno employees, BaillieGifford China Growth
Trust’s culture is expressed through its Board and
itsthird party service providers, in particular its
Managers, in their interactions with shareholders
and other stakeholders. The Board’s assessment
ofits own interactions is described in its Section
172Statement on page 41, and the
BaillieGiffordstatement on stewardship, which
describes the Managers’ culture of constructive
engagement, is set out on page 53.
Dividend policy
The Company’s priority is to produce capital
growth over the long term. The Company’s dividend
policy 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
truststatus.
Discount/premium policy
The Board recognises the need to address any
sustained and significant imbalance of buyers and
sellers which might otherwise lead to shares trading
at an anomalous discount or premium to net asset
value per share. While it has not adopted any formal
discount or premium targets which would dictate
thepoint at which the Company would seek to
purchase shares or issue further shares, the Board
iscommitted to utilising its share purchase and
share issuance authorities where appropriate in
such a way as to mitigate the effects of any such
imbalance. In considering whether buy-back or
issuance might be appropriate in any particular set
of circumstances, the Board will take into account,
inter alia: the prevailing market conditions; whether
the discount is substantial relative to the Company’s
peers; the degree of net asset value accretion that
will result from the buy-back or issuance; the cash
resources readily available to the Company; the
immediate pipeline of investment opportunities open
to the Company; and the level of the Company’s
existing borrowings.
Performance
At each Board meeting, the Directors consider a
number of performance measures to assess the
Company’s success in achieving its objectives.
Strategic report
Annual Report and Financial Statements 2025
34
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$25 million with
Royal Bank of Scotland (International) Limited which
expires on 11 April 2026.
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. Notwithstanding the conditional tender
offer announced by the Board on 13 November
2024 in relation to the performance for the four
year period to 30 November 2028, 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 35 to 41, 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 2026 with specific leverage and liquidity
stress testing conducted during the year, including
consideration of the risk of further market volatility
resulting from increasing geopolitical tensions.
In addition, the Board and the Managers monitor
the covenant levels included in the revolving credit
facility regularly. 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
overthe next five years.
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Baillie Gifford China Growth Trust plc
Principal and emerging risks
As explained on pages 74 and 75 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. A description of these risks, an assessment of the risk level and how they are being
managed or mitigated together with the change in assessment of any increase or decrease in risk during the
year is set out below:
Financial risk
What is the risk?
The Company’s assets consist mainly of
listed securities (90.8% of the investment
portfolio) and its principal and emerging
financial risks are therefore market related
and include market risk (comprising
currency risk, interest rate risk and other
price risk), liquidity risk and credit risk. An
explanation of those risks and how they
are managed is contained in note 18 to the
Financial Statements on pages 109 to 114.
How is it managed?
The Board has, in particular, considered
the impact of heightened market volatility
due to macroeconomic factors such as
higher inflation and continued high interest
rates and geopolitical concerns. In order
to oversee this risk, the Board considers
at each meeting various metrics including
industrial sector weightings, top and
bottom stock contributors to performance
along with sales and purchases of
investments. Individual investments are
discussed with the portfolio manager
together with general views on the
investment markets and sectors. A strategy
session is held annually.
Rating and
change
Current assessment of risk
This risk is considered to
have increased as market
volatility remains due to
continuing macroeconomic and
geopolitical concerns.
Investment strategy risk
What is the risk?
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.
Poor investment performance, including
through inappropriate
asset allocation, leads to value loss
for shareholders in comparison to the
benchmark or the peer group.
How is it managed?
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 discount/premium
policy. The strategy is considered in the
context of developments in the wider
financial services industry.
The performance of the Managers 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. TheBoard
regularly reviews andmonitors the
Company’s objective and investment
policy and strategy.
Rating and
change
Current assessment of risk
During the year the NAV total
return was 35.4% compared
to the benchmark return of
32.4%. Market conditions for
growth stocks typically held by
the Company are improving.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
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Annual Report and Financial Statements 2025
36
Discount risk
What is the risk?
The discount/premium at which the
Company’s shares trade relative to its
net asset value can change. The risk
of a widening discount is that it may
undermine investor confidence in the
Company.
How is it managed?
To manage this risk, the Boardmonitors
the level of discount/premium at which
the shares trade and the Company has
authority to buy back its existing shares,
when deemed by the Board to be in
the best interests of the Company and
itsshareholders.
Rating and
change
Current assessment of risk
The Company’s discount
widened during the year
(seechart on page 28).
TheCompany has been
buying back shares during
the year to 31 January 2025.
On 13November 2024, the
Board announced a conditional
tender offer, see page 10.
Regulatory risk
What is the risk?
Failure to comply with applicable legal
and regulatory requirements such as the
tax rules for investment trust companies,
the FCA Listing Rules and the Companies
Act could lead to suspension of the
Company’s Stock Exchange listing,
financial penalties, aqualified audit report
or the Company being subject to tax on
capital gains. Changes to the regulatory
environment could negatively impact the
Company.
How is it managed?
To mitigate this risk, BaillieGifford’s
Business Risk, Internal Audit and
Compliance Departments provide regular
reports to the Audit Committee on
BaillieGifford’s monitoring programmes.
Major regulatory change could impose
disproportionate compliance burdens
on the Company. In suchcircumstances
representation is made to ensure that
the special circumstances of investment
trusts are recognised. Shareholder
documents and announcements, including
the Company’s published Interim and
Annual Report and Financial Statements,
are subject to stringent review processes
and procedures are in place to ensure
adherence to the Transparency Directive
and the Market Abuse Directive with
reference to insideinformation.
Rating and
change
Current assessment of risk
All control processes are
working effectively. Therehave
been no material regulatory
changes that have impacted
the Company during the year.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
37
Baillie Gifford China Growth Trust plc
Decreasing RiskIncreasing Risk Stable Risk
Custody and Depositary risk
What is the risk?
Safe custody of the Company’s assets
may be compromised through control
failures by the Depositary, including
breaches of cyber security.
How is it managed?
To mitigate this risk, the Audit Committee
receives six-monthly reports from the
Depositary confirming safe custody of the
Company’s assets held by the Custodian.
Cash and portfolio holdings are
independently reconciled to the
Custodian’s records by the Managers who
alsoagree uncertificated private portfolio
holdings to confirmations from investee
companies. TheCustodian’s audited
internal controls reports are reviewed
byBaillieGifford’s Business Risk
Department and a summary ofthekey
points is reported to theAudit Committee
and anyconcerns investigated. Inaddition,
the existence of assets is subject to annual
external audit.
Rating and
change
Current assessment of risk
All control procedures are
working effectively.
Operational risk
What is the risk?
Failure of BaillieGifford’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.
How is it managed?
To mitigate this risk, BaillieGifford has a
comprehensive business continuity plan
which facilitates continued operation of the
business in the event of a service disruption
or major disaster. TheAudit Committee
reviews BaillieGifford’s Reporton Internal
Controls and the reports by other key
third party providers are reviewed by
BaillieGifford on behalf of the Board and
a summary of the key points is reported
to the Audit Committee and any concerns
investigated. Inthe year under review, the
other key third party service providers have
not experienced significant operational
difficulties affecting their respective
services to theCompany.
Rating and
change
Current assessment of risk
All control procedures are
working effectively.
Moderate RiskHigh Risk Low Risk
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Annual Report and Financial Statements 2025
38
Decreasing RiskIncreasing Risk Stable Risk
Leverage risk
What is the risk?
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 ifleverage were
notused.
How is it managed?
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 by the Board and the Managers.
Rating and
change
Current assessment of risk
No significant change in risk
level. The Company continues
to deploy gearing and has
arevolving credit facility
inplace which expires in
April2026.
Climate and governance risk
What is the 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.
How is it managed?
As described on page 76, the
consideration of ESG (including
climate change) is a core component of
BaillieGifford’s investment process, with
the Board overseeing and challenging
BaillieGifford on ESG matters. The Board
meet with the Investment Manager and
discuss the investment portfolio, including
the application of BaillieGifford’s ESG
framework. BaillieGifford’s Governance
and Sustainability team undertake specific
ESG reviews on investment portfolios.
Rating and
change
Current assessment of risk
The Investment Manager
continues to employ strong
ESG stewardship and
engagement policies.
Moderate RiskHigh Risk Low Risk
* See Glossary of terms and alternative performance measures on pages 129 to 131.
39
Baillie Gifford China Growth Trust plc
Cyber securityrisk
What is the risk?
A cyber-attack on BaillieGifford’s network
or that of athird party service provider
could impact the confidentiality, integrity
or availability of data and systems.
How is it managed?
The Audit Committee reviews Reports
on Internal Controls published by
BaillieGifford and other third party service
providers. BaillieGifford’s Business Risk
Department report to the Audit Committee
on the effectiveness of information
security controls in place at BaillieGifford
and its business continuity framework.
Cyber security due diligence is performed
by BaillieGifford on third party service
providers which includes a review of crisis
management and business continuity
frameworks.
Rating and
change
Current assessment of risk
This risk is considered to be
increasing due to ongoing
geopolitical tensions and an
observed increase in malign
cyber activity. Emerging
technologies, including AI,
could potentially increase
information security risks. In
addition, service providers
operate a hybrid approach of
remote and office working,
thereby increasing the potential
of a cyber security threat.
Single country risk
What is the risk?
The Company invests predominantly in
equities ofcompanies which are
incorporated or domiciled, orwhich
conduct a significant portion of their
business, inChina. 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 asingle geographical
market, inthis case the Chinese market.
How is it managed?
The Company’s exposure to asingle
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.
Rating and
change
Current assessment of risk
This risk is seen as increasing
due to concerns over
geopolitical risks.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
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Annual Report and Financial Statements 2025
40
Emerging market risk
What is the 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, inparticular
relating to Taiwan, remain heightened with
the potential for further sanctions tobe
imposed. Investing in China is often
through contractual structures, such
asVariable Interest Entities (‘VIEs’, see
Glossary of terms and alternative
performance measures on page 131) that
arecomplex and could be opento
challenge.
How is it managed?
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 Chinaand the portfolio.
TheBoard monitors the risks associated
with any complex investment structures,
including the proportion of investments
held in VIEs (estimated to be 32% as at
31January 2025). The Board evaluate
sanctions risk with the Manager and where
appropriate with input from
externaladvisers.
Rating and
change
Current assessment of risk
Rising concerns over
geopolitical risk.
Unlisted securities risk
What is the risk?
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
How is it managed?
BaillieGifford conducts appropriate due
diligence in respect of all unlisted
investments, and has an established
valuation approach
(as described on page 55), whichis
carefully reviewed bytheBoard.
Rating and
change
Current assessment of risk
No change in assessment
ofrisk.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
41
Baillie Gifford China Growth Trust plc
Promoting the success of the Company
(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; c) the need to
foster the company’s business relationships with
suppliers, customers and others; d) the impact of
the company’s operations on the community and
the environment; e) the desirability of the company
maintaining a reputation for high standards of
business conduct; and f) the need to act fairly as
between members of the company.
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 to be: its existing and
potential new shareholders; its externally-appointed
Managers and Secretaries (BaillieGifford); other
professional service providers (corporate broker,
registrar, auditors and depositary); lenders; wider
society and the environment.
The Board considers that the interests of the
Company’s key stakeholders are aligned, in terms
of wishing to see the Company deliver sustainable
long-term growth, in line with the Company’s
stated objective and strategy, and meet the highest
standards of legal, regulatory, and commercial
conduct, with the differences between stakeholders
being merely a matter of emphasis on those
elements.
Emerging risk
As explained on pages 74 to 76, the Board has regular discussions on principal risks and uncertainties, including any risks which
are not an immediate threat but could arise in the longer term. The Board considers that the key emerging risks arise from the
interconnectedness of global economies and the related exposure of the investment portfolio to external and emerging threats such as
escalating geopolitical tensions, cyber security risks including developing AI and quantum computing capabilities, and new coronavirus
variants orsimilar public health threats.
This is mitigated by the Board discussing at each Board meeting the impact of such threats on both markets globally and also more
specifically on the Chinese market. This is mitigated by the Managers’ close links to the investee companies and their ability to ask
questions on contingency plans. The Managers believe the impact of such events may be to slow growth rather than to invalidate
the investment rationale over the long term. The Managers monitor certain emerging risks and have established a group to manage
the response to any future events that might result in heightened levels of market volatility. Regular exercises are carried out to
test the Managers’ response to various scenarios. The Company also monitors its service providers to ensure there is adequate
businesscontinuity.
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Annual Report and Financial Statements 2025
42
Stakeholder Why we engage How we engage and what we do
Shareholder Shareholders are, collectively, the Company’s
owners: providing them with a return for their
investment in accordance with the Company’s
investment policy and objective is the reason
for its existence.
The Board places great importance on communication
with shareholders. The Annual General Meeting provides
an opportunity for the Board and Managers to present to
shareholders on the Company’s performance, future plans
and prospects. It also allows shareholders the opportunity to
meet with the Board and Managers and raise questions and
concerns. The Chair and Senior Independent Director (‘SID’)
are available to meet with shareholders independently of the
Managers as appropriate. The Managers meet regularly with
shareholders and their respective representatives, reporting
their views back to the Board. Directors also attend certain
shareholder presentations, in order to gauge shareholder
sentiment first hand. Shareholders may also communicate
with members of 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 page 132). These communication
opportunities help inform the Board when considering how
best to promote the success of the Company for the benefit
ofall shareholders over the long term.
BaillieGifford –
Managers and
Secretaries
The Company’s Board has delegated the
management of the Company’s portfolio,
and the administration of the Company’s
operations including fulfilment of regulatory
and taxation reporting requirements, to
BaillieGifford. BaillieGifford is therefore
responsible for the substantial activities of
the Company and has the most immediate
influence on its conduct towards the other
stakeholders, subject to the oversight and
strategic direction provided by the Board.
The Board seeks to engage with its Managers and
Secretaries, and other service providers, in a collaborative
and collegiate manner, encouraging open and constructive
discussion and debate, while also ensuring that appropriate
and regular challenge is brought and evaluation conducted.
This approach aims to enhance service levels and strengthen
relationships with the Company’s providers, with a view
to ensuring the interests of the Company’s shareholders
are best served by keeping cost levels proportionate and
competitive, and by maintaining the highest standards of
business conduct.
Portfolio companies As all of the Company’s operations are
conducted by third party professional
providers, it is the companies held in its
investment portfolio which have the primary
real-world impact in terms of social and
environmental change, both positively and
negatively, as well as generating, through their
commercial success, the investment growth
sought by the Company’s shareholders.
The investee companies have an interest in
understanding their shareholders’ investment
rationale in order to assure themselves
that long-term business strategies will be
supported.
The Board is cognisant 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. The Board’s review of the Managers includes
an assessment of their ESG approach and its application in
making investment decisions. The Board regularly reviews
Governance Engagement reports, which document the
Managers’ interactions with investee companies on ESG
matters (see pages 45 to 51).
Brokers The Company’s brokers provide an interface
between the Company’s Board and its
institutional shareholders.
The Company’s brokers regularly attend Board meetings,
and provide reports to those meetings, in order to keep
the Board apprised of shareholder and wider market
sentiment regarding the Company. They also arrange forums
for shareholders to meet the Chair, or other Directors,
outwiththe normal general meeting cycle.
The Board’s methods for assessing the Company’s progress in the context of its stakeholders’ interests are
set out below.
43
Baillie Gifford China Growth Trust plc
Stakeholder Why we engage How we engage and what we do
Registrars The Company’s registrars provide an
interfacewith those shareholders who
holdthe Company’s shares directly.
The Company Secretaries liaise with the registrars to
ensure the frequency and accuracy of communications
to shareholders is appropriate, and monitor shareholder
correspondence to ensure that the level of service provided
by the registrars is acceptable. The Managers’ risk function
reviews the registrars’ internal controls report and reports on
the outcome of this review to the Audit Committee.
Auditor The Company’s Auditor has a responsibility to
provide an opinion on whether the Company’s
Financial Statements as a whole are free from
material misstatement, as set out in more
detail in the Auditor’s report to the members
on page 87.
The Company’s Auditor meets with the Audit Committee, in
the absence of the Managers where deemed necessary, and
the Managers undertake to provide all information requested
by the Auditor in connection with the Company’s annual audit
promptly and to ensure that it is complete and accurate in all
respects.
Depositary
and Custodian
The Depositary is responsible for the
safekeeping of the Company’s financial
instruments, as set out in more detail on
page65.
The Depositary provides the Audit Committee with a report
on its monitoring activities. The Board and Managers seek to
engage with the Depositary and Custodian in a collaborative
and collegiate manner, encouraging open and constructive
discussion and debate, while also ensuring that appropriate
and regular challenge is brought and evaluation conducted.
This approach aims to enhance service levels and strengthen
relationships with the Company’s providers, with a view to
ensuring the interests of the Company’s shareholders are
best served by keeping cost levels proportionate and
competitive, and by maintaining the highest standards of
business conduct.
Lenders Lenders such as holders of debt instruments
(debentures, bonds and private placement
loan notes) and banks providing fixed or
revolving credit facilities or overdrafts provide
the Company’s gearing and have an interest
inthe Company’s ongoing financial health
andviability.
The Company’s legal advisers review all legal agreements
in connection with the Company’s debt arrangements
and advise the Board on the appropriateness of the terms
and covenants therein. The Managers and Secretaries
ensure that the frequency and accuracy of reporting on,
for example, covenant certification, is appropriate and
that correspondence from the lenders receives a prompt
response.
AIC/industry peers The Association of Investment Companies
(‘AIC’) and the Company’s investment
trust industry peers have an interest in
the Company’s conduct and performance,
asadverse market sentiment towards
oneinvestment trust can affect attitudes
towards the wider industry.
The Company is a member of the AIC, and the Directors
and/or the Managers and Secretaries (as appropriate)
participate in technical reviews, requests for feedback on
proposed legislation or regulatory developments, corporate
governance discussions and/or training.
Investment platforms Investment platforms provide an interface
with shareholders who invest in the
Companyindirectly.
The Managers liaise with the various investment platforms
onstrategies for improving communications with the
Company’s shareholders who hold their shares via these
platforms. An annual timetable of key dates is published on
the Company’s website, for the ease of reference of such
shareholders.
Wider society and
the environment
No entity, corporate or otherwise, can exist
without having an influence on the society
inwhich it operates or utilising the planet’s
resources. Through its third-party relationships,
as noted above, the Company seeks to be a
positive influence and, in circumstances
where that is not possible, to mitigate its
negative impacts insofar as is possible.
The Board and Managers’ interactions with the various
stakeholders as noted above form the principal forms of
direct engagement with wider society and in respect of the
environment (commercial, financial, and in terms of planetary
health and resources).
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Annual Report and Financial Statements 2025
44
The Board recognises the importance of maintaining
the interests of the Company and its stakeholders,
in aggregate, firmly front of mind in its key decision
making and BaillieGifford & 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 include:
•
the Board’s decision to announce a conditional
tender offer on 13 November 2024;
• as part of ongoing Board succession and
refreshment, the appointment and induction of
Sarah MacAulay to the Board, with effect from
1May 2024. The Board believes her considerable
knowledge and experience will be a great benefit
to the Company. Details of her relevant skills and
experience are provided on page 62;
• the purchase of 2,756,602 of the Company’s own
shares into treasury at a discount to net asset
value (4.5% of share capital as at 31 January
2024), for subsequent reissue, in order to ensure
the Company’s shareholders found liquidity for
their shares when natural market demand was
insufficient, and on terms that enhance net asset
value for remaining shareholders;
•
the renewal of the loan facility;
• the Board met with shareholders representing
approximately 30% of the register to discuss the
Company’s strategy;
•
the Board’s visit to China with the Manager to
meet portfolio companies and investment analysts
in Shanghai;
•
enhanced marketing of Manager through
increased budget with both BaillieGifford and
broker; and
• the Board’s decision to declare a final dividend
of2.2p.
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 matters
areprovided below.
Gender representation
At 31 January 2025, 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 page73.
Environmental, social and governance policy
Details of the Company’s policy on socially
responsible investment can be found under Corporate
Governance and Stewardship on page76.
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. Astatement by the Managers under the
Act has been published on the Managers’ website
atbailliegifford.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 pages07 to 11
and the Managers’ report on pages12 to 19.
The Strategic report, which includes pages07 to 59
was approved by the Board of Directors and signed
on its behalf on 31March 2025.
Nicholas Pink
Chair
45
Baillie Gifford China Growth Trust plc
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 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
ofcorporate governance, executive remuneration
and board structure, sustainability of business
practices, and environmental and social impact
(extract inBox1).
Box 1 shows our full ESG due diligence framework
which includes one question on Good Governance
standards to reflect the explicit monitoring process
regarding the requirement of Sustainable Finance
Disclosure Regulation (‘SFDR’) and one question
on the Company’s efforts to address climate and
broader environmental issues. Most importantly,
we look for and assess topics that the management
find the most material to their businesses. This
framework is used both in our pre-buy analysis and
for existing investee reviews.
Where companies are found lacking, engagement
isour preferred approach. Indeed, we believe that
investors, companies and society stand to benefit
ifwe can play a role in pushing businesses towards
Managers’ report on
environmental, social and
governance engagement
improved standards of governance, behaviour and
performance. As such, we seek to engage with
thecompanies 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.
Our engagement efforts have been further
streamlined and strengthened with the launch of the
Engagement Hub in 2024 to enhance the visibility of
engagements across the firm and increase our
accountability to better track and monitor progress
against engagement objectives.
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
andqualitative.
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46
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 2024 to 31 January 2025. 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 BaillieGifford 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 have a robust approach to climate change and wider environmental issues (incl. carbon
disclosure, climate targets, net zero path)?
• 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?
• Does the company uphold Good Governance Standards (incl. UNGC Principles 3 and 10, accounting, tax)?
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, Anker and CATL)
along with the presence of some state-owned
enterprises (including Kweichou Moutai). There was
no significant change during the reporting period.
Alack of independence with no extenuating context
is a cause for engagement and further investigation.
In 2024, we saw an increase in percentage of female
directors in both our portfolio and the Index. We are
glad to see some of our holding companies such as
China Merchants Bank welcomed female members
during last year’s board re-election. Apart from
gender diversity, background and the role of board
members, the independence of the members at
the Audit Committee, long board tenure, and over
boarding are also indicators that we actively engage
in. Apart from gender diversity, background and the
role of board members, long-term board tenure, and
over boarding are also indicators that we actively
engage in.
●
Company
● Index
0102030405060
Average board tenure (in years)
Percentage of female directors
Board independence percentage
54.7
56.4
9.9
8.3
20.6
19.1
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Baillie Gifford China Growth Trust plc
Ownership
What it is – The table below highlights the range and
concentrations of different ownership structures
held within the public companies in the portfolio.
Anexplanation of the definitions is included below
the table. Data for 12 holdings is missing so the
totals showing for the Company add up to 79.1%.
What does the data tell us – Whereas the index is
heavily invested in state-owned enterprises, nearly
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.
Compared with last year, there is a slight decrease in
the percentage of controlled and family firms. This is
due to a combined changes of company weightings.
portfolio construction, and a higher availability
ofdata.
Owner Type
Index
%
Company
%
Controlled 20.9 8.4
Principal 10.3 4.9
Founder firm 50.7 60.1
Family firm 2.3 4.9
Widely held 1.5 0.8
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.
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, which can be found at
unglobalcompact.org/what-is-gc/mission/principles.
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 one is on the watchlist. There is no data on
UNGC compliance for three of our holdings (15.4%
of the portfolio).
Zijin Mining remains on the data providers’
watchlist and it is also on another third party’s non-
compliance list. We have laid out and are currently
at the end of a 3-year engagement plan. Although
we believe the company is on the right direction of
travel, we are looking for hard evidence. During the
reporting period, we continued to engage on Zijin’s
human rights auditing at the Group level and have
made it clear to the company that a failure to provide
more assurance by disclosing their independent
social responsibility audits in the next reporting
season would lead to the divestment. Our dedicated
ESG analyst also visited Zijin’s mines in Tibet to
learn more about their occupational safety measures
and community relations building.
Tencent remains non-compliant on a third party
list with Principle 2 of the UN Global Compact for
allegations of complicity in human rights abuses. Our
research and engagement lead us to conclude that
the company is taking action to the greatest extent
possible to comply with domestic legislation while
also attempting to comply with international norms.
We keep an annual ESG dialogue with Tencent
and will continue to keep this on our watchlist for
enhanced due diligence. During the reporting period,
we actively supported the company by highlighting
potential next steps on data privacy that may trigger
a re-assessment by the third party.
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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.
Passed UN Global Compact Compliance
75.6
85.8
●
Company ● Index
0%
20%
100%
80%
60%
40%
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
US$1million invested. Weighted Average Carbon
Intensity is the sum product of the portfolio
constituent weights and intensities of Carbon
Intensity (the total carbon emissions per US$1million
of revenue generated and shows the efficiency
of the portfolio in terms of emissions per unit
of financial output). These intensity measures
allow comparison of emissions across companies
of different sizes and in different industries.
Werecognise that carbon footprinting and emissions
intensity analysis is imperfect. Beyond simple
concerns about data accuracy and availability,
thisanalysis can only tell us where a company is
– not where it is going. This is why we see it as a
starting point and not the end.
Carbon footprint (tCO
2
e/US$ million invested)
Scope 1, 2 & Material Scope 3
(PCAF)
Scope 1&2
0
200
800
600
400
22.2
162.4
215.5
547.3
Weighted average carbon intensity
(tCO
2
e/US$ million revenue)
Scope 1, 2 & Material Scope 3
(PCAF)
Scope 1&2
●
Company ● Index
0
200
1,000
800
600
400
55.3
269.8
334.2
791.2
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 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.
What does the data tell us – The data demonstrates
lower carbon intensity and relative carbon than the
index (MSCI China All Share). The Weighted Average
Carbon Intensity tCO
2
e/US$ million revenue for
Scope 1, 2 and those material Scope 3 emissions
are also below the benchmark. This is attributed to
the fact that most of our holdings are light in assets,
except a few from the manufacturing and power
sectors.
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Baillie Gifford China Growth Trust plc
Material Scope 3 emissions are the Scope 3
emissions from entities operating in certain sectors
where such emissions are particularly significant.
Per the Partnership for Carbon Accounting
Financials (‘PCAF’) guidance, the material emissions
include oil and gas, mining, transportation,
construction, buildings, materials and industrial
activities sectors. We are at the stage of exploring
meaningful ways to encourage more holdings
to track, disclose, and mitigate their material
Scope3emissions.
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.
Thefollowing three examples highlight our approach
to engagement.
Box 2
Quick reactions to geopolitical news and evaluation of the impact on companies’ long-term growth –
Contemporary Amperex Technology Co, Ltd (‘CATL’) &Tencent Holdings
CATL and Tencent, as two key holdings in the Growth Trust, together account for over 15% of the portfolio.
Both of them were challenged by geopolitical tensions – U.S. Department of Defense put them onto the
Chinese Military Company (CMC) list in January 2025, targeting to cast a certain level of trade restrictions.
Leveraging our solid relationships with the companies, we soon managed to arrange online meetings with
them and learn more about the companies’ takes and plans going forward.
From the conversations, we learned that CATL has completed a detailed analysis of the business impact
and concluded there is no material effect on operations from the addition to the list. The internal legal team
and external lawyers are providing assistance, while CATL is maintaining communication with overseas
customers who have raised inquiries. The company is confident in achieving good communication and
consultation post-regulations, though the timeline remains under internal discussion. CATL utilise OEM
partnerships to carry out business in the U.S., including licensing arrangements with Ford and joint ventures
with Stellantis. To mitigate the risks of its upstream material suppliers being targeted by geopolitics,
CATL has been diversifying its raw material suppliers, including self-construction. Some diversification
practices include investing in mining operations and conducting second-time mining at some old mines to
seekminerals.
Tencent reiterated its voluntary open announcement that its addition to the list was a serious mistake,
in its opinion. The company’s Public Affairs, Public Relations, and Legal teams are in the process of
communicating with the US authorities, and based on their years of experience dealing with US officials,
they are confident that Tencent will be removed from the list. A company spokesperson highlighted its
recent delisting from the US Counterfeit Notorious Market list as evidence that their interactions with
UStrade representatives have resulted in positive outcomes. Although the spokesperson could not predict a
timeline for removal from the CMC list, the most positive outcome that the company can envisage would be
in several months time.
We appreciated both companies’ sharing to the best of their ability. Upon our understanding, the impact
of the CMC list is rather limited on our holdings as long as the situation does not escalate and process
to review sanctions remains rational. We will keep an eye on Tencent’s and CATL’s progress in removing
themselves from the list.
* CREDIT stands for carbon footprint, recycling, energy, due diligence, innovation and transparency
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50
Box 3
Continuing to engage 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, butthe
recent two areas Zijin emphasised as crucial for their growth and societal contribution are copper and
lithium, key to energy transition and storage.
As part of the three-year engagement plan, in 2024 our dedicated ESG analyst visited its subsidiary Julong
Copper mine in Tibet, the largest mineral copper site that Zijin owns in China and the third globally, to
discuss its occupational safety management and equitable treatment of employees and contractors after a
shaft falling accident a year ago. We learned that the incident led to a comprehensive review and overhaul
of safety protocols, including equipment checks, personnel accountability, and enhanced contractor
management. A strengthened risk assessment framework now categorises outsourced units to ensure
safety standards, with financial incentives tied to safety performance. To prevent such accidents from
reoccurring, Julong Copper has partnered with the China Occupational Safety and Health Association
to enhances its safety management system. The subsidiary also reiterated its commitment to treat
employees and contractors with equal regard, sharing resources, safety training, working conditions, etc.
We also visited the tailing ponds and discussed material topics such as ecological restoration, community
engagement, autonomous driving, and other green mining practices.
While we continue to believe that Zijin is in the right direction of travel over sustainable issues, and we truly
value its contribution to the supply of copper and other battery materials that meet the increasing demand
for the global EV trend, at the end of our three-year engagement plan with the company targeting its UNGC
non-compliance status assessed by a third party, we set new objectives to gain hard evidence. We ask Zijin
to provide more assurances to stakeholders on how they uphold commitment at high-risk mines and the use
of leverage for mines where they are not the operator by disclosing their independent social responsibility
audits in the next reporting season. Through email correspondence and in a face-to face meeting with the
IRand ESG team in December 2024, we have made it clear to the company that a failure to do so could lead
to divestment.
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Baillie Gifford China Growth Trust plc
Box 4
Continuing to learn about the company’s ESG approach and analyse advantages and challenges across the
value chain – BYD Company Limited
We keep supporting BYD on its sustainable journey when it grows into a superstar in battery and EV
manufacturing globally. We aim at building a relationship for ESG engagement and learning more about the
company’s commitments and performance in their own practices and in their value chains.
The vertically integrated supply chain at BYD is impressive and a strength. It was helpful to read BYD’s
updated disclosures referencing both national and international standards including International Labour
Organisation (ILO) and OECD which we suggested in 2023. BYD’ routine review of suppliers and its platform
for traceability and optimisation are also great advantages.
We also highlighted to BYD about a data provider flagging it as having an estimated 1% revenue from the
production of e-cigarettes and other tobacco products. Though it is not a material issue for the company, we
thought it is necessary for the company to be aware of and that it may hinder particular global funds from
owning it. BYD confirmed that they did have some business in vaporisers in the past but not in the business
of making tobacco products. They also confirmed that they were no longer involved with the production of
vaporisers. Being aware of the issue, BYD contacted the data provider and this flag has been removed by the
time of writing.
With the backdrop of BYD’s involvement in the labour controversy of a construction partner in Brazil, we
have conducted in-house analysis. We conclude that BYD’ quick cut with the contractor indicated its attitude
towards no tolerance of labour violations. Thus, we tend not to regard the company as complicit in the modern
slavery act. Meanwhile, we believe the incident should trigger a thorough internal review of its global business
partners and its due diligence mechanisms to prevent similar events from reoccurring. In addition, we need to
look for evidence or suggest that BYD’s Supplier Code of Conduct should apply to all categories of business
partners including construction partners to gain assurance. We also plan to encourage the company to
disclose more detailed information like the number of layout of business partners at all phases of its global
projects when it marches through the EV world. These will be the important fact-finding and influencing points
in our future engagement with BYD.
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BaillieGifford –
proxy voting
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. Therefore, we
fully exercise our voting rights on behalf of our clients
in the reporting period. The three “No Vote” in the chart
was due to that we were asked to vote one in four
options of one proposal on the frequency of advisory
vote on executive compensation. We voted for annually
and thus left the other three optionsblank.
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 BaillieGifford China Growth Trust
in the reporting period. 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, during the reporting period, we opposed one
company’s amendments to the articles of association
because one amendment would give the board full
discretion to decide on the issuance of shares and
convertible bonds. We would prefer that shareholders
are able to assess the appropriateness of these
issuances on a case-by-case basis.
In 2024, our central voting team has updated our
General Principles and market-based guides for
voting which serves as a living reference document
to all things related to proxy voting. The jurisdiction
sheets capture market specific context and keep
reflecting the latest regulations of each market.
In addition to the international proxy voting advisers,
our in-house voting analyses are also based on input
from a local voting service provider with good market
knowledge. Our embedded ESG analyst in the region
clarifies details with the companies when necessary
to make the most informed decisions.
The data
All data is pulled from MSCI, Sustainalytics, ISS
andBoardEx, 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. The data covers the calendar year 2024.
For more detail, please see bailliegifford.com/en/
global/all-users/literature-library/miscellaneous/
investment-stewardship-activities-report/
BaillieGifford China Growth Trust
proxy voting record 2024
% Votes
Votes for 95.5 953
Votes against 2.3 23
Abstain 1.9 19
No Vote 0.3 3
Total 100 998
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.
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Baillie Gifford China Growth Trust plc
BaillieGifford –
statementon stewardship
BaillieGifford’s overarching ethos is that we are
‘Actual’ investors. That means we seek to invest
for the long term. Our role as an engaged owner
is core to our mission to be effective stewards
for our clients. As an active manager, we invest in
companies at different stages of their evolution
across many industries and geographies, and focus
on their unique circumstances and opportunities.
Ourapproach favours a small number of simple
principles rather than overly prescriptive policies.
This helps shape our interactions with holdings
andensures our investment teams have the
freedomandretain the responsibility to act
inclients’bestinterests.
Long-term value creation
We believe that companies that are run for the
long term are more likely to be better investments
over our clients’ time horizons. We encourage our
holdings to be ambitious, focusing on long-term
value creation and capital deployment for growth.
We know events will not always run according to
plan. In these instances we expect management
to act deliberately and to provide appropriate
transparency. We think helping management to
resist short-term demands from shareholders often
protects returns. We regard it as our responsibility to
encourage holdings away from destructive financial
engineering towards activities that create genuine
value over the long run. Our value will often be in
supporting management when others don’t.
Alignment in vision and practice
Alignment is at the heart of our stewardship
approach. We seek the fair and equitable treatment
of all shareholders alongside the interests of
management. While assessing alignment with
management often comes down to intangible factors
and an understanding built over time, we look for
clear evidence of alignment in everything from
capital allocation decisions in moments of stress
to the details of executive remuneration plans and
committed share ownership. We expect companies
to deepen alignment with us, rather than weaken it,
where the opportunity presents itself.
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54
Governance fit for purpose
Corporate governance is a combination of structures
and behaviours; a careful balance between systems,
processes and people. Good governance is the
essential foundation for long-term company
success. We firmly believe that there is no single
governance model that delivers the best long-term
outcomes. We therefore strive to push back against
one-dimensional global governance principles in
favour of a deep understanding of each company
we invest in. We look, very simply, for structures,
people and processes which we think can maximise
the likelihood of long-term success. We expect to
trust the boards and management teams of the
companies we select, but demand accountability
ifthat trust is broken.
Sustainable business practices
A company’s ability to grow and generate value for
our clients relies on a network of interdependencies
between the company and the economy, society and
environment in which it operates. We expect holdings
to consider how their actions impact and rely on these
relationships. We believe long-term success depends
on maintaining a social licence to operate and look
for holdings to work within the spirit and not just the
letter of the laws and regulations that govern them.
Material factors should be addressed at the board
level as appropriate.
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Baillie Gifford China Growth Trust plc
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
adhoc basis in response to ‘trigger events’.
Ourvaluation process ensures that private companies
are valued in both a fair and timely manner.
The valuation process is overseen by a valuations
committee at BaillieGifford which takes advice
froman independent third party (S&P Global).
Theportfolio managers feed into the process,
butthe valuations committee owns the process 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,
theprices 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.
Continued market volatility has meant that recent
pricing has moved much more frequently than would
have been the case with the quarterly valuations
cycle. Beyond the regular cycle, the valuations team
also monitors the portfolio for certain ‘trigger events’.
These may include: changes in fundamentals; a
takeover approach; an intention to carry out an initial
public offering; or changes to the valuation of
comparable public companies. The valuations team
also monitors relevant market indices on a weekly
basis and updates valuations in a manner consistent
with our external valuer’s (S&P Global) most recent
valuation report where appropriate. When market
volatility is particularly pronounced the team do
these checks daily. Any ad hoc change to the fair
valuation of any holding is implemented swiftly and
reflected in the next published net asset value. There
is no delay.
More information specific to the valuation
ofByteDance, the unlisted holding held by
BaillieGifford China Growth Trust can be
foundinnote 9, on page 106.
The Independent Auditor’s report on page 87
explains the procedures carried out by the external
Auditor on the private companies (unquoted
investments) as part of their audit.
BaillieGifford – valuing
private companies
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Annual Report and Financial Statements 2025
56
Name Business
Value
£’000
% of total
assets*
Tencent Social media and entertainment company 19,013 11.9
ByteDance
Social media and entertainment company 14,429 9.1
Alibaba Group Online retailer, payments and cloud business 9,679 6.1
Meituan Online food delivery company 8,150 5.1
Kweichow Moutai Luxury baijiu maker 6,268 3.9
CATL Electric vehicle battery maker 5,315 3.3
PDD Holdings Online retailer 5,129 3.2
China Merchants Bank Consumer lending and wealth management 5,057 3.2
Ping An Insurance Life and health insurance 4,984 3.1
Midea Group White goods and robotics manufacturer 3,781 2.4
BYD Hybrid and EV automobiles 3,666 2.3
NetEase Gaming and entertainment business 3,423 2.2
Shenzhen Megmeet Electrical Power electronics manufacturer 3,366 2.1
Zijin Mining Group Renewable energy enabler 2,909 1.8
Pop Mart Toy and collectibles maker 2,716 1.7
Weichai Power Construction machinery and heavy duty trucks 2,715 1.7
Zhejiang Sanhua Intelligent Controls Heating and cooling component manufacturer 2,491 1.6
Sunny Optical Technology Electronic components for smartphones and autos 2,412 1.5
Anker Innovations Consumer electronics 2,411 1.5
PROYA Cosmetics and personal care company 2,397 1.5
BeiGene Immunotherapy biotechnology company 2,325 1.5
Haidilao International Hot pot restaurant brand 2,214 1.4
Estun Automation Robotics and factory automation company 2,023 1.3
Jiangsu Azure Small form batteries 1,983 1.2
ENN Energy Gas distributor and provider 1,968 1.2
List of
investments
at 31 January 2025
57
Baillie Gifford China Growth Trust plc
Name Business
Value
£’000
% of total
assets*
Shenzhen Inovance Technology Factory automation company 1,965 1.2
Shenzhou International Garment manufacturer 1,954 1.2
Fuyao Glass Industry Group Automotive glass manufacturer 1,952 1.2
Centre Testing International Testing and inspection company 1,951 1.2
Shandong Sinocera Functional Material Advanced materials manufacturer 1,943 1.2
Kingsoft Software for SMEs and corporates 1,730 1.1
KE Holdings Online real estate 1,708 1.1
Luckin Coffee
†
Coffee retailer 1,688 1.1
SG Micro Corp Semiconductor designer 1,618 1.0
Naura Technology GP Integrated micro-electronics company 1,537 1.0
Li-Ning Domestic sportswear manufacturer 1,530 1.0
Zhongji Innolight Optical transceiver and component maker for AI chips 1,501 1.0
Advanced Micro-Fabrication Etch and deposition semiconductor equipment
manufacturer
1,489 1.0
Kingdee International Software Software for SMEs and corporates 1,483 0.9
Silergy Semiconductors & semiconductor equipment 1,237 0.8
Sungrow Power Supply Component supplier to renewables industry 1,231 0.8
Yifeng Pharmacy Chain Drug retailer 1,231 0.8
Yonyou Network Technology Software for SMEs and corporates 1,127 0.7
Sinocare Diagnostics and diabetes company 1,029 0.6
Robam Appliances White goods manufacturer 1,010 0.6
Minth Automotive parts manufacturer 1,007 0.6
Shanxi Xinghuacun Fen Wine Factory Distiller and distributer of liquor products 973 0.6
Guangzhou Kingmed Diagnostics Diagnostics company 916 0.6
Horizon Robotics AI chips used in autonomous driving and advanced
driving assistance systems
873 0.6
Strategic report
Annual Report and Financial Statements 2025
58
Name Business
Value
£’000
% of total
assets*
Hangzhou Tigermed Consulting Clinical trial contract research organisation 866 0.6
Medlive Technology Medical dictionary and marketing organisation 834 0.5
China Oilfield Services Oilfield service provider 675 0.4
Dongguan Yiheda Automation Co Automation components 606 0.4
New Horizon Health
#
Early cancer detection 194 0.1
Total investments 158,682 99.7
Net liquid assets
‡
511 0.3
Total assets* 159,193 100.0
Borrowings (6,094) (3.8)
Shareholders’ funds 153,099 96.2
* Total assets before deduction of loans.
Denotes unlisted investment (private company).
†
Includes investments in American Depositary Receipt (ADR).
#
Suspended.
‡
For a definition of terms used, see Glossary of terms and alternative performance measures on pages 129 to 131.
Listed
equities
%
Suspended
equities
%
Unlisted
securities
%
Net liquid
assets
%
Total
assets
%
31 January 2025 90.5 0.1 9.1 0.3 100.0
31 January 2024 91.1 – 8.4 0.5 100.0
Figures represent percentage of total assets.
59
Baillie Gifford China Growth Trust plc
Distribution
of total assets
*
Sector at 31 January 2025
* Total assets represents total net assets before deduction of borrowings.
3
4
5
8
7
2
6
1
Sector 2025
%
2024
%
1 Consumer discretionary 29 25
2 Communication
services
24 18
3 Consumer staples 7 9
4 Financials 6 8
5 Healthcare 3 8
6 Industrials 15 15
7 Information technology 10 8
8 Materials 3 5
9 Real estate 1 1
10 Utilities 1 2
11 Net liquid assets 1 1
Governance
report
This governance report, which includes
pages 60 to 85 outlines the Board’s
approach to the governance of your
Company. We believe that good governance
builds better outcomes and we are
committed to high standards of corporate
governance and transparency.
61
Baillie Gifford China Growth Trust plc
Directors and
management
Nicholas Pink
Chair
Appointed 2023
Tim Clissold
Director
Appointed 2021
Nicholas Pink has extensive senior management
experience in financial services with previous roles
at UBS Investment Bank including Global Head
of Research and Head of Asia Research. Nicholas
is currently the Chairman of Ruffer Investment
Company Limited. He was previously an independent
director of Redburn (Europe) Limited, and a non-
executive director of JP Morgan Emerging Europe,
Middle East and Africa Securities plc. He was
appointed as a Director of the Company in 2023 and
appointed Chair in 2024.
Tim Clissold 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. Tim is a Senior Advisor to
Highgate, where he assists resolving disputes
between foreign investors and Chinese companies.
He is a Visiting Fellow at Jesus College, Cambridge
University and a non executive director of Henderson
Far East Income Limited. He was a member of
the Strategic Advisory Board of Braemar Energy
Ventures, aNew 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.
Directors
Governance report
Annual Report and Financial Statements 2025
62
Sarah MacAulay
Director
Appointed 2024
Sarah MacAulay has over twenty years of Asian
fund management experience based in both
London and Hong Kong, managing unit trusts and
institutional assets. She was formerly a Director of
Baring Asset Management (Asia) Ltd in Hong Kong,
Asian Investment Manager at Kleinwort Benson
Investment Management and Eagle Star in London.
She is currently Chairman of Schroder Asian Total
Return Investment Company plc and a non-executive
Director of Fidelity Japan Trust plc and Bellevue
Healthcare Trust plc. Until March 2024, Sarah was
Chair of JPMorgan Multi-Asset Growth and Income
plc and Senior Independent Director of abdn China
Investment Company Ltd.
Jonathan Silver 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.
Jonathan Silver
Audit Committee
Chair
Appointed 2022
All of the Directors are members of the Audit Committee.
Magdalene Miller
Director
Appointed 2020
Magdalene Miller 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.
63
Baillie Gifford China Growth Trust plc
Managers and secretaries
The Company has appointed BaillieGifford & Co
Limited, a wholly owned subsidiary of BaillieGifford
& Co, as its Alternative Investment Fund Managers
(‘AIFM’) and Company Secretary. BaillieGifford &Co
Limited has delegated investment management
services to BaillieGifford & Co. BaillieGifford & Co
is an investment management firm formed in 1927
out of the legal firm BaillieGifford, WS, which had
been involved in investment management since 1908.
BaillieGifford is one of the largest investment trust
managers in the UK and currently manages twelve
investment trusts. BaillieGifford 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 BaillieGifford totalled
around £205 billion as at 27March 2025. Based
in Edinburgh, it is one of the leading privately
owned investment management firms in the UK,
with58partners and a staff of around 1,708.
During the year ended 31 January 2025, the
Managers of BaillieGifford China Growth Trust were
Linda Lin and Sophie Earnshaw.
Sophie joined BaillieGifford in 2010 and is an
investment manager in the Emerging Markets
andChina A-share Teams. She has also been
co-manager of the China Fund and a member
oftheInternational 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.
Linda is an investment manager in the China Equities
team and a decision maker on BaillieGifford’s All
China and China A share strategies. She is also
a member of the Long Term Global Growth team.
Linda joined BaillieGifford in September 2014 and
worked in Edinburgh until relocating to Shanghai
in 2019 as Head of the Investment Team. She
became a partner of the firm in May 2022 and is now
based in Edinburgh. Prior to joining BaillieGifford,
Linda spent four years as a global equity analyst
with Aubrey Capital and two years in real estate
investment in China. She graduated BComm in
Accounting and Finance from the University of
Auckland, New Zealand in 2007 and MSc in Finance
and Investment from the University of Edinburgh in
2011. Linda is a native Mandarin speaker.
BaillieGifford & Co and BaillieGifford & Co Limited
are both authorised and regulated by the Financial
Conduct Authority.
Sophie Earnshaw
Investment Manager
Linda Lin
Investment Manager
Governance report
Annual Report and Financial Statements 2025
64
The Directors present their
Reporttogether with the
audited Financial Statements
of the Company for the year to
31January 2025.
Directors’
report
Corporate governance
The Corporate governance report is set out on
pages70 to 76 and forms part of this Report.
Managers and company secretaries
BaillieGifford & Co Limited, a wholly owned
subsidiary of BaillieGifford & Co, was appointed
as the Company’s Alternative Investment Fund
Managers (‘AIFM’) and Company Secretaries on
16 September 2020. BaillieGifford & Co Limited
has delegated portfolio management services to
BaillieGifford & Co. Dealing activity and transaction
reporting has been further sub-delegated to
BaillieGifford Overseas Limited and BaillieGifford
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
bepayable 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.
65
Baillie Gifford China Growth Trust plc
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
BaillieGifford & Co Limited as AIFM and the
delegation of investment management services to
BaillieGifford & 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
TheBank 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 pages 61
and62.
All Directors will retire at the Annual General Meeting
and offer themselves for re-election. 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 provisions, 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.
Governance report
Annual Report and Financial Statements 2025
66
Dividends
The Board recommends a final dividend of 2.20p
perordinary share (2024 – 2.00p). No interim
dividend was declared (2024 – nil). Dividends will
beby way of a final dividend and be not less than
theminimum 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 25 July 2025 to shareholders
on the register at the close of business on 20 June
2025. The ex-dividend date is 19 June 2025.
Share capital
Capital structure
The Company’s capital structure at 31 January
2025 consists of 68,348,151 ordinary shares of 25p
each (2024 – 68,348,151) of which 59,095,680
(2024 – 61,852,282) are allotted and fully paid and
9,252,471 (2024 – 6,495,869) 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.
Dividends
The ordinary shares carry a right to receive
dividends. Interim dividends 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 119 to 122.
Major interests disclosed 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
Number of
ordinary 25p
shares held at
31 January 2025
% of
issue *
City of London Investment
Management
11,460,214 19.4
Rathbone Nominees 3,076,669 5.2
* Ordinary shares in issue excluding treasury shares.
In the period from 31 January 2025 to 27March
2025, the Company was notified that City of London
Investment Management held 10,915,099 shares
(18.5% of the shares in issue as at 27March 2025).
There have been no other changes to the major
interests in the Company’s shares intimated up to
27March 2025.
Analysis of shareholders at 31 January
2025
Number of
shares held
2025
%
2024
Number of
shares held
2024
%
Institutions 19,110,755 32.3 14,871,063 24.0
Intermediaries/
Retail savings
platforms
34,842,353 59.0 42,555,981 68.8
Individuals 3,983,263 6.7 4,254,717 6.9
Marketmakers 1,159,309 2.0 170,521 0.3
59,095,680 100.0 61,852,282 100.0
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 119 to 122. Shareholders who hold shares in
their own name on the main register will be provided
with a form of proxy. If you hold shares 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
buyback shares, and proposed capital reduction
areexplained in more detail below.
67
Baillie Gifford China Growth Trust plc
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
£4,859,626. 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 withoutthe prior
approval of shareholders in GeneralMeeting.
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 £1,472,614 (representing 10% of
the issued ordinary share capital of the Company as
at 27March 2025). This authority will continue until
the conclusion of the Annual General Meeting to be
held in 2026 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 2025, 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 9,143,613
ordinary shares (equivalent to 14.99% of its issued
share capital), such authority to expire at the 2024
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 2026.
Such purchases will only be made at a discount to the
prevailing net asset value.
During the year to 31 January 2025, 2,756,602
shares (2024 – 160,700 shares) were bought back
under the buy-back authority, representing 4.5% of
share capital as at 31 January 2024.
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. an amount equal to the higher of the price of
the last independent trade of an ordinary share
and the highest current independent bid for an
ordinary share on the trading venue where the
purchase is carried out.
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, bythe Board. Your attention is drawn to
Resolution 13 in the Notice of Annual General
Meeting. Thisauthority, 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.
Capital reduction
Special resolution 14 seeks to cancel the entire
amount standing to the credit of the Company’s
share premium account.
The Company has built up a substantial share
premium account owing to the high level of
historic issuance of the shares. This account is
non-distributable. The Company may cancel the
share premium account with such amount credited
to a distributable reserve of the Company following:
(a) approval from the shareholders of the Company
by special resolution; (b) the confirmation of the High
Court of Justice in England and Wales (the Court);
(c) the registration of the Court’s order approving
the Capital Reduction (the Court Order) and (d) the
Capital Reduction not otherwise being unlawful.
Further details are set out in the Notes to the Notice
of Annual General Meeting on page 116.
Governance report
Annual Report and Financial Statements 2025
68
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, 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
ofthatinformation.
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
re-appointment 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 31March 2025.
Subsequent to the year-end, the Company has
repurchased an additional 191,121 shares, placed
into Treasury, for a total consideration of £457,570.
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 07 to 59.
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 reason
set out above, the Company considers itself to be
a low energy user and has no energy and carbon
information to disclose under the SECR regulations.
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
Nicholas Pink
Chair
31 March 2025
69
Baillie Gifford China Growth Trust plc
Governance report
Annual Report and Financial Statements 2025
70
Compliance
The Board confirms that the Company has complied
throughout the year under review with the relevant
provisions of the UK 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 page 79).
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, discount/premium
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.
Corporate
governance report
The Board is committed to
achieving and demonstrating
high standards of Corporate
Governance. This statement
outlines how the principles of the
2018 UK Corporate Governance
Code (the ‘UK Code’) which
can be found at frc.org.uk and
the relevant principles of the
Association of Investment
Companies (‘AIC’) Code of
Corporate Governance (the ‘AIC
Code’) published in 2019 were
applied throughout the financial
year. The AIC Code provides
a framework of best practice
forinvestment companies
andcanbe found at theaic.co.uk.
71
Baillie Gifford China Growth Trust plc
Board of Directors
Comprises independent
non-executive directors
Chair: Nicholas Pink
Senior Independent Director:
Magdalene Miller
Audit Committee
Chair: Jonathan Silver
Purpose: The primary purpose of the
Company’s Audit Committee is to provide
oversight of the financial reporting
process, the audit process, the Company’s
system of internal controls, compliance
with laws and regulations.
Nomination
Committee
Chair: Nicholas Pink
Purpose: The main purpose of the
Nomination Committee is to oversee Board
recruitment and succession planning as
well as Board appraisals including
identifying training needs.
Third party service providers appointed
by the Board
Alternative Investment Fund Manager and Company Secretary:
BaillieGifford & Co Limited
(wholly owned subsidiary of BaillieGifford & Co)
Dealing activity and transaction reporting:
BaillieGifford Overseas Limited and
BaillieGifford Asia (Hong Kong) Limited
The Company does not have a
Management Engagement Committee,
thefunction of a Management
Engagement Committee is performed
bythe Board. That function is to ensure
that the Managers remain suitable to
manage the portfolio, that the
management contract is competitive
andreasonable for the shareholders,
andthat the Company maintains
appropriate administrative and company
secretarial support.
Ernst & Young LLP
Auditor
The Bank of
NewYorkMellon
(International) Limited
Depositary and Custodian
Computershare
Investor Services
PLC
Registrar
JP Morgan
Cazenove
Company broker
Governance report
Annual Report and Financial Statements 2025
72
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’), BaillieGifford & Co
Limited, and, in the context of a Board comprising
only non-executive Directors, there is no chief
executive officer. The Senior Independent Director
isMagdalene Miller.
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
pages 61 to 62.
There is an agreed procedure for Directors to seek
independent professional advice, if necessary, at the
Company’s expense.
Appointments to the Board
The terms and conditions of Directors’ appointments
are set out in formal letters of appointment which are
available for inspection on request.
Under the provisions of the Company’s Articles
of Association, Directors are subject to election
by shareholders at the first AGM after their
appointment. Thereafter, all Directors will retire at
each AGM 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
theindependence or contribution of Directors of
aninvestment trust company, where continuity
andexperience can be a benefit to the Board.
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 2 1 4
Nicholas Pink 4 2 1 4
Tim Clissold 4 2 1 4
Magdalene Miller 4 2 1 4
Sarah MacAulay* 3 1 1 2
Susan Platts-Martin
†
1 1 0 2
Jonathan Silver 4 2 1 4
* Appointed 1 May 2024.
†
Retired 30 April 2024.
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
Board. 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.
TheChair’s appraisal was led by Magdalene Miller,
the Senior Independent Director. The appraisals
73
Baillie Gifford China Growth Trust plc
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.
Board composition
In order to fulfil its obligations, the Board recognises
the importance of having a range of skilled and
experienced Directors, balancing the benefits of
length of service and knowledge of the Company
with the desirability of ensuring regular refreshment
of the Board. The Board reviews its composition
annually.
The following disclosures are provided in respect
of the FCA Listing Rules targets that: i) 40% of a
board should be women; ii) at least one senior role
should be held by a woman; and iii) at least one
board member should be from a non-white ethnic
background, as defined by the Office of National
Statistics criteria. As an externally managed
investment company with no chief executive officer
or chief financial officer, the roles which qualify as
senior under FCA guidance are Chair and Senior
Independent Director (‘SID’). The Board also
considers Audit Committee Chair to represent a
senior role within this context.
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
31January 2025.
Gender Number %
Senior
roles
*
Men 3 60% 2
Women
2
40%
1
Ethnic background Number %
Senior
roles
*
White British or Other White
(including minority white groups)
4 80%
2
Asian/Asian British
1 20
%
1
* As an externally managed investment company with no chief executive
officer or chief financial officer, the roles which qualify as senior under
FCA guidance are Chair and Senior Independent Director (‘SID’). The
Chair is a man and the SID a woman. The Board also considers the role
of Audit Committee Chair to represent a senior role within this context
and this role is performed by a man.
The 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.
All recruitment for new Board members will be
external, through the use of an external recruitment
agency. The recruitment agency will be engaged
to undertake the selection of a list of suitable
candidates for consideration and approval by the
Nominations Committee. The external recruitment
agency will be asked to put forward candidates
withthe desired skillset and also with a diverse
range of backgrounds, cultures and identities.
The Nominations Committee will take the FCA
Listing Rule diversity targets and any other best
practice matters into account when determining
the appropriateness of a candidate and final
appointment.
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.
Governance report
Annual Report and Financial Statements 2025
74
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 80 to 83.
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 77 to 79.
Nomination Committee
The Nomination Committee consists of the whole
Board due to the small size of the Board. Mr Pink is
Chair of the Nomination Committee. The Committee
meets at least annually and at such other times
as may be required. The Committee has written
terms of reference that include reviewing the
Board, identifying and nominating new candidates
for appointment to the Board, Board appraisal,
succession planning and training. The Committee
also considers whether Directors should be
recommended for re-election by shareholders.
The Committee is also responsible for considering
Directors’ potential conflicts of interest and for
making recommendations to the Board on whether
or not the potential conflicts should be authorised.
The Committee’s terms of reference are available on
request from the Company and on the Company’s
website: bailliegiffordchinagrowthtrust.com
Internal controls and risk management
The Directors acknowledge their responsibility
forthe 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). BaillieGifford & 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. BaillieGifford & 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 BaillieGifford & 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
theserisks.
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.
75
Baillie Gifford China Growth Trust plc
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
FundManagers Regulations, The Bank of New York
Mellon (International) Limited acts as the Company’s
Depositary and BaillieGifford & 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 BaillieGifford’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
areport 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 page 38), are
monitored and the sensitivity of the portfolio to
keyrisks 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 BaillieGifford’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 35 to 41 and contained in note 1 to the
Financial Statements. The Board has, in particular,
considered the impact of increasing geopolitical
tensions and conflicts, including increased
macroeconomic concerns alongside 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, and the current revolving credit facility
expires in April 2026. 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
theCompany.
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 34, that the Company will
continue in operational existence until 30 April 2026,
which is for a period of at least 12 months from the
date of approval of these Financial Statements.
Governance report
Annual Report and Financial Statements 2025
76
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 page 132). All correspondence
addressed to the Chair is dealt with directly by
theChair.
The Company’s Annual General Meeting provides
a further forum for communication with all
shareholders. The level of proxies lodged for
eachresolution is announced at the meeting and
is published at bailliegiffordchinagrowthtrust.com
subsequent to the meeting. The notice period
for theAnnual 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 BaillieGifford & 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
toconsider how ESG factors could impact
long-term investment returns. The Managers’
report on ESG onpages 45 to 51 provides more
detail. Thestatement of compliance with the UK
Stewardship Code can be found on the Managers’
website at bailliegifford.com. BaillieGifford & Co,
the Managers, has considered the Sustainable
Finance Disclosure Regulation (‘SFDR’) and further
details can be found on page 128.
The Managers are signatories to the United Nations
Principles for Responsible Investment 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 Managers have 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 portfolio is provided in
theManagers’ report on ESG on pages 45 and 51.
BaillieGifford’s Task Force on Climate-
Related Financial Disclosures (‘TCFD’) Climate
Reportisavailable on the Managers’ website
atbailliegifford.com. A Company specific
TCFD climate report is also available on the
Company’s page of the Company’s website at
bailliegiffordchinagrowthtrust.com. The Managers,
BaillieGifford & Co, are signatories to the CDP
(formerly the Carbon Disclosure Project).
On behalf of the Board
Nicholas Pink
Chair
31 March 2025
77
Baillie Gifford China Growth Trust plc
The Audit Committee consists
of all Directors. The members
of the Committee consider that
they have the requisite financial
skills and experience to fulfil the
responsibilities of the Committee.
Jonathan Silver is the Chair
oftheCommittee.
Audit
Committee report
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 72).
At least once a year the Committee meets with the
external Auditor without any representatives of the
Managers being present.
Main activities of the Committee
The Committee met four times during the year to
31January 2025, with two of the meetings focussed
on the review of the Company’s private company
valuation. BaillieGifford attended all meetings.
BaillieGifford & Co’s Internal Audit and Compliance
Departments and the AIFM’s permanent risk function
provided reports on their monitoring programmes for
the two meetings focussed on governance matters
and the approval of the financial statements, Ernst
& Young LLP, the external Auditor attended both of
those meetings.
The following significant issues have been
considered in relation to the Annual Report and
Accounts for the year ended 31 January 2025:
Valuation and existence
The prices of all the listed investments at 31January
2025 were agreed to external price sources. The
majority of the investments are in listed securities and
market prices are readily available from independent
external pricing sources. The Committee reviewed
the Managers’ valuation policy for investments in
unlisted companies (as described on page 55) and
approved the valuation of the unlisted and suspended
investments following a detailed review of the valuation
of the investments 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 from the Company’s custodian.
Governance report
Annual Report and Financial Statements 2025
78
Recognition of income
Income received is accounted for in line with
theCompany’s accounting policy. There were
nosignificant 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 35 to 41.
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
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 Company announced the introduction of a
performance related tender offer (the ‘Conditional
Tender Offer’) in November 2024. In the event that the
Company’s net asset value total return does not exceed
the benchmark total return (MSCI China All Shares
index in sterling terms) over the period beginning from
the NAV announcement in relation to 29 November
2024 to the NAV announcement in relation to
30November 2028, then the Conditional Tender Offer
will be held as soon as practicable thereafter.
The Committee also reviewed the Viability statement
on page 34 and the statement on going concern
on page 75 including the impact of 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.
Other Matters Considered During the Year
During the year, the Audit Committee also
considered the following:
•
Independent Auditor: Ernst & Y
oung (‘EY’) were
re-appointed as Independent Auditor for the year
ended 31 January 2025. Details are provided on
page 79 in the section External Auditor.
•
Compliance with sec
tion 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 c
yber 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.
•
Ser
vice 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
BaillieGifford & Co whereby their staff may,
in confidence, raise concerns about possible
improprieties in matters of financial reporting or
other matters.
•
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 thereshould
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.
•
F
air, 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.
79
Baillie Gifford China Growth Trust plc
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 pages 74 and 75. 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 year to 31 January 2025;
•
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 2025.
To assess the effectiveness of the external Auditor,
the Committee reviewed and considered:
•
the Auditor’s fulfilment of the agreed audit plan;
• feedback from the Secretaries on the performance
of the audit team;
•
the Audit Quality Inspection Report from the FRC;
and
•
detailed discussion with audit personnel to
challenge audit processes and deliverables.
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
oftheaudit.
Ernst & Young LLP has been engaged as the
Company’s Auditor since 2020. The audit Partner
responsible for the audit is 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. Ahmer Huda is the lead audit partner, has
held the role since 2024 and will continue as audit
partner until the conclusion of the 2029 audit.
Ernst & Young LLP has confirmed that it believes it
is independent within the meaning of regulatory and
professional requirements and that the objectivity
ofthe 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.
Accountability and audit
The respective responsibilities of the Directors
and the Auditor in connection with the Financial
Statements are set out on pages 84 to 85.
On behalf of the Board
Jonathan Silver
Audit Committee Chair
31 March 2025
Governance report
Annual Report and Financial Statements 2025
80
Directors’
remuneration report
Statement by the Chair
The Directors’ Remuneration Policy is subject to
shareholder approval every three years or sooner
ifanalteration to the policy is proposed. The
Remuneration Policy which is set out below was last
approved at the Annual General Meeting in June
2023 and no changes are proposed to the policy
atthe Annual General Meeting to be held on
19June2025.
The Board reviewed the level of fees during the year
and considered peer group comparatives, and it was
agreed that with effect from 1 February 2025, the
non-executive Director fee should increase by£1,000
to £28,000. The additional fee for the Chairman of
the Audit Committee and the additional fee for the
Senior Independent Director should increase by £500
to£5,500 and £1,500 respectively.
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 Boarddoes not believe that this is appropriate
fornon-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.
This report has been prepared in
accordance with the requirements
of the Companies Act 2006.
81
Baillie Gifford China Growth Trust plc
Expected
fees for
year ending
31 January 2026
£
Fees paid
for the year to
31 January 2025
£
Chair’s fee 44,000 44,000
Non-executive Director’s fee 28,000 27,000
Additional fee for the Chairman of the Audit Committee 5,500 5,000
Additional fee for Senior Independent Director 1,500 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
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
toreceive.
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 2025 together with the
expected fees payable in respect of the year ending
31 January 2026 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.
Governance report
Annual Report and Financial Statements 2025
82
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.
Wheredisclosures have been audited, they are indicated as such. The Auditor’s opinion is included
intheIndependent Auditor’s report on pages 87 to 94.
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
2025
Fees
£
2025
Taxable
benefits *
£
2025
Total
£
2024
Fees
£
2024
Taxable
benefits *
£
2024
Total
£
Nicholas Pink
†
39,750 1,836 41,586 10,833 1,843 12,676
Susan Platts-Martin
#
11,000 621 11,621 43,000 4,953 47,953
Tim Clissold 27,000 1,392 28,392 26,000 2,484 28,484
Magdalene Miller
‡
28,000 1,612 29,612 26,626 2,592 29,218
Sarah MacAulay
¶
20,250 510 20,760 – – –
Andrew Robson
§
– – – 12,021 687 12,708
Jonathan Silver
^
32,000 619 32,619 29,128 2,076 31,204
158,000 6,590 164,590 147,608 14,635 162,243
Annual percentage change in remuneration
This represents the annual percentage change in the entire remuneration paid to the Directors.
Name
% from
2024 to
2025
% from
2023 to
2024
% from
2022 to
2023
% from
2021 to
2022
% from
2020 to
2021
Nicholas Pink
†
228 – – – –
Susan Platts-Martin
#
(76) 11 2 (17) 24
Tim Clissold
**
– 10 206 – –
Dermot McMeekin
††
– – – (61) –
Magdalene Miller
‡
1 11 2 492 –
Sarah MacAulay
¶
– – – – –
Chris Ralph
^^
– – (59) 7 –
Andrew Robson
§
(97) (60) 2 12 –
Jonathan Silver
^
5 296 – – –
* Comprises expenses incurred by Directors in the course of travel to attend Board and Committee meetings.
†
Mr Pink was appointed as a Director on 1 September 2023 and as Chair on 1 May 2024.
#
Ms Platts-Martin retired as Chair on 30 April 2024 and was paid an additional £10,000 for the year to 31 January 2021 to reflect the
exceptional work done in relation to the selection of the new Managers.
‡
Ms Miller was appointed as a Director on 26 November 2020 and was appointed Senior Independent Director on 15 June 2023.
¶
Ms MacAulay was appointed as a Director on 1 May 2024.
§
Mr Robson retired as a Director on 15 June 2023.
^
Mr Silver was appointed as a Director on 1 September 2022 and appointed as Audit Chair on 15 June 2023.
**
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.
83
Baillie Gifford China Growth Trust plc
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, 99.4% were in favour, 0.5%
were against and votes withheld were 0.1%. At the
last Annual General Meeting at which the Directors’
Remuneration Policy was considered (June 2023),
99.4% of the proxy votes received were in favour,
0.5% were against and 0.1% votes were withheld.
Relative importance of spend on pay
The table below shows the actual expenditure
(feesand taxable benefits) during the year
in relationto Directors’ remuneration and
distributionsto shareholders.
2025
£’000
2024
£’000
Change
%
Directors’ remuneration 165 162 1.9
Share buy backs 5,503 299 1,740.5
Dividends 1,220 1,054 15.7
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. Thebenchmark was chosen for comparison
purposes as it is the index against which the
Company measures its performance.
Directors’ interests (audited)
The Directors at the end of the year under review, and their interests in the Company, are shown in
thefollowing table. There is no requirement under the Company’s Articles of Association for Directors
tohold shares in the Company. There have been no changes intimated in the Directors’ interests up to
31March2025.
Name
Nature
of interest
Ordinary 25p
shares held at
31 January
2025
Ordinary 25p
shares held at
31 January
2024
Nicholas Pink Beneficial 26,158 25,992
Tim Clissold Beneficial 50,000 50,000
Magdalene Miller Beneficial 10,000 2,300
Sarah MacAulay* Beneficial 27,000 –
Jonathan Silver Beneficial 25,000 25,000
* Sarah MacAulay was appointed to the Board on 1 May 2024.
Performance graph
(figures rebased to 100 at 31 January 2015)
Cumulative to 31 January
20252015 2017 2019 2021 2023
Source: LSEG and relevant underlying index providers. See disclaimer
on page 127.
All figures are total returns (assuming net dividends are reinvested).
See Glossary of terms and alternative performance measures on pages
129 to 131.
* MSCI China All Shares Index (in sterling terms). Prior to 16 September
2020 the benchmark was MSCI AC Asia ex Pacific Index.
0
300
150
100
50
250
200
● Benchmark* ● Baillie Gifford China Growth Trust’s
share price
Past performance is not a guide to future performance.
Approval
The Directors’ remuneration report on pages 80
to 83 was approved by the Board of Directors and
signed on its behalf on 31 March 2025.
Nicholas Pink
Chair
Governance report
Annual Report and Financial Statements 2025
84
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.
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
theAnnual Report and Financial Statements
aremade available on a website. Financial
Statements are published on the Company’s
websitein accordance with legislation in the
UnitedKingdom governing the preparation
anddissemination of Financial Statements,
whichmay 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
pageofthe Managers’ website.
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.
Underthat law they have elected to prepare
the Financial Statements in accordance with
applicable law and United Kingdom Accounting
Standards, comprising Financial Reporting
Standard 102 ‘TheFinancial Reporting Standard
applicable intheUK and Republic of Ireland’ (FRS
102). Undercompany law the Directors must not
approvethe Financial Statements unless they
aresatisfied that they give a true and fair view ofthe
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
applythem consistently;
•
state whether applicable United Kingdom
Accounting Standards, comprising FRS 102,
havebeen followed, subject to any material
departures disclosed and explained in the
Financial Statements;
•
make judgements and accounting estimates
thatare 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.
Statement of Directors’
responsibilities
in respect of the Annual Report and the Financial Statements
85
Baillie Gifford China Growth Trust plc
Responsibility statement of the Directors
inrespect 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 thedevelopment and performance of the
businessand 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,
businessmodel and strategy.
On behalf of the Board
Nicholas Pink
Chair
31 March 2025
Financial
report
The Financial Statements for the
year to 31 January 2025 are set
out on pages 96 to 114 and have
been prepared in accordance with
FRS 102 ‘The Financial Reporting
Standard applicable in the UK and
Republic of Ireland’.
87
Baillie Gifford China Growth Trust plc
Independent
auditor’s report
to the members of BaillieGifford China Growth Trust plc
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 Company in
conducting the audit.
Opinion
We have audited the financial statements of
BaillieGifford China Growth Trust plc (“the
Company”) for the year ended 31 January 2025
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 2025 and of its profit 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
Financial report
Annual Report and Financial Statements 2025
88
• 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 and in turn impacting the
goingconcern.
•
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.
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 2026,
which is at least 12 months from the date these
financial statements were authorised for issue.
In relation to the Company’s ‘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.
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.
•
Inspecting the Directors’ assessment of going
concern, including the revenue forecast, for
the period to 30 April 2026 which is at least 12
months from the date these financial statements
were authorised for issue.
•
Reviewing the factors and assumptions, including
the impact of the current economic environment
and other significant events that could give rise to
market volatility, as applied to the revenue forecast
and the liquidity assessment of the investments
and determined, through testing of the
methodology and calculations, that the methods,
inputs and assumptions utilised are appropriate to
be able to make an assessment for the Company.
•
Consideration of the mitigating factors included in
the revenue forecasts 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 in order to cover working capital
requirements should revenue decline significantly.
89
Baillie Gifford China Growth Trust plc
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 £1.53m 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 specialist.
Climate change
Stakeholders are increasingly interested in how
climate change will impact Companies. The
Company has determined that the most significant
future impacts from climate change on its operations
will be from how climate change could affect the
Company’s investments and overall investment
process. This is explained on page 38 under the
principal and emerging risks section of the annual
report. This disclosure forms part of the ‘Other
information’, rather than the audited financial
statements. Our procedures on these unaudited
disclosures therefore consisted solely of considering
whether they are materially inconsistent with the
financial statements or our knowledge obtained in
the course of the audit or otherwise appear to be
materially misstated, in line with our responsibilities
on ‘Other information’.
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 that there was no further
impact of climate change to be taken into account
other than the unlisted investment as the listed
investments are fair 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.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, 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.
Financial report
Annual Report and Financial Statements 2025
90
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 items in the Income
Statement (as described on page 78 in the Audit
Committee’s Report and as per the accounting
policy set out on pages 101 and 102)
The total revenue for the year to 31 January
2025 was £2.72m (2024: £2.60m), consisting
primarily of dividend income from listed
investments.
The Company received 5 special dividends
amounting to £1.95m (2 special dividends
amounting to £0.08m classified as revenue,
and 3 special dividends amounting to £1.87m
classified as capital).
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. For 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’.
For the five special dividends received by the
Company, we checked the appropriateness of
classification as revenue or capital 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 incorrect valuation
or ownership of the investment
portfolio.
91
Baillie Gifford China Growth Trust plc
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 77
in the Audit Committee’s Report and as per the
accounting policy set out on pages 101 and 102).
The valuation of the investment portfolio
at 31January 2025 was £158.68m (2024:
£124.75m) consisting of listed equities with an
aggregate value of £144.06m (2024: £114.20m)
and unlisted and suspended equity investments
with an aggregate value of £14.62m (2024:
£10.55m).
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 fair value of the suspended investment is
the last traded price, adjusted for the estimated
impact of suspension on the investee company.
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 and suspended
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 Private Companies Valuation Group
and the Directors’ process for review of the
unlisted and suspended 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 report 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 and suspended investments
held as at the year-end we utilised our specialist
Valuations team to review and challenge the
valuation. Thisincluded:
• Reviewing the valuation papers prepared by
the Manager as at the year end;
• For the unlisted investment, assessing
whether the valuation has been performed in
line with the accounting policy and the IPEV
guidelines;
• Assessing the appropriateness of the data
inputs and challenging the assumptions used
to support the valuations;
• 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 and
suspended investments; and
• Determining a fair value range for
the valuation and assessing whether
Management’s valuation is within this range.
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 2025 to an
independent confirmation received directly from
the Company’s Depository.
The results of our procedures
identified no material
misstatements in relation to
the risk of incorrect valuation
or ownership of the investment
portfolio.
Financial report
Annual Report and Financial Statements 2025
92
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
£1.53 million (2024: £1.19 million), which is 1%
(2024: 1%) of shareholders’ funds. We believe that
shareholders’ funds provides us with materiality
aligned to the key measurement of the Company’s
performance.
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% (2024: 75%) of our planning
materiality, namely £1.15m (2024: £0.89m). Wehave
set performance materiality at this percentage
due to past experience of the audit that indicates
a lower risk of misstatements, both corrected
anduncorrected.
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 £0.08m (2024:
£0.08m), being 5% of net return on ordinary
activities before taxation.
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 £0.07m (2024: £0.06m), 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
theCompanies 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;
93
Baillie Gifford China Growth Trust plc
Matters on which we are required to report
by exception
In the light of the knowledge and understanding
ofthe 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 UK 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 page 75;
•
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 34;
•
Director’s statement on whether it has a
reasonable expectation that the Company will
be able to continue in operation and meets its
liabilities set out on page 78;
•
Directors’ statement on fair, balanced and
understandable set out on page 85;
•
Board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on page 35;
•
The section of the annual report that describes the
review of effectiveness of risk management and
internal control systems set out on page 74; and;
•
The section describing the work of the audit
committee set out on pages 77 to 79.
Responsibilities of Directors
As explained more fully in the Directors’
responsibilities statement set out on pages 84 and
85, 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 orerror.
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
ofthefinancial 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.
Financial report
Annual Report and Financial Statements 2025
94
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 UK Listing Rules, the UK Corporate
Governance Code, The Companies (Miscellaneous
Reporting) Regulations 2018, 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 fraud risks 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
unlisted and suspended investments 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
www.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 six years, covering the years ending 31 January
2020 to 31 January 2025.
•
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.
Ahmer Huda (Senior statutory auditor)
forandonbehalf of Ernst & Young LLP,
StatutoryAuditor
London
31 March 2025
95
Baillie Gifford China Growth Trust plc
Financial report
Annual Report and Financial Statements 2025
96
For the year ended 31 January
Notes
2025
Revenue
£’000
2025
Capital
£’000
2025
Total
£’000
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
Gains/(losses) on investments 9 – 40,068 40,068 – (83,606) (83,606)
Currency (losses)/gains 13 – (1) (1) – 105 105
Income 2 2,718 – 2,718 2,599 – 2,599
Investment management fee 3 (246) (737) (983) (255) (765) (1,020)
Other administrative expenses 4 (584) – (584) (523) – (523)
Net return before finance costs
and taxation
1,888 39,330 41,218 1,821 (84,266) (82,445)
Finance costs of borrowings 5 (149) (448) (597) (136) (408) (544)
Net return before taxation 1,739 38,882 40,621 1,685 (84,674) (82,989)
Tax
6
(210) – (210) (187) – (187)
Net return after taxation 1,529 38,882 40,411 1,498 (84,674) (83,176)
Net return per ordinary share 7 2.53p 64.39p 66.92p 2.42p (136.61p) (134.19p)
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 100 to 114 are an integral part of the Financial Statements.
Income
statement
97
Baillie Gifford China Growth Trust plc
As at 31 January As at 31 January
Notes
2025
£’000
2025
£’000
2024
£’000
2024
£’000
Fixed assets
Investments held at fair value through profit or loss 9 158,682 124,751
Current assets
Debtors 10 40 23
Cash and cash equivalents 15 975 926
1,015 949
Creditors
Amounts falling due within one year 11 (6,598) (6,289)
Net current liabilities (5,583) (5,340)
Total assets less current liabilities 153,099 119,411
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 56,154 22,775
Revenue reserve 13 6,993 6,684
Shareholders’ funds 153,099 119,411
Net asset value per ordinary share* 14 259.07p 193.06p
The Financial Statements of BaillieGifford China Growth Trust plc (Company registration number 91798)
were approved and authorised for issue by the Board and were signed on 31 March 2025.
Nicholas Pink
Chair
The accompanying notes on pages 100 and 114 are an integral part of the Financial Statements.
* See Glossary of terms and alternative performance measures on pages 129 to 131.
Balance
sheet
Financial report
Annual Report and Financial Statements 2025
98
For the year ended 31 January 2025
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
Shareholders’ funds at 1 February 2024 17,087 31,780 41,085 22,775 6,684 119,411
Dividends paid during the year 8 – – – – (1,220) (1,220)
Net return after taxation 7 – – – 38,882 1,529 40,411
Ordinary shares bought back into treasury – – – (5,503) – (5,503)
Shareholders’ funds at 31 January 2025 17,087 31,780 41,085 56,154 6,993 153,099
For the year ended 31 January 2024
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
Shareholders’ funds at 1 February 2023 17,087 31,780 41,085 107,748 6,240 203,940
Dividends paid during the year 8 – – – – (1,054) (1,054)
Net return after taxation 7 – – – (84,674) 1,498 (83,176)
Ordinary shares bought back in-to treasury – – – (299) – (299)
Shareholders’ funds at 31 January 2024 17,087 31,780 41,085 22,775 6,684 119,411
The accompanying notes on pages 100 to 114 are an integral part of the Financial Statements.
Statement of
changes in equity
99
Baillie Gifford China Growth Trust plc
* Cash from operations includes dividends received of £2,697,000 (2024 – £2,576,000) and interest received of £21,000 (2024 – £23,000).
The accompanying notes on pages 100 to 114 are an integral part of the Financial Statements.
Cash flow
statement
For the year ended 31 January
Notes
2025
£’000
2025
£’000
2024
£’000
2024
£’000
Net return before taxation 40,621 (82,989)
Adjustments to reconcile company profit before tax to net cash flow from operating activities
Net (gains)/losses on investments 9 (40,068) 83,606
Currency losses/(gains) 1 (105)
Finance costs of borrowings 5 597 544
Other capital movements
Changes in debtors (16) 3
Change in creditors 40 (97)
Taxation
Overseas withholding tax suffered 6 (212) (198)
Overseas withholding tax reclaims received 2 11
Cash from operations* 965 775
Interest paid (534) (541)
Net cash inflow from operating activities 431 234
Cash flows from investing activities
Acquisitions of investments 9 (31,284) (14,521)
Disposals of investments 9 37,421 15,663
Net cash inflow/(outflow) from investing activities 6,137 1,142
Cash flows from financing activities
Equity dividends 8 (1,220) (1,054)
Bank loans repaid
(5,906)
–
Bank loans drawndown
5,970
–
Shares bought back 13 (5,503) (299)
Net cash outflow from financing activities (6,659) (1,353)
Increase/(decrease) in cash and cash equivalents (91) 23
Exchange movements 140 (97)
Cash and cash equivalents at start of year 15 926 1,000
Cash and cash equivalents at end of year 15 975 926
Financial report
Annual Report and Financial Statements 2025
100
01 Principal accounting policies
The Financial Statements for the year to 31 January 2025
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
setout below which are consistent with those applied for
theyear ended 31 January 2024.
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
increasing market volatility due to macroeconomic and
geopolitical concerns, 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 and emerging risks and
other matters, as set out in the Viability Statement on
page 34, that the Company will continue in operational
existence until 30 April 2026, which is for a period of
at least 12months from the date of approval of these
FinancialStatements.
In preparing these Financial Statements the Directors
have considered the impact of climate change risk as a
principal risk as set out on page 38, and have concluded
that it does not have a material impact on the Company’s
investments. They have considered the impact of climate
change on the value of both the listed and unlisted
investments included in the Financial Statements.
Thelisted 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
onthe 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
arevenue and capital nature has been presented.
Financial assets and financial liabilities are recognised
inthe 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
tothe UK’s regulatory environment, are also UK based.
The financial statements are presented in Pounds
Sterling rounded to the nearest thousand, except where
otherwiseindicated.
b. Significant accounting estimates and judgements
The preparation of the Financial Statements requires
theuse of estimates, assumptions and judgements.
Theseestimates, assumptions and judgements affect
thereported 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.
Thekey sources of estimation and uncertainty relate
tothe assumptions used in the determination of the fair
value of the unlisted investment, which are detailed in
note 9 on pages 105 and 107.
Notes to the
Financial Statements
101
Baillie Gifford China Growth Trust plc
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 2022 (‘IPEV Guidelines’)
toeach unlisted investment; and
ii. the Directors’ consideration of whether each fair
valueis 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.
Thisestimate 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
onthe basis of their business characteristics and
growth patterns;
ii. the selection of a revenue metric (either historic
orforecast);
iii. the application of an appropriate discount factor to
reflect the reduced liquidity of unlisted companies
versus their listed peers;
iv. the estimation of the probability assigned to an exit
being through an initial public offering (‘IPO’) or a
company sale;
v. the selection of an appropriate industry benchmark
index to assist with the valuation validation or the
application of valuation adjustments, particularly in the
absence of established earnings or closely comparable
peers; and
vi. the calculation of valuation adjustments derived
frommilestone analysis (i.e. incorporating operational
success against the plan/forecasts of the business into
the valuation).
c. Investments
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 classified 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 the suspended investment 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 (c) replacement cost approach (net assets). The
valuation process 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.
Financial report
Annual Report and Financial Statements 2025
102
e. Income
i. Income from equity investments is brought into
accounton 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
isrecognised on an accruals basis.
iv. Overseas dividends include the taxes deducted
atsource.
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
and75% 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. Long term borrowings, overdrafts 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 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.
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,
beinginvestment business, consequently no business
segmental analysis is provided.
103
Baillie Gifford China Growth Trust plc
02 Income
2025
£’000
2024
£’000
Income from investments
Overseas dividends 2,697 2,576
Other income
Interest 21 23
Total income 2,718 2,599
03 Investment management fee
2025
Revenue
£’000
2025
Capital
£’000
2025
Total
£’000
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
Investment management fee 246 737 983 255 765 1,020
Details of the Investment Management Agreement are disclosed on pages 64 and 65. BaillieGifford & 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.
04 Other administrative expenses
2025
£’000
2024
£’000
General administrative expenses 196 183
Directors’ fees (see Directors’ remuneration report on page 80) 158 148
Marketing
* 99 71
Custody fees
37 29
Registrar fees
31 28
Depositary fees
13 15
Auditor’s remuneration – statutory audit of Company’s Annual Financial Statements 50 49
584 523
* The Company is part of a marketing programme which includes all the Investment Trusts managed by the Managers. 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 Managers. The Managers matches the Company’s marketing contribution and provides the resource to manage and run the programme.
05 Finance costs of borrowing
2025
Revenue
£’000
2025
Capital
£’000
2025
Total
£’000
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
Interest on bank loans 149 448 597 136 408 544
Financial report
Annual Report and Financial Statements 2025
104
06 Tax on ordinary activities
2025
Revenue
£’000
2025
Capital
£’000
2025
Total
£’000
2024
£’000
2024
£’000
2024
£’000
Analysis of charge in year
Corporation tax repayment from HMRC – – – (11) – (11)
Overseas withholding taxation 210 – 210 198 – 198
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
25% (2024 – 24%)*. The differences are
explained below:
Net return before taxation 1,739 38,882 40,621 1,685 (84,674) (82,989)
Net return on ordinary activities multiplied by
the standard rate of corporation tax in the UK
of 25% (2024 – 24%)
435 9,721 10,156 405 (20,322) (19,917)
Effects of:
Capital returns not taxable – (10,017) (10,017) – 20,040 20,040
Income not taxable (674) – (674) (619) – (619)
Overseas withholding tax incurred 212 – 212 198 – 198
Taxable losses in year not utilised 239 296 535 214 282 496
Tax repayment received (2) – (2) (11) – (11)
Revenue tax charge for the year 210 – 210 187 – 187
* A tax rate of 24% reflects the increase in the UK corporation tax rate from 19% to 25% from 1 April 2023.
As an investment trust, the Company’s capital gains are not taxable.
Factors that may affect future tax charges
At 31 January 2025 the Company had a potential deferred tax asset of £7, 0 73,000 (2024 – £6,518,000) 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% (2024 – 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.
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.
The decision of the First Tier Tribunal (FTT) in the Post Prudential case was issued in December 2021 and was largely in favour
of the claimants. However, many of the decisions of the FTT were appealed by HMRC. Subsequently in January 2024 the Upper
Tribunal (UT) issued a further judgement overturning some but not all the FTT’s decisions. HMRC and the claimants appealed the
UT’s decision to the Court of Appeal which was heard in January 2025. The judgement has not been issued 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.
105
Baillie Gifford China Growth Trust plc
07 Net return per ordinary share
2025
Revenue
2025
Capital
2025
Total
2024
Revenue
2024
Capital
2024
Total
Net return per ordinary share 2.53p 64.39p 66.92p 2.42p (136.61p) (134.19p)
Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £1,529,000 (2024 –
£1,498,000), and on 60,389,282 (2024 – 61,981,380) 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 gain for the financial year of £38,882,000 (2024 – loss of £84,674,000)
and on 60,389,282 (2024 – 61,981,380) ordinary shares, being the weighted average number of ordinary shares in issue during
eachyear.
There are no dilutive or potentially dilutive shares in issue.
08 Ordinary dividends
2025 2024 2025
£’000
2024
£’000
Amounts recognised as distributions in the period:
Previous year’s final dividend (paid 24 July 2024) 2.00p 1.70p 1,220 1,054
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
ofdividends for the year is £1,529,000 (2024 – £1,498,000).
2025 2024 2025
£’000
2024
£’000
Dividends paid and proposed in the period:
Proposed final dividend per ordinary share
(payable 25 July 2025)
2.20p 2.00p 1,296 1,229
09 Investments
As at 31 January 2025
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Securities
Listed equities 144,059 – – 144,059
Suspended equities* – – 194 194
Unlisted equities – – 14,429 14,429
Total financial asset investments 144,059 – 14,623 158,682
As at 31 January 2024
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Securities
Listed equities 114,200 – – 114,200
Unlisted equities – – 10,551 10,551
Total financial asset investments 114,200 – 10,551 124,751
Investments in securities are financial assets held 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.
* New Horizon Health was a Listed equity from 1 February 2024 until suspension on 28 March 2024.
Financial report
Annual Report and Financial Statements 2025
106
09 Investments (continued)
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 100. The Company’s unlisted
ordinary share investment at 31 January 2025 was valued using the market approach using comparable traded multiples.
Asensitivity analysis of the unlisted security is on page 116. During the year, a listed equity investment with a fair value at
31January 2024 of £449,000 was transferred from Level 1 to Level 3. The shares were suspended and a write-down from the last
traded price was applied, to reflect the reputational impact of the suspension on the underlying business.
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 56. 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 2025
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 n/a 8,212 14,429 Nil Information not publicly available*
As at
31 January 2024
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
Latest
Financial
Statements
ByteDance Social Media n/a 8,212 10,551 Nil Information not publicly available*
* Confidentiality agreements prevent the disclosure of this information.
Listed
equities
£’000
Suspended
equities
£’000
Unlisted
equities *
£’000
Total
£’000
Cost of investments held at 1 February 2024 211,376 1,515 8,212 221,103
Unrealised holding (losses)/gains at 1 February 2024 (97,625) (1,066) 2,339 (96,352)
Value of investments held at 1 February 2024 113,751 449
†
10,551 124,751
Analysis of transactions during the year:
Purchases at cost 31,284 – – 31,284
Sales proceeds received (37,421) – – (37,421)
Realised losses on sales (23,144) – – (23,144)
Changes in investment holding gains/(losses) 59,589 (255) 3,878 63,212
Value of investments held at 31 January 2025 144,059 194 14,429 158,682
Cost of investments held at 31 January 2025 182,095 1,515 8,212 191,822
Investment holding (losses)/gains at 31 January 2025 (38,036) (1,321) 6,217 (33,140)
Value of investments at 31 January 2025 144,059 194 14,429 158,682
* The unlisted security investment represents a holding in ByteDance.
† New Horizon Health was a Listed equity from 1 February 2024 until suspension on 28 March 2024.
107
Baillie Gifford China Growth Trust plc
09 Investments (continued)
The company received £37,421,000 (2024 – £15,663,000) from investments sold in the year. The book cost of these investments
when they were purchased was £60,565,000 (2024 – £29,408,000). 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. The purchases and sales proceeds
figures above include transaction costs of £35,000 (2024 – £13,000) and £47,000 (2024 – £22,000) respectively.
2025
£’000
2024
£’000
Net losses on investments
Losses on sales (23,144) (13,745)
Changes in investment holding gains/(losses) 63,212 (69,861)
40,068 (83,606)
10 Debtors
2025
£’000
2024
£’000
Due within one year:
Accrued income and prepaid expenses 40 23
40 23
None of the above debtors are investments classified as held at fair value through profit or loss. The carrying amount of debtors
isa reasonable approximation of fair value.
11 Creditors – amounts falling due within one year
2025
£’000
2024
£’000
The Royal Bank of Scotland (International) Limited loan 6,094 5,890
Investment management fee
261 207
Other creditors and accruals 243 192
6,598 6,289
None of the above creditors are financial liabilities held at fair value through profit or loss. At 31 January 2025 borrowings of
£6.1m (US$7. 5 million) (2024 – £5.9 million (US$7.5 million)) were drawn down under a two year US$25 million revolving credit
facility with The Royal Bank of Scotland (International) Limited with a maturity date of 11 April 2026. 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;
ii. The Company’s adjusted portfolio value is not less than £50,000,000; and
iii. Eligible investments held shall not be less than 40 in number.
12 Share capital
2025
Number
2025
£’000
2024
Number
2024
£000
Allotted, called up and fully paid ordinary shares of 25p each 59,095,680 14,774 61,852,282 15,463
Treasury shares of 25p each 9,252,471 2,313 6,495,869 1,624
Total 68,348,151 17,087 68,348,151 17,087
In the year to 31 January 2025 no shares were issued from treasury (2024 – no 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 2025 the
Company had authority to buy back 7,241,206 ordinary shares. During the year to 31 January 2025, no ordinary shares (2024 –
nil) were bought back for cancellation and 2,756,602 ordinary shares (2024 – 160,700) 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
Annual Report and Financial Statements 2025
108
13 Capital and reserves
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
realised
£’000
Capital
reserve
unrealised
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 February 2024 17,087 31,780 41,085 119,089 (96,314) 6,684 119,411
Net losses on sales
of investments
– – – (23,144) – – (23,144)
Changes in investment
holding gains
– – – – 63,212 – 63,212
Exchange differences – – – 140 – – 140
Exchange differences
on bank loans
– – – (6) (135) – (141)
Ordinary shares
bought back
– – – (5,503) – – (5,503)
Investment management
fee charged to capital
– – – (737) – – (737)
Finance costs of borrowings
charged to capital
– – – (448) – – (448)
Dividends paid in year – – – – – (1,220) (1,220)
Revenue return after
taxation
– – – – – 1,529 1,529
At 31 January 2025 17,087 31,780 41,085 89,391 (33,237) 6,993 153,099
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
realised
£’000
Capital
reserve
unrealised
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 February 2023 17,087 31,780 41,085 134,186 (26,438) 6,240 203,940
Net losses on sales
of investments
– – – (13,745) – – (13,745)
Changes in investment
holding gains
– – – – (69,861) – (69,861)
Exchange differences – – – (97) – – (97)
Exchange differences
on bank loans
– – – 217 (15) – 202
Ordinary shares
bought back
– – (299) – – (299)
Investment management
fee charged to capital
– – – (765) – – (765)
Finance costs of borrowings
charged to capital
– – – (408) – – (408)
Dividends paid in year – – – – – (1,054) (1,054)
Revenue return after
taxation
– – – – – 1,498 1,498
At 31 January 2024 17,087 31,780 41,085 119,089 (96,314) 6,684 119,411
The capital reserve as at 31 January 2025 is £56,154,000 and is shown in the above table as capital reserve realised £89,391,000
and capital reserve unrealised (£33,237,000). The capital reserve unrealised includes investment holding losses of£33,140
,000
(2024 – losses of £96,352,000).
Under the terms of the Company’s Articles of Association, sums standing to the credit of the realised 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 realised in the table above, are distributable.
109
Baillie Gifford China Growth Trust plc
14 Shareholders’ funds per ordinary share
2025 2024 2025
£’000
2024
£’000
Shareholders’ funds 259.07p 193.06p 153,099 119,411
Net asset value per ordinary share is based on the net assets as shown above and 59,095,680 (2024 – 61,852,282) ordinary
shares, being the number of ordinary shares in issue at the year end, excluding shares held in treasury. At 31 January 2025 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
2024
£’000
Cash flows
£’000
Exchange
movement
£’000
31 January
2025
£’000
Cash and cash equivalents 926 (91) 140 975
Loans due within one year (5,890) (63) (141) (6,094)
(4,964) (154) (1) (5,119)
1 February
2023
£’000
Cash flows
£’000
Exchange
movement
£’000
31 January
2024
£’000
Cash and cash equivalents 1,000 23 (97) 926
Loans due within one year (6,092) – 202 (5,890)
(5,092) 23 105 (4,964)
16 Contingent liabilities, guarantees and financial commitments
There were no contingent liabilities, guarantees or financial commitments at the year end (2024 – none).
17 Transactions with related parties and the managers and secretaries
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 pages 80 to 83. 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 BaillieGifford & Co Limited is set out in note 3 on page 103 and the amount accrued is set out in
note11 on page 107. Details of the Investment Management Agreement are set out on pages 64 and 65.
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
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 56 to 58.
Financial report
Annual Report and Financial Statements 2025
110
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 2025
Investments
£’000
Cash and
deposits
£’000
Bank loans
£’000
Debtors
and creditors
£’000
Net
exposure
£’000
US dollar 21,247 895 – – 22,142
Hong Kong dollar 85,169 – (6,094) (84) 78,991
Chinese renminbi 51,029 49 – – 51,078
Taiwanese dollar 1,237 11 – – 1,248
Total exposure to currency risk 158,682 955 (6,094) (84) 153,459
Sterling – 20 – (380) (360)
158,682 975 (6,094) (464) 153,099
At 31 January 2024
Investments
£’000
Cash and
deposits
£’000
Bank loans
£’000
Debtors
and creditors
£’000
Net
exposure
£’000
US dollar 13,353 737 (5,890) (21) 8,179
Hong Kong dollar 62,593 – – – 62,593
Chinese renminbi 46,687 155 – – 46,842
Taiwanese dollar 2,118 – – – 2,118
Total exposure to currency risk 124,751 892 (5,890) (21) 119,732
Sterling – 34 – (355) (321)
124,751 926 (5,890) (376) 119,411
Currency Risk Sensitivity
At 31 January 2025, 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 2024.
2025
£’000
2024
£’000
US dollar 2,214 818
Hong Kong dollar 7,899 6,259
Chinese renminbi 5,108 4,684
Taiwanese dollar 125 212
15,346 11,973
111
Baillie Gifford China Growth Trust plc
18 Financial instruments (continued)
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 2025, the majority of the Company’s assets were non-interest bearing, and there was exposure to
interest bearing liabilities through the loan agreement.
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
The interest rate risk profile of the Company’s financial liabilities at 31 January was:
2025
£’000
2024
£’000
Floating rate – US$ denominated – 5,890
Floating rate – HKD denominated 6,094 –
6,094 5,890
Maturity profile
The maturity profile of the Company’s financial liabilities at 31 January was:
2025
£’000
2024
£’000
In less than three months
Repayment of loans 6,094 5,890
Interest on loan 84 21
(6,178) 5,911
Interest rate risk sensitivity
An increase of 1% in interest rates, with all other variables being held constant, would have decreased the Company’s net assets
for the year to 31 January 2025 by £63,000 (year to 31 January 2024 – £53,000). A decrease of 1% 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.
Financial report
Annual Report and Financial Statements 2025
112
18 Financial instruments (continued)
Other price risk sensitivity
A full list of the Company’s investments is shown on pages 56 to 58.
90.8% (2024 – 91.5%) of the Company’s net assets are invested in Level 1 quoted equities. A 10% increase in quoted equity
valuations at 31 January 2025 would have increased total net assets and net return on ordinary activities after taxation by
£14,425,000 (2024 – £11,420,000 ). A decrease of 10% would have had an equal but opposite effect.
9.1% (2024 – 8.5%) of the Company’s net assets are invested in an unlisted security. A 25% increase in the fair value at 31 January
2025 would have increased total net assets and net return on ordinary activities after taxation by £3,607,000 (2024 – £2,638,000).
A decrease of 25% would have had an equal but opposite effect. 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 100 and 101). 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. Thetable also provides the range of values for the key
unobservable inputs.
0.1% (2024 – £nil) of the Company’s net assets are invested in an suspended security. A 25% increase in the fair value
at 31January 2025 would have increased total net assets and net return on ordinary activities after taxation by £48,000
(2024–£nil). A decrease of 25% would have had an equal but opposite effect.
As at
31 January 2025 Significant unobservable inputs*
Valuation
technique
Fair value of
investments
£’000
Key
unobservable
inputs
Other
unobservable
inputs Range
Sensitivity
%
Sensitivity to changes in
significant unobservable inputs
Market approach
using comparable
traded multiples
14,429 Enterprise
value /
Last twelve
months ( EV/
LTM) revenue
multiple
a,b,c,d 1.3x – 9.9x 10% If EV/LTM multiples changed
by +/- 10%, the fair value
would change by £1,151,741 and
(£1,388,422)
Discount for
lack of liquidity
e 10% 10% If the illiquidity discount is
changed by +/- 10%, the fair
value would change by £160,445
and (£160,212)
As at
31 January 2024 Significant unobservable inputs*
Valuation
technique
Fair value of
investments
£’000
Key
unobservable
inputs
Other
unobservable
inputs Range
Sensitivity
%
Sensitivity to changes in
significant unobservable inputs
Market approach
using comparable
traded multiples
10,551 Enterprise
value /
Last twelve
months ( EV/
LTM) revenue
multiple
a,b,c,d 1.23x –
7.22x
10% If EV/LTM multiples changed
by +/- 10%, the fair value
would change by £918,101 and
(£918,497)
Discount for
lack of liquidity
e 10% 10% If the illiquidity discount is
changed by +/- 10%, the fair
value would change by £117,040
and (£117,436)
* 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 101.
113
Baillie Gifford China Growth Trust plc
18 Financial instruments (continued)
Significant unobservable inputs (continued)
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.
c. Selection of comparable companies
The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance
of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable
companies are the industry sector in which they operate, the geography of the company’s operations, the respective revenue and
earnings growth rates and the operating margins. Typically, between 4 and 10 comparable companies will be selected for each
investment, depending on how many relevant comparable companies are identified. The resultant revenue or earnings multiples
orshare price movements derived will vary depending on the companies selected and the industries they operate in.
d. Estimated sustainable earnings
The selection of sustainable revenue or earnings will depend on whether the company is 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 the
y
falldue. Liquidity risk is not significant as the majority of the Company’s assets are in investments that are readily realisable.
TheCompany’s holding in an unlisted investment, which is not considered to be readily realisable, amounts to 9.1% of net assets
at 31 January 2025.
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 111.
Financial report
Annual Report and Financial Statements 2025
114
18 Financial instruments (continued)
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:
2025
£’000
2024
£’000
Debtors 40 23
Cash and cash equivalents 975 926
1,015 949
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 107. 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
pages 32 and 33, and shares may be repurchased or issued as explained on page 107.
Shareholder
information
Shareholder information
Annual Report and Financial Statements 2025
116
Notice of Annual
General Meeting
The Annual General Meeting of BaillieGifford
ChinaGrowth Trust plc will be held at 1 MoorgatePl,
City of London, London, EC2R 6EA on Thursday
19June 2025, at 10am. Youwill find directions to the
venue by scanning theQR code above. The Portfolio
Managers responsible for Baillie Gifford China
Growth Trust plc will give a short presentation on the
investment outlook.
To accurately reflect the views of shareholders of
theCompany, the Board intends to hold the AGM
voting on a poll, rather than by a show of hands
ashas been customary.
The Board encourages all shareholders to
submitproxy voting forms as soon as possible
and,in any event, by no later than 10am on
Tuesday17 June 2025.
Should shareholders have questions for the
Boardorthe Managers or any queries as to how
tovote orhow to attend the meeting they are
welcome asalways to submit them by email to
enquiries@bailliegifford.com or call 08009172113.
BaillieGifford may record your call.
For details of how to vote your shares if held via a
platform please refer to theaic.co.uk/how-to-vote-
your-shares.
Moorgate
Moorgate
Copthall Ave
Throgmorton Ave
Finsbury
Moorgate
Circus
London Wall
London Wall
Basinghall Ave
1 Moorgate Pl
City of London
London
EC2R 6EA
117
Baillie Gifford China Growth Trust plc
Notice is hereby given that an Annual General
Meeting of BaillieGifford China Growth Trust plc will
be held at 1 Moorgate Pl, City of London, London,
EC2R 6EA on Thursday 19June 2025, at 10am for
the following purposes.
To consider and, if thought fit, to pass the following
Resolutions as Ordinary Resolutions.
01. To receive and adopt the Financial Statements
of the Company for the year to 31 January 2025
with the Reports of the Directors and of the
Independent Auditor thereon.
02. To receive and approve the Directors’ Annual
Report on Remuneration for the year to
31January 2025.
03. To declare a final dividend of 2.20p per ordinary
share.
04. To re-elect Nicholas Pink as a Director of the
Company.
05. To re-elect Tim Clissold as a Director of the
Company.
06. To re-elect Magdalene Miller as a Director of the
Company.
07. To re-elect Jonathan Silver as a Director of the
Company.
08. To re-elect Sarah MacAulay as a Director of the
Company.
09. 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 £4,859,626, 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, 13 and 14 as Special Resolutions.
Shareholder information
Annual Report and Financial Statements 2025
118
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 £1,472,614,
being approximately 10% of the nominal value
of the issued share capital of the Company, as
at 27 March 2025.
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
8,829,793, 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;
c. the maximum price (excluding expenses)
which may be 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. an amount equal to the higher of the price
of the last independent trade of an ordinary
share and the highest current independent
bid for an ordinary share on the trading
venue where the purchase is carried out;
and
d. unless previously varied, revoked or renewed
by the Company in a General Meeting, the
authority hereby conferred shall expire at the
conclusion of the Annual General Meeting
of the Company to be held in respect of the
year ending 31 January 2026, 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.
14. That, (i) subject to the sanction of the High Court
of Justice in England and Wales (the Court),
the amount standing to the credit of the share
premium account of the Company, at the date an
order is made confirming such cancellation by the
Court, be cancelled; and (ii) the amount of the
share premium account so cancelled be credited
to a reserve of the Company.
By order of the Board
BaillieGifford & Co Limited
Managers and Secretaries
31 March 2025
119
Baillie Gifford China Growth Trust plc
Notes
01. 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.
02. 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.
03. 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.
04. 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.
05. 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.
Shareholder information
Annual Report and Financial Statements 2025
120
06. 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.
07. The return of a completed proxy form or
otherinstrument of proxy will not prevent
youattending the AGM and voting in person
ifyou wish.
08. 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.
09. 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
c. the request:
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 8 May 2025.
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
theCompany not later than Thursday 8May
2025. 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.
121
Baillie Gifford China Growth Trust plc
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
enquiries@bailliegifford.com.
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
enquiries@bailliegifford.com before 12June
2025.
17. As at 27 March 2025 (being the last practicable
day prior to the publication of this notice) the
Company’s issued share capital consisted of
58,904,559 ordinary shares, carrying one
vote each. Therefore, the total voting rights
in the Company as at 27 March 2025 were
58,904,559 votes. Voting on the resolutions will
be conducted by way of a poll. This will ensure
an exact and definitive result.
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
UKDisclosure and Transparency Rules.
19. No Director has a contract of service with the
Company.
20. Resolution 14 is a special resolution to cancel
the entire amount standing to the credit of the
Company’s share premium account (Share
Premium Account). The cancellation of the
Share Premium Account is proposed to be
completed by means of a court-approved
capital reduction as described below (the
Capital Reduction) subject to the passing of
Resolution14.
Background to the Capital Reduction
The Company has built up a substantial share
premium account owing to the high level of
historic issuance of the shares. This account
is non-distributable. The Company may
cancel the share premium account with such
amount credited to a reserve of the Company
following: (a) approval from the shareholders
of the Company by special resolution; (b)
the confirmation of the High Court of Justice
in England and Wales (the Court); (c) the
registration of the Court’s order approving the
Capital Reduction (the Court Order) and (d) the
Capital Reduction not otherwise being unlawful.
The Board believes that the Capital Reduction
will provide a significant pool of reserves which
can be used in future, if required to fund share
buybacks, dividends or any other returns of
capital to shareholders in accordance with
applicable law.
Shareholder information
Annual Report and Financial Statements 2025
122
Procedure for completing the Capital Reduction
Shareholder approval
Section 641 of the Companies Act 2006
provides that any reduction of the share
premium account must be approved by the
Company’s shareholders by a special resolution.
Court approval
In addition to the approval of the shareholders,
the Capital Reduction requires the approval of
the Court. Accordingly, following approval of the
Capital Reduction by shareholders at the AGM,
an application will be made to the Court in order
to confirm and approve the Capital Reduction.
Creditor protection
In providing its approval, the Court may require
protection for the creditors of the Company (if
any) whose debts remain outstanding on the
relevant date, except in the case of creditors
(including contingent creditors) that have
consented to the Capital Reduction. Any
such creditor protection may include seeking
the consent of the Company’s creditors to
the Capital Reduction or the provision by the
Company to the Court of an undertaking to
deposit a sum of money into a blocked account
created for the purpose of discharging, in
due course, any amounts owing to the non-
consenting creditors of the Company.
Court hearing
The Company intends that an application will
be made to the Court to approve the Capital
Reduction as soon as is reasonably practicable
after the AGM, provided that Resolution 14 is
approved by shareholders.
Provided that the Capital Reduction is approved
by shareholders and the Court, and subject to
any direction given by the Court in confirming
the Capital Reduction and/or the terms of any
undertaking given by the Company in relation to
the reserve which arise, the amounts standing
to the credit of the Share Premium Account will
be cancelled and credited to a new distributable
reserve of the Company. The distributable
reserves so created would then be available
to be applied, in accordance with Part 23 of
the Companies Act 2006, towards the future
payment of distributions to shareholders such as
dividends and share buybacks.
Right to abandon
If the special resolutions to approve the Capital
Reduction are not passed by the requisite
majority of shareholders at the AGM or Court
approval is not obtained, the Capital Reduction
will not proceed.
The Board reserves the right to abandon
or to discontinue (in whole or in part) the
application to the Court in the event that the
Board considered the terms on which the
Capital Reduction would be (or would likely
to be) confirmed by the Court, would not be
in the best interests of the Company and/or
the shareholders as a whole. The Board has
undertaken a thorough review of the Company’s
liabilities (including contingent liabilities)
and considers that the Company will be able
to satisfy the Court that, as at the date on
which the Court Order relating to the Capital
Reduction and the statement of capital in
respect of the Capital Reduction are registered
by the Registrar of Companies at Companies
House and the Capital Reduction therefore
becomes effective, the Company’s creditors will
either have consented to the Capital Reduction
or be sufficiently protected.
123
Baillie Gifford China Growth Trust plc
BaillieGifford 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 BaillieGifford China Growth
Trust, youcan 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.com and on other financial websites.
Company factsheets are also available on the
BaillieGifford website and are updated monthly.
These are available from BaillieGifford on request.
BaillieGifford 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
are normally issued in April and the AGM is normally
held in June.
Share register enquiries
Computershare Investor Services PLC maintains
theshare register on behalf of the Company.
Intheevent of queries 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
24hours a day, 7 days a week) which allows you to:
• hear the latest share price;
• confirm your current share holding balance;
• confirm your payment history; and
• order change of address, dividend bank mandate
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;
• update bank mandates and change address
details; and
• use online dealing services.
Further shareholder
information
Shareholder information
Annual Report and Financial Statements 2025
124
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 the last dividend
voucher or 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
aCREST Personal Member), you may appoint
one ormore proxies or give an instruction to a
proxy byhaving an appropriate CREST message
transmitted. For further information please refer
tothe CREST Manual.
UK Alternative Investment Fund Managers
(‘AIFM’) Regulations
In accordance with the AIFM Regulations,
informationin relation to the Company’s leverage
andthe remuneration of the Company’s AIFM,
BaillieGifford & Co Limited, is required to be
made available to investors. In accordance with
the Regulations, the AIFM remuneration policy
is available at bailliegifford.com or on request
(see contact details on page 132). The numerical
remuneration disclosures in respect of the AIFM’s
reporting period are available at bailliegifford.com.
Leverage
The Company’s maximum and actual leverage
(seeGlossary of terms and alternative
performancemeasures on pages 129 to 131)
levelsat 31 January 2025 are shown below:
Gross method
Commitment
method
Maximum limit 2.50:1 2.00:1
Actual 1.04:1 1.04:1
Automatic exchange of information
In order to fulfil its obligations under UK tax
legislation relating to the automatic exchange of
information, the Company is required to collect
and report certain information about certain
shareholders.
The legislation requires investment trust companies
to provide personal information to HMRC on certain
investors who purchase shares in investment trusts.
As an affected company, BaillieGifford China Growth
Trust will have to provide information annually to the
local tax authority on the tax residencies of a number
of non-UK basedcertificated shareholders and
corporateentities.
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
ofcollecting this information.
For further information, please see HMRC’s
QuickGuide: Automatic Exchange of
Information – information for account holders
gov.uk/government/publications/exchange-of-
information-account-holders.
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.
125
Baillie Gifford China Growth Trust plc
Communicating
with shareholders
Trust magazine BaillieGifford China Growth Trust web page at
bailliegiffordchinagrowthtrust.com
Trust magazine
Trust is the BaillieGifford 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 BaillieGifford,
including BaillieGifford China Growth Trust.
Trustplays an important role in helping to explain
our products so that readers can really understand
them. For a copy of Trust, please contact the
BaillieGiffordClient Relations Team (see contact
details on page 132).
You can subscribe to Trust magazine or view a
digitalcopy at bailliegifford.com/trust
Suggestions and questions
Any suggestions on how communications with
shareholders can be improved are welcomed, so
please contact the BaillieGifford Client Relations
Team and give them your suggestions. They will also
be very happy to answer questions that you may
have about BaillieGifford China Growth Trust.
BaillieGifford China Growth Trust on the web
Up-to-date information about BaillieGifford
China Growth Trust is available on the
Company’s page of the Managers’ website at
bailliegiffordchinagrowthtrust.com. You will find full
details of the Company, including recent portfolio
information and performance figures.
Client relations team contact details
You can contact the BaillieGifford Client Relations
Team by telephone, email or post:
Telephone: 0800 917 2113
Your call may be recorded for training or monitoring
purposes.
Email: enquiries@bailliegifford.com
Website: bailliegifford.com
Address:
BaillieGifford Client Relations Team
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
Please note that BaillieGifford is not permitted
to give financial advice. If you would like advice,
please ask an authorised intermediary.
Shareholder information
Annual Report and Financial Statements 2025
126
China: challenges
and opportunities
by Sophie Earnshaw
Embracing China’s innovation wave,
emphasising new growth drivers like green
technology and digital economy.
Kweichow Moutai:
spirit of China
Linda Lin
The fiery spirit that’s a profitable
symbol and Chinese culture
and luxury
China Growth Trust:
Manager Insights
by Sophie Earnshaw
Geopolitical challenges, innovation-led
growth, and why China remains a key
market for investors.
Insights
127
Baillie Gifford China Growth Trust plc
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Shareholder information
Annual Report and Financial Statements 2025
128
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 BaillieGifford China
Growth Trust is marketed in the EU by the AIFM,
BaillieGifford & Co Limited, via the National Private
Placement Regime (‘NPPR’) the following disclosures
have been provided to comply with the high-level
requirements of SFDR.
The AIFM has adopted BaillieGifford & Co’s
stewardship principles and guidelines as its
policyonintegration of sustainability risks in
investment decisions.
BaillieGifford & Co believes that a company
cannot be financially sustainable in the long run if
its approach to business is fundamentally out of
line with changing societal expectations. It defines
‘sustainability’ as a deliberately broad concept which
encapsulates a company’s purpose, values, business
model, culture, and operating practices.
BaillieGifford & Co’s approach to investment is
based on identifying and holding high quality growth
businesses that enjoy sustainable competitive
advantages in their marketplace. To do this it
looks beyond current financial performance,
undertaking proprietary research to build up an
in-depth knowledge of an individual company
and a view on its long-term prospects. This
includes the consideration of sustainability factors
(environmental, social and/or governance matters)
which it believes will positively or negatively
influence the financial returns of an investment.
The likely impact on the return of the portfolio
from a potential or actual material decline in the
Sustainable Finance Disclosure
Regulation (‘SFDR’)
value of investment due to the occurrence of
an environmental, social or governance event
or condition will vary and will depend on several
factors including but not limited to the type, extent,
complexity and duration of an event or condition,
prevailing market conditions and existence of any
mitigating factors.
Whilst consideration is given to sustainability
matters, there are no restrictions on the investment
universe of the Company, unless otherwise
stated within in its Investment Objective & Policy.
BaillieGifford & Co can invest in any companies it
believes could create beneficial long-term returns for
investors. However, this might result in investments
being made in companies that ultimately cause a
negative outcome for the environment or society.
More detail on the Investment Managers’ approach
to sustainability can be found in the ESG Principles
and Guidelines document, available publicly on the
BaillieGifford website bailliegifford.com and by
scanning the QR code below.
The underlying investments do not take into account
the EU criteria for environmentally sustainable
economic activities established under the EU
Taxonomy Regulation.
129
Baillie Gifford China Growth Trust plc
Glossary of terms and alternative
performance measures (‘APM’)
An alternative performance measure (‘APM’) is a financial measure of historical or future financial
performance, financial position, or cash flows, other than a financial measure defined or specified
intheapplicable financial reporting framework. The APMs noted below are commonly used measures
withinthe investment trust industry and serve to improve comparability between investment trusts.
The APMs are presented in Pounds Sterling rounded to the nearest thousand, except where otherwise
indicated.
Total adjusted assets
This is the Company’s definition of adjusted total assets, being the total value of all assets less current
liabilities, before deduction of all borrowings.
Net asset value
Net asset value is the value of total assets less liabilities (including borrowings). The net asset value per
share (‘NAV’) 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 it is said to be trading at a discount. The size of the discount is
calculated by subtracting the NAV per share from the share price and is usually expressed as a percentage
of the NAV. If the share price is higher than the NAV, it is said to be trading at a premium.
2025 2024
Closing NAV (a) 259.07p 193.06p
Closing share price (b) 232.00p 181.00p
Discount
((b) – (a)) ÷ (a)
(10.4%) (6.2%)
Shareholder information
Annual Report and Financial Statements 2025
130
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.
2025
NAV
2025
Share price
2024
NAV
2024
Share price
Closing NAV per share/share price (a) 259.07p 232.00p
193.06p
181.00p
Dividend adjustment factor* (b) 1.008783 1.009852 1.006801 1.007763
Adjusted closing NAV per share/share price (c) = (a) x (b) 261.35p 234.29p 194.37p 182.41p
Opening NAV per share/share price (d) 193.06p 181.00p 328.87p 308.00p
Total return (c) ÷ (d) -1 35.4% 29.4% (40.9%) (40.8%)
*
The dividend adjustment factor is calculated on the assumption that the dividend of 2.00p (2024 – 1.70p) paid by the Company during the year was
reinvested into shares of the Company at the cum income NAV/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 96 is provided below.
2025 2024
Investment management fee £983,000 £1,020,000
Other administrative expenses £584,000 £523,000
Total expenses (a) £1,567,000 £1,543,000
Average daily cum-income net asset value (b) £139,357,895 £158,468,461
Ongoing charges
((a) ÷ (b) expressed as a percentage)
1.12% 0.97%
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 shareholders’ funds
is called ‘gearing’. If the Company’s assets grow, shareholders’ funds grow proportionately more because the
debt remains the same. But if the value of the Company’s assets falls, the situation is reversed. Gearing can
therefore enhance performance in rising markets but can adversely impact performance in falling markets.
Gearing is the Company’s borrowings adjusted for cash and cash equivalents expressed as a percentage of
shareholders’ funds.
Gross gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds.
2025 2024
Gearing *
£’000
Gross
Gearing
†
£’000
Gearing *
£’000
Gross
Gearing
†
£’000
Borrowings (a) 6,094 6,094
5,890 5,890
Cash and cash equivalents (b) 975 – 926 –
Shareholders’ funds (c) 153,099 153,099 119,411 119,411
3.3% 4.0% 4.2% 4.9%
*
Gearing: ((a)–(b)) divided by (c), expressed as a percentage.
† Gross gearing: (a) divided by (c), expressed as a percentage.
131
Baillie Gifford China Growth Trust plc
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers (‘AIFM’) Regulations, leverage is any method
which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is
expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on a
gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s
positions after the deduction of sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash
balances and after certain hedging and netting positions are offset against each other.
Active share (APM)
Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that
differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio
that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an
active share of zero indicates a portfolio that tracks the index.
Unlisted (Private) Company
An unlisted (private) company means a company whose shares are not available to the general public for
trading and not listed on a stock exchange.
Variable Interest Entity (‘VIE’)
VIE structures are used by some Chinese companies to facilitate access to foreign investors in sectors
oftheChinese domestic economy which prohibit foreign ownership. The purpose of the VIE structure is
togive 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
Annual Report and Financial Statements 2025
132
Directors
Chair: Nicholas Pink
Tim Clissold
Sarah MacAulay
Magdalene Miller
Jonathan Silver
Alternative Investment Fund
Managers, Secretaries and
Registered office
BaillieGifford & Co Limited
3 St Helen’s Place
London EC3A 6AB
T: +44 (0)131 275 2000
bailliegifford.com
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
T: +44 (0)370 707 1410
Depositary and Custodian
Bank of New York Mellon
(International) Limited
160 Queen Victoria Street
London EC4V 4LA
Company Broker
JP Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Independent Auditor
Ernst & Young LLP
Chartered Accountants
and Statutory Auditors
25 Churchill Place
London E14 5EY
Further information
Client Relations Team
BaillieGifford & Co
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)800 917 2113
enquiries@bailliegifford.com
Company details
bailliegiffordchinagrowthtrust.com
Company Registration No. 91798
ISIN: GB0003656021
Sedol: 0365602
Ticker: BGCG
Legal Entity Identifier:
213800KOK5G3XYI7ZX18
Company
information
Calton Square, 1 Greenside Row, Edinburgh EH1 3AN
Telephone +44 (0)131 275 2000
bailliegiffordchinagrowthtrust.com