Annual Report and
Financial Statements
PLC
31 July 2023
Notes
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
Investment trusts are UK public listed companies and as such comply
with the requirements of the Financial Conduct Authority. They are not
authorised or regulated by the Financial Conduct Authority.
Ordinary Shares can qualify to be considered as a mainstream
investment product and can be recommended by Independent
Financial Advisers to ordinary retail investors in accordance with the
rules of the Financial Conduct Authority in relation to non-mainstream
investment products.
This document is important and requires your immediate attention.
If you reside in the United Kingdom and you are in any doubt as to
adviser authorised under the Financial Services and Markets Act 2000
If you have sold or otherwise transferred all of your ordinary shares in
was or is being effected for delivery to the purchaser or transferee.
Investor disclosure document
The UK Alternative Investment Fund Managers Regulations requires
certain information to be made available to investors prior to their
Disclosure Document is available for viewing at .
01
Introduction
Financial highlights 02
Strategic report
One year summary 22
Ten year record 26
Review of investments 28
Portfolio executive summary 32
Valuing private companies 36
Governance report
Financial report
Shareholder information
Contents
Introduction
Annual Report and Financial Statements 2023
02
Financial highlights
Year to 31 July 2023
Share price
*
(8.9%)
NAV
*
(3.6%)
Comparative index
*
†
0.8%
*
Comparatives for 2022 can be found on page 22.
†
The comparative index is the MSCI All Country Asia ex Japan Index (in sterling terms).
Past performance is not a guide to future performance.
Total returns
*
03
Introduction
Annual Report and Financial Statements 2023
04
Growth
2
: embracing
growth, disruption and
innovation.
is to invest in the Asia-
Japan) and in the Indian
Sub-continent in order to
achieve capital growth.
An introduction to
Investment Trust PLC
Our philosophy
Long-term
This matters. Stock prices are wildly unpredictable in
the earnings capability of a company. So when we
the patience that allows a good decision to prove
its worth.
Growth
We have found the most persistent source of alpha
the long-term. This trend persists irrespective of
starting valuation.
Active
We would observe three particular features which
emphasise the need for active management in the
a quarter of the index still consists of State Owned
when we want to take advantage of the tailwind
provided by economic cycles in certain countries
and times when we want to limit our exposure.
by a very small number of companies that do
exceptionally well. Being highly selective is imperative.
05
Our structure
Underpinning everything is a genuine commitment to
low costs. We believe our duty to shareholders is to
into shareholders keeping more of the returns
generated from their investment. Our scale and
commitment to low costs enables us to offer genuine
involved. See bailliegifford.com.
Our
structure
Company status
money to make additional
gearing can amplify
investment returns.
changes.
after the interests of our
shareholders. They meet
several times a year and
are responsible for various
performance.
Democratising access
to unlisted (private)
companies
liquid access to private
companies – a distinct
uninterrupted on their
journey from private to
public – shareholders
compounded returns.
companies is dependent
upon relationships
and reputation – our
from the access we enjoy
but without paying fees
normally associated with
private equity funds.
Accessibility
our shares are openly
tradeable for investors
from around the world.
fees or minimum
investment restrictions.
reporting when compared
with other structures that
hold private companies.
Permanent capital
structure provides a pool
of permanent capital.
the portfolio remains
intact and is not impacted
by shareholder demand.
invest for the long term
and hold assets that can
be harder to buy and
sell – such as private
companies.
by our companies.
This alignment underpins
the prospect of enduring
relationships.
This strategic report, which
includes pages 7 to 55 and
incorporates the Chairman’s
statement, has been prepared in
accordance with the Companies
Act 2006.
Strategic
report
07
statement
The portfolio managers aim to invest in high growth
in the world. In the last year these markets have been
tension between the US and China and rising US
interest rates and the consequent US dollar strength.
These have all challenged growth expectations and
challenging environment for growth investors. It is to
be expected that there will be periods during which
growth investment will not be rewarded. We are in
such a phase now. As the portfolio managers present
returns have been considerable and the premium
currently paid for growth is modest. While it is too
early to forecast an immediate improvement in
as if growth share valuations are at attractive levels
across the region.
Performance
negative 3.6%
*
and for the share price a negative
*
. This compared to a positive total return of
0.8%
*
for the MSCI All Country Asia ex Japan Index
in sterling terms over the same period. The shares
ended the period at an 8.0% discount to the NAV per
The notable positive stock contributors to the
EO Technics and the notable detractors were
Angus Macpherson
Chairman
*
Past performance is not a guide to future performance.
Strategic report
Annual Report and Financial Statements 2023
08
during the same period.
Environmental, Social and Governance (‘ESG’)
Your Board is committed to responsible investment.
It agrees with the managers that a thoughtful
approach is required when looking at ESG factors
in emerging markets. It is not appropriate to impose
a developed market standard on emerging markets
companies indiscriminately. The economic miracle of
the last forty years has resulted in over 800 million
people in Asia being lifted out of poverty through
economic reform and globalisation. This wealth
is resulting in increased consumption and carbon
levels seen in developed markets. Growth in carbon
emissions has also been stimulated by the West
long-term investment is that the businesses they
invest in must be sustainable. Asian countries need
play their part. The timescales for this will however
different starting points on their paths to prosperity.
and working with companies towards achieving
positive change. We further endorse the view that the
absolute levels of emissions are not the basis on which
to judge a company but rather its approach to all
critical component in manufacturing electric vehicles.
Gearing
The Board continues to set the gearing parameters
within which the portfolio managers are permitted
to operate. These parameters are reviewed regularly
and at present the agreed range of equity gearing
active consideration at present.
The Company has a multi-currency revolving credit
facility with The Royal Bank of Scotland International
March 2025 and provides for potential gearing
Earnings and dividend
year. After the deduction of the management fee and
dividend. The Board is therefore recommending that
consider investing in this Company if they require
income from their investment as the Company
typically invests in high growth stocks with little
or no yield.
shares were issued from treasury at a premium to
year-on-year net 0.85% reduction in the amount
of shares in issue. The issuance occurred early
Company was being promoted into the FTSE 250
been bought back.
Issuance will continue to be undertaken only at
dilution for existing investors. When this authority
spreads the operating expenses of the Company
be asking shareholders to renew the authority to
of any shares held in treasury at a premium to the
held in treasury at present. The Board intends
considering not only the level of the discount but
also the underlying liquidity and trading volumes
09
Board to seek to address any imbalance between
that results in a large discount to NAV whilst being
cognisant that current and potential shareholders
have expressed a desire for continuing liquidity.
Private Company Investments
the maximum permissible investment in unlisted
measured at the point of initial investment). As at
assets invested in 5 private companies compared
reasonableness of private company valuations in the
light of the share price volatility of listed companies.
using the services of Markit Valuation Services
(now S&P Global) for external advice. The Board is
comfortable that marked-to-market values are kept
as current as possible for the purpose of calculating
although based on many external (market) and
considered a number of methodologies in line with
International Private Equity and Venture Capital
expertise in this area and we are comfortable with
the strategy adopted by the managers to invest in
later stage private companies. This is very different
to being a venture capital investor which often
involves taking seats on company boards and
the business. While private company investing has
commensurate reward.
Taking as an example one of our private company
was US$25 billion. At our holding equity valuation
of US$225 billion that implies an EBITDA multiple of
8x. This is a conservative valuation for a company
than 30% and 80% respectively year on year. It is
risks of investing in private companies. The Board
is supportive of the managers continuing to invest
in them.
Details on the process and quantum of private
company valuations undertaken over the year can
be found on page 36.
Changes to the Board
over a period where the Company has made
considerable progress. The NAV of the Company
constituent of the FTSE 250 and provided a total
conditions and growth investing being seemingly
managed growth focussed long term investment
strategy such as that used by the portfolio manager.
continue to reward patient long term shareholders
in the future.
stand down as Chair and a member of the Board.
Someone new should have the opportunity of
chairing this Company and it is time for me to pursue
other roles. I will leave the Board once a suitable
for giving me the opportunity to Chair the Company
best for the future.
The Company’s portfolio managers
the role vacated by Mr Roderick Snell when he was
Mr Durrant is an investment manager in Baillie
RBS in its Group Strategy and Corporate Finance
Strategic report
Annual Report and Financial Statements 2023
10
TCFD and Consumer Duty
Recently introduced regulations by the FCA require
product-level reports on the climate-related risks
and opportunities in the respective investment
vehicle. These are known as TCFD (Task Force on
Climate-related Financial Disclosures) reports and
they are based on historic data at a single point in
time. The report produced by Baillie Gifford for our
.
The FCA also introduced a new set of rules labelled
consumers and includes a number of obligations
that will need to be met. One of these obligations
is to undertake an Assessment of Value on the
meaning that distributors will be able to undertake
their assessments and continue to make shares in
shareholders. It should be noted that in addition to
and Board assess various costs levied by third-party
service providers as well as the Managers and
with performance; this will continue to be the case.
Annual General Meeting
to allow time to register. There will be a presentation
I hope to see many of you there.
website at
Stock Exchange regulatory news service.
The invasion of Ukraine ended the geopolitical
consensus that prevailed since the fall of the
Berlin Wall. This consensus was an impetus for
globalisation and a key component of growth in Asia.
dominant West were likely to grow.
US and Western sanctions on a seemingly increasing
number of Chinese companies have made some of
them uninvestible. There is little doubt that foreign
at least in the short term. Should these sanctions
the market as a whole uninvestible.
Domestic considerations in China are also of
concern. The Chinese Government is developing
remains to be seen. Coupled with escalating tensions
likely to be greater complexity and risk in securing
Excess investment return is generated by judging
and managing risks. On the basis of the information
believe that the risks of investment in China and the
rewards. China is a critical trading partner of the
West and only the most extreme geopolitical
confrontation would justify the economic disruption
of severing economic ties entirely.
from key drivers of long-term growth such as the
to renewable energy and an AI led digital age of
portfolio managers to unearth the right investments.
has served investors well in the past.
The region remains one of the fastest growing
Board is of the view that investing in the fastest
growing companies in the fastest growing region still
offers attractive long-term investment opportunities
for patient growth investors. The portfolio managers
Angus Macpherson
Chairman
5 October 2023
11
*
Past performance is not a guide to future performance.
Overview
one of the fastest growing regions over the coming
decades and we strive to be invested in its fastest
growing companies. It is growth multiplied by growth
Such an investment style has been well rewarded
All Country Asia ex Japan Index (in sterling terms)
over these time periods.
5 year 3 year
NAV total return*
Share price total return*
MSCI All Country Asia ex Japan
total return (in sterling terms)*
there will inevitably be periods of time when our
growth style of investing will be out of favour with
compared to the comparative index which rose 0.8%
to reach their nadir as President Xi cemented his
grip on power during the 20th Chinese Communist
Investment Manager
Ben Durrant
Deputy Manager
Appointed 2023
Strategic report
Annual Report and Financial Statements 2023
12
Chinese economy disappointed and concerns over
Markets will likely remain volatile as investors
continue to grapple with an uncertain global
optimistic. Whilst many Western economies have
experimented with money printing and ultra low
Events in China will continue to play an important
the country faces several headwinds including
an imminent collapse of the economy are misplaced.
The government has moved to support the domestic
domestic property market appear overly pessimistic.
The broad exposure of the portfolio remains similar
valued at nearly the same price-to-earnings multiple
yet they are expected to grow their earnings at
long-term outlook for the region. Asia already
cemented itself as the lead contributor to global
more to global growth in US dollar terms than the
Philosophy
We are growth investors endeavouring to invest
in the top twenty percent of the fastest growing
companies in Asia. Across the region we have found
the most persistent source of outperformance to be
long term. This trend persists irrespective of starting
to come from earnings growth.
01. Underappreciated growth duration
We believe one of the greatest investment
are volatile from one quarter to the next. The market
generation even if the long-term growth rate turns
willing to reinvest in their business and with greater
ambition. This presents us with exciting investment
near term volatility to be ignored.
02. Underappreciated growth pace
The market consistently underestimates the
likelihood of rapid growth. The evidence shows that
most investors cluster around a narrow range of
potential to grow very rapidly. Our process is focused
and searching for low probability but high impact
the broader market.
03. Underappreciated growth surprise
interaction between top-down and bottom-up
of ignoring macroeconomics. Purely bottom-up
investment is a path to ruin in a universe where
industrial and economic cycles can dominate
investment returns over multi-year periods. The
long-term earnings for a vast number of companies
sectors – are determined by exogenous macro
factors beyond their control. This also provides
opportunities.
13
Our analysis shows that while it may pay to invest in
those companies that display consistently high levels
in those companies that transition from poor levels
providing a two-fold kicker to share price performance
– but identifying the drivers behind this change
direction of travel is hugely valuable.
will lead to a concentration in particular sectors or
MSCI AC
Asia
ex Japan
Index
trailing compound annual growth to
One year forecast earnings growth
Active share 82%
Portfolio turnover
Review
In the last Interim management statement we
articulated three key reasons why Asian economies
especially when compared to developed markets.
They are:
many major European countries.
it is Asian countries that behaved like orthodox
developed countries while much of the developed
world behaved like the emerging markets of
old. (Perhaps we are seeing the beginning of
a decade and the region is therefore far less
superior to much of the developed world. Combine
valuations at multi-year lows relative to developed
investors. China certainly faces a number of
lockdowns and regulatory crackdowns have inhibited
domestic economy. But the extreme pessimism over
the economy is too one-sided.
There are a number of signs that household
and June compared to the same pre-lockdown
are rapidly returning to pre-pandemic levels. Our
consumer related holdings in China have posted
accelerating economic growth and mobilising the
over the past couple of years. Time and patience is
ended at the start of the year.
Increasing policy support is also likely to be a
government has clearly and very publicly stated its
support for the private sector. Notably in July the
CCP Central Committee and the State Council issued
Strategic report
Annual Report and Financial Statements 2023
14
a joint statement on ‘promoting the development
private sector as ‘a driving force behind promoting
clampdown that particularly impacted technology
and platform businesses for the past couple of
– is receding.
extremely depressed. Stripping out cash and
book value.
We believe this presents us with a number of
excellent long term investment opportunities
and we increased our listed equity exposure
Chinese companies. Most additions were made to
and its subsidiary Ping An Bank. One new purchase
analogue chips in China (listed in Taiwan). Silergy
has the largest market share among domestic
of Chinese attempts to become self-reliant in
semiconductor chips.
Connect. The business makes loans to small and
are then packaged and sold on the Micro Connect
exchange. The company was founded by the former
remains the best structural growth story of any
advantage of share price weakness by adding to our
overweight.
Funding came from three main sources. The most
(<60bp) holdings in South Korea. These were
across a range of sectors including green energy
due to some small additions to other names in
manufacturer for semiconductors) and Samsung
weighting increased modestly over the period to
selling both Nickel Industries and Vale Indonesia.
We have become concerned by the huge capital
convert non-battery grade nickel into battery grade
nickel) commercially viable and this is likely to bring
than expected.
We also reduced our exposure to India. Notable
15
We are keeping our eye on several interesting
a successful export manufacturing industry. For
of government reforms and the establishment of
that manufacturing is starting to move to India. For
expanding in India with iPhone exports quadrupling
a strong export manufacturing base it has the
potential to transform the economy over the
coming years.
portfolio continuing to look different to many of our
largest exposures remain focused on the themes of
cyclical industries including materials and industrials
which make up the two largest relative positions
within the portfolio.
Performance
periods have been more challenging as our growth
with generally poor Asian markets held back by
and a surging US Dollar syphoning liquidity from the
region. Our portfolio maintains a strong growth bias;
we have faith in the long-term growth prospects
of the region and believe we are well placed to
markets turn.
comparative index which rose by 0.8% in sterling
underperformance came from weakness in three
Jadestone is an oil exploration and production
resulting in production halting for several months.
The lack of cash strained the balance sheet at a
time when the company was gearing up for a major
investment phase to bring several new assets on
success of the company very much rests on this
asset coming on stream in a timely manner.
the company was a 5.5% holding at the start of the
at the end of 2022 were weak. M&A integration
challenges and a slowdown in broader ecommerce
growth in India pushed the share price down by
52%. We are hopeful these issues are short term
their lows).
JD.com was weak despite reasonable operational
performance. Revenue growth was slower
ByteDance taking some low-end market share
as it leveraged its large user base to enter the
Strategic report
Annual Report and Financial Statements 2023
16
of its scale and in-house logistics capabilities.
performed strongly. Our top contributor to
performance was Ramkrishna Forgings which
on automotive and commercial vehicles. After
completing a major capacity expansion over the past
few years the company is seeing rapid sales growth
Other industrial companies in India also performed
manufacturers of telecom and power transmission
demand for power infrastructure. Tata Motors was
also strong as the domestic commercial vehicle and
auto business continued to see buoyant demand
impressed.
but stock selection in South Korea was the most
demand for its laser products is likely to hit an
and drills will need to be replaced by lasers in the
this holding towards the end of the period.
mainly from strength in our copper companies
MMG and Zijin Mining. This was followed by Real
Utilities where we had no holdings while the sector
followed by Communication Services and Consumer
Discretionary due to the weakness in our Chinese
names.
Environmental, social and governance
(‘ESG’) considerations
based on identifying and holding high quality growth
businesses that enjoy sustainable competitive
advantages in their marketplace.
proprietary research to build up our in-depth
knowledge of an individual company and form a view
Social and Governance matters which affect the
long-term investment returns. Such issues are
considered throughout the investment process
Our approach is guided by our ESG principles:
ownership of growing businesses: we want
and encourage them to ignore the short-term
pressures of the market.
businesses engaging in practices that are harmful
to society may be capable of generating attractive
returns in the short term but are unlikely to do so
over the periods we seek to invest.
not reliant on formulaic and backward-looking
screens.
consider the likely direction of change in otherwise
promising investments and engage accordingly.
Company engagement is key to our process. We
encourage steps to maximise opportunities and
minimise risks where we believe it is material to the
success of the company. Engagement priorities
are set through a combination of a subjective
assessment of the materiality of an issue and our
inputs to provide direction. We vote wherever
possible and will vote against management if we
believe that its actions are not in the interests of
shareholders.
We are supported by a dedicated emerging markets
17
Baillie Gifford statement
on stewardship
Baillie Gifford’s overarching ethos is that we are
‘Actual’ investors. We have a responsibility to behave
as supportive and constructively engaged long-term
investors. We invest in companies at different stages
of their evolution, across many different industries
and geographies, and we focus on their unique
circumstances and opportunities. Consequently,
we are wary of prescriptive policies and rules,
believing that these often run counter to thoughtful
favours a small number of simple principles which
help shape our interactions with companies and
give appropriate latitude to diverse processes of our
different investment teams. These principles do not
teams acquire.
Prioritisation of long-term value creation
focusing on long-term value creation and capital
resist demands from shareholders with shorter
way to achieve better investment outcomes. We
regard it as our responsibility to encourage holdings
towards activities that create genuine economic
and stakeholder value over the long run. We are
happy that our value will often be in supporting
A constructive and purposeful board
We believe that boards play a key role in supporting
corporate success and representing the interests of
these responsibilities. We believe good governance
works best when there are diverse skill sets and
the thinking of management.
Strategic report
Annual Report and Financial Statements 2023
18
Long-term focused remuneration with
stretching targets
transparent and reward superior strategic and
operational endeavour. We believe incentive
encourage policies which create genuine long-term
alignment with external capital providers. We are
these are commensurate with outstanding long-run
outcomes or short-termism. We generally think that
performance hurdles should be skewed towards
long-term results and that remuneration plans
should be subject to shareholder approval.
We believe it is in the long-term interests of all
companies to maintain strong relationships with
governance and ownership structures may need
and accountability should be prioritised at all
appropriate times.
Sustainable business practices
dependent on maintaining its social licence to
operate and look for holdings to work within
the spirit and not just the letter of the laws and
regulations that govern them. We expect all holdings
impact their long-term success. Environmental
practices should recognise the current pace
with appropriately ambitious policies and targets
focused on the relevant material dimensions.
Boards and senior management with superior
prospects for long-term value creation should
alongside plans for ongoing improvement.
19
holdings is as important as selecting the right
are aligned with our stewardship principles and
describe our approach to proxy voting and company
While these guidelines are intended to provide an
on what we believe to be in the best long-term
a policy.
A broad cross section of our investment staff are
involved in our ongoing work on stewardship. In the
same way that our investment approach is based
voting and engagement is led by the individual
investment teams. In keeping with our decentralised
we report accordingly in the proxy voting disclosure
on our website. We also have clear processes in
disclosure is available on our website.
Company meeting record
Voting distribution
Number of meetings voted
with management
Number of meetings with at least
Number of votes for
Number of votes against 8%
Number of votes abstain 2%
Strategic report
Annual Report and Financial Statements 2023
20
investment activities and, where necessary, effect change within our holdings, ultimately with the goal of
achieving better returns for our shareholders. The three examples below demonstrate our stewardship
approach through constructive, ongoing engagement.
Environmental, social and
governance engagement
Brilliance China Automotive – governance
Brilliance is a Chinese automotive company which
manufactures and sells BMW vehicles and auto
components. It has strategic partnerships and
manufacturers.
Our escalation activities date from the suspension
issues. Following several attempts to engage with
be completed and an indicative timeline detailing
information was crucial for shareholders to assess
further by sending separate letters to the boards
communication with the market while its shares
were suspended. We outlined our belief that the
complete for shareholders and investors to appraise
absolute commitment to work in the best interests
of all shareholders and achieve the resumption of
guidance set out by the stock exchange.
our letter with substantial improvements in
it required the company to complete for its
shares to resume trading. Measures included: an
independent investigation into the audit issues;
we spoke to investor relations ahead of the
annual general meetings. Brilliance underwent
to work in the interests of its shareholders.
21
Reliance Industries – the energy transition
We are deeply interested in companies that
are helping to facilitate social and economic
at emerging Asia. This could be one of the important
investment themes for investing in Asia over the
coming decades. A country which is particularly
interesting for us in this regard is India where there
are many new online businesses that have come
to market in recent years that are helping with this
food delivery.
important here: Reliance Industries. This is a
retail and green energy. When determining their
of lives.
in India that led data prices to collapse from an
unaffordable US$3 per gigabyte to less than eight
cents today. Domestic calls became free. This pulled
after the US and China. Reliance aims to become
energy by 2030.
Over the last year we engaged with Reliance
sustainability ambitions in more detail. We wanted
and how this relates to each of the business units.
And we have also discussed methane at some
long-term sustainable development. We have also
and carbon emissions further.
Zijin Mining – maintaining a social license
Zijin Mining is a large state-owned metals and mining
China and other parts of the world. The historic
is coming from copper. Most recently there have
been aspirations to move into battery materials
success. We have discussed with Zijin how it carries
out human rights due diligence. We have also
to community engagement in Peru and water use
in Inner Mongolia and have followed up with some
additional questions for other mines.
The company has established community grievance
Global Industry Standards on Tailings Management.
In April we wrote to the company to ask about: its
plans for human rights impact assessments (for
community engagement in Peru; water quality;
and the recent allegations regarding illegal mining
in Inner Mongolia. We received detailed answers
to our questions and in October 2022 we met with
management systems and environmental practices.
The company highlighted differences between the
by third-party rating providers. We encouraged the
company to provide more detailed updates on
human rights due diligence work and discussed
rating agencies.
We were pleased with the transparency and openness
of the company to discuss these issues. It was
helpful to learn more about the approach to ESG
management. We will seek to hear more about the
ESG assessments being planned which would include
human rights assessment and will continue to follow
up further with the company on these topics.
Strategic report
Annual Report and Financial Statements 2023
22
31 July
2023
31 July
2022 % change
*
Gearing
‡
(2%)
Net asset value per ordinary share*
Share price 586.00p
MSCI All Country Asia ex Japan Index
(in sterling terms)
†#
Dividend proposed per ordinary share
3.25p 3.00p
Revenue earnings per ordinary share
Ongoing charges
‡¶
Discount
‡¶
(8.0%)
Active share
‡
82% 83%
Year to 31 July 2023 2022
Total return
#‡
Net asset value per ordinary share
¶
(3.6%)
Share price
¶
MSCI All Country Asia ex Japan Index
(in sterling terms)
†
0.8% (8.2%)
The following information
has performed over the year to
31 July 2023.
*
†
The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
#
‡
¶
Key Performance Indicator.
Past performance is not a guide to future performance.
23
*
†
The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
#
‡
¶
Key Performance Indicator.
Past performance is not a guide to future performance.
Year to 31 July 2023 2023 2022 2022
Year’s high and low High Low High Low
Net asset value per
ordinary share*
Share price 523.00p 602.00p
‡¶
Year to 31 July 2023 2022
Net return per ordinary share
Revenue return
Capital return (30.05p)
Total return (25.49p) (118.80p)
Net assets per
ordinary share
(4.1%)
2023
2022
Share price per
ordinary share
(9.4%)
2023 586.00p
2022
†
(1.9%)
2023
2022
Strategic report
Annual Report and Financial Statements 2023
24
* The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
†
#
Past performance is not a guide to future performance.
Five year total return performance
†
share price, net asset value and index*
20232018 2019 2020 2021 2022
Cumulative to 31 July
● NAV total return
†
● Share price
total return
†
● Comparative
index total return*
Source: Baillie Gifford/Refinitiv and relevant underlying index providers
#
.
Dividends are reinvested.
50
300
200
150
100
250
Annual share price and net asset value
total returns
†
2023
2019
2020 2021 2022
Years to 31 July
● NAV total return
†
● Share price total return
†
Source: Baillie Gifford/Refinitiv.
Dividends are reinvested.
(40%)
80%
60%
40%
20%
(20%)
0%
The following charts indicate
performed relative to its
comparative index
*
and the
relationship between share
price and net asset value
31 July 2023.
25
20232019 2020 2021 2022
Years to 31 July
● NAV total return
†
● Share price total return
†
Source: Baillie Gifford/Refinitiv and relevant underlying index providers
#
.
Dividends are reinvested.
(20%)
60%
40%
20%
0%
Premium/(discount) to net asset value
†
Relative annual share price and net asset value
total returns
†
(compared to the MSCI All Country Asia ex Japan Index*)
20232018 2019 2020 2021 2022
Years to 31 July
● Pacific Horizon premium/(discount)
†
Source: Baillie Gifford/Refinitiv
#
.
(15%)
15%
10%
5%
0%
(10%)
(5%)
* The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
†
#
‡
Past performance is not a guide to future performance.
Five year active share
†
(compared to the MSCI All Country Asia ex Japan Index*)
20232018 2019 2020 2021 2022
Years to 31 July
● Active share
†
Source: Baillie Gifford and relevant underlying index providers
#
.
0%
100%
80%
60%
20%
40%
Five year turnover
‡
20232018 2019 2020 2021 2022
Years to 31 July
● Turnover
‡
Source: Baillie Gifford.
0%
40%
20%
30%
10%
Strategic report
Annual Report and Financial Statements 2023
26
Capital
At
31 July
Total
assets *
£’000
Borrowings
£’000
Shareholders’
funds *
£’000
Net asset value
per share *
p
Share price
p
Premium/
(discount) *
%
–
(8.2)
223.58
286.00
363.00 3.3
320.00
2020
802.00 3.2
2022 –
2023 580,355 – 580,355 637.18 586.00 (8.0)
Revenue Gearing ratios
Year to
31 July
Gross
revenue
£’000
Available
for ordinary
shareholders
£’000
Revenue
earnings per
ordinary
share
†
p
Dividend paid
and proposed
per ordinary
share (net)
p
Ongoing
charges *
%
Gearing *
%
Gross
gearing *
%
–
2 3
0.35 0.35 8
(0.30) 0.35 3
(0.38) –
(328) (0.60) – 8
8 – 8
2020 0.25 8
–
2022 3.00 –
2023 9,580 4,166 4.56 3.25 0.72 (2) –
record
*
†
The calculation of earnings per ordinary share is based on the revenue from ordinary activities after taxation and the weighted average number
Past performance is not a guide to future performance.
27
At
31 July
Net asset
value per
share *
Net asset
value total
return *
†
Share
price
Share price
total return *
†
Comparative
index
†#
Comparative
index
total return
†#
Retail
price
index
†
232 236
208
2020 265 322 328
522
2022 365
2023 350 359 374 384 152 196 150
Compound annual returns (%)
5 year 5.8
Cumulative to 31 July
20232013 2015 2018 2020 20222014 20172016 2019 2021
● Pacific Horizon share price
Source: Refinitiv and underlying data providers. See disclaimer on page 122.
All figures are total return (see glossary of terms and alternative performance measures on pages 123 and 124).
● NAV total return
†
● MSCI All Country Asia ex Japan Index (in sterling terms)
0
600
300
200
100
500
400
Ten year total return performance*
*
†
#
The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
Past performance is not a guide to future performance.
Strategic report
Annual Report and Financial Statements 2023
28
Review of
investments
A review of the Company’s
ten largest investments as at
31 July 2023.
*
Samsung Electronics
Samsung is a global leader in
semiconductors and electronics.
Its core business is highly
capital that permits it to invest
and innovate at scale.
Ping An Insurance
Ping An is the leading private
insurance company in China.
It has been investing heavily in
technology which gives it superior
competitive advantage compared
with its state-owned peers.
Insurance penetration in China
is low and has the potential to be
a long-term growth opportunity
for the company.
Geography Korea
Valuation
% of total assets*
(% of total assets
5.5%)
Nil)
Geography China
Valuation
% of total assets*
(% of total assets
(Net purchases in year
© Samsung.
29
*
Ramkrishna Forgings is one of
exports of forging components.
The company has been well
expansion and order wins is likely
to experience strong growth.
Delhivery
Delhivery is an Indian logistics
independent provider of end-
a national network used by all
ecommerce players. The scale
and modernity of its network
has allowed it to deliver both
the lowest costs and a reliable
of the best-placed operators to
of Indian ecommerce.
This was previously a private
company investment.
Dailyhunt (VerSe Innovation)
Dailyhunt is an Indian consumer
media company. Its short form
video and news aggregator apps
are popular across the country.
Its localised and user-generated
which is valued by advertisers
looking to reach the Indian
mass-market.
Geography India
Valuation
% of total assets* 3.2%
(% of total assets
5.5%)
(Net sales in year
Geography India
Valuation
% of total assets* 3.3%
(% of total assets
(Net sales in year
Geography India
Valuation
% of total assets* 3.0%
(% of total assets
Nil)
Strategic report
Annual Report and Financial Statements 2023
30
Zijin Mining Group
engaged in the exploration
broad portfolio of high quality
to generate strong production
years.
Tata Motors
Tata Motors is an Indian
automotive manufacturer with a
The domestic Indian business
is seeing a strong cyclical
efforts in electric vehicles appear
to be the best in the country.
EO Technics
EO Technics manufactures
lasers used in the manufacturing
and dicing. As semiconductors
become smaller and more
be needed to replace more
traditional equipment including
to rapid growth for EO Technics.
*
Geography China
Valuation
% of total assets*
(% of total assets
2.0%)
Nil)
Geography India
Valuation
% of total assets* 2.8%
(% of total assets
2.2%)
(Net purchases in year
Geography Korea
Valuation
% of total assets*
(% of total assets
0.8%)
(Net purchases in year
31
*
Samsung Engineering
Samsung Engineering is an
services to Samsung Group
companies and the hydrocarbon
sectors predominantly in the
Middle East and ASEAN.
The company continues to
receive strong orders in these
expertise in sustainable energy
solutions are making impressive
progress.
JD.com
JD.com is the largest Chinese
and it is the second-largest player
in overall Chinese ecommerce.
It has a strong logistics network
which is driving increased revenue
and market share.
Geography Korea
Valuation
% of total assets* 2.6%
(% of total assets
(Net sales in year
Geography China
Valuation
% of total assets* 2.6%
(% of total assets
3.3%)
(Net purchases in year
Strategic report
Annual Report and Financial Statements 2023
32
Performance
1 year
%
3 years
%
5 years
%
10 years
%
Share price 283.8
NAV (3.6) 258.5
Benchmark* 0.8
†
*
Benchmark: MSCI All Country Asia ex Japan Index (in sterling terms).
†
Contributors
Absolute
performance
% *
Ramkrishna Forgings
Samsung Engineering
EO Technics
Tata Motors
Skipper
Detractors
Absolute
performance
% *
Jadestone
Delhivery
JD.com
(56.2)
Dailyhunt (VerSe Innovation)
Key contributors and detractors to performance – year to 31 July 2023
*
Denotes listed investment previously held in the portfolio as a private company investment.
Denotes private company investment.
Source: Revolution.
33
New buys
FPT
Jio Financial Services
Mobile World Investment Corporation
Silergy
SK hynix
TISCO
Complete sales
China Conch Environment Protection
China Conch Venture
Flitto
Jiangxi Copper Co
Korea Zinc
Nickel Mines
PT Aneka Tambang
PT Vale Indonesia
S-Fuelcell
SK IE Technology
Zomato
Reductions
Delhivery
Prestige Estate Projects
Ramkrishna Forgings
Phoenix Mills
Merdeka Copper Gold
Samsung Engineering
MMG
Alibaba Group
Baidu.com
Chalice Mining
Dada Nexus ADR
EO Technics
Indiabulls Real Estate
Jadestone
JD.com
Meituan
Military Commercial
Joint Stock Bank
Ping An Bank
Ping An Insurance
Tata Motors
Additions
Denotes listed investment previously held in the portfolio as a private company investment.
Strategic report
Annual Report and Financial Statements 2023
34
Distribution of total assets
*
Geographical 2023
Sectoral 2023
1
2
3
4
6
5
7
8
*
#
The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
<£1bn>£25bn £10–25bn £1–2bn£2–5bn£5–10bn
Source: Baillie Gifford/Refinitiv and relevant underlying index providers.
See disclaimer on page 122.
● Pacific Horizon ● MSCI All Country Asia ex Japan index
#
% of portfolio and index stocks
0%
60%
50%
40%
30%
10%
20%
3
4
5
8
7
2
6
1
Geographical 2023
%
2022
%
China 28.5
2 India
3 Korea
Vietnam
5 Taiwan
6 Indonesia
5.2
8 Singapore 3.5 6.5
0.3
Other
0.3
Sectoral 2023
%
2022
%
Information Technology 22.0
2 Consumer Discretionary 20.3 20.2
3 Financials
Materials
5 Industrials
6 Communication Services 8.6
Real Estate
8 Energy
Consumer Staples 0.5 0.3
0.6
Net liquid assets 0.3
35
Strategic report
Annual Report and Financial Statements 2023
36
We aim to hold our private company investments
open-market transaction. Valuations are adjusted both
during regular valuation cycles and on an ad hoc
process ensures that private companies are valued
in both a fair and timely manner.
The valuation process is overseen by a valuations
independent third party (S&P Global). The valuations
group is independent from the investment team with
all voting members being from different operational
been applied.
We revalue the private holdings on a three month
reassessed each month. During stable market
investment would be valued two times in a six month
reviewed twice per year by the respective investment
trust boards and are subject to the scrutiny of
external auditors in the annual audit process.
These may include: changes in fundamentals;
a takeover approach; an intention to carry out an
of comparable public companies. Any ad hoc change
to the fair valuation of any holding is implemented
value. There is no delay.
The valuations team also monitors relevant market
indices on a weekly basis and updates valuations
(S&P Global) most recent valuation report where
appropriate.
Continued market volatility has meant that recent
pricing has moved much more frequently than would
have been the case with the quarterly valuations
cycle.
Instruments (lines of stock reviewed) 6
Revaluations performed
Percentage of portfolio revalued 2+ times
Percentage of portfolio revalued 5+ times 33%
been decreases. A handful of companies have
raised capital at an increased valuation. The average
movement in both valuation and share price for
those which have decreased in value is shown below.
Average
movement
in company
valuation
Average
movement
in share price
* (28.8%)
*
Share prices have decreased less than headline
of stock with preferential liquidation rights and
therefore providing down side protection.
in the event of a corporate sale or liquidation.
Valuing private
companies
37
Private companies summary
Transaction value
Historical snapshot
Portfolio activity – year to 31 July 2023
No new capital was deployed in private companies
during the year. No private companies listed or were
taken-over during the year.
0
40,000
30,000
20,000
10,000
Follow on
Buy Listed
20222021 202020182017
Concentration
Private exposure
Total private company exposure
Private company
exposure within
– 3.0%
04
private companies listed
since initial purchase
05
private companies
currently held
Dailyhunt
(VerSe Innovation)
ByteDance
Chime Biologics
Eden Biologics
Philtown Properties (Nil)
Total private company exposure
Strategic report
Annual Report and Financial Statements 2023
38
Jul
2023
Jul
2022
Jul
2016
Jul
2017
Jul
2018
Jul
2019
Jul
2020
Jul
2021
Source: Baillie Giff
ord.
Total assets in sterling (left hand axis)
Private company securities as a % of total assets (right hand axis)
Private company securities and listed securities previously held in the portfolio as private comany securities as a % of total assets (right hand axis)
*
See Glossary of Terms and Alternative Performance Measures on pages 123 to 124.
£ million
25
0
10
15
%
20
5
1,000
200
800
400
600
0
Private company securities and listed securities previously held as private company securities
as a percentage of total assets*
Performance of listed holdings held previously as private company investments
from date of initial investment of each holding to 31 July 2023
(absolute performance in sterling terms as a %)
Absolute performance from initial investment to initial public offering
Absolute performance from initial public offering to 31 July 2023 or sale
Total absolute performance from initial investment to 31 July 2023 or sale
No
te: Absolute performance returns cannot be added together as they are geometric.
Source: Revolution/Baillie Gifford.
Star Health
Zomato
Delhivery
80 10
0
-100 20 6040-80 -60 -40 -20 0
80 10
0
-100 20 6040-80 -60 -40 -20 0
Listed holdings at 31 July 2023
Listed holdings sold in the year to 31 July 2023
39
2023
£’000
2022
£’000
Purchases at cost –
Sales – proceeds received – –
– –
Change in listing –
Change in fair value
Closing balance 31 July 29,427 37,243
Overview
Valuation movements – year to 31 July 2023
Our private company exposure tends to be weighted
late stage private companies who are scaling up and
Pacific Horizon -29.7%
Average change at company level
Year to 31 July 2023
Private companies
ByteDance
Chime Biologics
Dailyhunt
(VerSe Innovation) Eden Biologics
Valuation changes
(40%)
60%
0%
(60%)
20%
40%
(20%)
(80%)
Pacific Horizon -40.54%
Average write-down per company
Year to 31 July 2023
(excluding companies revalued up)
Cap
Total equity
value (US$) Portfolio %
Number of
holdings
Micro <$300m 3
Small $300m–$2bn – –
Medium – –
5.0 2
5.1 5
Instruments valued
6
Revaluations performed
56%
Valued 5 times or more 33%
Strategic report
Annual Report and Financial Statements 2023
40
List of investments
Name
Geography
Business
2023
Value
£’000
2023
% of total
assets
Samsung Electronics Korea
manufacturer
China
Ramkrishna Forgings India Auto parts manufacturer 3.3
Delhivery
India 3.2
Dailyhunt (VerSe Innovation)
Series I Preferred
India Indian news aggregator application 2.3
Dailyhunt (VerSe Innovation)
Series Equity
India Indian news aggregator application
Dailyhunt (VerSe Innovation)
Series J Preferred
India Indian news aggregator application 0.3
3.0
China Gold and copper miner
Tata Motors India Automobile manufacturer 2.8
EO Technics Korea Manufacturer and distributor of semiconductor
laser markers
Samsung Engineering Korea Korean construction 2.6
JD.com China Online and mobile commerce 2.6
Alibaba Group China Online and mobile commerce 2.5
MMG China Chinese copper miner 2.5
Bank Rakyat Indonesia Consumer bank
Samsung SDI Korea Electrical equipment manufacturer 2.3
Reliance Industries India Indian petrochemical company
Indiabulls Real Estate India Domestic and commercial real estate provider
China Sportswear apparel supplier 2.0
Singapore Internet gaming and ecommerce 2.0
China Social media 2.0
Merdeka Copper Gold Indonesia Indonesian miner
India Owner and operator of a chain of Indian hotels
and resorts
Vietnam Consumer bank
Phoenix Mills India Commercial property manager
Baidu.com China Internet provider
PT Astra International Indonesia Automobile distributor
Accton Technology Taiwan Server network equipment manufacturer
41
Name
Geography
Business
2023
Value
£’000
2023
% of total
assets
Dragon Capital Vietnam Enterprise
Investments
Vietnam Vietnam investment fund
Vietnam Steel and related products manufacturer
China Real-estate platform
China Real-estate platform 655
Midea A Shares China
Prestige Estate Projects India Owner and operator of residential real estate
properties
Skipper India Transmission and distribution structures provider
Meituan China
Dada Nexus ADR China Chinese ecommerce distributor of online
consumer products
TSMC Taiwan Semiconductor manufacturer
Zhejiang Supor Co A Shares China Chinese manufacturer of cookware and home
appliance products
MediaTek Taiwan Taiwanese electronic component manufacturer
Jadestone Singapore Oil and gas explorer and producer
China
Korea Korean shipbuilder
Coupang Korea Ecommerce business
Military Commercial Joint
Stock Bank
Vietnam Retail and corporate bank
TISCO Thailand Retail and corporate bank
Koh Young Technology Korea 3D inspection machine manufacturer
Silergy Taiwan Semiconductor manufacturer
Ningbo Peacebird Fashion A Shares China Chinese fashion
India Indian mortgage provider 0.8
China Chinese semiconductor manufacturer 0.8
SK hynix Korea Semiconductor manufacturer 0.8
Korea Electronic component and device manufacturer
Geely Automobile China Automobile manufacturer
Kingdee International Software China Enterprise management software distributor
China Manufacturer of trailers and trucks
SDI Corporation Taiwan Stationary and lead frames for semiconductors
manufacturer
Strategic report
Annual Report and Financial Statements 2023
42
Name
Geography
Business
2023
Value
£’000
2023
% of total
assets
Ping An Bank A Shares China Consumer bank 0.6
India 0.6
Mobile World Investment
Corporation
Vietnam Electronic and grocery retailer 0.6
Chalice Mining China Miner 0.6
Property Guru Singapore Real-estate platform 0.5
Vietnam Food producer 0.5
Tsugami Precision China Industrial machinery manufacturer 0.5
A Shares
China
energy and lithium battery equipment
AirTac International Group Taiwan Pneumatic components manufacturer
Techtronic Industries Power tool manufacturer 0.3
Jio Financial Services India Financial service business 0.2
Binh Minh Plastics Joint Stock
Company
Vietnam Plastic piping manufacturer 0.2
Nexteer Automotive China Producer of automotive components 0.2
Brilliance China Automotive China Minibus and automotive components
manufacturer
0.2
FPT Vietnam IT service provider
Chime Biologics
China Biopharmaceutical company
Eden Biologics
Taiwan Biopharmaceutical company
Philtown Properties
Philippines Property developer – –
Total Investments 572,748 98.7
* 7,607 1.3
Total Assets 580,355 100.0
*
Denotes private company investment.
Denotes listed investment previously held in the portfolio as a private company investment.
Listed
equities
%
Private company
investments
*
%
Net liquid
assets
†
%
Total
assets
%
31 July 2023 93.6 5.1 1.3 100.0
0.3
Figures represent percentage of total assets.
*
Includes holdings in ordinary shares and preference shares.
†
43
Business model
Business and status
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
Exchange. They invest in a portfolio of assets in
demand. The Company has been approved as an
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
the Investment Trust (Approved Company) (Tax)
The Company is an Alternative Investment Fund
Investment Fund Managers Regulations.
Purpose
capital growth for shareholders.
Investment objective
Indian Sub-continent in order to achieve capital
growth. The Company is prepared to move freely
between the markets of the region as opportunities
for growth vary. The portfolio will normally consist
principally of quoted securities.
Investment policy
principally through investment in companies listed
(excluding Japan) and the Indian Sub-continent.
The Company may also invest in companies based
in the region and in investment funds specialising in
the region or particular countries or sectors within
it even if they are listed elsewhere. The maximum
total assets at time of investment.
Business review
Strategic report
Annual Report and Financial Statements 2023
44
The portfolio contains companies which the managers
comprise part of any index. The portfolio is actively
managed and will normally consist principally of
investments may be held. The maximum exposure
the time of initial investment. The Company is also
markets of the region.
In constructing the equity portfolio a spread of
the thematic characteristics of the portfolio are
sector weights have been set by the Board except
as imposed from time to time by banking covenants
on borrowings.
The Company may use derivatives which will be
in its investments. These typically take the form of
transactions.
The Company has a maximum approved equity
funds. Borrowings are invested in securities when
it is considered that investment opportunities
merit the Company taking a geared position.
The Company is also permitted to be less than
Board and Managers at every Board meeting.
Culture
As an externally managed investment company
expressed through its Board and its third party
their interactions with shareholders and other
Borrowings
Facility Lender Maturing 2023 2022
million
Royal Bank
of Scotland
International
2025
No
outstanding
drawings
No
outstanding
drawings
The main covenants relating to the loan are
that borrowings should not exceed 30% of the
covenants during the year.
45
The Board also has regard to the total return of the
Country Asia ex Japan Index (in sterling terms))
and considers the performance of comparable
looks for relative outperformance over the long
investment policy and the growth characteristics
of the portfolio investments may entail periods of
underperformance over the short and medium term.
and performance.
Key performance indicator
indicators (KPIs) to measure
the progress and performance
of the Company over time when
discharging its duties as set
out on page 67. These KPIs are
established industry measures.
Share price and net asset
value total returns (APM)
The total return is the return to
shareholders after reinvesting
the net dividend on the date that
the share price goes ex-dividend.
-50
0
50
100
150
200
250
300
● NAV total
return
● Share
price total
return
1 year 5 years10 years
(APM)
As stock markets and share prices
is rarely the same as its NAV. When
the share price is lower than the NAV
per share it is said to be trading at a
discount. If the share price is higher
is called a premium.
-8
-6
-4
-2
0
● Average discount/premium
of NAV to share price
1 year 5 years10 yea
rs
%
Ongoing charges (APM)
Ongoing charges are the total
recurring expenses (excluding
investments and borrowing costs)
incurred by the Company as a
percentage of the daily average
net asset value.
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
● Ongoing charges
movement
1 year 5 years10 years
%
Performance
Strategic report
Annual Report and Financial Statements 2023
46
Viability statement
Notwithstanding that the continuation of the
Company is subject to approval of shareholders
Company over a three year period. The Directors
continue to believe this period to be appropriate
approach. In the absence of any adverse change to
the regulatory environment and the favourable tax
period is one over which they do not expect there
risks and to the adequacy of the mitigating controls
in place. The Directors do not envisage any change
foresee any events that would prevent the Company
from continuing in existence over that period.
current position and have conducted a robust
emerging risks and uncertainties (as detailed on
(excluding Japan) and the Indian Sub-continent
equity markets would adversely impact the value of
the investment portfolio. The Directors have also
projected income and expenditure. The vast majority
and can be sold to meet its liabilities as they fall
affecting their respective services to the Company.
services required by the Company are outsourced to
can be replaced at relatively short notice where
necessary.
of increasing geopolitical tensions. The stress
testing did not indicate any matters of material
concern.
at which the shares trade and the Company has
deemed by the Board to be in the best interests
of the Company and its shareholders. In the year to
there is a reasonable expectation that the Company
will be able to continue in operation and meet its
liabilities as they fall due over the next three years.
47
the Company on a regular basis. The Directors have carried out a robust assessment of the principal
principal risks during the year. A description of these risks and how they are being managed or mitigated is
set out below.
The Board considers the heightened macroeconomic and geopolitical concerns to be factors which
trust. Their impact is considered within the relevant risks.
Financial
risk
mainly of listed securities
portfolio) and its principal and
therefore market related and
include market risk (comprising
liquidity risk and credit risk.
An explanation of those risks
and how they are managed
Financial Statements on pages
How is it mana
considered the impact of
heightened market volatility
during recent months due to
macroeconomic factors such
rates and geopolitical concerns.
Board considers at each meeting
various metrics including regional
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 various investment
markets and sectors. A strategy
session is held annually.
Current
This risk is increasing due to
increased market volatility
as a result of heightened
macroeconomic and
geopolitical concerns.
Investment
strategy risk
Pursuit of an investment
objective which the market
perceives to be unattractive or
implementation of an attractive
lead to reduced returns for
a decreased demand for the
trading at a widening discount
to their net asset value.
How is it mana
regularly reviews and monitors
the investment portfolio and
value at which the shares trade
and movements in the share
register and raises any matters
of concern with the Managers.
Current
This risk is increasing as the
during the recent period of
heightened macroeconomic
and geopolitical concern.
Decreasing RiskIncreasing Risk No Change
Strategic report
Annual Report and Financial Statements 2023
48
Political and
associated
economic
The Board is of the view that
political change in areas in
which the Company invests or
consequences for the Company.
How is it mana
Political developments are closely
monitored and considered by the
tensions between the USA and
China regarding tariffs and unrest
from the Russian invasion of
Ukraine. It monitors portfolio
to mitigate against the negative
impact of military action or trade
barriers. The Board believes
which predominantly comprises
companies listed on the stock
(excluding Japan) and the Indian
mitigate such political risks.
Current
This risk is increasing due to
the ongoing Russia-Ukraine
between China and the US.
Discount
risk
trade relative to its net asset
value can change. The risk of a
widening discount is that it may
in the Company.
How is it mana
Board monitors the level of
shares trade and the Company
has authority to buy back its
by the Board to be in the best
interests of the Company and
its shareholders.
Current
widened during the year.
Regulatory
risk
Failure to comply with
applicable legal and regulatory
requirements such as the
tax rules for investment trust
Rules and the Companies Act
could lead to suspension of the
Company being subject to tax
on capital gains.
How is it mana
Compliance Departments
provide regular reports to the
Audit Committee on Baillie
Major regulatory change
could impose disproportionate
compliance burdens on the
Company. In such circumstances
representation is made to ensure
that the special circumstances of
investment trusts are recognised.
Shareholder documents and
and Annual Report and Financial
stringent review processes and
procedures are in place to ensure
adherence to the Transparency
Directive and the Market Abuse
Directive with reference to inside
information.
Current
All control procedures are
working effectively. There
have been no material
regulatory changes that
have impacted the Company
during the year.
Decreasing RiskIncreasing Risk No Change
49
Custody and
depositary
risk
assets may be compromised
through control failures by the
of cyber security.
How is it mana
Committee receives six-monthly
reports from the Depositary
Custodian. Cash and portfolio
holdings are independently
records by the Managers who
from investee companies. The
controls reports are reviewed
Department and a summary
of the key points is reported
to the Audit Committee and
any concerns investigated.
Current
All control procedures are
working effectively.
Operational
risk
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 mana
has a comprehensive business
continuity plan which facilitates
continued operation of the
business in the event of a service
disruption. The Audit Committee
on Internal Controls and reports
by other key third party providers
are reviewed by Baillie Gifford
on behalf of the Board and a
summary of the key points is
reported to the Audit Committee
and any concerns investigated.
The other key third party service
providers have not experienced
affecting their respective services
to the Company.
Current
All control procedures are
working effectively.
Decreasing RiskIncreasing Risk No Change
Strategic report
Annual Report and Financial Statements 2023
50
The Company may borrow
money for investment purposes.
any borrowings will magnify
the impact of this loss. If
borrowing facilities are not
have to sell investments
to repay borrowings. The
Company can also make use
of derivative contracts.
How is it mana
require the prior approval of
the Board and leverage levels
are discussed by the Board and
Managers at every meeting.
Covenant levels are monitored
regularly. The majority of the
quoted securities that are readily
realisable. Further information on
leverage can be found on page
and Alternative Performance
Current
facility remains undrawn.
Climate and
governance
risk
Perceived problems on
in an investee company
shares being less attractive to
to potential valuation issues
arising 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 Managers to identify
ESG weaknesses in investee
companies could lead to the
adversely affecting its own
share price.
How is it mana
strong ESG stewardship and
engagement policies which are
bailliegifford.com
which have been reviewed and
which have been fully integrated
into the investment process. Due
diligence includes assessment
of the risks inherent in climate
change (see page 55).
Current
The Investment Manager
continues to employ strong
ESG stewardship and
engagement policies.
Decreasing RiskIncreasing Risk No Change
51
Cyber
security risk
network or that of a third party
service provider could impact
availability of data and systems.
How is it mana
Committee reviews Reports
on Internal Controls published
by Baillie Gifford and other
third party service providers.
Cyber security due diligence
is performed by Baillie Gifford
on third party service providers
which includes a review of crisis
management and business
continuity frameworks.
Current
All control procedures are
working effectively.
Emerging risk
the Annual Report and Financial
regular discussions on principal
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
risks including developing
AI and quantum computing
coronavirus variants or
similar public health threats.
How is it mana
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.
Current
No change in emerging risks.
Decreasing RiskIncreasing Risk No Change
Strategic report
Annual Report and Financial Statements 2023
52
Promoting the success of the Company
(section 172 statement)
the directors of a company must act in the way
to promote the success of the company for the
so have regard (amongst other matters and to the
extent applicable) to: a) the likely consequences
maintaining a reputation for high standards of
between members of the company.
being an externally-managed investment company
potential new shareholders; its externally-appointed
managers (Baillie Gifford); other professional service
and depositary); lenders; wider society and the
environment.
The Board considers that the interests of the
of wishing to see the Company deliver sustainable
being merely a matter of emphasis on those
elements.
are set out below.
Why we engage How we engage and what we do
Shareholder
owners: providing them with a return for their
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
and prospects. It also allows shareholders the opportunity to
meet with the Board and Managers and raise questions and
concerns. The Chair is available to meet with shareholders as
appropriate. The Managers meet regularly with shareholders
to the Board. Directors also attend certain shareholder
hand. Shareholders may also communicate with members of
communication opportunities help inform the Board when
considering how best to promote the success of the Company
53
Why we engage How we engage and what we do
Baillie Gifford –
Managers and
Secretaries
Gifford. Baillie Gifford is therefore responsible
for the substantial activities of the Company
subject to the oversight and strategic direction
provided by the Board.
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
highest standards of business conduct.
Portfolio companies
conducted by third party professional
investment portfolio which have the primary
real-world impact in terms of social and
The investee companies have an interest in
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
society and the environment. The Board considers that its
matters is an important part of its responsibility to all
an assessment of their ESG approach and its application in
making investment decisions. The Board regularly reviews
Brokers
institutional shareholders.
Board apprised of shareholder and wider market sentiment
regarding the Company. They also arrange forums for
the normal general meeting cycle.
Registrars
interface with those shareholders who
The Company Secretaries liaise with the registrars to
ensure the frequency and accuracy of communications
correspondence to ensure that the level of service provided
the outcome of this review to the Board.
Auditor
Financial Statements as a whole are free from
information requested by the auditor in connection with the
complete and accurate in all respects.
Strategic report
Annual Report and Financial Statements 2023
54
Why we engage How we engage and what we do
Depositary
and Custodian
The depositary is responsible for the
page 62.
other service providers in a collaborative and collegiate
challenge is brought and evaluation conducted. This approach
aims to enhance service levels and strengthen relationships
maintaining the highest standards of business conduct.
as described on page 8 and have an interest
and viability.
and advise the Board on the appropriateness of the terms
and covenants therein. The Managers and Secretaries
that correspondence from the lenders receives a prompt
response.
The Association of Investment Companies
industry peers have an interest in the
as adverse market sentiment towards
one investment trust can affect attitudes
towards the wider industry.
Investment platforms Investment platforms provide an interface
with shareholders who invest in the
Company indirectly.
The Managers liaise with the various investment platforms
on strategies for improving communications with the
platforms. An annual timetable of key dates is published on
shareholders.
Wider society and
the environment
negative impacts insofar as is possible.
stakeholders as noted above form the principal forms of
direct engagement with wider society and in respect of the
health and resources).
The Board recognises the importance of keeping
making. The Company Secretaries are available
at all times to the Board to ensure that suitable
consideration is given to the range of factors to
which the Directors should have regard. In addition
actions during the year which required the
Directors to have regard to applicable section
shares into treasury at a discount to net asset
their shares when natural market demand was
value for remaining shareholders.
on two separate occasions on a non pre-emptive
basis at a premium to net asset value.
55
Employees, human rights and community
issues
The Board recognises the requirement to provide
and community issues. As the Company has no
human rights and community issues.
Gender representation
two female. The Company has no employees. The
Environmental, social and governance policy
responsible investment can be found under
Corporate Governance and Stewardship on
approach to socially responsible investment set
and the Baillie Gifford statement on stewardship
United Nations Principles for Responsible Investment
Asset Managers Initiative and are also members of
the International Corporate Governance Network
and the Asian Corporate Governance Association.
The Company considers that it does not fall within
Company considers its supply chains to be of
low risk as its suppliers are typically professional
advisers. A statement by the Managers under the
at bailliegifford.com.
Climate change
The Board recognises that climate change poses a
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 published the
footprint and exposure to climate risk are measured
and reported. Companies disclosing their emission
and communicating emissions plans will be a helpful
place from which to begin more useful discussions
regulators.
the Managers
believe that carbon footprint metrics in isolation
others is a mostly meaningless observation. More
patient capital into innovative new technologies with
the potential to accelerate the transition away from
carbon. An external provider was engaged to map
the carbon footprint of the portfolio. This analysis
emissions and other carbon related characteristics.
Under the Streamlined Energy and Carbon Reporting
disclose energy and carbon information (see page 66).
Future developments of the Company
The outlook for the Company is set out in the
by the Board of Directors and signed on its behalf
on 5 October 2023.
Angus Macpherson
Chairman
Governance
report
This governance report, which includes
pages 57 to 82 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.
57
Directors and
management
Angus Macpherson
Chairman
Sir Robert Chote
Director
Appointed 2020
non-executive director of Schroder Japan Trust plc
Sir Robert Chote was appointed a Director in 2020.
as an advisor to the International Monetary Fund and
a senior adviser to governance reform consultancy
FMA and a visiting professor at the Department of
on advisory boards at the Warwick Manufacturing
Group and the Centre for Economic Performance of
Directors
Governance report
Annual Report and Financial Statements 2023
58
Angela Lane
Audit Committee
Chair
She is Chairman of the Audit Committee and is
accountant and has held several non-executive and
advisory roles for small and medium capitalised
companies across a range of industries. Previously she
for 3i plc. She is a non-executive director and Chair
of the Audit Committee of BlackRock Throgmorton
Joe Studwell
Director
at Dragonomics and author under the name of
an experienced Asian analyst and fund manager.
Companies Trust plc she became lead manager in
a director of Melville Paisley Investments.
Wee-Li Hee
Director
Appointed 2020
Management Engagement and Audit Committee.
59
Roddy is an Investment Manager in the Emerging
he has also spent time in the UK and European
Medical Biology from the University of Edinburgh
in 2006.
Ben is an Investment Manager in the Emerging
Private Companies teams. Prior to joining Baillie
Strategy and Corporate Finance Team. Ben is a
Investment
Manager
Ben Durrant
Deputy Manager
Appointed 2023
Portfolio Managers
Governance report
Annual Report and Financial Statements 2023
60
The Company has appointed Baillie Gifford & Co
services to Baillie Gifford & Co. Dealing activity
and transaction reporting have been further
Baillie Gifford & Co is an investment management
Baillie Gifford is one of the largest investment trust
managers in the UK and currently manages thirteen
close-ended investment companies. Baillie Gifford
together with investment portfolios on behalf of
the management or advice of Baillie Gifford totalled
the leading privately owned investment management
are both authorised and regulated by the Financial
Conduct Authority.
61
The Directors present their
Report together with the Financial
Statements of the Company for
the year to 31 July 2023.
Corporate governance
The Corporate Governance Report is set out on
Managers and company secretaries
management services to Baillie Gifford & Co.
Dealing activity and transaction reporting have been
further sub-delegated to Baillie Gifford Overseas
The Investment Management Agreement sets
out the matters over which the Managers have
authority in accordance with the policies and
notice. Compensation fees would only be payable
in respect of the notice period if termination were
to occur within a shorter notice period. The Board
is of the view that calculating the fee with reference
to performance would be unlikely to exert a positive
million of net assets and 0.55% on the remaining
net assets.
Governance report
Annual Report and Financial Statements 2023
62
management and secretarial arrangements on an
ongoing basis and a formal review is conducted by
the Management Engagement Committee annually.
in the review:
to date; and
Secretaries.
of the Management Engagement Committee that
the continuing appointment of Baillie Gifford & Co
of the investment management services to Baillie
Gifford & Co and the further sub-delegation of
dealing activity and transaction reporting to Baillie
the interests of shareholders as a whole due to
trust sector and the quality of the secretarial and
the Directors also considered the execution of
the agreed investment strategy and the relative
performance over the medium term.
Depositary
in accordance with the requirements of the UK
Alternative Investment Fund Managers Regulations.
a record of other assets and monitoring the
Directors
and 58.
All of the Directors are retiring at the Annual General
for re-election. Following formal performance
continues to be effective and that they remain
committed to the Company and capable of devoting
recommends their re-election to shareholders.
The Company has entered into qualifying third party
deeds of indemnity in favour of each of its Directors.
default or breach of trust or duty. The Directors
incurred in connection with criminal proceedings in
which the Director is convicted or civil proceedings
brought by the Company in which judgement is given
apply to any liability to the extent that it is recovered
from another person. The Company also maintains
interest to the Nomination Committee on an annual
taking into account the circumstances surrounding
them and makes a recommendation to the Board
authorised. Board authorisation is for a period of
one year.
there were no situations which gave rise to a direct
with interests of the Company.
63
Dividends
invest in companies based on the level of income
they may pay out as dividends.
or maintain dividends. This year the net revenue
available for distribution to shareholders amounted
to require a distribution to be made to maintain
investment trust status.
The Directors are therefore recommending the
ordinary shares will be paid on 30 November 2023
to shareholders on the register at the close of
Share capital
Capital structure
no restrictions concerning the holding or transfer
special rights attached to any of the shares.
Dividends
The ordinary shares carry a right to receive
dividends. Interim dividends are determined by the
subject to shareholder approval.
Capital entitlement
shareholders in proportion to their shareholdings.
Voting
Each ordinary shareholder present in person or by
Major interests disclosed in the Company’s shares
Name
Ordinary 10p
shares held
at 31 July 2023
% of
issue
*
8.5%
*
Analysis of shareholders at 31 July
2023
Number of
shares held
2023
%
2022
Number of
shares held
2022
%
Institutions
Intermediaries 50.2
Individuals
Marketmakers
91,081,949 100.0 91,860,961 100.0
Service. There have been no changes to the major
3 October 2023.
Annual General Meeting
proposed resolutions and information on the
their own name on the main register will be provided
with a Form of Proxy. If you hold shares through a
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
Issuance of shares
authority to issue shares and also an authority to
issue shares or sell shares held in treasury on a non
to existing shareholders pro-rata to their existing
holdings) for cash up to an aggregate nominal
the forthcoming Annual General Meeting and the
Governance report
Annual Report and Financial Statements 2023
64
premium to net asset value (on the basis of debt
valued at par value) on two separate occasions at
a weighted average price of 688.00 pence per
3 October 2023.
Meeting seeks a general authority for the Directors
to issue ordinary shares up to an aggregate nominal
latest practicable date prior to the publication of
No issue of ordinary shares will be made pursuant
effectively alter the control of the Company without
the prior approval of shareholders in general meeting.
cash without having to offer such shares to existing
the latest practicable date prior to publication of this
document.
The Directors consider that the authority proposed
a premium to net asset value and the level of natural
liquidity in the market is unable to meet demand. The
Directors do not intend to use this authority to sell
or issue ordinary shares on a non pre-emptive basis
at a discount to net asset value. While the level of
the authority being sought is greater than the 5%
recommended by the Pre-Emption Group in their
Statement of Principles on disapplying pre-emption
seeking authority to issue shares at a premium to the
normally raise concerns and the Directors consider
continue until the conclusion of the Annual General
Such authorities will only be used to issue shares or
sell shares from treasury at a premium to net asset
value and only when the Directors believe that it
would be in the best interests of the Company to do
so. The Directors believe that the ability to buy back
shares at a discount and re-sell them or issue new
shares at a premium are useful tools in smoothing
supply and demand.
way of a special resolution) to renew the authority
shares in issue (excluding treasury shares) as at
(excluding treasury shares) on the date on which the
resolution is passed). This authority will expire at the
end of the Annual General Meeting of the Company
made at a discount to the prevailing net asset value.
The Company may hold bought back shares in
treasury and then:
a. sell such shares (or any of them) for cash (or its
equivalent under the Companies Act 2006); or
b. cancel such shares (or any of them).
Shares will only be re-sold from treasury at (or at a
premium to) the net asset value per ordinary share.
65
Treasury shares do not receive distributions and
the Company will not be entitled to exercise the
voting rights attaching to them. In accordance with
expenses) that may be paid on the exercise of the
authority shall be an amount equal to the higher of:
i. 5 per cent. above the average closing price on the
date of the purchase; and
ii. the higher of the price of the last independent
trade and the highest current independent bid for
The minimum price (again exclusive of expenses)
that may be paid will be the nominal value of an
ordinary share. Purchases of ordinary shares will
warrants or options in issue. The Directors intend
only if to do so would result in an increase in net
asset value per ordinary share for the remaining
shareholders and if it is in the best interest of
shareholders generally.
Recommendation
The Board considers that all the resolutions to be
proposed at the Annual General Meeting are in the
best interests of the Company and its shareholders
recommends that you vote in favour of all of the
Financial instruments
borrowings and debtors and creditors that arise
directly from its operations such as sales and
purchases awaiting settlement and accrued income.
the exposure of the Company to risk are disclosed
Future developments of the Company
The outlook for the Company is set out in the
Going concern
Directors have undertaken a rigorous review of the
market related. An explanation of these risks and
heightened market volatility over recent months
is affected.
are investments in quoted securities which are
All borrowings require the prior approval of
the Board. The Board approves borrowing and
gearing limits and reviews regularly the amounts
of any borrowing and the level of gearing as well
as compliance with borrowing covenants. Stress
testing was performed in the year and no matters
were raised. The Company has continued to comply
with the investment trust status requirements of
the Investment Trust (Approved Company) (Tax)
right to vote on the continuation of the Company
Financial Statements have been prepared on the
going concern basis; having assessed the principal
and emerging risks and other matters set out in the
prospects of the Company over a period of three
will continue in operational existence for a period of
at least twelve months from the date of approval of
these Financial Statements.
Articles of Association
amended by special resolution at a general meeting
of shareholders.
Governance report
Annual Report and Financial Statements 2023
66
Disclosure of information to auditor
the Directors is aware there is no relevant audit
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
of that information.
Independent Auditor
and remuneration will be submitted to the Annual
General Meeting.
Post balance sheet events
thereto up to 5 October 2023.
Greenhouse Gas Emissions and Streamlined
Energy & Carbon Reporting (‘SECR’)
to third parties. The Company therefore has no
greenhouse gas emissions to report from its
any other emissions producing sources under
the Companies Act 2006 (Strategic Report and
itself to be a low energy user under the SECR
energy and carbon information.
Bribery act
bribery and is committed to carrying out business
procedures in place to prevent bribery.
Criminal Finances Act 2017
towards the criminal facilitation of tax evasion.
On behalf of the Board
Angus Macpherson
Chairman
5 October 2023
67
Compliance
who report against the AIC Code will be meeting
their obligations in relation to the UK Code (the
AIC Code can be found at ). The Board
the year under review with the relevant provisions of
the Code and the recommendations of the AIC Code
with the exception that the Company does not have
a separate internal audit function as explained on
The Board
The Board has overall responsibility for the
formally reserved for its approval including
governance policy. A strategy session is held
annually. The Board also reviews the Financial
budgets and performance of the Company. Full
and timely information is provided to the Board to
enable the Board to function effectively and to allow
Directors to discharge their responsibilities.
non-executive and independent.
effectiveness and setting its agenda.
concerns not properly addressed to the Chairman.
and chairs the Nomination Committee when it
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 (‘Code’), which can be found
principles of the Association of
Investment Companies (‘AIC’)
Code of Corporate Governance
(‘AIC Code’) issued in 2019 were
year. The AIC Code provides a
investment companies and can
Governance report
Annual Report and Financial Statements 2023
68
Board of Directors
Comprises independent
non-executive directors
Chair: Angus Macpherson
Senior Independent Director:
Angela Lane
Audit
Committee
Chair: Angela Lane
Purpose: The primary purpose of a
of internal controls and compliance with
laws and regulations.
Management Engagement
Committee
Chair: Angus Macpherson
Purpose: The role of the Management
Engagement Committee is to ensure that
the Managers remain suitable to manage
contract is competitive and reasonable for
maintains appropriate administrative and
company secretarial support.
Nomination
Committee
Chair: Angus Macpherson
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 Managers and Company Secretary:
subsidiary of Baillie Gifford & Co)
Dealing activity and transaction reporting:
Auditor
The Bank of
New York Mellon
Depositary
Computershare
Investor Services
Registrar
JP Morgan
69
The executive responsibility for investment
The Directors believe that the Board has a balance
of skills and experience that enable it to provide
effective strategic leadership and proper governance
There is an agreed procedure for Directors to
Appointments to the Board
recommendation to the Board by the Nomination
appointments are set out in formal letters of
appointment which are available for inspection
on request.
required to retire and seek approval by shareholders
at the next Annual General Meeting.
In accordance with the AIC Code of Corporate
re-election.
The names of Directors retiring and offering
themselves for re-election together with the reasons
why the Board supports this are set out on page 62.
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 view that length of service will not necessarily
compromise the independence or contribution of
Board. The Board concurs with the view expressed
in the AIC Code that long serving Directors should
not be prevented from being considered
independent.
In accordance with the AIC Code of Corporate
re-election. Following a formal performance
continued to be independent in character and
judgement and their skills and experience added
Meetings
There is an annual cycle of Board meetings which
policy and communication with shareholders.
regularly to discharge its duties effectively. The
table below shows the attendance record for the core
excluding ancillary and sub-committee meetings.
The Annual General Meeting was attended by all
Directors.
Directors’ attendance at meetings
Board
Audit
Committee
Nomination
Committee
Management
Engagement
Committee
Number of meetings 4 2 1 1
RA Macpherson 2
RW Chote 2
2
2
RF Studwell 2
Chairperson and Directors’ tenure
The Nomination Committee has considered the
question of tenure for directors and has concluded
that there should not be a set maximum time limit
for a director or chairperson to serve on the Board.
The Nomination Committee keeps under review
ensuring the Board has the right combination of
bringing in fresh ideas and perspective.
Governance report
Annual Report and Financial Statements 2023
70
Management Engagement Committee
All Directors are members of the Management
Chairman of the Board. The Board considers each
member of the Committee to be independent. To
year to consider: the performance and suitability
of the Manager; the terms and conditions of
Terms of Reference are available on request from
.
Nomination Committee
The Nomination Committee consists of all the
non-executive Directors and the Chairman of
the Board is Chairman of the Committee. The
Committee meets on an annual basis and at such
other times as may be required. The Committee has
written terms of reference that include reviewing
nominating new candidates for appointment to the
succession including overseeing development of
The Committee also considers whether Directors
should be recommended for re-election by
shareholders. The Committee is responsible for
and for making recommendations to the Board on
Terms of Reference are available on request from
.
Diversity policy
Appointments to the Board are made on merit
cognitive and personal strengths. The priority in
appointing new directors is to identify the candidate
with the best range of skills and experience to
complement existing Directors. Within the context
number of senior roles are available. The Board
Rules diversity targets more often than not but
implemented thoughtfully and having regard to the
result in periods when the diversity targets are not
of directors may prevent them from being able to
undertake the responsibilities of a senior role. In
by their inclusion outweighs the ambition of meeting
diversity targets.
Board composition
the importance of having a range of skilled and
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
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
Statistics criteria.
As an externally managed investment company
guidance are Chair and Senior Independent Director
Chair to represent a senior role within this context.
The Board currently complies in all respects with the
Gender Number %
Senior
roles
Men 3 60
Women 2
Prefer not to say – – –
Number %
Senior
roles
White 80
2
20
–
Prefer not to say – – –
71
Performance evaluation
a performance evaluation and review of both the
Board as a whole and of the individual Committees
was carried out during the year. After inviting each
Director and the Chairman to consider and respond
each Director was appraised by the Chairman and
contribution of individual Directors and the overall
effectiveness of the Board and its Committees.
Board and its Committees continues to be effective
and each Director and the Chairman are committed
commitments during the year.
Induction and training
New Directors are provided with an induction
programme which is tailored to the particular
circumstances of the appointee. During the year
updates on industry and regulatory matters were
provided to the Board by the Managers and
Secretaries. Other relevant training for Directors is
provided as necessary.
Remuneration
As all the Directors are non-executive there is
no requirement for a separate Remuneration
Board as a whole within the limits approved by
Audit Committee
The report of the Audit Committee is set out on
The Directors acknowledge their responsibility
internal controls systems and for reviewing their
Statements. These 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.
accordance with the FRC guidance ‘Guidance on
The practical measures to be taken in relation to the
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
risk function provide the Audit Committee with
regular reports on their monitoring programmes.
The reporting procedures for these departments
agreement. Baillie Gifford & Co conducts an annual
review of its system of internal controls which is
documented within an internal controls report which
on Controls at a Service Organisation. This report
is independently reviewed by Baillie Gifford &
Committee.
Governance report
Annual Report and Financial Statements 2023
72
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.
the year they also provide a mechanism to assess
whether further action is required to manage these
risks.
and internal controls systems which accord with
Internal Control and Related Financial and Business
review their effectiveness on a regular basis. No
under review and up to the date of this Report.
year and continue to be in place up to the date of
approval of this Report.
To comply with the UK Alternative Investment Fund
AIFM.
compliance with investment limits and leverage
requirements. The Depositary is liable for the loss of
will ensure that any delegate segregates the assets
prepares reports on its key controls and safeguards
which are independently reviewed by its appointed
summary of the key points is reported to the Audit
Committee and any concerns are investigated.
The Depositary provides the Audit Committee with a
report on its monitoring activities.
The AIFM has established a permanent risk
management function to ensure that effective risk
management policies and procedures are in place
and to monitor compliance with risk limits. The AIFM
has a risk management policy which covers the
risks associated with the management of the
this policy is reviewed and approved at least
annually. This review includes the risk management
processes and systems and limits for each risk area.
monitored and the sensitivity of the portfolio to key
risks is undertaken periodically as appropriate to
ascertain the impact of changes in key variables
in the portfolio. Exceptions from limits monitoring
Business Risk Department are escalated to the
AIFM and reported to the Board along with remedial
measures being taken.
Relations with shareholders
The Board places great importance on communication
regularly with shareholders and their representatives
Chairman and Directors also attend shareholder
communication with market participants and investors
in order to ascertain views on corporate matters. The
Chairman is available to meet with shareholders as
appropriate. Shareholders wishing to communicate
with any members of the Board may do so by writing
73
a forum for communication with all shareholders.
The level of proxies lodged for each resolution is
announced at the meeting and is published on the
subsequent to the meeting.
The notice period for the Annual General Meeting
is at least twenty working days.
Shareholders and potential investors may obtain
up-to-date information on the Company at
.
Corporate governance and stewardship
The Company has given discretionary voting powers
to Baillie Gifford & Co. The Managers vote against
rights or economic interests and report their actions
to the Board.
retaining investments and has asked the Managers
to take these issues into account as long as the
investment objectives are not compromised. The
Managers do not exclude companies from their
investment universe purely on the grounds of ESG
factors but adopt a positive engagement approach
whereby matters are discussed with management
with the aim of improving the relevant policies
and management systems and enabling the
Managers to consider how ESG factors could
statement of compliance with the UK Stewardship
bailliegifford.com
reviewed and endorsed by the Board. Baillie Gifford
considered the Sustainable Finance Disclosures
On behalf of the Board
Angus Macpherson
Chairman
5 October 2023
Governance report
Annual Report and Financial Statements 2023
74
The Audit Committee consists of
all the Directors. The members
of the Committee consider that
responsibilities of the Committee.
Ms AC Lane is Chairman of the
Audit Committee.
Audit
committee report
which are available on request from the Company
Secretaries and at . The terms
of reference are reviewed annually.
evaluation process.
At least once a year the Committee meets with the
external Auditor without any representative of the
Managers being present.
Main activities of the committee
The Committee met twice during the year and BDO
risk function provided reports on their monitoring
programmes for each of these meetings.
by the Committee during the course of the year
included the following:
Interim Reports;
the Annual Report and Financial Statements and
whether it provided the information necessary
control environment;
engagement of the external Auditor;
75
out to tender;
Auditor to supply non-audit services;
Auditor and the effectiveness of the audit process;
audit function;
Managers and Custodian; and
concerns about possible improprieties in matters
Internal audit
The Committee continues to believe that the
compliance and internal controls systems and the
internal audit function in place within the Investment
The external auditor has adopted a wholly
substantive approach to testing and therefore the
absence of an internal audit function has not had an
impact on audit procedures.
Financial reporting
areas of risk likely to impact the Financial Statements
the accuracy and completeness of income from
investments.
The majority of the investments are in quoted
securities and market prices are readily available
from independent external pricing sources. The
Internal Controls which details the controls in place
regarding recording and pricing of investments and
the reconciliation of investment holdings to third
party data.
2023 were agreed to external price sources. The
for investments in unlisted (private) companies (as
described on page 36) and approved the valuation of
the private investments following a detailed review
of the valuation of each investment and relevant
challenge where appropriate. The listed portfolio
investee companies.
Internal Controls which details the controls in place
regarding completeness and accurate recording of
investment income. The accounting treatment of
each special dividend received or receivable during
the year was reviewed by the Managers.
years and its ability to continue as a going concern
for at least twelve months from the date of signing
from the Managers on the cash position and cash
as they fall due. The Committee also reviewed
on going concern on page 65. Following this
Board the appropriateness of the going concern
basis in preparing the Financial Statements and
and statement on going concern.
Committee that they were not aware of any material
misstatements in the context of the Financial
Statements as a whole and that the Financial
Statements are in accordance with applicable law
and accounting standards.
The Committee reviewed the effectiveness of the
Governance report
Annual Report and Financial Statements 2023
76
External auditor
Committee reviewed:
from the Auditor describing its arrangements
to manage auditor independence and received
external Auditor. There were no non-audit fees for
the Committee reviewed and considered:
of the audit team; and
audit process the Committee considered and
reviewed:
audit.
with Mr Neil Fung-On as the lead audit partner. The
audit partners responsible for the audit are to be
with professional and regulatory standards in order
to protect independence and objectivity and to
audit as partner.
independent within the meaning of regulatory and
professional requirements and that the objectivity of
the audit partner and staff is not impaired.
independent and effective for the purpose of this
necessary to put the audit services contract out
to tender.
There are no contractual obligations restricting the
Accountability and audit
The respective responsibilities of the Directors
and the Auditor in connection with the Financial
On behalf of the Board
Chairman of the Audit Committee
5 October 2023
77
remuneration report
shareholder approval every three years or sooner if an
alteration to the policy is proposed. As the Remuneration
Policy was last approved at the Annual General Meeting
being sought at the forthcoming Annual General Meeting.
Your attention is drawn to Resolution 2 in the Notice of
approval is being sought is set out below and is unchanged
from that currently in force.
Directors’ remuneration policy
none of whom has a service contract with the Company.
There is no separate remuneration committee and the
should be set at a reasonable level that is commensurate
with the duties and responsibilities of the role and
consistent with the requirement to attract and retain
Directors of the appropriate quality and experience.
The Board believes that the fees paid to the Directors
be fair and should take account of the level of fees paid
by comparable investment trusts. Any views expressed by
shareholders on the fees being paid to Directors will be
taken into consideration by the Board when reviewing the
Non-executive Directors are not eligible for any other
allowable expenses. There are no performance conditions
incentive schemes or pension schemes. There is no notice
This report has been prepared in
accordance with the requirements
of the Companies Act 2006.
Governance report
Annual Report and Financial Statements 2023
78
Statement by the Chairman
The Board reviewed the level of fees during the year
and it was agreed that the principal consideration
when assessing the level of fees was balancing
the cost of remuneration with ensuring that the
Company had the ability to attract and retain
The Board were of the view that the investment
and regulatory framework. The Company also had
exposure to both listed and private equities and
could be exposed to complex securities such as
the scope of oversight required for this necessitated
a range of specialist skills to properly understand
the investment activities of the Company.
Following discussion and consideration of:
increased modestly year on year;
over the medium to long term was outperforming;
and
to the Trust Associates September 2022 report
based on the data from around 300 investment
I
Co
Independent Director). Fees were last increased
Limits on Directors’ remuneration
The fees for the non-executive Directors are
payable monthly in arrears and are determined
in aggregate. Any change to this limit requires
shareholder approval.
The fees paid to Directors in respect of the year
out in the table below. The fees payable to the
be determined following an annual review of the
Expected
fees for the
year ending
31 July 2024
£
Fees as at
31 July
2023
£
Non-executive Director fee
Additional fee for Audit
Committee Chair
Total aggregate annual fees that
can be paid to the Directors in
Association
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.
of the disclosures provided in this report. Where
79
Directors’ remuneration for the year (audited)
The Directors who served during the year received the following remuneration in the form of fees and
Name
2023
Fees
£
2023
Taxable
*
£
2023
Total
£
%
change
in year
2022
Fees
£
2022
Taxable
*
£
2022
Total
£
RA Macpherson 42,654 37,837
RW Chote 31,751 29,072
– 28,000 25,254
37,876 33,989
RF Studwell 30,606 6.8 28,662
161,000 9,887 170,887 10.4 142,500 12,314 154,814
*
Comprises travel and subsistence expenses incurred by or on behalf of the Directors in the course of travel to attend Board and Committee meetings
Annual percentage change in remuneration
This represents the annual percentage change
in the entire remuneration paid to the Directors.
Name
% from
2022 to
2023
% from
2021 to
2022
% from
2020 to
2021
RA Macpherson
RW Chote* 85.3
†
#
35.3
RF Studwell 6.8
*
†
#
being a 35.3% increase.
Directors’ interests (audited)
The Directors at the end of the year under
review and their interests in the Company are as
shown in the following table. There have been no
3 October 2023.
Name
Nature
of interest
Ordinary 10p
shares held
at 31 July
2023
Ordinary 10p
shares held
at 1 August
2022
RA Macpherson
RW Chote 500 –
RF Studwell
hold shares in the Company.
Governance report
Annual Report and Financial Statements 2023
80
Statement of voting at Annual General Meeting
were against and votes withheld were 0.3%. At the
Remuneration Policy was considered (November
Relative importance of spend on pay
The table below shows the actual expenditure during
distributions to shareholders.
2023
£’000
2022
£’000
Change
%
to shareholders
Company performance
return (assuming all dividends are reinvested) to
the total shareholder return on a notional investment
made up of shares in the component parts of the
FTSE All-Share Index. This index was chosen
for comparison purposes as it is a widely used
measure of performance for UK listed companies.
information purposes only.
Performance graph
Past performance is not a guide to future
performance.
Approval
to 80 was approved by the Board of Directors and
signed on its behalf on 5 October 2023.
Angus Macpherson
Chairman
Cumulative to 31 July
20232013 2015 2018 2020 20222014 20172016 2019 2021
● Pacific Horizon
share price
Source: Refinitiv and underlying data providers. See disclaimer on page 122.
All figures are total return (see glossary of terms and alternative
performance measures on pages 123 and 124).
● FTSE All-Share
Index
● MSCI All Country Asia ex Japan
Index (in sterling terms)
0
600
300
200
100
500
400
81
The Directors are responsible for keeping adequate
position of the Company and enable them to ensure
that the Financial Statements comply with the
Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for ensuring the
Annual Report and the Financial Statements are
made available on a website. Financial Statements
accordance with legislation in the United Kingdom
governing the preparation and dissemination
legislation in other jurisdictions. The maintenance
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
The Directors are responsible for preparing the
Annual Report and the Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
that law the Directors have prepared the Financial
Statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Under company law the Directors must not approve
that they give a true and fair view of the state of
the Company for that period. In preparing these
them consistently;
are reasonable and prudent;
disclosed and explained in the Financial
Statements;
concern basis unless it is inappropriate to presume
that the Company will continue in business; and
comply with the requirements of the Companies
Act 2006.
responsibilities
in respect of the Annual Report and the Financial Statements
Governance report
Annual Report and Financial Statements 2023
82
Each of the Directors, whose names and functions
are listed within the Directors and Managers section
Kingdom Generally Accepted Accounting Practice)
Company;
for shareholders to assess the Company’s
and the position of the Company, together with a
that it faces.
Angus Macpherson
Chairman
Notes
may differ from legislation in other jurisdictions.
Financial
report
The Financial Statements for the
year to 31 July 2023 are set out
on pages 91 to 111 have been
prepared in accordance with
FRS 102 ‘The Financial Reporting
Standard applicable in the UK
and Republic of Ireland’.
Financial report
Annual Report and Financial Statements 2023
84
Independent
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
responsibilities for the audit of the Financial
Statements section of our report. We believe that
and appropriate to provide a basis for our opinion.
Our audit opinion is consistent with the additional
report to the audit committee.
Independence
Following the recommendation of the audit
uninterrupted engagement including retenders and
independent of the Company in accordance
with the ethical requirements that are relevant
our other ethical responsibilities in accordance
with these requirements. The non-audit services
prohibited by that standard were not provided to
the Company.
Opinion on the Financial Statements
In our opinion the Financial Statements:
return for the year then ended;
United Kingdom Generally Accepted Accounting
Practice; and
requirements of the Companies Act 2006.
has been applied in their preparation is applicable
Financial Reporting Standard applicable in the UK
and Republic of Ireland (United Kingdom Generally
Accepted Accounting Practice).
85
ability to continue as a going concern for a period
of at least twelve months from when the Financial
Statements are authorised for issue.
have nothing material to add or draw attention to in
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.
Overview
2023 2022
Key audit
matters
Valuation and ownership
of investments
Materiality Company Financial Statements as a whole
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding
assessing the risks of material misstatement in the
Financial Statements. We also addressed the risk of
assessing whether there was evidence of bias by
the Directors that may have represented a risk of
material misstatement.
Conclusions relating to going concern
concern basis of accounting in the preparation of the
Financial Statements is appropriate. Our evaluation
ability to continue to adopt the going concern basis
of accounting included:
method of assessing going concern in light of
market volatility and the present uncertainties in
economic recovery by reviewing the information
used by the Directors in completing their
assessment;
challenging assumptions and judgements made
we considered the liquidity of the portfolios
and the available cash resources relative to the
forecast expenditure which was assessed against
the prior year for reasonableness;
by agreeing to actual results; and
ability to meet its short-term obligations by
assessing the net asset position and available
cash balance.
Financial report
Annual Report and Financial Statements 2023
86
Key Audit Matters
our audit of the Financial Statements of the current
risks of material misstatement (whether or not due to
Key Audit Matter How the scope of our audit addressed the Key Audit Matter
Valuation and ownership of investments (Note 1 and Note 9)
The investment portfolio at the year-end comprised quoted
We considered the valuation and ownership of investments to be
principal activity of the entity.
Whilst we do not consider the valuation of the quoted equity
year end.
selecting a valuation methodology and a high level of estimation
uncertainty involved in determining their valuations.
There is also a risk that errors made in the recording of
investments owned by the Company.
For these reasons and the materiality of the balance in relation to
key audit matter.
We responded to this matter by testing the valuation and
ownership of the portfolio of investments. We performed the
following procedures:
With respect to the quoted equity investments we:
externally quoted prices;
appropriate indication of fair value by considering the
realisation period for individual holdings;
per equity investment from the custodian regarding all
investments held at the balance sheet date; and
shares held per the statement obtained from the custodian
by the valuation per share.
methodology applied under the International Private Equity
accounting framework;
methodology selected;
sources and challenged subjective inputs including
comparison to independent information where appropriate
and performing stress and reverse stress testing; and
inclnuding consideration of relevant experience and
objectivity of the expert. We considered the appropriateness
of the methodology and assumptions employed by the expert
through review of the accounting framework and valuation
guidelines followed.
Key observations:
Based on our procedures performed we did not identify any
matters to suggest the valuation or ownership of the quoted
equity or private company investments was not appropriate.
efforts of the engagement team. These matters were
addressed in the context of our audit of the Financial
on these matters.
87
Our application of materiality
We apply the concept of materiality both in planning
effect of misstatements. We consider materiality to
of reasonable users that are taken on the basis of
the Financial Statements.
In order to reduce to an appropriately low level
the probability that any misstatements exceed
these levels will not necessarily be evaluated as
immaterial as we also take account of the nature
their effect on the Financial Statements as a whole.
determined materiality for the Financial Statements
as a whole and performance materiality as follows:
Company Financial Statements
2023 2022
Materiality
Basis for
determining
materiality
net assets
of net assets
Rationale for the
benchmark applied
value is the key measure of performance
for users of the Financial Statements.
Performance
materiality
Basis for determining
performance
materiality
Rationale for the
percentage applied
for performance
materiality
The level of performance materiality
applied was set after having considered
a number of factors including the
expected total value of known and
likely misstatements and the level of
transactions in the year.
Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in
Other information
The directors are responsible for the other
information. The other information comprises
the information included in the annual report and
Financial Statements other than the Financial
Our opinion on the Financial Statements does
we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other
other information is materially inconsistent with the
Financial Statements or our knowledge obtained
be materially misstated. If we identify such material
we are required to determine whether this gives
rise to a material misstatement in the Financial
required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
viability and that part of the Corporate Governance
with the provisions of the UK Corporate Governance
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.
Financial report
Annual Report and Financial Statements 2023
88
Directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
or returns adequate for our audit have not been
received from branches not visited by us; or
not in agreement with the accounting records and
returns; or
explanations we require for our audit.
Responsibilities of Directors
the preparation of the Financial Statements and
determine is necessary to enable the preparation
of Financial Statements that are free from material
and using the going concern basis of accounting
unless the Directors either intend to liquidate the
alternative but to do so.
Going concern and longer-term viability
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
assessment covers and why the period is
appropriate.
Other code provisions
understandable;
robust assessment of the emerging and principal
risks;
review of effectiveness of risk management and
internal control systems; and
Committee.
Other Companies Act 2006 reporting
Based on the responsibilities described below and
we are required by the Companies Act 2006 and
ISAs (UK) to report on certain opinions and matters
as described below.
Strategic Report and Directors’ Report
course of the audit:
which the Financial Statements are prepared is
consistent with the Financial Statements; and
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding
of the Company and its environment obtained in
material misstatements in the strategic report or
89
Auditor’s responsibilities for the audit of the
Financial Statements
Our objectives are to obtain reasonable assurance
about whether the Financial Statements as a whole
includes our opinion. Reasonable assurance is a
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
the basis of these Financial Statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
non-compliance with laws and regulations. We
to which our procedures are capable of detecting
Non-compliance with laws and regulations
Based on:
industry in which it operates;
with governance;
policies and procedures regarding compliance
with laws and regulations;
industry practice represented by the AIC SORP and
the applicable accounting framework.
Our procedures in respect of the above included:
to underlying supporting documentation;
governance relating to the existence of any non-
compliance with laws and regulations;
with governance throughout the period for
instances of non-compliance with laws and
regulations; and
Trust status compliance to check that the
Company was meeting its requirements to retain
its Investment Trust status.
Fraud
statement to material misstatement including fraud.
Our risk assessment procedures included:
governance regarding any known or suspected
instances of fraud;
policies and procedures relating to:
and
related to fraud;
with governance for any known or suspected
instances of fraud; and
how and where fraud might occur in the Financial
Statements.
areas most susceptible to be management override
of controls and the valuation of private company
investments.
Our procedures in respect of the above included:
section above for private company investments;
management in the Financial Statements to assess
their appropriateness and the existence of any
systematic bias;
of adjustments made in the preparation of the
Financial Statements; and
indications of bias or deliberate misstatement.
Financial report
Annual Report and Financial Statements 2023
90
and regulations and potential fraud risks to all
engagement team members who were all deemed
to have appropriate competence and capabilities
and remained alert to any indications of fraud
or non-compliance with laws and regulations
throughout the audit.
Our audit procedures were designed to respond
to risks of material misstatement in the Financial
detecting a material misstatement due to
fraud is higher than the risk of not detecting
misrepresentations or through collusion. There
are inherent limitations in the audit procedures
performed and the further removed non-compliance
with laws and regulations is from the events and
the less likely we are to become aware of it.
A further description of our responsibilities is
website at: .
Use of our report
work has been undertaken so that we might state
for no other purpose. To the fullest extent permitted
Chris Meyrick (Senior Statutory Auditor)
5 October 2023
in England and Wales (with registered number
91
For the year ended 31 July
Notes
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
– (25,404) – (118,594)
– (791) – 1,292
Income 2 – 9,580 – 11,067
Investment management fee 3 – (3,419) – (4,036)
Other administrative expenses – (762) – (1,093)
and taxation
5,399 (26,195) (20,796) 5,938 (117,302) (111,364)
Finance costs of borrowings 5 – (403) – (756)
Net return before taxation 4,996 (26,195) (21,199) 5,182 (117,302) (112,120)
Tax
6
(830) (2,086) 3,936
Net return after taxation 4,166 (27,451) 3,830 (112,014) (108,184)
Net return per ordinary share 7 4.56p (30.05p) (25.49p) 4.21p (123.01p) (118.80p)
under guidance published by the Association of Investment Companies.
All revenue and capital items in this Statement derive from continuing operations.
A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is
Income
statement
Financial report
Annual Report and Financial Statements 2023
92
As at 31 July
Notes
2023
£’000
2023
£’000
2022
£’000
2022
£’000
Fixed assets
Current assets
Debtors
Cash and cash equivalents
Creditors
Amounts falling due within one year:
Other creditors and accruals
Net current assets
Total assets less current liabilities 584,447 613,566
Creditors
Amounts falling due after more than one year:
Provision for tax liability
Net assets 580,355 610,550
Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Capital reserve
Revenue reserve
Shareholders’ funds 580,355 610,550
Net asset value per ordinary share 15 637.18p 664.65p
Angus Macpherson
Chairman
Balance
sheet
93
For the year ended 31 July 2023
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
610,550
Net return after taxation – – – (23,285)
Ordinary shares bought back into treasury – – – – (5,541)
Ordinary shares sold from treasury – – – 1,376
Ordinary shares issued – – – – – –
Dividends paid during the year 8 – – – – (2,745)
Shareholders’ funds at 31 July 2023 9,208 254,120 20,367 287,783 8,877 580,355
For the year ended 31 July 2022
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
687,231
Net return after taxation – – – (108,184)
Ordinary shares bought back into treasury – – – – (1,454)
Ordinary shares sold from treasury – – – – – –
Ordinary shares issued 365 – – – 32,957
Dividends paid during the year 8 – – – – – –
Shareholders’ funds at 31 July 2022 9,208 253,946 20,367 319,573 7,456 610,550
Statement of
Financial report
Annual Report and Financial Statements 2023
94
For the year ended 31 July
Notes
2023
£’000
2023
£’000
2022
£’000
2022
£’000
Net return before taxation
Net losses on investments
Finance costs of borrowings 5
Overseas withholding tax incurred
Indian tax paid on transactions
Changes in debtors 523 (580)
Change in creditors
Cash from operations*
Interest paid
4,447 2,522
Acquisitions of investments
Disposals of investments
10,297 (901)
Ordinary shares bought back into treasury
Ordinary shares sold from treasury –
Proceeds from ordinary shares issued –
Borrowings drawn down –
Borrowings repaid –
Equity dividends paid 8 –
(6,910) (32,082)
Increase/(decrease) in cash and cash equivalents 7,834 (30,461)
Exchange movements
Cash and cash equivalents at 31 July 12,442 5,399
*
statement
95
01 Principal accounting policies
Reporting Standard applicable in the UK and Republic of
which are unchanged from the prior year and have been
applied consistently.
a. Basis of accounting
nature and the Financial Statements are prepared on a
assumption that approval as an investment trust under
Investment Trust (Approved Company) (Tax) Regulations
explanation of these risks and how they are managed is
impact of heightened market volatility over recent months
is affected.
the prior approval of the Board. The Board approves
borrowing and gearing limits and reviews regularly the
amounts of any borrowing and the level of gearing as well
as compliance with borrowing covenants. The Company
has continued to comply with the investment trust status
affecting their respective services to the Company.
shareholders have the right to vote on the continuation
2026. The Financial Statements have been prepared on
the going concern basis; having assessed the principal
and emerging risks and other matters set out in the
prospects of the Company over a period of three years)
in operational existence for a period of at least twelve
months from the date of approval of these Financial
Statements.
The Financial Statements have been prepared in
UK Accounting Standards and with the Statement
of Recommended Practice ‘Financial Statements of
issued by the Association of Investment Companies
consequential amendments.
and loss account between items of a revenue and capital
nature has been presented in the Income Statement.
The allocation of items to revenue and capital is
reviewed on an annual basis and is considered to
remain appropriate for the current year.
b. Financial instruments
party to the contractual provisions of the instrument.
The preparation of the Financial Statements requires
reporting date. While estimates are based on best
the actual outcome may differ from these estimates.
The key sources of estimation and uncertainty relate
to the assumptions used in the determination of the
Notes to the
Financial Statements
Financial report
Annual Report and Financial Statements 2023
96
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
ii. the fair valuation of the unlisted investments.
The key judgements in the fair valuation process are:
application of the International Private Equity and
unlisted investment; and
value is appropriate following detailed review and
challenge. The judgement applied in the selection of the
methodology used for determining the fair value of each
the valuation.
Estimates
The key estimate in the Financial Statements is the
determination of the fair value of the unlisted investments
by the Managers for consideration by the Directors. This
the unlisted investments at the Balance Sheet date. The
fair valuation process involves estimation using subjective
inputs that are unobservable (for which market data is
unavailable). The main estimates involved in the selection
of the valuation process inputs are:
i. the selection of appropriate comparable companies
in order to derive revenue multiples and meaningful
earnings growth. Comparable companies are chosen on
the basis of their business characteristics and growth
patterns;
ii. the selection of a revenue metric (either historic or
forecast);
iii. the application of an appropriate discount factor to
versus their listed peers;
iv. the estimation of the probability assigned to an exit
company sale;
v. the selection of an appropriate industry benchmark
index to assist with the valuation validation or the
absence of established earnings or closely comparable
peers; and
vi. the calculation of valuation adjustments derived from
milestone analysis (i.e. incorporating operational
the valuation).
d. Investments
Investment purchases and sales are recognised on a trade
date basis. Expenses incidental to purchase and sale are
written off to capital at the time of acquisition or disposal.
Gains and losses on investments are recognised in the
Income Statement as capital items.
Investments are designated as held at fair value through
at subsequent reporting dates at fair value. The fair
fair value of suspended investments is the last traded
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
applies methodologies consistent with the International
Private Equity and Venture Capital Valuation guidelines
benchmarks and available market prices); (b) income
cost approach (net assets). The valuation process
the price of a recent investment may be an appropriate
be evaluated using the techniques described above.
The Managers monitor the investment portfolio on a fair
value basis and use the fair value basis for investments
performance.
e. 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.
f. Income
i. Income from equity investments is brought into account
on the date on which the investments are quoted
established.
ii. If scrip dividends are taken in lieu of dividends in
is credited to the revenue column of the Income
Statement. Any excess in the value of the shares
received over the amount of the cash dividend foregone
is recognised in the capital column of the Income
Statement.
97
iii. Special dividends are treated as capital or income
depending on the facts of each particular case.
iv. Unfranked investment income and overseas dividends
include the taxes deducted at source.
an accruals basis using the effective interest rate basis.
vi. Underwriting commission and interest receivable on
deposits are recognised on an accruals basis.
g. Expenses
All expenses are accounted for on an accruals basis
and are charged through the revenue column of the
off to capital when incurred.
Interest bearing bank loans are recorded at the proceeds
measured at amortised cost. Finance costs are accounted
for on an accruals basis and are charged through the
revenue column of the Income statement.
i. Taxation
Current tax assets and liabilities are measured at the
amount expected to be recovered from or paid to taxation
authorities. The tax rates and tax laws used to compute
the amount are those enacted or substantively enacted at
the reporting date.
j. Deferred taxation
at the current tax rate relevant to the realisation of the
only to the extent that it will be more likely than not that
differences can be deducted.
Transactions involving foreign currencies are converted at
the rate ruling at the time of the transaction. Assets and
liabilities in foreign currencies are translated at the closing
rates of exchange at the balance sheet date. Any gain or
loss arising from a change in exchange rate subsequent
to the date of the transaction is included as an exchange
gain or loss in the Income Statement as capital or revenue
as appropriate.
l. Capital redemption reserve
distributable reserve into which amounts are transferred
shares.
m. Capit al rese rve
in the fair value of investments held and realised and
unrealised exchange differences of a capital nature are
dealt with in this reserve after being recognised in the
n. Revenue reserve
this reserve. The revenue reserve may be distributed by
way of dividend.
o. Single segment reporting
segmental analysis is provided.
p. Dividend distributions
Final dividends are recognised in the period in which the
Financial report
Annual Report and Financial Statements 2023
98
02 Income
2023
£’000
2022
£’000
Income from investments
Overseas dividends
Other income
Deposit interest
Total income 9,580 11,067
Total income comprises:
9,580 11,067
03 Investment management fee
2023
£’000
2022
£’000
Investment management fee 3,419 4,036
fees are calculated and payable on a quarterly basis.
2023
£’000
2022
£’000
General administrative expenses
Custody charges 255
Marketing
*
85
Depositary fee
†
50 32
762 1,093
*
The Company is part of a marketing programme which includes all the investment trusts managed by the Manager. The marketing strategy has an
†
05 Finance costs of borrowings
2023
£’000
2022
£’000
* 403 756
*
99
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Overseas taxation 830 – 830 – 1,352
Indian tax paid and provided for – 1,256 – (5,288)
830 1,256 2,086 1,352 (5,288) (3,936)
2023
£’000
2022
£’000
Factors affecting the tax charge for the year
The tax assessed for the year is higher (2022 – higher) than the average standard rate of
*
Net return before taxation (21,199) (112,120)
Net return multiplied by the average standard rate of corporation tax in the
*
Capital loss not deductible
Overseas dividends not taxable in the UK
Overseas withholding tax incurred 830
Revenue tax charge for the year 830 1,352
Payments of Indian tax in the period
Capital tax charge for the year 1,256 (5,288)
Total tax 2,086 (3,936)
*
repayment is included within interest income. The capital tax charge results from the provision for tax liability in respect of Indian
Factors that may affect future tax charges
expenses in future periods. The potential deferred tax asset has been calculated using a corporation tax rate of 25% (2022 – 25%).
Financial report
Annual Report and Financial Statements 2023
100
2023
Revenue
2023
Capital
2023
Total
2022
Revenue
2022
Capital
2022
Total
Net return after taxation 4.56p (30.05p) (25.49p) 4.21p (123.01p) (118.80p)
issue (excluding treasury shares) during the year.
issue (excluding treasury shares) during the year.
(excluding treasury shares) during the year.
There are no dilutive or potentially dilutive shares in issue.
2023 2022 2023
£’000
2022
£’000
Amounts recognised as distributions in the year:
3.00p – –
2023 2022 2023
£’000
2022
£’000
3.25p 3.00p
As at 31 July 2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
* – 543,321
Unlisted company equities – – 2,555
Unlisted company preference shares
#
– – 26,872
542,048 1,273 29,427 572,748
As at 31 July 2022
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
– 571,296
Unlisted company equities – – 4,051
Unlisted company preference shares
#
– – 33,192
570,801 495 37,243 608,539
*
#
The investments in preference shares include liquidation preference rights that determine the repayment (or multiple thereof) of the original
investment in the event of a liquidation event such as a take-over.
becoming listed.
101
(continued)
Fair value hierarchy
for the individual investment in its entirety as follows:
Level 1 – using unadjusted quoted prices for identical instruments in an active market;
Level 2
that are directly or indirectly observable (based on market data); and
Level 3 – using inputs that are unobservable (for which market data is unavailable).
companies. The determinations of fair value included assumptions that the comparable companies and scenarios chosen for the
performance assessment provide a reasonable basis for the determination of fair value. In some cases the latest dealing price is
Listed
equities
£’000
Unlisted
equities
£’000
2023
Total
£’000
2022
Total
£’000
488,845
119,694
Value of investments at 1 August 2022 571,296 37,243 608,539 725,122
Movements in year:
Purchases at cost – 88,831
Sales – proceeds received – (99,218)
– gains on investments – 14,553
Change in fair value (39,957)
543,321 29,427 572,748 608,539
493,011
79,737
543,321 29,427 572,748 608,539
2023
£’000
2022
£’000
Realised gains on sales
Changes in investment holding gains and losses
(25,404) (118,594)
Details are disclosed below in accordance with the requirements of paragraph 82 of the AIC Statement of Recommended Practice
Financial report
Annual Report and Financial Statements 2023
102
(continued)
As at 31 July 2023
Latest
Financial
Statements
£’000
Value £’000
Income
recognised
from holding
in the period
£’000
Turnover
(‘000)
Pre-tax
(loss)
(‘000)
Net assets
attributable
to shareholders
(‘000)Name Business
Dailyhunt
(VerSe
Innovation)
Indian news
aggregator
application
Nil Information not publicly available
As at 31 July 2022
Latest
Financial
Statements
£’000
Value £’000
Income
recognised
from holding
in the period
£’000
Turnover
(‘000)
Pre-tax
(loss)
(‘000)
Net assets
attributable
to shareholders
(‘000)Name Business
Dailyhunt
(VerSe
Innovation)
Indian news
aggregator
application
Nil Information not publicly available
10 Debtors
2023
£’000
2022
£’000
Amounts falling due within one year:
Income accrued (net of withholding taxes)
Sales for subsequent settlement –
Other debtors and prepayments
420 1,248
2023
£’000
2022
£’000
non-utilisation fee
52 52
Investment purchases awaiting settlement –
Investment management fee
Other creditors and accruals 238
1,163 1,620
There were no breaches in the loan covenants during the year.
103
depending on the value and timing of any future sales of such investments and future Indian tax rates.
13 Share capital
2023
Number
2023
£’000
2022
Number
2022
£’000
22
92,074,961 9,208 92,074,961 9,208
Articles of Association share buy-backs are funded from the capital reserve.
14 Capital and reserves
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
610,550
Net gains on sales of investments – – – – 14,553
Changes in investment holding
gains and losses
– – – – (39,957)
Other exchange differences – – – – (791)
Indian CGT paid and provided for – – – – (1,256)
Ordinary shares bought back into
treasury
– – – – (5,541)
Ordinary shares sold from treasury – – – 1,376
Revenue return after taxation – – – – 4,166
Dividends paid during the year – – – – (2,745)
9,208 254,120 20,367 287,783 8,877 580,355
T
Financial report
Annual Report and Financial Statements 2023
104
The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in
accordance with the Articles of Association were as follows:
2023
Net asset
value
per share
2022
Net asset
value
per share
2023
Net assets
attributable
£’000
2022
Net assets
attributable
£’000
Ordinary shares 637.18p 664.65p 580,355 610,550
At 1 August
2022
£’000
£’000
Exchange
movement
£’000
At 31 July
2023
£’000
Cash at bank and in hand 5,399 7,834 (791) 12,442
17 Transactions with related parties and the managers and secretaries
with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under section
18 Financial instruments
of a permanent loss of capital rather than to minimise short term volatility. Risk provides the potential for both losses and gains.
The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting
period.
exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the
investment portfolio on an ongoing basis.
enter into derivative transactions without the prior approval of the Board.
105
18 Financial instruments (continued)
value of those items.
which the company is quoted.
otherwise adversely affect the value of the portfolio of investments.
At 31 July 2023
Investments
£’000
Cash and cash
equivalents
£’000
Other debtors
and creditors
£’000
Net
exposure
£’000
– – 142,684
Indian rupee 136,710
Korean won – 100,571
US dollar – 49,460
Indonesian rupiah – – 32,637
Taiwan dollar – 32,600
Vietnam dong 32 33,499
Chinese yuan – – 30,189
Thai baht – – 5,447
Australian dollar – – 3,311
Chinese renminbi – – – –
558,583 12,383 (3,858) 567,108
Sterling 13,247
572,748 12,442 (4,835) 580,355
At 31 July 2022
Investments
£’000
Cash and cash
equivalents
£’000
Other debtors
and creditors
£’000
Net
exposure
£’000
– 135,269
Indian rupee 132,537
Korean won – 101,271
US dollar 60,185
Indonesian rupiah – – 46,508
Taiwan dollar – 26,974
Vietnam dong – 25,323
Chinese yuan 200 – 43,341
Australian dollar – – 9,995
Chinese renminbi – –
578,477 5,296 (2,370) 581,403
Sterling 29,147
608,539 5,399 (3,388) 610,550
Financial report
Annual Report and Financial Statements 2023
106
18 Financial instruments (continued)
of change is considered to be reasonable based on observations of current market conditions. The analysis is performed on the
same basis for 2022.
2023
£’000
2022
£’000
Indian rupee
Korean won
US dollar
Indonesian rupiah
Taiwan dollar
Vietnam dong
Chinese yuan
Thai baht –
Australian dollar 500
28,355 29,070
Interest rate movements may affect directly:
account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the
other similar investments.
Financial assets
2023
Fair value
£’000
2023
Weighted
average
interest rate
2023
Weighted
rate period *
2022
Fair value
£’000
2022
Weighted
average
interest rate
2022
Weighted
rate period *
Cash and cash equivalents:
Overseas currencies
Sterling 0.5%
12,442 5,399
*
Based on expected redemption date.
107
18 Financial Instruments (continued)
Financial liabilities
2023
Within
1 year
£’000
2022
Within
1 year
£’000
52 52
The sensitivity analysis below has been determined based on the exposure to interest rates at the Balance Sheet date and with
would have had an equal but opposite effect.
Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the
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.
reasonable based on observations of current market conditions.
A sensitivity analysis is provided below which recognises that the valuation methodologies employed involve subjectivity in their
table also provides the range of values for the key unobservable inputs.
Financial report
Annual Report and Financial Statements 2023
108
18 Financial Instruments (continued)
As at
31 July 2023 *
Valuation
technique
Fair value as
at 31 July
2023
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range
#
Sensitivity
%
Sensitivity to changes
unobservable inputs
Market
approach
using
comparable
trading
multiples
revenue
multiple
‡
3.6x
the fair value would
Transaction
implied
premium and
discounts
g 88% If the transaction implied
premium is changed
value would change
Illiquidity
discounts
e If the illiquidity
discount is changed by
would change by
Benchmark
performance
Selection of
comparable
companies
§
If input comparable
company performance
the fair value would
†
#
Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication of
the typical multiple or adjustment being applied across the portfolio.
‡
§
company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed.
*
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 unobservable inputs is provided below and includes
109
18 Financial Instruments (continued)
As at 31 July
2022 *
Valuation
technique
Fair value as
at 31 July
2022
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Range
Weighted
average
range
#
Sensitivity
%
Sensitivity to changes
unobservable inputs
Market
approach
using
comparable
trading
multiples
revenue
multiple
‡
3.5x
fair value would change
Illiquidity
discounts
e If the transaction implied
the fair value would
Comparable
company
performance
Selection of
comparable
companies
§
-23% If input comparable
company performance
the fair value would
Recent
transaction
price
†
# Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication of
the typical multiple or adjustment being applied across the portfolio.
value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed.
*
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 unobservable inputs is provided below and includes
Financial report
Annual Report and Financial Statements 2023
110
18 Financial Instruments (continued)
a. Application of valuation basis
achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable
where appropriate forecasts are available.
b. Probability estimation of liquidation events
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
c. Selection of comparable companies
relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting
resultant revenue or earnings multiples or share price movements derived will vary depending on the companies selected and
the industries they operate in.
d. Estimated sustainable earnings
where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on
Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will
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
activity.
The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of
comparison.
g. Transaction implied premium and discount
will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable
be reduced due to factors such as period of time since the transaction and company performance. Where a calibrated approach
Board provides guidance to the Managers as to the maximum exposure to any one holding and to the maximum aggregate
exposure to substantial holdings.
111
18 Financial Instruments (continued)
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:
compared to the prospective investment return of the security in question;
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;
wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained
2023
£’000
2022
£’000
Cash and cash equivalents
Debtors and prepayments
12,862 6,647
approximate their fair value.
Capital management
Shareholder
information
113
Notice of Annual
General Meeting
The Board encourages all shareholders to submit proxy voting
.
Should shareholders have questions for the Board or the
to trustenquiries@bailliegifford.com
Baillie Gifford may record your call.
will be proposed as special resolutions:
Ordinary business
05. To re-elect Mr RA Macpherson as a Director of the Company.
06. To re-elect Sir RW Chote as a Director of the Company.
The Annual General Meeting of the Company will be held at the
John
Lewis
A8 Princes Street
Georg
e Street
Calton Square
Bus
Station
Omni
Centre
Balmoral
Hotel
L
e
i
t
h
S
t
r
e
e
t
Queen Street
W
a
t
e
r
l
o
o
P
l
a
c
e
C
a
l
t
o
n
H
i
l
l
C
a
l
t
o
n
R
o
a
d
St Andrew Square
Edinburgh
Waverley
Station
Leith
Walk
A7 North Bridge
York Place
G
r
e
e
n
s
i
d
e R
o
w
Tram
Stop
St Andrew Square
St Andrew Square
Tram
Stop
By Rail:
By Bus:
Lothian Buses local services include:
1, 3, 5, 7, 8, 10, 14, 15, 16, 25, 34
By Tram:
Stops at St Andrew Square and Picardy Place
Access to Waverley Train Station on foot
Shareholder information
Annual Report and Financial Statements 2023
114
Annual General Meeting at which the Financial Statements
are laid before the Company.
the Independent Auditor of the Company.
a. the Directors be generally and unconditionally authorised
to subscribe for or convert any security into shares in the
and
b. the authority given by this Resolution:
i. shall be in addition to all pre-existing authorities under
at the conclusion of the Annual General Meeting of the
agreement which would or might require the allotment
subscribe for or to convert any security into shares in
provided that such power:
a. shall be limited to the allotment of equity securities or
the sale of treasury shares up to an aggregate nominal
b. shall be in addition to all pre-existing powers under
save that the Company may before expiry of the power
conferred on the Directors by this Resolution make an
offer or agreement which would or might require equity
securities to be allotted after such expiry.
prejudice to the exercise of any such authority prior to the
that:
a. the maximum number of ordinary shares hereby authorised
share capital of the Company on the date on which this
Resolution is passed;
b. the minimum price (excluding expenses) which may be
paid for each ordinary share shall be the nominal value
of that share;
c. the maximum price (excluding expenses) which may be
paid for any ordinary share purchased pursuant to this
authority shall not be more than the higher of:
i. 5 per cent. above the average closing price on the
purchase; and
ii. the higher price of the last independent trade of an
ordinary share and the highest current independent bid
conferred shall expire at the conclusion of the Annual
General Meeting of the Company to be held in 2023
ordinary shares under such authority which will or might
be completed or executed wholly or partly after the
expiration of such authority and may make a purchase
of ordinary shares pursuant to any such contract or
contracts.
By Order of the Board
Company Secretaries
115
Notes
at the AGM. A proxy need not be a member of the Company
but must attend the AGM to represent you. You may appoint
more than one proxy provided each proxy is appointed
to exercise rights attached to different shares. You can
only appoint a proxy using the procedure set out in these
notes and the notes to the proxy form. You may not use
any electronic address provided either in this notice or any
related documents (including the Financial Statements
and proxy form) to communicate with the Company for any
purpose other than those expressly stated.
02. To be valid any proxy form or other instrument appointing a
received by post or (during normal business hours only) by
hand at the Registrars of the Company at Computershare
eproxyappointment.com no later than
non-working days) before 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
euroclear.com/CREST. CREST personal members or other
will be able to take the appropriate action on their behalf.
authenticated in accordance with Euroclear UK & Ireland
the appointment of a proxy or is an amendment to the
time of receipt will be taken to be the time (as determined
by the timestamp applied to the message by the CREST
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.
sponsors or voting service provider(s) should note that
special procedures in CREST for any particular message.
apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned
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 service by any particular time. In this
concerning practical limitations of the CREST system and
timings.
06. The Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)(a) of the
proxy will not prevent you attending the AGM and voting in
person if you wish.
attend and vote at the AGM (and for the purpose of the
determination by the Company of the votes they may
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.
(or to have someone else appointed) as a proxy for the
Annual General Meeting. If a Nominated Person has no such
instructions to the shareholder as to the exercise of voting
rights.
not apply to Nominated Persons. The rights described in
those Notes can only be exercised by shareholders of the
Company.
Shareholder information
Annual Report and Financial Statements 2023
116
payment) a statement (which is also passed to the Auditor)
conduct of the audit. Such requests must be made in writing
and must state your full name and address.
representing at least 5% of the total voting rights of all the
members who have a right to vote on the resolution to which
right to vote on the resolution to which the requests relate
and hold shares in the Company on which there has been
Such requests should be sent to the Company at
.
corporate representatives who may exercise on its behalf all
of its powers as a member provided that they do not do so in
relation to the same shares.
rights of the Company who appoints a person other than the
respective disclosure obligations under the UK Disclosure
Guidance and Transparency Rules.
117
trusts offer investors the following:
realised within its portfolio although investors are still liable for
How to invest
by asking a professional adviser to do so. If you are interested in
are a number of companies offering real time online dealing
services.
Sources of further information on the Company
The price of shares is quoted daily in the Financial Times (under
trustnet.com
are also available on the Baillie Gifford website. These are
available from Baillie Gifford on request.
Key dates
The Annual General Meeting is normally held in October or
November.
Capital gains tax
between the ordinary shares and the warrants as set out in the
costs are:
follows (Source: Thomson Reuters):
Ordinary share 55.00p
Share register enquiries
register on behalf of the Company. In the event of queries
Transfer forms.
at
management website service which allows you to:
your shares;
electronic format;
and enter your Shareholder Reference
Number and Company Code (this information can be found
Further shareholder
information
Shareholder information
Annual Report and Financial Statements 2023
118
Dividend reinvestment plan
Computershare operate a Dividend Reinvestment Plan which
can be used to buy additional shares instead of receiving your
dividend via cheque or into your bank account. For further
information log on to and follow the
instructions or telephone 0370 702 0000.
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
CREST proxy voting
If you are a user of the CREST system (including a CREST
give an instruction to a proxy by having an appropriate CREST
message transmitted. For further information please refer to the
CREST Manual.
Data protection
security of any personal data provided to it. Further details on how
personal data is held and processed on behalf of the Company
website .
Alternative investment fund managers
regulations (AIFMR)
In accordance with the UK Alternative Investment Fund Managers
bailliegifford.com
at bailliegifford.com.
Leverage exposure
Gross
method
Commitment
method
Maximum limit
Actual
Automatic Exchange of Information
information about certain shareholders.
The legislation requires investment trust companies to provide
the local tax authority on the tax residencies of a number of non-
Automatic Exchange of Information – information for account
holders
account-holders.
119
Communicating
with shareholders
Trust
published twice a year. It provides an insight to our investment
Trust plays an important role in helping to explain
our products so that readers can really understand them.
bailliegifford.com/trust
Suggestions and questions
Any suggestions on how communications with shareholders can
be improved are welcomed. Please contact the Baillie Gifford
Client Relations Team and give them your suggestions. They will
also be very happy to answer questions that you may have about
.
Client relations team contact details
You can contact the Baillie Gifford Client Relations Team by
Your call may be recorded for training or monitoring purposes.
Email: trustenquiries@bailliegifford.com
Website: bailliegifford.com
Address:
Baillie Gifford Client Relations Team
Calton Square
Please note that Baillie Gifford is not permitted
Shareholder information
Annual Report and Financial Statements 2023
120
Asia ex Japan: opportunities and
challenges
discusses how the trust seeks out the
fastest growing companies in the most
rapidly growing and populous region of
the world.
The Indonesian companies
powering the green transition
makes it crucial to a low-carbon future.
Investment Trust
by John Newlands
investment trust rode the tiger of growth.
121
disclosures have been provided to comply with the high-level
requirements of SFDR.
Guidelines as its policy on integration of sustainability risks in
investment decisions.
sustainable in the long run if its approach to business is
fundamentally out of line with changing societal expectations.
identifying and holding high quality growth businesses that enjoy
sustainable competitive advantages in their marketplace. To do
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
returns of an investment. The likely impact on the return of the
portfolio from a potential or actual material decline in the value of
governance event or condition will vary and will depend on several
and existence of any mitigating factors.
Sustainable Finance Disclosure
otherwise stated within in its Investment Objective & Policy.
Baillie Gifford & Co can invest in any companies it believes could
result in investments being made in companies that ultimately
cause a negative outcome for the environment or society.
sustainability can be found in the ESG Principles and Guidelines
bailliegifford.com.
The underlying investments do not take into account the EU
criteria for environmentally sustainable economic activities
established under the EU Taxonomy Regulation.
Shareholder information
Annual Report and Financial Statements 2023
122
provider disclaimer
of the data contained herewith nor as to the results to be obtained
by recipients of the data. No Provider shall in any way be liable
therefrom.
data or to otherwise notify a recipient thereof in the event that
any matter stated herein changes or subsequently becomes
inaccurate.
materials contained herein.
MSCI Index data
Source: MSCI. The MSCI information may only be used for your
form and may not be used as a basis for or a component of any
information is intended to constitute investment advice or a
recommendation to make (or refrain from making) any kind of
investment decision and may not be relied on as such.
and the user of this information assumes the entire risk of any
purpose) with respect to this information. Without limiting any of
(msci.com).
FTSE Index data
company under license. All rights in the FTSE Russell indexes
any liability for any errors or omissions in the indexes or data
and no party may rely on any indexes or data contained in this
sponsor or endorse the content of this communication.
123
Total assets
the total value of all assets held less all liabilities (other than
liabilities in the form of borrowings).
Shareholders’ funds and Net Asset Value
is the value of all assets held less all liabilities (including
borrowings). The NAV per share is calculated by dividing this
amount by the number of ordinary shares (excluding treasury
shares) in issue.
Net liquid assets
Net liquid assets comprise current assets less current liabilities
(excluding borrowings) and provisions for deferred liabilities.
Discount/premium (APM)
share price is rarely the same as its NAV. When the share price is
lower than the NAV per share it is said to be trading at a discount.
price from the NAV per share and is usually expressed as a
percentage of the NAV per share. If the share price is higher than
2023 2022
Net asset value per ordinary
share (a)
Share price (b) 586.00p
(Discount)/premium ((b) – (a)) ÷ (a) (8.0%) (2.7%)
Turnover
Turnover is calculated as the minimum of purchases and sales
Ongoing charges (APM)
of dealing in investments and borrowing costs) incurred by the
as detailed below:
2023
£’000
2022
£’000
Investment management fee
Other administrative expenses
Total expenses (a) 4,181 5,129
Average net asset value (b)
Ongoing charges ((a) ÷ (b)
expressed as a percentage)
0.72% 0.74%
China ‘A’ shares
Investor system.
Treasury shares
The Company has the authority to make market purchases of
its ordinary shares for retention as Treasury Shares for future
do not receive distributions and the Company is not entitled to
exercise the voting rights attaching to them.
Unlisted (private) company
An unlisted or private company means a company whose shares
are not available to the general public for trading and are not
listed on a stock exchange.
Shareholder information
Annual Report and Financial Statements 2023
124
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers
Regulations leverage is any method which increases the
exposure and its net asset value and can be calculated on a
any hedging and netting arrangements. Under the commitment
cash balances and after certain hedging and netting positions are
offset against each other.
Active share (APM)
is the percentage of the portfolio that differs from its comparative
the portfolio that overlaps with the comparative index. An active
Compound annual return (APM)
The compound annual return converts the return over a period of
longer than one year to a constant annual rate of return applied to
the compound value at the start of each year.
Gearing (APM)
additional investments for its portfolio. The effect of the borrowing
more because the debt remains the same. But if the value of
can therefore enhance performance in rising markets but can
adversely impact performance in falling markets.
2023
£’000
2022
£’000
Borrowings (at book cost) (a) – –
settlement
–
Add: purchases for subsequent
settlement
–
Adjusted borrowings (b)
Gearing:
(b) as a percentage of (c)
(2%) (1%)
2023
£’000
2022
£’000
Borrowings (at book value) (a) – –
Gross gearing:
(a) as a percentage of (b)
– –
Total return (APM)
The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.
2023
NAV
2023
Share price
2022
NAV
2022
Share price
(a) 586.00p
Dividend adjustment factor
*
(b)
Adjusted closing NAV per share/share price (c) = (a) x (b) 640.75p 589.34p 664.65p 647.00p
(d) 802.00p
Total return (c) ÷ (d) -1 (3.6%) (8.9%) (14.5%) (19.3%)
*
125
information
Directors
Chairman: RA Macpherson
RW Chote
RF Studwell
Registrar
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Alternative Investment
Fund Managers and
Company Secretaries
Baillie Gifford & Co Limited
Calton Square
bailliegifford.com
Depositary
(International) Limited
25 Bank Street
Canary Wharf
Independent Auditor
BDO LLP
55 Baker Street
Company details
Further information
Client Relations Team
Baillie Gifford & Co
Calton Square
trustenquiries@bailliegifford.com
Computershare
Investor Services PLC
Copyright © Baillie Gifford & Co 2023.