Annual Report and
Financial Statements
Baillie Gifford
UK Growth
Trust plc
30 April 2024
Notes
None of the views expressed in this document
should be construed as advice to buy or sell a
particular investment.
Investment trusts are UK public listed companies
and as such comply with the requirements of the
Financial Conduct Authority (‘FCA’). They are not
authorised or regulated by the FCA.
Baillie Gifford UK Growth Trust plc currently
conducts its affairs, and intends to continue to
conduct its affairs, so that the Company’s Ordinary
Shares can qualify to be considered as a mainstream
investment product and can be recommended by
Independent Financial Advisers to ordinary retail
investors in accordance with the rules of the FCA in
relation to non-mainstream investment products.
This document is important and requires your
immediate attention.
Investor disclosure document
The UK Alternative Investment Fund Managers
Regulations requires certain information to be
made available to investors prior to their investment
in the Company. The Company’s Investor Disclosure
Document is available for viewing at
bgukgrowthtrust.com.
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 immediately 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
holding in Baillie Gifford UK Growth Trust plc, please
forward this document, together with accompanying
documents, but not your personalised Form of Proxy,
as soon as possible to the purchaser of 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.
Cover: St. Paul’s Cathedral. London, UK
01
Baillie Gifford UK Growth Trust plc
Contents
Financial highlights 02
Strategic report
Chairman’s statement 05
Managers’ report 09
The managers’ core investment principles 13
Baillie Gifford’s stewardship principles 14
Baillie Gifford proxy voting 15
Environmental, social and governance engagement 17
Review of investments 22
List of investments 26
One year summary 28
Five year summary 29
Ten year record 30
Business review 32
Governance report
Directors and management 44
Directors’ report 46
Corporate governance report 51
Audit Committee report 59
Directors’ remuneration report 61
Statement of Directors’ responsibilities 65
Financial report
Independent auditor’s report 67
Income statement 75
Balance sheet 76
Statement of changes in equity 77
Cash flow statement 78
Notes to the financial statements 79
Shareholder information
Notice of Annual General Meeting 93
Further shareholder information 99
Communicating with shareholders 101
Glossary of terms and Alternative Performance Measures 104
Sustainable Finance Disclosure Regulation 107
Introduction
Annual Report and Financial Statements 2024
02
Financial
highlights
Year to 30 April 2024
* Alternative performance measure — see Glossary of Terms and Alternative Performance Measures on pages 104 to 106.
†
The benchmark is the FTSE All-Share Index.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 103.
Past performance is not a guide to future performance.
Share price
-0.5%
NAV
0.6%
Benchmark
7.5%
Share price total return
*
(figures rebased to 100 at 30 April 2023)
Discount
*
(figures plotted at month end dates)
Total returns
*
80
90
100
110
A
MFJDNOSAJJMA
Share price NAV Benchmark
†
2023
2024
(20%)
(18%)
(16%)
(14%)
(12%)
(10%)
AMFJDNOSAJJMA
Discount*
2023 2024
The principal investment objective of the Company is to
achieve capital growth predominantly from investment in
UK equities, with the aim of providing a total return in excess
of the FTSE All-Share Index.
Baillie Gifford UK Growth Trust plc
03
The Shard. London, UK
The Strategic report, which
includes pages 04 to 42 and
incorporates the Chairman’s
statement has been prepared
in accordance with the Companies
Act 2006.
Strategic
report
05
Baillie Gifford UK Growth Trust plc
Chairman’s
statement
Carolan Dobson
Chairman
Appointed to the
Board in 2014 and
as Chairman in 2016
Performance
In this, my final period as Chairman, it is disappointing
to report on a period of underperformance. For the
year to 30 April 2024, the Company’s net asset value
(‘NAV’) total return (capital and income) was 0.6%
compared to 7.5% for the FTSE All-Share Index
total return. The Company’s share price total return
declined 0.5% and the shares ended the period at a
15.3% discount to the Company’s NAV compared to
14.1% a year earlier.
In 2018 when the Board took the decision to appoint
Baillie Gifford to manage the Company’s assets,
it was in the expectation that a growth-focussed
UK equity mandate would deliver positive absolute
and relative returns over the long term. Since then,
whilst there have been periods of good performance,
the longer-term results have not been as expected.
Over five years to 30 April 2024, the Company’s
NAV total return was only 3.0% at a time when the
FTSE All-Share Index total return was 30.1%.
Board composition
As highlighted in my report last year, I will not
be standing for re-election to the Board at the
upcoming AGM as I will have completed ten years
of service and I am standing down from the Board
on 14 June 2024. Earlier this year our Chair of
the Audit Committee, Andrew Westenberger, led
a recruitment process supported by an external
recruitment consultant, Trust Associates, to find
my successor. Mr Neil Rogan was appointed to
the Board on 1 January 2024 and will take over as
Chairman on 14 June 2024. Neil is an experienced
Investment Trust Chairman and non-executive
director. He also spent 30 years as an investment
manager with Touche Remnant, Flemings and most
recently Gartmore/Henderson where he was Head
of Global Equities.
Subject to the outcome of the Company’s
continuation vote, I leave knowing that the Company
has a strong Board dedicated to operating in the
best interests of shareholders.
Strategic report
Annual Report and Financial Statements 2024
06
Board review
In February, the Board conducted a rigorous review
of the services Baillie Gifford provides to the
Company to inform the Board as to what it should
recommend to shareholders for the continuation
vote due at this year’s Annual General Meeting
(‘AGM’).
The Board reviewed the Managers’ provision of
company services, third party oversight, internal risk
controls, marketing, shareholder support, quality of
staff and overall commitment to our Company and
the investment trust sector and found these to be of
an excellent quality, provided with commitment and
integrity.
Turning to our Company’s investment performance,
the Board reviewed the Managers’ investment
philosophy and processes, the portfolio risk
analysis, the largest stock contributors to positive
and negative performance, the quality of the
companies held in the portfolio, turnover levels and
style tilts. The Board found these to be in line with
the Managers’ committed growth style and that
predicted risk of investments was set appropriately
for a committed growth-orientated long-term fund.
The Board examined the quality of the Managers’
research before stock purchase and thereafter and
found it very thorough and informed.
There has been much press comment about the
difficulties the UK stock market is facing, the lack of
traditional buyers for UK equities and the pressure
that companies feel to move their listings to the US
to achieve higher ratings. The Board examined these
issues with the support of their corporate brokers
and Baillie Gifford and found that whilst these
problems were real, they were not overwhelming.
There are several brokers providing research on
each of our companies, and none of our portfolio
companies, that are currently held, have moved
their listing. The UK equity market is now generally
considered to be inexpensive. That view is supported
by the number of takeover approaches appearing for
UK listed companies both from private equity buyers
and international companies.
Over this five-year period the macroeconomic
backdrop of sluggish economic growth, rising
interest rates and a spike in inflation has not been
conducive to Baillie Gifford’s growth investment
style. In addition, the UK benchmark index has
a significant exposure to resource and financial
companies whose profits tend to be cyclical with
limited long term sustainable growth and as such are
not areas that meet the Managers’ long term growth
requirements.
These broader style and macroeconomic factors
explain a significant amount of the investment
underperformance but not all. The balance between
successful and unsuccessful individual stock
investments over this period has not been in the
Company’s favour.
The Managers’ report on pages 09 to 12 provides
further detail on the investment performance of
the portfolio.
Unquoted investments
In January 2022 we made our first investment in
an unquoted company by investing into the shares
of Wayve, a UK software company developing
an AI system that allows vehicles to learn whilst
driving. This is an extremely competitive area with
many companies operating in it and it is a tribute to
Wayve’s technology excellence that a recent funding
round has raised more than $1billion from Softbank,
Microsoft and Nvidia.
Following how we valued this company since
investment is a good example of how we approach
unquoted valuations. We initially invested
£1,516,000 but when similar listed companies’ share
prices fell, we lowered our valuation to £582,000 on
31 October 2023. Now this recent funding valuation
has established a deal price, we have revalued the
shares to the deal price, and they are now valued at
£3,338,000.
A handsome uplift on our purchase price of 120%
and a good reflection of how long-term growth
investing with commitment and analysis can bear
rewards.
Continuation votes and
performance-triggered exit opportunity
In accordance with the Company’s Articles of
Association, shareholders have the right to vote on
the continuation of the Company every five years,
the next vote being at this year’s Annual General
Meeting in September.
Having concluded its review of Baillie Gifford’s
ability to deliver on the Company’s investment
objective, the Board continues to believe firmly in
the Company’s mandate and has confidence that
over the longer term the portfolio managers, through
application of Baillie Gifford’s investment process,
have the capacity to outperform. Accordingly, the
Board is recommending that shareholders vote
in favour of continuation at the Annual General
Meeting.
07
Baillie Gifford UK Growth Trust plc
The Board believes that the current style headwinds
will not last forever and growth will resume its
historical outperformance. The Board is reassured
that the current portfolio is populated with exciting
growth businesses with strong competitive positions
and large market opportunities. The fundamentals of
the portfolio look strong, with 97% of the portfolio
having positive earnings or cashflows and 1-year
forward sales growth and earnings better than the
index (6.0% and 7.6% 1-year forward sales and
earnings growth compared to 2.7% and 5.6% for
the FTSE All-Share Index).
However, the Board recognises shareholders’
patience will have been tested by the last three years
of underperformance and, following consultation
with shareholders representing a material proportion
of the Company’s share capital, if the continuation
vote is passed at the Annual General Meeting
the Board makes the following commitments,
which it believes will provide greater certainty for
shareholders in the event that underperformance
were to continue:
1. The Board will introduce a one-off 5-year
performance triggered exit opportunity whereby,
in the event the Company’s NAV per share total
return over the 5-year period from 30 April 2024
to 30 April 2029 does not equal or exceed the
total return on the Company’s benchmark (FTSE
All-Share Index), the Company will provide
shareholders with the opportunity to realise their
investment in full at close to NAV per share.
2. The Company will put forward a resolution at
the Annual General Meeting to be held by the
Company in 2027 for the continuation of the
Company. This is in addition to the five-yearly
continuation votes in the Company’s Articles of
Association and, as such, a continuation vote is
expected to be held in 2029 as well.
The Board believes these commitments are in the
best interests of shareholders as a whole.
Share issuance and buy-backs
Since issuing shares in 2021 and 2022, the
Company’s shares have de-rated and moved to
trading at a discount to NAV. Over the course of
the year to 30 April, the Company has bought back
on 67 occasions, buying into treasury 3,841,977
shares, which represents 2.6% of the Company’s
issued share capital as at 30 April 2023. Since the
financial year end, a further 635,000 shares have
been bought back. The Company currently has
14,873,677 shares held in treasury.
The Company’s share buy-back policy seeks
to operate in the best interests of shareholders
by taking into account the relative level of the
Company’s share price discount to NAV when
compared with peer group trusts, the absolute
level of discount, volatility in the level of discount
and the impact from share buy-back activity on the
long-term liquidity of the Company’s issued shares.
The Board recognises the importance to
shareholders that the Company’s shares should not
persistently trade at a significant discount to NAV
in absolute terms or relative to the peer group and,
while the Board does not believe it is appropriate to
publish a specific discount target, the Board would
expect to be more active in buying back shares,
when appropriate.
The Company benefits from the flexibility of
being able to issue new shares or to re-issue any
shares that might be held in treasury when there is
sufficient demand at a premium to NAV as this helps
to improve trading liquidity and reduces ongoing
costs by being asset accretive. The Company is
seeking to renew the annual issuance authority at
its AGM. To avoid any dilution to existing investors,
shares held in treasury and any new shares would
only be re-issued/issued at a premium to NAV and
after associated costs.
Gearing
During the year, the Company renewed its one-year
£30 million revolving credit facility with The Royal
Bank of Scotland International Limited. Drawn
and invested gearing stood at 6% and 5% of
shareholders’ funds as at the Company’s year-end
compared to 5% and 3% respectively a year earlier.
The Board sets internal guidelines for the portfolio
managers’ use of gearing which are altered from
time to time but are subject to net effective gearing
not representing more than 20% of shareholders’
funds.
Earnings and dividends
The net revenue return per share for the year was
5.68p, versus 4.05p in 2023. The year-on-year
increase was largely a consequence of increased
dividends received as well as special dividends from
Lancashire Holdings and 4imprint. A final dividend of
5.60p per share, payable on 13 September 2024 to
shareholders on the register as at 16 August 2024,
is being recommended to shareholders.
The Company’s priority is capital growth so
shareholders should not rely on receiving a regular
or growing level of income from their investment in
this Company.
Strategic report
Annual Report and Financial Statements 2024
08
Sustainability Disclosure Requirements
(‘SDR’)
In November 2023, the Financial Conduct Authority
(‘FCA’) published its sustainability disclosure
requirements and investment labels regime (‘SDR’)
to address concerns about misleading sustainability
claims. SDR includes an opt-in labelling regime
for sustainable investment products, additional
disclosure requirements and restrictions on the
use of sustainability terms. It also establishes
anti-greenwashing (‘AGW’) rules. Investment trusts
and their Managers are in scope of the SDR.
Although investment trusts are not directly in scope
of the AGW requirements, the rules apply indirectly
to them, mostly via obligations imposed on their
Managers.
Although Environmental, Social and Governance
(‘ESG’) factors are taken into consideration by
our portfolio managers as part of their investment
analysis, the Company itself does not have an
explicit sustainability objective and so under SDR is
potentially going to be categorised as ‘Non-labelled’
rather than ‘Labelled’ or ‘Other’.
Annual General Meeting
It is intended that the Company’s AGM will be held
on Wednesday 4 September 2024 at 12.00 noon at
the Leonardo Royal Hotel London City, 8-14 Cooper’s
Row, London, EC3N 2BQ. Shareholders are warmly
invited to attend however regular attendees should
note that this is a different venue to the one used
in recent years. To accurately reflect the views of
shareholders of the Company, the Board intends to
hold the AGM voting on a poll, rather than on a show
of hands.
The meeting will include a presentation by the
portfolio managers on the prospects for UK equities
and the positioning of the portfolio. They and the
Board will be available to answer any questions.
Light refreshments will be available.
Outlook
The portfolio managers and the Board believe that
the portfolio’s current valuations fail to adequately
reflect the value of the progress being made by the
investee companies. If this observation is correct,
once the macro backdrop becomes more favourable
for growth investors, for example lower interest rates
and reduced levels of inflation and/or a more stable
geopolitical backdrop, then the significantly higher
growth expectations for the portfolio against the
broader market should act as a catalyst for long-term
share price appreciation.
The current portfolio is comprised of exciting growth
businesses with large market opportunities, strong
competitive positions and, importantly, the cultural
adaptability to succeed in a rapidly changing world.
Having the nerve and patience to continue holding
them through turbulent times is likely to be key in
realising their long-term potential.
Carolan Dobson
Chairman
13 June 2024
09
Baillie Gifford UK Growth Trust plc
Managers’
report
This year we have segmented our Managers’ report
so that it starts with a summary of the drivers of
shorter term performance before then reflecting on
performance over the past five years and the factors
behind this. It ends with some commentary on the
outlook for the portfolio and the companies held.
Performance
We discussed the disappointing short-term
performance of the first half of the Company’s
financial year in the interim report. In the second
half of the year, the Company’s NAV total return
broadly matched the index, the FTSE All-share
total return, so the result for the year remained
unsatisfactory (over the six months to 30 April
2024, the Company’s NAV per share total return was
14.2% compared to 14.2% for the FTSE All-Share
total return). There are a number of strands to this:
while the absolute performance of the index over the
year was respectable, the performance of individual
holdings in the portfolio was much more dispersed,
reflecting in particular a slant to the downside
with the stockmarket displaying displeasure at any
unexpected bad news, particularly with growth
businesses. For example, a further unexpected
charge against profits led to a further lurch down in
the share price of wealth manager St James’s Place,
while concerns about the health of the Chinese
economy notably impacted the shares of pig breeder
Genus, life insurer Prudential and to some extent
the luxury goods retailer Burberry. While painful in
the short term, we believe in all these cases there
remains a long term growth investment case in and
we are patiently sticking with them. For example with
Prudential, the growth case involves its exposure to
a wide variety of fast growing Asian life insurance
markets where it has strong competitive positions
that allows it to weather the shorter term vagaries of
the GDP growth in one country.
Moreover, an impressive new management team
have articulated a clear and simple strategy that
they are beginning to execute on. This is not
meant to be dismissive of possible China risks for
Prudential but as bottom up stock pickers we see
this is an example of a business that is growing and
getting stronger even if the share price appears
disconnected to these fundamentals.
Although some other businesses that had guided
to softer short-term trading fared better, such as
the leader in UK kitchens Howden Joinery and IT
services business Softcat, a greater number in the
portfolio simply marked time as the market appeared
to place more emphasis on the cloudy near term
economic and geopolitical outlook, rather than the
long term opportunities for the businesses. We did
see particularly strong operational performance
rewarded in the strong share price performance
of specialist marketer 4imprint and the foreign
exchange payment disruptor Wise. Lastly, Wayve, our
sole unquoted investment, which is an autonomous
driving technology business, was written up
substantially following its latest funding round where
a significant sum of new investment was raised at a
higher valuation.
Strategic report
Annual Report and Financial Statements 2024
10
5-year review
It is five years since the Company’s last Continuation
Vote. When we took over the management of the
Company from Schroders, we asked shareholders to
judge us over five years. The results are not what we,
the Board or you as a fellow shareholder would have
hoped for, having underperformed by 4.8% p.a.. We
were therefore asked by the Board to examine the
data, offer our perspectives and explain why we feel
confident about the portfolio being in good shape
from here, despite the disappointing outcome so far.
A recap of how we invest
Our investment philosophy is anchored around a
core belief that share prices will follow fundamentals
over the long term. We try to identify companies
that will deliver superior earnings growth and hold
onto them long enough for their unique competitive
and cultural strengths to emerge as the dominant
influence on share prices. The following chart
provides some evidence to support this approach
as it shows the striking correlation between superior
long-term earnings growth and stock price returns
for the FTSE All-Share. However, the path is not
always a smooth one and there will be periods when
our style of investing will be out of favour.
Why hasn’t our investment approach
worked recently?
Since taking over the management of Baillie
Gifford UK Growth Trust, we believe that the
macroeconomic backdrop has had an unusually
dominant influence on investment outcomes.
For example, if we consider calendar year NAV
performance, as detailed in the table below, we
can see that the portfolio delivered robust relative
returns during the initial shock of COVID-19 in
2020 as many of the high-margin, capital-light,
well-capitalised companies held were better able
to weather the pandemic and, in some cases,
directly benefited from global lockdowns. However,
relative performance started to struggle in 2021 as
economies re-opened and supply chains struggled
to operate smoothly.
In 2022, the conflict in Ukraine put still greater
upward pressure on prices and interest rates
rose sharply. It was at this point in 2022 that
our performance was most challenged in both
absolute and relative terms. Why? The stock
market had to process the imperative to discount
future cash flows at a higher rate. Conventional
wisdom dictates that the multiples applied to
future earnings streams should compress in a more
inflationary environment, so the market had to
grapple with the right ‘new normal’ multiple to attach
to equities. Growth businesses, which are valued
on the premise of long-duration earnings streams
projected out into the future, underwent a sharp
decline in their share prices. To put it simply, the
market backdrop over the past few years has given
rise to an environment where the share prices of
growth companies have been hit indiscriminately,
regardless of the fundamental operational progress
they are making. We believe that much of the recent
underperformance of the portfolio has been down
to this - our investment style being out of favour -
rather than too many poor investment decisions.
To be clear, we have made individual mistakes
that have hurt performance, and we have learnt
from these experiences, but the magnitude of the
underperformance cannot be explained by these.
Discrete annual performance
to 31 December each year
2019 2020 2021 2022 2023
Share price 28.7% 12.7% 8.2% -29.9% 2.3%
NAV 25.3% 4.6% 12.1% -22.0% 4.2%
Index 19.2% -9.8% 18.3% 0.3% 7.9%
Source: Morningstar, FTSE, Total return in sterling.
Index: FTSE All-Share Index
-8
-6
-4
-2
0
2
4
6
8
Quintile 1
(High)
Q2Q3Q4Quintile 5
(Low)
Median relative returns (p.a.) %
Earnings growth quintile
-6.8
1.9
4.8
6.4
-1.4
Source: FactSet, FTSE All-Share. The universe consists of all stocks
listed in the FTSE All-Share Index at each starting period and excluding
repetitions.
Past performance is not a guide to future returns.
All investment strategies have the potential for profit and loss.
Delivered median total returns by earnings
growth quintile
Rolling five-year horizons (1994 - 2023)
11
Baillie Gifford UK Growth Trust plc
Could we have mitigated the
underperformance?
We asked the investment risk team at Baillie
Gifford to undertake analysis to identify whether
we could have done anything different from 2021
when performance turned down. The short answer
is that after looking at various scenarios, the only
way we could have achieved an outcome aligned
with the index would have been to significantly
change the portfolio by taking large new positions
in some of the largest businesses in the UK, such
as Shell, BP and HSBC. Many of these companies
in our view do not have obvious long term growth
potential but they have been beneficiaries of the
macroeconomic turmoil described above because
of their near term earnings certainty. Owning many
of these large ‘value’ stocks would have mitigated
underperformance, however, it would have also
undermined our active, bottom up, long-term growth
investment style. We consider it imperative to stick
to our long-term growth investment philosophy
because the alternative is trying to second guess,
and trade around, short term swings in “style” in
stock markets. Attempting to do so in our view could
make things far worse for shareholders.
Why do we believe that performance will
improve over the next five years?
With a high inflationary and interest rate
environment, we understand why our style of
growth investing has been out of favour with
the market. However, we believe that current
valuations fail to adequately reflect the value of
the progress we are seeing in the businesses we
invest in; they underestimate the adaptability of the
management teams running these businesses, and
they overlook the resilient financial characteristics
that the portfolio possesses. Rather than a cause
for despondency, this disconnect between share
prices and fundamentals is a key reason why we
remain confident in the long-term outlook for the
performance of the portfolio.
The three charts below illustrate the superior quality
and resiliency characteristics of the portfolio relative
to the index. While we would urge caution in relying
too heavily on spuriously precise earnings forecasts,
it is encouraging that the portfolio is invested in
companies with higher growth expectations than the
broader market.
Why does this matter? As we noted earlier, our
investment philosophy is anchored around a core
belief that share prices will follow fundamentals
over the long term. Enduring growth should act as a
catalyst for long-term share price appreciation.
We continue to believe the portfolio is populated
with exciting growth businesses, with large market
opportunities, strong competitive positions, and
importantly, the cultural adaptability to succeed
in a rapidly changing world. Having the nerve and
patience to continue holding them through turbulent
times is key to realising their long-term potential.
36%
gross margins
vs
26% index*
Solid foundations
97%
positive earnings
or cashflow
Resilient financials
0
1
2
3
4
5
6
7
8
Sales 1Y
forward growth p.a.
Baillie Gifford UK Growth Trust plc
%
Earnings 1Y
forward growth p.a.
6.0
2.7
7. 6
5.6
FTSE All-Share Index
Compelling growth expecations
Source: Baillie Gifford & Co, FactSet, FTSE. As at 30 April 2024. Sterling.
Baillie Gifford UK Growth Trust.
*Index: FTSE All-Share Index.
Portfolio and index earnings figures exclude companies with negative earnings.
Strategic report
Annual Report and Financial Statements 2024
12
Outlook for the portfolio
We see an abundance of significant and
unrecognised potential within the current portfolio.
We see it in long-standing holdings like Auto Trader,
Experian and Ashtead which have been working
successfully to expand their already substantial
market opportunities, are embedding themselves
ever more deeply into their customers’ businesses
and whose competitive advantages are now deeper
than they have ever been. We also see it in relatively
more recent purchases like IT service providers
Kainos and Softcat which enjoy multi-decade growth
tailwinds from the adoption of technology by both
enterprises and the public sector, and where the
market fails to appreciate unique cultural strengths
which make both stand out from competitors and be
most trusted advisors to customers.
Despite all the doom and gloom surrounding
the state of innovation in the UK, we look to
long-standing holdings like Renishaw and Genus
whose commitment to research and development
spending, we believe, will yield significant results in
the coming decade by enabling manufacturers and
farmers across the globe to solve some of their most
pressing productivity and sustainability challenges.
Earlier in their lifecycles are companies like AI
autonomous driving start-up Wayve, the surgical
endoscopy business Creo Medical, and next
generation sequencing company Oxford Nanopore.
All three are at the vanguard of progress in their
respective fields and are true world leaders.
We invest in companies for decades, so trust in
management is of great importance for us. We are
fortunate to be invested alongside some of the most
accomplished leadership teams such as those at
Games Workshop and 4imprint whose long-term
mindset and dedication to doing the right thing have
been a crucial ingredient in the enormous success
both businesses have achieved over time.
Your portfolio managers work in an investment
firm which allocates capital to some of the most
promising public and private enterprises across the
world. We can both say, with some confidence, that
the companies in this portfolio can hold their own
across that global investment stage.
Iain McCombie and Milena Mileva
Baillie Gifford & Co
13 June 2024
13
Baillie Gifford UK Growth Trust plc
The managers’ core
investment principles
Investment philosophy
The following are the three core principles
underpinning our investment philosophy. We have
a consistent, differentiated long-term investment
approach to managing UK equities that should
stand investors in the Company in good stead:
Growth
We search for the few companies which have
the potential to grow substantially and profitably
over many years. Whilst we have no insight into the
short-term direction of a company’s share price, we
believe that, over the longer term, those companies
which deliver above average growth in cash flows
will be rewarded with above average share price
performance and that the power of compounding is
often under-appreciated by investors. Successful
investments will benefit from a rising share price
and also from income accumulated over long
periods of time.
Patience
Great growth companies are not built in a day.
We firmly believe that investors need to be patient
to fully benefit from the scale of the potential.
Our investment time horizon, therefore, spans
decades rather than quarters and our portfolio
turnover is significantly below the UK industry
average. This patient, long-term approach affords
a greater chance for the superior growth and
competitive traits of companies to emerge as the
dominant influence on their share prices and allows
compounding to work in the investors’ favour.
Active investment management
It is our observation that too much attention
is paid to the composition of market indices
and active managers should make meaningful
investments in their best ideas regardless of the
weightings of the index. As a result, shareholders
should expect the composition of the portfolio to
be significantly different from the benchmark and
hence the outcome in returns (in both good and
bad periods) will also be significantly different from
the benchmark. This differentiation is a necessary
condition for delivering superior returns over a
long-term time horizon.
Portfolio construction flows from the investment
beliefs stated above.
Strategic report
Annual Report and Financial Statements 2024
14
Baillie Gifford’s
stewardship principles
Baillie Gifford’s overarching ethos is that we are
‘Actual’ investors. That means we seek to invest for
the long term. Our role as an engaged owner is core
to our mission to be effective stewards for our clients.
As an active manager, we invest in companies at
different stages of their evolution across many
industries and geographies, and focus on their unique
circumstances and opportunities. Our approach
favours a small number of simple principles rather
than overly prescriptive policies. This helps shape our
interactions with holdings and ensures our investment
teams have the freedom and retain the responsibility
to act in clients’ best interests.
Long-term value creation
We believe that companies that are run for the
long term are more likely to be better investments
over our clients’ time horizons. We encourage our
holdings to be ambitious, focusing on long-term
value creation and capital deployment for growth.
We know events will not always run according to
plan. In these instances we expect management
to act deliberately and to provide appropriate
transparency. We think helping management to
resist short-term demands from shareholders often
protects returns. We regard it as our responsibility to
encourage holdings away from destructive financial
engineering towards activities that create genuine
value over the long run. Our value will often be in
supporting management when others don’t.
Alignment in vision and practice
Alignment is at the heart of our stewardship
approach. We seek the fair and equitable treatment
of all shareholders alongside the interests of
management. While assessing alignment with
management often comes down to intangible factors
and an understanding built over time, we look for
clear evidence of alignment in everything from
capital allocation decisions in moments of stress
to the details of executive remuneration plans and
committed share ownership. We expect companies
to deepen alignment with us, rather than weaken it,
where the opportunity presents itself.
Governance fit for purpose
Corporate governance is a combination of structures
and behaviours; a careful balance between systems,
processes and people. Good governance is the
essential foundation for long-term company
success. We firmly believe that there is no single
governance model that delivers the best long-term
outcomes. We therefore strive to push back against
one-dimensional global governance principles in
favour of a deep understanding of each company
we invest in. We look, very simply, for structures,
people and processes which we think can maximise
the likelihood of long-term success. We expect to
trust the boards and management teams of the
companies we select, but demand accountability
if that trust is broken.
Sustainable business practices
A company’s ability to grow and generate value for
our clients relies on a network of interdependencies
between the company and the economy, society and
environment in which it operates. We expect holdings
to consider how their actions impact and rely on these
relationships. We believe long-term success depends
on maintaining a social licence to operate and look
for holdings to work within the spirit and not just the
letter of the laws and regulations that govern them.
Material factors should be addressed at the board
level as appropriate.
15
Baillie Gifford UK Growth Trust plc
Baillie Gifford
proxy voting
We believe that ‘active ownership’ of our clients’
holdings is as important as selecting the right
investments in the first instance. These guidelines
are aligned with our stewardship principles and
describe our approach to proxy voting and company
engagement, the key levers of active ownership,
often described as ‘stewardship’.
While these guidelines are intended to provide an
insight into how we approach voting on our clients’
behalf, it is important to note that we assess every
company individually. In voting, we will always
evaluate proposals on a case-by-case basis, based
on what we believe to be in the best long-term
interests of our clients, rather than rigidly applying
a policy.
A broad cross section of our investment staff are
involved in our ongoing work on stewardship. In the
same way that our investment approach is based
around empowered and independent teams, our
voting and engagement is led by the individual
investment teams. In keeping with our decentralised
and autonomous culture, our investment teams will,
on occasion, elect to vote differently on the same
general meeting resolutions. Where this happens,
we report accordingly in the proxy voting disclosure
on our website. We also have clear processes in
place to identify, prevent and manage potential
proxy voting related conflicts of interest to ensure
that in all cases the firm acts in the clients’ best
interest. Baillie Gifford’s firm-wide conflict of interest
disclosure is available on our website.
Prior to taking any voting action, we usually address
specific ESG concerns by engaging directly with the
company, using voting as an escalation mechanism
if we have not seen sufficient progress. Voting
activity and the reasons for any resolutions voted
against in the period is disclosed on the Company
website and can be viewed at bgukgrowthtrust.com.
Company meeting record
Voting distribution
Number of meetings voted
with management
26
Number of meetings with at least
one against, withhold or abstain
17
Meetings not voted 4
Votes for 95.4%
Votes against 2.1%
Votes abstained 0.4%
No vote 2.1%
Strategic report
Annual Report and Financial Statements 2024
16
Peak District, UK
17
Baillie Gifford UK Growth Trust plc
Environmental, social and
governance engagement
By engaging with companies, we seek to build
constructive relationships with them, to better
inform our investment activities and, where
necessary, effect change within our holdings,
ultimately with the goal of achieving better returns
for our shareholders. The four following examples
demonstrate our stewardship approach through
constructive, ongoing engagement.
Hargreaves Lansdown
Objective
To establish progress in relation to board
appointments and have an introductory meeting
with the new CEO.
Discussion
In May 2023, we had a meeting with the chair,
Deanna Oppenheimer, to discuss the timeline for
appointing the new CEO Dan Olley. Later in the year,
we had an introductory meeting with Mr Olley, who
took up his role as CEO in August. He previously
served as a non-executive director on the company’s
board. We discussed his priorities, which include
driving growth and increasing the pace of change in
the business. We shared with him our thoughts on
the company.
Outcome
In our meeting with the chair, we were reassured
that the regulatory process was progressing well and
that Mr Olley, as a board member, had good insight
into the implementation of the group’s investment
strategy. Following our meeting with Mr Olley, we
were pleased that he was finally in the CEO seat.
Our intention is to leave him to get on with the job
and we expect to engage again in the first half of
2024.
Strategic report
Annual Report and Financial Statements 2024
18
Ashtead
Objective
During the period, Ashtead published its annual
report and failed to disclose its Scope 3 carbon
emissions despite previously assuring us that the
information would be published. We then spoke
with its head of ESG to understand the reasons for
not reporting the relevant carbon data. We were
also provided with an update on the company’s
decarbonisation progress.
Discussion
Having spoken to the same individual in 2022 and
emphasised the importance of disclosing Scope 3
emissions, we expected Ashtead to begin reporting
on this in its latest annual report. We believe that
disclosure of both direct and supply chain carbon
emissions enables investors to measure the potential
risk a company faces from exposure to carbon
taxes. Our latest discussion highlighted the difficulty
Ashtead faces in reasonably estimating both the
‘in use’ emissions from rented plant equipment and
particularly the lifetime emissions once equipment is
subsequently sold. Ashtead’s asset portfolio involves
more than one million items of plant equipment,
so the potential for variability in overall estimated
emissions is significant. The company worked with
a consultant for several years, who had built a
custom model for Ashtead to employ in assessing
all its greenhouse gas emissions. However, despite
working closely together, Ashtead was not entirely
satisfied with the assumptions and modelling used
by the consultant and ultimately decided to rebuild
parts of the model in-house. This led to delays
with the previously communicated timeframe and
hence the decision to not report data with lower
accuracy in estimation. We also learnt further details
about various initiatives Ashtead is pursuing across
its operations to reduce its emissions footprint.
These include trialling very large electric trucks in
California and also expanding the company’s use of
renewable diesel across the US.
Outcome
We were reassured by the explanation provided
and recognise that Ashtead is continuing to
work towards estimating the company’s Scope 3
emissions footprint with reasonable accuracy.
We were assured that the relevant data will be
published no later than its next annual report.
Following our engagement, in Q1 2024, we were
pleased to see that Ashtead had published its
Scope 3 emissions data.
19
Baillie Gifford UK Growth Trust plc
Abcam
Objective
Our stewardship often involves engaging with a wide
range of stakeholders. For example, during the year
we spoke with Dr Jonathan Milner (co-founder and
shareholder in Abcam) in order to help finalise our
position on Danaher Corporation’s US$24-a-share
cash bid for Abcam.
Discussion
At the end of Q3 2023, Dr Milner set out his view that
the bid undervalued Abcam and that he could deliver
the existing strategy in a more disciplined way with a
new board. He explained that this would require the
bid to be defeated at the EGM and then he would
call another EGM to replace most of Abcam’s board.
Dr Milner explained that he was restricted in what
he could tell us about his shadow board so we were
given no insight into who its members might be. We
discussed the risks inherent in such significant board
change, including the potential for a messy leadership
transition. We talked about the potential for employee
disruption given his intended focus on cost-cutting
(including pay) and the risk that Abcam scientists
might defect to Danaher if the bid failed. On valuation,
while we had sympathy with his view that Danaher’s
offer undervalued the long-term potential of the
business, we did not share his conviction that a higher
offer would be forthcoming from Danaher if this offer
was rejected.
Outcome
Having engaged with multiple stakeholders
post the takeover bid announcement, we undertook
the sale of our holding before the EGM. We did
so with a heavy heart having been investors since
Abcam’s listing on AIM in 2005. Our decision
reflected, on the one hand, our reluctance to endorse
the board’s valuation of the business and, on the
other, our unease about the material uncertainties
ahead if the bid was defeated. Shortly before the
EGM, Dr Milner conceded defeat and the takeover
by Danaher was approved.
Strategic report
Annual Report and Financial Statements 2024
20
Boohoo.com
Objective
We engaged with Boohoo on several occasions
following the revelations in 2020 regarding the
working conditions inside the company’s operations
in Leicester. Over the course of the past year, we
took the opportunity to examine the progress the
company had subsequently made, particularly with
auditing the extensive supply chain.
Discussion
Speaking with the Director of Responsible Sourcing
and Product Operations (RESPO), we learned that
Boohoo had recruited extensively since 2020, and
his department employs more than 130 individuals.
Having been recruited to develop RESPO, he now
had responsibility for onboarding all new suppliers,
auditing the existing supply chain (approximately
1,100 direct suppliers) and managing all raw material
sourcing. The Director of RESPO highlighted the
previous lack of internal controls and reporting
processes to ensure consistent, minimum supply
chain standards across the business. Over the last
few years, his team had been consolidating and
comprehensively mapping the company’s entire
factory supply chain. This provides greater oversight
and enables the business to manage the increasing
regulatory requirements for enhanced supply chain
disclosure. Unlike many of its peers, Boohoo now
publishes a list of all its tier-1 suppliers online. We
also learned about cotton programmes such as
CottonConnect, which enables Boohoo to work
directly with farmers in Pakistan to reduce their use
of chemicals and boost their yields. As with factory
suppliers, the company is currently mapping the
supply chain for all its key raw materials and will
publish the results by 2025. We also spoke about
how the company had begun to use DNA sample
analysis to trace the exact soil location of cotton in
the supply chain. This technology is being used to
reduce the risk of cotton grown in Xinjiang, China,
being used within Boohoo’s supply chain. Under
recent legislation, many suppliers of cotton from
Xinjiang are prohibited from US importation.
Outcome
This was part of ongoing engagement to deepen our
understanding of the challenges that exist for both
the company and the industry. We were encouraged
by the progress made since 2020 but material
supply chain risks remain. Following our engagement
with the company, we decided to sell the holding
in January 2024. Having let the dust settle on the
post-pandemic headwinds, we concluded that the
competitive backdrop had deteriorated significantly
and that it was unlikely that the business will return
to profitable growth over the medium term.
21
Baillie Gifford UK Growth Trust plc
Dartford Crossing. Kent, UK
Strategic report
Annual Report and Financial Statements 2024
22
Review of
investments
A review of the Company’s
ten largest investments as at
30 April 2024
Auto Trader Group
Dominant advertising portal for
used cars in the UK. Through its
large audience of UK car buyers
and the continuous development
of its unparalleled automotive
data assets, Auto Trader is
becoming ever more deeply
embedded in the workflows
of retailers. The company has
significantly stepped up its efforts
to evolve from an advertising to a
transactional platform, providing
a superior buying experience to
consumers and helping retailers
become more efficient.
Experian
Credit analytics and data provider.
It enables businesses to form an
opinion on the creditworthiness
of potential customers and helps
consumers to understand and
improve their ability to borrow.
It also protects businesses and
individual customers against fraud
and identity theft. We see Experian
as exceptionally well-placed to
benefit from the relentless trend
towards the digitisation of all
aspects of both consumer and
corporate life.
Sector Technology
Valuation £15,065,000
% of total assets 5.0
Valuation at
30 April 2023
£13,706,000
% of total assets at
30 April 2023
4.4
Net purchases/
(sales) in year to
30 April 2024
–
Sector Industrials
Valuation £14,798,000
% of total assets 4.9
Valuation at
30 April 2023
£11,376,000
% of total assets at
30 April 2023
3.7
Net purchases/
(sales) in year to
30 April 2024
£1,401,000
© Auto Trader Group plc
23
Baillie Gifford UK Growth Trust plc
Games Workshop
Miniature gaming company,
known for its fantasy game,
Warhammer. Its excellent
competitive position translates
into strong pricing power and
high margins. We believe its
addressable market is expanding
as the hobby gains popularity
in the US & Far East. It is also
focused on monetising its deep
pool of intellectual property
across the broader media space,
as evidenced by its recent TV/film
partnership with Amazon.
Ashtead
An equipment rental company
operating predominantly in the
US. It benefits from a structural
shift towards increased rental
penetration, underpinned by
compelling economic and
regulatory drivers. We see Ashtead
as one of the leading consolidators
in this very fragmented industry.
We believe its scale and continued
investments make it very hard
for smaller competitors to match
the breadth and availability of its
equipment offering.
Volution Group
Manufacturer of ventilation
products which range from
simple extractor fans to
more complex heat recovery
solutions. Its products are
very well-positioned to benefit
from environmental regulation
in building and construction.
For instance, its heat recovery
ventilation solutions are already
helping customers to meet
new energy efficiency building
standards. This is a promising
tailwind that could boost organic
growth for years to come.
Sector Consumer discretionary
Valuation £14,735,000
% of total assets 4.9
Valuation at
30 April 2023
£14,758,000
% of total assets
at 30 April 2023
4.8
Net purchases/
(sales) in year to
30 April 2024
–
Sector Industrials
Valuation £14,059,000
% of total assets 4.7
Valuation at
30 April 2023
£11,014,000
% of total assets at
30 April 2023
3.6
Net purchases/
(sales) in year to
30 April 2024
–
Sector Industrials
Valuation £13,946,000
% of total assets 4.7
Valuation at
30 April 2023
£13,888,000
% of total assets at
30 April 2023
4.5
Net purchases/
(sales) in year to
30 April 2024
–
© Games Workshop Limited © Ashtead Group plc © Volution Group
Strategic report
Annual Report and Financial Statements 2024
24
4imprint
Distributor of logo-printed
promotional products. It operates
in a large and highly fragmented
market and has consistently
taken market share from
smaller competitors. Over the
past few years, the long-term
focused management team have
transformed the efficiency of
their marketing spend. We believe
that the company’s scale will
become an increasing competitive
advantage which, combined with
strong financial characteristics,
makes it an attractive investment.
Renishaw
World leading engineering
company. Renishaw has
developed unparalleled expertise
in metrology. It has a strong track
record of innovations, which is
underpinned by consistently
high levels of research and
development spending.
Renishaw’s products are integral
to continued progress in advanced
manufacturing and robotics.
Howden Joinery
Manufacturer and
supplier of kitchens to small
builders/property developers
in the UK. Its decentralised,
customer-centric business model
has proved very successful and it
is very well-positioned to continue
to take market share. It has a
compelling customer proposition
which combines local depots in
convenient locations, high
stock-availability and good
customer service. It also has
a long-term opportunity to
replicate its successful model in
the less mature French market.
Sector Consumer discretionary
Valuation £12,600,000
% of total assets 4.2
Valuation at
30 April 2023
£9,847,000
% of total assets
at 30 April 2023
3.2
Net purchases/
(sales) in year to
30 April 2024
–
Sector Industrials
Valuation £10,590,000
% of total assets 3.5
Valuation at
30 April 2023
£8,601,000
% of total assets at
30 April 2023
2.8
Net purchases/
(sales) in year to
30 April 2024
£567,000
Sector Consumer discretionary
Valuation £11,918,000
% of total assets 4.0
Valuation at
30 April 2023
£7,883,000
% of total assets
t 30 April 2023
2.6
Net purchases/
(sales) in year to
30 April 2024
£748,000
© Howdens Credit: M4OS Photos / Alamy Stock Photo © Renishaw plc
25
Baillie Gifford UK Growth Trust plc
Wise
Global FX transfer company.
Having recognised that the
process of transferring money
abroad is expensive, slow, opaque
and inconvenient, Wise is on a
mission to improve the process
for both individual consumers
and businesses. Wise’s strong
customer proposition provides
the potential for a long run way
for continued market share gains
in what is a large, global,
cross-border market.
Softcat
Leading distributor of IT solutions.
This is first and foremost a
relationship business, and Softcat
differentiates itself through the
quality of service provided by
its highly engaged employees,
who share in the success of the
business. Its business model and
culture set it apart from its peers,
and its scale and investments in
developing its capabilities add to a
sustainable competitive advantage.
Sector Industrials
Valuation £10,577,000
% of total assets 3.5
Valuation at
30 April 2023
£7,494,000
% of total assets at
30 April 2023
2.4
Net purchases/
(sales) in year to
30 April 2024
–
Sector Technology
Valuation £9,720,000
% of total assets 3.2
Valuation at
30 April 2023
£5,344,000
% of total assets at
30 April 2023
1.7
Net purchases/
(sales) in year to
30 April 2024
£3,050,000
© Shutterstock/Wise
Strategic report
Annual Report and Financial Statements 2024
26
List of investments
as at 30 April 2024
Name Business
Fair value
£’000
% of total
assets
Basic materials
Rio Tinto Metals and mining company 6,174 2.0
Victrex Speciality high-performance chemicals manufacturer 1,712 0.6
7,886 2.6
Consumer discretionary
Games Workshop Toy manufacturer and retailer 14,735 4.9
Howden Joinery Manufacturer and distributor of kitchens to trade customers 12,600 4.2
4imprint Direct marketer of promotional merchandise 11,918 4.0
RELX Professional publications and information provider 5,871 2.0
Burberry Luxury goods retailer 4,595 1.5
Moonpig Online greetings card and gifting platform 3,565 1.2
53,284 17.8
Consumer staples
Diageo International drinks company 7,894 2.6
7,894 2.6
Financials
AJ Bell UK wealth manager 9,533 3.2
Legal & General Insurance and investment management company 9,206 3.1
Just Group Provider of retirement income products and services 8,113 2.7
Lancashire Holdings General insurance 7,399 2.5
Prudential International life insurer 6,463 2.1
Hiscox Property and casualty insurance 5,954 2.0
IntegraFin Provides platform services to financial clients 5,891 2.0
St. James’s Place UK wealth manager 4,668 1.5
Hargreaves
Lansdown
UK retail investment platform 4,355 1.4
Molten Ventures Technology focused venture capital firm 3,633 1.2
IG Group Spread betting website 3,217 1.1
68,432 22.8
27
Baillie Gifford UK Growth Trust plc
Industrials
Experian Global provider of credit data and analytics 14,798 4.9
Ashtead Construction equipment rental company 14,059 4.7
Volution Group Supplier of ventilation products 13,946 4.7
Renishaw World leading metrology company 10,590 3.5
Wise Online platform to send and receive money 10,577 3.5
Bunzl Distributor of consumable products 7,923 2.7
Inchcape Car wholesaler and retailer 7,832 2.6
Halma Specialist engineer 7,079 2.4
Bodycote Heat treatment and materials testing 6,463 2.2
PageGroup Recruitment consultancy 4,871 1.6
FDM Group Provider of professional services focusing on information
technology
2,701 0.9
100,839 33.7
Name Business
Fair value
£,000
% of total
assets
Healthcare
Genus World leading animal genetics company 7,165 2.4
Creo Medical Designer and manufacturer of medical equipment 749 0.2
Exscientia Biotech company 518 0.2
Oxford Nanopore Novel DNA sequencing technology 305 0.1
8,737 2.9
Real estate
Rightmove UK's leading online property portal 5,477 1.8
Helical Property developer 3,702 1.3
9,179 3.1
Technology
Auto Trader Group Advertising portal for second hand cars in the UK 15,065 5.0
Softcat IT reseller and infrastructure solutions provider 9,720 3.2
Kainos Group IT services and implementer 8,954 3.1
Wayve Technologies
Ltd Series B Pref.
Developer of full autonomous driving systems 3,338 1.1
First Derivatives IT consultant and software developer 3,262 1.1
40,339 13.5
Total Equities 296,590
99.0
Net Liquid Assets 2,913 1.0
Total Assets 299,503 100.0
Denotes unlisted (private company) investment.
Stocks in bold are the 20 largest investments.
Strategic report
Annual Report and Financial Statements 2024
28
30 April 2024 30 April 2023 % change
Shareholders’ funds £283.2m £294.4m
Net asset value per share 193.0p 195.6p (1.3)
Share price 163.5p 168.0p (2.7)
FTSE All-Share Index 3.4
Revenue earnings per ordinary share 5.68p 4.05p 40.2
Dividends paid and payable in respect of the year 5.60p 3.60p 55.6
Ongoing charges* 0.70% 0.70%
Discount* (15.3%) (14.1%)
Active share* 87% 85%
Invested gearing* 5% 3%
One year
summary
Year to 30 April 2024 2024 2023 2023
Year’s high and low High Low High Low
Net asset value per share 201.7p 165.6p 207.3p 164.5p
Share price 173.4p 141.8p 179.0p 141.5p
Discount* (12.0%) (16.6%) (8.6%) (17.2%)
30 April 2024 30 April 2023
Net return per ordinary share
Revenue 5.68p 4.05p
Capital (5.42p) (2.57p)
Total
0.26p 1.48p
Year to 30 April 2024 2023
Total returns (%)*
Net asset value 0.6 1.1
Share price (0.5) (1.3)
FTSE All-Share Index 7.5 6.0
For a definition of terms see Glossary of Terms and Alternative Performance Measures on pages 104 to 106.
* Alternative performance measure – see Glossary of Terms and Alternative Performance Measures on pages 104 to 106.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 103.
Past performance is not a guide to future performance.
29
Baillie Gifford UK Growth Trust plc
Five year
summary
* Alternative performance measure – see Glossary of Terms and Alternative Performance Measures on pages 104 to 106.
† The benchmark is the FTSE All-Share Index.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 103.
Past performance is not a guide to future performance.
The following charts indicate how an investment in
Baillie Gifford UK Growth Trust plc has performed
relative to its benchmark and its underlying net asset
value over the five year period to 30 April 2024.
Annual change in net asset value and share price
NAV total return* Share price total return*
(30%)
(15%)
0%
15%
30%
45%
60%
20242023202220212020
Annual net asset value and share price total returns
*
(relative to the benchmark† total returns)
(40%)
(30%)
(20%)
(10%)
0%
10%
20%
30%
20242023202220212020
NAV total return*
relative to the benchmark
total return*
†
Share price total return*
relative to the benchmark
total return*
†
Five year total return
*
performance
(figures rebased to 100 at 30 April 2019)
50
75
100
125
150
2024
20232022202120202019
Share price NAV Benchmark
†
April
April
(Discount)/premium
*
to net asset value
(figures plotted on a monthly basis)
(20%)
(15%)
(10%)
(5%)
0%
5%
202420232022202120202019
(Discount)/premium*
April April
Strategic report
Annual Report and Financial Statements 2024
30
Ten year
record
At
30 April
Total assets
£’000
Borrowings
£’000
Shareholders’
funds
£’000
Net asset
value per share
p
Share price
p
(Discount)/
premium
%
*
2014 332,917 30,000 302,917 188.2 178.5 (5.2)
2015 298,837 – 298,837 185.7 167.0 (10.1)
2016 274,880 – 274,880 171.4 152.9 (10.8)
2017 304,372 – 304,372 195.6 168.5 (13.9)
2018 324,252 12,000 312,252 207.5 187.5 (9.6)
2019 305,735 – 305,735 203.1 192.0 (5.5)
2020 263,659 – 263,659 175.2 161.5 (7.8)
2021 365,503 2,450 363,053 237.3 244.0 2.8
2022 309,383 6,450 302,933 197.4 174.2 (11.8)
2023 308,872 14,450 294,422 195.6 168.0 (14.1)
2024 299,503 16,350 283,153 193.0 163.5 (15.3)
Capital
Year to
30 April
Gross
revenue
£’000
Available
for ordinary
shareholders
£’000
Revenue
earnings per
ordinary share
p
Dividends
paid and
proposed per
ordinary share
p
Ongoing
charges
ratio
%
*
2014 10,758 9,843 6.12 5.50
†
0.47
2015 10,372 9,475 5.89 6.00
†
0.47
2016 9,839 9,262 5.77 5.20 0.32
2017 10,069 9,248 5.83 5.40 0.62
2018 10,980 10,099 6.58 6.00 0.63
2019 8,658 7,710 5.12 4.45 0.51
#
2020 6,562 5,644 3.75 3.10 0.66
2021 5,297 4,351 2.88 2.42 0.65
2022 7,787 6,737 4.39 3.91 0.63
2023 7,260 6,145 4.05 3.60 0.70
2024 9,787 8,484 5.68 5.60 0.70
Invested
gearing
%
*
Drawn
gearing
%
*
9 10
(4) –
(2) –
(1) –
3 4
(1) –
(1) –
– 1
2 2
3 5
5 6
Revenue Gearing ratios
Source: Baillie Gifford/LSEG. See disclaimer on page 104.
See Glossary of Terms and Alternative Performance Measures on pages 104 to 106.
* Alternative performance measure – see Glossary of Terms and Alternative Performance Measures on pages 104 to 106.
†
Includes a special dividend of 1.00p per ordinary share.
# Baillie Gifford & Co Limited was appointed Manager in 2018 and agreed to waive the management fee for the year ended 30 April 2019
to the extent of £732,000. Without the management fee waiver, the ongoing charges for the year to 30 April 2019 would have been 0.76%.
31
Baillie Gifford UK Growth Trust plc
At
30 April
Net asset
value per
share
Net asset
value total
return*
Share
price
Share price
total return* Benchmark
†
Benchmark
total return
†
*
Revenue
earnings per
ordinary share
Dividends paid
and proposed
per ordinary
share
2014
100 100 100 100 100 100
100 100
2015
99 102 94 97 104 107
96 109
2016
91 97 86 92 95 101
94 95
2017
104 114 94 105 109 122
95 98
2018
110 125 105 121 114 132
108 109
2019
108 125 108 127 112 135
84 81
2020
93 110 90 108 90 113
61 56
2021
126 151 137 166 110 142
47 44
2022
105 127 98 120 116 154
72 71
2023
104 128 94 118 118 164
66 65
2024 103 129 92 118 122 176 93 102
Compound annual returns
5 year
(1.0%) 0.6% (3.2%) (1.4%) 1.7% 5.4% 2.1% 4.7%
10 year
0.3% 2.6% (0.9%) 1.7% 2.0% 5.8% (0.7%) 0.2%
Cumulative Performance (taking 2014 as 100)
Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 103.
* Alternative performance measure – see Glossary of terms and Alternative Performance Measures on pages 104 to 106.
†
FTSE All-Share Index.
Past performance is not a guide to future performance.
Ten year total return
*
performance
50
100
150
200
2024
2023202220212020201920182017201620152014
NAV total return* Share price total return* Benchmark
†
total return*
Strategic report
Annual Report and Financial Statements 2024
32
Business
review
Business model
Business and status
Baillie Gifford UK Growth Trust plc (‘the Company’)
is a public company limited by shares and is
incorporated in England. The Company is an
investment company within the meaning of section
833 of the Companies Act 2006 and carries on
business as an investment trust. Investment trusts
are UK public listed companies and their shares are
traded on the London Stock Exchange. They invest
in a portfolio of assets in order to spread risk. The
Company has a fixed share capital, although, subject
to shareholder approval sought annually, it may
purchase its own shares or issue shares. The price of
the Company’s shares is determined, like other listed
shares, by supply and demand. The Company has
been approved as an investment trust by
HM Revenue & Customs subject to the Company
continuing to meet the eligibility conditions. The
Directors are of the opinion that the Company has
continued to conduct its affairs so as to enable
it to comply with the ongoing requirements of
section 1158 of the Corporation Tax Act 2010 and
the Investment Trust (Approved Company) (Tax)
Regulations 2011.
The Company is an Alternative Investment Fund
(AIF) for the purposes of the UK Alternative
Investment Fund Managers Regulations.
Investment objective
The principal investment objective of the Company
is to achieve capital growth predominantly from
investment in UK equities, with the aim of providing
a total return in excess of the FTSE All-Share Index.
Investment policy
The Company invests in a portfolio of between 35
and 65 companies selected for their potential to
provide, in aggregate, attractive returns relative to
the total return of the FTSE All-Share Index.
The portfolio is invested primarily in listed equities
but may also invest in unlisted investments,
including private companies, convertible securities,
and equity-related derivatives.
On acquisition of any unlisted investment,
the Company’s aggregate holding in unlisted
investments shall not exceed 10% of the total asset
value of the Company.
The Company may also use derivatives for efficient
portfolio management purposes.
The majority of investments are constituents of the
FTSE 350 Index although constituents of other UK
FTSE indices may be held.
The Company is also permitted to make investments
outside of the UK where these investments have a
meaningful connection with the UK.
The size of individual stock holdings depends on
the Managers’ degree of conviction, not the stock’s
weight in any index.
The Company may not invest more than 15% of its
total assets in any one single company measured at
the time of investment.
The maximum permitted investment in other listed
investment companies (including investment trusts)
is 10% of total assets at the time of purchase unless
such companies have a stated investment policy not
to invest more than 15% of their total assets in other
listed investment companies, in which case the limit
is 15%.
The level of gearing within the portfolio is agreed by
the Board and the absolute amount of any gearing
should not exceed 20% of the net asset value of the
Company at the time of drawdown.
The Company can also hold up to 20% of total
assets in cash or cash equivalents.
33
Baillie Gifford UK Growth Trust plc
Share price (discount)/premium
*
As stock markets and share prices
vary, an investment trust’s share price
is rarely the same as its net asset value
(NAV). When the share price is lower
than the NAV per share it is said to be
trading at a discount. If the share price
is higher than the NAV per share, this
situation is called a premium.
Average (discount)/premium* of
NAV to share price
over stated period to
30 April 2024
1 year 5 years10 years
%
●
(20)
(15)
(10)
(5)
0
Ongoing charges
*#
Ongoing charges are the total
recurring expenses (excluding
the Company’s cost of dealing in
investments and borrowing costs)
incurred by the Company as a
percentage of the daily average
net asset value.
0.0
0.2
0.4
0.6
0.8
● Ongoing charges*
2014 2024
%
At each Board meeting, the
Directors consider a number
of performance measures to
assess the Company’s success
in achieving its objectives.
The Board uses key performance
indicators (KPIs) to measure
the progress and performance
of the Company over time when
discharging its duties. These KPIs
are established industry measures.
Share price, net asset value
and comparative index
†
total
returns
*
The total return is the return to
shareholders after reinvesting the
net dividend on the date that the
share price goes ex-dividend.
(10)
20
50
80
● Net asset value total return*
1 year 5 years 10 years
● Share price total return*
● Comparative index total return*
†
%
Key performance indicators
The Board also has regard to the management fee and to peer group comparative performance. Across these
measures, the Board looks for relative outperformance over the long term, while remaining mindful that the
nature of the investment policy and the growth characteristics of the portfolio investments may entail periods
of underperformance over the short and medium term.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 103.
* Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 104 to 106.
† The benchmark is the FTSE All-Share Index.
# Baillie Gifford & Co Limited was appointed Manager in 2018 and agreed to waive the management fee for the year ended 30 April 2019 to the extent of
£732,000. Without the management fee waiver, the ongoing charges for the year to 30 April 2019 would have been 0.76%.
Past performance is not a guide to future performance.
Strategic report
Annual Report and Financial Statements 2024
34
Borrowings
The Company has a one year £30 million unsecured
revolving credit loan facility with The Royal Bank of
Scotland International Limited which is due to expire
on 6 July 2024 and negotiations are underway to
replace this facility. At 30 April 2024, £16,350,000
had been drawn down (2023 – £14,450,000).
Further details of the Company’s borrowings are set
out in note 11 on page 85.
Principal and emerging risks
As explained on pages 55 and 56 there is an
ongoing process for identifying, evaluating and
managing the risks faced by the Company on a
regular basis. The Directors have carried out a
robust assessment of the principal and emerging
risks facing the Company, including those that would
threaten its business model, future performance,
regulatory compliance, solvency or liquidity. A
description of these risks and how they are being
managed or mitigated is set out below. There have
been no significant changes to the nature of the
principal risks during the year. An upwards arrow,
dash or downwards arrow has been included to
show if the risk level has increased, not changed or
decreased since it was reported in last year’s Annual
Report and Financial Statements.
The Board considers heightened macroeconomic
and geopolitical concerns to be factors which
exacerbate existing areas of risk as categorised and
further explained below.
Financial
risk
What is the risk?
The Company’s assets consist
predominately of listed
securities and its principal and
emerging risks are therefore
market related and include
market risk (comprising currency
risk, interest rate risk and other
price risk), liquidity risk and
credit risk. An explanation of
those risks and how they are
managed is contained in note 18
on pages 87 to 91.
How is it managed?
The Board has, in particular,
considered the impact of
heightened market volatility due
to macroeconomic factors such
as higher inflation and interest
rates and geopolitical concerns,
including the Russia-Ukraine
conflict. To monitor and, where
possible, mitigate these risks the
Board considers at each meeting
various portfolio metrics including
individual stock performance, the
composition and diversification of
the portfolio by sector, purchases
and sales of investments and
the top and bottom contributors
to performance. The Managers
provide rationale for stock
selection decisions. A strategy
meeting is held annually.
Current assessment of risk
This risk increased due
to increased market volatility
as a result of heightened
geopolitical concerns and
macroeconomic factors,
as well as the UK market
being seemingly out of
favour with investors.
Investment
strategy risk
What is the risk?
Pursuing an investment strategy
to fulfil the Company’s objective
which the market perceives to be
unattractive or inappropriate, or
the ineffective implementation of
an attractive or appropriate
strategy, may lead to reduced
returns for shareholders and, as
a result, a decreased demand for
the Company’s shares. This may
lead to the Company’s shares
trading at a widening discount
to their net asset value.
How is it managed?
To mitigate this risk, the Board
regularly reviews and monitors:
the Company’s objective and
investment policy and strategy;
the investment portfolio and
its performance; the level of
discount/premium to net asset
value at which the shares trade;
and movements in the share
register and raise any matters of
concern with the Managers.
Current assessment of risk
This risk increased as the
market’s appetite for growth
stocks, typically held by the
Company, declined during the
recent period of heightened
macroeconomic and
geopolitical concern.
Decreased RiskIncreased Risk No Change
35
Baillie Gifford UK Growth Trust plc
Decreased RiskIncreased Risk No Change
Discount risk
What is the risk?
The discount/premium at
which the Company’s shares
trade relative to its net asset
value can change. The risk of a
widening discount is that it may
undermine investor confidence
in the Company.
How is it managed?
To manage this risk, the
Board monitors the level of
discount/premium at which the
shares trade and the Company
has authority to buy back its
existing shares when deemed
by the Board to be in the best
interests of the Company and its
shareholders.
Current assessment of risk
The Company’s shares
continued to trade at a
discount. In the year to
30 April 2024, the
Company bought back
3,841,977 shares.
Climate and
governance
risk
What is the risk?
Perceived problems on
Environmental, Social and
Governance (‘ESG’) matters
in an investee company could
lead to that company’s shares
being less attractive to investors,
adversely affecting its share
price, in addition to potential
valuation issues arising from any
direct impact of the failure to
address the ESG weakness on
the operations or management
of the investee company (for
example in the event of an
industrial accident or spillage).
Repeated failure by the
Investment Manager to identify
ESG weaknesses in investee
companies could lead to the
Company’s own shares being less
attractive to investors, adversely
affecting its own share price.
How is it managed?
This is mitigated by the
Investment Managers’ thorough
ESG stewardship and engagement
policies, which are available to
view on the Managers’ website:
bailliegifford.com and have been
reviewed and endorsed by the
Company, and are fully integrated
into the investment process as
well as the extensive upfront and
ongoing due diligence which the
Investment Managers undertake
on each investee company.
This due diligence includes
assessment of the risks inherent
in climate change (see page 57).
The Directors have considered
the impact of climate change on
the Financial Statements of the
Company and this is included in
note 1 to the Financial Statements
on page 79.
Current assessment of risk
The Investment Manager
continued to employ strong
ESG stewardship and
engagement policies.
Regulatory
risk
What is the risk?
Failure to comply with
applicable legal and regulatory
requirements such as the tax
rules for investment companies,
the FCA Listing Rules and the
Companies Act could lead to
suspension of the Company’s
Stock Exchange listing,
financial penalties, a qualified
audit report or the Company
being subject to tax on
capital gains.
How is it managed?
To mitigate this risk, Baillie
Gifford’s Business Risk,
Internal Audit and Compliance
Departments provide regular
reports to the Audit Committee
on Baillie Gifford’s monitoring
programmes. Major regulatory
change could impose
disproportionate compliance
burdens on the Company. In such
circumstances representation is
made to ensure that the special
circumstances of investment
trusts are recognised. Shareholder
documents and announcements,
including the Company’s
published Interim and Annual
Report and Financial Statements,
are subject to stringent review
processes, and procedures are
in place to ensure adherence to
the Transparency Directive and
the Market Abuse Directive with
reference to inside information.
Current assessment of risk
All control procedures were
working effectively.
Strategic report
Annual Report and Financial Statements 2024
36
Decreased RiskIncreased Risk No Change
Custody and
depositary
risk
What is the risk?
Safe custody of the Company’s
assets may be compromised
through control failures by the
Depositary, including breaches
of cyber security.
How is it managed?
To mitigate this risk, the Audit
Committee receives six monthly
reports from the Depositary
confirming safe custody of the
Company’s assets held by the
Custodian. Cash and portfolio
holdings are independently
reconciled to the Custodian’s
records by the Managers.
The Custodian’s assured internal
controls reports are reviewed
by Baillie Gifford’s Business Risk
Department and a summary of the
key points is reported to the Audit
Committee and any concerns
investigated. In addition, the
existence of assets is subject to
annual external audit.
Current assessment of risk
All control procedures were
working effectively.
Operational
risk
What is the risk?
Failure of Baillie Gifford’s
systems or those of other
third party service providers
could lead to an inability to
provide accurate reporting
and monitoring or a
misappropriation of assets.
How is it managed?
To mitigate this risk, Baillie
Gifford has a comprehensive
business continuity plan which
facilitates continued operation
of the business in the event of
a service disruption or major
disaster. The Audit Committee
reviews Baillie Gifford’s Report on
Internal Controls and the reports
by other key third party providers
are reviewed by Baillie Gifford on
behalf of the Board. The other
key third party service providers
have not experienced significant
operational difficulties affecting
their respective services to the
Company.
Current assessment of risk
All control procedures were
working effectively.
Leverage
risk
What is the risk?
The Company may borrow
money for investment purposes
(sometimes known as ‘gearing’
or ‘leverage’). If the investments
fall in value, any borrowings
will magnify the impact of this
loss. If borrowing facilities are
not renewed, the Company
may have to sell investments to
repay borrowings.
How is it managed?
To mitigate this risk, all borrowing
facilities require the prior approval
of the Board and leverage levels
are discussed by the Board and
Managers at every meeting.
Covenant levels are monitored
regularly. The Company’s
investments are predominately
in listed securities, at present,
that are readily realisable.
Further information on leverage
can be found on page 103
and in the Glossary of terms
and Alternative Performance
Measures on pages 104 to 106.
Current assessment of risk
Whilst lenders’ willingness
to initiate and maintain
lending facilities reduced
during the year, the one year
£30m revolving credit facility
was replaced with another
one year £30m revolving
credit facility which expires
in July 2024. Negotiations
are underway to replace this
facility.
37
Baillie Gifford UK Growth Trust plc
Decreased RiskIncreased Risk No Change
Political
risk
What is the risk?
Political change in areas in
which the Company invests or
may invest may have practical
consequences for the Company.
How is it managed?
Political developments are
monitored and considered
by the Board. The Board
continues to assess the potential
consequences for the Company’s
future activities including those
that may arise from further
constitutional change.
Current assessment of risk
This risk increased as
governments and consumers
around the world continue
to assess the impact of
heightened geopolitical
tensions.
Cyber
security
risk
What is the risk?
A cyber attack on Baillie Gifford’s
network or that of a third party
service provider could impact
the confidentiality, integrity or
availability of data and systems.
How is it managed?
To mitigate this risk, the Audit
Committee reviews Reports
on Internal Controls published
by Baillie Gifford and other
third party service providers.
Baillie Gifford’s Business Risk
Department report to the Audit
Committee on the effectiveness
of information security controls
in place at Baillie Gifford and its
business continuity framework.
Cyber security due diligence
is performed by Baillie Gifford
on third party service providers
which includes a review of crisis
management and business
continuity frameworks.
Current assessment of risk
This risk is seen as increasing
due to recent indications
that the continuation of
geopolitical tensions could
lead to cyber attacks.
Emerging technologies,
including AI, could potentially
increase information security
risks. In addition, service
providers operate a hybrid
approach of remote and
office working, thereby
increasing the potential of
a cyber security threat.
Emerging
risks
As explained on pages 55 and 56, the Board has regular discussions on principal risks and uncertainties,
including any risks which are not an immediate threat but could arise in the longer term. The Board considers
that the key emerging risks arise from the interconnectedness of the global economy and the related
exposure of the investment portfolio to external and emerging threats such as the societal and financial
implications of an escalation of geopolitical tensions, cyber security risks including developing AI and
quantum computing capabilities, new coronavirus variants or similar public health threats. The Board also
notes that increased levels of government borrowing may result in an elevated level of interest rates
and/or increased market volatility. This is mitigated by the Board discussing at each Board meeting economic
and geopolitical factors and how these might impact the Company. The Board also considers the Investment
Managers’ close links to the investee companies and their ability to ask questions on contingency plans.
The Investment Managers believe the impact of such events may be to slow the pace of growth rather than to
invalidate the investment rationale over the long term. The Managers monitor certain emerging risks and have
established a group to manage the response to any future events that might result in heightened levels of
market volatility. Regular exercises are carried out to test the Managers’ response to various scenarios.
Strategic report
Annual Report and Financial Statements 2024
38
Viability statement
Notwithstanding that the continuation of the
Company is subject to approval by shareholders
every five years, with the next vote at the Annual
General Meeting in 2024 and with an additional
continuation vote to be held in 2027, the Directors
have, in accordance with provision 31 of the
UK Corporate Governance Code, assessed the
prospects of the Company over a five year period.
The Directors continue to believe this period to be
appropriate as it reflects the Company’s longer
term investment strategy and to be a period during
which, in the absence of any adverse change to the
regulatory environment and to the tax treatment
afforded to UK investment trusts, they do not
expect there to be any significant change to the
current principal risks facing the Company nor
to the effectiveness of the controls employed to
mitigate those risks. Furthermore, the Directors do
not reasonably envisage any change in strategy or
any events which would prevent the Company from
operating over a period of five years.
In considering the viability of the Company, the
Directors have conducted a robust assessment
of each of the principal and emerging risks and
uncertainties, including climate change, detailed
on pages 34 to 37 and in particular the impact of
market risk where a significant fall in UK equity
markets would adversely impact the value of the
investment portfolio. The vast majority of the
Company’s investments are listed and readily
realisable and can be sold to meet its liabilities as
they fall due. The Directors have also considered
the Company’s leverage and liquidity in the context
of the unsecured revolving credit loan facility
of £30 million expiring in July 2024, which had
£16,350,000 drawn down at 30 April 2024 and
£16,350,000 drawn down as at 13 June 2024.
Negotiations are underway to replace this facility.
Specific leverage and liquidity stress testing was
conducted during the year, including consideration
of the risk of further market deterioration resulting
from heightened macroeconomic and geopolitical
concerns. The stress testing did not indicate any
matters of concern. In addition, all of the key
operations required by the Company are outsourced
to third party service providers and it is reasonably
considered that alternative providers could be
engaged at relatively short notice where necessary.
Based on the Company’s processes for monitoring
revenue projections and operating costs, share
price discount/premium, the Managers’ compliance
with the investment objective, asset allocation,
the portfolio risk profile, leverage, counterparty
exposure, liquidity risk, financial controls and the
Managers’ operational resilience, the Directors have
concluded that there is a reasonable expectation
that the Company will be able to continue in
operation and meet its liabilities as they fall due
over the next five years subject to passing the
continuation votes at the Annual General Meetings
in 2024 and 2027.
Section 172 statement
Under section 172 of the Companies Act 2006, the
directors of a company must act in the way they
consider, in good faith, would be most likely to
promote the success of the company for the benefit
of its members as a whole, and in doing so have
regard (amongst other matters and to the extent
applicable) to:
a. the likely consequences of any decision
in the long-term;
b. the interests of the company’s employees;
c. the need to foster the company’s business
relationships with suppliers, customers and others;
d. the impact of the company’s operations
on the community and the environment;
e. the desirability of the company maintaining
a reputation for high standards of business
conduct; and
f. the need to act fairly as between members
of the company.
In this context and having regard to the Company
being an externally-managed investment company
with no employees, the Board considers that the
Company’s key stakeholders are its existing and
potential new shareholders, its externally-appointed
managers (Baillie Gifford) and other professional
service providers (corporate broker, registrar, auditor
and depositary), lenders, wider society and the
environment.
39
Baillie Gifford UK Growth Trust plc
The Board’s methods for assessing the Company’s progress in the context of its stakeholders’ interests are
set out below.
Stakeholder Why we engage How we engage and what we do
Shareholders Shareholders are, collectively, the
Company’s owners: providing them with a
return for their investment in accordance
with the Company’s investment policy and
objective is the reason for its existence.
Great importance is placed by the Board on communication
with shareholders and the Annual General Meeting provides
the key forum for the Board and Managers to present to
shareholders on the performance of the Company and on the
future plans/prospects for the Company (see Notice of Meeting
on page 93). It also allows shareholders the opportunity to
meet with the Board and Managers and to raise questions and
concerns. The Chairman is available to meet with shareholders as
appropriate and the Managers meet regularly with shareholders
and their respective representatives, reporting back on views to
the Board. Shareholders may also communicate with the Board
at any time by writing to them at the Company’s registered
office, writing to the Company’s broker or emailing the Managers
at trustenquiries@bailliegifford.com. 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.
Baillie Gifford,
Managers and
Secretaries
The Company’s Board has delegated
the management of the Company’s
portfolio and the administration of
the Company’s operations including
fulfilment of regulatory and taxation
reporting requirements to Baillie Gifford.
Baillie Gifford is therefore responsible
for the substantial activities of the
Company and have the most immediate
influence on its conduct towards the other
stakeholders, subject to the oversight and
strategic direction provided by the Board.
The Board seeks to engage with its Managers and Secretaries,
and other service providers in a collaborative and collegiate
manner, encouraging open and constructive discussion and
debate, while also ensuring that appropriate and regular challenge
is brought and evaluation conducted. This approach aims to
enhance service levels and strengthen relationships with the
Company’s providers, with a view to ensuring the interests of the
Company’s shareholders are best served by keeping cost levels
proportionate and competitive, and by maintaining the highest
standards of business conduct.
Portfolio
companies
As all of the Company’s operations are
conducted by third party professional
providers, it is the companies held in
its investment portfolio which have the
primary real-world impact in terms of
social and environmental change, both
positively and negatively, as well as
generating, through their commercial
success, the investment growth sought
by the Company’s shareholders.
The investee companies have an interest
in understanding their shareholders’
investment rationale in order to assure
themselves that long-term business
strategies will be supported.
The Board is cognisant of the need to consider the impact of
the Company’s investment strategy and policy on wider society
and the environment. The Board considers that its oversight
of environmental, social and governance (‘ESG’) matters is an
important part of its responsibility to all stakeholders. The Board’s
review of the Investment Manager includes an assessment of their
ESG approach and its application in making investment decisions.
The Board reviews Governance Engagement reports, which
document the Investment Manager’s interactions with investee
companies on ESG matters (see pages 17 to 20). The portfolio
managers regularly report to the Board on discussions with
portfolio companies on operational and strategic matters.
Registrar The Company’s registrars provide an
interface with those shareholders who
hold the Company’s shares directly.
The Investment Manager liaises with the registrars to ensure the
frequency and accuracy of communications to shareholders is
appropriate, and monitor shareholder correspondence to ensure
that the level of service provided by the registrar is acceptable.
The Investment Manager’s risk function reviews the registrar’s
internal controls report and reports on the outcome of this review
to the Board.
Strategic report
Annual Report and Financial Statements 2024
40
Stakeholder Why we engage How we engage and what we do
Auditor The Company’s Auditor has a responsibility
to provide an opinion on whether the
Company’s Financial Statements as a
whole are free from material misstatement,
as set out in more detail in the Auditor’s
report to the members on pages 67 to 74.
The Company’s Auditor meets with the Audit Commitee, in the
absence of the Managers where deemed necessary, and the
Managers undertake to provide all information requested by the
Auditor in connection with the Company’s annual audit promptly
and to ensure that it is complete and accurate in all respects.
Brokers The Company’s brokers provide an
interface between the Company’s Board
and its institutional shareholders.
The Company’s brokers regularly attend Board meetings, and
provide reports to those meetings, in order to keep the Board
apprised of shareholder and wider market sentiment regarding
the Company. They also arrange opportunities for shareholders to
meet the Chairman outside the normal general meeting cycle.
Depositary
and Custodian
The depositary is responsible for the
safekeeping of the Company’s financial
instruments, as set out in more detail on
page 56.
The Depositary provides the Audit Committee with a report on
its monitoring activities. The Investment Manager’s Business
Risk team reviews the relevant Bank of New York Mellon
internal controls report and reports any relevant matters to the
Audit Committee. The Board exercises robust oversight of the
Depositary and Custodian. This approach aims to enhance service
levels and strengthen relationships, with a view to ensuring
the interests of the Company’s shareholders are best served
by keeping cost levels proportionate and competitive, and by
maintaining the highest standards of business conduct.
AIC/industry
peers
The Association of Investment Companies
(‘AIC’) and the Company’s investment
trust industry peers have an interest in
the Company’s conduct and performance,
as adverse market sentiment towards
one investment trust can affect attitudes
towards the wider industry.
The Company is a member of the AIC, and the Directors
and/or the Investment Manager and Secretaries (as appropriate)
participate in technical reviews, requests for feedback on
proposed legislation or regulatory developments, corporate
governance discussions and/or training.
Investment
platforms
Investment platforms provide an interface
with shareholders who invest in the
Company indirectly.
The Investment Manager liaises with the various investment
platforms on strategies for improving communications with the
Company’s shareholders who hold their shares via these platforms.
An annual timetable of key dates is published on the Company’s
website, for the ease of reference of such shareholders.
Lenders Lenders such as holders of debt
instruments (debentures and private
placement loan notes) and banks providing
fixed or revolving credit facilities provide
the Company’s gearing and have an
interest in the Company’s ongoing
financial health and viability.
The Company’s legal advisers review all legal agreements in
connection with the Company’s debt arrangements and advise the
Board on the appropriateness of the terms and covenants therein.
The Managers and Secretaries ensure that the frequency and
accuracy of reporting on, for example, covenant certification, is
appropriate and that correspondence from the lenders receives a
prompt response.
Wider society and
the environment
No entity, corporate or otherwise,
can exist without having an influence
on the society in which it operates
or utilising the planet’s resources.
Through its third-party relationships,
as noted above, the Company seeks to be
a positive influence and, in circumstances
where that is not possible, to mitigate its
negative impacts insofar as is possible.
The Board and Investment Manager’s interactions with the
various stakeholders as noted above form the principal forms
of direct engagement with wider society and in respect of the
environment (commercial, financial, and in terms of planetary
health and resources).
41
Baillie Gifford UK Growth Trust plc
The Board recognises the importance of keeping
the interests of the Company’s shareholders,
and of acting fairly between them, firmly front of
mind in its key decision making and the Company
Secretaries are at all times available to the Board
to ensure that suitable consideration is given to the
range of factors to which the Directors should have
regard. In addition to ensuring that the Company’s
stated investment objective was being pursued, key
decisions and actions during the year which have
required the Directors to have regard to applicable
section 172 factors include:
• In July 2023, the Company replaced its one year
£30 million revolving credit facility with
The Royal Bank of Scotland International Limited
with another £30 million revolving one year
credit facility with The Royal Bank of Scotland
International Limited which provides the Company
a borrowing capacity in order to generate
improved returns to shareholders through the
deployment of gearing;
• As part of the Board’s succession planning,
the Board completed its recruitment process
and appointed Neil Rogan on 1 January 2024.
This appointment is consistent with the AIC
Corporate Governance Code principle that a
‘successful company is led by an effective board,
whose role is to promote the long-term sustainable
success of the company, generating value for
shareholders and contributing to wider society’; and
• The buying back of £6.2 million of the Company’s
own shares during the year to 30 April 2024.
These shares were bought back into treasury for
subsequent reissue at a later date, at a discount to
net asset value, on terms that enhance NAV/share
for remaining shareholders.
Employees, human rights and community
issues
The Board recognises the requirement to provide
information about employees, human rights
and community issues. As the Company has no
employees, all its Directors are non-executive
and all its functions are outsourced, there are no
disclosures to be made in respect of employees,
human rights and community issues. Further
information on the Company’s approach to
environmental, social and governance (‘ESG’)
matters is provided on page 57.
Gender representation
The Board comprises five Directors, two female
and three male. The Company has no employees.
The Board’s policy on diversity is set out on page 54.
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 57.
The Company considers that it does not fall within
the scope of the Modern Slavery Act 2015 and it is
not, therefore, obliged to make a slavery and human
trafficking statement. In any event, the Company
considers its supply chains to be of low risk as
its suppliers are typically professional advisers.
A statement by the Managers under the Act
has been published on the Managers’ website
at bailliegifford.com.
Future developments of the company
The outlook for the Company for the next 12 months
is set out in the Chairman’s Statement on pages 05
to 08 and the Managers’ Report on pages 09 to 12.
The Strategic Report, which includes pages 04 to 42
was approved by the Board of Directors and signed
on its behalf on 13 June 2024.
Carolan Dobson
Chairman
Strategic report
Annual Report and Financial Statements 2024
42
King’s Cross Tunnel. London, UK
This Governance report, which
includes pages 43 to 65 outlines
the Board’s approach to the
governance of your Company.
We believe that good governance
builds better outcomes and we
are committed to high standards
of corporate governance and
transparency.
Governance
report
Governance report
Annual Report and Financial Statements 2024
44
Directors and
management
Carolan Dobson
Chairman
Appointed 2014,
Appointed
Chairman in 2016
Carolan Dobson was appointed a Director in 2014 and became
Chairman in 2016. She is chairman of Brunner Investment Trust plc
and Blackrock Latin American Investment Trust plc. Previously, she
was Head of US equities at Murray Johnstone as well as Head of
Pan-European equities, global sectors and UK equities at Abbey
National Asset Managers. She was also Head of Investment Trusts at
Murray Johnstone and previously was chair of JP Morgan European
Discovery Trust plc and abrdn Smaller Companies Income Trust plc.
Andrew
Westenberger
Director
Appointed 2017
Andrew Westenberger was appointed a Director in 2017 and became
Chairman of the Audit Committee in 2017. He is the chief financial
officer of Hurst Point Group. Previously, he was chief financial officer
of Tysers Insurance Brokers, a leading independent specialist broker
and risk management firm. He was also group finance director of
Brewin Dolphin Holdings PLC and Evolution Group Plc, a non-executive
director and trustee of the Chartered Institute of Securities and
Investments and held senior finance roles at Barclays Capital and
Deutsche Bank. He is a Chartered Accountant.
Ruary Neill
Director
Appointed 2018
Ruary Neill was appointed a Director in 2018 and became Senior
Independent Director in July 2021. He is currently a director of JP Morgan
Emerging Markets Investment Trust plc and is a member of the Advisory
Board, SOAS China Institute, London University. Previously, he worked
in investment banking at UBS Investment Bank prior to which he spent
several years in the financial sector working in Asian Equity Markets for
UBS Investment Bank and Schroder Securities.
45
Baillie Gifford UK Growth Trust plc
Cathy Pitt
Director
Appointed 2021
Cathy Pitt was appointed a Director in 2021. She is a former Consultant
Partner at international law firm CMS and has over 20 years’ experience
advising boards and asset managers on a broad range of corporate
matters. She is a non-executive director of Gresham House Energy
Storage Fund plc and the Association of Investment Companies.
Neil Rogan
Director
Appointed 2024
Neil Rogan was appointed a Director in 2024. He is chairman of
Invesco Asia Trust plc and a director of JPMorgan Global Growth &
Income Trust plc. Prior to this, he was an investment manager with
Touche Remnant, Flemings and most recently Gartmore/Henderson
where he was Head of Global Equities. He was also previously the
chairman of Murray Income Trust PLC and a director of The Scottish
Investment Trust PLC.
Managers and secretaries
The Company has appointed Baillie Gifford & Co
Limited, a wholly owned subsidiary of Baillie Gifford
& Co, as its Alternative Investment Fund Manager
(‘AIFM’) and Company Secretary. Baillie Gifford
& Co Limited has delegated investment management
services to Baillie Gifford & Co. Baillie Gifford & Co is
an investment management firm formed in 1927 out
of the legal firm Baillie Gifford, WS, which has been
involved in investment management since 1908.
Baillie Gifford is one of the largest investment trust
managers in the UK and currently manages twelve
investment trusts. Baillie Gifford also manage a listed
investment company, unit trusts and Open Ended
Investment Companies, together with investment
portfolios on behalf of pension funds, charities
and other institutional clients, both in the UK and
overseas. Funds under the management or advice
of Baillie Gifford total around £224 billion. Based in
Edinburgh, it is one of the leading privately owned
investment management firms in the UK, with 57
partners and a staff of around 1,800.
The Managers of Baillie Gifford UK Growth plc’s
portfolio are Iain McCombie and Milena Mileva. Iain
and Milena are both partners at Baillie Gifford.
Baillie Gifford & Co and Baillie Gifford & Co Limited
are both authorised and regulated by the Financial
Conduct Authority.
All of the Directors are members of the following
Committees: Nomination, Remuneration and
Management Engagement. All Directors are
members of the Audit Committee with the exception
of Carolan Dobson, who stepped down from the
Committee in December 2018.
Governance report
Annual Report and Financial Statements 2024
46
Directors’
report
The Directors present their Report together with the
audited Financial Statements of the Company for the
year to 30 April 2024.
Corporate governance
The Corporate Governance Report is set out on
pages 51 to 58 and forms part of this Report.
Managers and company secretaries
Baillie Gifford & Co Limited, a wholly owned
subsidiary of Baillie Gifford & Co, has been
appointed as the Company’s Alternative Investment
Fund Manager (‘AIFM’) and Company Secretary.
Baillie Gifford & Co Limited has delegated portfolio
management services to Baillie Gifford & Co.
Dealing activity and transaction reporting has been
further sub-delegated to Baillie Gifford Overseas
Limited and Baillie Gifford Asia (Hong Kong) Limited.
The Investment Management Agreement between
the AIFM and the Company sets out the matters over
which the Managers have authority in accordance
with the policies and directions of, and subject to
restrictions imposed by, the Board. The Investment
Management Agreement is terminable by the
Managers on not less than six months’ notice or on
shorter notice in certain circumstances. With effect
from 6 June 2024, the Investment Management
Agreement is terminable by the Company on
not less than three months’ notice or on shorter
notice in certain circumstances. Prior to this, the
Investment Management Agreement was terminable
by the Company on not less than six months’ notice
or on shorter notice in certain circumstances.
Compensation would only be payable if termination
occurred prior to the expiry of the notice period.
The annual management fee is 0.5% of net assets,
calculated and payable quarterly.
Careful consideration has been given by the Board
as to the basis on which the management fee is
charged. The Board considers that maintaining a
relatively low ongoing charges ratio is in the
best interests of shareholders. The Board is also of
the view that calculating the fee with reference to
performance would be unlikely to exert a positive
influence over the long-term performance.
The Board considers the Company’s investment
management and secretarial arrangements on an
ongoing basis and a formal review is conducted by
the Management Engagement Committee annually.
The Committee considered, amongst others, the
following topics in its review: the quality of the
personnel assigned to handle the Company’s affairs;
the investment process and the results achieved to
date; investment performance; the administrative
services provided by the Secretaries and the quality
of information provided; the marketing efforts
undertaken by the Managers; the relationship with
the Managers; and, comparative peer group charges
and fees.
Following the most recent review, the Management
Engagement Committee concluded that the
continuing appointment of Baillie Gifford & Co
Limited as AIFM and Secretaries, and the delegation
of investment management services to Baillie
Gifford & Co and the further sub-delegation of
dealing activity and transaction reporting to Baillie
Gifford Overseas Limited, on the terms agreed, is
in the interests of the Company and shareholders
as a whole. This was subsequently approved by the
Board.
47
Baillie Gifford UK Growth Trust plc
Depositary
In accordance with the Alternative Investment
Fund Managers Regulations, The Bank of New York
Mellon (International) Limited has been appointed
as Depositary to the Company. The Depositary’s
responsibilities include cash monitoring,
safe keeping of the Company’s financial instruments,
verifying ownership and maintaining a record
of other assets and monitoring the Company’s
compliance with investment limits and leverage
requirements. The custody function is also
undertaken by The Bank of New York Mellon
(International) Limited (‘the Custodian’).
Directors
Information about the Directors, including their
relevant experience, can be found on pages 44
and 45.
All the Directors, with the exception of Carolan
Dobson and Neil Rogan, will retire at the Annual
General Meeting and offer themselves for
re-election. Carolan Dobson will stand down from
the Board on 14 June 2024. Neil Rogan will stand
for election at the 2024 AGM. Following a formal
performance evaluation, the Chairman confirms
that the Board considers that their performance
continues to be effective and each remains
committed to the Company. Their contribution to the
Board is greatly valued and the Board recommends
their re-election to shareholders.
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 to
30 April 2024 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 her or him. 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.
Conflicts of interest
Each Director submits a list of potential conflicts of
interest to the Board for consideration and approval
at each meeting. The Board considers these
carefully, taking into account the circumstances
surrounding them prior to authorisation. Having
considered the lists of potential conflicts there were
no situations which gave rise to a direct or indirect
interest of a Director which conflicted with the
interests of the Company.
Dividend
The Board recommends a final dividend of 5.60p
per ordinary share. No interim dividend was
declared. Dividends are paid by way of a single
final payment and will be at least the minimum
permissible to maintain investment trust status
after taking account of any variables.
If approved by shareholders at the Annual General
Meeting, the recommended final dividend per
ordinary share will be paid on 13 September 2024
to shareholders on the register at the close of
business on 16 August 2024. The ex-dividend
date is 15 August 2024.
Share capital
Capital structure
The Company’s capital structure at 30 April 2024
consists of 160,917,184 ordinary shares of 25p
each (2023 – 160,917,184) of which 146,678,507
(2023 – 150,520,484) were allotted and fully paid
and 14,238,677 (2023 – 10,396,700) are held in
treasury. There are no restrictions concerning the
holding or transfer of the Company’s ordinary shares
and there are no special rights attached to any of
the shares.
Dividend
The ordinary shares carry a right to receive
dividends. Interim dividends are determined by the
Directors, whereas the proposed final dividend is
subject to shareholder approval.
Capital entitlement
On a winding up, after meeting the liabilities of the
Company, the surplus assets will be paid to ordinary
shareholders in proportion to their shareholdings.
Voting
Each ordinary shareholder present in person or by
proxy is entitled to one vote on a show of hands and,
on a poll, to one vote for every share held.
Information on the deadlines for proxy appointments
can be found on pages 96 to 98.
Governance report
Annual Report and Financial Statements 2024
48
Major interests in the company’s shares
The Company has received notifications in
accordance with the Financial Conduct Authority’s
Disclosure and Transparency Rules of the following
interests in the voting rights attached to the
Company’s issued share capital.
Name
No of
ordinary 25p
shares held
at 30 April
2024
% of
issue *
1607 Capital Partners, LLC (indirect) 16,388,293 11.2
Rathbone Investment Management Ltd
and Rathbone Investment Management
International Ltd (combined, indirect) 15,402,823 10.5
Tilney Smith & Williamson Limited
and Smith & Williamson Holdings Limited
†
(combined, indirect) 15,329,125 10.5
City of London Investment Management
Company Limited (indirect) 14,738,847 10.0
Subsequent to the year end, City of London Investment Management
Company Limited (indirect) advised they held 16,084,808 shares
(11.0% of shares issued). There have been no other changes to the
major interests in the Company’s shares intimated up to 12 June 2024.
* Ordinary shares in issue excluding treasury shares.
† After the date of the notification of major holdings, the names of
Tilney Smith & Williamson Limited and Smith & Williamson Holdings
Limited were changed to Evelyn Partners Group Limited and Evelyn
Partners Professional Services Group Limited, respectively.
Annual general meeting
Share issuance authority
At the last Annual General Meeting, the Directors
were granted shareholders’ approval for a general
authority to allot shares and also an authority to
issue shares or sell shares held in treasury on a non
pre-emptive basis (without first offering such shares
to existing shareholders pro-rata to their existing
holdings). No shares were issued during the year
(2023 – no shares were issued).
Both authorities expire at the forthcoming Annual
General Meeting and the Directors are seeking
shareholders’ approval to renew them for a further
year, as detailed below.
Resolution 10 in the Notice of Annual General
Meeting seeks a general authority for the Directors
to allot shares up to an aggregate nominal amount
of £3,651,087.50. This amount represents 10% of
the Company’s total ordinary share capital in issue
at 12 June 2024 and meets institutional guidelines.
This authority will continue until the conclusion of
the Annual General Meeting to be held in 2025 or
on the expiry of 15 months from the passing of the
resolutions, if earlier.
Resolution 11, which is proposed as a special
resolution, seeks authority for the Directors to
issue shares or sell shares held in treasury on a
non pre-emptive basis for cash up to an aggregate
nominal amount of £3,651,087.50 (representing
10% of the issued ordinary share capital of the
Company as at 12 June 2024). This authority will
only be used to issue shares or sell shares from
treasury at a premium to net asset value on the
basis of debt valued at par value and only when
the Directors believe that it would be in the best
interests of the Company to do so. This authority will
continue until the conclusion of the Annual General
Meeting to be held in 2025 or on the expiry of 15
months from the passing of the resolutions, if earlier.
Market purchases of own shares
At the last Annual General Meeting the Company
was granted authority to purchase up to 22,513,553
ordinary shares (equivalent to 14.99% of its
issued share capital), such authority to expire at
the 2024 Annual General Meeting. The Directors
are seeking shareholders’ approval at the Annual
General Meeting to renew the authority to make
market purchases up to 21,891,921 ordinary
shares representing approximately 14.99% of the
Company’s ordinary shares in issue at the date of
passing of the resolution, such authority to expire at
the Annual General Meeting of the Company to be
held in 2025.
3,841,977 shares (2023 – 2,975,000 shares) were
bought back during the year under review and as
at 30 April 2024 14,238,677 shares were held in
treasury (2023 – 10,396,700). Between 1 May and
12 June 2024, the Company bought back 635,000
shares into treasury at a cost of £1,115,000 shares
were held in treasury as at 12 June 2024.
The share buy-back policy seeks to operate in the
best interests of shareholders by taking into account
the relative level of the Company’s share price
discount when compared with peer group trusts, the
absolute level of discount and the impact from share
buy-back activity on the long-term liquidity of the
Company’s issued shares.
The Company may hold bought-back shares ‘in
treasury’ and then:
i. sell such shares (or any of them) for cash (or its
equivalent under the Companies Act 2006); or
ii. cancel the shares (or any of them).
All buy-backs will initially be held in treasury. Shares
will only be resold from treasury at a premium to net
asset value per ordinary share.
49
Baillie Gifford UK Growth Trust plc
The Company shall not be entitled to exercise the
voting rights attaching to treasury shares.
In accordance with the Listing Rules of the Financial
Conduct Authority, the maximum price (excluding
expenses) that may be paid on the exercise of the
authority must not exceed the higher of:
i. 5 per cent. above the average closing price on the
London Stock Exchange of an ordinary share over
the five business days immediately preceding the
date of purchase; and
ii. an amount equal to the higher of the price of
the last independent trade of an Ordinary Share
and the highest current independent bid for an
Ordinary Share on the trading venue where the
purchase is carried out.
The minimum price (exclusive of expenses) that may
be paid will be 25p per share. Purchases of shares
will be made within guidelines established, from
time to time, by the Board. Your attention is drawn
to Resolution 12 in the Notice of Annual General
Meeting. This authority, if conferred, will only be
exercised if to do so would result in an increase in
net asset value per ordinary share for the remaining
shareholders and if it is considered in the best
interests of shareholders generally.
Continuation vote
The Company’s Articles of Association require that
shareholder approval is sought for the Company to
continue as an investment trust for a further five
year period. This is proposed as Resolution 13 in
the Notice of Annual General Meeting and more
detail is set out in the Chairman’s statement on
pages 05 to 08.
Financial instruments
The Company’s financial instruments comprise its
investment portfolio, 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 18 to the Financial Statements.
Articles of Association
The Company’s Articles of Association may only be
amended by special resolution at a general meeting
of shareholders.
Disclosure of information to auditors
The Directors confirm that, so far as each of
the Directors is aware, there is no relevant audit
information of which the Company’s Auditor is
unaware and the Directors have taken all the steps
that they might reasonably be expected to have
taken as Directors in order to make themselves
aware of any relevant audit information and to
establish that the Company’s Auditor is aware
of that information.
Independent auditor
The Auditor, Ernst & Young LLP, is willing to
continue in office and in accordance with section
489 and section 491(1) of the Companies Act
2006, resolutions concerning their re-appointment
and remuneration will be submitted to the Annual
General Meeting.
Post balance sheet events
The Directors confirm that there have been
no significant post Balance Sheet events up to
13 June 2024 that require disclosure in the
Financial Statements.
Stakeholder engagement
Although the Company has no employees, trade
suppliers or customers, the Directors give regular
consideration to the need to foster the Company’s
business relationships with its stakeholders, in
particular with shareholders, its externally appointed
Managers, other professional service providers
and lenders. The effect of this consideration upon
the key decisions taken by the Company during
the financial year is set out in further detail in the
Strategic Report on pages 04 to 42.
Governance report
Annual Report and Financial Statements 2024
50
Greenhouse Gas Emissions and Streamlined
Energy & Carbon Reporting (‘SECR’)
All of the Company’s activities are outsourced
to third parties. The Company therefore has no
greenhouse gas emissions to report from its
operations, nor does it have responsibility for
any other emissions producing sources under
the Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013. For the same
reasons as set out above, the Company considers
itself to be a low energy user under the SECR
regulations and therefore is not required to disclose
energy and carbon information.
Bribery Act
The Company has a zero tolerance policy towards
bribery and is committed to carrying out business
fairly, honestly and openly. The Managers also adopt
a zero tolerance approach and have policies and
procedures in place to prevent bribery.
Criminal Finances Act 2017
The Company has a commitment to zero tolerance
towards the criminal facilitation of tax evasion.
Recommendation
The Directors unanimously recommend you vote
in favour of the resolutions to be proposed at the
Annual General Meeting as it is their view that the
resolutions are in the best interests of shareholders
as a whole.
On behalf of the Board
Carolan Dobson
Chairman
13 June 2024
51
Baillie Gifford UK Growth Trust plc
Corporate
governance report
The Board is committed to achieving and
demonstrating high standards of corporate
governance. The Association of Investment
Companies (‘AIC’) Code of Corporate Governance
(‘AIC Code’) provides a framework of best practice
for investment companies and can be found at
theaic.co.uk. The Financial Reporting Council (‘FRC’)
has confirmed that AIC members who report against
the AIC Code, as is the case with the Company, will
be meeting their obligations in relation to the 2018
UK Corporate Governance Code (‘UK Code’) which
can be found at frc.org.uk.
Compliance
The Board confirms that the Company has complied
throughout the year under review with the relevant
provisions of the Code and the recommendation of
the AIC Code. The Code includes provisions relating
to the role of the chief executive, executive directors’
remuneration and the need for an internal audit
function. Given that the Company is an externally
managed investment trust, the Board considers
these provisions are not relevant to the Company.
The need for an internal audit function specific to
the Company has been addressed on page 59.
The Board
The Board has overall responsibility for the
Company’s affairs. It has a number of matters
formally reserved for its approval including strategy,
investment policy, gearing, share buy-back and
issuance policy, treasury matters, dividend and
corporate governance policy. A separate session
devoted to strategy is held each year. The Board
seeks to contribute to the delivery of the Company’s
strategy by engaging with the Managers in a
collaborative and collegiate manner with open and
respectful discussion and debate being encouraged,
whilst also ensuring that appropriate and regular
challenge is brought and evaluation is conducted.
The Board also reviews the Financial Statements,
investment transactions, revenue budgets and
performance of the Company. Full and timely
information is provided to the Board to enable it
to function effectively and to allow Directors to
discharge their responsibilities.
The Board comprises five Directors, all of whom
are non-executive. The Chairman is responsible for
organising the business of the Board, ensuring its
effectiveness and setting its agenda. The executive
responsibility for investment management has been
delegated to the Company’s Alternative Investment
Fund Manager (‘AIFM’), Baillie Gifford & Co Limited,
and, in the context of a Board comprising only
non-executive Directors, there is no chief executive
officer. The Senior Independent Director is Ruary Neill.
The Directors believe that the Board has a balance
of skills and experience that enables it to provide
effective strategic leadership and proper governance
of the Company. Information about the Directors,
including their relevant experience, can be found on
pages 44 and 45.
There is an agreed procedure for Directors to seek
independent professional advice, if necessary, at the
Company’s expense.
Appointments to the Board
The terms and conditions of Directors’ appointments
are set out in formal letters of appointment which are
available for inspection on request.
Under the provisions of the Company’s Articles of
Association, a Director appointed during the year is
required to retire and seek election by shareholders
at the next Annual General Meeting. The Board
has agreed that all Directors will retire at each
Annual General Meeting and, if appropriate, offer
themselves for re-election.
Governance report
Annual Report and Financial Statements 2024
52
Third-party service providers
appointed by the Board
Alternative Investment Fund Managers and Company Secretaries:
Baillie Gifford & Co Limited (wholly owned
subsidiary of Baillie Gifford & Co)
Dealing activity and transaction reporting:
Baillie Gifford Overseas Limited and
Baillie Gifford Asia (Hong Kong) Limited
Ernst & Young
LLP
Auditor
The Bank of
New York Mellon
(International) Limited
Depositary
Computershare
Investor Services
PLC
Registrar
Winterflood
Securities Ltd
Company broker
* The independent non-executive directors are made up of Carolan Dobson, Ruary Neill, Andrew Westenberger, Cathy Pitt and Neil Rogan. All Directors
are members of the Management Engagement Committee, Remuneration Committee and Nomination Committee. All Directors, with the exception of
the Chairman of the Company, are members of the Audit Committee. Further details on their experience can be found on pages 44 and 45.
Audit
Committee
Chairman:
Andrew Westenberger
Purpose: The primary purpose
of the Company’s Audit
Committee is to provide
oversight of the financial
reporting process, the audit
process, the Company’s system
of internal controls and
compliance with laws and
regulations.
Nomination
Committee
Chairman:
Carolan Dobson
Purpose: The main purpose of
the Nomination Committee is to
oversee Board recruitment and
succession planning as well as
Board appraisals including
identifying training needs.
Management
Engagement
Committee
Chairman:
Carolan Dobson
Purpose: The primary purpose
of the Management
Engagement Committee is to
ensure that the investment
management, administrative
and company secretarial
services provided to the
Company remain appropriate
and competitive.
Remuneration
Committee
Chairman:
Ruary Neill
Purpose: The primary purpose
of the Remuneration Committee
is to review and make
recommendations to the Board
in respect of the level of
remuneration paid to Directors
within the limits approved by
shareholders.
Board of Directors
Comprises independent
non-executive directors*
Chairman: Carolan Dobson
Senior Independent
Director: Ruary Neill
53
Baillie Gifford UK Growth Trust plc
Independence of Directors
All the Directors are considered by the Board to
be independent of the Managers and free of any
business or other relationship which could interfere
with the exercise of their independent judgement.
The Directors recognise the importance of succession
planning for company boards and review the Board
composition annually. The Board is of the view that
length of service will not necessarily compromise
the independence or contribution of Directors of
an investment trust company, where continuity and
experience can be a benefit to the Board.
Meetings
There is an annual cycle of Board meetings which
is designed to address, in a systematic way, overall
strategy, review of investment policy, investment
performance, marketing, revenue budgets, dividend
policy and communication with shareholders. The
Board considers that it meets sufficiently regularly
to discharge its duties effectively. The table below
shows the attendance record for the core Board and
Committee meetings held during the year, excluding
ancillary and sub-committee meetings. The Annual
General Meeting was attended by all the Directors.
Nomination Committee
The Nomination Committee consists of all the
Directors and Carolan Dobson is the Chairman of
the Committee. The Committee meets on an annual
basis and at such other times as may be required.
The Committee has written terms of reference
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’s Terms of Reference are
available on request from the Company and on
the Company’s page of the Managers’ website:
bgukgrowthtrust.com.
During the year, the Committee, chaired by
Andrew Westenberger, engaged an external search
consultancy, Trust Associates, to recruit a new
Director to join the Board. Neil Rogan was identified
as the preferred candidate and was appointed with
effect from 1 January 2024. Trust Associates has no
other connection with the Company.
Policy on Chairman’s tenure
The Board’s policy is that the Chairman will serve for
no longer than nine years, other than in exceptional
circumstances for the benefit of the Company.
As previously announced, it is the intention of
the Board that Neil Rogan will take on the role
of Chairman of the Board when Carolan Dobson
stands down from the Board. Carolan Dobson will
stand down from the Board on 14 June 2024 and
Neil Rogan will take on the role of Chairman on 14
June 2024.
Performance evaluation
An appraisal of the Chairman, each Director and a
performance evaluation and review of the Board as
a whole and its Committees was carried out during
the year. Each Director and the Chairman responded
to an evaluation questionnaire which was discussed
appropriately with the Chairman. The Chairman’s
appraisal was led by Ruary Neill, the Senior
Independent Director. The appraisals and evaluations
considered, amongst other criteria, the balance
of skills of the Board, training and development
requirements, the contribution of individual Directors
and the overall effectiveness of the Board and its
Committees. Following this process it was concluded
that there was a diverse range of skills within the
Board, and the performance of each Director, the
Chairman, the Board and its Committees continues
to be effective and that each Director and the
Chairman remain committed to the Company.
Board
Audit
Committee
Nomination
Committee
Remuneration
Comittee
Management
Engagement
Committee
Number of meetings 4 2 1 1 1
Carolan Dobson* 4 – 1 1 1
Ruary Neill 4 2 1 1 1
Cathy Pitt 4 2 1 1 1
Neil Rogan
†
1 – 1 1 1
Andrew
Westenberger
4 2 1 1 1
* Carolan Dobson stepped down as a member of the Audit Committee in
December 2018 but attends by invitation.
†
Neil Rogan did not attend all of the meetings during the year because
he was appointed on 1 January 2024. He attended all of the meetings
held following his appointment and therefore attended all applicable
meetings.
Governance report
Annual Report and Financial Statements 2024
54
A review of the Chairman’s and the 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 Chairman’s other
commitments during the year.
Diversity policy
Appointments to the Board are made on merit with
due regard for the benefits of diversity including the
requirements of the Listing Rules. The priority in
appointing new Directors is to identify the candidate
with the best range of skills and experience to
complement existing Directors.
The Board believes that maintaining a diversity of
thought and experience on the Board and at an
operational level within Baillie Gifford represents
the best way of discharging its responsibilities to
shareholders.
Diversity of the board
The Directors consider Board composition in
terms of the overall value the Board offers to
shareholders; this means that it seeks to ensure
that (i) the Directors, between them, have diverse
expertise allowing them to bring an appropriate
range of skills to the performance of their duties;
and (ii) the Directors represent a diverse range of
backgrounds and characteristics, which enables a
range of perspectives to contribute to governance
and decision-making.
The FCA Listing Rules on diversity and inclusion
set out the targets which should be met as follows:
(i) at least 40% of individuals on a board should be
women; (ii) at least one senior board position should
be held by a woman; and (iii) at least one individual
on its board should be from a minority ethnic
background (as defined by the Office of National
Statistics (ONS) criteria). As an externally managed
investment company with no chief executive officer
(CEO) or chief financial officer (CFO), the roles
which qualify as senior under FCA guidance are
the Chairman and Senior Independent Director (SID).
The Board considers the Audit Committee Chairman
to be a senior role.
Board as at 30 April 2024
Sex
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% 1 n/a n/a
Not specified/prefer not to say
– – – n/a n/a
* The Company only has two of the senior roles specified by the Listing Rules, that is the position of Chairman and SID. While the Company considers
the role of Audit Chairman to be a senior role, this is not reflected as a senior role in this table. The role of Audit Committee Chairman is currently held
by a man.
Ethnicity
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)
5 100% 2 * n/a n/a
Mixed/Multiple Ethnic Groups
– – – n/a n/a
Asian/Asian British
– – – n/a n/a
Black/African/Caribbean/Black
British
– – – n/a n/a
Other ethnic group, including
Arab
– – – n/a n/a
Not specified/prefer not to say – – – n/a n/a
* The Company only has two of the senior roles specified by the Listing Rules, that is the position of Chairman and SID. While the Company considers the
role of Audit Chairman to be a senior role, this is not reflected as a senior role in this table. The current Audit Committee Chairman’s ethnic background
is white.
55
Baillie Gifford UK Growth Trust plc
As shown in the Board composition tables, the
Company met the targets on percentage of women
and women in senior roles, but did not meet the
target in relation to the ethnic background of the
Board. While there have been no changes to Board
membership between 30 April 2024 and 13 June
2024, Carolan Dobson is not seeking re-election and
will step down from the Board on 14 June 2024. Neil
Rogan will take on the role of Chairman of the Board
on 14 June 2024.
The Board considers that its small size is the
principal reason why the other Listing Rule targets
were not met. The Board supports, and is ambitious
to meet, all the Listing Rule diversity targets and will
continue to review its size and composition both as
part of its refreshment cycle and more widely.
All recruitment for new board members will be
external, through the use of search agencies or
platforms. Recruitment consultants will be asked to
put forward candidates with the desired skillset but
also with a diverse range of characteristics.
Induction and training
New Directors are provided with an induction
programme which is tailored to the particular
circumstances of the appointee. Regular briefings
were provided during the year on industry
and regulatory matters. Directors receive other
relevant training as necessary.
Remuneration Committee
The Remuneration Committee consists of all
Directors and Ruary Neill is the Chairman of the
Committee. The Remuneration Committee reviews
and makes recommendations to the Board in respect
of the level of remuneration paid to Directors within
the limits approved by shareholders. The Company’s
policy on remuneration is set out in the Directors’
Remuneration Report on pages 61 to 64.
The Committee’s Terms of Reference are available
on request from the Company and on the Company’s
page of the Managers’ website: bgukgrowthtrust.com.
Management Engagement Committee
The role of the Management Engagement
Committee is to ensure that the Manager
remains suitable to manage the portfolio, that
the management contract is competitive and
reasonable for shareholders, and that the Company
maintains appropriate administrative and company
secretarial support. All Directors are members of
the Management Engagement Committee which is
chaired by the Chairman of the Board. The Board
considers each member of the Committee to be
independent.
To discharge its duties, the Committee met on
one occasion during the year to consider: the
performance and suitability of the Manager; the terms
and conditions of the AIFM Agreement, including
fees; and, the Committee’s Terms of Reference.
The Committee’s Terms of Reference are available
on request from the Company and on the Company’s
page of the Managers’ website: bgukgrowthtrust.com.
Audit Committee
The report of the Audit Committee is set out on
pages 59 to 60.
Internal controls and risk management
The Directors acknowledge their responsibility for
the Company’s risk management and internal control
systems and for reviewing their effectiveness.
The systems are designed to manage rather than
eliminate the risk of failure to achieve business
objectives and can only provide reasonable but not
absolute assurance against material misstatement
or loss.
The Board confirms that there is an ongoing
process for identifying, evaluating and managing
the significant risks faced by the Company in
accordance with the FRC guidance ‘Guidance on
Risk Management, Internal Control and Related
Financial and Business Reporting’. The practical
measures in relation to the design, implementation
and maintenance of control policies and procedures
to safeguard the Company’s assets and to manage
its affairs properly, including the maintenance of
effective operational and compliance controls have
been delegated to the Managers and Secretaries.
The Board oversees the functions delegated
to the Managers and Secretaries and the
controls managed by the AIFM in accordance
with the Alternative Investment Fund Managers
Regulations (as detailed below). Baillie Gifford &
Co’s Internal Audit and Compliance Departments
and the AIFM’s permanent risk function provide
the Audit Committee with regular reports on their
monitoring programmes. The reporting procedures
for these departments are defined and formalised
within a service level agreement. Baillie Gifford & Co
conducts an annual review of its system of
internal controls which is documented within an
internal controls report which complies with
ISAE 3402 – Assurance Reports on Internal Controls
of Service Organisations made available to Third
Parties. This report is independently reviewed
by Baillie Gifford & Co’s Auditor and a copy is
submitted to the Audit Committee.
Governance report
Annual Report and Financial Statements 2024
56
A report identifying the material risks faced by the
Company and the key controls employed to manage
these risks is reviewed by the Audit Committee.
These procedures ensure that consideration is
given regularly to the nature and extent of risks
facing the Company and that they are being
actively monitored. Where changes in risk have
been identified during the year they also provide
a mechanism to assess whether further action is
required to manage these risks.
The Directors confirm that they have reviewed the
effectiveness of the Company’s risk management
and internal controls systems, which accord with the
FRC ‘Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting’
and they have procedures in place to review their
effectiveness on a regular basis. No significant
weaknesses were identified in the year under review
and up to the date of this Report.
The Board confirms that these procedures have
been in place throughout the Company’s financial
year and continue to be in place up to the date of
approval of this Report.
To comply with the Alternative Investment Fund
Managers Regulations, The Bank of New York
Mellon (International) Limited acts as the
Company’s Depositary and Baillie Gifford & Co
Limited as its AIFM.
The Depositary’s responsibilities include cash
monitoring, safe keeping of the Company’s financial
instruments, verifying ownership and maintaining
a record of other assets and monitoring the
Company’s compliance with investment limits and
leverage requirements. The Depositary is liable for
the loss of financial instruments held in custody. The
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, including leverage (see page 103),
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.
The Company’s principal and emerging risks are
market related and include market risk, liquidity risk
and credit risk. An explanation of these risks and
how they are managed is contained in note 18 to the
Financial Statements. The Board has, in particular,
considered recent heightened geopolitical tensions
and conflicts and macroeconomic concerns,
including increased inflation and interest rates. It
has reviewed specific leverage and liquidity stress
testing but does not believe the Company’s going
concern status is affected. The Company’s assets,
the vast majority of which are investments in quoted
securities which are readily realisable, exceed its
liabilities significantly. All borrowings require the
prior approval of the Board. Gearing levels and
compliance with borrowing covenants are reviewed
by the Board on a regular basis. Details of the
Company’s one year loan facility with The Royal
Bank of Scotland International Limited which is
due to be repaid in July 2024 are shown in note 11
on page 85. Negotiations are underway to
replace this facility. The Company has continued
to comply with the investment trust status
requirements of section 1158 of the Corporation
Tax Act 2010 and the Investment Trust (Approved
Company) Regulations 2011.
57
Baillie Gifford UK Growth Trust plc
In accordance with the Company’s Articles of
Association, shareholders have the right to vote
on the continuation of the Company every five
years, the next vote being at the Annual General
Meeting to be held on 4 September 2024. The
Company’s Board, Managers and brokers engage
with shareholders on an ongoing basis. The Board
has considered the feedback received regarding
shareholders’ voting intentions, the composition
of the Company’s shareholder register and the
outcome of the previous continuation vote held in
2019, and concluded that, at the date of signing
these Annual Report and Financial Statements, it is
likely that the vote on continuation of the Company
will be in favour of continuation.
Accordingly, the Financial Statements have been
prepared on the going concern basis as it is the
Directors’ opinion, having assessed the principal
risks and other matters, as set out in the Viability
Statement on page 38 and revenue estimates
prepared to 30 June 2025, 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 Chairman
meets shareholders independently of the Managers
and reports shareholders’ views to the Board.
Shareholders wishing to communicate with
any members of the Board may do so by writing
to them at the Company’s registered office or
through the Company’s broker, Winterflood
Investment Trusts (see contact details on page 108).
All correspondence addressed to the Chairman is
dealt with directly by the Chairman. The Company’s
Managers also meet regularly with shareholders and
their representatives.
The Company’s Annual General Meeting provides
a further forum for communication with all
shareholders. The level of proxies lodged for each
resolution is announced at the Meeting and is
published at bgukgrowthtrust.com subsequent
to the meeting. The notice period for the Annual
General Meeting is at least twenty working days.
Shareholders and potential investors may obtain
up-to-date information on the Company from the
Managers’ website at bgukgrowthtrust.com.
Corporate governance and stewardship
The Company believes that it is in the shareholders’
interests to consider environmental, social and
governance (‘ESG’) factors when selecting and
retaining investments and has asked the Managers
to take these issues into account. The Managers
do not exclude companies from their investment
universe purely on the grounds of ESG factors but
adopt a positive engagement approach whereby
matters are discussed with management with
the aim of improving the relevant policies and
management systems and enabling the Managers to
consider how ESG factors could impact long-term
investment returns. The Managers’ Stewardship
Principles and examples of portfolio company
engagement are set out on pages 13 to 20 and the
Statement of Compliance with the UK Stewardship
Code can be found on the Managers’ website:
bailliegifford.com. The Managers’ approach has
been reviewed and endorsed by the Board.
The Company has given discretionary voting powers
to Baillie Gifford & Co. The Managers vote against
resolutions they consider may damage shareholders’
rights or economic interests. The Board reviews
regular reports on voting and engages with the
Managers on these matters.
Baillie Gifford & Co, the Company’s Managers, has
considered the Sustainable Finance Disclosures
Regulation (‘SFDR’) and further details can be found
on page 107.
The Managers, Baillie Gifford & Co, are signatories
to the United Nations Principles for Responsible
Investment and are also members of the
International Corporate Governance Network.
Climate change
The Board recognises that climate change poses a
serious threat to our environment, our society and
to economies and companies around the globe.
Addressing the underlying causes is likely to result
in companies that are high emitters of carbon
facing greater societal and regulatory scrutiny and
higher costs to account for the true environmental
impact of their activities. The Managers utilise
data sourced from a third-party provider to map
the carbon footprint of the equity portfolio using
the information to prioritise engagement and
understand what higher emitting companies are
doing to manage climate risk better. The carbon
intensity of the Company’s portfolio is 77.0% lower
than the Company’s benchmark (FTSE All-Share).
Governance report
Annual Report and Financial Statements 2024
58
This analysis is based on 98.7% of the value of the
Company’s equity portfolio which reports on carbon
emissions and other carbon related characteristics
and is measured using data from MSCI via the
Factset platform.
Carbon intensity measures the carbon efficiency
of the portfolio per unit of output and assesses the
portfolio’s exposure to carbon-intensive companies.
Baillie Gifford’s Task Force on Climate-Related
Financial Disclosures (‘TCFD’) Climate Report
is available on the Managers’ website at
bailliegifford.com. A Company specific TCFD
climate report is also available on the Company’s
page of the Managers’ website
at bgukgrowthtrust.com.
The Managers, Baillie Gifford & Co, are signatories
to the Carbon Disclosure Project.
On behalf of the Board
Carolan Dobson
Chairman
13 June 2024
59
Baillie Gifford UK Growth Trust plc
The Audit Committee consists of all independent
Directors except for the Chairman of the Board,
Carolan Dobson. The members of the Committee
consider that they have the requisite financial skills
and experience to fulfil the responsibilities of the
Committee. Andrew Westenberger, Chairman of
the Committee, is a Chartered Accountant. The
Committee’s authority and duties are clearly defined
within its written Terms of Reference which are
available on request from the Company and on
the Company’s page of the Managers’ website:
bgukgrowthtrust.com. The Terms of Reference are
reviewed annually.
The Committee’s effectiveness is reviewed on an
annual basis as part of the Board’s performance
evaluation process (see page 53).
At least once a year the Committee meets with the
external Auditor without any representative of the
Manager being present.
Main activities of the committee
The Committee met twice during the year to
30 April 2024 and the external Auditor attended
both meetings. Baillie Gifford & Co’s Internal Audit
and Compliance Departments and the AIFM’s
permanent risk function provided reports on their
monitoring programmes for these meetings. The
external auditor also met with the Chairman of the
Audit Committee separately twice during the year.
The matters considered, monitored and reviewed
by the Committee during the course of the year
included the following:
• the results announcements and the Annual and
Interim reports;
• the Company’s accounting policies and practices
and the implementation of the Managers’ valuation
policy for investments in unlisted (private)
companies;
Audit Committee
report
• the regulatory changes impacting the Company;
• the fairness, balance and understandability of
the Annual Report and Financial Statements and
whether it provided the information necessary
for shareholders to assess the Company’s
performance, business model and strategy;
• the effectiveness of the Company’s internal
control environment;
• the appointment/re-appointment, remuneration
and terms of engagement of the external Auditor;
• whether the audit services contract should be put
out to tender;
• the policy on the engagement of the external
Auditor to supply non-audit services;
• the independence and objectivity of the external
Auditor and the effectiveness of the audit process;
• the need for the Company to have its own internal
audit function;
• internal controls reports received from the
Managers and other service providers; and
• the arrangements in place within
Baillie Gifford & Co whereby its staff may,
in confidence, raise concerns about possible
improprieties in matters of financial reporting
or other matters.
Internal audit
The Committee continues to believe that the
compliance and internal control systems and the
internal audit function in place within the Investment
Managers provide sufficient assurance that a
sound system of internal control, which safeguards
shareholders’ investment and the Company’s assets,
is maintained. An internal audit function, specific to
the Company, is therefore considered unnecessary.
Governance report
Annual Report and Financial Statements 2024
60
Financial reporting
The Committee considers that the most significant
issues likely to affect the Financial Statements are
the existence and valuation of investments, as they
represent 99.0% of total assets, and the accuracy
and completeness of income from investments.
The majority of the investments are in quoted
securities and market prices are readily available
from independent external pricing sources.
The Committee reviewed Baillie Gifford’s Report
on Internal Controls which details the controls
in place regarding the recording and pricing of
investments. The Managers agreed the prices of all
the listed investments at 30 April 2024 to external
price sources and the holdings were agreed to
confirmations from the Company’s Custodian.
The Committee reviewed the Managers’ valuation
approach for investments in unlisted companies
(as described on pages 79 and 80) and approved
the valuation of the unlisted investment following
a detailed review of the valuation of the investment
and relevant challenge where appropriate. The
Managers agreed the holding in certificated form
to confirmations from the Company’s Custodian.
The Committee reviewed the Managers’ report on
Internal Controls which details the controls in place
regarding completeness and accurate recording of
investment income. The accounting treatment of
each special dividend received or receivable during
the year was reviewed by the Managers.
The Managers 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.
Internal controls and risk management
The Committee reviewed the effectiveness
of the Company’s risk management and
internal controls systems as described on
pages 55 and 56. No significant weaknesses
were identified in the year under review.
External auditor
To fulfil its responsibility regarding the
independence and objectivity of the external
auditor, the Committee reviewed:
• the audit plan for the current year;
• a report from the Auditor describing their
arrangements to manage auditor independence
and received confirmation of its independence;
and
• the extent of non-audit services provided by the
external Auditor. There were no non-audit fees for
the year to 30 April 2024.
To assess the effectiveness of the external Auditor,
the Committee reviewed and considered:
• the Auditor’s fulfilment of the agreed audit plan;
• feedback from the Secretaries on the performance
of the audit team;
• the Audit Quality Inspection Report on Ernst &
Young LLP issued by the FRC’s Audit Quality
Review team; and
• detailed discussion with audit personnel to
challenge audit processes and deliverables.
To fulfil its responsibility for oversight of the external
audit process the Committee considered and
reviewed:
• the Auditor’s engagement letter;
• the Auditor’s proposed audit strategy;
• the audit fee; and
• a report from the Auditor on the conclusion of the
audit.
The audit partner responsible for the audit will 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. Ms Mercer, the
current partner, will continue as audit partner until the
conclusion of the 2025 audit. The year under audit
represents Ms Mercer’s fourth year as audit partner.
Ernst & Young LLP has confirmed that it believes it
is independent within the meaning of regulatory and
professional requirements and that the objectivity of
the audit partner and staff is not impaired.
Having carried out the review process described
above, the Committee is satisfied that the Auditor
has remained independent and effective 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 65 to 74.
On behalf of the Board
Andrew Westenberger
Audit Committee Chairman
13 June 2024
61
Baillie Gifford UK Growth Trust plc
Directors’
remuneration report
This report has been prepared in accordance with
the requirements of the Companies Act 2006.
Statement by the Chairman
The Directors’ Remuneration Policy is subject
to shareholder approval every three years or
sooner if an alteration to the policy is proposed.
The Remuneration Policy which is set out below
was last approved at the Annual General Meeting
in September 2023 and no changes are proposed to
the policy for the Annual General Meeting to be
held in 2024.
The Board reviewed the level of fees during the year
and concluded that there would be no change to the
fees. The fees were last increased with effect from 1
May 2023.
Directors’ remuneration policy
The determination of the Directors’ fees is a matter
considered by the Remuneration Committee and
recommended to the Board for adoption.
It is the Board’s policy to determine the level of
Directors’ remuneration having regard to amounts
payable to non-executive Directors in the industry
generally, the role that individual Directors fulfil in
respect of Board and Committee responsibilities,
and time committed to the Company’s affairs,
taking into account the aggregate limit of fees
set out in the Company’s Articles of Association.
This aggregate limit of Directors’ fees is currently
set at £200,000 per annum and any increase in
this level requires approval by the Board and the
Company’s shareholders. The Chairman of the
Board, the Chairman of the Audit Committee and the
Senior Independent Director each receive fees at a
higher rate than the other Directors to reflect their
additional responsibilities. Directors’ fees are set at
a level to recruit and retain individuals of sufficient
calibre, with the level of knowledge, experience
and expertise necessary to promote the success of
the Company in reaching its short and long-term
strategic objectives.
The Board and its Committees exclusively comprise
non-executive Directors. No Director past or present
has an entitlement to a Company pension, and the
Company has not, and does not intend to operate
a share scheme for Directors or to award any share
options or long-term performance incentives to any
Director. No Director has a service contract with
the Company. However, Directors have a letter of
appointment. Directors do not receive exit payments
and are not provided with any compensation for loss
of office. No other payments are made to Directors
other than the reimbursement of reasonable
out-of-pocket expenses incurred in attending
to the Company’s business.
The terms of Directors’ letters of appointment are
available for inspection at the Company’s registered
office address during normal business hours and
during the Annual General Meeting at the location
of such meeting.
The Board did not seek the views of shareholders
in setting this Remuneration Policy. Any comments
on the Policy received from shareholders would be
considered on a case-by-case basis.
As the Company does not have any employees, no
employee pay and employment conditions were
taken into account when setting this Remuneration
Policy and no employees were consulted in its
construction.
Directors’ fees are reviewed annually and take into
account research from third parties on the fee
levels of directors of peer group companies, as
well as industry norms and factors affecting the
time commitment expected of the Directors. New
Directors are subject to the provisions set out in this
Remuneration Policy.
Governance report
Annual Report and Financial Statements 2024
62
Limits on Directors’ remuneration
The fees for the non-executive Directors are payable
monthly in arrears and the fees paid in respect of
the year ended 30 April 2024 together with the
expected fees payable in respect of the year ending
30 April 2025 are set out in following table. The fees
payable to the Directors in the subsequent financial
years will be determined following an annual review
of the Directors’ fees.
Name
Expected
fees for year
ending 30
April 2025
£
Fees paid for
the year to 30
April 2024
£
Carolan Dobson 5,100 42,500
Ruary Neill
31,500 31,500
Cathy Pitt
30,000 30,000
Neil Rogan
41,000 10,000
Andrew Westenberger
35,000 35,000
Total aggregate annual
fees that can be paid to the
Directors in any year under
the Directors’ Remuneration
Policy, as set out in the
Company’s Articles of
Association
200,000 200,000
Annual report on remuneration
An ordinary resolution for the approval of this report
will be put to the members at the forthcoming
Annual General Meeting.
The law requires the Company’s Auditor to audit
certain disclosures provided in this report. Where
disclosures have been audited, they are indicated
as such. The Auditor’s opinion is included in the
Independent Auditor’s Report on pages 67 to 74.
Statement of voting at Annual General Meeting
At the last Annual General Meeting, of the
proxy votes received in respect of the Directors’
remuneration report, 99.8% were in favour, 0.1%
were against and votes withheld were 0.1%. At the
last Annual General Meeting at which the Directors’
Remuneration Policy was considered (September
2023), 99.7% of the proxy votes received were in
favour, 0.2% were against and 0.1% votes were
withheld.
63
Baillie Gifford UK Growth Trust plc
Where fees or taxable benefits for a Director were nil in the prior year, the year on year movement has been noted as ‘n/a’. Due to Covid-19 restrictions,
there was no travel for the financial year to 30 April 2021. In person Board and committee meetings resumed partway through the financial year to
30 April 2022.
Name
2024
fees
%
2024
taxable
benefits
%
2023
fees
%
2023
taxable
benefits
%
2022
fees
%
2022
taxable
benefits
%
2021
fees
%
2021
taxable
benefits
%
Carolan Dobson 4.7 102.0 5.7 294.7 1.6 n/a 0.8 (100.0)
Ruary Neill 2.9 2.6 6.4 2,115.3 6.5 n/a 0.7 (100.0)
Cathy Pitt
(appointed 5 August 2021)
3.1 103.6 43.0 46.6 n/a n/a n/a n/a
Neil Rogan
(appointed 1 January 2024)
n/a n/a n/a n/a n/a n/a n/a n/a
Andrew Westenberger 5.7 27.4 7.8 659.8 1.7 n/a 0.7 (100.0)
Annual Percentage Change in Remuneration
This represents the annual percentage change in the remuneration paid to the Directors.
Name
2024 fees
£
2024 taxable
benefits*
£
2024 total
£
2023 fees
£
2023 taxable
benefits*
£
2023 total
£
Carolan Dobson 42,500 5,261 47,761 40,600 2,605 43,205
Ruary Neill 31,500 2,818 34,318 30,600 2,747 33,347
Cathy Pitt 30,000 4,000 34,000 29,100 1,965 31,065
Neil Rogan
(appointed 1 January 2024)
10,000 1,998 11,998 – – –
Andrew Westenberger 35,000 4,192 39,192 33,100 3,290 36,390
149,000 18,269 167,269 133,400 10,607 144,007
Directors’ Remuneration for the Year (audited)
The Directors who served during the year received the following remuneration in the form of fees and
taxable benefits. This represents the entire remuneration paid to the Directors.
* Comprises expenses incurred by Directors in the course of travel to attend Board and Committee meetings held at the normal place of business.
These amounts have been grossed up for applicable income tax and national insurance.
Governance report
Annual Report and Financial Statements 2024
64
Source: LSEG and relevant underlying index providers.
See disclaimer on page 103.
All figures are total returns (assuming net dividends are reinvested).
See Glossary of Terms and Alternative Performance Measures on
pages 104 to 106.
Past performance is not a guide to future performance.
Name
Nature of
interest
Ordinary 25p
shares held
at 30 April
2024
Ordinary 25p
shares held
at 30 April
2023
Carolan Dobson Beneficial 26,949 26,949
Ruary Neill Beneficial 20,000 20,000
Cathy Pitt Beneficial 5,362 5,362
Neil Rogan Beneficial 15,328 –
Andrew
Westenberger
Beneficial 20,000 20,000
Directors’ Interests (audited)
The Directors at the end of the year under review,
and their interests in the Company, are shown in
the following table. There have been no changes
intimated in the Directors’ interests up to 13 June
2024.
2024
£’000
2023
£’000
Change
%
Directors’ remuneration 167 144 16.0
Dividends 5,410 5,951 (9.1)
Relative importance of spend on Pay
The table below shows the actual expenditure during
the year in relation to Directors’ remuneration and
distributions to shareholders.
Company performance
The following graph compares the share price
total return (assuming all dividends are reinvested)
to ordinary shareholders compared with the
total shareholder return on a notional investment
made up of shares in the component parts of the
FTSE All-Share Index. This index was chosen for
comparison purposes as it is a widely used measure
of performance for UK listed companies and also
the index against which the Company measures its
performance.
Performance graph
(figures rebased to 100 at 30 April 2014)
Approval
The Directors’ remuneration report on pages 61 to
64 was approved by the Board of Directors
and signed on its behalf on 13 June 2024.
Ruary Neill
Remuneration Committee Chairman
50
100
150
200
2024
20222020201820162014
BG UK Growth Share Price FTSE All-Share Index
65
Baillie Gifford UK Growth Trust plc
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 applicable law and
United Kingdom Accounting Standards, comprising
Financial Reporting Standard 102 the Financial
Reporting Standard Applicable in the UK and
Republic of Ireland (‘FRS 102’). Under company
law the Directors must not approve the Financial
Statements unless they are satisfied that they give
a true and fair view of the state of affairs of the
Company and of its profit or loss for that year. In
preparing these Financial Statements, the Directors
are required to:
• select suitable accounting policies and then apply
them consistently;
• state whether applicable United Kingdom
Accounting Standards, comprising FRS 102, have
been followed, subject to any material departures
disclosed and explained in the Financial
Statements;
• make judgements and accounting estimates that
are reasonable and prudent; and
• prepare the Financial Statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to ensure
that the Financial Statements and the Directors’
remuneration report comply with the Companies
Act 2006. They are responsible for such internal
control as they determine is necessary to enable
the preparation of financial statements that are free
from material misstatement, whether due to fraud
or error, and have general authority for taking such
steps as are reasonably open to them to safeguard
the assets of the Company and to prevent and
detect fraud and other irregularities.
Under applicable laws and regulations, the Directors
are also responsible for preparing a Strategic report,
Directors’ report, Directors’ remuneration report and
Corporate governance statement that complies with
that law and those regulations.
The Directors have delegated responsibility to
the Managers for the maintenance and integrity
of the Company’s page of the Managers’ website.
Legislation in the United Kingdom governing
the preparation and dissemination of Financial
Statements may differ from legislation in other
jurisdictions.
Responsibility statement of the Directors in
respect of the annual financial report
We confirm that, to the best of our knowledge:
• the Financial Statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities,
financial position and net return of the Company;
• the Strategic report includes a fair review of the
development and performance of the business
and the position of the issuer, together with a
description of the principal risks and uncertainties
they face; and
• the Annual Report and Financial Statements taken
as a whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Company’s position
and performance, business model and strategy.
On behalf of the Board
Carolan Dobson
13 June 2024
Financial
report
The Financial Statements for the
year to 30 April 2024 are set
out on pages 66 to 91 have been
prepared in accordance with
FRS 102 ‘The Financial Reporting
Standard applicable in the UK
and Republic of Ireland’.
67
Baillie Gifford UK Growth Trust plc
Independent
auditor’s report
to the members of Baillie Gifford UK Growth Trust plc
Opinion
We have audited the financial statements of Baillie
Gifford UK Growth Trust plc (‘the Company’) for
the year ended 30 April 2024 which comprise
the Income Statement, the Balance Sheet, the
Statement of Changes in Equity, the Cash Flow
Statement, and the related notes 1 to 19, including
a summary of significant accounting policies. The
financial reporting framework that has been applied
in their preparation is applicable law and United
Kingdom Accounting Standards including FRS 102
“The Financial Reporting Standard applicable in
the UK and Republic of Ireland” (United Kingdom
Generally Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the Company’s affairs
as at 30 April 2024 and of its profit for the year
then ended;
• have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing (UK)
(ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the
audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance
with the ethical requirements that are relevant to
our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to
public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with
these requirements.
The non-audit services prohibited by the FRC’s
Ethical Standard were not provided to the Company
and we remain independent of the Company in
conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of
the Company’s ability to continue to adopt the
going concern basis of accounting included:
• Confirmation of our understanding of the
Company’s going concern assessment process
and engaged with the Directors and the Company
Secretary to determine if all key factors that we
have become aware of during our audit were
considered in their assessment.
• Inspection of the Directors’ assessment of going
concern, including the revenue forecast, for the
period to 30 June 2025 which is at least twelve
months from the date these financial statements
were authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is
able to continue to meet its ongoing costs as they
fall due.
Financial report
Annual Report and Financial Statements 2024
68
• Review of the factors and assumptions, including
the impact of the current economic environment,
as applied to the revenue forecast and the liquidity
assessment of the investments. We considered
the appropriateness of the methods used to
calculate the revenue forecast and the liquidity
assessment and determined, through testing
of the methodology and calculations, that the
methods, inputs and assumptions utilised were
appropriate to be able to make an assessment for
the Company.
• Assessment of the risk of breaching the debt
covenants as a result of a reduction in the value
of the Company’s portfolio. We calculated the
Company’s compliance with debt covenants and
we performed reverse stress testing in order to
identify what factors would lead to the Company
breaching the financial covenants.
• Consideration of the mitigating factors included in
the revenue forecasts that are within the control
of the Company. We reviewed the Company’s
assessment of the liquidity of investments held
and evaluated the Company’s ability to sell those
investments in order to cover working capital
requirements should revenue decline significantly.
• Assessment of the impact of the continuation vote
at the September 2024 AGM on the going concern
basis of preparation, by considering the current
and historical performance of the Company,
reviewing minutes from the Broker’s and Directors’
discussion with certain shareholders about their
current intentions in relation to the continuation
vote and assessing the Directors’ analysis of the
responses the Broker received.
• Review of the Company’s going concern
disclosures included in the annual report in order
to assess that the disclosures were appropriate
and in conformity with the reporting standards.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the Company’s ability
to continue as a going concern for a period to 30
June 2025 which is at least twelve months from the
date these financial statements were authorised for
issue.
In relation to the Company’s reporting on how they
have applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to
in relation to the Directors’ statement in the financial
statements about whether the Directors considered
it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of
the Directors with respect to going concern are
described in the relevant sections of this report.
However, because not all future events or conditions
can be predicted, this statement is not a guarantee
as to the Company’s ability to continue as a going
concern.
Key audit matters
Risk of incomplete or inaccurate revenue
recognition, including the classification
of special dividends as revenue or capital
items in the Income Statement
Risk of incorrect valuation or ownership
of the investment portfolio
Materiality
Overall materiality of £2.83m which
represents 1% of shareholders’ funds.
Overview of our audit approach
69
Baillie Gifford UK Growth Trust plc
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determine our audit scope for the
Company. This enables us to form an opinion on
the financial statements. We take into account
size, risk profile, the organisation of the Company
and effectiveness of controls, the potential impact
of climate change and changes in the business
environment when assessing the level of work to be
performed. All audit work was performed directly
by the audit engagement team and our valuation
specialists.
Climate change
Stakeholders are increasingly interested in how
climate change will impact companies. The
Company has determined that the most significant
future impacts from climate change on its operations
will be from how climate change could affect the
Company’s investments and overall investment
process. This is explained on page 35 in the principal
and emerging risks section. This disclosure forms
part of the “Other information,” rather than the
audited financial statements. Our procedures on
these unaudited disclosures therefore consisted
solely of considering whether they are materially
inconsistent with the financial statements or our
knowledge obtained in the course of the audit or
otherwise appear to be materially misstated, in line
with our responsibilities on “Other information”.
Our audit effort in considering climate change
was focused on the adequacy of the Company’s
disclosures in the financial statements as set out in
note 1(a) and conclusion there was no further impact
of climate change to be taken into account as in line
with FRS 102 listed investments are valued at fair
value, which for the Company are quoted bid prices
for investments in active markets at the balance
sheet date and therefore reflect market participants
view of climate change risk. The unlisted investment
has been valued with reference to a recent purchase
price which reflects market participants view
of climate change risk. We also challenged the
Directors’ considerations of climate change in their
assessment of viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due
to fraud) that we identified. These matters included
those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement
team. These matters were addressed in the context
of our audit of the financial statements as a whole,
and in our opinion thereon, and we do not provide a
separate opinion on these matters.
Financial report
Annual Report and Financial Statements 2024
70
Risk Our response Key observations communicated to the
Audit Committee
Incomplete or inaccurate revenue
recognition, including the classification
of special dividends as revenue or capital
items in the Income Statement
Refer to the Audit Committee Report
(pages 59 and 60); Accounting policies
(page 79 to 81); and Note 2 of the
Financial Statements (page 81)
The total revenue for the year to 30
April 2024 was £9.79m (2023: £7.26m),
consisting primarily of dividend income
from listed equity investments.
The investment income receivable by
the Company during the year directly
affects the Company’s revenue return.
There is a risk of incomplete or inaccurate
recognition of revenue through the failure
to recognise proper income entitlements
or to apply an appropriate accounting
treatment.
In addition, the Directors may be required
to exercise judgment in determining
whether income receivable in the form
of special dividends should be classified
as ‘revenue’ or ‘capital’ in the Income
Statement.
We have performed the following
procedures:
We obtained an understanding of
Baillie Gifford’s processes and controls
surrounding revenue recognition by
performing walkthrough procedures.
For all dividends received and accrued,
we recalculated the dividend income by
multiplying the investment holdings at
the ex-dividend date, traced from the
accounting records, by the dividend
per share, which was agreed to an
independent data vendor. We also agreed,
for a sample of dividends received and
dividends accrued, amounts to bank
statements.
To test completeness of recorded income,
we tested that expected dividends for each
investee company held during the year had
been recorded as income with reference to
an external source.
For all dividends accrued at the year
end, we reviewed the investee company
announcements to assess whether the
entitlement arose prior to 30 April 2024.
For all investments held during the year,
we inspected the type of dividends paid
with reference to an external data source
to identify those which were special
dividends. We confirmed five special
dividends, amounting to £1.49m, were
received during the year. We tested all
five special dividends by recalculating
the amount received and assessing
the appropriateness of classification
as revenue by reviewing the underlying
circumstances of the special dividends
received.
The results of our procedures identified
no material misstatement in relation to the
risk of incomplete or inaccurate revenue
recognition, including through incorrect
classification of special dividends as
revenue or capital items in the Income
Statement.
71
Baillie Gifford UK Growth Trust plc
Risk Our response Key observations communicated to the
Audit Committee
Incorrect valuation or ownership of the
investment portfolio
Refer to the Audit Committee Report
(pages 59 an 60); Accounting policies
(pages 79 to 81); and Note 9 of the
Financial Statements (pages 83 and 84)
The valuation of the investment portfolio
at 30 April 2024 was £296.59m (2023:
£302.54m) consisting of listed equities
with an aggregate value of £293.25m
(2023: £301.91m) and an unlisted equity
investment amounting to £3.34m (2023:
£0.63m).
The valuation of the assets held in the
investment portfolio is the key driver of
the Company’s net asset value and total
return. Incorrect investment pricing, or
failure to maintain proper legal title of the
investments held by the Company could
have a significant impact on the portfolio
valuation and the return generated for
shareholders.
The fair value of listed investments is
determined using quoted market bid prices
at close of business on the reporting date.
The unlisted investment is valued at fair
value by the Directors following a detailed
review and appropriate challenge of the
valuations proposed by the Investment
Manager. The unlisted investment policy
applies methodologies consistent with the
International Private Equity and Venture
Capital Valuation guidelines (“IPEV”).
The valuation of the unlisted investment,
and the resultant impact on the unrealised
gains/(losses), is the area requiring the
most significant judgement and estimation
in the preparation of the financial
statements.
We have performed the following
procedures:
We obtained an understanding of the
Manager’s processes and controls
surrounding investment valuation and
legal title, including an understanding
of the operation of the Manager’s
Unlisted Valuation Securities Group
and the Directors’ process for review of
the unlisted investment valuations, by
performing walkthrough procedures.
For all listed investments in the portfolio,
we compared the market prices to
an independent pricing vendor and
recalculated the investment valuations as at
the year end.
We inspected the stale price reports
produced by Baillie Gifford to identify
prices that have not changed and verified
whether the listed price is a valid fair value.
We did not identify any listed investments
with stale prices.
For the unlisted investment held as at
the year-end we utilised our specialist
Valuations team to review and challenge
the valuation. This included:
• Reviewing the valuation papers
prepared by the Manager as at the year
end;
• Assessing whether the valuation has
been performed in line with the IPEV
guidelines;
• Assessing whether the valuation has
been performed in accordance with the
accounting policy;
• Assessing the appropriateness of
the data inputs and challenging the
assumptions used to support the
valuations; and
• Assessing other facts and
circumstances, such as market
movement and comparative company
information, that have an impact on
the fair market value of the unlisted
investment.
We recalculated the unrealised gains/
losses on investments as at the year-end
using the book-cost reconciliation.
We compared the Company’s investment
holdings as at 30 April 2024 to an
independent confirmation received directly
from the Company’s Custodian.
The results of our procedures identified
no material misstatement in relation to the
risk of incorrect valuation or ownership of
the investment portfolio.
Financial report
Annual Report and Financial Statements 2024
72
Our application of materiality
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably
be expected to influence the economic decisions
of the users of the financial statements. Materiality
provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Company to be
£2.83 million (2023: £2.94 million), which is 1%
(2023: 1%) of shareholders’ funds. We believe that
shareholders’ funds provides us with a materiality
aligned to the key measure of the Company’s
performance.
Performance materiality
The application of materiality at the individual
account or balance level. It is set at an amount to
reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with
our assessment of the Company’s overall control
environment, our judgement was that performance
materiality was 75% (2023: 75%) of our planning
materiality, namely £2.12m (2023: £2.21m). We
have set performance materiality at this percentage
due to our experience of working with the Company
that indicates a lower risk of misstatements, both
corrected and uncorrected.
Given the importance of the distinction between
revenue and capital for investment trusts, we have
also applied a separate testing threshold for the
revenue column of the Income Statement of £0.42m
(2023: £0.31m), being 5% of the net revenue return
on ordinary activities before taxation.
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would
report to them all uncorrected audit differences in
excess of £0.14m (2023: £0.15m), which is set at
5% of planning materiality, as well as differences
below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against
both the quantitative measures of materiality
discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information
included in the annual report, other than the
financial statements and our auditor’s report
thereon. The Directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not
cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information
and, in doing so, consider whether the other
information is materially inconsistent with the
financial statements or our knowledge obtained in
the course of the audit or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives
rise to a material misstatement in the financial
statements themselves. If, based on the work we
have performed, we conclude that there is a material
misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the Directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the strategic report and
the Directors’ report for the financial year for
which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and Directors’ reports have
been prepared in accordance with applicable legal
requirements.
73
Baillie Gifford UK Growth Trust plc
Matters on which we are required to report
by exception
In the light of the knowledge and understanding
of the Company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or Directors’
report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept,
or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements and the part of the
Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and
returns; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in
relation to going concern, longer-term viability and
that part of the Corporate Governance Statement
relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit,
we have concluded that each of the following
elements of the Corporate Governance Statement is
materially consistent with the financial statements or
our knowledge obtained during the audit:
• Directors’ statement with regards to the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on pages 56 and 57;
• Directors’ explanation as to its assessment of the
Company’s prospects, the period this assessment
covers and why the period is appropriate set out
on page 38;
• Director’s statement on whether it has a
reasonable expectation that the group will be able
to continue in operation and meets its liabilities set
out on pages 56 and 57;
• Directors’ statement on fair, balanced and
understandable set out on page 65;
• Board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on pages 34 to 37;
• The section of the annual report that describes the
review of effectiveness of risk management and
internal control systems set out on page 55 and
56; and;
• The section describing the work of the audit
committee set out on pages 59 and 60;
Responsibilities of directors
As explained more fully in the Directors’
responsibilities statement set out on page 65,
the Directors are responsible for the preparation
of the financial statements and for being satisfied
that they give a true and fair view, and for such
internal control as the directors determine is
necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors
are responsible for assessing the Company’s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern
and using the going concern basis of accounting
unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
Financial report
Annual Report and Financial Statements 2024
74
Explanation as to what extent the audit
was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the
prevention and detection of fraud rests with both
those charged with governance of the Company and
management.
• We obtained an understanding of the legal and
regulatory frameworks that are applicable to the
Company and determined that the most significant
are United Kingdom Generally Accepted
Accounting Practice, the Companies Act 2006,
the Listing Rules, UK Corporate Governance Code,
the Association of Investment Companies’ Code
and Statement of Recommended Practice, Section
1158 of the Corporation Tax Act 2010 and The
Companies (Miscellaneous Reporting) Regulations
2018.
• We understood how the Company is complying
with those frameworks through discussions with
the Audit Committee and Company Secretary
and review of Board minutes and the Company’s
documented policies and procedures.
• We assessed the susceptibility of the Company’s
financial statements to material misstatement,
including how fraud might occur by considering
the key risks impacting the financial statements.
We identified a fraud risk with respect to the
incomplete or inaccurate revenue recognition
through incorrect classification of special
dividends as revenue or capital items in the
Income Statement and incorrect valuation of the
unquoted investment and the resultant impact
on unrealised losses. Further discussion of our
approach is set out in the section on key audit
matters above.
• Based on this understanding we designed our
audit procedures to identify non-compliance
with such laws and regulations. Our procedures
involved review of the reporting to the Directors
with respect to the application of the documented
policies and procedures and review of the financial
statements to ensure compliance with the
reporting requirements of the Company.
A further description of our responsibilities for
the audit of the financial statements is located on
the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit
committee, we were appointed by the Company on
5 August 2020 to audit the financial statements
for the year ending 30 April 2021 and subsequent
financial periods.
The period of total uninterrupted engagement
including previous renewals and reappointments
is four years, covering the years ending 30 April
2021 to 30 April 2024.
• The audit opinion is consistent with the additional
report to the audit committee.
Use of our report
This report is made solely to the Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the Company’s members those matters we are
required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s
members as a body, for our audit work, for this
report, or for the opinions we have formed.
Caroline Mercer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
Edinburgh
13 June 2024
75
Baillie Gifford UK Growth Trust plc
Income
statement
for the year ended 30 April 2024 (with comparatives for the year ended 30 April 2023)
Dividends declared in respect of the financial year ended 30 April 2024 amount to 5.60p (2023 – 3.60p). Further information on dividend distributions can
be found in note 8 on page 83.
The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns
are prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing operations.
A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.
The accompanying notes on pages 79 to 91 are an integral part of the Financial Statements.
For the year ended 30 April
Notes
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Losses on investments 9 – (6,288) (6,288) – (2,542) (2,542)
Currency losses – (93) (93) – – –
Income 2 9,787 – 9,787 7,260 – 7,260
Investment management fee 3 (421) (982) (1,403) (432) (1,009) (1,441)
Other administrative expenses 4 (568) – (568) (533) – (533)
Net return before finance costs
and taxation
8,798 (7,363) 1,435 6,295 (3,551) 2,744
Finance costs of borrowings 5 (314) (732) (1,046) (150) (349) (499)
Net return on ordinary activities
before taxation
8,484 (8,095) 389 6,145 (3,900) 2,245
Tax on ordinary activities 6 – – – – – –
Net return of ordinary activities
after taxation
8,484 (8,095) 389 6,145 (3,900) 2,245
Net return per ordinary share 7 5.68p (5.42p) 0.26p 4.05p (2.57p) 1.48p
Financial report
Annual Report and Financial Statements 2024
76
Balance
sheet
as at 30 April 2024 (with comparatives as at 30 April 2023)
As at 30 April
Notes
2024
£’000
2024
£’000
2023
£’000
2023
£’000
Fixed assets
Investments held at fair value through profit or loss 9 296,590 302,536
Current assets
Debtors 10 2,242 1,479
Cash and cash equivalents 18 1,917 5,512
4,159 6,991
Creditors
Amounts falling due within one year 11 (17,596) (15,105)
Net current liabilities (13,437) (8,114)
Net assets 283,153 294,422
Capital and reserves
Share capital 12 40,229 40,229
Share premium account 13 11,664 11,664
Capital redemption reserve 13 19,759 19,759
Warrant exercise reserve 13 417 417
Share purchase reserve 13 49,380 55,628
Capital reserve 13 143,508 151,603
Revenue reserve 13 18,196 15,122
Shareholders’ funds 283,153 294,422
Net asset value per ordinary share* 14 193.0p 195.6p
The Financial Statements of Baillie Gifford UK Growth Trust plc (Company registration number 2894077)
were approved and authorised for issue by the Board and were signed on 13 June 2024.
Carolan Dobson
Chairman
The accompanying notes on pages 79 to 91 are an integral part of the Financial Statements.
77
Baillie Gifford UK Growth Trust plc
Statement of
changes in equity
The accompanying notes on pages 79 to 91 are an integral part of the Financial Statements.
For the year ended 30 April 2024
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Warrant
exercise
reserve
£’000
Share
purchase
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
Shareholders’ funds
at 1 May 2023
40,229 11,664 19,759 417 55,628 151,603 15,122 294,422
Ordinary shares bought
back into treasury
12 – – – – (6,248) – – (6,248)
Dividends paid during the
year
8 – – – – – – (5,410) (5,410)
Net return on ordinary
activities after taxation
7 – – – – – (8,095) 8,484 389
Shareholders’ funds
at 30 April 2024
40,229 11,664 19,759 417 49,380 143,508 18,196 283,153
For the year ended 30 April 2023
Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Warrant
exercise
reserve
£’000
Share
purchase
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
Shareholders’ funds
at 1 May 2022
40,229 11,664 19,759 417 60,433 155,503 14,928 302,933
Ordinary shares bought back
into treasury
12 – – – – (4,805) – – (4,805)
Dividends paid during the
year
8 – – – – – – (5,951) (5,951)
Net return on ordinary
activities after taxation
7 – – – – – (3,900) 6,145 2,245
Shareholders’ funds
at 30 April 2023
40,229 11,664 19,759 417 55,628 151,603 15,122 294,422
Financial report
Annual Report and Financial Statements 2024
78
Cash flow
statement
* Cash from operations includes dividends received of £9,539,000 (2023 - £7,523,000) and £82,000 deposit interest (2023 - £77,000).
† Cash and cash equivalents represents cash at bank and short-term deposits repayable on demand.
The accompanying notes on pages 79 to 91 are an integral part of the Financial Statements.
For the year ended 30 April 2024 (with comparatives for the year ended 30 April 2023)
Notes
2024
£’000
2024
£’000
2023
£’000
2023
£’000
Cash flows from operating activities
Net return on ordinary activities before taxation 389 2,245
Adjustments to reconcile company profit before tax to net cash flow from operating activities
Net losses on investments 9 6,288 2,542
Currency losses 93 –
Finance costs of borrowings 1,046 499
Other capital movements
Changes in debtors (171) 344
Changes in creditors 31 (3)
Cash from operations* 7, 6 76 5,627
Interest paid (897) (357)
Net cash inflow from operating activities 6,779 5,270
Cash flows from investing activities
Acquisitions of investments (24,185) (24,014)
Disposals of investments 23,251 25,521
Net cash (outflow)/inflow from investing activities (934) 1,507
Cash flows from financing activities
Bank loan drawn down 1,900 8,000
Equity dividends paid 8 (5,410) (5,951)
Ordinary shares bought back into treasury and stamp duty
thereon
12 (5,837) (4,805)
Net cash outflow from financing activities (9,347) (2,756)
(Decrease)/increase in cash and cash equivalents (3,502) 4,021
Exchange movements (93) –
Cash and cash equivalents at start of year 15 5,512 1,491
Cash and cash equivalents at end of year
†
15
1,917 5,512
79
Baillie Gifford UK Growth Trust plc
Notes to the
Financial Statements
01 Principal accounting policies
The Financial Statements for the year to 30 April 2024 have
been prepared in accordance with FRS 102 ‘The Financial
Reporting Standard applicable in the UK and Republic of
Ireland’ on the basis of the accounting policies set out below
which are consistent with those applied for the year ended
30 April 2023.
a. Basis of accounting
All of the Company’s operations are of a continuing
nature and the Financial Statements are prepared on a
going concern basis under the historical cost convention,
modified to include the revaluation of fixed asset
investments at fair value through profit or loss and on the
assumption that approval as an investment trust under
section 1158 of the Corporation Tax Act 2010 and the
Investment Trust (Approved Company) (Tax) Regulations
2011 will be retained. The Board has, in particular,
considered recent heightened geopolitical tensions
and conflicts and macroeconomic concerns, including
increased inflation and interest rates. It has reviewed the
results of specific leverage and liquidity stress testing,
but does not believe the Company’s going concern status
is affected. The Company’s assets, which are primarily
investments in quoted securities and are readily realisable
(Level 1) exceed its liabilities significantly and could be
sold to repay borrowings if required.
All borrowings require the prior approval of the Board.
Gearing levels and compliance with loan covenants are
reviewed by the Board on a regular basis. The Royal
Bank of Scotland International Limited one year revolving
credit facility which was due for repayment in July 2023
was replaced with another The Royal Bank of Scotland
International Limited one year revolving credit facility as
shown in note 11 on page 85. Negotiations are underway
to replace this facility.
The Company has continued to comply with the
investment trust status requirements of section 1158 of
the Corporation Tax Act 2010 and the Investment Trust
(Approved Company) Regulations 2011.
In accordance with the Company’s Articles of Association,
shareholders have the right to vote on the continuation of
the Company every five years, the next vote being at the
Annual General Meeting to be held on 4 September 2024.
The Company’s Board, Managers and brokers engage
with shareholders on an ongoing basis. The Board has
considered the feedback received regarding shareholders’
voting intentions, the composition of the Company’s
shareholder register and the outcome of the previous
continuation vote held in 2019, and concluded that, at
the date of signing these Annual Report and Financial
Statements, it is likely that the vote on continuation of the
Company will be in favour of continuation.
Accordingly, the Financial Statements have been prepared
on the going concern basis as it is the Directors’ opinion,
having assessed the principal and emerging risks and
other matters, as set out in the Viability Statement on
page 38, that the Company will continue in operational
existence until 30 June 2025, which is for a period of at
least twelve months from the date of approval of these
Financial Statements.
The Financial Statements have been prepared in
accordance with the Companies Act 2006, applicable
United Kingdom Accounting Standards and with the
AIC’s Statement of Recommended Practice ‘Financial
Statements of Investment Trust Companies and Venture
Capital Trusts’ issued in November 2014 and updated
in July 2022 with consequential amendments. In
order to better reflect the activities of the Company
and in accordance with guidance issued by the AIC,
supplementary information which analyses the profit
and loss account between items of a revenue and capital
nature has been presented in the Income statement.
Financial assets and financial liabilities are recognised in
the Company’s Balance sheet when it becomes a party to
the contractual provisions of the instrument.
In preparing these Financial Statements the Directors
have considered the impact of climate change risk as
a principal risk as set out on page 35. In line with FRS
102 investments are valued at fair value, which for the
Company are quoted bid prices for investments in active
markets at the balance sheet date and therefore reflect
market participants view of climate change risk. The
unlisted investment has been valued in reference to a
recent purchase price (see 1(b) below) which similarly
reflects market participants view of climate change risk.
The Directors consider the Company’s functional
currency to be sterling as the Company’s shareholders
are predominantly based in the UK and the Company
and its investment manager, who are subject to the UK’s
regulatory environment, are also UK based.
The Company has only one material segment being that
of an investment trust company investing in a portfolio of
long term investments.
Financial report
Annual Report and Financial Statements 2024
80
b. Significant accounting estimates and judgements
The preparation of the Financial Statements requires
the use of estimates, assumptions and judgements.
These estimates, assumptions and judgements affect
the reported amounts and liabilities, at the reporting date.
While estimates are based on best judgement
using information and financial data available, the
actual outcome may differ from these estimates.
The key sources of estimation and uncertainty relate
to the assumptions used in the determination of the fair
value of the unlisted investment.
Judgements
The Directors consider that the preparation of the
Financial Statements involves the key judgements in
relation to the fair valuation of the unlisted investment.
The key judgements in the fair valuation process are:
i. the Managers’ determination of the appropriate
application of the International Private Equity and
Venture Capital Guidelines 2022 (‘IPEV Guidelines’)
to each unlisted investment; and
ii. the Directors’ consideration of whether each fair
value is appropriate following detailed review and
challenge. The judgement applied in the selection of the
methodology used for determining the fair value of each
unlisted investment can have a significant impact upon
the valuation.
Estimates
The key estimate in the Financial Statements is the
determination of the fair value of the unlisted investment
by the Managers for consideration by the Directors. This
estimate is key as it significantly impacts the valuation of
the unlisted investment at the Balance sheet date. The
fair valuation process involves estimation using subjective
inputs that are unobservable (for which market data is
unavailable). The main estimates involved in the selection
of the valuation process inputs are:
i. the selection of appropriate comparable companies to
assist with the valuation validation or the application
of valuation adjustments. Comparable companies are
chosen on the basis of their business characteristics
and growth patterns; and
ii. the estimation of the probability assigned to an exit
being through an initial public offering (‘IPO’) or a
company sale.
c. Investments
The Company’s investments are classified as held at fair
value through profit and loss in accordance with sections
11 and 12 of FRS 102.
Purchases and sales of investments are recognised on a
trade date basis.
Upon initial recognition investments in securities are
recognised at fair value, which is transaction value.
Subsequently, investments are included at fair value
which are quoted bid prices for investments traded in
active markets. Changes in the fair value of investments
and gains and losses on disposal are recognised as capital
items in the Income statement.
Unlisted investments are valued at fair value following
a detailed review and appropriate challenge of the
valuations. The Managers’ unlisted investment policy
applies methodologies consistent with the International
Private Equity and Venture Capital Valuation guidelines
(‘IPEV’). These methodologies can be categorised
as follows: (a) market approach (multiples, industry
valuation benchmarks and available market prices);
(b) income approach (discounted cash flows); and
(c) replacement cost approach (net assets). The
valuation process recognises also, as stated in the IPEV
Guidelines, that the price of a recent investment may be
an appropriate starting point for estimating fair value,
however it should be evaluated using the techniques
described above.
d. Cash and cash equivalents
Cash and cash equivalents include cash in hand and
deposits repayable on demand. Deposits are repayable
on demand if they can be withdrawn at any time without
notice and without penalty or if they have a maturity or
period of notice of not more than one working day.
e. Income
i. Income from equity investments is brought into
account on the date on which the investments are
quoted ex-dividend or, where no ex-dividend date is
quoted, when the Company’s right to receive payment
is established.
ii. Special dividends are treated as repayments of
capital or income depending on the facts of each
particular case.
iii. Interest receivable/payable on bank deposits is
recognised on an accruals basis.
iv. If scrip is taken in lieu of dividends in cash, the net
amount of the cash dividend declared is credited to the
revenue account. Any excess in the value of the shares
received over the amount of the cash dividend foregone
is recognised as capital.
f. Expenses
All expenses are accounted for on an accruals basis.
Expenses are charged through the revenue account
except as follows:
i. Where they relate directly to the acquisition or disposal
of an investment, in which case they are charged to
capital. These expenses are commonly referred to as
transaction costs and comprise brokerage commission
and stamp duty.
ii. The management fee is allocated 30% to revenue
and 70% to capital in line with the Board’s expected
long-term split of revenue and capital return from the
Company’s investment portfolio.
g. Borrowings and finance costs
Finance costs are accounted for on an accruals basis.
Finance costs are allocated 30% to revenue and 70%
to capital in line with the Board’s expected long-term
split of revenue and capital return from the Company’s
investment portfolio.
81
Baillie Gifford UK Growth Trust plc
02 Income
2024
£’000
2023
£’000
Income from investments
UK dividends 9,705 7,183
Other income
Deposit interest 82 77
Total income 9,787 7,260
Special dividends received in the year amounted to £1,491,000 (2023 – £311,000) with £1,491,000 (2023 – £311,000) classified
to revenue and nil (2023 – nil) classified to capital.
03 Investment management fee
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Investment management fee 421 982 1,403 432 1,009 1,441
Details of the Investment Management Agreement are disclosed on page 46. Baillie Gifford & Co Limited’s annual management
fee is 0.5% of net asset value, calculated on a quarterly basis.
01 Principal accounting policies (continued)
h. Deferred taxation
In accordance with FRS 102, deferred taxation is provided
on all timing differences which have originated but not
reversed by the Balance sheet date, calculated on a non-
discounted basis at the tax rates expected to apply when
the timing differences reverse, based on what has been
enacted or substantially enacted, relevant to the benefit
or liability. Deferred tax assets are recognised only to
the extent that it is more likely than not that there will be
taxable profits from which underlying timing differences
can be deducted.
i. Value Added Tax (VAT)
Expenses are disclosed inclusive of the related
irrecoverable VAT.
j. Dividend Distributions
Final dividends are recognised in the year in which the
dividends are approved by the Company’s shareholders.
k. Share premium account
The balance classified as share premium represents:
• the proceeds of sales of shares held in treasury in
excess of the weighted average purchase price paid by
the Company to repurchase the shares; and
• the excess of the proceeds of issuance of new shares
over the nominal value.
l. Capital redemption reserve
The nominal value of ordinary share capital repurchased
and cancelled is transferred out of the called-up share
capital and into the capital redemption reserve.
m. Warrant exercise reserve
The premium arising on issue of shares where there were
warrants attached was apportioned between shares and
warrants as part of shareholders’ funds on the basis of
the market values of the shares and warrants on the first
day of dealing. The warrant element was referred to as
the warrant reserve. On exercise of these warrants, the
premium relating to the warrants exercised is transferred
from the warrant reserve to a warrant exercise reserve.
n. Share purchase reserve
The cost of repurchasing ordinary shares including related
stamp duty and transaction costs are taken directly to
share purchase reserve. Share purchase transactions are
accounted for on a trade date basis.
o. Capital reserve
Gains and losses on disposal of investments, changes in
the fair value of investments held, exchange differences
of a capital nature and the amount by which other assets
and liabilities valued at fair value differ from their book
cost are dealt with in the capital reserve. The sales
proceeds of treasury shares reissued are treated as a
realised profit up to the amount of the weighted average
purchase price of those shares and is transferred to
capital reserves.
p. Revenue reserve
The revenue profit or loss for the year is taken to or from
this reserve. The revenue reserve may be distributed by
way of a dividend.
Financial report
Annual Report and Financial Statements 2024
82
04 Other administrative expenses
2024
£’000
2023
£’000
General administrative expenses 187 152
Custody charges 22 9
Directors’ fees (see Directors’ remuneration report page 63) 149 133
Auditor’s remuneration for audit services* 62 59
Marketing
†
81 103
Depositary fees 33 45
Registrar fees 34 32
568 533
* Includes irrecoverable VAT of £10,000 (2023 – £9,800).
†
The Company is part of a marketing programme which includes all the Investment Trusts managed by the Manager. The
marketing strategy has an ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy
is borne in partnership by the Company and the Manager. The Manager matches the Company’s marketing contribution and
provides the resource to manage and run the programme.
05 Finance costs of borrowings
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Interest on bank loan 314 732 1,046 150 349 499
06 Tax
2024
£’000
2023
£’000
Analysis of charge in year
Tax charge for the year — —
— —
Factors affecting tax charge for year
The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 25%
(2023 – 19.5%*). The differences are explained below:
Net return on ordinary activities before taxation 389 2,245
Net return on ordinary activities multiplied by the standard rate of corporation tax in the UK of
25% (2023 – 19.5%*)
97 438
Effects of:
Capital returns not taxable/allowable 1,595 495
Income not taxable (2,403) (1,400)
Taxable losses in year not utilised 711 467
Tax charge for the year – –
* A tax rate of 19.5% reflects the increase in the UK corporation tax rate from 19% to 25% from 1 April 2023.
As an investment trust, the Company’s capital gains are not taxable.
Factors that may affect future tax charges
At 30 April 2024 the Company had surplus management expenses and losses on non-trading loan relationships of £56,916,000
(2023 – £54,073,000) which have not been recognised as a deferred tax asset. This is because the Company is not expected
to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is
unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses.
Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to obtain
approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the
revaluation or disposal of investments.
83
Baillie Gifford UK Growth Trust plc
07 Net return per ordinary share
2024
Revenue
2024
Capital
2024
Total
2023
Revenue
2023
Capital
2023
Total
Net return per ordinary share 5.68p (5.42p) 0.26p 4.05p (2.57p) 1.48p
Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £8,484,000
(2023 – £6,145,000), and on 149,401,543 (2023 – 151,603,018) ordinary shares, being the weighted average number of ordinary
shares in issue during each year.
Capital return per ordinary share is based on the net capital loss for the financial year of £8,095,000 (2023 – net capital loss of
£3,900,000), and on 149,401,543 (2023 – 151,603,018) ordinary shares, being the weighted average number of ordinary shares
in issue during each year.
There are no dilutive or potentially dilutive shares in issue.
08 Ordinary dividends
2024 2023
2024
£’000
2023
£’000
Amounts recognised as distributions in the year:
Previous year’s final dividend (paid 15 September 2023)
3.60p 3.91p 5,410 5,951
Also set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the
requirements of section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of
dividend for the year is £8,484,000 (2023 – £6,145,000).
2024 2023
2024
£’000
2023
£’000
Dividends paid and payable in respect of the year:
Proposed final dividend (payable 13 September 2024) 5.60p 3.60p 8,214 5,410
09 Fixed assets – investments
Investments in securities are financial assets classified as held at fair value through profit or loss. In accordance with Financial
Reporting Standard 102, the following tables provide an analysis of these investments based on the fair value hierarchy described
below, which reflects the reliability and significance of the information used to measure their fair value.
As at 30 April 2024
Level 1
£’000
Level2
£’000
Level 3
£’000
Total
£’000
Listed equities 293,252 – – 293,252
Unlisted preference shares* – – 3,338 3,338
Total financial asset investments 293,252 – 3,338 296,590
As at 30 April 2023
Level 1
£’000
Level2
£’000
Level 3
£’000
Total
£’000
Listed equities 301,909 – – 301,909
Unlisted preference shares* – – 627 627
Total financial asset investments 301,909 – 627 302,536
* The unlisted preference shares investment represents a holding in Wayve Technologies Ltd.
Financial report
Annual Report and Financial Statements 2024
84
09 Fixed assets – investments (continued)
Fair value hierarchy
The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the
profit and loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level
input that is significant to the fair value measurement.
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 Company’s unlisted investment at 30 April 2024 was valued using the price of a recent transaction. A sensitivity analysis of
the unlisted security’s valuation, where applicable, is on page 89.
Listed
securities
£’000
Unlisted
securities*
£’000
2024
total
£’000
2023
total
£’000
Cost of investments held at start of year 307,534 1,516 309,050 311,155
Investment holding losses at start of year (5,625) (889) (6,514) (4,570)
Value of investments held at start of year 301,909 627 302,536 306,585
Analysis of transactions during the year:
Purchases at cost 24,185 – 24,185 24,014
Sales – proceeds received (23,843) – (23,843) (25,521)
(Losses)/gains on investments (8,999) 2,711 (6,288) (2,542)
Value of investments held at end of year 293,252 3,338 296,590 302,536
Cost of investments held at end of year 299,106 1,516 300,622 309,050
Investment holding (losses)/gains at end of year (5,854) 1,822 (4,032) (6,514)
Fair value of investments held at end of year 293,252 3,338 296,590 302,536
* The unlisted securities investment represents a holding in Wayve Technologies Ltd.
The Company received proceeds of £23,843,000 (2023 – £25,521,000) from investments sold in the year. The book cost of
these investments when they were purchased was £32,613,000 (2023 – £26,119,000). These investments have been revalued
over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
Transaction costs of £118,000 (2023 – £115,000) and £9,000 (2023 – £10,000) were suffered on purchases and sales
respectively.
2024
£’000
2023
£’000
Net (losses)/gains on investments classified as held at fair value through profit or loss
Losses on sale (8,770) (598)
Changes in investment holding gains 2,482 (1,944)
(6,288) (2,542)
10 Debtors
2024
£’000
2023
£’000
Amounts falling due within one year:
Accrued income and prepaid expenses 1,622 1,454
Investment sales awaiting settlement 592 –
Other debtors and prepayments 28 25
2,242 1,479
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.
85
Baillie Gifford UK Growth Trust plc
11 Creditors – amounts falling due within one year
2024
£’000
2023
£’000
Bank loans 16,350 14,450
Share buybacks awaiting settlement 411 –
Other creditors and accruals 835 655
17,596 15,105
None of the above creditors are financial liabilities held at fair value through profit or loss. Included in other creditors is £354,000
(2023 – £368,000) in respect of the investment management fee.
At 30 April 2024, the Company had a one year £30 million unsecured revolving credit loan facility with The Royal Bank of
Scotland International Limited which expires in July 2024. At 30 April 2024, £16,350,000 was drawn down under this facility.
At 30 April 2023, £14,450,000 was drawn down under a one year £30 million unsecured revolving credit loan facility with The
Royal Bank of Scotland International Limited which expired in July 2023.
The main covenant relating to the above loan is that total borrowings shall not exceed 30% of adjusted portfolio value.
There were no breaches of loan covenants during the year.
12 Share capital
2024
Number
2024
£’000
2023
Number
2023
£’000
Allotted, called up and fully paid ordinary shares of 25p each 146,678,507 36,669 150,520,484 37,630
Treasury shares of 25p each 14,238,677 3,560 10,396,700 2,599
160,917,184 40,229 160,917,184 40,229
The Company’s shareholder authority permits it to hold shares bought back ‘in treasury’. Under such authority, treasury shares
may be subsequently either sold for cash (at a premium to net asset value per ordinary share) or cancelled. At 30 April 2024 the
Company had authority to buy back 19,001,576 ordinary shares. During the year to 30 April 2024, 3,841,977 shares were bought
back into treasury at a total cost of £6,248,000 (2023 – 2,975,000 shares were bought back into treasury at a total cost of
£4,805,000).
In the year to 30 April 2024, no shares were sold from treasury (2023 – no shares were sold from treasury ). At 30 April 2024 the
Company had authority to issue or sell from treasury 15,041,548 ordinary shares.
Financial report
Annual Report and Financial Statements 2024
86
13 Capital and reserves
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Warrant
exercise
reserve
£’000
Share
purchase
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 May 2023 40,229 11,664 19,759 417 55,628 151,603 15,122 294,422
Losses on investments – – – – – (6,288) – (6,288)
Ordinary shares bought
back into treasury
– – – – (6,248) – – (6,248)
Investment management
fee charged to capital
– – – – – (982) – (982)
Finance costs of borrowings
charged to capital
– – – – – (732) – (732)
Other exchange differences – – – – – (93) – (93)
Dividends paid in year – – – – – – (5,410) (5,410)
Revenue return on ordinary
activities after taxation
– – – – – – 8,484 8,484
At 30 April 2024 40,229 11,664 19,759 417 49,380 143,508 18,196 283,153
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Warrant
exercise
reserve
£’000
Share
purchase
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 May 2022 40,229 11,664 19,759 417 60,433 155,503 14,928 302,933
Losses on investments – – – – – (2,542) – (2,542)
Ordinary shares bought
back into treasury
– – – – (4,805) _ _ (4,805)
Investment management
fee charged to capital
– – – – - (1,009) _ (1,009)
Finance costs of borrowings
charged to capital
– – – – - (349) _ (349)
Dividends paid in year – – – – - - (5,951) (5,951)
Revenue return on ordinary
activities after taxation
– – – – - - 6,145 6,145
At 30 April 2023 40,229 11,664 19,759 417 55,628 151,603 15,122 294,422
The capital reserve includes investment holding losses of £4,032,000 (2023 – losses of £6,514,000) as disclosed in note 9.
The revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable.
14 Net asset value per ordinary share
2024 2023
2024
£’000
2023
£’000
Ordinary shares of 25p 193.0p 195.6p 283,153 294,422
Net asset value per ordinary share is based on the net assets as shown above and 146,678,507 (2023 – 150,520,484) ordinary
shares, being the number of ordinary shares in issue at the year end, excluding shares held in treasury.
87
Baillie Gifford UK Growth Trust plc
15 Analysis of change in net debt
At 1 May
2023
£’000
Cash flows
£’000
Exchange
movement
£’000
At 30 April
2024
£’000
Cash and cash equivalents
5,512 (3,502) (93) 1,917
Loans due within one year
(14,450) (1,900) – (16,350)
(8,938) (5,402) (93) (14,433)
At 1 May
2022
£’000
Cash flows
£’000
Exchange
movement
£’000
At 30 April
2023
£’000
Cash and cash equivalents
1,491 4,021 – 5,512
Loans due within one year
(6,450) (8,000) – (14,450)
(4,959) (3,979) – (8,938)
16 Contingent liabilities, guarantees and financial commitments
There were no contingent liabilities, guarantees or financial commitments at either year end.
17 Transactions with related parties and the Managers and Secretaries
The Directors’ fees for the year and interests in the Company’s shares at the end of the year are detailed in the Directors’
remuneration report on pages 61 to 64. No Director has a contract of service with the Company. During the years reported,
no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006.
The Management fee due to Baillie Gifford & Co Limited is set out in note 3 on page 81 and the amount accrued at 30 April 2024
is set out in note 11 on page 85. Details of the Investment Management Agreement are set out on page 46. With effect from 6
June 2024, the Investment Management Agreement is terminable by the Company on not less than three months’ notice or on
shorter notice in certain circumstances. Prior to this, the Investment Management Agreement was terminable by the Company on
not less than six months’ notice or on shorter notice in certain circumstances.
18 Financial instruments
The Company invests in equities for the long term so as to achieve its investment objective of long-term capital growth with the
aim of providing a total return in excess of the FTSE All-Share Index. The Company borrows money when the Board and Managers
have sufficient conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing.
In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial
instruments and markets in which it invests and could result in either a reduction in the Company’s net assets or a reduction in the
profits available for dividend.
These risks are categorised here as market risk (comprising interest rate risk, market price risk and currency 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 the short-term volatility.
The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting year.
Market risk
The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because
of changes in market prices. This market risk comprises three elements – interest rate risk, market price risk and currency risk.
The Board of Directors reviews and agrees policies for managing these risks and the Company’s Investment Manager assesses the
exposure to market risk when making individual investment decisions as well as monitoring the overall level of market risk across
the investment portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown on pages 22 to 27.
i. Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and interest payable on variable rate
borrowings. They may also impact upon the market value of the Company’s investments as the effect of interest rate movements
upon the earnings of a company may have a significant impact upon the valuation of that company’s equity.
The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when making
investment decisions and when entering borrowing agreements.
Cash generally comprises cash at bank, which can earn interest. The Board reviews on a regular basis the amount of investments
in cash and the income receivable on cash deposits.
The Company has the ability to finance part of its activities through borrowings at approved levels. The amount of such
borrowings and the approved levels are monitored and reviewed regularly by the Board.
Financial report
Annual Report and Financial Statements 2024
88
18 Financial instruments (continued)
The interest risk profile of the Company’s financial assets and financial liabilities and the maturity profile of the undiscounted
future cash flows in respect of the Company’s contractual financial liabilities at 30 April are shown below:
2024
£’000
2023
£’000
The interest rate risk profile of the Company’s financial assets at 30 April was:
Cash 1,917 5,512
The interest rate risk profile of the Company’s financial liabilities at 30 April was:
Floating rate borrowings 16,350 14,450
All short term floating rate borrowings are stated at book cost which is considered to be equal to their fair value given the facilities
are revolving credit facilities.
Interest rate sensitivity
An increase of 100 basis points in interest rates, with all other variables held constant, would have decreased the Company’s total
net assets and total return on ordinary activities for the year ended 30 April 2024 by £198,000 (2023 – £124,000). A decrease of
100 basis points would have had an equal but opposite effect.
ii. Market price risk
Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the
Company’s net assets. The Company’s exposure to changes in market prices relates to the fixed asset investments as disclosed
in note 9.
The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant
information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance, the
investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company’s objectives
and investment policies.
Other price risk sensitivity
A full list of the Company’s investments is shown on pages 26 and 27. There is a concentration of exposure to the UK, though it
should be noted that the Company’s investment may not be entirely exposed to economic conditions in the UK, as many UK listed
companies do much of their business overseas. 103.6% (2023 – 102.5%) of the Company’s net assets are invested in quoted
equities. A 10% increase in quoted equity valuations at 30 April 2024 would have increased total net assets by £29,325,000
(2023 – £30,191,000). A decrease of 10% would have had an equal but opposite effect.
1.2% (2023 – 0.2%) of the Company’s net assets are invested in unlisted (private) company investments. The fair valuation of the
private company investment is influenced by the estimates, assumptions and judgements made in the fair valuation process (see
1(b) on page 80). Where applicable, a sensitivity analysis is provided below which recognises that the valuation methodologies
employed involve subjectivity in their significant unobservable inputs and illustrates the sensitivity of the valuations to these
inputs.
89
Baillie Gifford UK Growth Trust plc
18 Financial instruments (continued)
Significant unobservable inputs*
At 30 April 2024
Valuation approach
Fair values
as at 30 April
2024
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Sensitivity
%
Sensitivity to
changes in significant
unobservable inputs
Recent transaction price 3,338 n/a
#
a,b n/a n/a
Significant unobservable inputs*
At 30 April 2023
Valuation approach
Fair values
as at 30 April
2023
£’000
Key
unobservable
inputs
Other
unobservable
inputs
†
Sensitivity
%
Sensitivity to
changes in significant
unobservable inputs
Comparable company performance 627 Selection of
comparable
companies
‡
a,b,c,d 10 If input comparable
company performance
changed by +/-10%,
the fair value would
change by £25,000
and -£33,000.
† See explanation for other unobservable inputs below (sections ‘a’ to ‘d’ as relevant).
# Whilst a recent transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor in the
unobservable inputs noted in the above table.
‡ See explanation for the selection of comparable companies in section ‘c’ below.
* Significant unobservable inputs
The variable inputs applicable to a broad category of valuation basis will vary dependent on the particular circumstances of a
private company valuation. An explanation of each of the relevant key variable inputs is provided below.
(a) Application of valuation basis
The valuation basis applied to a private company investment will vary depending on the circumstances of the investment.
When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement
of key milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks
and companies. For those investments where a trading multiples approach can be taken, the methodology will factor in
revenue, earnings or net assets as appropriate for the investment, and where a suitable correlation can be identified with the
comparable companies then a regression analysis will be performed. Discounted cash flows will also be considered where
appropriate forecasts are available.
(b) Probability estimation of liquidation events
The probability of a liquidation event such as a company sale, or alternatively an initial public offering (‘IPO’), is a key variable
input in the transaction-based and multiples-based valuation techniques. The probability of an IPO versus a company sale is
typically estimated from the outset to be 50:50 if there has been no indication by the company of pursuing either of these
routes. If the company has indicated an intention to IPO, the probability is increased accordingly to 75% and if an IPO has
become a certainty the probability is increased to 100%. Likewise, in a scenario where a company is pursuing a trade sale
the weightings will be adjusted accordingly in favour of a sale scenario, or in a situation where a company is underperforming
expectations significantly and therefore deemed very unlikely to pursue an IPO.
(c) Selection of comparable companies
The selection of comparable companies is assessed individually for each investment at the point of investment, and the
relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting
appropriate comparable companies are the industry sector in which they operate, the geography of the company’s operations,
the respective revenue and earnings growth rates and the operating margins. Typically, between 4 and 10 comparable
companies will be selected for each investment, depending on how many relevant comparable companies are identified.
The resultant revenue or earnings multiples or share price movements derived will vary depending on the companies selected
and the industries they operate in.
(d) Selection of appropriate benchmarks
The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of
each company are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used
for comparison.
Financial report
Annual Report and Financial Statements 2024
90
18 Financial instruments (continued)
Currency risk
Certain of the Company’s assets, liabilities and income could be denominated in currencies other than sterling (the Company’s
functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling
value of those items.
Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is
not significant as the majority of the Company’s assets are in investments that are readily realisable.
The Company has the power to take out borrowings, which give it access to additional funding when required. The Company’s
borrowing facilities are detailed in note 11.
Maturity profile
The maturity profile of the Company’s financial liabilities due in less than one year at 30 April was:
2024
£’000
2023
£’000
The maturity profile of the Company’s financial liabilities at 30 April was:
In less than one year
– repayment of loans 16,350 14,450
– accumulated interest 190 298
– share buybacks awaiting settlement 411 –
– other creditors and accruals 835 655
17,786 15,403
Credit risk
This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in
the Company suffering a loss. This risk is managed as follows:
• where the Investment Manager makes an investment in a bond or other security with credit risk, that credit risk is assessed and
then compared to the prospective investment return of the security in question;
• the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate
segregates the assets of the Company. The Depositary has delegated the custody function to The Bank of New York Mellon
(International) Limited. Bankruptcy or insolvency of the Custodian may cause the Company’s rights with respect to securities
held by the Custodian to be delayed. The Investment Manager monitors the Company’s risk by reviewing the Custodian’s
internal control reports and reporting its findings to the Board;
• investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Investment
Manager. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian 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.
91
Baillie Gifford UK Growth Trust plc
18 Financial instruments (continued)
Credit risk exposure
The exposure to credit risk at 30 April was:
2024
£’000
2023
£’000
Cash and cash equivalents 1,917 5,512
Accrued income and prepaid expenses 1,622 1,454
Investment sales awaiting settlement 592 –
Other debtors and prepayments 28 25
4,159 6,991
None of the Company’s financial assets are past due or impaired.
Fair value of financial assets and financial liabilities
The Company’s investments are stated at fair value and the Directors are of the opinion that the reported values of the Company’s
other financial assets and liabilities approximate to fair value.
19 Capital management
The objectives of the Company are to ensure that it will continue as a going concern and to maximise the capital return to its
equity shareholders through an appropriate level of gearing. Its borrowings are set out on note 11 on page 85. The Company does
not have any externally imposed capital requirements. The capital of the Company is the ordinary share capital as detailed in note
12. It is managed in accordance with its investment policy in pursuit of its investment objective, both of which are detailed on page
32, and shares may be repurchased or issued as explained on pages 48 and 49.
Shareholder
information
93
Baillie Gifford UK Growth Trust plc
Notice of
Annual General Meeting
The Annual General Meeting of the Company will be
held at the Leonardo Royal Hotel London City, 8-14
Cooper’s Row, London, EC3N 2BQ on Wednesday 4
September 2024, at 12.00 noon.
If you have any queries as to how to vote or how to
attend the meeting, please call us on 0800 917 2112.
Baillie Gifford may record your call.
To accurately reflect the views of shareholders of
the Company, the Board intends to hold the AGM
voting on a poll, rather than by a show of hands as
has been customary.
The Board encourages all shareholders to submit
proxy voting forms as soon as possible and, in any
event, by no later than 12.00 noon on 2 September
2024. We would encourage shareholders to monitor
the Company’s website at bgukgrowthtrust.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
trustenquiries@bailliegifford.com or call 0800 917
2112. Baillie Gifford may record your call.
TRINTY SQUARE GARDEN
S
Four Seasons
Hotel
Tower Hill
Tower Hill
Trinity House
Hilton DoubleTree
Hotel
Leonardo Royal
Hotel London City
B
y
w
a
r
d
S
t
r
e
e
t
Pepys Street
Notice is hereby given that an Annual General
Meeting of Baillie Gifford UK Growth Trust plc
will be held at Leonardo Royal Hotel London
City, 8-14 Cooper’s Row, London, EC3N 2BQ on
Wednesday 4 September 2024 at 12.00 noon
for the following purposes.
Shareholder information
Annual Report and Financial Statements 2024
94
Ordinary business
To consider and, if thought fit, to pass the following
Resolutions as Ordinary Resolutions.
01. To receive and adopt the Financial Statements
of the Company for the year to 30 April 2024
with the Reports of the Directors and of the
Independent Auditor thereon.
02. To approve the Directors’ annual report on
remuneration for the year to 30 April 2024.
03. To declare a final dividend of 5.60p per
ordinary share.
04. To re-elect Andrew Westenberger as a Director.
05. To re-elect Ruary Neill as a Director.
06. To re-elect Cathy Pitt as a Director.
07. To elect Neil Rogan is a Director.
08. To re-appoint Ernst & Young LLP as Independent
Auditor of the Company to hold office from the
conclusion of this meeting until the conclusion
of the next Annual General Meeting at which
the Financial Statements are laid before the
Company.
09. To authorise the Directors to determine the
remuneration of the Independent Auditor of the
Company.
Special business
To consider and, if thought fit, to pass Resolutions
10 and 13 as Ordinary Resolutions and Resolutions
11 and 12 as Special Resolutions.
10. That, in substitution for any existing authority,
but without prejudice to the exercise of any such
authority prior to the date hereof, the Directors
of the Company be and they are hereby
generally and unconditionally authorised in
accordance with section 551 of the Companies
Act 2006 (the ‘Act’) to exercise all the powers of
the Company to allot shares in the Company and
to grant rights to subscribe for or to convert any
security into shares in the Company (‘Securities’)
provided that such authority shall be limited to
the allotment of shares and the grant of rights
in respect of shares with an aggregate nominal
value of up to £3,651,087.50, such authority
to expire at the conclusion of the next Annual
General Meeting of the Company after the
passing of this resolution or on the expiry of
15 months from the passing of this resolution,
whichever is the earlier, unless previously
revoked, varied or extended by the Company in
a general meeting, save that the Company may
at any time prior to the expiry of this authority
make an offer or enter into an agreement which
would or might require Securities to be allotted
or granted after the expiry of such authority
and the Directors shall be entitled to allot or
grant Securities in pursuance of such an offer or
agreement as if such authority had not expired.
95
Baillie Gifford UK Growth Trust plc
11. That, subject to the passing of Resolution 10
above, and in substitution for any existing power
but without prejudice to the exercise of any such
power prior to the date hereof, the Directors of
the Company be and they are hereby generally
empowered, pursuant to sections 570 and 573
of the Companies Act 2006 (the ‘Act’), to allot
equity securities (within the meaning of section
560(1) of the Act), for cash pursuant to the
authority given by Resolution 10 above, and to
sell treasury shares for cash, as if section 561(1)
of the Act did not apply to any such allotment or
sale, provided that this power:
a. expires at the conclusion of the next Annual
General Meeting of the Company after
the passing of this Resolution or on the
expiry of 15 months from the passing of this
Resolution, whichever is the earlier, save that
the Company may, before such expiry, make
an offer or agreement which would or might
require equity securities to be allotted or
treasury shares to be sold after such expiry
and the Directors may allot equity securities or
sell treasury shares in pursuance of any such
offer or agreement as if the power conferred
hereby had not expired; and
b. shall be limited to the allotment of equity
securities or the sale of treasury shares up to
an aggregate nominal value of £3,651,087.50,
being approximately 10% of the nominal value
of the issued share capital of the Company,
as at 12 June 2024.
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 701 of the Companies Act 2006
(the ‘Act’) to make market purchases (within
the meaning of section 693(4) of the Act) of
fully paid ordinary shares of 25 pence each in
the capital of the Company (‘ordinary shares’)
(either for retention as treasury shares for
future reissue, resale, transfer or cancellation),
provided that:
a. the maximum aggregate number of ordinary
shares hereby authorised to be purchased
is 21,891,921, 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 25
pence;
c. the maximum price (excluding expenses)
which may be paid for each ordinary share
shall not be more than the higher of:
i. 5 per cent above the average closing
price on the London Stock Exchange of
an ordinary share over the five business
days immediately preceding the date of
purchase; and
ii. an amount equal to the higher of the price
of the last independent trade of an Ordinary
Share and the highest current independent
bid for an Ordinary Share on the trading
venue where the purchase is carried out;
and
d. unless previously varied, revoked or renewed
by the Company in a general meeting, the
authority hereby conferred shall expire at the
conclusion of the Annual General Meeting of
the Company to be held in respect of the year
ending 30 April 202 5, 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.
13. That, for the purposes of, and in accordance
with Article 176 of the Company’s Articles
of Association, approval is sought for the
continuance of the Company until the Annual
General Meeting of the Company to be held in
respect of the year to 30 April 2029.
By order of the Board
Baillie Gifford & Co Limited
Managers and Secretaries
4 July 2024
Shareholder information
Annual Report and Financial Statements 2024
96
Notes
01. As a member you are entitled to appoint a proxy
or proxies to exercise all or any of your rights
to attend, speak and vote at the AGM. A proxy
need not be a member of the Company but
must attend the AGM to represent you. You may
appoint more than one proxy provided each
proxy is appointed to exercise rights attached to
different shares. You can only appoint a proxy
using the procedure set out in these notes and
the notes to the proxy form. You may not use
any electronic address provided either in this
notice or any related documents (including the
circular and proxy form) to communicate with
the Company for any purpose other than those
expressly stated.
02. To be valid any proxy form or other instrument
appointing a proxy, together with any power
of attorney or other authority under which it
is signed or a certified copy thereof, must be
received by post or (during normal business
hours only) by hand at the Registrars of the
Company at Computershare Investor Services
PLC, The Pavilions, Bridgwater Road, Bristol,
BS99 6ZY or eproxyappointment.com no later
than 2 days (excluding non-working days)
before the time of the meeting or any adjourned
meeting.
03. CREST members who wish to appoint a
proxy or proxies through the CREST electronic
proxy appointment service may do so by
using the procedures described in the CREST
Manual and/or by logging on to the website
euroclear.com/CREST. CREST personal
members or other CREST sponsored members,
and those CREST members who have appointed
a voting service provider(s), should refer to their
CREST sponsor or voting service provider(s),
who will be able to take the appropriate action
on their behalf.
04. In order for a proxy appointment or instruction
made using the CREST service to be valid, the
appropriate CREST message (a ‘CREST Proxy
Instruction’) must be properly authenticated in
accordance with Euroclear UK & International
Limited’s specifications, and must contain the
information required for such instruction, as
described in the CREST Manual. The message,
regardless of whether it constitutes the
appointment of a proxy or is an amendment to
the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted
so as to be received by the Company’s registrar
(ID 3RA50) no later than 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.
05. CREST members and, where applicable,
their CREST sponsors, or voting service
providers should note that Euroclear UK &
International Limited does not make available
special procedures in CREST for any particular
message. Normal system timings and
limitations will, therefore, apply in relation to
the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST
personal member, or sponsored member, or
has appointed a voting service provider(s), to
procure that his/her CREST sponsor or voting
service provider(s) take(s)) such action as
shall be necessary to ensure that a message
is transmitted by means of the CREST system
by any particular time. In this connection,
CREST members and, where applicable, their
CREST sponsors or voting system providers are
referred, in particular, to those sections of the
CREST Manual concerning practical limitations
of the CREST system and timings.
06. The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out
in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
07. The return of a completed proxy form or
other instrument of proxy will not prevent
you attending the AGM and voting in person
if you wish.
97
Baillie Gifford UK Growth Trust plc
08. Pursuant to Regulation 41 of the Uncertificated
Securities Regulations 2001 and section 311 of
the Companies Act 2006 the Company specifies
that to be entitled to attend and vote at the
Annual General Meeting (and for the purpose of
the determination by the Company of the votes
they may cast), shareholders must be registered
in the Register of Members of the Company no
later than 2 days (excluding non-working days)
prior to the commencement of the AGM or any
adjourned meeting. Changes to the Register
of Members after the relevant deadline shall
be disregarded in determining the rights of any
person to attend and vote at the meeting.
09. Any person to whom this notice is sent who is
a person nominated under section 146 of the
Companies Act 2006 to enjoy information rights
(a ‘Nominated Person’) may, under an agreement
between him/her and the shareholder by whom
he/she was nominated, have a right to be
appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting.
If a Nominated Person has no such proxy
appointment right or does not wish to exercise it,
he/she may, under any such agreement, have a
right to give instructions to the shareholder as to
the exercise of voting rights.
10. The statement of the rights of shareholders in
relation to the appointment of proxies in Notes
1 and 2 above does not apply to Nominated
Persons. The rights described in those Notes
can only be exercised by shareholders of the
Company.
11. Under section 338 of the Companies Act 2006,
members meeting the qualification criteria set
out in note 14 below may, subject to certain
conditions, require the Company to circulate
to members notice of a resolution which may
properly be moved and is intended to be moved
at that meeting. The conditions are that: (a) the
resolution must not, if passed, be ineffective
(whether by reason of inconsistency with any
enactment or the Company’s constitution
or otherwise); (b) the resolution must not
be defamatory of any person, frivolous or
vexatious; and (c) the request: (i) may be in hard
copy form or in electronic form; (ii) must identify
the resolution of which notice is to be given
by either setting out the resolution in full or,
if supporting a resolution sent by another
member, clearly identifying the resolution which
is being supported; (iii) must be authenticated
by the person or persons making it; and (iv)
must be received by the Company no later than
23 July 2024.
12. Under section 338A of the Companies Act
2006, members meeting the qualification
criteria set out at note 14 below may require the
Company to include in the business to be dealt
with at the Annual General Meeting a matter
(other than a proposed resolution) which may
properly be included in the business (a matter of
business). The request must have been received
by the Company not later than 23 July 2024.
The conditions are that the matter of business
must not be defamatory of any person, frivolous
or vexatious. The request must identify the
matter of business by either setting it out in full
or, if supporting a statement sent by another
member, clearly identify the matter of business
which is being supported. The request must be
accompanied by a statement setting out the
grounds for the request. Members seeking to do
this should write to the Company providing their
full name and address.
13. Under section 527 of the Companies Act 2006,
members meeting the qualification criteria set
out in note 14 below may require the Company
to publish, on its website, (without payment) a
statement (which is also passed to the Auditor)
setting out any matter relating to the audit of the
Company’s Financial Statements, including the
Auditor’s Report and the conduct of the audit.
Such requests must be made in writing and must
state your full name and address.
14. In order to be able to exercise the members’
rights in notes 11 to 13, the relevant request
must be made by: (a) members representing
at least 5% of the total voting rights of all
the members who have a right to vote on the
resolution to which the requests relate; or
(b) at least 100 members who have a right to
vote on the resolution to which the requests
relate and hold shares in the Company on
which there has been paid up an average sum,
per member, of at least £100. Such requests
should be sent to the Company at Calton
Square, 1 Greenside Row, Edinburgh, EH1 3AN.
Electronic requests permitted under section
338 (see note 11) should be sent to
trustenquiries@bailliegifford.com.
Shareholder information
Annual Report and Financial Statements 2024
98
15. Information regarding the Annual General
Meeting, including information required by
section 311A of the Companies Act 2006, is
available from the Company’s page of the
Managers’ website at bgukgrowthtrust.com.
16. Members have the right to have questions raised
at the meeting in accordance with section 319A
of the Companies Act 2006.
17. 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.
18. As at 12 June 2024 (being the last practicable
day prior to the publication of this notice) the
Company’s issued share capital consisted of
146,043,507 ordinary shares, carrying one vote
each. Therefore, the total voting rights in the
Company as at 12 June 2024 were 146,043,507
votes. Voting on the resolutions will be conducted
by way of a poll. This will ensure an exact and
definitive result.
19. Any person holding 3% or more of the total
voting rights of the Company who appoints a
person other than the Chairman of the meeting
as his/her proxy will need to ensure that both
he/she and his/her proxy complies with their
respective disclosure obligations under the UK
Disclosure and Transparency Rules.
20. No Director has a contract of service with the
Company.
99
Baillie Gifford UK Growth Trust plc
Further shareholder
information
Baillie Gifford UK Growth Trust plc is an
investment trust. Investment trusts offer
investors the following:
• participation in a diversified portfolio of shares;
• constant supervision by experienced professional
managers; and
• the Company is free from capital gains tax on
capital profits realised within its portfolio, although
investors are still liable for capital gains tax on
profits when selling their investment.
How to invest
The Company’s shares are traded on the London
Stock Exchange. They can be bought by placing an
order with a stockbroker, or by asking a professional
adviser to do so. If you are interested in investing
directly in Baillie Gifford UK Growth Trust plc, you
can do so online. There are a number of companies
offering real time online dealing services. Find
out more by visiting the investment trust pages at
bailliegifford.com.
Sources of further information
on the Company
The price of shares is quoted daily in the
Financial Times and can also be found on the
Company’s page of the Managers’ website at
bgukgrowthtrust.com, Trustnet at trustnet.com and
on other financial websites. Company factsheets are
also available on the Baillie Gifford website and are
updated monthly. These are available from Baillie
Gifford on request.
Baillie Gifford UK Growth Trust
share identifiers
ISIN GB0007913485
Sedol 0791348
Ticker BGUK
Legal Entity Identifier 549300XX386SYWX8XW22
The ordinary shares of the Company are listed on
the London Stock Exchange and their price is shown
in the Financial Times.
Key dates
Ordinary shareholders normally receive one dividend
in respect of each financial year paid in September.
The Annual Report and Financial Statements are
normally issued in July and the AGM is held in
September.
Share register enquiries
Computershare Investor Services PLC maintains
the share register on behalf of the Company. In the
event of queries regarding shares registered in your
own name, please contact the Registrars on
0370 703 0025.
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.
Shareholder information
Annual Report and Financial Statements 2024
100
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 0370 703 0025.
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.
2024
Number of
shares held
2024
%
2023
Number of
shares held
2023
%
Institutions 42,761,097 29.1 37,186,797 24.7
Intermediaries/
Retail Savings
Platforms 85,619,970 58.4 101,232,343 67.3
Individuals 7,337,614 5.0 8,050,122 5.3
Marketmakers 10,959,826 7.5 4,051,222 2.7
146,678,507 100.0 150,520,484 100.0
Analysis of shareholders at 30 April
These Financial Statements have been approved by
the Directors of Baillie Gifford UK Growth Trust plc.
Baillie Gifford only provides information about its
products and does not provide investment advice.
The staff of Baillie Gifford and Baillie Gifford UK
Growth’s Directors may hold shares in Baillie Gifford
UK Growth and may buy or sell such shares from
time to time.
Cost-effective ways to buy and hold shares
in Baillie Gifford UK Growth Trust
Information on how to invest in Baillie Gifford UK
Growth Trust can be found at bgukgrowthtrust.com.
101
Baillie Gifford UK Growth Trust plc
Communicating
with shareholders
Trust magazine UK Growth Investment Trust plc web page at
bgukgrowthtrust.com
Trust magazine
Trust is the Baillie Gifford investment trust magazine
which is published twice a year. It provides an insight
to our investment approach by including interviews
with our fund managers, as well as containing
investment trust news, investment features and
articles about the trusts managed by Baillie Gifford,
including Baillie Gifford UK Growth Trust plc. Trust
plays an important role in helping to explain our
products so that readers can really understand them.
For a copy of Trust, please contact the Baillie Gifford
Client Relations Team (see contact details opposite).
You can subscribe to Trust magazine or view a digital
copy at bailliegifford.com/trust.
Suggestions and questions
Any suggestions on how communications with
shareholders can be improved are welcomed, so
please contact the Baillie Gifford Client Relations
Team and give them your suggestions. They will also
be very happy to answer questions that you may
have about Baillie Gifford UK Growth Trust.
UK Growth Trust on the Web
Up-to-date information about Baillie Gifford
UK Growth Trust plc, is on the Baillie Gifford
UK Growth Trust plc pages of the Managers’ website
at bgukgrowthtrust.com. You will find full details
of Baillie Gifford UK Growth Trust plc, including
recent portfolio information and performance figures.
Client relations team contact details
You can contact the Baillie Gifford Client Relations
Team by telephone, email or post:
Telephone: 0800 917 2112
Your call may be recorded for training or monitoring
purposes.
Email: trustenquiries@bailliegifford.com
Website: bailliegifford.com
Address:
Baillie Gifford Client Relations Team
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
Please note that Baillie Gifford is not permitted
to give financial advice. If you would like advice,
please ask an authorised intermediary.
Shareholder information
Annual Report and Financial Statements 2024
102
Insights
UK Growth
Stewardship Report
Genus and Rio Tinto case
studies provide examples of
the UK Equities Team 2022
and 2023 engagements.
UK equities:
growth on our doorstep
Our specialist approach is
well-placed to take advantage of
early-stage British businesses.
Ashtead:
hiding in plain sight
This little-known equipment rental
company is one of the UK’s most
exciting growth stories.
103
Baillie Gifford UK Growth Trust plc
Alternative Investment Fund Managers
(‘AIFM’) regulations
In accordance with the AIFM Regulations,
information in relation to the Company’s leverage
and the remuneration of the Company’s AIFM,
Baillie Gifford & Co Limited, is required to be made
available to investors.
AIFM Remuneration
In accordance with the Regulations, the
AIFM remuneration policy is available at
bailliegifford.com or on request (see contact
details on page 108). The numerical remuneration
disclosures in respect of the AIFM’s reporting period
are available at bailliegifford.com.
Leverage
The Company’s maximum and actual leverage levels
(see Glossary of terms and Alternative Performance
Measures on pages 104 to 106) at 30 April 2024 are
shown below:
Gross method Commitment method
Maximum limit 2.00:1 2.00:1
Actual 1.05:1 1.05:1
Automatic exchange of information
In order to fulfil its obligations under UK Tax
Legislation relating to the automatic exchange of
information, the Company is required to collect
and report certain information about certain
shareholders.
The legislation will require investment trust
companies to provide personal information to
HMRC on certain investors who purchase shares in
investment trusts. As an affected company, Baillie
Gifford UK Growth Trust plc will have to provide
information annually to the local tax authority on
the tax residencies of a number of non-UK based
certificated shareholders and corporate entities.
Shareholders, excluding those whose shares are
held in CREST, who come on to the share register
will be sent a certification form for the purposes of
collecting this information.
For further information, please see HMRC’s Quick
Guide: Automatic Exchange of Information –
information for account holders gov.uk/government/
publications/exchange-of-information-account-
holders.
Third party data provider disclaimer
No third party data provider (‘Provider’) makes any
warranty, express or implied, as to the accuracy,
completeness or timeliness of the data contained
herewith nor as to the results to be obtained by
recipients of the data.
No Provider shall in any way be liable to any
recipient of the data for any inaccuracies, errors
or omissions in the index data included in this
document, regardless of cause, or for any damages
(whether direct or indirect) resulting therefrom. No
Provider has any obligation to update, modify or
amend the data or to otherwise notify a recipient
thereof in the event that any matter stated herein
changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have
any liability whatsoever to you, whether in contract
(including under an indemnity), in tort (including
negligence), under a warranty, under statute or
otherwise, in respect of any loss or damage suffered
by you as a result of or in connection with any
opinions, recommendations, forecasts, judgements,
or any other conclusions, or any course of action
determined, by you or any third party, whether or
not based on the content, information or materials
contained herein.
FTSE Index data
London Stock Exchange Group plc and its group
undertakings (collectively, the ‘LSE Group’). ©
LSE Group 2024 FTSE Russell is a trading name
of certain of the LSE Group companies. ‘FTSE®’
‘Russell®’, ‘FTSE Russell®’, is/are a trade mark(s) of
the relevant LSE Group companies and is/are used
by any other LSE Group company under license. All
rights in the FTSE Russell indexes or data vest in the
relevant LSE Group company which owns the index
or the data. Neither LSE Group nor its licensors
accept any liability for any errors or omissions in
the indexes or data and no party may rely on any
indexes or data contained in this communication.
No further distribution of data from the LSE Group is
permitted without the relevant LSE Group company’s
express written consent. The LSE Group does not
promote, sponsor or endorse the content of this
communication.
Shareholder information
Annual Report and Financial Statements 2024
104
An alternative performance measure (‘APM’) is a financial measure of historical or future financial
performance, financial position, or cash flows, other than a financial measure defined or specified in the
applicable financial reporting framework. The APMs noted below are commonly used measures within the
investment trust industry and serve to improve comparability between investment trusts.
Total assets
This is the Company’s definition of adjusted total assets, being the total value of all assets held less all
liabilities (other than liabilities in the form of borrowings).
Net Asset Value
Net Asset Value (‘NAV’) is the value of total assets less liabilities (including borrowings). The NAV per share is
calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares).
Net Liquid Assets
Net liquid assets comprise current assets less current liabilities, excluding borrowings.
Discount/premium (‘APM’)
As stockmarkets and share prices vary, an investment trust’s share price is rarely the same as its NAV.
When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the
discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a
percentage of the NAV per share. If the share price is higher than the NAV per share, it is said to be trading
at a premium.
2024 2023
Closing NAV per share 193.0p 195.6p
Closing share price
163.5p 168.0p
Discount (15.3%) (14.1%)
Glossary of terms and Alternative
Performance Measures (‘APM’)
105
Baillie Gifford UK Growth Trust plc
Total return (APM)
The total return is the return to shareholders after reinvesting the net dividend on the date that the share
price goes ex-dividend.
2024
NAV
2024
share price
2023
NAV
2023
share price
Closing NAV per share/share price
(a) 193.0p 163.5p 195.6p 168.0p
Dividend adjustment factor*
(b) 1.0197 1.0226 1.0204 1.0232
Adjusted closing NAV per share/share price (c = a x b) 196.8p 167.2p 199.6p 171.9p
Opening NAV per share/share price
(d) 195.6p 168.0p 197.4p 174.2p
Total return (c ÷ d)-1 0.6% (0.5%) 1.1% (1.3%)
* The dividend adjustment factor is calculated on the assumption that the dividend of 3.60p (2023 – 3.91p) paid by the Company during the year were
reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.
Ongoing charges (APM)
The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average
net asset value. The ongoing charges have been calculated on the basis prescribed by the Association of
Investment Companies.
A reconciliation from the expenses detailed in the Income statement on page 75 is provided below.
2024 2023
Investment management fee £1,403,000 £1,441,000
Other administrative expenses
£568,000 £533,000
Total expenses (a) £1,971,000 £1,974,000
Average net asset value (b) £280,829,000 £283,920,000
Ongoing charges ((a) ÷ (b) expressed as a percentage)
0.70% 0.70%
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow
money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders’
assets is called ‘gearing’. If the Company’s assets grow, the shareholders’ assets grow proportionately more
because the debt remains the same. But if the value of the Company’s assets falls, the situation is reversed.
Gearing can therefore enhance performance in rising markets but can adversely impact performance in
falling markets.
Shareholder information
Annual Report and Financial Statements 2024
106
Invested gearing is the Company’s borrowings adjusted for cash and cash equivalents expressed as a
percentage of shareholders’ funds.
2024 2023
Borrowings £16,350,000 £14,450,000
Less: cash and cash equivalents
(£1,917,000) (£5,512,000)
Adjusted borrowings £14,433,000 £8,938,000
Shareholders’ funds £283,153,000 £294,422,000
Invested gearing 5% 3%
Drawn gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds.
2024 2023
Borrowings £16,350,000 £14,450,000
Shareholders’ funds
£283,153,000 £294,422,000
Drawn gearing 6% 5%
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers (AIFM) Regulations, leverage is any method
which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is
expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on a
gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s
positions after the deduction of sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the deduction of sterling
cash balances and after certain hedging and netting positions are offset against each other. The Company’s
maximum and actual leverage as at the year end are set out on page 103.
Active Share (APM)
Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that
differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio
that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an
active share of zero indicates a portfolio that tracks the index.
Unlisted (Private) Company
An unlisted (private) company means a company whose shares are not available to the general public for
trading and not listed on a stock exchange.
107
Baillie Gifford UK Growth Trust plc
Sustainable Finance Disclosure
Regulation (‘SFDR’)
The EU Sustainable Finance Disclosure Regulation
(‘SFDR’) does not have a direct impact in the UK
due to Brexit, however, it applies to third-country
products marketed in the EU. As Baillie Gifford UK
Growth Trust plc 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
stewardship principles and guidelines as its policy
on integration of sustainability risks in investment
decisions.
Baillie Gifford & Co believes that a company
cannot be financially sustainable in the long run if
its approach to business is fundamentally out of
line with changing societal expectations. It defines
‘sustainability’ as a deliberately broad concept which
encapsulates a company’s purpose, values, business
model, culture, and operating practices.
Baillie Gifford & Co’s approach to investment is
based on identifying and holding high quality growth
businesses that enjoy sustainable competitive
advantages in their marketplace. To do this it
looks beyond current financial performance,
undertaking proprietary research to build up an
in-depth knowledge of an individual company
and a view on its long-term prospects. This
includes the consideration of sustainability factors
(environmental, social and/or governance matters)
which it believes will positively or negatively
influence the financial returns of an investment.
The likely impact on the return of the portfolio
from a potential or actual material decline in the
value of investment due to the occurrence of
an environmental, social or governance event
or condition will vary and will depend on several
factors including but not limited to the type, extent,
complexity and duration of an event or condition,
prevailing market conditions and existence of any
mitigating factors.
Whilst consideration is given to sustainability
matters, there are no restrictions on the investment
universe of the Company, unless otherwise stated
within in its investment objective & policy. Baillie
Gifford & Co can invest in any companies it believes
could create beneficial long-term returns for
investors. However, this might result in investments
being made in companies that ultimately cause a
negative outcome for the environment or society.
More detail on the Manager’s approach to
sustainability can be found in the stewardship
principles and guidelines document, available publicly
on the Baillie Gifford website bailliegifford.com and by
scanning the QR code below.
The underlying investments do not take into account
the EU criteria for environmentally sustainable
economic activities established under the EU
Taxonomy Regulation.
Shareholder information
Annual Report and Financial Statements 2024
108
Directors
Chairman: Carolan Dobson
Ruary Neill
Cathy Pitt
Neil Rogan
Andrew Westenberger
Depository
The Bank of New York Mellon
(International) Limited
160 Queen Victoria Street
London
EC4V 4LA
Alternative Investment Fund
Managers, Secretaries and
Registered Office
Grimaldi House
28 St James’s Square
London
SW1Y 4JH
T: +44 (0)131 275 2000
bailliegifford.com
Registrar
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
T: +44 (0)370 703 0025
Company Broker
Winterflood Investment Trusts
Riverbank House
2 Swan Lane
London
EC4R 3GA
Independent Auditor
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
Further information
Client Relations Team
Baillie Gifford & Co
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)800 917 2112
trustenquiries@bailliegifford.com
Company details
bgukgrowthtrust.com
Company Registration No. 2894077
ISIN: GB0007913485
Sedol: 0791348
Ticker: BGUK
Legal Entity Identifier:
549300XX386SYWX8XW22
Company
information
109
Baillie Gifford UK Growth Trust plc
Calton Square, 1 Greenside Row, Edinburgh EH1 3AN
Telephone +44 (0)131 275 2000
bgukgrowthtrust.com