THE SCHIEHALLION

FUND LIMITED

Annual Report and Financial Statements

For the year to 31 January 2023

Investment Objective

The Schiehallion Fund Limited seeks to generate capital growth

for investors through making long-term minority investments in

later stage private businesses that the Company considers to

have transformational growth potential and to have the potential

to become publicly traded.

Strategic Report

1 Summary of Results

3 Chairperson’s Statement

5 Business Review

12 Investment Manager’s Review

14 Valuing Private Companies

15 Approach to Environmental, Social and

Governance Considerations (ESG)

16 Baillie Gifford Statement on Stewardship

and Stewardship Principles for Public

Companies

17 Review of Investments

21 List of Investments

23 Allocation of Net Assets

24 Distribution of Net Assets

Governance Report

25 Directors and Management

27 Directors’ Report

31 Corporate Governance Report

36 Audit Committee Report

38 Directors’ Remuneration Report

40 Statement of Directors’ Responsibilities

Financial Report

41 Independent Auditor’s Report

45 Statement of Comprehensive Income

46 Statement of Financial Position

47 Statement of Changes in Equity

48 Statement of Cash Flows

49 Notes to the Financial Statements

Shareholder Information

67 Notice of Annual General Meeting

71 Further Shareholder Information

72 Alternative Investment Fund Managers

Regulations

72 Glossary of Terms and Alternative

Performance Measures

74 Sustainable Finance Disclosure

Regulation (‘SFDR’)

Contents

Notes

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the action you should take you should consult your stockbroker, bank manager, solicitor,

accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if

you are in the United Kingdom or, if not, from another appropriately authorised financial adviser.

If you have sold or otherwise transferred all of your ordinary shares in The Schiehallion Fund Limited, please

forward this document, together with any accompanying documents, but not your personalised Form of Proxy,

as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom

the sale or transfer was or is being effected for delivery to the purchaser or transferee.

The Schiehallion Fund Limited 01

All investment strategies have the potential for profit and loss.

Past performance is not a guide to future performance.

Ordinary shares 31 January 2023 31 January 2022 % change

Shareholders’ funds US$597.61m US$791.66m

Net asset value per ordinary share 119.42¢ 158.20¢ (24.5)

Share price 92.00¢ 212.00¢ (56.6)

(Discount)/premium

†

(23.0%) 34.0%

Number of shares in issue 500,430,002 500,430,002

Market capitalisation US$460.40m US$1,060.91m

Ongoing charges

†

0.87% 0.89%

Year ended

31 January 2023

Year ended

31 January 2022

Revenue loss per share (0.98¢) (1.47¢)

C shares 31 January 2023

Period from

26 April 2021

to 31 January 2022 % change

Shareholders’ funds US$555.57m US$680.85m

Net asset value per C share 79.37¢ 97.26¢ (18.4)

Share price 49.00¢ 118.00¢ (58.5)

(Discount)/premium

†

(38.3%) 21.3%

Number of shares in issue 700,000,000 700,000,000

Market capitalisation US$343.00m US$826.00m

Ongoing charges

†

0.71% 0.38%

Year Ended

31 January 2023

Period from

26 April 2021

to 31 January 2022

Revenue loss per share (0.35¢) (0.28¢)

Notes

* For a definition of terms see Glossary of Terms and Alternative Performance Measures on pages 72 and73

†

Alternative performance measure, see Glossary of Terms and Alternative Performance Measures on pages 72 and 73.

26 April 2021, the date the Company’s C shares were admitted to trading on the Specialist Fund Segment of the Main Market of the

London Stock Exchange.

Summary of Results

The following information illustrates how The Schiehallion Fund Limited performed over the

year ended 31 January 2023.

This Strategic Report includes pages 1 to 24 and incorporates the Chairperson’s Statement.

Strategic Report

02 Annual Report 2023

Strategic Report

Period’s High and Low

Ordinary shares Year ended 31 January 2023 Year ended 31 January 2022

Period’s high and low High Low High Low

Net asset value per ordinary share 153.18¢ 116.84¢ 198.40¢ 146.57¢

Share price 214.00¢ 91.50¢ 296.00¢ 180.00¢

Premium/(Discount)

†

40.5% (26.9%) 64.9% 17.4%

C shares Year ended 31 January 2023

Period from 26 April 2021

to 31 January 2022

Period’s high and low High Low High Low

Net asset value per C share 97.20¢ 77.32¢ 101.21¢ 97.17¢

Share price 129.00¢ 49.00¢ 145.00¢ 117.50¢

Premium/(Discount)

†

36.1% (41.1%) 42.4% 17.9%

Performance Since Inception

Ordinary shares 31 January 2023 27 March 2019

‡

% change

Net asset value per ordinary share 119.42¢ 99.66¢ 19.8

Share price

92.00¢ 100.00¢ (8.0)

C shares 31 January 2023 26 April 2021

% change

Net asset value per C share 79.37¢ 99.25¢ (20.0)

Share price

49.00¢ 124.00¢ (60.5)

Notes

* For a definition of terms see Glossary of Terms and Alternative Performance Measures on pages 72 and 73.

†

Alternative performance measure, see Glossary of Terms and Alternative Performance Measures on pages 72 and 73.

26 April 2021, the date the Company’s C shares were admitted to trading on the Specialist Fund Segment of the Main Market of the

London Stock Exchange.

‡

27 March 2019, the date the Company’s ordinary shares were admitted to trading on the Specialist Fund Segment of the Main Market

of the London Stock Exchange.

Summary of Results

(continued)

The Schiehallion Fund Limited 03

Chairperson’s Statement

Past performance is not a guide to future performance.

For a definition of terms see Glossary of Terms and Alternative Performance Measures on pages 72 and 73.

Strategic Report

The Schiehallion Fund Limited (the ‘Company’ or ‘Schiehallion’)

seeks to generate capital growth for investors through long-term

minority investments in later stage private businesses that the

Company considers to have transformational growth potential

and to have the potential to become publicly traded.

The last year has been a period of great public market share price

volatility. Public market prices are incorporated into the Company’s

private company valuation process and have, therefore, impacted

the Company’s carrying values of its investments. The Company’s

valuation policy is set out on page 14.

The Board meets quarterly with the Company’s portfolio managers

and holds meetings to review the Company’s investment valuations

twice a year. We also have regular contact with the Investment

Manager outside of formal Board meetings. Last week, I visited one

of the Company’s larger investments and two potential investments

with the portfolio manager. The Investment Manager has a

dedicated Private Companies investment team, supported by a

specialist operations team that ensures that investments are

monitored at all stages. Details of the Investment Manager’s

resources are set out on page 26.

The Board has complete confidence in the Investment Manager’s

ability to scrutinise and oversee private company investments. In

the view of the Board which includes a director who has 40 years

of private equity and venture capital experience, the Investment

Manager has the most rigorous process of any investor in this area.

The Board is wholly committed to the aim of the company that

seeks to generate returns of three times capital over a rolling ten

year period through long-term minority investments in later stage

private businesses.

Investment Performance

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

ordinary share price and net asset value returned negative 56.6%

and negative 24.5%, respectively. Over the period from 27 March

2019 (launch date) to 31 January 2023, the Company’s ordinary

share price and net asset value returned negative 8.0% and

positive 19.8%, respectively.

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

C share price and net asset value returned negative 58.5% and

negative 18.4%, respectively. During the period from admission

to trading on 26 April 2021 to 31 January 2023, the Company’s

C share price and net asset value returned negative 60.5% and

negative 20.0%, respectively.

Commentary on performance is included in the Investment

Managers’ Review.

Share Price Discount

In each of the Company’s previous Annual Reports, I noted the

level of premium to net asset value at which the Company’s

shares have traded and explained that investors should bear in

mind that shares bought at a high premium to net asset value

can quickly lose substantial value if the premium is eroded.

Unfortunately, this proved to be the case over the last 12 months

as sentiment turned against growth stocks and private company

investments. The ordinary shares derated from a 34.0% premium

to net asset value at the start of 2022 to a 23.0% discount to net

asset value at the year end. The C shares also derated from a

21.3% premium to net asset value to a 38.3% discount to net

asset value over the same period.

Although there is no current intention to exercise the authority to

purchase the Company’s shares, the Company will be seeking

authority to renew the buy-back authority for the ordinary shares

at the forthcoming Annual General Meeting (‘AGM’). The Company

is also seeking authority at the AGM to purchase the Company’s

C shares. No shares were bought back during the year ended

31 January 2023.

The Company has a general authority to issue further shares if

the Directors determine such issues to be in the best interests of

shareholders and the Company as a whole. At 31 January 2023

the Company had authority, which was granted at the initial

launch, to issue a further 242.75 million shares. This authority

expires at the end of the period concluding immediately prior to

the Annual General Meeting to be held in 2024 (or, if earlier five

years from 15 March 2019, the date the special resolution was

passed).

Deployment of Capital

The C shares will convert into ordinary shares once at least 85 per

cent. of the net placing proceeds of the C share issue have been

deployed. When the C shares were issued in April 2021, your

Board said it would be reasonable to expect that the C share

proceeds would be two-thirds invested within two years. As at

31 January 2023, approximately 79% of C share proceeds had

been invested in 25 companies. There is commentary on the

Company’s portfolio in the Investment Manager’s Review and

Review of Investments on pages 12 to 24.

Cost

The ongoing charges for the ordinary shares as at 31 January 2023

were 0.87%. Last year, the ongoing charges for the ordinary shares

were 0.89%.

The ongoing charges for the C shares as at 31 January 2023

were 0.71%. Last year, the ongoing charges, for the period from

26 April 2021 to 31 January 2022, for the C shares were 0.38%.

Management fees are not charged on cash and cash equivalents,

so the ongoing charges have risen as the C share proceeds have

been deployed. As at 31 January 2023 the C share capital has

been 79% deployed, increasing from 60% in the previous year.

04 Annual Report 2023

Strategic Report

Earnings and Dividend

The Company’s priority is to generate capital growth over the long

term. The Company therefore has no dividend target and will not

seek to provide shareholders with a particular level of distribution.

This period the net revenue return per ordinary share was a

negative 0.98 cents (year to 31 January 2022, negative 1.47 cents)

and the net revenue return per C share was negative 0.35 cents

(period to 31 January 2022, negative 0.28 cents). The Board is

recommending that no final dividend be paid.

Board

Members of the Board come from a broad variety of backgrounds

and the Board can draw on a very extensive pool of knowledge

and experience. Directors’ biographies can be found on page 25.

The Board undertook an external evaluation during the year and

has considered its balance of skills, which was deemed to be

suitable for the Company. All the Directors are subject to annual

re-election at the AGM in May.

Annual General Meeting

The AGM will be held at 12 noon on Friday 12 May 2023 at the

offices of Alter Domus in Guernsey. Shareholders are reminded

that they are able to submit proxy voting forms before the

applicable deadline on Wednesday 10 May 2023 and also to

direct any questions for the Board or Manager in advance by

email to trustenquiries@bailliegifford.com or by calling

0800 917 2112. (Please note that Baillie Gifford may record your call).

Information on the resolutions can be found on pages 67 and 68.

The Directors consider that all resolutions to be put to

shareholders are in their and the Company’s best interests as a

whole and recommend that shareholders vote in their favour.

Chairperson’s Statement (continued)

Investment Outlook

The past year has been characterised by geo-political

uncertainties, inflationary pressures, higher interest rates,

increased cost of borrowing, and a recessionary environment.

The macro context worsened the disruption caused by supply

chains stemming in part from the COVID-19 pandemic.

Although inflationary pressures have begun to ease, these

factors have collectively contributed to a challenging economic

and market environment.

Despite the considerable uncertainties, the Board and the

Investment Manager are optimistic about the outlook for the

Company with its focus on the long-term and investing in

companies with transformational potential. The Company solely

invests in companies with exceptional growth potential which are

not widely accessible in public markets. The potential of the

companies in our portfolio is generally dependent on their ability

to take advantage of opportunities. Therefore, the Board is

positive about the growth prospects of these companies, and the

pipeline of private companies that the Investment Manager has

access to. The Board and the Investment Manager are confident

in the investment outlook for the Company.

Dr Linda Yueh CBE

Chairperson

27 March 2023

The Schiehallion Fund Limited 05

Business Review

Business Model

Business and Status

The Schiehallion Fund Limited (the ‘Company’) is a non-cellular

investment company limited by shares, registered and incorporated

in Guernsey under the Companies (Guernsey) Law, 2008 (the

‘Companies Law’) on 4 January 2019, with registration number

65915. The Company is a registered closed-ended investment

scheme registered pursuant to the Protection of Investors (Bailiwick

of Guernsey) Law 2020 and the Registered Collective Investment

Scheme Rules, 2021 issued by the Guernsey Financial Services

Commission (‘GFSC’). The Company is listed on the Specialist

Fund Segment of the Main Market of the London Stock Exchange.

The Company has fixed share capital consisting of both ordinary

and C shares, although subject to shareholder approval, it may

purchase its own ordinary and/or C shares or issue ordinary and/

or C shares.

The authority to purchase ordinary shares expires at the end of

the Company’s Annual General Meeting (‘AGM’) and the Directors

are seeking to renew this authority at the AGM on 12 May 2023.

The Directors are also seeking authority at the AGM to purchase

C shares.

The authority to issue ordinary shares will expire at the end

of the period immediately prior to the AGM to be held in 2024

(or, if earlier, five years from 15 March 2019, the date the special

resolution was passed). The price of the ordinary shares and

C shares is determined, like other listed shares, by supply and

demand. The Company’s ordinary shares and C shares are

denominated in US dollars.

The Company is an Alternative Investment Fund (‘AIF’) for the

purposes of the UK Alternative Investment Fund Managers

Regulations.

Company Culture

The Board acknowledges the importance of a strong corporate

governance culture that meets the requirements of the Code of

Corporate Governance issued by the Guernsey Financial Services

Commission (the ‘Guernsey Code’), the UK Listing Rules and

other bodies such as the AIC and that contributes to the Company’s

long-term success.

Life of the Company

The Company has been established with an unlimited life.

Investment Objective

The Company’s investment objective is to generate capital growth

for investors through making long-term minority investments in

later stage private businesses that the Company considers to

have transformational growth potential and to have the potential

to become publicly traded.

Investment Policy

In making its initial investment in a business, the Company will seek

to invest in private businesses which it considers have the potential

to become admitted to trading on a public stock exchange. Those

investments will typically take the form of equity or equity-related

instruments (which may include, without limitation, preference

shares, convertible debt instruments, equity-related and equity-

linked notes and warrants) issued by investee companies.

The Company will only invest in private businesses that are

considered to have some or all of the following features:

— the potential to grow revenue and earnings multiple fold

over the long term;

— scalable business models that should enable those

businesses to grow into their opportunity;

— robust competitive advantages;

— exceptional management teams;

— an entry price which significantly undervalues the long-term

opportunity for the business; and

— an ambition and ability to become stand-alone public companies.

Investee companies may be from any sector and any geography.

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

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

the portfolio in a manner consistent with spreading investment risk.

With prior approval of the Board, the Company may permit the use

of derivatives for the purpose of currency hedging, though it currently

does not expect to do so. Save for this and for investments made

using equity-related instruments as described above, the Company

may not engage in derivative transactions for any purpose.

The Board does not intend to use structural gearing with a view

to enhancing equity returns on investments. The Company may

employ gearing on a short-term basis for the purpose of bridging

investments and general working capital purposes. The Company

may in aggregate borrow amounts equalling up to 10% of net

asset value, calculated at the time of drawdown.

The Company is subject to the following investment restrictions:

— an investee company must be a private investee company at

the time of the Company’s initial investment in that investee

company. The Company may, however, make subsequent

investments in the investee company, even if the investee

company has been admitted to trading on a public stock

exchange in the period since the Company’s initial investment;

— a private investee company must have a value of at least

US$500 million at the time of the Company’s initial investment

in the private investee company. This restriction will not apply

to the Company’s subsequent investments in the investee

company, if any;

— the Company may not make an initial investment in a private

investee company which exceeds in value 10% (calculated at

the time of investment) of the most recently published net

asset value (save to the extent that breach of this 10% limit is

due to a change in the value of the Company’s invested assets

or currency fluctuations from the time of the Company’s firm

commitment to make the investment to the time of investment);

— the Company may not make any investment in a private

investee company that would cause the value of the

Company’s holding in that private investee company to

exceed 19.9% (calculated at the time of investment) of the

most recently published net asset value; and

— the Company may not make any investment in an investee

company that would cause the Company’s holding in that

investee company to exceed 20% (calculated at the time of

investment) of the total issued share capital of the investee

company.

Strategic Report

06 Annual Report 2023

Strategic Report

A reference to the value of assets of the Company (including

investee companies) in the restrictions above shall refer to the

value as determined in accordance with the Company’s valuation

policy from time to time.

The Company does not currently expect the portfolio to be

majority invested in public investee companies at any point in time,

but it has not set a limit on the percentage of the portfolio which

can be invested in public investee companies at a given time.

As disclosed in the Company’s C Share Prospectus, it is intended

that the Company would, subsequent to the issue of the C shares,

be two-thirds invested by the end of the investment period of two

years from the date of Admission. However, during that period the

Company could at any time hold overnight or term deposits or,

pending investment in investee companies, invest in a range of

cash equivalent instruments such as US Treasury Bills or money

market funds. There was no restriction on the amount of cash

or cash equivalent instruments that the Company could hold.

At 31 January 2023, the Company’s ordinary shares net assets

were 93.6% invested and held the remaining 6.4% in cash and

other current assets and liabilities. At 31 January 2023, the

Company’s C share net assets were 74.3% invested and held the

remaining 25.7% in US Treasury Bills, cash and other current

assets and liabilities.

Dividend Policy

The Company’s priority is to produce capital growth over the long

term. Given the nature of the Company’s investments, the Company

does not expect to pay dividends in the foreseeable future and

therefore has no dividend target and will not seek to provide

shareholders with a particular level of income. If any dividends

or distributions are made, they will at all times be subject to

compliance with the solvency test prescribed by Guernsey law.

Liquidity Policy

The Directors will consider repurchasing ordinary and/or C shares

in the market if they believe it to be in the interests of shareholders

as a whole and as a means of addressing imbalances between

supply and demand for the shares.

The timing, price and volume of any buyback of ordinary and/or C

shares will be at the absolute discretion of the Directors and is

subject to the Company having sufficient working capital for its

requirements and surplus cash resources available. The acquisition

of shares pursuant to the authorities is subject to compliance with

the solvency test and any other relevant provisions of the

Companies Law.

Share Buybacks – At the last Annual General Meeting the

Company was granted authority to purchase up to 75,014,457

ordinary shares (equivalent to 14.99% of its issued share capital

as at 12 May 2022), such authority to expire at the 2023 Annual

General Meeting. The Directors are seeking shareholders’ approval

at the Annual General Meeting to renew the authority to make

market purchases of up to 75,014,457 ordinary shares representing

approximately 14.99% of the Company’s ordinary shares in issue

as at 24 March 2023, being the latest practicable date prior to the

publication of this document, such authority to expire at the

Annual General Meeting of the Company to be held in 2024.

The Directors are also seeking shareholders’ approval at the 2023

Annual General Meeting to make market purchases of up to

104,930,000 C shares representing approximately 14.99% of the

Company’s C shares in issue as at 27 March 2023, being the

latest practicable date prior to the publication of this document,

such authority to expire at the Annual General Meeting of the

Company to be held in 2024.

In the event that the Board decides to repurchase shares,

purchases will only be made through the market for cash at prices

(after taking account of all commissions, costs and expenses of

the purchases) not exceeding the last reported net asset value

per ordinary or C share, as applicable.

Shares purchased by the Company may be cancelled or held in

treasury (or a combination of both). Shares may be sold from

treasury but not at a price per share which would be less (after

taking account of all commissions, costs and expenses of such

sale) than the last reported net asset value per share at the

relevant time. No shares were bought back by the Company

during the year ended 31 January 2023.

Treasury Shares – The Company is permitted to hold shares

acquired by way of market purchase in treasury, rather than being

obliged to cancel them. A maximum of 10% of the ordinary

shares and 10% of the C shares in issue at the relevant time may

be held in treasury. Such shares may be subsequently cancelled

or sold for cash. Holding shares in treasury would give the

Company the ability to sell shares from treasury quickly and in a

cost efficient manner, and would provide the Company with

additional flexibility in the management of its capital base.

However, the issue of shares from treasury will be subject to the

Articles of Incorporation and the provisions relating to rights of

pre-emption contained therein, further details of which are

referred to in the section entitled ‘Share Issuance’ below.

No shares were held in treasury at the year end.

Share Issuance – The Directors have authority to issue further

ordinary shares. Further issues of ordinary shares will only be made

if the Directors determine such issues to be in the best interests of

shareholders and the Company as a whole. Relevant factors in

making such determination include the Company’s performance,

the discount/premium at which the ordinary shares trade to the

prevailing net asset value per ordinary share, perceived investor

demand and investment opportunities. Ordinary shares will only

be issued at prices per ordinary share which, after taking into

account any placing commission and expenses payable in

respect of such issues, are not less than the last reported net

asset value per ordinary share.

There are no provisions of Guernsey law which confer rights of

pre-emption in respect of the issue of ordinary shares. The Articles

of Incorporation do, however, contain pre-emption rights in

relation to issue of ordinary shares for cash, although such

pre-emption rights have, by a resolution passed on 15 March 2019,

been disapplied in respect of up to 720 million ordinary shares

or C shares (such figure to include the ordinary shares issued

pursuant to the Placing) for a period concluding immediately prior

to the Annual General Meeting of the Company to be held in 2024

(or, if earlier, five years from the date of the passing of the relevant

resolution).

The Schiehallion Fund Limited 07

Strategic Report

477,250,000 shares were issued in the initial placing leaving the

ability to issue up to a further 242,750,000 shares. There have

been 23,180,000 shares issued since the initial placing hence the

Directors have authority to issue a further 219,570,000 shares.

By way of a special resolution dated 18 March 2021 the Directors

have a general authority to allot up to 700,000,000 C shares.

On 26 April 2021, the Company issued 700,000,000 C shares

of US$1 each raising gross proceeds of US$700,000,000.

Performance

At each Board meeting, the Directors consider a number of

performance measures to assess the Company’s success in

achieving its objectives.

Key Performance Indicators

The key performance indicators (‘KPIs’) used to measure the

progress and performance of the Company over time are

established industry measures and are as follows:

— the movement in net asset values per share;

— the movement in the share prices;

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

per share; and

— ongoing charges.

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

Terms and Alternative Performance Measures on pages 72 and 73.

The KPIs for the year ended 31 January 2023 are shown on

pages 1 and 2.

Borrowings

The Company’s approach to borrowings is noted within the

Investment Policy detailed on page 5.

There were no borrowings as at 31 January 2023.

Principal and Emerging Risks

As explained on pages 33 and 34, there is a process for

identifying, evaluating and managing the risks, including emerging

risks, faced by the Company on a regular basis. The Directors

have carried out a robust assessment of the principal and

emerging risks facing the Company, including those that would

threaten

its business model, future performance, solvency or liquidity.

A description of these risks and how they are being managed

or mitigated is set out in the table below.

The Board considers the implications of geopolitical tensions,

such as those arising from the Russian invasion of Ukraine,

tensions between the USA and China regarding tariffs, the impact

of Brexit and the Covid-19 pandemic to be factors which

exacerbate existing risks, rather than discrete risks, within the

context of an investment fund. While the risk due to Covid-19

has declined over the year, it still remains a potential threat in

some businesses and geographies. Their impact is considered

within the relevant risks.

Impact How the risk is managed Current assessment of risk

Investment and Strategic Risk

Liquidity of Investments The Company’s investments are

predominately in private investee

companies or companies which

have recently completed an IPO.

Such investments may not be liquid

or may have restrictions on sale or

transfer of shares. This may limit

the Company’s ability to realise

investments at short notice or at all.

By diversification of the portfolio,

in accordance with the Company’s

investment limits and risk

diversification policies.

Increasing: The Company

has not seen any significant

impact on underlying liquidity

of investments, however, the

economic climate has led to

lower IPO activity during the

year.

Market, Economic,

Political and

Environmental Risks

From time to time a large proportion

of the total value of the Company’s

portfolio could be concentrated in a

limited number of investee companies,

which could be adversely affected

by an unexpected change in their

markets, by governmental intervention

or by a reputational issue. This could

have a material impact on the overall

value of the Company’s portfolio and

consequential adverse effects on the

Company’s share price.

The Board assesses this risk by

considering, at each meeting,

metrics which have contributed

to performance as well as

discussion with the investment

manager on specific conditions

which the underlying investee

companies face. This risk is also

managed by the Company’s

investment diversification policy.

Increasing: This risk is seen

as increasing due to increased

volatility as a result of the

Russian invasion of Ukraine,

increasing energy prices and

inflation rates, as well as the

global reach of the increasing

political tension between the

US and China. The Covid-19

pandemic continues to have a

lingering impact on the global

economic environment.

08 Annual Report 2023

Impact How the risk is managed Current assessment of risk

Investment and Strategic Risk (continued)

Valuation Risk The Company invests in late-stage

private businesses which are valued

in accordance with International

Private Equity and Venture Capital

Valuation (‘IPEV’) Guidelines using

appropriate valuation methods.

Such methods include an element

of judgement which may lead to a

material misstatement of the valuation

and consequently in the Company’s

net asset value.

The Investment Manager has

a robust valuation methodology,

which it applies consistently. The

Board meets with the Investment

Manager at special meetings solely

to consider the valuations for the

Interim and Annual Financial

Statements. At these meetings

there is an opportunity for the

Board to challenge the valuations

and to request further information.

Increasing: This risk is seen

as increasing due to the ongoing

invasion of Ukraine by Russia,

increasing energy prices and

inflation rates and the impact

events these are having on

global markets. Reduced

valuations of public listed

companies have had an impact

by depressing the inputs used

to value the Company’s private

listed investee companies.

Investment Strategy Risk Pursuing an investment strategy

to fulfil the Company’s objective

which the market perceives to be

unattractive or inappropriate, or

ineffective implementation of the

Company’s investment strategy,

may lead to lower returns for

shareholders and a consequential

impact on share price.

The Board regularly reviews and

monitors the Company’s investment

policy and strategy, the investment

portfolio and its performance, the

level of discount/premium to net

asset value at which the shares

trade and movements in the share

also held annually. In addition, the

Investment Manager keeps in close

contact with key shareholders and

provides regular feedback to the

Board.

Stable: Controls are working

effectively with no change during

the current year.

Discount Risk The discount/premium at which the

Company’s shares trade relative to

its net asset value can change.

Such an imbalance can diminish

the attractiveness of the Company’s

shares to existing investors and

lead to a lack of liquidity in the

Company’s share trading.

The Board monitors the level of

discount/premium at each Board

meeting. The Company has

authorities in place to buy back

or issue shares, when deemed

to be in the best interest of the

Company and its shareholders.

Increasing: The risk is

increasing as the Company’s

shares moved from a premium

to a discount during the year.

Environmental, Social

and Governance (‘ESG’)

Failure by the Investment Manager

to identify potential future problems

on ESG matters in an investee

company could lead to the

Company’s shares being less

attractive to investors as well as

potential valuation issues in the

underlying investee company.

The Investment Manager has an

application process integrated

into the investment process, as

well as upfront and ongoing due

diligence which the Investment

Manager undertakes on each

investee company. This includes

the risk inherent in climate change

(see page 35).

Stable: This risk is mitigated

by the Investment Manager’s

strong ESG stewardship and

engagement policies.

External Risks

Political and Associated

Economic Risk

Global political changes in policy or

direction changes in areas in which

the Company invests or may invest

may have practical consequences for

the Company and impact financial

performance.

Political developments and other

social trends are closely monitored

by the Board and are regularly

discussed at Board meetings.

Increasing: This risk is

increasing as Governments and

consumers around the world

continue to assess the impact of

the Russian invasion of Ukraine,

including sanctions applied in

response, increasing energy

prices and inflation rates and

intensifying of US-China tensions.

The ongoing assessment of the

longer term impacts of Covid-19

on international policy remains a

factor for consideration.

Strategic Report

The Schiehallion Fund Limited 09

Strategic Report

Impact How the risk is managed Current assessment of risk

External Risks (continued)

Legal and Regulatory Risk Failure to comply with tax or

regulatory rules could lead to

suspension of the Company’s stock

exchange listing, financial penalties

or a qualified audit report. Changes

in tax legislation may lead to the

Company being subject to tax on

capital gains.

The Board receives regular

updates from the Investment

Manager and Administrator on

Compliance and the Investment

Manager’s monitoring programmes.

External legal advice is sought on

any areas of concern.

Stable: All control procedures

working effectively. There have

been no material regulatory

changes that have occurred

during the year.

Operational Risks

Performance and

Reliance on Third Party

Service Providers

In common with other investment

companies the Company has no

direct employees and relies entirely

for its operations on third party

service providers. Failure of the

Investment Manager’s systems or

those of another service provider

could lead to an inability to accurately

report or lead to a misappropriation

of assets.

The Audit Committee receives

reports from the Investment

Manager’s Business Risk

Department on their monitoring

programme of internal controls.

The Audit Committee also receives

ISAE 3402 or equivalent reports

on the Investment Manager

and other service providers.

These reports are reviewed by

Baillie Gifford’s Business Risk

Department and a summary of

the key points is reported to

the Audit Committee and any

concerns are investigated.

Decreasing: All control

procedures working effectively.

Portfolio management and all

regulatory and administrative

tasks have continued

uninterrupted. This risk is

decreasing due to the reduced

impact of the Covid-19

pandemic.

Cyber Security Threats Errors, fraud or control failures

by the Company’s key service

providers or loss of data through

increasing cyber threats or business

continuity could damage the

Company’s reputation or investors

interests or result in losses.

The Audit Committee and the

Board receive confirmation that all

service providers have appropriate

Cyber/IT policies to ensure that

controls are in place including

business continuity and disaster

recovery arrangements.

Increasing: Increasing risk

due to recent indications that

developments relating to the

Russian invasion of Ukraine

could lead to cyber attacks.

As a result of operational changes

made during the height of the

Covid-19 pandemic, service

providers are using a hybrid

approach of remote and office

working, thereby creating a

higher potential of a Cyber

Security Threat, highlighted by

a growing number of attacks

on high profile companies.

Key Professionals Loss of Key Professionals, particularly

in relation to the Investment Manager

could impact the Company’s ability

to implement its investment strategy.

The Board reviews the Investment

Manager’s performance annually

as well as the resources of the

Investment Manager for attracting

and r

etaining talent.

Stable: All procedures are

satisfactory.

10 Annual Report 2023

Strategic Report

Emerging Risks

As explained on pages 7 to 9 the Board has regular discussions

on principal risks and uncertainties, including any risks which are

not an immediate threat but could arise in the longer term.

The Board considers that the key emerging risks arise from two

areas:

— The global reach of the investment portfolio and its exposure

to external and emerging threats such as the Russian invasion

of Ukraine, US/China tensions, cyber risk and the decreasing

but lasting risk of coronavirus. An escalation in tensions may

lead to sanctions being imposed on China with the potential

of adversely affecting the Company’s Chinese investments.

Rising inflation, increasing energy costs and increasing interest

rates are likely to add pressures to the companies in the

investment portfolio. These are mitigated by the Investment

Manager’s close links to the investee companies and their

ability to ask questions on contingency plans. The Investment

Manager believes the impact of such events may be to slow

growth rather than to invalidate the investment rationale; and

— As investors place increased emphasis on Environmental,

Social and Governance issues (‘ESG’), any failure by the

Investment Manager to identify potential future problems on

ESG matters in an investee company could lead to the

Company’s shares being less attractive to investors as well as

potential valuation issues in the underlying investee company.

This is mitigated by the Investment Manager’s strong ESG

policies, which have been adopted by the Company, and

which are fully integrated into the investment process as well

as the extensive upfront and ongoing due diligence which the

Investment Manager undertakes on each investee company.

These include the risks inherent in climate change (see page 35).

Viability Statement

In accordance with the requirements of the AIC Code that the

Directors assess the prospects of the Company over a defined

period, the Board has evaluated the long-term prospects of the

Company beyond the twelve month time horizon assumption

within the going concern framework taking account of the longer

term investment strategy of the Company. Details of how that

assessment has been undertaken are set out below.

The Board undertakes a robust risk assessment of the principal

and emerging risks, detailed on pages 33 and 34, facing the

Company but believes that a sudden or prolonged downturn in

global economies is the most significant risk facing the Company.

Such a downturn could significantly affect valuations of the

Company’s investments and its net asset value as well as

impacting liquidity since the Company may not be able to realise

its investments at a reasonable price. The Board believes the

Company would still be viable during such a downturn, similar

to that seen in the early part of the COVID-19 pandemic, since

it does not have any long-term gearing obligations which might

require immediate repayment or has any obligation to pay

dividends. The Company also holds a well-diversified portfolio of

investments in various industries in order to minimise the impact

of any economic shock. Specific leverage and liquidity testing was

conducted during the year, including consideration of the risk of

further market deterioration resulting from the Russian invasion

of Ukraine and the ongoing COVID-19 pandemic. The stress

testing did not indicate any matters of concern.

Since the Company outsources its operations to third parties,

the viability of the Company could be impacted if a service

provider was unable to provide or withdrew their services.

The recent COVID-19 pandemic has stress tested the resilience

of third party service providers which include its Investment

Manager, Administrator, Custodian and Depositary, Registrar,

Auditor and Broker. None have experienced any significant

operational difficulties which affected the services they provide to

the Company. In addition, the Board considers outsourced third

party service providers could be replaced at relatively short

notice where necessary.

Finally, the Investment Manager monitors closely the Company’s

cash requirements to meet ongoing fees and expenses and

expects to maintain around 2% of its assets in cash or near cash

to meet these obligations. At 31 January 2023, the Company held

cash and cash equivalent investments amounting to $182 million.

These liquid assets could sustain the Company’s annual operating

expenses for the year, including the management fee of US$8.9

million, for at least 20 years. The Company also has liquid listed

investments of US$119 million which could be sold should the

need arise.

As a result of this analysis, the Board believes the Company can

effectively manage the principal and emerging risks and uncertainties

and remains confident that the Company will be able to continue

in operation, and does not envisage any change in strategy,

objectives or events that would prevent the Company from operating

over the period of at least five years. This period has been

increased from three to five years to better reflect the medium

to long-term investment horizon of the Company.

In determining the period of assessment, the Directors consider

that five years is appropriate given the reduced rate of deployment of

capital over the last year and when valuing the underlying companies

we would normally look to a medium term. The Company takes

note that it has an even longer term time horizon when applying

its investment strategy of 10 years however, projecting longer

term financial and economic scenarios presents difficulties and

therefore making five years the period of assessment is considered

more appropriate.

Relations with Stakeholders

Although the Company is domiciled in Guernsey, the Board has

considered the guidance set out in the AIC Code in relation to

section 172 of the Companies Act 2006 in the UK. Section 172

of the Companies Act requires that the Directors of a Company

must act in the way they consider, in good faith, would be most

likely to promote the success of the Company for the benefit of its

stakeholders as a whole and in doing so have regard (amongst

other matters and to the extent applicable) to:

(a) the likely consequences of any decision in the long term;

(b) the interests of the Company’s employees;

suppliers, customers and others;

(d) the impact of the Company’s operations on the community

and the environment;

(e) the desirability of the Company maintaining a reputation for

high standards of business conduct; and

(f) the need to act fairly between stakeholders of the Company.

The Schiehallion Fund Limited 11

In this context and having regard to Schiehallion being an

externally managed investment company with no employees,

the Board considers that the Company’s key stakeholders are

its existing and potential new shareholders, its externally-

appointed managers, Baillie Gifford & Co Limited, and other

service providers (Administrator, Corporate Broker, Registrar,

Auditor and Depositary), as well as wider society and the

environment.

Great importance is placed by the Board on communication

with shareholders as described in Relations with Shareholders

on page 34.

The Board seeks to engage with its managers and other service

providers in a collaborative and collegiate manner, with open and

respectful discussion and debate being encouraged, whilst also

ensuring that appropriate and regular challenge is brought and

evaluation is conducted. The aim of this approach is to enhance

service levels and strengthen relationships with the Company’s

third-party service providers with a view to ensuring the interests

of the Company’s shareholders are best served by keeping cost

levels proportionate and competitive, by maintaining the highest

standards of business conduct and by upholding the Company’s

values.

Whilst the Company’s operations are limited (with all substantive

operations being conducted by the Company’s third-party service

providers), the Board is aware of the need to consider the impact

of the Company’s investment strategy and policy on wider society

and the environment. The Board considers that its oversight of

Environmental, Social and Governance (‘ESG’) matters is an

important part of its responsibility to all stakeholders and that

proper consideration of ESG considerations are factored into the

Investment Manager’s decision making process and described by

the Investment Manager as follows:

The Investment Manager is often asked how Environmental,

Social and Governance (‘ESG’) considerations are factored into

our investment thinking. Schiehallion does not have an explicit

ESG mandate, but these questions are still woven through our

research. There is a common perception that ESG analysis is

somehow distinct from fundamental business analysis. This might

be true over short time periods, but over our time horizon of ten

years and beyond, these two types of analysis converge. How a

business is run, its impact on broader stakeholders, and the

perception of whether it is a force for good or ill, will come to have

a direct impact on the growth prospects of a given business, just

as much as the business’s competitive advantage and margin

structure. In our research framework, we ask of every company

‘What is your impact on society?’. We ask this question, not to

satisfy some abstract ESG criteria, but because it unlocks insight

into long-term opportunities and risks for companies.

The Board recognises the importance of keeping the interests of

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

firmly front of mind in its key decision making and the Investment

Manager is at all times available to the Board to ensure that suitable

consideration is given to the range of factors to which the Directors

should have regard. The Annual General Meeting provides the key

forum for the Board and Managers to present to shareholders on

the Company’s performance, future plans and prospects. It also

allows shareholders the opportunity to meet with the Board and

Strategic Report

Managers and raise questions and concerns. The Chairperson is

available to meet with shareholders as appropriate independently

of the Managers. The Managers communicate regularly with

current and potential shareholders and their representatives,

reporting their views back to the Board. Directors can also attend

investor presentations, in order to gauge sentiment first hand.

Investors may also communicate with members of the Board at

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

to the Company’s broker. These communication opportunities

help inform the Board when considering how best to promote the

success of the Company for the benefit of all stakeholders over

the long term.

In addition to ensuring that the Company’s stated investment

objective was being pursued, key decisions and actions during

the year which have required the Directors to have regard to

applicable section 172 factors include:

— the appointment of Lintstock to carry out an external

performance evaluation of the Board as a whole and its

committees (see page 33 for further information): and

— the annual evaluation of all service providers and review

of their remuneration.

Employees, Human Rights and Community Issues

The Board recognises the requirement to provide information

about employees, human rights and community issues. As the

Company has no employees, all its Directors are non-executive

and all its functions are outsourced, there are no disclosures to

be made in respect of employees, human rights and community

issues.

Gender and Ethnic Representation

The Board comprises five Directors, two women, including the

Chairperson who is from an ethnic minority background, and

three men. The Company has no employees. The Board’s policy

on diversity is set out on page 32.

Environmental, Social and Governance Policy

Details of the Company’s policy on socially responsible investment

can be found under Corporate Governance and Stewardship on

page 16.

The Company makes efforts to hold board meetings virtually and

provide reports digitally, to limit non-essential travel and usage of

paper. All publicly available documentation produced is made

available digitally.

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

the Modern Slavery Act 2015 (‘the Act’) and it is not, therefore,

obliged to make a slavery and human trafficking statement. In any

event, the Company considers its supply chains to be of low risk

as its suppliers are typically professional advisers. A statement by

the Investment Manager under the Act has been published on the

Investment Manager’s website at bailliegifford.com.

Future Developments of the Company

The outlook for the Company for the next twelve months is set

out in the Chairperson’s Statement on page 4 and the Investment

Manager’s Review on page 13.

12 Annual Report 2023

Investment Manager’s Review

Strategic Report

The role of the annual Investment Managers’ review is to look

both backwards and forwards. Looking backwards, we are

disappointed with what we delivered for shareholders over the last

12 months. However, looking forward to 2023 and beyond, we feel

a sense of profound optimism for the portfolio and new opportunities.

Performance

Our aspiration is to generate a net return for the Company of

approximately three times invested capital over rolling 10 year

periods, measured on the basis of NAV total return on the portfolio.

During the year to 31 January 2023, the NAV total return of the

ordinary shares and the C shares was negative 24.5% and negative

18.4% respectively. The path to long-term capital growth is never

straight, and periods of volatility and underperformance are

inevitable. However, even in this context, 2022 was a year in

which we stepped backwards rather than forwards. We are

conscious that this has been particularly felt by newer investors,

who did not experience the strong performance of the ordinary

shares in the previous two financial years.

Across The Schiehallion Fund, poor NAV performance was

driven by significant declines in the value of our holdings that

had entered the public markets, markdowns in the carrying values

of our private company investments due to reductions in the

valuations of comparable public companies and indices, and poor

operational performance from some portfolio companies. Pain for

both ordinary and C shareholders was exacerbated by share price

swings from significant premiums to NAV to discounts to NAV.

Portfolio

Whilst we can feel gloomy looking at investment returns over the

last 12 months, we only need to look at the companies in The

Schiehallion Fund to start feeling more optimistic. We believe

shareholders’ capital is invested in some of the best private

companies in the world, capable of delivering outsized investment

returns over the long run. This is not without risk, or even in some

cases, controversy. As we exited 2022, the five largest holdings

were SpaceX, Scopely, ByteDance, Solugen, and Wise. It would

be hard to imagine a more diverse set of businesses than those

making money selling access to space, virtual in-game goods,

advertising, speciality chemicals, and foreign exchange. In each

of these companies, there are strong founders, robust competitive

advantages, and huge addressable markets. The average growth

rate of these companies was approximately 50% and three of the

five are profitable.

It is not just at the top end of the portfolio where the quality of

companies and the scale of potential upside gives us real optimism.

Looking at the whole portfolio, the average revenue growth rate

was just over 50%

†

in the last 12 months. Holdings such as

Databricks are helping organisations use advances in AI to improve

their use of data to inform product development and decision-

making. Away, a direct-to-consumer luggage business, has seen

a significant upswing in its business after a tough time during

Covid-19. McMakler, a digital German real estate broker, is

weathering a tough operating environment but (we believe)

taking significant share from its competitors. We hope the extra

detail around portfolio companies included in the review of

investments on pages 17 to 24 will help convey this excitement

and optimism to shareholders.

Of course, some companies met challenges in 2022. Consumer-

facing companies that saw leaps forward in demand in 2020–2022

saw growth rates come back as consumer spending retrenched,

and they started to lag those big increases. We saw this in

companies such as Affirm, Warby Parker, Masterclass and Pet

Circle. Epic Games faced another kind of challenge in a large fine

by the FTC for historical issues around online child protection and

payment practices. These issues have long since been rectified,

but it was nevertheless short of the standards we expect of our

companies.

Investing in Late-stage Private Companies

We typically invest in late-stage private companies that are scaling

up and becoming profitable. At the stage we invest, founders are

no longer looking for the operational support traditional venture

capital firms offer. Instead, we provide long-term patient capital to

fund further expansion, often holding businesses after they have

listed on public markets, to capture their full growth potential.

One of the benefits of investing in late stage private companies

is that these companies tend to have well-established financing

teams and diversified banking relationships. This benefit was

evident during the recent uncertainty in the banking sector.

We engaged with all the private companies in our portfolios

to help better understand their banking relationships and any

potential impacts. The vast majority of investee companies had no

material exposure to Silicon Valley Bank. In addition, we were

reassured by the Federal Reserve’s announcements that deposits

would be accessible and that affected companies were able to

access their deposits and continue with business as usual.

Deployment

2022 was also a frustrating year for deployment. Our universe

has no shortage of attractive companies, but we made fewer

investments in the last 12 months than in any year since

inception. Three factors drove this. Firstly, many good companies

chose not to raise due to adverse market conditions. Secondly,

there was often a mismatch between companies’ valuation

expectations and what we believed reflected market conditions.

This led to us walking away from opportunities after deep

diligence based on price. Finally, in one notable instance where

we found a good business at a compelling price, misalignments

uncovered in our legal due diligence process caused us to walk

away from the investment.

The net result was that deployment from the C-Share pool was

slower than anticipated.

During the year, we invested in two new companies, Kepler

Computing and Merlin Labs; further information on each is

included in the review of investments. We also added to existing

investments in Loft, Northvolt, Affirm, Brex, Databricks, Faire

Wholesale, Solugen, Tempus and Ver Se. As at 31 January 2023,

approximately 79% of C share proceeds had been deployed.

†

Alternative performance measure, see Glossary of Terms and Alternative Performance Measures on pages 72 and 73.

The Schiehallion Fund Limited 13

Looking Forward

From a deployment perspective, 2023 has got off to a good start.

We are currently in deep diligence on companies in the US, China,

Italy, and Israel. In all these instances, price realism exists,

sometimes at valuations below previous rounds. We believe

normalising down rounds is essential for high-growth private

markets. Far from viewing it as a marker of failure, we applaud

those founders and boards willing to adjust their expectations to

market norms. We have more respect for those companies that

raise rounds at lower valuations than those that use artificial means

to maintain valuations set in an environment that no longer exists.

Most of the capital we have deployed from Schiehallion has been

primary investment into companies. Companies create and issue

new shares, with the capital we use to buy them going directly

onto the companies’ balance sheets. This is our preferred means

of investment as it gives companies extra resources to fund their

growth. Put another way, the investment itself favourably twists the

odds and magnitude of success. This contrasts with secondary

investment, where shares are bought from existing investors, with

none of the capital going to the company’s benefit in the same

direct manner. Our preference has always been, and will continue

to be, for primary over secondary investment, but in the current

environment, we are seeing some compelling secondary

opportunities that are too good to ignore. Early investors at the

end of their fund life are coming under pressure to realise gains

and return capital to their clients. This is giving rise to a spike in

the supply of shares in private companies, with a corresponding

decline in the price at which we can buy these shares. We have

been more actively exploring this market in conjunction with our

dealing team. Though we have not yet transacted in this manner,

we see it as an extra string to our bow that, over time, has the

potential to broaden the opportunity set for The Schiehallion Fund.

We want to finish by thanking shareholders for their support in 2022.

As we look into 2023, we see strong reasons for optimism for both

our existing holdings and new opportunities. Our proposition around

long-termism and alignment with companies is more relevant

today than it ever had been and we maintain our conviction that

this will lead to attractive returns for shareholders.

Peter Singlehurst

27 March 2023

Strategic Report

14 Annual Report 2023

We hold our private company investments at ‘fair value’ i.e.,

the price that would be received to sell an asset or paid to

transfer a liability in an orderly transaction between market

participants at the measurement date. Valuations are adjusted

both during regular valuation cycles and on an ad hoc basis in

response to ‘trigger events’. Our valuation process ensures that

private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations committee at

Baillie Gifford which takes advice from an independent third party

(S&P Global). The Baillie Gifford valuations committee is

independent from the portfolio managers, as well as Baillie Gifford’s

Private Companies Specialist team, with all voting members being

from different operational areas of the firm, and the portfolio

managers only receive final valuation notifications once they have

been applied.

We revalue private company investments on a three-month rolling

cycle, with one-third of the holdings reassessed each month.

For Schiehallion, and our investment trusts, the prices are also

reviewed twice per year by the respective boards and are subject

to the scrutiny of external auditors in the annual audit process.

Recent market volatility has meant that recent pricing has moved

much more frequently than would have been the case with the

quarterly valuations cycle.

Beyond the regular cycle, the valuations committee also monitors

each of the private company investments for certain ‘trigger

events’. These may include changes in fundamentals; a takeover

approach; an intention to carry out an Initial Public Offering (‘IPO’);

or changes to the valuation of comparable public companies.

The valuations committee also monitors relevant market indices

on a weekly basis and updates valuations in a manner consistent

with our external valuer’s (S&P Global) most recent valuation

report where appropriate. When market volatility is particularly

pronounced the team do these checks daily. Any ad hoc change

to the fair valuation of any holding is implemented swiftly and

reflected in the next published NAV. There is no delay.

Valuing Private Companies

The Schiehallion Fund*

Instruments valued 451

Instruments held 74

Percentage of portfolio revalued up to 4 times 18.9%

Percentage of portfolio revalued 5 or more times 81.1%

* Data reflecting year to 31 January 2023.

During the year, most valuations have resulted in decreases.

Valuation movements

†

Average movement per instrument (16.7%)

Average mark-down per instrument (28.1%)

Average movement at private company level (28.5%)

Average mark-down at private company level (40.6%)

†

Alternative performance measures, see Glossary of Terms and Alternative

Performance Measures on pages 72 and 73.

Share prices have decreased less than headline valuations

because Schiehallion typically holds preference stock, which

provides downside protection. The share price movement reflects

a probability weighted average of both the regular valuation,

which would be realised in an IPO, and the downside protected

valuation, which would normally be triggered in the event of a

corporate sale or liquidation.

Strategic Report

The Schiehallion Fund Limited 15

Approach to Environmental, Social and Governance Considerations (‘ESG’)

The environmental, social and governance considerations at play when Baillie Gifford’s Private Companies Team researches late-stage

private companies.

ESG In Our Philosophy

Over our long-term horizon, we believe there is a convergence

between what is good for a business and what is good for the world

at large. The conventional wisdom that there is tension between

profitability and doing the right thing is based on short-term thinking.

Over our investment horizon, we believe profitability depends not

only on a company’s ability to serve customers well but also on its

ability to do this without jeopardising its social licence to operate.

As such, we don’t break out consideration of a company’s role

in the broader system from our core investment work, under ESG

or any other rubric. These considerations are core to long-term

investing. It is the long-term nature of the growth ambition within

our investment philosophy that causes us to pay special attention to

the positive and/or negative externalities produced by a company’s

operations. Over five-year-plus periods, these can have profound

impacts on a company’s relationship with customers, regulators

and staff. They can hugely help or hinder the growth of a business.

This is not about being a moral conscience for our clients. Rather,

it is a vital part of practising the philosophy that we believe will grow

the value of their capital over the long term.

ESG In Our Process

The Private Companies Team structures our research into potential

investments by using a proprietary ‘10 Questions’ research

framework. These questions aim to address issues such as the

scale of the opportunity, the competitive edge and potential

returns, whilst others focus specifically on ESG related topics.

Question Four (‘How does the company’s culture help it achieve

the leadership’s long-term business vision?’) asks about the

stakeholders within a firm, the culture within the workplace, and

whether it cultivates a healthy organisational mindset capable of

delivering the mission. We have declined companies in the past

based on negative behaviours toward staff as part of this question.

Meanwhile, Question Five asks about external stakeholders

(‘Do the company’s customers like them?’). This question is

geared towards ecosystem impact in terms of opportunities and

potential strengths, not just uncovering risks. Question Six explores

the E and S of ESG in greater depth (‘How do environmental and

social factors create opportunities and risks?’).

Ultimately, this approach enables us to explore the inevitable grey

areas. Companies, like economies, are complex ecosystems.

Judging such a system as ‘good’ or ‘bad’ based on a single metric

or factor strikes us as profoundly unwise. Factors must be weighed

together. Consideration must be subjective and nuanced. The key

data points are inherently qualitative. We would be doing our clients

and our companies a disservice if we portrayed it as anything else.

Strategic Report

16 Annual Report 2023

Prioritisation of Long-term Value Creation

We encourage company management and their boards to be

ambitious and focus their investments on long-term value creation.

We understand that it is easy for businesses to be influenced by

short-sighted demands for profit maximisation but believe these

often lead to sub-optimal long-term outcomes. We regard it as our

responsibility to steer businesses away from destructive financial

engineering towards activities that create genuine economic value

over the long run. We are happy that our value will often be in

supporting management when others do not.

A Constructive and Purposeful Board

We believe that boards play a key role in supporting corporate

success and representing the interests of minority shareholders.

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

have the resources, cognitive diversity and information they need

to fulfil these responsibilities. We believe that a board works best

when there is strong independent representation able to assist,

advise and constructively test the thinking of management.

Long-Term Focused Remuneration with Stretching

Targets

We look for remuneration policies that are simple, transparent and

reward superior strategic and operational endeavour. We believe

incentive schemes can be important in driving behaviour, and

we encourage policies which create alignment with genuine

long-term shareholders. We are accepting of significant pay-outs

to executives if these are commensurate with outstanding

long-run value creation, but plans should not reward mediocre

outcomes. We think that performance hurdles should be skewed

towards long-term results and that remuneration plans should be

subject to shareholder approval.

Baillie Gifford Statement on Stewardship

Our Stewardship Principles for Public Companies

Fair Treatment of Stakeholders

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

strong relationships with all stakeholders, treating employees,

customers, suppliers, governments and regulators in a fair and

transparent manner. We do not believe in one-size-fits-all governance

and we recognise that different shareholder structures are appropriate

for different businesses. However, regardless of structure,

companies must always respect the rights of all equity owners.

Sustainable Business Practices

We look for companies to act as responsible corporate citizens,

working within the spirit and not just the letter of the laws and

regulations that govern them. We believe that corporate success

will only be sustained if a business’s long-run impact on society

and the environment is taken into account. Management and

boards should therefore understand and regularly review this

aspect of their activities, disclosing such information publicly

alongside plans for ongoing improvement.

Reclaiming Activism for Long-Term Investors

Baillie Gifford’s over-arching ethos is that we are ‘actual’ investors. We have a responsibility to behave as supportive and constructively

engaged long-term investors. We invest in companies at different stages in their evolution, across vastly different industries and

geographies and we celebrate their uniqueness. Consequently, we are wary of prescriptive policies and rules, believing that these

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

which help shape our interactions with companies.

Strategic Report

The Schiehallion Fund Limited 17

Review of Investments

A review of the Company’s top ten investments as at 31 January 2023 is given below.

Strategic Report

What Does It Do? Why We Like It Update

SpaceX designs,

manufactures and

launches rockets

and spacecrafts.

By fully embracing

innovation and vertical

integration, SpaceX

has opened up a series

of cost and capability

improvements which

are transforming the

space industry. SpaceX

is methodically moving

closer to its vision of

making humanity an

interplanetary species.

SpaceX continues to make impressive progress in its

mission. The company is close to finalising Starship,

a fully reusable spacecraft designed to carry crew and

cargo that NASA has selected to land astronauts on the

moon. Starship is SpaceX’s next step from the five

operational crew launches the company has achieved

with NASA and eight in total in the last two years.

SpaceX has now launched more than 3,300 satellites for

its Starlink service and used its Falcon 9 rocket to launch

satellites for communications providers OneWeb, and

Eutelsat in the last few months. This impressive operational

performance has led to continued strength in the

company’s share price even amongst weaker market

performance.

SPACEX

Scopely is a

private

independent

publisher of

interactive

entertainment for

both casual and

committed gamers.

Scopely is rapidly

becoming the partner

of choice for intellectual

property owners to

monetise their content

without devaluing their

brand.

Scopely has grown steadily since our initial investment

in 2019 and the share price has held up well in 2022 due

to continuing demand and the clear desire of companies

such as Microsoft and Sony to acquire and grow the

gaming side of their businesses. Scopely continued to

invest to grow the business in 2022, most notably acquiring

Stumble Guys in September as well as other local gaming

studios. Its acquisition of GSN games from Sony, in the

previous year, has driven revenue growth and improved

margins, which it looks to further enhance by expanding

beyond mobile to web and PC platforms, thereby avoiding

the high commission rates charged by Google and Apple

and expanding each game’s potential market.

SCOPELY

ByteDance

is the Chinese

technology

developer behind

short-form video

platforms Douyin

and TikTok and

news aggregator

Toutiao.

ByteDance’s unique

culture of innovation

has led to the incredible

growth of users across

its platform, both in

China and worldwide.

Despite its significant

scale, its under-

monetised user base

and continually improving

customer experience

leave it positioned to

continue to grow.

ByteDance continues to show impressive operational

performance amidst headwinds which have weighed

on technology company valuations in China, such as the

ongoing geopolitical tensions with the U.S. and Europe

ByteDance’s daily and monthly active users have grown

across its platform, including short-form video apps, TikTok

and Douyin and its news app Toutiao. Rising user numbers

and engagement led to 70% revenue growth in 2021,

continued growth in 2022, and a positive cash flow

position. Although we have seen evidence of an active

secondary market for ByteDance shares and some

company buybacks at a lower valuation, the opportunity

remains strong, having yet to fully monetise TikTok, one of

the most visited internet sites in the world.

BYTEDANCE

Solugen is a

synthetic biology

and chemicals

company. It

designs and

manufactures

enzymes to use

together with

catalysts to

transform

feedstock into

finished chemicals.

Solugen is pioneering

a revolutionary

approach which has

the potential to make

chemicals at much

better yields, costs

and environmental

footprints than

traditional processes.

Since our initial investment in 2021, Solugen has continued

to make meaningful progress in its bid to scale up synthetic

biology and bring greener chemicals to the world. Solugen

has performed well over the last year, enabling them to raise

capital at a higher valuation despite the difficult fundraising

environment. Solugen has strong demand both for its

chemical sales, having shipped more than 50m pounds of

products in 2021 and for the use of its original 10 kilotons

per annum (‘KTA’) Bioforge in Houston. The company

hopes to reach 250KTA of capacity in the next five years.

Solugen also has continued to produce new molecules,

with four in 2021 and the announcement of its new glucaric

molecules in 2022. Increasing capacity not only unlocks

chemical demand but should also enable it to accelerate

new molecule production in the next few years.

SOLUGEN

18 Annual Report 2023

Strategic Report

What Does It Do? Why We Like It Update

Wise is an

international

money transfer

business.

It enables customer

and business

payments that

eliminate

intermediaries

and minimise

transaction costs.

Wise’s integrated

platform and lower

cost base allow it to

not only charge lower

transaction fees and

improve the user

experience but

establish itself as

an infrastructure layer

for a growing foreign

exchange market.

Wise has delivered exceptional progress since our initial

investment in 2019, with payment volumes growing from

c.$10bn in 2016 to a predicted c.$100bn for FY 2022,

with expected revenue growth of c.70%. Wise now has

over 5.8m users on its platform who continue to increase

their payment volumes, underlining the value it delivers to

its customers based on price, speed, convenience and

transparency. To maintain its lead, Wise continues to

invest to improve its platform and add new features such

as ‘interest’ for UK customers, removing fees for certain

domestic transfers in Europe and improving pay-ins for

businesses. Even after this investment, the company is

highly profitable and cash generative and well poised to

continue to expand market share in a growing market.

Listed – July 2021

WISE

Northvolt operates

lithium-ion battery

plants intended to

produce eco-

friendly batteries

for electric vehicles.

Still in the early innings

of the energy transition,

moving away from

fossil fuel cars is a

vast and long growth

opportunity, with

batteries the critical

enabler of change.

Northvolt’s excellent

team, focus on

sustainability and

commitments from

manufacturers leave it

well-positioned against

its rivals.

Northvolt now has over $55bn in orders from car

manufacturers such as BMW, Polestar and Volkswagen

to deliver on, in addition to the implementation of its

large-scale battery recycling program. To satisfy the rapidly

expanding demand for electric vehicles, Northvolt raised

$1.1bn in the summer to finance the continued expansion

of battery cell and cathode production in Europe. However,

due to the European energy cost crisis, the company are

considering whether to delay its plans to build a third facility

in Heide, Germany, to potentially expand to North America

first, where it believes it could build batteries for between

30%–40% less. Northvolt also continues to innovate in its

use of sustainable materials. It announced an agreement

with Stora Enso to produce a battery anode made from

Lignin, a plant polymer derived from Nordic forest wood.

NORTHVOLT

Brex provides

credit cards,

current accounts

and cash

management

software to

underserved

growing

businesses.

Today’s system of tools

for a business to raise,

manage and spend

money is often a

disjointed, expensive

and frustrating

experience. With Brex’s

business model and

customer alignment,

they can expand to

provide every service

a growing business

needs in an integrated

and cheaper fashion.

Brex recently decided to move away from small businesses

to focus on institutionally backed and scaled companies.

It also continues to evolve its software platform, introducing

spending management tools, an international payroll

system and enhanced customisation of financial data in the

last year. Its work here is bearing fruit as its card and spend

management solution, Empower, crossed $3bn annualised

processing volume in its first three months of going live.

Brex announced in October that it had laid off 11% of its

workforce, showing the company is not immune to the

challenging macroeconomic environment, which has also

caused weakness in its share price due to a fall in the

valuation of its fintech peers in public markets.

BREX

The Schiehallion Fund Limited 19

Strategic Report

What Does It Do? Why We Like It Update

Daily Hunt is

the developer of

content and video

platforms for local

language internet

users in India.

With internet and

smartphone penetration

increasing steadily, Daily

Hunt serves a rapidly

growing population of

500m local language

users and an evolving

advertising market.

The company’s local

content creator network

and personalisation

algorithms leave it in

a strong position to

delight users and add

new products.

Daily Hunt’s high-quality, specialised content and

recommendation engine continue to drive growth for the

business. It continues to hit new highs in terms of both the

number of users and engagement across its platform of

apps. It has also announced plans to expand into the Middle

East, its first foray into the global market and an area of close

cultural alignment with its core Indian user base. This should

provide a chance to boost user and revenue growth further

alongside the long-term structural opportunities presented

in India. Daily Hunt is sharpening its focus on profitability,

announcing both headcount cuts across its workforce and

more disciplined sales and marketing expenditure without so

far affecting its revenue generation. The company is well

positioned, with its video platform app, Josh, growing quickly

without yet being properly monetised and its news app,

Daily Hunt, performing well.

DAILY HUNT

(VER SE)

Affirm is a digital

financial services

company that

offers simple,

transparent and

affordable

consumer loans to

buy anything from

electronics to

home furnishings

and holidays.

Consumer loans and

credit card markets,

reliant on late fees

and opaque charging

structures, are ripe for

disruption. Affirm’s

proprietary credit

checking model,

better user experience

and honest approach

create the foundation

to integrate themselves

into the financial lives

of customers and

merchants.

Affirm’s share price has been hit hard recently amidst

a broader sell-off in consumer credit companies due to

worsening inflation, rising interest rates and growing

recession fears. Affirm had previously experienced rapid

share price growth during the pandemic. Despite the

challenging environment, it continues to grow, with its

gross merchandise value (GMV) and revenue increasing

62% and 34%, respectively, year on year. Higher interest

rates are impacting funding costs and margins, but

reassuringly, Affirm’s delinquency rates have remained

stable and below pre-pandemic levels, validating their

proprietary credit checking model, which should continue

to improve. The management team is confident in the

company’s ability to disrupt incumbent credit card

companies and help its merchant partners with improved,

cost-effective customer acquisition. We added to our

position in Affirm in 2022 on share price weakness.

AFFIRM

Genki Forest

is a fast-growing

beverage company

in China, mainly

offering sugar-free

sparkling water

and ready-to-drink

teas.

Genki has anticipated

consumer demand

for healthy and new

products with its rapid

data-driven product

development process,

particularly for China’s

400m Gen Z customers.

This scalable formula,

married with its

experimental distribution

approach, could lead

it to establish itself as

China’s version of

Coca-Cola.

Previously reliant on third-party manufacturers, Genki has

recently raised money to expand its own manufacturing

capabilities with six self-built factories now operational

across China. It also has a vast distribution network,

cooperating with over 1,000 dealers in 2021. China’s zero

covid policy during the pandemic has impacted Genki’s

growth domestically and the resultant supply chain

disruption has also impaired overseas expansion plans.

Competitors are also increasingly encroaching on their

turf, with many releasing new health-orientated beverages

and trying to push Genki out of their expanding offline

distribution channels. Despite the competition locally,

pandemic restrictions easing should allow Genki to

continue to grow internationally, with the company now

selling its products in more than 40 countries globally.

GENKI

FOREST

TECHNOLOGY

20 Annual Report 2023

A review of the Company’s new investments made during the year to 31 January 2023

is given below.

Strategic Report

When Who Why How

KEPLER

COMPUTING

Developer of a next-generation

computing technology.

Baillie Gifford first

invested in Kepler

Computing in July

2022 (Schiehallion

– July 2022).

Kepler Computing is a

semiconductor company,

founded in 2018 to develop next

generation memory and CPU

chips based on a ferroelectric

material. In contrast to many

other semiconductor startups,

the idea is not to provide a new

chip architecture, but to go one

level deeper and rethink the

underlying units that a chip

architecture is composed of.

Kepler Computing aims to be

a new type of semiconductor

company combining elements

of ARM’s licensing model with

the manufacturing and materials

expertise of a TSMC or Intel.

In the shorter term, the

technology could help relieve

the current supply chain

constraints in the semiconductor

industry. In the longer term,

it would be adopted by leading

edge incumbents and second-

tier foundries.

Baillie Gifford

sourced Kepler

Computing through

its proprietary

network, with an

introduction from

Gates Frontier and

Addition.

MERLIN

LABS

Manufacturer of autonomous flying

technology.

Baillie Gifford first

invested in Merlin

Labs in April 2022

(Schiehallion

– April 2022).

Merlin Labs is building a system

that will enable aircraft to fly

themselves. Making use of

off-the-shelf hardware and

innovative proprietary software,

Merlin Labs has been able to

build a capable, reliable and

certifiable AI pilot.

Merlin Labs is focused on

crew reduction rather than full

autonomy, which is unique in the

industry and has allowed Merlin

Labs to make significant progress

with the regulators. The fully-

burdened cost of a commercial

airline pilot to a large airline is up

to $500,000 per year, so the

possibility of reducing the number

of pilots required on a flight from

two (or more) down to just one

makes for a very attractive

product offering.

Baillie Gifford

sourced Merlin Labs

directly, with an

introduction coming

from Google

Ventures.

The Schiehallion Fund Limited 21

List of Investments as at 31 January 2023

Name

Business

Country

2023

Ordinary

value

US$’000

2023

C shares

value

US$’000

2023

Total value

US$’000

2023

% of

net

assets

2022

Total

value

US$’000

Space Exploration

Technologies Corp

Designs, manufactures and launches

advanced rockets and spacecraft United States 70,113 – 70,113 6.1 50,992

Scopely Inc Online gaming company United States 60,223 – 60,223 5.2 47,918

ByteDance Ltd Social media and news aggregation

company China 49,808 – 49,808 4.3 58,378

Solugen Inc Combines enzymes and metal

catalysts to make chemicals United States – 47,881 47,881 4.2 28,129

Wise PLC – Listed Online platform to send and receive

money United Kingdom 30,112 10,009 40,121 3.5 48,644

Northvolt AB Lithium ion battery manufacturer Sweden 22,525 16,280 38,805 3.4 30,975

Brex Inc Corporate credit cards for startups United States 11,292 24,441 35,733 3.1 15,709

Daily Hunt (Ver Se

Innovation Limited)

Telephone voice, data, text

messaging, and roaming services India 32,032 – 32,032 2.8 33,236

Affirm Holdings Inc –

Listed

Online platform which provides point

of sale consumer finance United States 14,437 17,427 31,864 2.8 57,033

Genki Forest Technology

Group Holdings Limited Non-alcoholic beverages China – 29,727 29,727 2.6 33,000

Faire Wholesale Inc Online wholesale marketplace United States – 29,404 29,404 2.6 36,703

Epic Games Inc Video game developer United States 28,320 – 28,320 2.5 29,013

Stripe Inc Online payment platform United States 27,943 – 27,943 2.4 45,046

Chime Financial Inc Digital current account provider United States 7,417 19,294 26,711 2.3 44,357

Flix SE European mobility provider Germany 13,309 13,356 26,665 2.3 21,865

McMakler GmbH Real estate services Germany – 24,621 24,621 2.1 28,583

Tempus Labs Inc Oncological records aggregator and

diagnostic testing provider United States 20,177 4,210 24,387 2.1 27,089

Databricks Inc Data software solutions United States – 23,523 23,523 2.0 24,766

Grammarly Inc

Online platform for checking

grammar, spelling and improving

written communication United States – 22,353 22,353 1.9 45,002

Nuro Inc Developer of autonomous delivery

vehicles United States 9,100 12,112 21,212 1.8 29,874

Warby Parker (JAND Inc) –

Listed

Online and physical corrective

eyewear retailer United States 20,774 – 20,774 1.8 47,868

Rappi Inc

Provider of an on-demand delivery

platform designed to connect

consumers with local stores United States – 19,922 19,922 1.7 25,542

Workrise Technologies Inc Jobs marketplace for the energy

sector United States 17,073 – 17,073 1.5 25,026

Kepler Computing Inc Semiconductor company United States – 15,919 15,919 1.4 –

Indigo Agriculture Inc Microbial seed treatments to increase

crop yields and grain marketplace United States 15,839 – 15,839 1.4 16,958

Loft Holdings Ltd Online property platform Brazil – 15,569 15,569 1.4 19,223

Merlin Labs Inc Autonomous flight technology United States – 13,842 13,842 1.2 –

Strategic Report

22 Annual Report 2023

Name

Business

Country

2023

Ordinary

value

US$’000

2023

C shares

value

US$’000

2023

Total value

US$’000

2023

% of

net

assets

2022

Total

value

US$’000

Convoy Inc Marketplace for truckers and shippers United States 9,165 4,210 13,375 1.2 17,185

PsiQuantum

Silicon photonic quantum computing United States – 13,195 13,195 1.1 15,000

Jiangxiaobai Holdings Ltd Producer of alcoholic beverages China 12,892 – 12,892 1.1 14,187

Away (JRSK Inc) Travel and lifestyle brand United States 12,355 – 12,355 1.1 11,920

Tanium Inc Online security management United States 11,799 – 11,799 1.0 29,773

Pet Circle (Millell Pty Ltd) Pet food and accessories Australia – 11,357 11,357 1.0 28,182

Wayve Technologies Ltd AI based software for self-driving cars United Kingdom – 9,728 9,728 0.8 16,267

Carbon Inc Manufactures and develops 3D

printers United States 9,670 – 9,670 0.8 12,920

Blockstream Corp Inc Financial software developer United States – 8,885 8,885 0.8 13,937

Graphcore Ltd Computer chip developer United Kingdom 8,706 – 8,706 0.7 16,600

Airbnb Inc – Listed Online market place for travel

accommodation United States 8,544 – 8,544 0.7 11,828

Cohesity Inc Data storage United States 8,033 – 8,033 0.7 11,930

Illumina Inc – Listed Gene sequencing equipment and

consumables United States 7,355 – 7,355 0.6 9,396

Honor Technology Inc Provider of home-care services United States 2,990 3,888 6,878 0.6 12,043

MasterClass (Yanka

Industries Inc) Online education platform United States 6,487 – 6,487 0.6 8,542

Allbirds Inc – Listed Sustainable direct-to-customer

footwear brand United States 4,659 1,459 6,118 0.5 27,600

Oscar Health Inc – Listed Healthcare insurance provider United States 3,157 – 3,157 0.3 5,508

HeartFlow Inc Develops software for cardiovascular

disease diagnosis and treatment United States 2,029 – 2,029 0.2 11,413

Ginkgo Bioworks Holdings

Inc – Listed

Genetic engineering for industrial

applications United States 1,085 – 1,085 0.1 3,162

Total securities 559,420 412,612 972,032 84.3 1,148,322

* During the year Zymergen was taken over by Ginkgo Bioworks.

Strategic Report

The Schiehallion Fund Limited 23

Allocation of Net Assets

As at 31 January 2023

2023

Ordinary

value

US$’000

2023

C shares

value

US$’000

2023

Total

value

US$’000

2023

% of net

assets

2022

Total

value

US$’000

Listed investments 90,123 28,895 119,018 10.3 211,039

Private company investments 469,297 383,717 853,014 74.0 937,283

US treasury bills – 136,797 136,797 11.9 268,216

Cash and cash equivalents 38,872 6,927 45,799 3.9 86,898

Net current assets (684) (761) (1,445) (0.1) (30,924)

Total net assets 597,608 555,575 1,153,183 100.0 1,472,512

Capital

deployed

(US$’000) *

Number of

private

company

acquisitions

Number of

private

company

realisations

Number of

IPOs/listings

Gross

Internal

Rate of

Return

(IRR) *

Gross

Multiple on

Invested

Capital

(MOIC) *

Company metrics 1,046,802 46 1 7 (2.7%) 1.0

* Alternative performance measure, see Glossary of Terms and Alternative Performance Measures on pages 72 and 73.

Name

2023

Ordinary

value

US$’000

2023

C shares

value

US$’000

2023

Total value

US$’000

2023

% of net

assets

2022

Total

value

US$’000

US Treasury Bill 18/05/2023 – 23,112 23,112 2.0 –

US Treasury Bill 13/07/2023 – 22,874 22,874 2.0 –

US Treasury Bill 07/09/2023 – 22,870 22,870 2.0 –

US Treasury Bill 23/03/2023 – 22,801 22,801 2.0 –

US Treasury Bill 02/11/2023 – 22,630 22,630 2.0 –

US Treasury Bill 28/12/2023 – 22,510 22,510 1.9 –

US Treasury Bill 24/03/2022 – – – – 44,697

US Treasury Bill 16/06/2022 – – – – 44,738

US Treasury Bill 14/07/2022 – – – – 44,786

US Treasury Bill 08/09/2022 – – – – 44,782

US Treasury Bill 03/11/2022 – – – – 44,698

US Treasury Bill 29/12/2022 – – – – 44,515

Total US Treasury Bills – 136,797 136,797 11.9 268,216

Cash 38,872 6,927 45,799 3.9 86,898

Other current assets and liabilities (684) (761) (1,445) (0.1) (30,924)

Net current assets 38,188 142,963 181,151 15.7 324,190

Net assets 597,608 555,575 1,153,183 100.0 1,472,512

Name

Listed

investments

Private

company

investments

Net current

assets

Net

assets

31 January 2023 10.3 74.0 15.7 100.0

31 January 2022 14.3 63.7 22.0 100.0

Strategic Report

24 Annual Report 2023

Distribution of Net Assets

Ordinary Shares

Geographical as at 31 January 2023 (31 January 2022)

Sectoral as at 31 January 2023 (31 January 2022)

Consumer

Discretionary

11.6

(14.6%)

Consumer Staples

4.8

(3.9%)

Healthcare

5.5% (7.0%)

Materials 0.2% (0.4%)

Information

Technology

21.0% (18.7%)

Industrials

19.9

(14.2%)

Communications Services

14.9% (12.7%)

Financials

15.7

(22.2%)

Net Current Assets 6.4%

(6.3%)

China 10.6% (9.1%)

Germany

2.2

(1.3%)

Net Current Assets

6.4

(6.3%)

United States

65.2

(69.4%)

India

5.4

(4.2%)

Sweden

3.8

(3.0%)

United Kingdom

6.4

(6.7%)

The Strategic Report which incorporates pages 1 to 24 was approved by the Board on 27 March 2023.

Dr Linda Yueh CBE

Chairperson

The above sectoral distribution is not derived from any index.

C Shares

Geographical as at 31 January 2023 (31 January 2022)

Sectoral as at 31 January 2023 (31 January 2022)

US Treasury Bills

24.7% (39.4%)

Consumer Discretionary

10.4

(11.5%)

Consumer Staples

5.4

(4.8%)

Healthcare

1.5% (0.9%)

Materials 8.6% (4.1%)

Information

Technology

20.5% (20.6%)

Industrials

7.8% (4.7%)

Financials

12.8

(6.1%)

Real Estate

7.2% (7.0%)

Net Current Assets

1.1

(0.9%)

Germany

6.8

(5.9%)

Net Current Assets

1.1

(0.9%)

United States

50.7

(41.8%)

US Treasury Bills

24.7% (39.4%)

Australia

2.0

(4.1%)

Sweden 2.9%

(0.9%)

United Kingdom

3.6

(4.2%)

Brazil

2.8

(2.8%)

China

5.4

(Nil)

The above sectoral distribution is not derived from any index.

Strategic Report

The Schiehallion Fund Limited 25

Governance Report

Directors and Management

Directors

Dr Linda Yueh CBE

Dr Linda Yueh was appointed a Director and Chairperson

on 4 January 2019 and is also Chairperson of the Nomination

Committee. Dr Linda Yueh is an experienced Board director,

academic economist and adviser on economic policy. She is a

fellow in economics at St Edmund Hall, University of Oxford and

adjunct professor of economics at London Business School.

She was visiting professor at the LSE and visiting professor of

economics at Peking University. Dr Yueh is an Adviser to the UK

Board of Trade and was a member of the Ring-fencing and Proprietary

Trading Review Panel for the UK government. She is also a

non-executive director of Rentokil Initial PLC, SEGRO PLC and

Standard Chartered PLC. She was previously Senior Independent

Director of Fidelity China Special Situations PLC and a non-executive

director of Baillie Gifford’s flagship Scottish Mortgage Investment

Trust PLC and JPMorgan Asian Growth and Income PLC. In the

King’s New Year Honours List of 2023, Dr Yueh was awarded a

CBE for Services to Economics.

John Mackie CBE

Mr John Mackie was appointed a Director on 4 January 2019

and is also the Senior Independent Director. Following an early

career in retail management, Mr Mackie went to the University of

Glasgow as a mature student and then qualified as a chartered

accountant with Arthur Andersen & Co in Glasgow. He then spent

five years with 3i Group before joining Morgan Grenfell Private

Equity in 1990 as a founder director. Mr Mackie was made a

director of Morgan Grenfell & Co in 1993. From 2000 to 2006,

Mr Mackie was chief executive of the British Venture Capital

Association and was a partner in Parallel Private Equity LLP until

2011. He was, until 2013, chairman of Henderson Private Equity

Investment Trust PLC, until 2014, a director of Baronsmead VCT

PLC and, until September 2018, the senior independent director

at Mithras Investment Trust PLC. Mr Mackie is currently a partner

in Mithras Capital Partners LLP and chairman of the advisory

boards at Amadeus and Angels Seed Fund and Amadeus IV

Early Stage Fund. In the 2006 New Years Honours list he was

awarded a CBE for services to business.

Dr David Chiswell OBE

Dr David Chiswell was appointed a Director on 2 September

2021. Dr Chiswell has over 30 years’ experience in the biotechnology

industry. In 1990, Dr Chiswell co-founded Cambridge Antibody

Technology and served as its chief executive officer (‘CEO’) from

1996 to 2002. He served as CEO of Kymab Ltd from 2015 to

2018 and prior to that as CEO of Nabriva Therapeutics from 2009

to 2012. He served as a director of Arakis and non-executive

chairman of Sosei, Arrow Therapeutics, Daniolabs, Nabriva

Therapeutics and Kymab. Dr Chiswell is currently chairman of

Albireo Pharma Inc and, Epsilogen Ltd and a board member of

Avillion Bond 2 Development 2 GP. Dr Chiswell is also a past

chairman of the UK BioIndustry Association and his contributions

to the field were recognised in 2006 when he was awarded the

OBE by HM the Queen for services to the biotechnology industry.

Trudi Clark

Ms Trudi Clark was appointed a Director on 4 January 2019

and is also Chairperson of the Audit Committee. Ms Clark

graduated in business studies and qualified as a chartered

accountant with Robson Rhodes in Birmingham before moving

to Guernsey in 1987. In Guernsey she joined KPMG, where she

was responsible for an audit portfolio including some of the major

financial institutions in Guernsey. After 10 years in public practice,

Ms Clark was recruited by the Bank of Bermuda as head of

European internal audit, later moving into corporate banking.

In 1995 she joined Schroders in the Channel Islands as CFO

and was promoted in 2000 to banking director and in 2003 to

managing director. From 2006 to 2009, Ms Clark established a

family office, specialising in alternative investments. From 2009 to

2018 she returned to public practice specialising in corporate

restructuring services. Since 2018, Ms Clark is audit committee

chair of BMO Commercial Property Trust Limited and Taylor

Maritime Investments Limited, and a non-executive director of

NB Private Equity Partners Ltd where she is a member of the

audit committee and chairs the remuneration, nomination and

management engagement committees. Ms Clark also holds

a personal fiduciary licence issued by the GFSC and acts as

non-executive director and consultant to one high net worth family.

Richard Holmes

Mr Richard Holmes was appointed a Director on 2 September

2021. Mr Holmes completed a BSc in Economics at London

School of Economics and then a Masters at Warwick University.

He worked in various marketing roles at Unilever in London,

Paris and Milan from 1983 to 1995. He then moved to Boots Plc

where he was marketing director and launched the Boots

Advantage Card and set up Boots.com. In 2007, he moved to

Guernsey to join the board of Specsavers Optical Group as

group marketing director. He retired from full time work in 2018.

He currently holds various non-executive positions, including

Lok‘nStore Plc, Moorfields Eye Hospital and Citizens Advice

Guernsey.

All the Directors are members of the Audit Committee with the

exception of Dr Yueh. Dr Yueh stepped down from the Audit

Committee in March 2022. All Directors are members of the

Nomination Committee.

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

on a very extensive pool of knowledge and experience.

Directors and Management

26 Annual Report 2023

Investment Manager

The Company has appointed Baillie Gifford & Co Limited, a

wholly-owned subsidiary of Baillie Gifford & Co, as Investment

Manager and as Alternative Investment Fund Manager (the

‘Investment Manager’). Baillie Gifford and Co Limited has delegated

portfolio management services to Baillie Gifford Overseas Limited.

Baillie Gifford & Co is an investment management firm formed in

1927 out of the legal firm Baillie & Gifford, WS which had been

involved in investment management since 1908.

Baillie Gifford is one of the largest investment trust managers in

the UK and, as well as Schiehallion, currently manages twelve

investment trusts together with investment portfolios on behalf

of pension funds, charities and other institutional clients, both in

the UK and overseas. Funds under management or advice of

Baillie Gifford totalled around £230 billion as at 24 March 2023.

Based in Edinburgh it is one of the leading privately-owned

investment management firms in the UK, with 51 partners.

Baillie Gifford has a dedicated Private Companies investment

team of eight investors. In addition, Baillie Gifford has a further

29 investors who research and invest in both private and public

companies. Baillie Gifford’s Private Company investors are

supported by a team of specialist deal lawyers, valuation analysts

and other operational staff to ensure that the investments are

monitored at all stages from pre-buy to ongoing relations with

the companies.

The portfolio manager of Schiehallion is Peter Singlehurst and

the deputy portfolio manager is Robert Natzler. Peter joined

Baillie Gifford in 2010 and is head of the Private Companies

Team and Robert joined in 2015.

Baillie Gifford & Co Limited, Baillie Gifford & Co and Baillie Gifford

Overseas Limited are all authorised and regulated by the Financial

Conduct Authority.

Governance Report

The Schiehallion Fund Limited 27

Directors’ Report

The Directors present their Report together with the audited

Financial Statements of the Company for the year ended

31 January 2023.

Listing Status

Since the Company’s ordinary shares were admitted to trading

on the Specialist Fund Segment of the London Stock Exchange,

a regulated market, on 27 March 2019, the Company is subject

to the Prospectus Rules, the Disclosure Guidance and

Transparency Rules, the Market Abuse Regulation and the

London Stock Exchange’s Admission and Disclosure Standards.

Corporate Governance

The Corporate Governance Report is set out on pages 25 to 40

and forms part of this Report.

Investment Manager

The Company has appointed Baillie Gifford & Co Limited as its

Investment Manager (the ‘Investment Manager’). As the entity

appointed to be responsible for risk management and portfolio

management, the Investment Manager has also been appointed

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

Baillie Gifford & Co Limited has delegated portfolio management

services to Baillie Gifford Overseas Limited.

The Investment

Management Agreement is terminable on not less than six months’

notice. Compensation fees would only be payable in respect of the

notice period if termination by the Company were to occur within

a shorter notice period.

Under the terms of the Investment

Management Agreement and with effect from the date the

Company’s ordinary shares were admitted to trading on the

Specialist Fund Segment of the Main Market of the London Stock

Exchange, the Investment Manager is entitled to an annual fee of:

0.9% on the net asset value excluding cash or cash equivalent

assets up to and including US$650 million; 0.8% on the net asset

value excluding cash or cash equivalent assets exceeding

US$650 million up to and including US$1.3 billion; and 0.7% on

the net asset value excluding cash or cash equivalent assets

exceeding US$1.3 billion. Management fees are calculated and

payable quarterly.

The Board is of the view that calculating the fee with reference to

performance would be unlikely to exert a positive influence on

performance.

The Board as a whole fulfils the functions of the Management

Engagement Committee. The Board considers the Company’s

investment management arrangements and administration

arrangements (detailed below) on a continuing basis and a formal

review is conducted at least annually.

The Board considers, amongst others, the following topics in its

review:

— the quality of the personnel assigned to handle the

Company’s affairs;

— the investment process and the results achieved to date; and

— the administrative services provided by the Investment Manager.

Following the most recent review, it is the opinion of the Directors

that the continuing appointment of Baillie Gifford & Co Limited as

Investment Manager and AIFM and the delegation of the portfolio

management services to Baillie Gifford Overseas Limited, on the

terms agreed, is in the interests of the Company and the

shareholders as a whole due to the strength of the investment

management team, the Investment Manager’s commitment

to the investment funds sector and the quality of the

administrative function.

Administrator

Alter Domus (Guernsey) Limited has been appointed as

Administrator, Secretary and Designated Manager of the Company

(the ‘Administrator’). The Administrator is responsible for certain

aspects of the day-to-day administration and general secretarial

functions of the Company in conjunction with the Investment

Manager (including but not limited to the maintenance of the

Company’s statutory records). The Administrator is entitled to

receive a fixed annual fee of £69,900 (exclusive of goods and

services tax), payable quarterly in arrears. This fee is subject to

an annual increase in line with Guernsey RPI. The Administrator

is also entitled to reimbursement of reasonable costs, expenses

and disbursements properly incurred.

Depositary

In accordance with the Alternative Investment Fund Managers

Directive, the AIFM must appoint a Depositary to the Company.

The Bank of New York Mellon (International) Limited has been

appointed as the Company’s Depositary. The Depositary’s

responsibilities include cash monitoring, safe keeping of the

Company’s financial instruments, verifying ownership and

maintaining a record of other assets and monitoring the

Company’s compliance with investment limits and leverage

requirements. The custody function is also undertaken by

The Bank of New York Mellon (International) Limited.

Directors

The names and biographical details of the Board members

who served on the Board as at the year end and up to the date

the Financial Statements were signed can be found on page 25.

The Corporate Governance Code requires that all Directors be

subject to annual election by shareholders. As a result, the

Directors will retire at the Annual General Meeting on 12 May 2023

and offer themselves for re-election. Following a formal performance

evaluation, the Chairperson confirms that the Board members

consider that their performance continues to be effective and that

they remain committed to the Company. The Board therefore

recommends their re-election to shareholders.

Director Indemnification and Insurance

The Company has entered into qualifying third-party deeds of

indemnity in favour of each of its Directors. The deeds, which

were in force during the year ended 31 January 2023 and up to

the date of approval of this Report, cover any liabilities that may

arise to a third party, other than the Company, for negligence,

default or breach of trust or duty. The Directors are not indemnified

in respect of liabilities to the Company, any regulatory or criminal

fines, any costs incurred in connection with criminal proceedings

in which the Director is convicted or civil proceedings brought

by the Company in which judgement is given against him/her.

In addition, the indemnity does not apply to any liability to the

extent that it is recovered from another person.

The Company maintains Directors’ and Officers’ liability insurance.

Governance Report

28 Annual Report 2023

Conflicts of Interest

Each Director submits a list of potential conflicts of interest at

each Board meeting. The Board considers these carefully, taking

into account the circumstances surrounding them when deciding

whether or not the potential conflicts should be authorised.

Having considered the lists of potential conflicts, there were no

situations which gave rise to a direct or indirect interest of a

Director which conflicted with the interests of the Company.

Share Capital

Capital Structure

The Company’s capital structure, as at 31 January 2023, consisted

of 500,430,002 ordinary shares of US$1 each (2022 – 500,430,002

ordinary shares of US$1 each and 700,000,000 C shares of

US$1 each (2022 – 700,000,000)). The ordinary and C shares

are subject to transfer restrictions and forced transfer provisions

for investors in the United States and certain other jurisdictions.

Capital Entitlement

On a winding up, after meeting the liabilities of the Company,

the surplus assets of the respective share classes will be paid

to ordinary and C shareholders in proportion to their respective

shareholdings.

Dividends

The ordinary and C shares carry a right to receive dividends.

Given the nature of the Company’s investments, the Company

does not expect to pay dividends in the foreseeable future.

If any dividends or distributions are made, they will at all times

be subject to compliance with the solvency test prescribed by

Guernsey law.

Voting

Each ordinary and C shareholder present in person or by proxy

is entitled to one vote on a show of hands and, on a poll, to one

vote for every share held.

Restrictions on voting apply to those shareholders who are subject

to restrictions under the United States Bank Holding Company

Act of 1956 (BHCA restricted holder) and may apply to those

shareholders who are pension plans subject to section 11 of

Schedule III to the Pension Benefits Standards Regulations, 1985

(Canada) (CPP Certifying Shareholder). It is recommended that

each shareholder give consideration to the Company’s Articles

of Incorporation and their rights thereunder when considering

whether they may be subject to restricted voting rights.

Information on the deadlines for proxy appointments can be

found on pages 69 and 70.

C shares will convert to ordinary shares once the C share portfolio

is at least 85% invested. It is expected that conversion will occur

within 12 months of the issuance of this report.

Major Interests Disclosed in the Company’s Shares

Name

No. of ordinary shares

held at 31 January 2023

% of

issue

Florida Retirement System Trust

Fund (Direct) 190,900,000 38.2

RBC Canadian Master Trust

(Indirect) 47,725,000 9.5

Baillie Gifford & Co (Indirect) 47,725,000 9.5

Winnipeg Civic Employee’s

Benefits Program

42,500,000 8.5

Textron Inc. Master Trust (Direct) 35,000,000 7.0

NAV Canada Pension Plan (Direct) 25,000,000 5.0

Name

No. of C shares

held at 31 January 2023

% of

issue

Baillie Gifford & Co (Indirect) 70,803,954 10.1

Blackrock (Indirect) 48,709,834 7.0

RBC Canadian Master Trust

(Indirect) 47,725,000 6.8

Columbia Threadneedle Investments

(Indirect) 44,373,439 6.3

Sarasin & Partners (Indirect) 40,105,682 5.7

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

Company’s ordinary or C shares disclosed up to 24 March 2023.

Directors’ Interests

The Directors are not required to hold shares in the Company.

The Directors at the end of the year under review, and their

interests in the Company are shown in the following table.

There have been no changes intimated in the Directors’ interests

up to 24 March 2023.

Nature of

interest

C shares

held at

31 January

2023

C shares

held at

31 January

2022

L Yueh Beneficial 58,641 –

J Mackie Beneficial 57,642 –

D Chiswell Beneficial 520,000 –

T Clark Beneficial 80,000 –

R Holmes Beneficial 72,098 –

Issuance of Shares and Share Buybacks

By way of a special resolution dated 15 March 2019 the Directors

have a general authority to allot up to 720 million ordinary shares

or C shares, such figure to include the ordinary shares issued at

the initial placing. 477,250,000 ordinary shares were issued at the

Company’s initial placing hence the Company has the ability to

issue a further 242,750,000 ordinary shares under this existing

authority which expires at the end of the period concluding

immediately prior to the Annual General Meeting of the Company

to be held in 2024 (or, if earlier, five years from the date of the

resolution).

Governance Report

The Schiehallion Fund Limited 29

In the year to 31 January 2023, no ordinary shares were issued

(2022 – 20,080,000 ordinary shares raising net proceeds

of US$41,431,000). In the period from 31 January 2023 to

24 March 2023, no ordinary shares have been issued.

In the year to 31 January 2023, no C shares were issued (2022

– 700,000,000 C shares raising net proceeds of US$694,802,000).

In the period from 31 January 2023 to 24 March 2023, no

C shares have been issued.

Annual General Meeting

Market Purchases of Shares by the Company

At the last Annual General Meeting, the Company was granted

authority to purchase up to 75,014,457 ordinary shares

(equivalent to 14.99% of its issued share capital) at 12 May 2022,

such authority to expire at the 2023 Annual General Meeting.

The Directors are seeking shareholders’ approval at the 2023

Annual General Meeting to renew the authority to make market

purchases up to 75,014,457 ordinary shares representing

approximately 14.99% of the Company’s ordinary shares in issue

as at 24 March 2023, being the latest practicable date prior to

publication of this document (or, if less, up to 14.99% of the

ordinary shares in issue (excluding treasury shares) on the date on

which the resolution is passed), such authority to expire at the

Annual General Meeting of the Company to be held in 2024.

The Directors are also seeking shareholder approval at the 2023

Annual General Meeting to make market purchases of up to

104,930,000 C shares representing approximately 14.99% of the

Company’s C shares in issue at 24 March 2023, being the latest

practicable date prior to the publication of this document (or, if

less, up to 14.99% of the C shares in issue on the date on which

the resolution is passed), such authority to expire at the Annual

General Meeting of the Company to be held in 2024.

No shares were bought back during the year (2022 – none) and

no shares are held in treasury.

Share buybacks may be made principally:

(i) to enhance net asset value for continuing shareholders by

purchasing shares at a discount to the prevailing net asset

value; and

(ii) to address any imbalance between the supply of and the

demand for the Company’s shares that results in a discount

of the quoted market price to the published net asset value

per share.

The Company may hold bought back shares in treasury and then:

(i) sell such shares (or any of them) for cash; or

(ii) cancel the shares (or any of them).

Shares will only be re-sold from treasury at a premium to net

asset value per ordinary share.

In accordance with the Listing Rules of the UK Listing Authority,

the maximum price (excluding expenses) that may be paid on

the exercise of the authority must not exceed the higher of:

(i) 5% above the average closing price on the London Stock

Exchange of an ordinary or C share over the five business

days immediately preceding the date of purchase; and

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

highest current independent bid as stipulated by Article 5(1)

of Commission Regulation (EC) 22 December 2003

implementing the Market Abuse Directive as regards

exemptions for buyback programmes and stabilisation of

financial instruments (No. 2273/2003).

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

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

shares will be made within guidelines established, from time to

time, by the Board. Your attention is drawn to Resolutions 11 and

12 in the Notice of Annual General Meeting.

Recommendation

The Board considers each resolution being proposed at the

Annual General Meeting to be in the best interests of the

Company and its shareholders as a whole and it unanimously

recommends that all shareholders vote in favour of them.

Financial Instruments

The Company’s financial instruments comprise its investment

portfolio, US Treasury Bills, cash balances and debtors and

creditors that arise directly from its operations such as sales and

purchases awaiting settlement and accrued income. The financial

risk management objectives and policies arising from its financial

instruments and the exposure of the Company to risk are

disclosed in note 15 to the Financial Statements.

Articles of Incorporation

The Company’s Articles of Incorporation may only be amended

by special resolution at a general meeting of shareholders.

Disclosure of Information to Auditor

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

there is no relevant audit information of which the Company’s

Auditor is unaware and the Directors have taken all the steps

that they ought to have taken as Directors in order to make

themselves aware of any relevant audit information and to establish

that the Company’s Auditor is aware of that information.

Independent Auditor

The Auditor, KPMG Channel Islands Limited, appointed upon

the Company’s incorporation, is willing to continue in office.

Resolutions concerning KPMG Channel Islands Limited’s

reappointment and remuneration will be submitted to the

Annual General Meeting.

Greenhouse Gas Emissions

All of the Company’s activities are outsourced to third parties.

The Company therefore has no greenhouse gas emissions to

report from its operations, nor does it have responsibility for

any other emissions producing sources under the Companies Act

2006 (Strategic Report and Directors’ Reports) Regulations 2013.

For the same reason as set out above, the Company is a low

energy user under the SECR regulations and has no energy and

carbon information to disclose.

Governance Report

30 Annual Report 2023

Bribery Act

The Company has a zero tolerance policy towards bribery and is

committed to carrying out business fairly, honestly and openly.

The Investment Manager also adopts a zero tolerance approach

and has policies and procedures in place to prevent bribery.

Tax Evasion

The Company has a commitment to zero tolerance towards the

criminal facilitation of tax evasion.

Events after the Reporting Date

The Directors confirm that there have been no events after the

reporting date which require adjustment of, or disclosure in,

the Financial Statements or notes thereto up to 27 March 2023.

On behalf of the Board

Dr Linda Yueh CBE

Chairperson

27 March 2023

Governance Report

The Schiehallion Fund Limited 31

Corporate Governance Report

The Board is committed to achieving and demonstrating high

standards of Corporate Governance. The Board has taken note of

the Code of Corporate Governance issued by the Guernsey Financial

Services Commission (the ‘Guernsey Code’). The Guernsey Code

provides a governance framework for GFSC licensed entities,

authorised and collective investment schemes. Companies

reporting in compliance with the UK Corporate Governance Code

(the ‘UK Code’) or The Association of Investment Companies

Code of Corporate Governance (the ‘AIC Code’) are deemed to

satisfy the provisions of the Guernsey Code. This statement outlines

how the principles of the AIC Code were applied throughout the

financial year ended 31 January 2023. The Company intends to

comply with the AIC Code for the year ended 31 January 2024.

The AIC Code can be found at theaic.co.uk.

Compliance

The Board confirms that the Company has complied throughout

the year under review with the relevant provisions of the AIC Code

and the recommendations of the AIC Code.

The Board

The Board has overall responsibility for the Company’s affairs.

It has a number of matters formally reserved for its approval

including strategy, investment policy, currency hedging, gearing,

treasury matters, dividend and corporate governance policy.

A separate strategy session is held annually. The Board also

reviews the Financial Statements, investment transactions, revenue

budgets and performance of the Company. Full and timely

information is provided to the Board to enable the Board to function

effectively and to allow Directors to discharge their responsibilities.

The Board currently comprises five Directors all of whom are

non-executive. The Chairperson, Dr Linda Yueh, is responsible for

organising the business of the Board, ensuring its effectiveness and

setting its agenda. The Board reviews its composition annually.

The executive responsibilities for investment management have

been delegated to the Company’s Alternative Investment Fund

Manager (‘AIFM’), Baillie Gifford & Co Limited, and in the context

of a Board comprising entirely Non-Executive Directors, there

is no chief executive officer. Mr John Mackie is the Company’s

Senior Independent Director (SID). Mr Mackie is available to

shareholders if they have concerns not properly addressed

by the Chairperson. The SID leads the Chairperson’s appraisal.

The Directors believe that the Board has a balance of skills

and experience which enable it to provide effective strategic

leadership and proper governance of the Company. Information

about the Directors, including their relevant experience, can be

found on page 25.

There is an agreed procedure for Directors to seek independent

professional advice if necessary at the Company’s expense.

Appointments to the Board

The terms and conditions of Directors’ appointments are set out

in formal letters of appointment which are available for inspection

on request.

Under the provisions of the Company’s Articles of Incorporation,

a Director appointed during the period is required to retire and

seek election by shareholders at the next Annual General Meeting.

In accordance with the principals of the AIC Code, all Directors

will offer themselves for re-election annually.

The reasons why the Board supports the election and re-election

of the Directors are set out on page 27.

Directors are not entitled to any termination payments in relation

to their appointment.

Independence of Directors

All of the Directors are considered by the Board to be

independent of the Investment Manager and the Administrator

and free of any business or other relationship which could

interfere with the exercise of their independent judgement.

The Directors recognise the importance of succession planning

for company boards and review the Board composition annually.

The Board is of the view that length of service will not necessarily

compromise the independence or contribution of Directors of an

investment company, where continuity and experience can be a

benefit to the Board. The Board concurs with the view expressed

in the AIC Code that long serving Directors should not be

prevented from being considered independent.

Following formal performance evaluation, the Board considers

that each Director continues to be independent in character and

judgement and his/her skills and experience were a significant

benefit to the Board.

Tenure of Directors

The Nomination Committee has considered the question of tenure

for directors, noting the provisions in the AIC Code, and has

concluded that there should not be a set maximum time limit for

a chairperson or director to serve on the Board. The Nomination

Committee keeps under review the balance of skills, knowledge,

experience, performance and length of service of the Directors

ensuring the Board has the right combination of skills and

preservation of knowledge and experience balanced with the

appointment of new Directors bringing in fresh ideas and perspective.

Meetings

There is an annual cycle of Board meetings which is designed

to address, in a systematic way, overall strategy, review of

investment policy, investment performance, premium/discount,

marketing, revenue budgets, dividend policy and communication

with shareholders. The Board considers that it meets sufficiently

regularly to discharge its duties effectively. The following table

shows the attendance record for the Board and Committee

meetings held during the year ended 31 January 2023.

Directors’ Attendance at Meetings

Board

Audit

Committee

Nomination

Committee

Board

Valuation

Meetings

Number of meetings 4 2 2 2

L Yueh

* 4 1 2 2

J Mackie 4 2 2 2

D Chiswell 4 2 2 2

T Clark 4 2 2 2

R Holmes 4 2 2 2

* Dr Yueh stepped down from the Audit Committee following the

meeting, held in March 2022, to approve the Company’s 2022

year end accounts.

Governance Report

32 Annual Report 2023

Nomination Committee

The Nomination Committee consists of the whole Board and

the Chairperson of the Board is Chairperson of the Committee.

The Committee meets on an annual basis and at such other

times as may be required. The Committee has written terms of

reference which include reviewing the composition of the Board,

identifying and nominating new candidates for appointment to

the Board, Board appraisal, succession planning and training.

The Committee also considers whether Directors should be

recommended for re-election by shareholders. The Committee is

responsible for considering Directors’ potential conflicts of interest

and for making recommendations to the Board on whether or not

the potential conflicts should be authorised.

Diversity

Appointments to the Board are made on merit with due regard for

the benefits of diversity including gender and ethnicity. The priority

in appointing new Directors is to identify the candidate with the best

range of skills and experience to complement existing Dir

ectors.

The Board will not display any bias for age, gender, race, sexual

orientation, r

eligion, ethnic or national origins, or disability in

considering the appointment of its Directors. However, it is the

Board’s policy to ensure that all appointments are made on the basis

of merit against the specification prepared for each appointment.

Board Gender as at 31 January 2023

Number of

Board Members

Percentage

of the Board

Number of

senior positions

on the Board

Number in

executive

management

Percentage of

executive

management

Men 3 60% 1 n/a n/a

Women 2 40% 2 n/a n/a

* Target of 40% of board are women is met per the Hampton-Alexander Review.

The positions of the Chairperson and Chair of the Audit Committee are held by women. The position of Senior Independent Director is held by

a man. This exceeds the target that at least one senior board position should be held by a woman.

Board Ethnic Background as at 31 January 2023

Number of

Board Members

Percentage

of the

Board

Number of

senior positions

on the Board

Number in

executive

management

Percentage

of executive

management

White British or

other White (including

minority-white groups) 4 80% 2 n/a n/a

Minority ethnic 1 20% 1 n/a n/a

†

Target of at least one member of the board is from a minority background is met per the Parker Review.

The Committee’s terms of reference are available on request from the Company and on the Company’s website: schiehallionfund.com.

The composition of the Board is two-fifths female, which complies

with the target outlined in the FCA Listing Rules. The Board consists

of one Director who is from an ethnic minority background, thereby

meeting the recommendations of the Parker Review. The Board

further includes one Director with a registered disability.

Although the Company is not required to report against the

targets set out in the FCA’s Listing Rule 9.8.6R(9)(a) until the 2024

Annual Report, the boar

d has resolved to do so for the year ended

31 January 2023. In relation to Listing Rule 9.8.6R(9), (10) and (11)

the Board provides the following information in relation to its

Diversity.

As an externally managed investment fund, there are no executive

staff, and therefore the Company does not have a chief executive

officer (‘CEO’) or a chief financial officer (‘CFO’), both of which are

deemed senior board positions by the FCA. The Board however

considers the Chair of the Audit Committee to be a senior board

position and the following disclosures are made on this basis.

The FCA recognises the Chairperson and Senior Independent

Director to be senior board positions. The Board has also resolved

that the Company’s year end date is the most appropriate date for

disclosure purposes.

Governance Report

The Schiehallion Fund Limited 33

Performance Evaluation

During the year the Board appointed Lintstock, a firm which assists

companies with external board evaluations. Lintstock has no

other connection with the Company or its Directors. Each Director

completed a questionnaire, provided by Lintstock, which was

followed up with a telephone interview carried out by a

representative of Lintstock. The Board evaluation included a

review of the following areas:

— Board composition and expertise;

— Board dynamics;

— Management and focus of meetings;

— Board information and support;

— Audit and Nomination Committees;

— Investment Strategy and performance;

— External relations;

— Risk management; and

— Succession.

Lintstock reviewed the information from the questionnaires and

interviews. It is intended that an external evaluation will be carried

out every three years.

Following the process, it was concluded that the performance of

each Director, the Chairperson, the Board and its committees

continues to be effective and each Director, including the

Chairperson remains committed to the Company.

A review of the Chairperson’s and other Directors’ commitments

was carried out and the Nomination Committee is satisfied that

they are capable of devoting sufficient time to the Company.

There were no significant changes to the Chairperson’s other

commitments during the year ended 31 January 2023.

Induction and Training

New Directors are provided with an induction programme which

is tailored to the particular circumstances of the appointee.

During the year ended 31 January 2023, briefings on industry and

regulatory matters were provided to the Board by the Investment

Manager and Administrator. Directors receive other relevant

training as necessary.

Remuneration

As all the Directors are non-executive, there is no requirement

for a separate Remuneration Committee. Directors’ fees are

considered by the Board as a whole within the limits approved

by shareholders. The Company’s policy on remuneration is set

out in the Directors’ Remuneration Report on pages 38 and 39.

Audit Committee

The report of the Audit Committee is set out on pages 36 and 37.

Internal Controls and Risk Management

The Directors acknowledge their responsibility for the Company’s

risk management and internal controls systems and for reviewing

their effectiveness. The systems are designed to manage rather

than eliminate the risk of failure to achieve business objectives

and can only provide reasonable but not absolute assurance

against material misstatement or loss.

The Board confirms that there is a continuing process for identifying,

evaluating and managing the significant risks faced by the

Company in accordance with the FRC guidance, ‘Guidance on

Risk Management, Internal Control and Related Financial and

Business Reporting’.

The practical measures in relation to the design, implementation

and maintenance of control policies and procedures to safeguard

the Company’s assets and to manage its affairs properly, including

the maintenance of effective operational and compliance controls

have been delegated to the Investment Manager and Administrator.

The Board oversees the functions delegated to the Investment

Manager and Administrator and the controls managed by the

AIFM in accordance with the Alternative Investment Fund Managers

Directive (as detailed below). Baillie Gifford & Co’s Internal Audit

and Compliance Departments and the AIFM’s permanent risk

function provide the Audit Committee with regular reports on their

monitoring programmes. The reporting procedures for these

departments are defined and formalised within a service level

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

system of internal controls which is documented within an internal

controls report which complies with ISAE 3402 and Technical

Release AAF 01/06 – Assurance Reports on Internal Controls of

Service Organisations made available for Third Parties. This report

is independently reviewed by Baillie Gifford & Co’s auditor and a

copy is submitted to the Audit Committee.

A report identifying the principal and emerging risks faced by the

Company and the key controls employed to manage these risks

is reviewed by the Audit Committee at each Audit Committee

meeting.

These procedures ensure that consideration is given regularly to

the nature and extent of risks facing the Company and that they

are being actively monitored. Where changes in risk have been

identified during the period they also provide a mechanism to

assess whether further action is required to manage these risks.

The Directors confirm that they have reviewed the effectiveness

of the Company’s risk management and internal controls systems

which accord with the FRC guidance, ‘Guidance on Risk

Management, Internal Control and Related Financial and Business

Reporting’ and they have procedures in place to review their

effectiveness on a regular basis. No significant weaknesses were

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

Governance Report

34 Annual Report 2023

The Board confirms that these procedures have been in place

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

place up to the date of approval of this Report.

To comply with the Alternative Investment Fund Managers

Directive, The Bank of New York Mellon (International) Limited

acts as the Company’s Depositary and Baillie Gifford & Co Limited

as its AIFM.

The Depositary’s responsibilities include cash monitoring, safe

keeping of the Company’s financial instruments, verifying ownership

and maintaining a record of other assets and monitoring the

Company’s compliance with investment limits and leverage

requirements. The Depositary is liable for the loss of financial

instruments held in custody. The Depositary will ensure that any

delegate segregates the assets of the Company. The Company’s

Depositary also acts as the Company’s Custodian. The Custodian

prepares reports on its key controls and safeguards which are

independently reviewed by KPMG LLP. The reports are reviewed

by Baillie Gifford’s Business Risk Department and a summary of

the key points is reported to the Audit Committee and any

concerns are investigated.

The Depositary provides the Audit Committee with a report on its

monitoring activities.

The AIFM has established a permanent risk management function

to ensure that effective risk management policies and procedures

are in place and to monitor compliance with risk limits. The AIFM

has a risk management policy which covers the risks associated

with the management of the portfolio, and the adequacy and

effectiveness of this policy is reviewed and approved at least

annually. This review includes the risk management processes

and systems and limits for each risk area.

The risk limits, which are set by the AIFM and approved by the

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

of the portfolio. These limits are monitored and the sensitivity of

the portfolio to key risks is undertaken periodically as appropriate

to ascertain the impact of changes in key variables in the portfolio.

Exceptions from limits monitoring and stress testing undertaken

by Baillie Gifford’s Business Risk Department are escalated to the

AIFM and reported to the Board along with any remedial

measures being taken.

Going Concern

In accordance with the Financial Reporting Council’s guidance on

going concern and liquidity risk, the Directors have undertaken a

rigorous review of the Company’s ability to continue as a going

concern

In undertaking this review, the Directors have considered the

Company’s principal and emerging risks. The Company’s principal

risks are market-related and include market risk, liquidity risk and

credit risk. An explanation of these risks and how they are

managed is set out on pages 7 to 10 and contained in note 15

to the Financial Statements on pages 61 to 66.

The Board has, in particular, considered the impact of heightened

market volatility due to the macroeconomic and geopolitical

concerns, including rising inflation and interest rates, the Russian

invasion of Ukraine as well as the lingering effects of the Covid-19

pandemic. Specific leverage and stress testing has been carried

out by the Board and having done so the Board does not believe

the Company’s going concern status is affected. The Company

maintains sufficient cash balances to enable it to meet its liabilities

as they fall due.

In managing the Company’s assets, the Investment Manager will

seek to ensure that the Company holds at all times a proportion

of assets that is sufficiently liquid to enable it to discharge its

payment obligations.

Accordingly, the Financial Statements have been prepared on the

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

the principal and emerging risks and other matters set out in the

Viability Statement on page 10 which assesses the prospects of

the Company over a period of five years, that the Company will

continue in operational existence for a period of at least twelve

months from the date of approval of these Financial Statements.

Relations with Shareholders

The Board places great importance on communication with

shareholders. The Company’s Investment Manager meets

regularly with shareholders and their representatives and reports

shareholders’ views to the Board. The Chairperson is available

to meet with shareholders as appropriate. Shareholders wishing

to communicate with any member of the Board may do so by

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

Company’s broker, Winterflood Securities Limited (see contact

details on the back cover). The Company’s Annual General

Meeting provides a forum for communication with all shareholders.

These communication opportunities help inform the Board when

considering how best to promote the success of the Company

for the benefit of all shareholders over the long term. The level

of proxies lodged for each resolution will be announced at the

Annual General Meeting and will be published on the Company’s

page of the Investment Manager’s website schiehallionfund.com

subsequent to the meeting.

Shareholders and potential investors may obtain up-to-date

information on the Company at schiehallionfund.com.

Corporate Governance and Stewardship

The Company has given discretionary voting powers to Baillie

Gifford & Co. The Investment Manager votes against resolutions

they consider may damage shareholders’ rights or economic

interests.

The Company believes that it is in the shareholders’ interests to

consider environmental, social and governance (‘ESG’) factors

when selecting and retaining investments and has asked the

Investment Manager to take these issues into account as long as

the investment objectives are not compromised. The Investment

Governance Report

The Schiehallion Fund Limited 35

Manager does not exclude companies from its investment

universe purely on the grounds of ESG factors but adopts a

positive engagement approach whereby matters are discussed

with management with the aim of improving the relevant policies

and management systems and enabling the Investment Manager

to consider how ESG factors could impact long-term investment

returns. The Investment Manager’s statement of compliance with

the UK Stewardship Code can be found on the Investment

Manager’s website at bailliegifford.com. The Investment

Manager’s policy has been reviewed and endorsed by the Board.

The Baillie Gifford Statement on Stewardship and its Stewardship

Principals are set out on page 16. Baillie Gifford & Co, the

Managers, has considered the Sustainable Finance Disclosure

Regulation (‘SFDR’) and further details can be found on page 74.

The Investment Manager, Baillie Gifford & Co, is a signatory to the

United Nations Principles for Responsible Investment and the

Carbon Disclosure Project and is also a member of the Asian

Corporate Governance Association and International Corporate

Governance Network.

Climate Change

The Board recognises that climate change poses a serious threat

to our environment, our society and to economies and companies

around the globe. Addressing the underlying causes is likely to

result in companies that are high emitters of carbon facing greater

societal and regulatory scrutiny and higher costs to account for

the true environmental impact of their activities.

Baillie Gifford’s Task Force on Climate-Related Financial Disclosures

(‘TCFD’) Climate Report is available on the Managers’ Website

at bailliegifford.com. The Managers, Baillie Gifford & Co, are

signatories to the Carbon Disclosure Project.

On behalf of the Board

Dr Linda Yueh CBE

Chairperson

27 March 2023

Governance Report

36 Annual Report 2023

The Company’s Audit Committee is chaired by Ms Trudi Clark,

and meets twice a year or more often if required. Ms Clark is a

Charter

ed Accountant. The Board considers that the members

of the Audit Committee have the requisite financial skills and

experience to fulfil the r

esponsibilities of the Audit Committee.

The Committee consists of all the Directors, except for Dr Yueh,

who stood down from the Audit Committee in March 2022.

Although not a member of the Committee, Dr Yueh was invited

to and attended all the meetings.

The Committee’s authority and duties are clearly defined within

its written terms of reference which are available on request

from the Administrator and on the Company’s website at

schiehallionfund.com. The terms of reference are reviewed

annually.

The Committee’s effectiveness is reviewed on an annual basis

as part of the Board’s performance evaluation process.

At least once a year the Committee meets with the external

Auditor without any representative of the Investment Manager

being present.

Main Activities of the Committee

KPMG Channel Island Limited (‘KPMG’) attended both Audit

Committee meetings held during the year along with the meeting

held on 27 March 2023 to approve the Annual Report and

Financial Statements. Baillie Gifford & Co’s Internal Audit and

Compliance Departments and the AIFM’s permanent risk function

provided reports on their monitoring programmes at both

meetings held during the year.

The matters considered, monitored and reviewed by the

Committee covering the year ended 31 January 2023 include

the following:

— the interim results announcement and the Interim Report;

— the Company’s accounting policies and practices and the

implementation of the Investment Manager’s Valuation

Policy for investments in unquoted companies;

— the regulatory changes impacting the Company;

— the fairness, balance and understandability of the Annual

Report and Financial Statements and whether it provided

the information necessary for shareholders to assess the

Company’s performance, business model and strategy;

— the effectiveness of the Company’s internal control

environment;

— appointment/reappointment, remuneration and terms of

engagement of the external Auditor;

— the policy on the engagement of the external Auditor to

supply non-audit services;

— the independence and objectivity of the external Auditor;

— the need for the Company to have its own internal audit

function;

— internal controls reports received from the Investment

Manager and Custodian; and

— the arrangements in place within the Investment Manager

and Administrator whereby their staff may, in confidence,

raise concerns about possible improprieties in matters of

financial reporting or other matters.

Audit Committee Report

Internal Audit

The Committee believes that the compliance and internal controls

systems and the internal audit function in place within the

Investment Manager provides sufficient assurance that a sound

system of internal control, which safeguards shareholders’

investment and the Company’s assets, is maintained. An internal

audit function specific to the Company is therefore considered

unnecessary.

Financial Reporting

The Committee considers that the most significant area of risk

likely to impact the Financial Statements is the valuation of private

company investments as they represent 74.0% of the Company’s

net assets and since the valuation of these investments requires

the use of estimates, assumptions and judgements.

Private Company Investments

The Committee reviewed the Investment Manager’s valuation

approach for investments in private companies (as described in

note 1(e) on page 50) and approved the valuations of the private

company investments following a detailed review of the valuation

of each investment and relevant challenge where appropriate.

The Investment Manager agreed the holdings in certificated form

to confirmations from the Company’s Custodian and holdings of

uncertificated private company investments were agreed to

confirmations from the relevant investee companies.

Listed Investments

Investments in quoted securities have market prices which are

readily available from independent external pricing sources.

The Committee reviewed the Investment Manager’s Report on

Internal Controls which details the controls in place regarding

the recording and pricing of investments.

The Investment Manager agreed the prices of all the listed

investments at 31 January 2023 to external price sources and

the holdings were agreed to confirmations from the Company’s

Custodian or Transfer Agent.

Other Matters

The Committee reviewed the Investment Manager’s Report on

Internal Controls which details the controls in place regarding the

complete and accurate recording of investment income.

At the meeting held on 27 March 2023, the Investment Manager

and external Auditor confirmed to the 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.

Governance Report

The Schiehallion Fund Limited 37

Internal Controls and Risk Management

The Committee reviewed the effectiveness of the Company’s risk

management and internal controls systems as described on

pages 33 and 34. No significant weaknesses were identified in the

period under review.

External Auditor

To fulfil its responsibility regarding the independence of the

external Auditor, the Committee reviewed:

— the Auditor’s audit strategy for the financial year ended

31 January 2023 which included a report from the Auditor

describing their arrangements to manage auditor

independence and received confirmation of their

independence; and

— there were no non-audit services provided by the external

Auditor in the year to 31 January 2023. The non-audit fees in

the previous year to 31 January 2022 paid to KPMG Channel

Islands Limited were for providing procedural services related

to the issue of the Company’s C shares. The fees charged for

these services were US$83,000 (see note 4 on page 52).

The Committee does not believe this impaired the Auditor’s

independence and confirmed the services provided are

permitted under the non-audit services policy of the

Company.

To assess the effectiveness of the external Auditor, the Committee

had detailed discussions with audit personnel to challenge audit

processes and deliverables.

To fulfil its responsibility for oversight of the external audit process

the Committee considered and reviewed:

— the Auditor’s engagement letter;

— the Auditor’s proposed audit strategy;

— the audit fee; and

— a report from the Auditor on the conclusion of the audit.

KPMG Channel Islands Limited was appointed as the Company’s

Auditor, by the Directors, upon the Company’s incorporation.

The audit partner responsible for the audit is to be rotated at least

every five years in accordance with professional and regulatory

standards in order to protect independence and objectivity and to

provide fresh challenge to the business.

KPMG Channel Islands Limited has confirmed that it believes it is

independent within the meaning of regulatory and professional

requirements and that the objectivity of the audit partner and staff

is not impaired.

Having carried out the review described above, the Committee

is satisfied that the Auditor is independent and effective for the

purposes of this year’s audit.

There are no contractual obligations restricting the Committee’s

choice of external Auditor.

Accountability and Audit

The respective responsibilities of the Directors and the Auditor

in connection with the Financial Statements are set out on

pages 40 to 44.

On behalf of the Board

Trudi Clark

Audit Committee Chairperson

27 March 2023

Governance Report

38 Annual Report 2023

Statement by the Chairperson

The Directors’ Remuneration Policy is subject to shareholder

approval every three years or sooner if an alteration to the policy

is proposed. As the Remuneration Policy, which is set out below,

was last approved at the Annual General Meeting in May 2020,

shareholders’ approval is being sought at the forthcoming Annual

General Meeting. Shareholders’ attention is drawn to Resolution 2

in the Notice of Annual General Meeting on page 67. The policy

for which approval is sought is set out below and is unchanged

from that currently in force.

Directors’ fees are increased in line with inflation annually. A resolution

to amend the aggregate limit for Directors’ fees will be put to

shareholders as and when required.

Directors’ Remuneration Policy

The Board is composed wholly of non-executive Directors, none

of whom has a service contract with the Company. There is no

separate remuneration committee and the Board as a whole

considers changes to Directors’ fees from time to time.

The Board’s policy is that the remuneration of Directors should be

set at a reasonable level that is commensurate with the duties

and responsibilities of the role and consistent with the requirement

to attract and retain Directors of the appropriate quality and

experience. The Board believes that the fees paid to the Directors

should reflect the experience of the Board as a whole, be fair and

should take account of the level of fees paid by comparable

investment companies. Baillie Gifford & Co Limited provides

comparative information when the Board considers the level of

Directors’ fees. The Board also receives advice from independent

companies, for instance, Trust Associates, who produces an

annual report on Directors’ fees for the sector, had reviewed the

Board’s fees. Any views expressed by shareholders on the fees

being paid to Directors will be taken into consideration by the

Board when reviewing the Board’s policy on remuneration.

Non-executive Directors are not eligible for any other remuneration

or benefits apart from the reimbursement of allowable expenses.

There are no performance conditions relating to Directors’ fees

and there are no long-term incentive schemes or pension schemes.

There is no notice period and no compensation is payable on loss

of office.

Directors’ Remuneration Report

Limits on Directors’ Remuneration

The fees for the non-executive Directors are payable quarterly in

arrears and are determined within the limit set out in the Company’s

Articles of Incorporation, which is currently £360,000 per annum

in aggregate. Any change to this limit requires shareholder

approval by way of an ordinary resolution.

The basic and additional annual fees payable to Directors in

respect of the year to 31 January 2023 and the expected fees

payable in respect of the year ending 31 January 2024 are set

out in the table below. The fees payable to the Directors in the

subsequent financial periods are subject to annual increases in

line with inflation.

Statement of Voting at Annual General Meeting

At the Annual General Meeting held on 12 May 2022, of the proxy

votes received in respect of the Directors’ Remuneration Report

that approved the annual increases in line with inflation, 100.0%

were in favour, 0.0% were against and 0.0% were withheld.

Expected fees

per annum for

year ending

31 January 2024

Fees for the

year ending

31 January

2023

L Yueh 90,300 82,500

J Mackie 72,200 66,000

D Chiswell 60,200 55,000

T Clark 75,500 69,000

R Holmes 60,200 55,000

Total aggregate annual fees that can be

paid to the Directors in any year under the

Directors’ Remuneration Policy, as set out

in the Company’s Articles of Incorporation 360,000 360,000

Annual Report on Remuneration

An ordinary resolution for the approval of this report will be put to

the members at the forthcoming Annual General Meeting.

Governance Report

The Schiehallion Fund Limited 39

Directors’ Remuneration for the Year

The Directors who served during the year ended 31 January 2023 received the following remuneration in the form of fees and taxable

benefits. This represents the entire remuneration paid to the Directors.

For the year ended 31 January 2023 For the year ended 31 January 2022

Name

Fees

Total

Fees

Other

fees

Total

L Yueh (Chairperson) 82,500 82,500 52,359 5,000 57,359

J Mackie (Senior Independent Director) 66,000 66,000 38,867 5,000 43,867

D Chiswell (appointed 2 September 2021) 55,000 55,000 16,852 – 16,852

T Clark (Audit Committee Chairperson) 69,000 69,000 41,517 5,000 46,517

R Holmes (appointed 2 September 2021) 55,000 55,000 16,852 – 16,852

327,500 327,500 166,447 15,000 181,447

* Each Director, appointed at the time of the C share issuance, received a one-off fee of £5,000 which covered services relating to the issue of

the Company’s C shares. As these fees related to the listing of the Company’s C shares, they were included within the cost of issuing shares

(see note 10).

No other remuneration or compensation was paid or is payable by the Company during the period to any of the Directors, other than travel

expenses of US$6,000 (2022 – nil).

Annual Percentage Change in Remuneration

This represents the annual percentage change in the entire

remuneration paid to the Directors.

% from

2022 to 2023

% from

2021 to 2022

L Yueh 43.8 27.5

J Mackie 50.5 33.3

D Chiswell

* 36.0 –

T Clark 48.3 32.9

R Holmes

* 36.0 –

* R Holmes & D Chiswell were appointed to the board on 2 September

2021. Their fees for the period from 2 September 2021 to 31 January

2022 have been annualised in order to provide the above annual

percentage change from 2022 to 2023.

Relative Importance of Spend on Pay

As the Company has no employees, the Directors do not consider

it appropriate to present a table comparing remuneration paid to

employees with distributions to shareholders. The Directors’

remuneration for the period is set out on the previous page.

There were no distributions to shareholders by way of dividend

or share repurchases during the period.

Directors’ Service Details

Name

Date of

appointment

Due date

for re-election

L Yueh 4 January 2019 AGM in 2023

J Mackie 4 January 2019 AGM in 2023

D Chiswell 2 September 2021 AGM in 2023

T Clark 4 January 2019 AGM in 2023

R Holmes 2 September 2021 AGM in 2023

Approval

The Report on remuneration on pages 38 and 39 was approved

by the Board of Directors and signed on its behalf on 27 March

2023.

Dr Linda Yueh CBE

Chairperson

Governance Report

40 Annual Report 2023

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report

and Financial Statements in accordance with applicable law and

regulations.

Company law requires the Directors to prepare Financial

Statements for each financial year. Under that law they have

elected to prepare the Financial Statements in accordance with

International Financial Reporting Standards as issued by the

International Accounting Standards Board.

Under company law, the Directors must not approve the Financial

Statements unless they are satisfied that they give a true and fair

view of the state of affairs of the Company and of its profit or loss

for that period.

In preparing these Financial Statements, the Directors are

required to:

— select suitable accounting policies and then apply them

consistently;

— make judgements and estimates that are reasonable and

prudent;

— state whether applicable accounting standards have been

followed, subject to any material departures disclosed and

explained in the Financial Statements;

— assess the Company’s ability to continue as a going concern,

disclosing as applicable, matters relating to going concern;

and

— use the going concern basis of accounting unless they either

intend to liquidate the Company or to cease operations, or

have no realistic alternative but to do so.

The Directors are responsible for keeping proper accounting

records that are sufficient to show and explain the Company’s

transactions and disclose with reasonable accuracy at any time

the financial position of the Company and enable them to ensure

that its Financial Statements comply with the Companies

(Guernsey) Law, 2008. They are responsible for such internal

control as they determine is necessary to enable the preparation

of Financial Statements that are free from material misstatement,

whether due to fraud or error, and have general responsibility for

taking such steps are reasonably open to them to safeguard the

assets of the Company and to prevent and detect fraud and

other irregularities.

The Directors are responsible for the maintenance and integrity

of the corporate and financial information included on the

Company’s website. Legislation in Guernsey governing the

preparation and dissemination of Financial Statements may differ

from legislation in other jurisdictions.

Responsibility Statement of the Directors in Respect

of the Annual Report and Financial Statements

We confirm to the best of our knowledge:

— the Financial Statements, prepared in accordance with the

applicable set of accounting standards, give a true and fair

view of the assets, liabilities, financial position and profit or

loss of the Company; and

— the Strategic Report includes a fair review of the development

and performance of the business and the position of the

issuer, together with a description of the principal risks and

uncertainties they face.

We consider the Annual Report and Financial Statements, taken

as a whole, is fair, balanced and understandable and provides the

information necessary for shareholders to assess the Company’s

position and performance, business model and strategy.

On behalf of the Board

Dr Linda Yueh CBE

27 March 2023

Governance Report

Note

The following note relates to financial statements published on a website and is not included in the printed version of the Annual Report

and Financial Statements:

— The Directors have delegated responsibility to the Managers for the maintenance and integrity of the Company’s page of the

Managers’ website; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the

auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially

presented on the website.

The Schiehallion Fund Limited 41

Financial Report

Independent Auditor’s Report

To the Members of The Schiehallion Fund Limited

Our opinion is unmodified

We have audited the financial statements of The Schiehallion Fund Limited (the ‘Company’), which comprise the statement of financial

position as at 31 January 2023, the statements of comprehensive income, changes in equity and cash flows for the year then ended,

and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements:

— give a true and fair view of the financial position of the Company as at 31 January 2023, and of the Company’s financial performance

and cash flows for the year then ended;

— are prepared in accordance with International Financial Reporting Standards; and

— comply with the Companies (Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities

are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical

requirements including the FRC Ethical Standard as required by the Crown Dependencies’ Audit Rules and Guidance. We believe that the

audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Key audit matters: our assessment of the risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements

and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those

which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the

engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming

our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit

matter was as follows (unchanged from 2022):

The risk Our response

Valuation of private

company investments

US$ 853,014,000

(2022 – US$ 937,283,000)

Refer to the Audit

Committee Report on page

36 of the Annual Report,

note 1 (d), 1 (e), 7 and 15

of the financial statements

Basis:

The Company’s investments are

classified, recognised and measured

at fair value through profit or loss in

accordance with IFRS 9. Private

company investments represent 74%

of the Company’s net assets as at

31 January 2023.

The directors review and challenge

the valuation of private company

investments proposed by Baillie Gifford

& Co Limited (the ‘Investment Manager’).

The Investment Manager’s investment

valuation policy applies techniques

consistent with the International Private

Equity and Venture Capital Valuation

(‘IPEV’) Guidelines 2018. In assessing

fair value the Investment Manager

considers information provided by their

independent third party valuation firm

(the ‘Valuation Agent’).

Risk:

The valuation of the Company’s private

company investments is a significant

risk area of our audit, given that they

represent a significant portion of the

net assets of the Company.

The valuation of the Company’s private

company investments incorporates a

risk of error given the significance of

estimates and judgements that may

be involved in the determination of

their fair value.

Our audit procedures included but were not limited to:

Internal Controls:

We evaluated the design and implementation of the control in place in

relation to the valuation of the Company’s private company investments.

Challenging management’s assumptions and inputs including

use of our KPMG valuation specialist:

For the private company investments, with the support of our KPMG

valuation specialist, we:

— assessed the scope of the services provided by the Valuation

Agent in relation to the private company investments as well as

the objectivity, capability and competence of the Valuation Agent;

— held discussions with the Investment Manager to understand the

valuation approach;

— read the valuation reports and memoranda produced by the

Valuation Agent and by the Investment Manager, including the

Investment Manager’s considerations of the Valuation Agent’s reports;

— assessed the reasonableness and appropriateness of the valuation

approach and methodology applied to each private company

investment;

— benchmarked the assumptions established in the valuation models

employed to observable market data;

— obtained an understanding of how the impact of global economic

factors and the resultant increase in uncertainty have been

reflected in the valuation of private company investments; and

— corroborated material investee company inputs and recent investment

transactions used in the valuation models to supporting documentation.

Assessing disclosures:

We also considered the Company’s disclosures (see notes 1 (d) and 15)

in relation to the use of estimates and judgements relating to the valuation

of private company investments and the Company’s investment valuation

policies adopted in note 1 (e) and fair value disclosures in note 7 for

compliance with International Financial Reporting Standards.

42 Annual Report 2023

Financial Report

Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at $23,100,000, determined with reference to a benchmark of net assets of

$1,153,183,000, of which it represents approximately 2.0% (2022 – 2.0%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold,

performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account

balances add up to a material amount across the financial statements as a whole. Performance materiality for the Company was set at

75% (2022 – 75%) of materiality for the financial statements as a whole, which equates to $17,325,000. We applied this percentage in

our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.

We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding $1,155,000, in addition to other

identified misstatements that warranted reporting on qualitative grounds.

Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification of significant

risks of material misstatement and the associated audit procedures performed in those areas as detailed above.

Going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or

to cease its operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also

concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern

for at least a year from the date of approval of the financial statements (the ‘going concern period’).

In our evaluation of the directors’ conclusions, we considered the inherent risks to the Company’s business model and analysed how

those risks might affect the Company’s financial resources or ability to continue operations over the going concern period. The risk that

we considered most likely to affect the Company’s financial resources or ability to continue operations over this period was the availability

of capital to meet operating costs and other financial commitments.

We considered whether this risk could plausibly affect the liquidity in the going concern period by comparing severe, but plausible

downside scenarios that could arise from this risk against the level of available financial resources indicated by the Company’s financial

forecasts.

We considered whether the going concern disclosure in note 1 (a) to the financial statements gives a full and accurate description of

the directors’ assessment of going concern.

Our conclusions based on this work:

— we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is

appropriate;

— we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or

conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern

for the going concern period; and

— we found the going concern disclosure in the notes to the financial statements to be acceptable.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent

with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will

continue in operation.

Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (‘fraud risks’) we assessed events or conditions that could indicate an incentive

or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

— enquiring of management as to the Company’s policies and procedures to prevent and detect fraud as well as enquiring whether

management have knowledge of any actual, suspected or alleged fraud;

— reading minutes of meetings of those charged with governance; and

— using analytical procedures to identify any unusual or unexpected relationships.

As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk

that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk

related to revenue recognition because the Company’s revenue streams are simple in nature with respect to accounting policy choice,

and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did

not identify any additional fraud risks.

The Schiehallion Fund Limited 43

We performed procedures including

— Identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to supporting

documentation; and

— incorporating an element of unpredictability in our audit procedures.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements

from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the

Company’s regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding

compliance with laws and regulations. As the Company is regulated, our assessment of risks involved gaining an understanding of

the control environment including the entity’s procedures for complying with regulatory requirements.

The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and

taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related

financial statement items.

The Company is subject to other laws and regulations where the consequences of non-compliance could have a material effect on

amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or impacts on the Company’s

ability to operate. We identified financial services regulation as being the area most likely to have such an effect, recognising the

regulated nature of the Company’s activities and its legal form. Auditing standards limit the required audit procedures to identify non-

compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any.

Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect

that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements

in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards.

For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial

statements, the less likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement.

We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and

regulations.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report but

does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the

other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise

appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this

other information, we are required to report that fact. We have nothing to report in this regard.

We have nothing to report on other matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if,

in our opinion:

— the Company has not kept proper accounting records; or

— the financial statements are not in agreement with the accounting records; or

— we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for the

purpose of our audit.

Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 40, the directors are responsible for: the preparation of the financial

statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of

accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Financial Report

44 Annual Report 2023

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of

assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at frc.org.uk/auditorsresponsibilities.

The purpose of this report and restrictions on its use by persons other than the Company’s members, as a body

This report is made solely to the Company’s members, as a body, in accordance with section 262 of the Companies (Guernsey) Law,

2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to

them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to

anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have

formed.

Steven Stormonth

For and on behalf of KPMG Channel Islands Limited

Chartered Accountants and Recognised Auditors

Guernsey

27 March 2023

Financial Report

The Schiehallion Fund Limited 45

Statement of Comprehensive Income

For the year ended 31 January 2023 For the year ended 31 January 2022

Notes

Revenue

US$’000

Capital

US$’000

Total

US$’000

Revenue

US$’000

Capital

US$’000

Total

US$’000

(Losses)/gains on investments 7 – (311,938) (311,938) – 39,460 39,460

Currency losses – (17) (17) – (19) (19)

Income 2 2,800 – 2,800 362 – 362

Investment management fee 3 (8,931) – (8,931) (8,427) – (8,427)

Other administrative expenses 4 (1,233) – (1,233) (1,100) – (1,100)

Operating (loss)/profit before

finance costs and taxation (7,364) (311,955) (319,319) (9,165) 39,441 30,276

Finance costs of borrowings (10) – (10) (7) – (7)

Operating (loss)/profit before taxation (7,374) (311,955) (319,329) (9,172) 39,441 30,269

Tax on ordinary activities – – – – – –

(Loss)/profit and total

comprehensive (loss)/income

for the year (7,374) (311,955) (319,329) (9,172) 39,441 30,269

Total comprehensive (loss)/income

for the year analysed as follows:

Attributable to ordinary shareholders (4,923) (189,131) (194,054) (7,238) 51,460 44,222

Attributable to C shareholders (2,451) (122,824) (125,275) (1,934) (12,019) (13,953)

(Loss)/profit and total comprehensive

(loss)/income for the year (7,374) (311,955) (319,329) (9,172) 39,441 30,269

(Loss)/earnings per ordinary share 5 (0.98¢) (37.79¢) (38.77c) (1.47¢) 10.46¢ 8.99¢

Loss per C share 5 (0.35¢) (17.55¢) (17.90¢) (0.28¢) (1.72¢) (2.00¢)

The total column of this statement represents the Statement of Comprehensive Income of the Company. The supplementary revenue and capital

columns are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in this statement derive from continuing operations.

The accompanying notes on pages 49 to 66 are an integral part of the Financial Statements.

Financial Report

46 Annual Report 2023

Statement of Financial Position

The accompanying notes on pages 49 to 66 are an integral part of the Financial Statements.

As at 31 January

Notes

2023

US$’000

2023

US$’000

2022

US$’000

2022

US$’000

Fixed assets

Investments held at fair value through profit or loss 7 972,032 1,148,322

Current assets

US Treasury Bills 15 136,797 268,216

Cash and cash equivalents 15 45,799 86,898

Debtors 8 884 405

183,480 355,519

Current liabilities

Amounts falling due within one year 9 (2,329) (31,329)

Net current assets 181,151 324,190

Net assets 1,153,183 1,472,512

Capital and reserves

Share capital 10/11 1,216,503 1,216,503

Capital reserve 11 (51,536) 260,419

Revenue reserve 11 (11,784) (4,410)

Shareholders’ funds 1,153,183 1,472,512

Shareholders’ funds – ordinary shares 597,608 791,663

Net asset value per ordinary share 12 119.42¢ 158.20¢

Number of ordinary shares in issue 10 500,430,002 500,430,002

Shareholders’ funds – C shares 555,575 680,849

Net asset value per C share 12 79.37¢ 97.26¢

Number of C shares in issue 10 700,000,000 700,000,000

The Financial Statements of The Schiehallion Fund Limited (Company registration number 65915) were approved and authorised for issue by

the Board of Directors and were signed on 27 March 2023.

Dr Linda Yueh CBE

Chairperson

Financial Report

The Schiehallion Fund Limited 47

Statement of Changes in Equity

For the year ended 31 January 2023

Notes

capital

US$’000

Capital

reserve

US$’000

Revenue

reserve

US$’000

Shareholders’

funds

US$’000

Shareholders’ funds at 1 February 2022 1,216,503 260,419 (4,410) 1,472,512

Ordinary shares issued 10/11 – – – –

C shares issued 10/11 – – – –

Total comprehensive loss – ordinary shares – (189,131) (4,923) (194,054)

Total comprehensive loss – C shares – (122,824) (2,451) (125,275)

Shareholders’ funds at 31 January 2023 1,216,503 (51,536) (11,784) 1,153,183

For the year ended 31 January 2022

Notes

capital

US$’000

Capital

reserve

US$’000

Revenue

reserve

US$’000

Shareholders’

funds

US$’000

Shareholders’ funds at 1 February 2021 480,340 220,978 4,762 706,080

Ordinary shares issued 10/11 41,361 – – 41,361

C shares issued 10/11 694,802 – – 694,802

Total comprehensive income/(loss) – ordinary shares – 51,460 (7,238) 44,222

Total comprehensive loss – C shares – (12,019) (1,934) (13,953)

Shareholders’ funds at 31 January 2022 1,216,503 260,419 (4,410) 1,472,512

The accompanying notes on pages 49 to 66 are an integral part of the Financial Statements.

Financial Report

48 Annual Report 2023

The accompanying notes on pages 49 to 66 are an integral part of the Financial Statements.

Statement of Cash Flows

For the year ended

31 January 2023

For the year ended

31 January 2022

Notes US$’000 US$’000 US$’000 US$’000

Cash flows from operating activities

Operating (loss)/profit before taxation (319,329) 30,269

US Treasury Bills interest (1,618) (166)

Net losses/(gains) on investments 311,938 (39,460)

Currency losses 17 19

Changes in debtors and creditors (899) 879

Net cash used in operating activities

* (9,891) (8,459)

Cash flows from investing activities

Acquisitions of US Treasury Bills (161,229) (1,031,088)

Disposals of US Treasury Bills 294,266 840,039

Acquisitions of investments 7 (166,076) (474,843)

Disposals of investments 7 1,848 8,740

Net cash used in investing activities (31,191) (657,152)

Cash flows from financing activities

Ordinary shares issued 10/11 – 41,613

C shares issued 10/11 – 694,802

Net cash inflow from financing activities – 736,415

Net (decrease)/increase in cash and cash equivalents (41,082) 70,804

Effect of exchange rate fluctuations on cash and cash equivalents (17) (19)

Cash and cash equivalents at 1 February 86,898 16,113

Cash and cash equivalents at 31 January 45,799 86,898

* Cash from operations includes interest received of US$700,000 (2022 – US$1,000).

2023

US$’000

2022

US$’000

Cash and cash equivalents comprise the following:

Cash at bank 45,799 86,898

Financial Report

The Schiehallion Fund Limited 49

The Schiehallion Fund Limited is a non-cellular investment company

limited by shares, registered and incorporated in Guernsey under the

Companies (Guernsey) Law, 2008 (the ‘Companies Law’) on 4 January

2019, with registration number 65915. The Company is a registered

closed-ended investment scheme registered pursuant to the Protection

of Investors (Bailiwick of Guernsey) Law, 2020 and the Registered

Collective Investment Scheme Rules 2021 issued by the Guernsey

Financial Services Commission.

The Company’s shares are listed on the Specialist Fund Segment of

the Main Market of the London Stock Exchange.

1 Principal Accounting Policies

The Financial Statements for the year ended 31 January 2023 have

been prepared in accordance with International Financial Reporting

Standards (‘IFRS’) as issued by the International Accounting Standards

Board (‘IASB’).

(a) Basis of Accounting

The Financial Statements have been prepared in accordance with

International Financial Reporting Standards (‘IFRS’). The Financial

Statements give a true and fair view and comply with the Companies

(Guernsey) Law, 2008. Where presentational guidance set out in

the Statement of Recommended Practice (‘SORP’) for Investment

Companies issued by the Association of Investment Companies

(‘AIC’) updated in July 2022 (the ‘AIC SORP’) is consistent with the

requirements of IFRS, the Directors have sought to prepare the

Financial Statements on a basis compliant with the recommendations

of the SORP.

Going Concern

The Directors have adopted the going concern basis in preparing

the Company’s Financial Statements. The Board has, in particular,

considered the impact of heightened market volatility due to

macroeconomic and geopolitical concerns, including rising

inflation and interest rates, the Russian invasion of Ukraine as well

as the lingering effects of the Covid-19 pandemic. The Board

does not believe the Company’s going concern status is affected.

The Company maintains sufficient cash balances to enable it to

meet its liabilities as they fall due. It is the Directors’ opinion that

the Company has adequate resources to continue in operational

existence for a period of at least twelve months from the date

of approval of these Financial Statements. In reaching this

conclusion the Directors considered the Company’s investment

portfolio, cash position and expenses.

(b) Functional and Presentational Currency

The Company’s functional and presentational currency is the US

dollar. The US dollar is the functional currency as the Company

has issued its share capital in US dollars, its shareholders are

based globally and the Company’s investment policy has global

reach. The Company’s performance is evaluated and its liquidity is

managed in US dollars. Therefore, the US dollar is considered the

currency that most closely represents the economic effects of the

underlying transactions, events and conditions.

The Financial Statements have been prepared under the historical

cost convention, adjusted for the revaluation of fixed asset

investments at fair value through profit or loss.

(d) Accounting Estimates, Assumptions and Judgements

The preparation of the Financial Statements requires the use of

estimates, assumptions and judgements. These estimates,

assumptions and judgements affect the reported amounts of

assets and liabilities, at the reporting date. While estimates are

based on best judgement using information and financial data

available, the actual outcome may differ from these estimates.

The key sources of estimation and uncertainty relate to the fair

valuation of the private company investments.

Judgements

The Directors consider that the preparation of the Financial

Statements involves the following key judgements:

(i) the determination of the functional currency of the Company

as US dollars (see rationale in 1(b) above); and

(ii) the fair valuation of the private company investments.

The key judgements in the fair valuation process are:

(i) the Investment Manager’s determination of the appropriate

application of the International Private Equity and Venture

Capital Valuation (‘IPEV’) Guidelines 2018 to each private

company investment; and

(ii) the Directors’ consideration of whether each fair value

is appropriate following detailed review and challenge.

The judgement applied in the selection of the methodology

used (see 1(e) below) for determining the fair value of each

private company investment can have a significant impact

upon the valuation.

Estimates

The key estimate in the Financial Statements is the determination

of the fair value of the private company investments by the

Investment Manager for consideration by the Directors. This

estimate is key as it significantly impacts the valuation of the private

company investments at the date of the Statement of Financial

Position. The fair valuation process involves estimation using

subjective inputs that are unobservable (for which market data is

unavailable). The main estimates involved in the selection of the

valuation process inputs are:

(i) the selection of appropriate comparable companies in order

to derive revenue multiples and meaningful relationships

between enterprise value, revenue and earnings growth.

Comparable companies are chosen on the basis of their

business characteristics and growth patterns;

(ii) the selection of a revenue metric (either historical or forecast);

(iii) the application of an appropriate discount factor to reflect the

reduced liquidity of private companies versus their listed peers;

(iv) the estimation of the probability assigned to an exit being

through an initial public offering (‘IPO’) or a company sale;

(v) the selection of an appropriate industry benchmark index to

assist with the valuation validation or the application of

valuation adjustments, particularly in the absence of

established earnings or closely comparable peers; and

(vi) the calculation of valuation adjustments derived from

milestone analysis (i.e. incorporating operational success

against the plan/forecasts of the business into the valuation).

Notes to the Financial Statements

Financial Report

50 Annual Report 2023

Fair value estimates are cross-checked to alternative estimation

methods where possible to improve the robustness of the

estimates. As the valuation outcomes may differ from the fair

value estimates a price sensitivity analysis is provided in Other

Price Risk Sensitivity in note 15 on pages 63 to 65 to illustra

te the

effect on the Financial Statements of an over or under estimation

of the unobservable inputs used in the estimation of fair values.

The risk of an over or under estimation of fair values is greater

when methodologies are applied using more subjective inputs.

Assumptions

The determination of fair value by the Investment Manager involves

key assumptions dependent upon the valuation technique used.

As explained in 1(e) below, the primary technique applied under

the IPEV Guidelines is the Multiples approach. Where the Multiples

approach is used the valuation process recognises also, as stated

in the IPEV Guidelines, that the price of a recent investment may

be an appropriate calibration for estimating fair value. The Multiples

approach involves subjective inputs and therefore presents a

greater risk of over or under estimation and particularly in the

absence of a recent transaction. The key assumptions for the

Multiples approach are that the selection of comparable companies

provides a reasonable basis for identifying relationships between

enterprise value, revenue and growth to apply in the determination

of fair value. Other assumptions include:

(i) the discount applied for reduced liquidity versus listed peers;

(ii) the probabilities assigned to an exit being through either an

IPO or a company sale; and

(iii) that the application of milestone analysis and industry

benchmark indices are a reasonable basis for applying

appropriate adjustments to the valuations.

Valuations are cross-checked for reasonableness to alternative

Multiples-based approaches or benchmark index movements

as appropriate.

(e) Investments

The Company’s investments are classified, recognised and

measured at fair value through profit or loss in accordance with

IFRS 9. Changes in fair value of investments and gains and losses

on disposal are recognised as capital items in the Statement of

Comprehensive Income.

Recognition and Initial Measurement

Purchases and sales of investments are accounted for on a trade

date basis. Expenses incidental to purchase and sale are written

off to capital at the time of acquisition or disposal. All investments

are designated as valued at fair value through profit or loss upon

initial recognition and are measured at subsequent reporting

dates at fair value.

Measurement and Valuation

Listed Investments

The fair value of listed security investments is bid value, or, in the

case of holdings on certain recognised overseas exchanges, at last

traded prices depending on the custom of the relevant exchange.

Private Company Investments

Private company investments are valued at fair value by the Directors

following a detailed review and appropriate challenge of the

valuations proposed by the Investment Manager. The Investment

Manager’s private company investment valuation policy applies

techniques consistent with the IPEV Guidelines.

The techniques applied are predominantly market-based

approaches. The market-based approaches available under

the IPEV Guidelines are set out below and are followed by an

explanation of how they are applied to the Company’s private

companies portfolio:

— Multiples;

— Industry Valuation Benchmarks; and

— Available Market Prices.

The nature of the private companies portfolio currently will

influence the valuation technique applied. The valuation approach

recognises that, as stated in the IPEV Guidelines, the price of a

recent investment, if resulting from an orderly transaction, generally

represents fair value as at the transaction date and may be an

appropriate starting point for estimating fair value at subsequent

measurement dates. However, consideration is given to the facts

and circumstances as at the subsequent measurement date,

including changes in the market or performance of the investee

company. Milestone analysis is used where appropriate to

incorporate the operational progress of the investee company into

the valuation. Additionally, the background to the transaction must

be considered. As a result, various Multiples-based techniques are

employed to assess the valuations particularly in those companies

with established revenues. Discounted cashflows are used where

appropriate. An absence of relevant industry peers may preclude

the application of the Industry Valuation Benchmarks technique

and an absence of observable prices may preclude the Available

Market Prices approach. All valuations are cross-checked for

reasonableness by employing relevant alternative techniques.

The private company investments are valued according to a three

monthly cycle of measur

ement dates. The fair value of the private

company investments will be reviewed before the next scheduled

three monthly measurement date on the following occasions:

— at the year end and half year end of the Company; and

— where there is an indication of a change in fair value as defined

in the IPEV guidelines (commonly referred to as ‘trigger’ events).

A trigger event may include any of the following:

— a subsequent round of financing by the investee company;

— a secondary transaction involving the investee company

where there is sufficient information available to enable an

assessment of the nature of the transaction;

— a recent material change in the current or expected financial

and/or operational performance of the investee company;

— a material milestone achieved or missed by the investee

company;

— a change in the management personnel of the investee company;

— a material change in the market environment in which the

investee company operates; or

— a material change in market indices or economic indicators.

Derecognition

Financial assets are derecognised when the contractual rights to

cash flows from the asset expire or the Company transfers the

financial assets and substantially all of the risks and rewards of

ownership have been transferred.

On derecognition of a financial asset, the difference between the

weighted average carrying amount of the asset (or the carrying

amount allocated to the proportion of the asset derecognised),

and the consideration received (including new asset obtained

less any liability assumed), is recognised in profit and loss.

Financial Report

The Schiehallion Fund Limited 51

Financial liabilities are derecognised when the contractual

obligations are discharged, cancelled or expired.

Gains and Losses

Gains and losses on investments, including those arising from

foreign currency exchange differences, are recognised in the

Statement of Comprehensive Income as capital items.

The Investment Manager monitors the investment portfolio on a fair

value basis and uses the fair value basis for investments in making

investment decisions and monitoring financial performance.

(f) US Treasury Bills

Assets that are held in order to collect contractual cash flows

that are solely payments of principal and interest are measured

at amortised cost. These assets are subsequently measured

at amortised cost using the effective interest rate method less

impairment

recognised using the expected credit loss method.

As at 31 January 2023 impairment recognised was nil (31 January

2022 – nil).

(g) 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.

(h) Financial Liabilities

Bank loans and overdrafts are classified as loans and are initially

recorded at the proceeds received net of direct costs and

subsequently measured at amortised cost.

(i) Income

(i) Income from equity investments is brought into account on

the date on which the investments are quoted ex-dividend or,

where no ex-dividend date is quoted, when the Company’s

right to receive payment is established.

(ii) If scrip dividends are taken in lieu of dividends in cash, the net

amount of the cash dividend declared is credited to the

revenue account. Any excess in the value of the shares

received over the amount of the cash dividend foregone is

recognised as capital.

(iii) Special dividends are treated as repayments of capital or

income depending on the facts of each particular case.

(iv) Overseas dividends include the taxes deducted at source.

(v) Interest receivable on bank deposits is recognised on an

accruals basis.

(vi) Interest from fixed interest securities is recognised on an

effective interest rate basis. Where income returns are for a

non-fixed amount, the impact of these returns on the effective

interest rate is recognised once such returns are known.

If there is reasonable doubt that a return will be received,

its recognition is deferred until that doubt is removed.

(j) Expenses

All expenses are accounted for on an accruals basis. Expenses

are charged through the revenue column of the Statement of

Comprehensive Income except where: (i) they relate directly to

the acquisition or disposal of an investment (transaction costs),

in which case they are recognised as capital within losses/gains

on investments; and (ii) they relate directly to the buyback/

issuance of shar

es, in which case they are added to the buyback

cost or deducted from the share issuance proceeds. Expenses

which do not explicitly relate to either the ordinary shares or

C shares are allocated 50:50 between both share classes (based

on appr

oximate net asset values at time of C share issuance).

(k) Taxation

The Company has applied for and been granted exemption from

liability to income tax in Guernsey under the Income Tax (Exempt

Bodies) (Guernsey) Ordinance, 1989 in Guernsey for the current

period. The exemption must be applied for annually and will be

granted, subject to the payment of an annual fee, which is

currently fixed at £1,200 per applicant, provided the Company

qualifies for exemption under the applicable legislation.

It is the intention of the Directors to conduct the affairs of the

Company so as to ensure that it continues to qualify for exempt

company status for the purposes of Guernsey taxation.

(l) Foreign Currencies

Transactions involving foreign currencies other than US dollars

are converted at the rate ruling at the time of the transaction.

Assets and liabilities in such currencies are translated at the

closing rates of exchange at the date of the Statement of

Financial Position. Any gain or loss arising from a change in

exchange rate subsequent to the date of the transaction is

included as an exchange gain or loss in the capital reserve or

revenue reserve as appropriate. Foreign exchange movements

on investments are included in the Statement of Comprehensive

Income within gains or losses on investments.

(m) Capital Reserve

Gains and losses on disposal of investments, changes in the fair

value of investments held and realised and unrealised foreign

exchange differences of a capital nature are dealt with in this

reserve after being recognised in the Statement of Comprehensive

income. Purchases of the Company’s own shares may be funded

from this reserve.

(n) Revenue Reserve

Income and expense items of a revenue nature are included in

the Revenue Reserve after being recognised in the Statement

of Comprehensive Income. Any dividends paid by the Company

would be funded from this reserve.

(o) Single Segment Reporting

The chief operating decision maker is the Board of Directors.

The Directors are of the opinion that the Company is engaged

in a single segment of business, being investment business,

consequently no segmental analysis is presented.

(p) New and Revised Standards

The following accounting standards were issued but not yet

effective at the year end. The Directors have considered their

impact and have concluded they will not have a significant impact

on the Financial Statements:

(i) Disclosure of Accounting Policies – Amendments to IAS 1

and IFRS Practice Statement 2

(ii) Definition of Accounting Estimates – Amendments to IAS 8

Financial Report

52 Annual Report 2023

2 Income

2023

US$’000

2022

US$’000

US Treasury Bills interest 1,618 166

Overseas interest 482 195

Deposit interest 700 1

Total income 2,800 362

3 Investment Management Fee

2023

US$’000

2022

US$’000

Investment management fee 8,931 8,427

Details of the Investment Management Agreement are set out on page 27. Under the terms of the Investment Management Agreement and

with effect from the date the Company’s ordinary shares were admitted to trading on the Specialist Fund Segment of the Main Market of the

London Stock Exchange, the Investment Manager is entitled to an annual fee (exclusive of VAT, which shall be added where applicable) of:

0.9% on the net asset value excluding cash or cash equivalent assets up to and including US$650 million; 0.8% on the net asset value

excluding cash or cash equivalent assets exceeding US$650 million up to and including US$1.3 billion; and 0.7% on the net asset value

excluding cash or cash equivalent assets exceeding US$1.3 billion. Management fees are calculated and payable quarterly.

Cash equivalents include US Treasury Bills.

4 Other Administrative Expenses

2023

US$’000

2022

US$’000

General administrative expenses 517 511

Administrator’s fee 86 92

Auditor’s remuneration for audit services 236 248

Directors’ fees 394 249

1,233 1,100

In the year to 31 January 2023 there were no fees paid to the Auditor, KPMG Channel Islands Limited, in respect of non-audit services.

In the year to 31 January 2022 non-audit fees paid to the Auditor amounted to US$83,000 in respect of procedural services related to

the issuance of the Company’s C shares. As these costs related to the issuance of the C shares, they are capital in nature and included

within the costs of issuing shares (see note 11).

5 Earnings per Share

Year ended 31 January 2023 Year ended 31 January 2022

Ordinary shares US$’000 ¢ US$’000 ¢

Revenue return on ordinary activities after taxation (4,923) (0.98) (7,238) (1.47)

Capital return on ordinary activities after taxation (189,131) (37.79) 51,460 10.46

(Loss)/profit and total comprehensive (loss)/income for the year (194,054) (38.77) 44,222 8.99

Weighted average number of ordinary shares in issue 500,430,002 491,934,440

Year ended

31 January 2023

Period from 27 April 2021

to 31 January 2022

C shares US$’000 ¢ US$’000 ¢

(Loss)/revenue return on ordinary activities after taxation (2,451) (0.35) (1,934) (0.28)

Capital return on ordinary activities after taxation (122,824) (17.55) (12,019) (1.72)

Profit and total comprehensive (loss)/income for the year/period (125.275) (17.90) (13,953) (2.00)

Weighted average number of C shares in issue 700,000,000 700,000,000

Financial Report

The Schiehallion Fund Limited 53

6 Ordinary Dividends

There were no dividends paid or proposed in respect of the year to 31

January 2023 (2022 – US$nil)

7 Financial Instruments

Fair Value Hierarchy

The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is

the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment

in its entirety as follows:

Level 1 – using unadjusted quoted prices for identical instruments in an active market;

Level 2 – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and

Level 3 – using inputs that are unobservable (for which market data is unavailable).

The valuation techniques used by the Company are explained in the accounting policies on page 50. Transfers between levels of the fair

value hierarchy take place when the criteria for recognition in another level are met, such as the listing of an investment.

As at 31 January 2023

Level 1

US$’000

Level 2

US$’000

Level 3

US$’000

Total

US$’000

Listed equities 119,018 – – 119,018

Private company ordinary shares/warrants – – 131,977 131,977

Private company preference shares

* – – 708,914 708,914

Private company convertible promissory notes – – 12,123 12,123

Total financial asset investments 119,018 – 853,014 972,032

As at 31 January 2022

Level 1

US$’000

Level 2

US$’000

Level 3

US$’000

Total

US$’000

Listed equities 211,039 – – 211,039

Private company ordinary shares/warrants – – 167,268 167,268

Private company preference shares

* – – 765,207 765,207

Private company convertible promissory notes – – 4,808 4,808

Total financial asset investments 211,039 – 937,283 1,148,322

* The investments in preference shares are not classified as equity holdings as they 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.

During the year ended 31 January 2023, investments with a fair value (IPO price) of US$nil (2022 – US$197,699,000) were transferred from

Level 3 to Level 1 on becoming listed.

Investments in securities are financial assets held at fair value through profit or loss. In accordance with IFRS 13, the table above provides

an analysis of these investments based on the fair value hierarchy described above, which reflects the reliability and significance of the

information used to measure their fair value.

Financial Report

54 Annual Report 2023

7 Financial Instruments (continued)

Fair Value Hierarchy (continued)

Listed

securities

US$’000

Private

company

securities *

US$’000

Total

US$’000

Cost of investments at 1 February 2022 147,488 752,024 899,512

Investment holding gains and losses at 1 February 2022 63,551 185,259 248,810

Fair value of investments at 1 February 2022 211,039 937,283 1,148,322

Movements in the period:

Purchases at cost

†

25,795 113,068 138,863

Sales – proceeds (1,367) (1,848) (3,215)

– loss on disposal (13,633) – (13,633)

Changes in categorisation – – –

Changes in investment holding gains and losses (102,816) (195,489) (298,305)

Fair value of investments at 31 January 2023 119,018 853,014 972,032

Cost of investments at 31 January 2023 158,283 863,244 1,021,527

Investment holding gains and losses at 31 January 2023 (39,265) (10,230) (49,495)

Fair value of investments at 31 January 2023

* 119,018 853,014 972,032

* Includes holdings in preference shares, promissory notes, ordinary shares and warrants.

†

During the period the Company disposed of its investment in Zymergen in exchange for proceeds comprising Ginkgo Bioworks Holdings

Inc shares, the equivalent value of which on the transaction date was US$1,367,163. The Ginkgo Bioworks Holdings Inc shares received

are a non-cash item and hence are not reflected in the Statement of Cash Flows on page 48.

The purchases and sales proceeds figures above include transaction costs of US$nil (2022 – US$99,000) and US$nil (2022 – US$nil) respectively.

Listed

securities

US$’000

Private

company

securities *

US$’000

Total

US$’000

Cost of investments at 1 February 2021 19,126 374,084 393,210

Investment holding gains and losses at 1 February 2021 83,316 137,653 220,969

Fair value of investments at 1 February 2021 102,442 511,737 614,179

Movements in the period:

Purchases at cost

†

43,588 472,519 516,107

Sales – proceeds – (21,424) (21,424)

– gains on sales – 11,424 11,424

Changes in categorisation 197,699 (197,699) –

Changes in investment holding gains and losses (132,690) 160,726 28,036

Fair value of investments at 31 January 2022 211,039 937,283 1,148,322

Cost of investments at 31 January 2022 147,488 752,024 899,512

Investment holding gains and losses at 31 January 2022 63,551 185,259 248,810

Fair value of investments at 31 January 2022

* 211,039 937,283 1,148,322

* Includes holdings in preference shares, promissory notes, ordinary shares and warrants.

†

During the period the Company disposed of its investment in Grail in exchange for proceeds comprising cash of US$8,740,000 and llumina

shares, the equivalent value of which on the transaction date was US$12,684,000. The Illumina shares received are a non-cash item and

hence are not reflected with the Statement of Cash Flows on page 44.

The purchases and sales proceeds figures above include transaction costs of US$99,000 (2021 – US$31,000) and US$nil (2021 – US$nil) respectively.

2023

US$’000

2022

US$’000

Net gains on investments designated at fair value through profit or loss

(Losses)/gains on investments disposed/taken over during the year (13,633) 11,424

Changes in investment holding gains on investments still held at year-end 45,244 176,112

Changes in investment holding losses on investments still held at year-end (343,549) (148,076)

(311,938) 39,460

Financial Report

The Schiehallion Fund Limited 55

7 Financial Instruments (continued)

Investment Holdings

Details of significant holdings are noted below in accordance with the disclosure requirements of paragraph 82 of the AIC Statement

of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (updated in July 2022),

in relation to the private company investments. As required, this disclosure includes turnover, pre-tax profits and net assets attributable

to investors, as reported within the most recently audited financial statement of the investee companies.

Ordinary share private company

investment portfolio as at

31 January 2023 Proportion Income Net assets

Name Business

Latest

Financial

Statements

of capital

owned

Book

cost

US$’000

Value

US$’000

recognised

from holding

in the period

Turnover

US$’000

Pre-tax

profit/(loss)

US$’000

attributable to

shareholders

US$’000

Space

Exploration

Technologies

Corp

Designs, manufactures and

launches advanced

rockets and spacecraft n/a 0.03 22,100 70,114 nil

Information not publicly available

Scopely Inc Online gaming company n/a 0.87 21,299 60,223 nil

ByteDance Ltd Social media and news

aggregation company n/a 0.02 25,000 49,808 nil

Daily Hunt (Ver

Se Innovation

Limited)

Telephone voice, data, text

messaging, and roaming

services n/a 1.34 37,119 32,032 nil

Epic Games Inc Video game developer n/a 0.10 22,054 28,320 nil

Stripe Inc Online payment platform n/a 0.04 18,052 27,943 nil

Northvolt AB Lithium ion battery

manufacturer n/a 0.20 10,351 22,525 nil

Tempus Labs

Inc

Oncological records

aggregator and diagnostic

testing provider n/a 0.37 13,468 20,177 nil

Workrise

Technologies

Inc

Jobs marketplace for the

energy sector n/a 0.94 22,500 17,073 nil

Indigo

Agriculture Inc

Microbial seed treatments to

increase crop yields and

grain marketplace n/a 0.50 16,873 15,838 nil

Flix SE European mobility provider n/a 0.44 11,153 13,309 nil

Jiangxiaobai

Holdings Ltd

Producer of alcoholic

beverages n/a 0.54 9,996 12,892 nil

Away (JRSK Inc) Travel and lifestyle brand n/a 4.76 14,375 12,355 nil

Tanium Inc Online security management n/a 0.32 24,352 11,799 nil

Brex Inc Corporate credit cards for

startups n/a 0.13 10,006 11,291 nil

Carbon Inc Manufactures and develops

3D printers n/a 0.37 10,000 9,670 nil

Convoy Inc Marketplace for truckers and

shippers n/a 0.31 10,000 9,165 nil

Nuro Inc Developer of autonomous

delivery vehicles n/a 0.18 10,000 9,100 nil

Graphcore Ltd Computer chip developer n/a 0.49 11,200 8,706 nil 50,444 (184,540) 342,723

Cohesity Inc Data storage n/a 0.37 10,000 8,033 nil

Information not publicly available

Chime Financial

Inc

Digital current account

provider n/a 0.07 10,000 7,417 nil

MasterClass

(Yanka

Industries Inc) Online education platform n/a 0.36 10,000 6,488 nil

Honor

Technology

Inc

Provider of home-care

services n/a 0.46 5,000 2,990 nil

HeartFlow Inc Develops software for

cardiovascular disease

diagnosis and treatment n/a 0.28 10,000 2,029 nil

Ordinary share private company investment portfolio total 364,898 469,297

Financial Report

56 Annual Report 2023

7 Financial Instruments (continued)

Investment Holdings

C share private company

investment portfolio

as at 31 January 2023 Proportion Income Net assets

Name Business

Latest

Financial

Statements

of capital

owned

Book

cost

US$’000

Value

US$’000

recognised

from holding

in the period

Turnover

US$’000

Pre-tax

profit/(loss)

US$’000

attributable to

shareholders

US$’000

Solugen Inc Combines enzymes and

metal catalysts to make

chemicals n/a 2.31 45,000 47,881 nil

Information not publicly available

Genki Forest

Technology

Group

Holdings

Limited Non-alcoholic beverages n/a 0.21 33,000 29,727 nil

Faire Wholesale

Inc Online wholesale marketplace n/a 0.36 36,186 29,404 nil

McMakler

GmbH Real estate services n/a 2.89 29,075 24,621 nil

Brex Inc Corporate credit cards for

startups n/a 0.28 34,040 24,441 nil

Databricks Inc Data software solutions n/a 0.07 26,900 23,523 nil

Grammarly Inc Online platform for checking

grammar, spelling and

improving written

communication n/a 0.36 45,002 22,353 nil

Rappi Inc Provider of an on-demand

delivery platform designed

to connect consumers with

local stores n/a 0.55 30,000 19,922 nil

Chime Financial

Inc

Digital current account

provider n/a 0.12 30,000 19,294 nil

Northvolt AB Lithium ion battery

manufacturer n/a 0.11 15,766 16,280 nil

Kepler

Computing

Inc Semiconductor company n/a 1.64 15,000 15,919 nil

Loft Holdings

Ltd Online property platform n/a 4.83 21,718 15,569 nil

Merlin Labs Inc Autonomous flight technology n/a 2.53 15,000 13,842 nil

Flix SE European mobility provider n/a 0.44 13,848 13,356 nil

PsiQuantum Silicon photonic quantum

computing n/a 0.49 15,000 13,195 nil

Nuro Inc Developer of autonomous

delivery vehicles n/a 0.18 16,000 12,112 nil

Pet Circle (Millell

Pty Ltd) Pet food and accessories n/a 3.56 28,464 11,357 nil

Wayve

Technologies

Ltd

AI based software for

self-driving cars n/a 1.72 16,402 9,728 nil

Blockstream

Corp Inc Financial software developer n/a 0.51 15,000 8,885 nil

Convoy Inc Marketplace for truckers and

shippers n/a 0.13 5,000 4,210 nil

Tempus Labs Inc Oncological records

aggregator and diagnostic

testing provider n/a 0.06 5,000 4,210 nil

Honor

Technology

Inc

Provider of home-care

services n/a 0.49 6,945 3,888 nil

C share private company investment portfolio total 498,345 383,717

Company private company investment portfolio total 861,243 853,014

Financial Report

The Schiehallion Fund Limited 57

7 Financial Instruments (continued)

Investment Holdings (continued)

Ordinary share private company

investment portfolio

as at 31 January 2022 Proportion Income Net assets

Name Business

Latest

Financial

Statements

of capital

owned

Book

cost

US$’000

Value

US$’000

recognised

from holding

in the period

Turnover

US$’000

Pre-tax

profit/(loss)

US$’000

attributable to

shareholders

US$’000

ByteDance Ltd Social media and news

aggregation company n/a 0.02 25,000 58,378 nil

Information not publicly available

Space

Exploration

Technologies

Corp

Designs, manufactures and

launches advanced rockets

and spacecraft n/a 0.05 22,100 50,991 nil

Scopely Inc Online gaming company n/a 1.11 21,299 47,918 nil

Stripe Inc Online payment platform n/a 0.04 18,053 45,047 nil

Daily Hunt (Ver

Se Innovation

Limited)

Telephone voice, data, text

messaging, and roaming

services n/a 1.37 30,153 33,236 nil

Tanium Inc Online security management n/a 0.33 24,353 29,773 nil

Epic Games Inc Video game developer n/a 0.11 22,055 29,013 nil

Tempus Labs

Inc

Oncological records

aggregator and diagnostic

testing provider n/a 0.38 13,468 27,089 nil

Workrise

Technologies

Inc

Jobs marketplace for the

energy sector n/a 0.94 22,500 25,026 nil

Northvolt AB Lithium ion battery

manufacturer n/a 0.17 10,351 24,177 nil

Indigo

Agriculture Inc

Microbial seed treatments to

increase crop yields and

grain marketplace n/a 0.58 16,873 16,958 nil

Graphcore Ltd Computer chip developer n/a 0.49 11,200 16,600 nil 3,327 (140,945) 251,862

Brex Inc Corporate credit cards for

startups n/a 0.16 10,006 15,708 nil

Information not publicly available

Chime Financial

Inc

Digital current account

provider n/a 0.02 10,000 15,530 nil

Nuro Inc Developer of autonomous

delivery vehicles n/a 0.15 10,000 14,554 nil

Jiangxiaobai

Holdings Ltd

Producer of alcoholic

beverages n/a 0.54 9,993 14,187 nil

Carbon Inc Manufactures and develops

3D printers n/a 0.39 10,000 12,920 nil

Convoy Inc Marketplace for truckers and

shippers n/a 0.31 10,000 12,185 nil

Cohesity Inc Data storage n/a 0.41 10,000 11,930 nil

Away (JRSK Inc) Travel and lifestyle brand n/a 5.04 14,375 11,920 nil

HeartFlow Inc Develops software for

cardiovascular disease

diagnosis and treatment n/a 0.63 10,000 11,413 nil

Flix SE European mobility provider n/a 0.39 11,153 10,560 nil

MasterClass

(Yanka

Industries Inc) Online education platform n/a 0.37 10,000 8,542 nil

Honor

Technology

Inc

Provider of home-care

services n/a 0.52 5,000 5,585 nil

Ordinary share private company investment portfolio total 357,931 549,241

Financial Report

58 Annual Report 2023

7 Financial Instruments (continued)

Investment Holdings (continued)

C share private company

investment portfolio

as at 31 January 2022 Proportion Income Net assets

Name Business

Latest

Financial

Statements

of capital

owned

Book

cost

US$’000

Value

US$’000

recognised

from holding

in the period

Turnover

US$’000

Pre-tax

profit/(loss)

US$’000

attributable to

shareholders

US$’000

Grammarly Inc Online platform for checking

grammar, spelling and

improving written

communication n/a 0.35 45,002 45,002 nil

Information not publicly available

Faire Wholesale

Inc Online wholesale marketplace n/a 0.31 27,179 36,703 nil

Genki Forest

Technology

Group

Holdings

Limited Non-alcoholic beverages n/a 0.21 33,000 33,000 nil

Chime Financial

Inc

Digital current account

provider n/a 0.05 30,000 28,827 nil

McMakler

GmbH Real estate services n/a 3.11 29,075 28,583 nil

Pet Circle

(Millell Pty Ltd) Pet food and accessories n/a 3.56 28,464 28,182 nil

Solugen Inc Combines enzymes and

metal catalysts to make

chemicals n/a 7.15 30,000 28,129 nil

Rappi Inc Provider of an on-demand

delivery platform designed

to connect consumers with

local stores n/a 0.59 30,000 25,542 nil

Databricks Inc Data software solutions n/a 0.07 26,900 24,766 nil

Loft Holdings

Ltd Online property platform n/a 0.77 20,000 19,224 nil

Wayve

Technologies

Ltd

AI based software for

self-driving cars n/a 2.22 16,402 16,267 nil

Nuro Inc Developer of autonomous

delivery vehicles n/a 0.23 16,000 15,320 nil

PsiQuantum Silicon photonic quantum

computing n/a 0.51 15,000 15,000 nil

Blockstream

Corp Inc Financial software developer n/a 0.50 15,000 13,937 nil

Flix SE European mobility provider n/a 0.49 13,848 11,305 nil

Northvolt AB Lithium ion battery

manufacturer n/a 0.10 6,276 6,797 nil

Honor

Technology

Inc

Provider of home-care

services n/a 0.72 6,945 6,458 nil

Convoy Inc Marketplace for truckers and

shippers n/a 0.15 5,000 5,000 nil

C share private company investment portfolio total 394,092 388,042

Company private company investment portfolio total 752,023 937,283

Financial Report

The Schiehallion Fund Limited 59

8 Debtors

2023

US$’000

2022

US$’000

Amounts falling due within one year:

Income accrued (net of withholding taxes) 759 278

Share issuance awaiting settlement – –

Other debtors and prepayments 125 127

884 405

None of the above debtors are financial assets designated at fair value through profit or loss. The carrying amount of debtors is a reasonable

approximation of fair value. There were no debtors that were past due or impaired at 31

January 2023 (2022 – US$nil)

Creditors – Amounts falling due within one year

2023

US$’000

2022

US$’000

Unsettled investment purchases – 28,580

Investment management fee 2,106 2,459

Administrator’s fee 7 8

Other creditors and accruals 216 282

2,329 31,329

None of the above creditors at 31 January 2023 (2022 – US$nil) are financial liabilities designated at fair value through profit or loss.

Share Capital

2023

Number

2023

US$’000

2022

Number

2022

US$’000

Allotted, called up and fully paid ordinary shares of US$1 each 500,430,002 521,701 500,430,002 521,701

Allotted, called up and fully paid C shares of US$1 each 700,000,000 694,802 700,000,000 694,802

By way of a special resolution dated 15 March 2019 the Directors have a general authority to allot up to 720,000,000 ordinary shares or C shares,

such figure to include the ordinary shares issued at the initial placing. 477,250,000 ordinary shares were issued at the Company’s initial

placing. During the year to 31 January 2023, the Company issued no ordinary and no C shares. In the period from 31 January 2023 to

24 March 2023 no further shares were issued. Consequently, the Company has the authority to issue a further 219,570,000 ordinary shares

under the existing authority which expires at the end of the period concluding immediately prior to the Annual General Meeting of the Company

to be held in 2024 (or, if earlier, five years from the date of the resolution).

By way of a special resolution dated 18 March 2021, the Directors have a general authority to allot up to 700,000,000 C shares. On 26 April

2021, the Company issued 700,000,000 C shares of US$1 each and raised net proceeds of US$694,802,000. The issue costs of US$5,198,000

consisted of mainly broker commission (US$4,066,000), legal fees (US$601,000) and listing fees (US$396,000).

By way of an ordinary resolution passed on 12 May 2022, the Directors of the Company have general authority to make market purchases

of up to 75,014,457 ordinary shares, being 14.99% of the ordinary shares in issue. This authority will expire at the end of the period

concluding immediately prior to the second Annual General Meeting of the Company to be held on 12 May 2023. No shares have been

bought back during the year ended 31 January 2023 hence the authority remains at 75,014,457 ordinary shares.

The Company maintains separate Ordinary and C share portfolios, as detailed in note 7.

Holders of ordinary shares have the right to receive income and capital from assets attributable to such share class. Assets are allocated

through the appreciation and realisation of investments acquired using the proceeds of the ordinary share issue. Ordinary shareholders

have the right to receive notice of general meetings of the Company and have the right to attend and vote at all general meetings.

Holders of C shares have the right to receive income and capital from assets attributable to such share class. Assets are allocated through

the appreciation and realisation of investments acquired using the proceeds of the C share issue. C shareholders have the right to receive

notice of general meetings of the Company and have the right to attend and vote at all general meetings.

Financial Report

60 Annual Report 2023

Capital and Reserves

capital

US$’000

Capital

reserve

US$’000

Revenue

reserve

US$’000

Shareholders’

funds

US$’000

At 1 February 2022 1,216,503 260,419 (4,410) 1,472,512

Changes in investment holding gains and losses – (311,938) – (311,938)

Exchange differences – (17) – (17)

Ordinary shares issued – – – –

C shares issued – – – –

Revenue earnings on ordinary activities after taxation – – (7,374) (7,374)

At 31 January 2023 1,216,503 (51,536) (11,784) 1,153,183

capital

US$’000

Capital

reserve

US$’000

Revenue

reserve

US$’000

Shareholders’

funds

US$’000

At 1 February 2021 480,340 220,978 4,762 706,080

Changes in investment holding gains and losses – 39,460 – 39,460

Exchange differences – (19) – (19)

Ordinary shares issued 41,361 – – 41,361

C shares issued 700,000 – – 700,000

Costs in relation to C share issue (5,198) – – (5,198)

Revenue earnings on ordinary activities after taxation – – (9,172) (9,172)

At 31 January 2022 1,216,503 260,419 (4,410) 1,472,512

The capital reserve includes investment holding losses of US$62,934,000 (2022 – gains of US$248,810,000) as disclosed in note 7.

The revenue reserve and the capital reserve (to the extent it constitutes realised profits) may be distributed by way of dividend.

Net Asset Value per Share

The net asset value per ordinary and C share and the net assets attributable to the ordinary and C shareholders at

January calculated in

accordance with the Articles of Incorporation were as follows:

Ordinary shares 2023 2022

Shareholders’ funds US$597,608,000 US$791,663,000

Number of ordinary shares in issue at the year end 500,430,002 500,430,002

Net asset value per ordinary share 119.42¢ 158.20¢

C shares 2023 2022

Shareholders’ funds US$555,570,000 US$680,849,000

Number of C shares in issue at the year end 700,000,000 700,000,000

Net asset value per C share 79.37¢ 97.26¢

There are no dilutive or potentially dilutive shares in issue. The aggregate change in assets during the year attributable to the ordinary and

C shares is shown in note 11.

13 Contingencies, Guarantees and Financial Commitments

In accordance with the Corporate Income Tax (‘CIT’) Law of the People’s Republic of China (‘PRC’) and its latest Detailed Implementation

Regulations (‘DIRs’), the Tax Collection and Administration Law of the PTC (‘TCAL’) and its DIRS, the transfer of shares in the Company’s

private Chinese resident holdings would be subject to Chinese withholding tax on a taxable gain. However, the tax basis for calculating

taxable gains is unclear, varying between different locations and tax authorities within the PRC. As such, the amount of any tax that may

arise on disposal of the Company’s private Chinese resident holdings is currently highly uncertain. The Directors are however satisfied that,

based on information available to them at the time of approving these financial statements, the quantum of any such tax charge would not

be material and consequently no accrual for withholding tax is recognised within the financial statements.

At the year end, the Company had an investment in Stripe, which had a right, but not an obligation, to sell to the Company, Series H

Preferred shares up to a maximum cost of US$1,920,000. Subsequent to the year end, the Company participated in a fund raise for Stripe.

As part of this equity funding round this put option was extinguished.

Financial Report

The Schiehallion Fund Limited 61

14 Transactions with Related Parties and the Investment Manager and Administrator

Each of the Directors is entitled to receive a fee from the Company at such rate as may be determined in accordance with the Articles

of Incorporation. Directors’ fees for the year are detailed in the Directors’ Remuneration Report on pages 38 and 39.

All of the Directors will also be entitled to be paid all reasonable expenses properly incurred by them in connection with the performance of

their duties. These expenses will include those associated with attending general Board or committee meetings and legal fees. The Board

may determine that additional remuneration may be paid, from time to time, to any one or more Directors in the event such Director or

Directors are requested by the Board to perform extra or special services on behalf of the Company.

No Director has a contract of service with the Company.

The Directors have the following shareholdings in the Company:

Name Nature of interest C shares held at 31 January 2023 C shares held at 31 January 2022

L Yueh Beneficial 58,641 –

J Mackie Beneficial 57,642 –

D Chiswell Beneficial 520,000 –

T Clark Beneficial 80,000 –

R Holmes Beneficial 72,098 –

Details of the investment management contract are set out in note 3. The management fee payable to the Investment Manager by the

Company for the year ended 31 January 2023, as disclosed in note 3, was US$8,931,000 (2022 – US$8,427,000) of which US$2,106,000

was outstanding at 31 January 2023 (2022 – US$2,459,000), as disclosed in note 9.

The fee payable to the Administrator, for the year to 31 January 2023 as disclosed in note 4, was US$86,000 (2022 – US$92,000)

of which US$7,000 was outstanding at 31 January 2023 (2022 – US$8,000) as disclosed in note 9.

15 Risk Management

The Company predominantly invests in long-term minority investments in later stage private businesses. Pending investment in private

companies the Company may invest in a range of cash equivalent instruments. The Company may employ gearing on a short-term basis

for the purpose of bridging investments and general working capital purposes. In pursuing its investment objective, the Company is exposed

to various types of risk that are associated with the financial instruments and markets in which it invests.

These risks are categorised as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk.

The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood of a permanent loss of

capital rather than to minimise short-term volatility. Risk provides the potential for both losses and gains. In assessing risk, the Board

encourages the Investment Manager to exploit the opportunities that risk affords.

Market Risk

The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in

market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board of Directors

reviews and agrees policies for managing these risks and the Company’s Investment Manager both assesses the exposure to market risk

when making individual investment decisions and monitors the overall level of market risk across the investment portfolio on an ongoing

basis.

Details of the Company’s investment portfolio are shown in note 7. The Company may, from time to time, enter into derivative transactions to

hedge specific market, currency or interest rate risk. In the year to 31 January 2023, no such transactions were entered into (2022 – no such

transactions). The Company’s Investment Manager may not enter into derivative transactions without the prior approval of the Board.

(i) Currency Risk

The Company’s assets, liabilities and income are principally denominated in US dollars, the Company’s functional currency and that in which

it reports its results. Consequently, movements in the exchange rate of its functional currency relative to other foreign currencies will affect

the US dollar value of those items.

The Investment Manager monitors the Company’s exposure to foreign currencies and reports to the Board on a regular basis. The Investment

Manager assesses the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset value

and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed. owever,

the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings

may have a more significant impact upon a company’s valuation than a simple translation of the currency in which the company is quoted.

Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted,

is shown over the page.

Financial Report

62 Annual Report 2023

15 Risk Management (continued)

Currency Risk (continued)

At 31 January 2023

Investments

US$’000

US Treasury

Bills and cash

US$’000

Other debtors

and creditors *

US$’000

Net

exposure

US$’000

Sterling 58,555 237 124 58,916

Euro 51,286 – – 51,286

Indian rupee 11,357 – – 11,357

Australian dollar 32,032 – – 32,032

Total exposure to currency risk 153,230 237 124 153,591

US dollar 818,802 182,359 (1,569) 999,592

972,032 182,596 (1,445) 1,153,183

At 31 January 2022

Investments

US$’000

US Treasury

Bills and cash

US$’000

Other debtors

and creditors *

US$’000

Net

exposure

US$’000

Sterling 64,911 445 127 65,483

Euro 50,448 28,580 – 79,028

Indian rupee 33,236 – – 33,236

Australian dollar 28,182 – – 28,182

Total exposure to currency risk 176,777 29,025 127 205,929

US dollar 971,545 326,089 (31,051) 1,266,583

1,148,322 355,114 (30,924) 1,472,512

* Includes net non-monetary assets of US$124,000 (2022 – US$127,000).

Currency Risk Sensitivity

At 31 January 2023, if the US dollar had strengthened by 10% in relation to all other currencies, with all other variables held constant,

total net assets and profit and total comprehensive income for the year to 31 January 2023 would have decreased by US$15,359,000

(2022 (5%) – US$10,296,000). A 10% weakening of the US dollar to other currencies, with all other variables held constant, would have

had an equal but opposite effect on the Financial Statement amounts.

A change of 10% in foreign currency rates (2022 – 5%) has been considered to be a reasonably plausible change reflective of market

circumstance in the year.

(ii) Interest Rate Risk

Interest rate movements may affect directly the level of income receivable on cash deposits and the interest payable on any variable rate borrowings.

They may also impact upon the market value of investments as the effect of interest rate movements upon the earnings of a company may

have a significant impact upon the valuation of that company’s equity.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making

investment decisions and when entering borrowing agreements.

The Board reviews on a regular basis the amount of investments in cash and the income receivable on cash deposits.

The Company may finance, on a short-term basis, part of its activities through borrowings at approved levels. The amount of any such borrowings

and the approved levels are monitored and reviewed regularly by the Board.

The interest rate risk profile of the Company’s financial assets and liabilities at 31 January 2023 and 31 January 2022 is shown below.

Financial Assets

2023

Fair value

US$’000

2023

Weighted average

interest rate

2022

Fair value

US$’000

2022

Weighted average

interest rate

Cash

US dollar 45,562 – 57,873 –

Euro – – 28,580 –

Sterling 237 – 445 –

The cash deposits generally comprise overnight call or short-term money market deposits and earn interest at floating rates based on

prevailing bank base rates.

Financial Report

The Schiehallion Fund Limited 63

15 Risk Management (continued)

Interest Rate Risk (continued)

Interest Rate Risk Sensitivity

Financial Liabilities

The Company currently has no financial liabilities.

An increase of 100 basis points in interest rates, with all other variables being held constant, would have increased the Company’s total net

assets and profit and total comprehensive income for the year ended 31 January 2023 by US$511,000 (2022 – US$517,000). This is mainly due

to the Company’s exposure to interest rates on its cash balances. A decrease of 100 basis points would have had an equal but opposite effect.

A change of 100 basis points in interest rates has been considered to be a reasonably plausible change taking account of the movement

in interest rates during the year.

(iii) Other Price Risk

Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s net

assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant

information from the Investment Manager. The Company’s portfolio of private company Level 3 investments is not necessarily affected by

market performance, however the valuations are affected by the performance of the underlying securities in line with the valuation criteria in

note 1(e). The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for

the current investment portfolio positioning to ensure consistency with the Company’s objectives and investment policies. Investments are

selected based upon the merit of individual companies. The portfolio does not seek to reproduce any index.

Other Price Risk Sensitivity

A full list of the Company’s investments is given on pages 21 to 23. In addition, an analysis of the investment portfolio by broad geographical,

industrial or commercial sector is shown on page 24.

15.1% of the Company’s ordinary shares net assets are invested in listed investments. 5.2% of the Company’s C shares net assets are

invested in listed investments.

78.5% of the Company’s ordinary shares net assets are invested in private company investments. 69.1% of the Company’s C shares net

assets are invested in private company investments.

A 20% increase in quoted equity valuations at 31 January 2023 would have increased total net assets and net return after taxation by

US$23,804,000 (2022 (10% increase) – US$21,104,000). A decrease of 20% would have an equal but opposite effect.

The fair valuation of the private company investments is influenced by the estimates, assumptions and judgements made in the fair valuation

process (see note 1(d) on pages 49 and 50).

The private companies sensitivity analysis below recognises that the valuation methodologies employed involve different levels of subjectivity in

their inputs. The sensitivity analysis applies a wider range of input variable sensitivity to the Multiples methodology as it involves more significant

subjective estimation than the recent transaction method (the risk of over or under estimation is higher due to the greater subjectivity involved,

for example, in selecting the most relevant measure of sustainable revenues and identifying appropriate comparable companies).

As at

31 January 2023

Valuation

technique

Fair value of

investments

US$’000

Significant unobservable

inputs

* Range

Sensitivity

Sensitivity to changes in significant

unobservable inputs

Market approach

using comparable

trading multiples

444,168 EV/LTM revenue multiple

EV/NTM revenue multiple

Valuation (discount)/

premium

1.4x–7.7x

2.1x–4.5x

(18.7%) to

117.6%

10%

If EV/LTM multiples changed by

+/-10%, the fair value would change

by $29,726,888 and ($30,223,319).

If EV/NTM multiples changed by

+/-10%, the fair value would change

by $1,067,698 and ($1,067,709).

If a +/- 10% adjustment is applied to the

calculated premiums and discounts the

fair value would change by $5,091,514

and ($4,392,862).

Comparable

company

performance

310,833 Selection of comparable

companies

(40%)–20% 10% If input comparable company performance

changed by +/-10%, the fair value would

change by $19,987,767 and ($20,249,838)

Price of expected

transaction

2,029 Execution risk discount n/a 10% If the execution risk changed by

+/-10%, the fair value would change

by +/- $202,908.

Recent transaction

price

125,711 n/a n/a n/a n/a

Total 853,014

Financial Report

64 Annual Report 2023

15 Risk Management (continued)

Other Price Risk Sensitivity (continued)

Comparable company performance considers the movements in index performance and comparable company share prices from the last

transaction date to the point of valuation. Consideration is also given to the probability of different liquidation scenarios. For the investments

where an adjusted recent transaction was appropriate, the comparable share prices ranged from (40%) to 20%. Trading multiples involve

reviewing the performance of each holding against their respective peer-group. For the investments where a trading-multiples methodology

was appropriate, the enterprise value /last twelve months multiple ranged from 1.4x–7.7x and the enterprise value/forecast revenue was

2.1x–4.5x. The probability of all liquidation scenarios was deemed to be equal, aside from those holdings where an upcoming IPO/acquisition

is imminent, however there has been no impact on the disclosures above. These movements and scenarios were considered along with the

last transaction price to determine a fair value at the valuation point.

As at

31 January 2022

Valuation

approach

Fair value of

investments

US$’000

Significant unobservable input* Range

Sensitivity

Sensitivity to changes in significant

unobservable inputs

Recent transaction

price

317,595 n/a n/a n/a n/a

Market approach

using comparable

trading multiples

332,816 EV/LTM revenue multiple

EV/NTM revenue multiple

Valuation (discount)/

premium

3.9x–13.2x

2.7x

(14.5%)–70.6%

10%

If EV/LTM multiples changed by +/-10%,

the fair value would change by

US$25,095,152 and (US$24,533,059)

If EV/LTM multiples changed by

+/-10%, the fair value would change by

US$1,041,740 and (US$932,671)

If the valuation discount/premium

changed by +/-10% of the discount/

premium, the fair value would change

by US$1,716,750 and (US$2,754,025)

Price of expected

transaction

81,154 Execution risk discount 10% 10% If the execution risk changed by

+/-10%, the fair value would change

by +/-US$8,115,427

Comparable

company

performance

205,718 Selection of comparable

companies

(34%)–22% 10% If input comparable company performance

changed by +/-10%, the fair value

would change by US$14,909,056

and (US$15,162,494)

Total 937,283

*Significant Unobservable Inputs

The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private

company valuation. An explanation of each of the key variable inputs is provided below and includes an indication of the range in value for

each input, where relevant. The assumptions made in the production of the inputs are described in note 1(d) on pages 49 and 50.

Selection of Appropriate Benchmarks

The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of each company are key

inputs to the benchmark selection.

Selection of Comparable Companies

The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance of the

comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable companies are

the industry sector in which they operate, the geography of the company’s operations, the respective revenue and earnings growth rates

and the operating margins. Typically, between 4 and 10 comparable companies will be selected for each investment, depending on how

many relevant comparable companies are identified. The resultant revenue or earnings multiples derived will vary depending on the

companies selected and the industries they operate in.

Probability Estimation of Liquidation Events

The probability of a liquidation event such as a company sale, or alternatively an initial public offering (‘IPO’), is a key variable input in the

transaction-based and multiples-based valuation techniques. The probability of an IPO versus a company sale is typically estimated from

the outset to be 50:50 if there has been no indication by the company of pursuing either of these routes. If the company has indicated an

intention to IPO, the probability is increased accordingly to 7

5% and if an IPO has become a certainty the probability is increased to 100%.

Likewise, in a scenario where a company is pursuing a trade sale the weightings will be adjusted accordingly in favour of a sale scenario,

or in a situation where a company is underperforming expectations significantly and therefore deemed very unlikely to pursue an IPO.

Financial Report

The Schiehallion Fund Limited 65

15 Risk Management (continued)

Other Price Risk Sensitivity (continued)

Application of Valuation Basis

Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each investment.

When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement of key

milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks and companies.

For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as

appropriate for the investment, and where a suitable correlation can be identified with the comparable companies then a regression analysis

will be performed. Discounted cash flows will also be considered where appropriate forecasts are available.

Estimated Sustainable Earnings

The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and where it is not

then sustainable revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve

months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has

reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward,

then forward estimated revenue or earnings may be used instead.

Application of Liquidity Discount

The application of a liquidity discount will be applied either through the calibration of a valuation against the most recent transaction,

or by application of a specific discount. The discount applied where a calibration is not appropriate is typically 10%, reflecting that the

majority of the investments held are substantial companies with some secondary market activity.

Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Investments in private

businesses are expected to comprise a material proportion of the Company’s portfolio. Interests in private businesses are highly illiquid and

have no public market, which may affect the Company’s ability to vary its portfolio or dispose of or liquidate part of its portfolio in a timely

fashion, or at all, and at satisfactory prices in response to changes in economic or other conditions. At 31 January 2023, the Company,

within the allocation of net assets due to the C shares, held US$136,797,000 of US Treasury Bills (2022 – US$268,216,000) which are

fully realisable. The Board provides guidance to the Investment Manager as to the maximum exposure to any one holding and to the

maximum aggregate exposure to substantial holdings.

The Company has the power to take out borrowings, which give it access to additional funding when required. There are no borrowings as

at 31 January 2023 (2022 – US$nil).

Credit Risk

This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company

suffering a loss. This risk is managed as follows:

— where the Investment Manager makes an investment in a bond or other security with credit risk, that credit risk is assessed and then

compared to the prospective investment return of the security in question;

—

the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates the

assets of the Company. The

Investment

Manager monitors the Company’s risk by reviewing the Custodian’s internal control reports and

reporting its findings to the Board;

— investment transactions are carried out with brokers whose creditworthiness is reviewed by the Investment Manager. Transactions are

ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian bank ensures that the counterparty to any

transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the

Company is completed;

— the creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein the

creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject to

rigorous assessment by the Investment Manager; and

— cash is only held at banks that are regularly reviewed by the Investment Manager. At 31 January 2023, all cash deposits were held with

the custodian bank which has a credit rating of F1+ (2022 – F1+).

Financial Report

66 Annual Report 2023

15 Risk Management (continued)

Credit Risk Exposure

The exposure to credit risk at 31 January was:

2023

US$’000

2022

US$’000

US Treasury Bills 136,797 268,216

Cash and short-term deposits 45,799 86,898

Debtors and prepayments 884 405

183,480 355,519

The maximum exposure in cash and cash equivalents during the year to 31 January 2023 was US$319,868,000 (2022 – US$746,151,000

and the minimum was US$181,612,000 (2022 – US$69,589,000). None of the Company’s financial assets are past due or impaired.

Fair Value of Financial Assets and Financial Liabilities

The Directors are of the opinion that the carrying amount of financial assets and liabilities of the Company in the Statement of Financial

Position approximate their fair value.

Capital Management

The capital of the Company is its share capital and reserves as set out in note

11.

The objective of the Company is to invest predominantly in

long-term minority investments in later stage private businesses in order to achieve capital growth. The Company’s investment policy is set

out on pages 5 and 6. In pursuit of the Company’s objective, the Board has a responsibility for ensuring the Company’s ability to continue

as a going concern are set out on page 34 and details of the related risks and how they are managed are set out on pages 7 to 10 and pages

33 and 34, respectively. The Company has the authority to issue

and buyback its shares and changes to the share capital during the period

are set out in note

16 Subsequent Events

A detailed in note 13, subsequent to the Company’s year end the put option to acquire shares in Stripe was extinguished.

Financial Report

The Schiehallion Fund Limited 67

The Company’s Annual General Meeting (AGM) is being convened

at 12 noon on Friday, 12 May, at the offices of at the offices of Alter

Domus, North Suite, 1st Floor, Regency Court, Glategny Esplanade

St Peter Port, Guernsey, Channel Islands, GY1 1WW.

The Board encourages all shareholders to submit proxy voting

forms, appointing the chairperson of the AGM, as soon as

possible and, in any event, by no later than 12 noon on

10 May 2023.

We would encourage shareholders to monitor the Company’s

website at schiehallionfund.com. Should shareholders have

questions for the Board or the Managers or any queries as to how

to vote, they are welcome as always to submit them by email to

adgg-aafa-f@alterdomus.com or call Hannah Dunnell at Alter

Domus (Guernsey) Limited on +44 (0) 1481 742 255.

Alter Domus (Guernsey) Limited may record your call.

If you or, if appointed, your proxy wish to attend the Annual General

Meeting electronically you, or your proxy, will have the same right

to attend, be counted in the quorum, participate in the business of

the Annual General Meeting, speak and vote as if you, or your proxy,

had attended the meeting in person. Details of how to attend the

Annual General Meeting electronically can be obtained from Alter

Domus (Guernsey) Limited on the contact details provided above.

Notice is hereby given that the fourth Annual General Meeting

of The Schiehallion Fund Limited will be held at the offices of

Alter Domus, North Suite, 1st Floor, Regency Court, Glategny

Esplanade St Peter Port, Guernsey, Channel Islands, GY1 1WW.,

on Friday, 12 May 2023 at 12 noon for the following purposes:

To consider and, if thought fit, to pass the following Resolutions

as Ordinary Resolutions:

1. To receive and adopt the Annual Report and Financial

Statements of the Company for the year to 31 January 2023

with the Reports of the Directors and of the Independent

Auditor thereon.

2. To approve the Directors’ Remuneration Policy.

3. To approve the Directors’ Annual Report on Remuneration

for the year to 31 January 2023.

4. To re-elect Dr Linda Yueh as a Director.

5. To re-elect Mr John Mackie as a Director.

6. To re-elect Ms Trudi Clark as a Director.

7. To re-elect Dr David Chiswell as a Director.

8. To re-elect Mr Richard Holmes as a Director.

9. To reappoint KPMG Channel Islands Limited as Independent

Auditor of the Company to hold office from the conclusion of

this meeting until the conclusion of the next Annual General

Meeting at which the Financial Statements are laid before the

Company.

10. To authorise the Directors to determine the remuneration of

the Independent Auditor of the Company.

Notice of Annual General Meeting

Shareholder Information

ALTER DOMUS

(GUERNSEY)

LIMITED

Marina

Court

Marina

Court

Regency

Court

ate

ny Espl

Don

Stre

To consider and, if thought fit, to pass Resolutions 11 and 12

as Special Resolutions.

11. That, in substitution for any existing authority but without

prejudice to the exercise of any such authority prior to the

date hereof, the Company be and is hereby generally and

unconditionally authorised, pursuant to and in accordance

with section 315(2)(b) of the Companies (Guernsey) Law,

2008 (the ‘Law’) to make market purchases (within the

meaning of section 316 of the Law) of ordinary shares of no

par value in the capital of the Company (‘ordinary shares’)

(either for retention as treasury shares for future reissue,

resale, transfer or cancellation), provided that:

(a) the maximum aggregate number of ordinary shares

hereby authorised to be purchased is 75,014,457, or,

if less, the number representing approximately 14.99%

of the issued ordinary share capital of the Company as

at the date of the passing of this resolution;

(b) the minimum price (excluding expenses) which may be

paid for each ordinary share is US$1.00;

paid for each ordinary share shall not be more than the

higher of:

68 Annual Report 2023

Shareholder Information

(i) 5% above the average closing price on the London

Stock Exchange of an ordinary share over the five

business days immediately preceding the date of

purchase; and

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

highest current independent bid on the London Stock

Exchange as stipulated by Article 5(1) of Commission

Regulation (EC) 22 December 2003 implementing the

Market Abuse Directive as regards exemptions for

buyback programmes and stabilisation of financial

instruments (No. 2273/2003).

(d) unless previously varied, revoked or renewed by the

Company in a general meeting, the authority hereby

conferred shall expire at the conclusion of the Annual

General Meeting of the Company to be held in respect of

the year ending 31 January 2024, save that the Company

may, prior to such expiry, enter into a contract to

purchase ordinary shares under such authority which will

or might be completed or executed wholly or partly after

the expiration of such authority and may make a purchase

of ordinary shares pursuant to any such contract.

12. That, in substitution for any existing authority but without

prejudice to the exercise of any such authority prior to the

date hereof, the Company be and is hereby generally and

unconditionally authorised, pursuant to and in accordance

with section 315(2)(b) of the Companies (Guernsey) Law,

2008 (the `Law’) to make market purchases (within the

meaning of section 316 of the Law) of C shares of no par

value in the capital of the Company (`C shares’) (either for

retention as treasury shares for future reissue, resale, transfer

or cancellation), provided that:

(a) the maximum aggregate number of C shares hereby

authorised to be purchased is 104,930,000, or, if less,

the number representing approximately 14.99% of the

issued C share capital of the Company as at the date

of the passing of this resolution;

(b) the minimum price (excluding expenses) which may be

paid for each ordinary share is US$1.00;

paid for each C share shall not be more than the higher of:

(i) 5% above the average closing price on the London

Stock Exchange of an ordinary share over the five

business days immediately preceding the date of

purchase; and

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

highest current independent bid on the London Stock

Exchange as stipulated by Article 5(1) of Commission

Regulation (EC) 22 December 2003 implementing the

Market Abuse Directive as regards exemptions for

buyback programmes and stabilisation of financial

instruments (No. 2273/2003).

(d) unless previously varied, revoked or renewed by the

Company in a general meeting, the authority hereby

conferred shall expire at the conclusion of the Annual

General Meeting of the Company to be held in respect of

the year ending 31 January 2024, save that the Company

may, prior to such expiry, enter into a contract to

purchase C shares under such authority which will or

might be completed or executed wholly or partly after the

expiration of such authority and may make a purchase of

ordinary shares pursuant to any such contract.

By order of the Board

Alter Domus (Guernsey) Limited

Secretary

27 March 2023

The Schiehallion Fund Limited 69

In connection with your votes on the resolutions to be considered

at the upcoming AGM of The Schiehallion Fund Limited

(‘Schiehallion’), you are being requested to certify as to your

status in the three respects described below. It is important that

you make the correct certifications in order to avoid your votes

being capped or scaled down when that is not necessary.

These certifications will also appear in the updated CREST

and on the hard copy proxy form as additional resolutions.

Each certification is described below. The certifications are

required in accordance with Articles 82 and 82A of Schiehallion’s

articles of incorporation, which are available to view on the

company’s website at schiehallionfund.com.

Please return confirmation of your status in respect of each

certification by email to this email address by 5 pm (UK time)

on 10 May 2023.

1. BHCA Certification

You are asked to certify whether, at the time of the AGM,

you are subject to restrictions under the US Bank Holding

Company Act of 1956 (‘BHCA’) in respect of certain of your

equity investments due to your relationship with a bank

holding company (as defined by the BHCA).

If you certify that you are subject to restrictions under the

BHCA, your votes will be disregarded in respect of each

resolution to appoint or remove a director and may be

capped in respect of any other resolution.

2. US Shareholder Certification

You are asked to certify that, at the time of voting: (a) you

are not a US Person or US Resident (each as defined in

Schiehallion’s articles – see below); and (b) to the extent that

you hold shares for the account or benefit of another person,

such other person is not a US Person or US Resident.

In Schiehallion’s articles:

— a ‘US Person’ means a ‘U.S. person’ as defined in

Regulation S under the US Securities Act of 1933; and

— a ‘US Resident’ means a resident of the United States

within the meaning of Rule 405 under the US Securities

Act of 1933 or Rule 3b–4(c) under the US Exchange Act

of 1934.

If you do not certify that you are not a US Person or US

Resident (or holding shares for the account of such a person),

it will be assumed that you are such a person and your votes

may be scaled down in respect of each resolution to appoint

or remove a director.

3. Canadian Pension Plan Certification

You are asked to certify whether, at the time of the AGM,

you are a pension plan governed by the laws of Canada (or a

jurisdiction thereof) that is subject to section 11 of Schedule III

to the Pension Benefits Standards Regulations, 1985 (Canada)

or a substantially similar restriction contained in the legislation

governing such pension plan (a ‘Canadian Pension Plan’).

If you certify that you are a Canadian Pension Plan, your votes

may be scaled down in respect of each resolution to appoint

or remove a director.

General Notes

1. As a member you are entitled to appoint a proxy or proxies to

exercise all or any of your rights to attend, speak and vote at

the AGM. A proxy need not be a member of the Company but

must attend the AGM to represent you. You may appoint

more than one proxy provided each proxy is appointed to

exercise rights attached to different shares. You can only

appoint a proxy using the procedure set out in these notes

and the notes to the proxy form. You may not use any

electronic address provided either in this notice or any related

documents (including the Financial Statements and proxy

form) to communicate with the Company for any purpose

other than those expressly stated.

2. To be valid any proxy form or other instrument appointing a

proxy, together with any power of attorney or other authority

under which it is signed or a certified copy thereof, must be

received by post or (during normal business hours only) by

hand at the Registrars of the Company at Computershare

Investor Services (Guernsey) Limited, First floor, Tudor House,

Le Bordage, St Peter Port, Guernsey, Channel Islands,

GY1 1DB or eproxyappointment.com no later than two days

(excluding non-working days) before the time of the meeting

or any adjourned meeting.

3. CREST members who wish to appoint a proxy or proxies

through the CREST electronic proxy appointment service

may do so by using the procedures described in the CREST

Manual and/or by logging on to the website

euroclear.com/CREST. CREST personal members

or other CREST sponsored members, and those CREST

members who have appointed a voting service provider(s),

should refer to their CREST sponsor or voting service

provider(s), who will be able to take the appropriate action on

their behalf.

4. In order for a proxy appointment or instruction made using the

CREST service to be valid, the appropriate CREST message

(a ‘CREST Proxy Instruction’) must be properly authenticated

in accordance with Euroclear UK & Ireland Limited’s

specifications, and must contain the information required

for such instruction, as described in the CREST Manual.

The message, regardless of whether it constitutes the

appointment of a proxy or is an amendment to the instruction

given to a previously appointed proxy must, in order to be

valid, be transmitted so as to be received by the Company’s

registrar (ID 3RA50) no later than two days (excluding non-

working days) before the time of the meeting or any

adjournment. For this purpose, the time of receipt will be

taken to be the time (as determined by the timestamp applied

to the message by the CREST Application Host) from which

the Company’s registrar is able to retrieve the message by

enquiry to CREST in the manner prescribed by CREST.

After this time any change of instructions to proxies appointed

through CREST should be communicated to the appointee

through other means.

Shareholder Information

70 Annual Report 2023

5. CREST members and, where applicable, their CREST

sponsors, or voting service providers should note that

Euroclear UK & Ireland Limited does not make available

special procedures in CREST for any particular message.

Normal system timings and limitations will, therefore, apply

in relation to the input of CREST Proxy Instructions. It is the

responsibility of the CREST member concerned to take

(or, if the CREST member is a CREST personal member,

or sponsored member, or has appointed a voting service

provider(s), to procure that his/her CREST sponsor or voting

service provider(s) take(s)) such action as shall be necessary

to ensure that a message is transmitted by means of the

CREST system by any particular time. In this connection,

CREST members and, where applicable, their CREST

sponsors or voting service providers are referred, in particular,

to those sections of the CREST Manual concerning practical

limitations of the CREST system and timings.

6. The Company may treat as invalid a CREST Proxy Instruction

in the circumstances set out in Regulation 34 of The

Uncertified Securities (Guernsey) Regulations, 2009.

7. The return of a completed proxy form or other instrument of

proxy will not prevent you attending the AGM and voting in

person if you wish.

8. Pursuant to Regulation 41 of The Uncertificated Securities

(Guernsey) Regulations, 2009 and article 84 of the Company’s

Articles of Incorporation the Company specifies that to be

entitled to attend and vote at the Annual General Meeting (and

for the purpose of the determination by the Company of the

votes they may cast), shareholders must be registered in the

(excluding non-working days) prior to the commencement of

the AGM or any adjourned meeting. Changes to the Register

of Members after the relevant deadline shall be disregarded in

determining the rights of any person to attend and vote at the

meeting.

9. Any person to whom this notice is sent who is a person

nominated by a shareholder holding their shares on behalf of

that person to enjoy information rights (a ‘Nominated Person’)

may, under an agreement between him/her and the

shareholder by whom he/she was nominated, have a right to

be appointed (or to have someone else appointed) as a proxy

for the Annual General Meeting. If a Nominated Person has no

such proxy appointment right or does not wish to exercise it,

he/she may, under any such agreement, have a right to give

instructions to the shareholder as to the exercise of voting

rights.

10. The statement of the rights of shareholders in relation to the

appointment of proxies in Notes 1 and 2 above does not

apply to Nominated Persons. The rights described in those

Notes can only be exercised by shareholders of the Company.

11. The members of the Company may require the Company to

publish, on its website, (without payment) a statement (which

is also passed to the Auditor) setting out any matter relating to

the audit of the Company’s Financial Statements, including

the Auditor’s report and the conduct of the audit. The Company

will be required to do so once it has received such requests

from members representing at least 5% of the total voting

rights of the Company. Such requests must be made in

writing and must state your full name and address and be

sent to the Company at Albert House, South Esplanade,

St Peter Port, Guernsey, Channel Islands, GY1 1AJ.

12. Information regarding the Annual General Meeting is available

from the Company’s page of the Investment Manager’s

website at schiehallionfund.com.

13. Members have the right to ask questions at the meeting and

the Company must cause to be answered any such questions

relating to the business being dealt with at the meeting,

provided that no such answer need be given if:

(a) to do so would interfere unduly with the preparation for

the meeting or involve the disclosure of confidential

information;

(b) the answer has already been given on a website in the

form of an answer to a question; or

good order of the meeting that the question be answered.

14. Members have the right to require the directors of the

Company to call a general meeting upon receiving requests to

do so from members who hold more than 10% of such of the

capital of the Company as carries the right of voting at general

meetings of the Company (excluding any capital held as

treasury shares) and to require that notice of any resolutions

identified in such a request as being intended to be moved at

the meeting be circulated with notice of the meeting pursuant

to section 204(2) of the Companies (Guernsey) Law, 2008.

15. Any corporation which is a member can appoint one or more

corporate representatives who may exercise on its behalf all of

its powers as a member provided that they do not do so in

relation to the same shares.

16. As at 24 March 2023 (being the last practicable day prior to

the publication of this notice) the Company’s issued share

capital consisted of 500,430,002 ordinary shares, carrying

one vote each and 700,000,000 C shares carrying one vote

each. Therefore, the total voting rights in the Company as at

24 March 2023 were 1,200,430,002 votes.

17. Any person holding 3% or more of the total voting rights of the

Company who appoints a person other than the Chairperson

of the meeting as his/her proxy will need to ensure that both

he/she and his/her proxy complies with their respective

disclosure obligations under the Disclosure Guidance and

Transparency Rules.

Shareholder Information

The Schiehallion Fund Limited 71

Further Shareholder Information

Sources of Further Information on the Company

The price of shares is quoted daily in the Financial Times and can

also be found on the Company’s page of the Investment Manager’s

website at schiehallionfund.com, Trustnet at trustnet.co.uk and

on other financial websites. Monthly factsheets are also available

on the Baillie Gifford website. These are available from Baillie Gifford

on request.

The Schiehallion Fund Identifiers

ISIN GG00BJ0CDD21

Sedol BJ0CDD2

Ticker ordinary shares MNTN

Ticker C shares MNTC

Legal Entity Identifier 213800NQOLJA1JCWXQ56

The ordinary shares and C shares of the Company are listed on

the London Stock Exchange and their prices are shown in the

Financial Times under ‘Investment Companies’.

Key Dates

The Annual Report and Financial Statements are normally issued

in March and the Annual General Meeting will normally be held in

May.

Share Register Enquiries

Computershare Investor Services (Guernsey) Limited maintains

the share register on behalf of the Company. In the event of

queries regarding shares registered in your own name, please

contact the Registrars on +44 (0) 370 707 4040 or at

info@computershare.co.je.

This helpline also offers an automated self-service functionality

(available 24 hours a day, 7 days a week) which allows you to:

— hear the latest share price;

— confirm your current share holding balance; and

— order Change of Address and Stock Transfer forms.

You can also check your holding on the Registrars’ website at

investorcentre.co.uk. They also offer a free, secure share

management website service which allows you to:

— view your share portfolio and see the latest market price

of your shares;

— calculate the total market price of each shareholding;

— view price histories and trading graphs;

— change address details; and

— use online dealing services.

To take advantage of this service, please log in at

investorcentre.co.uk and enter your shareholder Reference

Number and Company Code (this information

can be found on your share certificate).

Electronic Proxy Voting

If you hold stock in your own name you can choose to vote by

returning proxies electronically at eproxyappointment.com.

If you have any questions about this service please contact

Computershare on +44 (0) 370 707 4040 or at

info@computershare.co.je.

CREST Proxy Voting

If you are a user of the CREST system (including a CREST

Personal Member), you may appoint one or more proxies or

give an instruction to a proxy by having an appropriate CREST

message transmitted. For further information please refer to the

CREST Manual.

Data Protection

The Company is committed to ensuring the confidentiality and

security of any personal data provided to it. Further details on

how personal data is held and processed on behalf of the

Company can be found in the privacy policy available on the

Company’s website schiehallionfund.com.

Automatic Exchange of Information

In order to fulfil its legal obligations under the Guernsey Common

Reporting Standard Legislation relating to the automatic

exchange of information, the Company is required to collect and

report certain information about certain shareholders.

The legislation will require investment companies to provide

personal information to the Guernsey authorities on certain

investors who purchase shares in investment funds. As an

affected company, The Schiehallion Fund Limited will have to

provide information annually to the local authority on the tax

residencies of non-UK based certificated shareholders and

corporate entities.

Foreign Account Tax Compliance Act

Pursuant to the reciprocal information sharing inter governmental

agreement entered into by the States of Guernsey and the US

Treasury, and for the purposes of the US Foreign Account Tax

Compliance Act (‘FATCA’) of the Company registered with the

Internal Revenue Service (‘IRS’) as a Foreign Financial Institution

(‘FFI’) and received a Global Intermediary Identification Number

(R2NXXB.9999.SL.831). The Company can be located on the

IRS FFI list.

Shareholder Information

72 Annual Report 2023

In accordance with the Alternative Investment Fund Managers Regulations, information in relation to the Company’s leverage and the

remuneration of the Company’s AIFM, Baillie Gifford & Co Limited, is required to be made available to investors. In accordance with the

Directive, the AIFM’s remuneration policy is available at bailliegifford.com or on request (see contact details on the back cover) and the

numerical remuneration disclosures in respect of the AIFM’s relevant reporting period are also available at bailliegifford.com.

The Company’s maximum and actual leverage levels at 31 January 2023 are shown below:

Gross method Commitment method

Maximum limit 1.20:1 1.10:1

Actual 0.96:1 1.00:1

Alternative Investment Fund Managers (‘AIFM’) Regulations (unaudited)

An alternative performance measure is a financial measure of historical or future financial performance, financial position, or cash flows,

other than a financial measure defined or specified in the applicable financial reporting framework.

Total Assets

Total value of all assets held less current liabilities, other than liabilities in the form of borrowings.

Net Asset Value

Also described as shareholders’ funds, net asset value (‘NAV’) is the value of total assets less liabilities (including borrowings). The NAV

per share is calculated by dividing this amount by the number of ordinary shares or C shares, as applicable, in issue.

Net Current Assets

Net current assets comprise current assets less current liabilities excluding borrowings.

Premium/(Discount) (APM)

As stockmarkets and share prices vary, the Company’s share price is rarely the same as its NAV. When the share price is lower than

the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the

NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share,

this situation is called a premium.

Ordinary shares 2023 2022

Closing NAV per share (a) 119.42¢ 158.20¢

Closing share price (b) 92.00¢ 212.00¢

Discount/premium ((b – a) ÷ (a) expressed as a percentage) (23.0%) 34.0%

C shares 2023 2022

Closing NAV per share (a) 79.37¢ 97.26¢

Closing share price (b) 49.00¢ 118.00¢

Discount/premium ((b – a) ÷ (a) expressed as a percentage) (38.3%) 21.3%

Capital Deployed (APM)

Capital deployed reflects cumulative amounts invested since inception of the Company.

Internal Rate of Return (IRR) (APM)

The IRR indicates the annualised rate of return for the Company’s investment portfolio.

Gross Multiple on Invested Capital (MOIC) (APM)

The MOIC expresses, as a multiple, how much return the Company has made on investment realisations and income, relative to its

book cost.

Glossary of Terms and Alternative Performance Measures (‘APM’) (unaudited)

Shareholder Information

The Schiehallion Fund Limited 73

Ongoing Charges (APM)

The total recurring expenses (excluding the Company’s costs of dealing in investments and borrowing costs) incurred by the Company

as a percentage of the average net asset value (with debt at fair value).

Ordinary shares

2023

US$’000

2022

US$’000

Investment management fee 5,166 6,816

Other administrative expenses 637 655

Total expenses (a) 5,803 7,471

Average net asset value (with borrowings deducted at fair value) (b) 668,671 835,470

Ongoing Charges ((a) ÷ (b) expressed as a percentage) 0.87% 0.89%

C shares

2023

US$’000

2022

US$’000

Investment management fee 3,765 1,611

Other administrative expenses 596 445

Total expenses 4,361 2,056

Total expenses annualised (a) 4,361 2,680 *

Average net asset value (with borrowings deducted at fair value) (b) 617,439 697,793

Ongoing Charges ((a) ÷ (b) expressed as a percentage) 0.71% 0.38%

* The total expenses above cover the period from 26 April 2021 to 31 January 2022. A period of 280 days.

Leverage (APM)

For the purposes of the Alternative Investment Fund Managers Regulations, leverage is any method which increases the Company’s

exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and

its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the

sum of the Company’s positions after the deduction of US dollar cash balances, without taking into account any hedging and netting

arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain

hedging and netting positions are offset against each other.

Average Revenue Growth Rate (APM)

Calculated by taking an average of each investee company’s last 12 months revenue growth (as a percentage).

Average Movement at Private Company Level/Per Instrument (APM)

Calculated by taking an average of all valuation movements (as a percentage) by company and by line of share class.

Average Mark-down at Private Company Level/Per Instrument (APM)

Calculated by taking an average of all valuation mark downs (as a percentage) by company and by line of share class.

Shareholder Information

74 Annual Report 2023

The EU Sustainable Finance Disclosure Regulation (‘SFDR’)

does not have a direct impact in the UK due to Brexit, however,

it applies to third-country products marketed in the EU.

As Schiehallion is marketed in the EU by the AIFM, Baillie Gifford

& Co Limited, via the National Private Placement Regime (‘NPPR’)

the following disclosures have been provided to comply with

the high-level requirements of SFDR.

The AIFM has adopted Baillie Gifford & Co’s Governance and

Sustainable Principles and Guidelines as its policy on integration

of sustainability risks in investment decisions.

More detail on the Investment Manager’s approach to

sustainability can be found in the Governance and Sustainability

Principles and Guidelines document, available publicly on the

Baillie Gifford website

bailliegifford.com

Taxonomy Regulation

The Taxonomy Regulation establishes an EU-wide framework

of criteria for environmentally sustainable economic activities in

respect of six environmental objectives. It builds on the disclosure

requirements under the SFDR by introducing additional disclosure

obligations in respect of AIFs that invest in an economic activity that

contributes to an environmental objective.

The Company does not commit to make sustainable investments

as defined under SFDR. As such, the underlying investments

do not take into account the EU criteria for environmentally

sustainable economic activities.

Sustainable Finance Disclosure Regulation (‘SFDR’)

Shareholder Information

Directors

Chairperson:

Dr Linda Yueh CBE

John Mackie CBE

Dr David Chiswell OBE

Trudi Clark

Richard Holmes

Administrator, Secretary,

Designated Manager

and Registered Office

Alter Domus (Guernsey) Limited

North Suite

1st Floor, Regency Court

Glategny Esplanade

St Peter Port

Guernsey

Channel Islands

GY1 1WW

Tel: +44 (0) 1481 742250

Investment Manager

and Alternative

Investment Fund

Manager

Baillie Gifford & Co Limited

Calton Square

1 Greenside Row

Edinburgh

EH1 3AN

Tel: +44 (0) 131 275 2000

bailliegifford.com

Registrar

Computershare Investor Services

(Guernsey) Limited

First Floor

Tudor House

Le Bordage

St Peter Port

Guernsey

Channel Islands

GY1 1DB

Tel: +44 (0) 370 707 4040

Depositary

The Bank of New York Mellon

(International) Limited

160 Queen Victoria Street

Queen Victoria Street

London

EC4V 4LA

Corporate Broker

Winterflood Securities Limited

The Atrium Building

Cannon Bridge House

25 Dowgate Hill

London

EC4R 2GA

Independent Auditor

KPMG Channel Islands Limited

Glategny Court

Glategny Esplanade

St Peter Port

Guernsey

Channel Islands

GY1 1WR

Company Details

schiehallionfund.com

Company Registration

No. 65915

ISIN GG00BJ0CDD21

Sedol BJ0CDD2

Ticker MNTN

Ticker MNTC

Legal Entity Identifier

213800NQOLJA1JCWXQ56