Annual Report and 30 April 2024 Financial Statements ## Baillie Gifford ## UK Growth ## Trust plc 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. Notes None of the views expressed in this document If you are in any doubt as to the action you should should be construed as advice to buy or sell a take you should consult your stockbroker, bank particular investment. manager, solicitor, accountant or other independent financial adviser authorised under the Financial Investment trusts are UK public listed companies Services and Markets Act 2000 immediately if you and as such comply with the requirements of the are in the United Kingdom or, if not, from another Financial Conduct Authority (‘FCA’). They are not appropriately authorised financial adviser. authorised or regulated by the FCA. If you have sold or otherwise transferred all of your Baillie Gifford UK Growth Trust plc currently holding in Baillie Gifford UK Growth Trust plc, please conducts its affairs, and intends to continue to forward this document, together with accompanying conduct its affairs, so that the Company’s Ordinary documents, but not your personalised Form of Proxy, Shares can qualify to be considered as a mainstream as soon as possible to the purchaser of transferee, investment product and can be recommended by or to the stockbroker, bank or other agent through Independent Financial Advisers to ordinary retail whom the sale or transfer was or is being effected investors in accordance with the rules of the FCA in for delivery to the purchaser or transferee. relation to non-mainstream investment products. This document is important and requires your immediate attention. Cover: St. Paul’s Cathedral. London, UK Baillie Gifford UK Growth Trust plc Financial highlights 02 ## Contents 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 01 Introduction ## 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. ## Financial ## highlights Year to 30 April 2024 Total returns * Share price NAV Benchmark ## -0.5% 0.6% 7.5% Share price total return * Discount * (figures rebased to 100 at 30 April 2023) (figures plotted at month end dates) 90 80 MFJDNOSAJJMA (10%) 110 2023 † (12%) 100 (14%) (16%) * Alternative performance measure — see Glossary of Terms and Alternative Performance Measures on pages 104 to 106. † The benchmark is the FTSE All-Share Index. (18%) Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 103. Past performance is not a guide to future performance. (20%) | | | | A AMFJDNOSAJJMA | | --- | --- | --- | --- | | 02 | Annual Report and Financial Statements 2024 | | | | 2023 2024 | | 2024 | | | Share price NAV Benchmark Discount* | | | | Baillie Gifford UK Growth Trust plc The Shard. London, UK 03 ## Strategic ## report 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. Baillie Gifford UK Growth Trust plc # Chairman's statement ![img-0.jpeg](img-0.jpeg) **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. 05 Strategic report Board review These broader style and macroeconomic factors explain a significant amount of the investment In February, the Board conducted a rigorous review underperformance but not all. The balance between of the services Baillie Gifford provides to the successful and unsuccessful individual stock Company to inform the Board as to what it should investments over this period has not been in the recommend to shareholders for the continuation Company’s favour. vote due at this year’s Annual General Meeting (‘AGM’). The Managers’ report on pages 09 to 12 provides further detail on the investment performance of The Board reviewed the Managers’ provision of the portfolio. company services, third party oversight, internal risk controls, marketing, shareholder support, quality of Unquoted investments staff and overall commitment to our Company and the investment trust sector and found these to be of In January 2022 we made our first investment in an excellent quality, provided with commitment and an unquoted company by investing into the shares integrity. of Wayve, a UK software company developing an AI system that allows vehicles to learn whilst Turning to our Company’s investment performance, driving. This is an extremely competitive area with the Board reviewed the Managers’ investment many companies operating in it and it is a tribute to philosophy and processes, the portfolio risk Wayve’s technology excellence that a recent funding analysis, the largest stock contributors to positive round has raised more than $1billion from Softbank, and negative performance, the quality of the Microsoft and Nvidia. companies held in the portfolio, turnover levels and style tilts. The Board found these to be in line with Following how we valued this company since the Managers’ committed growth style and that investment is a good example of how we approach predicted risk of investments was set appropriately unquoted valuations. We initially invested for a committed growth-orientated long-term fund. £1,516,000 but when similar listed companies’ share The Board examined the quality of the Managers’ prices fell, we lowered our valuation to £582,000 on research before stock purchase and thereafter and 31 October 2023. Now this recent funding valuation found it very thorough and informed. has established a deal price, we have revalued the shares to the deal price, and they are now valued at There has been much press comment about the £3,338,000. difficulties the UK stock market is facing, the lack of traditional buyers for UK equities and the pressure A handsome uplift on our purchase price of 120% that companies feel to move their listings to the US and a good reflection of how long-term growth to achieve higher ratings. The Board examined these investing with commitment and analysis can bear issues with the support of their corporate brokers rewards. and Baillie Gifford and found that whilst these problems were real, they were not overwhelming. Continuation votes and There are several brokers providing research on performance-triggered exit opportunity each of our companies, and none of our portfolio In accordance with the Company’s Articles of companies, that are currently held, have moved Association, shareholders have the right to vote on their listing. The UK equity market is now generally the continuation of the Company every five years, considered to be inexpensive. That view is supported the next vote being at this year’s Annual General by the number of takeover approaches appearing for Meeting in September. UK listed companies both from private equity buyers and international companies. Having concluded its review of Baillie Gifford’s ability to deliver on the Company’s investment Over this five-year period the macroeconomic objective, the Board continues to believe firmly in backdrop of sluggish economic growth, rising the Company’s mandate and has confidence that interest rates and a spike in inflation has not been over the longer term the portfolio managers, through conducive to Baillie Gifford’s growth investment application of Baillie Gifford’s investment process, style. In addition, the UK benchmark index has have the capacity to outperform. Accordingly, the a significant exposure to resource and financial Board is recommending that shareholders vote companies whose profits tend to be cyclical with in favour of continuation at the Annual General limited long term sustainable growth and as such are Meeting. not areas that meet the Managers’ long term growth requirements. 06 Annual Report and Financial Statements 2024 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. 07 Strategic report Sustainability Disclosure Requirements The meeting will include a presentation by the portfolio managers on the prospects for UK equities (‘SDR’) and the positioning of the portfolio. They and the In November 2023, the Financial Conduct Authority Board will be available to answer any questions. (‘FCA’) published its sustainability disclosure Light refreshments will be available. requirements and investment labels regime (‘SDR’) to address concerns about misleading sustainability Outlook claims. SDR includes an opt-in labelling regime for sustainable investment products, additional The portfolio managers and the Board believe that disclosure requirements and restrictions on the the portfolio’s current valuations fail to adequately use of sustainability terms. It also establishes reflect the value of the progress being made by the anti-greenwashing (‘AGW’) rules. Investment trusts investee companies. If this observation is correct, and their Managers are in scope of the SDR. once the macro backdrop becomes more favourable Although investment trusts are not directly in scope for growth investors, for example lower interest rates of the AGW requirements, the rules apply indirectly and reduced levels of inflation and/or a more stable to them, mostly via obligations imposed on their geopolitical backdrop, then the significantly higher Managers. growth expectations for the portfolio against the broader market should act as a catalyst for long-term Although Environmental, Social and Governance share price appreciation. (‘ESG’) factors are taken into consideration by our portfolio managers as part of their investment The current portfolio is comprised of exciting growth analysis, the Company itself does not have an businesses with large market opportunities, strong explicit sustainability objective and so under SDR is competitive positions and, importantly, the cultural potentially going to be categorised as ‘Non-labelled’ adaptability to succeed in a rapidly changing world. rather than ‘Labelled’ or ‘Other’. Having the nerve and patience to continue holding them through turbulent times is likely to be key in realising their long-term potential. Annual General Meeting It is intended that the Company’s AGM will be held on Wednesday 4 September 2024 at 12.00 noon at Carolan Dobson the Leonardo Royal Hotel London City, 8-14 Cooper’s Chairman Row, London, EC3N 2BQ. Shareholders are warmly 13 June 2024 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. 08 Annual Report and Financial Statements 2024 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 Moreover, an impressive new management team performance of the first half of the Company’s have articulated a clear and simple strategy that financial year in the interim report. In the second they are beginning to execute on. This is not half of the year, the Company’s NAV total return meant to be dismissive of possible China risks for broadly matched the index, the FTSE All-share Prudential but as bottom up stock pickers we see total return, so the result for the year remained this is an example of a business that is growing and unsatisfactory (over the six months to 30 April getting stronger even if the share price appears 2024, the Company’s NAV per share total return was disconnected to these fundamentals. 14.2% compared to 14.2% for the FTSE All-Share Although some other businesses that had guided total return). There are a number of strands to this: to softer short-term trading fared better, such as while the absolute performance of the index over the the leader in UK kitchens Howden Joinery and IT year was respectable, the performance of individual services business Softcat, a greater number in the holdings in the portfolio was much more dispersed, portfolio simply marked time as the market appeared reflecting in particular a slant to the downside to place more emphasis on the cloudy near term with the stockmarket displaying displeasure at any economic and geopolitical outlook, rather than the unexpected bad news, particularly with growth long term opportunities for the businesses. We did businesses. For example, a further unexpected see particularly strong operational performance charge against profits led to a further lurch down in rewarded in the strong share price performance the share price of wealth manager St James’s Place, of specialist marketer 4imprint and the foreign while concerns about the health of the Chinese exchange payment disruptor Wise. Lastly, Wayve, our economy notably impacted the shares of pig breeder sole unquoted investment, which is an autonomous Genus, life insurer Prudential and to some extent driving technology business, was written up the luxury goods retailer Burberry. While painful in substantially following its latest funding round where the short term, we believe in all these cases there a significant sum of new investment was raised at a remains a long term growth investment case in and higher valuation. 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. 09 Strategic report ## 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. ## Delivered median total returns by earnings growth quintile Rolling five-year horizons (1994 - 2023) ![img-1.jpeg](img-1.jpeg) 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. All investment strategies have the potential for profit and loss. ## 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. ## 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. 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. 10 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Could we have mitigated the the market. However, we believe that current valuations fail to adequately reflect the value of underperformance? the progress we are seeing in the businesses we We asked the investment risk team at Baillie invest in; they underestimate the adaptability of the Gifford to undertake analysis to identify whether management teams running these businesses, and we could have done anything different from 2021 they overlook the resilient financial characteristics when performance turned down. The short answer that the portfolio possesses. Rather than a cause is that after looking at various scenarios, the only for despondency, this disconnect between share way we could have achieved an outcome aligned prices and fundamentals is a key reason why we with the index would have been to significantly remain confident in the long-term outlook for the change the portfolio by taking large new positions performance of the portfolio. in some of the largest businesses in the UK, such as Shell, BP and HSBC. Many of these companies The three charts below illustrate the superior quality in our view do not have obvious long term growth and resiliency characteristics of the portfolio relative potential but they have been beneficiaries of the to the index. While we would urge caution in relying macroeconomic turmoil described above because too heavily on spuriously precise earnings forecasts, of their near term earnings certainty. Owning many it is encouraging that the portfolio is invested in of these large ‘value’ stocks would have mitigated companies with higher growth expectations than the underperformance, however, it would have also broader market. undermined our active, bottom up, long-term growth Why does this matter? As we noted earlier, our investment style. We consider it imperative to stick investment philosophy is anchored around a core to our long-term growth investment philosophy belief that share prices will follow fundamentals because the alternative is trying to second guess, over the long term. Enduring growth should act as a and trade around, short term swings in “style” in catalyst for long-term share price appreciation. stock markets. Attempting to do so in our view could make things far worse for shareholders. We continue to believe the portfolio is populated with exciting growth businesses, with large market opportunities, strong competitive positions, and Why do we believe that performance will importantly, the cultural adaptability to succeed improve over the next five years? in a rapidly changing world. Having the nerve and With a high inflationary and interest rate patience to continue holding them through turbulent environment, we understand why our style of times is key to realising their long-term potential. growth investing has been out of favour with Solid foundations Resilient financials Compelling growth expecations 7 6.0 6 5.6 5 | | 36% | | | 97% | 4 | | | --- | --- | --- | --- | --- | --- | --- | | gross margins | | positive earnings | | | | | | | | | | | 3 | 2.7 | | | vs | | or cashflow | | | | 26% index* 8 7. 6 2 1 0 Sales 1Y Earnings 1Y forward growth p.a. forward growth p.a. % Baillie Gifford UK Growth Trust plc FTSE All-Share Index 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. 11 Strategic report Outlook for the portfolio We see an abundance of significant and Earlier in their lifecycles are companies like AI unrecognised potential within the current portfolio. autonomous driving start-up Wayve, the surgical We see it in long-standing holdings like Auto Trader, endoscopy business Creo Medical, and next Experian and Ashtead which have been working generation sequencing company Oxford Nanopore. successfully to expand their already substantial All three are at the vanguard of progress in their market opportunities, are embedding themselves respective fields and are true world leaders. ever more deeply into their customers’ businesses We invest in companies for decades, so trust in and whose competitive advantages are now deeper management is of great importance for us. We are than they have ever been. We also see it in relatively fortunate to be invested alongside some of the most more recent purchases like IT service providers accomplished leadership teams such as those at Kainos and Softcat which enjoy multi-decade growth Games Workshop and 4imprint whose long-term tailwinds from the adoption of technology by both mindset and dedication to doing the right thing have enterprises and the public sector, and where the been a crucial ingredient in the enormous success market fails to appreciate unique cultural strengths both businesses have achieved over time. which make both stand out from competitors and be most trusted advisors to customers. Your portfolio managers work in an investment firm which allocates capital to some of the most Despite all the doom and gloom surrounding promising public and private enterprises across the the state of innovation in the UK, we look to world. We can both say, with some confidence, that long-standing holdings like Renishaw and Genus the companies in this portfolio can hold their own whose commitment to research and development across that global investment stage. 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 Iain McCombie and Milena Mileva pressing productivity and sustainability challenges. Baillie Gifford & Co 13 June 2024 12 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## The managers’ core ## investment principles Investment philosophy Active investment management The following are the three core principles It is our observation that too much attention underpinning our investment philosophy. We have is paid to the composition of market indices a consistent, differentiated long-term investment and active managers should make meaningful approach to managing UK equities that should investments in their best ideas regardless of the stand investors in the Company in good stead: weightings of the index. As a result, shareholders should expect the composition of the portfolio to Growth be significantly different from the benchmark and hence the outcome in returns (in both good and We search for the few companies which have bad periods) will also be significantly different from the potential to grow substantially and profitably the benchmark. This differentiation is a necessary over many years. Whilst we have no insight into the condition for delivering superior returns over a short-term direction of a company’s share price, we long-term time horizon. believe that, over the longer term, those companies which deliver above average growth in cash flows Portfolio construction flows from the investment will be rewarded with above average share price beliefs stated above. 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. 13 Strategic report ## 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 Governance fit for purpose We believe that companies that are run for the Corporate governance is a combination of structures long term are more likely to be better investments and behaviours; a careful balance between systems, over our clients’ time horizons. We encourage our processes and people. Good governance is the holdings to be ambitious, focusing on long-term essential foundation for long-term company value creation and capital deployment for growth. success. We firmly believe that there is no single We know events will not always run according to governance model that delivers the best long-term plan. In these instances we expect management outcomes. We therefore strive to push back against to act deliberately and to provide appropriate one-dimensional global governance principles in transparency. We think helping management to favour of a deep understanding of each company resist short-term demands from shareholders often we invest in. We look, very simply, for structures, protects returns. We regard it as our responsibility to people and processes which we think can maximise encourage holdings away from destructive financial the likelihood of long-term success. We expect to engineering towards activities that create genuine trust the boards and management teams of the value over the long run. Our value will often be in companies we select, but demand accountability supporting management when others don’t. if that trust is broken. Alignment in vision and practice Sustainable business practices Alignment is at the heart of our stewardship A company’s ability to grow and generate value for approach. We seek the fair and equitable treatment our clients relies on a network of interdependencies of all shareholders alongside the interests of between the company and the economy, society and management. While assessing alignment with environment in which it operates. We expect holdings management often comes down to intangible factors to consider how their actions impact and rely on these and an understanding built over time, we look for relationships. We believe long-term success depends clear evidence of alignment in everything from on maintaining a social licence to operate and look capital allocation decisions in moments of stress for holdings to work within the spirit and not just the to the details of executive remuneration plans and letter of the laws and regulations that govern them. committed share ownership. We expect companies Material factors should be addressed at the board to deepen alignment with us, rather than weaken it, level as appropriate. where the opportunity presents itself. 14 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Baillie Gifford ## proxy voting We believe that ‘active ownership’ of our clients’ Company meeting record 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. Number of meetings voted 26 A broad cross section of our investment staff are with management involved in our ongoing work on stewardship. In the Number of meetings with at least 17 same way that our investment approach is based one against, withhold or abstain around empowered and independent teams, our Meetings not voted 4 voting and engagement is led by the individual investment teams. In keeping with our decentralised and autonomous culture, our investment teams will, Voting distribution 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 Votes for 95.4% website and can be viewed at bgukgrowthtrust.com. Votes against 2.1% Votes abstained 0.4% No vote 2.1% 15 Strategic report Peak District, UK 16 Annual Report and Financial Statements 2024 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 Outcome To establish progress in relation to board In our meeting with the chair, we were reassured appointments and have an introductory meeting that the regulatory process was progressing well and with the new CEO. that Mr Olley, as a board member, had good insight into the implementation of the group’s investment Discussion strategy. Following our meeting with Mr Olley, we In May 2023, we had a meeting with the chair, were pleased that he was finally in the CEO seat. Deanna Oppenheimer, to discuss the timeline for Our intention is to leave him to get on with the job appointing the new CEO Dan Olley. Later in the year, and we expect to engage again in the first half of we had an introductory meeting with Mr Olley, who 2024. 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. 17 Strategic report Ashtead Objective Outcome During the period, Ashtead published its annual We were reassured by the explanation provided report and failed to disclose its Scope 3 carbon and recognise that Ashtead is continuing to emissions despite previously assuring us that the work towards estimating the company’s Scope 3 information would be published. We then spoke emissions footprint with reasonable accuracy. with its head of ESG to understand the reasons for We were assured that the relevant data will be not reporting the relevant carbon data. We were published no later than its next annual report. also provided with an update on the company’s Following our engagement, in Q1 2024, we were decarbonisation progress. pleased to see that Ashtead had published its Scope 3 emissions data. 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. 18 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Abcam Objective Outcome Having engaged with multiple stakeholders Our stewardship often involves engaging with a wide post the takeover bid announcement, we undertook range of stakeholders. For example, during the year the sale of our holding before the EGM. We did we spoke with Dr Jonathan Milner (co-founder and so with a heavy heart having been investors since shareholder in Abcam) in order to help finalise our Abcam’s listing on AIM in 2005. Our decision position on Danaher Corporation’s US$24-a-share reflected, on the one hand, our reluctance to endorse cash bid for Abcam. the board’s valuation of the business and, on the Discussion other, our unease about the material uncertainties ahead if the bid was defeated. Shortly before the At the end of Q3 2023, Dr Milner set out his view that EGM, Dr Milner conceded defeat and the takeover the bid undervalued Abcam and that he could deliver by Danaher was approved. 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. 19 Strategic report Boohoo.com Objective Outcome This was part of ongoing engagement to deepen our We engaged with Boohoo on several occasions understanding of the challenges that exist for both following the revelations in 2020 regarding the the company and the industry. We were encouraged working conditions inside the company’s operations by the progress made since 2020 but material in Leicester. Over the course of the past year, we supply chain risks remain. Following our engagement took the opportunity to examine the progress the with the company, we decided to sell the holding company had subsequently made, particularly with in January 2024. Having let the dust settle on the auditing the extensive supply chain. post-pandemic headwinds, we concluded that the Discussion competitive backdrop had deteriorated significantly and that it was unlikely that the business will return Speaking with the Director of Responsible Sourcing to profitable growth over the medium term. 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. 20 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Dartford Crossing. Kent, UK 21 Strategic report ## Review of ## investments A review of the Company’s ten largest investments as at 30 April 2024 © Auto Trader Group plc Auto Trader Group Experian Dominant advertising portal for Credit analytics and data provider. used cars in the UK. Through its It enables businesses to form an large audience of UK car buyers opinion on the creditworthiness and the continuous development of potential customers and helps of its unparalleled automotive consumers to understand and data assets, Auto Trader is improve their ability to borrow. becoming ever more deeply It also protects businesses and embedded in the workflows individual customers against fraud of retailers. The company has and identity theft. We see Experian significantly stepped up its efforts as exceptionally well-placed to to evolve from an advertising to a benefit from the relentless trend transactional platform, providing towards the digitisation of all a superior buying experience to aspects of both consumer and consumers and helping retailers corporate life. become more efficient. | Sector Technology | | | Sector Industrials | | | | --- | --- | --- | --- | --- | --- | | Valuation £15,065,000 | | | Valuation £14,798,000 | | | | % of total assets 5.0 | | | % of total assets 4.9 | | | | Valuation at | £13,706,000 | | Valuation at | £11,376,000 | | | 30 April 2023 | | | 30 April 2023 | | | | % of total assets at | | 4.4 | % of total assets at | | 3.7 | | 30 April 2023 | | | 30 April 2023 | | | | Net purchases/ | | – | Net purchases/ | £1,401,000 | | | (sales) in year to | | | (sales) in year to | | | | 30 April 2024 | | | 30 April 2024 | | | 22 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc © Games Workshop Limited © Ashtead Group plc © Volution Group Games Workshop Ashtead Volution Group Miniature gaming company, An equipment rental company Manufacturer of ventilation known for its fantasy game, operating predominantly in the products which range from Warhammer. Its excellent US. It benefits from a structural simple extractor fans to competitive position translates shift towards increased rental more complex heat recovery into strong pricing power and penetration, underpinned by solutions. Its products are high margins. We believe its compelling economic and very well-positioned to benefit addressable market is expanding regulatory drivers. We see Ashtead from environmental regulation as the hobby gains popularity as one of the leading consolidators in building and construction. in the US & Far East. It is also in this very fragmented industry. For instance, its heat recovery focused on monetising its deep We believe its scale and continued ventilation solutions are already pool of intellectual property investments make it very hard helping customers to meet across the broader media space, for smaller competitors to match new energy efficiency building as evidenced by its recent TV/film the breadth and availability of its standards. This is a promising partnership with Amazon. equipment offering. tailwind that could boost organic growth for years to come. | Sector Consumer discretionary | | | Sector Industrials | | | Sector Industrials | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Valuation £14,735,000 | | | Valuation £14,059,000 | | | Valuation £13,946,000 | | | | % of total assets 4.9 | | | % of total assets 4.7 | | | % of total assets 4.7 | | | | Valuation at | £14,758,000 | | Valuation at | £11,014,000 | | Valuation at | £13,888,000 | | | 30 April 2023 | | | 30 April 2023 | | | 30 April 2023 | | | | % of total assets | | 4.8 | % of total assets at | | 3.6 | % of total assets at | | 4.5 | | at 30 April 2023 | | | 30 April 2023 | | | 30 April 2023 | | | | Net purchases/ | | – | Net purchases/ | | – | Net purchases/ | | – | | (sales) in year to | | | (sales) in year to | | | (sales) in year to | | | | 30 April 2024 | | | 30 April 2024 | | | 30 April 2024 | | | 23 Strategic report © Howdens Credit: M4OS Photos / Alamy Stock Photo © Renishaw plc | Howden Joinery | 4imprint | Renishaw | | --- | --- | --- | | Manufacturer and | Distributor of logo-printed | World leading engineering | | supplier of kitchens to small | promotional products. It operates | company. Renishaw has | | builders/property developers | in a large and highly fragmented | developed unparalleled expertise | | in the UK. Its decentralised, | market and has consistently | in metrology. It has a strong track | | customer-centric business model | taken market share from | record of innovations, which is | | has proved very successful and it | smaller competitors. Over the | underpinned by consistently | | is very well-positioned to continue | past few years, the long-term | high levels of research and | | to take market share. It has a | focused management team have | development spending. | | compelling customer proposition | transformed the efficiency of | Renishaw’s products are integral | | which combines local depots in | their marketing spend. We believe | to continued progress in advanced | | convenient locations, high | that the company’s scale will | manufacturing and robotics. | | stock-availability and good | become an increasing competitive | | | customer service. It also has | advantage which, combined with | | | a long-term opportunity to | strong financial characteristics, | | | replicate its successful model in | makes it an attractive investment. | | the less mature French market. | Sector Consumer discretionary | | | Sector Consumer discretionary | | | Sector Industrials | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Valuation £12,600,000 | | | Valuation £11,918,000 | | | Valuation £10,590,000 | | | | % of total assets 4.2 | | | % of total assets 4.0 | | | % of total assets 3.5 | | | | Valuation at | £9,847,000 | | Valuation at | £7,883,000 | | Valuation at | £8,601,000 | | | 30 April 2023 | | | 30 April 2023 | | | 30 April 2023 | | | | % of total assets | | 3.2 | % of total assets | | 2.6 | % of total assets at | | 2.8 | | at 30 April 2023 | | | t 30 April 2023 | | | 30 April 2023 | | | | Net purchases/ | | – | Net purchases/ | £748,000 | | Net purchases/ | £567,000 | | | (sales) in year to | | | (sales) in year to | | | (sales) in year to | | | | 30 April 2024 | | | 30 April 2024 | | | 30 April 2024 | | | 24 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc © Shutterstock/Wise Wise Softcat Global FX transfer company. Leading distributor of IT solutions. Having recognised that the This is first and foremost a process of transferring money relationship business, and Softcat abroad is expensive, slow, opaque differentiates itself through the and inconvenient, Wise is on a quality of service provided by mission to improve the process its highly engaged employees, for both individual consumers who share in the success of the and businesses. Wise’s strong business. Its business model and customer proposition provides culture set it apart from its peers, the potential for a long run way and its scale and investments in for continued market share gains developing its capabilities add to a in what is a large, global, sustainable competitive advantage. cross-border market. | Sector Industrials | | | Sector Technology | | | | --- | --- | --- | --- | --- | --- | | Valuation £10,577,000 | | | Valuation £9,720,000 | | | | % of total assets 3.5 | | | % of total assets 3.2 | | | | Valuation at | £7,494,000 | | Valuation at | £5,344,000 | | | 30 April 2023 | | | 30 April 2023 | | | | % of total assets at | | 2.4 | % of total assets at | | 1.7 | | 30 April 2023 | | | 30 April 2023 | | | | Net purchases/ | | – | Net purchases/ | £3,050,000 | | | (sales) in year to | | | (sales) in year to | | | | 30 April 2024 | | | 30 April 2024 | | | 25 Strategic report # 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** | 26 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc | 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** | | **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** | | **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. 27 Strategic report # One year summary | | 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% | | | 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 | | Year to 30 April | 2024 | 2023 | 2023 | | --- | --- | --- | --- | | **Year's high and low** | **High** | **Low** | **Low** | | Net asset value per share | 201.7p | 165.6p | 207.3p | | Share price | 173.4p | 141.8p | 179.0p | | 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** | 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. 28 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Five year ## summary 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. Five year total return * performance (Discount)/premium * to net asset value (figures rebased to 100 at 30 April 2019) (figures plotted on a monthly basis) 75 50 20232022202120202019 April † Annual change in net asset value and share price Annual net asset value and share price total returns * (relative to the benchmark† total returns) 20% 45% 10% 30% 0% 15% (10%) 0% (15%) 30% 150 5% 60% 20242023202220212020 20242023202220212020 0% 125 | | NAV total return* | | Share price total return* | | --- | --- | --- | --- | | | relative to the benchmark | | relative to the benchmark | | (5%) | | † | | † 100 (20%) (10%) * Alternative performance measure – see Glossary of Terms and Alternative Performance Measures on pages 104 to 106. (30%) † The benchmark is the FTSE All-Share Index. (15%) (40%) Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 103. Past performance is not a guide to future performance. (20%) (30%) 202420232022202120202019 2024 29 April April April (Discount)/premium* Share price NAV Benchmark NAV total return* Share price total return* total return* total return* Strategic report ## Ten year ## record Capital | | | | | | Shareholders’ | | | Net asset | | | | (Discount)/ | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | At | Total assets | | Borrowings | | | funds | value per share | | | Share price | | | premium | | * | | 30 April | | £’000 | | £’000 | | £’000 | | | p | | p | | | % | | 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) Revenue Gearing ratios Dividends | | | | Available | | | Revenue | | | paid and | | Ongoing | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Gross | for ordinary | | | earnings per | | | proposed per | | | charges | | | Invested | | | Drawn | | | | Year to | revenue | shareholders | | | ordinary share | | | ordinary share | | | | ratio | * | gearing | | * | gearing | | * | | 30 April | £’000 | | | £’000 | | | p | | | p | | % | | | % | | | % | | | | | | | | | | | | | † | | | | | 9 10 | | | | | | 2014 10,758 9,843 6.12 5.50 | | | | | | | | | | | | 0.47 | | | | | | | | | | | | | | | | | | | † | | | | | (4) – | | | | | | 2015 10,372 9,475 5.89 6.00 | | | | | | | | | | | | 0.47 | | | | | | | | | 2016 9,839 9,262 5.77 5.20 0.32 | | | | | | | | | | | | | | | (2) – | | | | | | 2017 10,069 9,248 5.83 5.40 0.62 | | | | | | | | | | | | | | | (1) – | | | | | | 2018 10,980 10,099 6.58 6.00 0.63 | | | | | | | | | | | | | | | 3 4 | | | | | | | | | | | | | | | | | | | # | | (1) – | | | | | 2019 8,658 7,710 5.12 4.45 0.51 | 2020 6,562 5,644 3.75 3.10 0.66 | (1) – | | --- | --- | | 2021 5,297 4,351 2.88 2.42 0.65 | – 1 | | 2022 7,787 6,737 4.39 3.91 0.63 | 2 2 | | 2023 7,260 6,145 4.05 3.60 0.70 | 3 5 | | 2024 9,787 8,484 5.68 5.60 0.70 | 5 6 | 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%. 30 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Cumulative Performance (taking 2014 as 100) Dividends paid | | Net asset | | | Net asset | | | | | | | | Revenue | | and proposed | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | At | value per | | | value total | | Share | Share price | | Benchmark | † | earnings per | | | per ordinary | | | 30 April | | share | | | return* | price | total return* Benchmark | † | total return | * | ordinary share | | | | 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% * Ten year total return performance 150 100 50 2023202220212020201920182017201620152014 † NAV total return* Share price total return* Benchmark total return* 200 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. 31 2024 Strategic report ## Business ## review Business model Business and status Baillie Gifford UK Growth Trust plc (‘the Company’) The portfolio is invested primarily in listed equities is a public company limited by shares and is but may also invest in unlisted investments, incorporated in England. The Company is an including private companies, convertible securities, investment company within the meaning of section and equity-related derivatives. 833 of the Companies Act 2006 and carries on On acquisition of any unlisted investment, business as an investment trust. Investment trusts the Company’s aggregate holding in unlisted are UK public listed companies and their shares are investments shall not exceed 10% of the total asset traded on the London Stock Exchange. They invest value of the Company. in a portfolio of assets in order to spread risk. The Company has a fixed share capital, although, subject The Company may also use derivatives for efficient to shareholder approval sought annually, it may portfolio management purposes. purchase its own shares or issue shares. The price of The majority of investments are constituents of the the Company’s shares is determined, like other listed FTSE 350 Index although constituents of other UK shares, by supply and demand. The Company has FTSE indices may be held. been approved as an investment trust by HM Revenue & Customs subject to the Company The Company is also permitted to make investments continuing to meet the eligibility conditions. The outside of the UK where these investments have a Directors are of the opinion that the Company has meaningful connection with the UK. continued to conduct its affairs so as to enable The size of individual stock holdings depends on it to comply with the ongoing requirements of the Managers’ degree of conviction, not the stock’s section 1158 of the Corporation Tax Act 2010 and weight in any index. the Investment Trust (Approved Company) (Tax) The Company may not invest more than 15% of its Regulations 2011. total assets in any one single company measured at The Company is an Alternative Investment Fund the time of investment. (AIF) for the purposes of the UK Alternative The maximum permitted investment in other listed Investment Fund Managers Regulations. investment companies (including investment trusts) Investment objective is 10% of total assets at the time of purchase unless such companies have a stated investment policy not The principal investment objective of the Company to invest more than 15% of their total assets in other is to achieve capital growth predominantly from listed investment companies, in which case the limit investment in UK equities, with the aim of providing is 15%. a total return in excess of the FTSE All-Share Index. The level of gearing within the portfolio is agreed by Investment policy the Board and the absolute amount of any gearing The Company invests in a portfolio of between 35 should not exceed 20% of the net asset value of the and 65 companies selected for their potential to Company at the time of drawdown. provide, in aggregate, attractive returns relative to The Company can also hold up to 20% of total the total return of the FTSE All-Share Index. assets in cash or cash equivalents. 32 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Key performance indicators | At each Board meeting, the | Share price, net asset value | | | | | --- | --- | --- | --- | --- | | Directors consider a number | | | † | | | | and comparative index | | total | | | of performance measures to | | * | | 50 | returns assess the Company’s success The total return is the return to % in achieving its objectives. shareholders after reinvesting the 20 The Board uses key performance net dividend on the date that the indicators (KPIs) to measure share price goes ex-dividend. the progress and performance (10) 1 year 5 years 10 years of the Company over time when ● Net asset value total return* discharging its duties. These KPIs ● Share price total return* are established industry measures. † Share price (discount)/premium * As stock markets and share prices (5) vary, an investment trust’s share price (10) is rarely the same as its net asset value (NAV). When the share price is lower (15) than the NAV per share it is said to be trading at a discount. If the share price (20) 1 year 5 years10 years is higher than the NAV per share, this ● Average (discount)/premium* of situation is called a premium. NAV to share price over stated period to 30 April 2024 Ongoing charges *# Ongoing charges are the total 0.6 recurring expenses (excluding the Company’s cost of dealing in 0.4 investments and borrowing costs) 0.2 incurred by the Company as a percentage of the daily average 0.0 net asset value. 2014 2024 ● Ongoing charges* 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 80 0 of underperformance over the short and medium term. 0.8 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. 33 ● Comparative index total return* Strategic report Borrowings robust assessment of the principal and emerging risks facing the Company, including those that would The Company has a one year £30 million unsecured threaten its business model, future performance, revolving credit loan facility with The Royal Bank of regulatory compliance, solvency or liquidity. A Scotland International Limited which is due to expire description of these risks and how they are being on 6 July 2024 and negotiations are underway to managed or mitigated is set out below. There have replace this facility. At 30 April 2024, £16,350,000 been no significant changes to the nature of the had been drawn down (2023 – £14,450,000). principal risks during the year. An upwards arrow, Further details of the Company’s borrowings are set dash or downwards arrow has been included to out in note 11 on page 85. show if the risk level has increased, not changed or decreased since it was reported in last year’s Annual Principal and emerging risks Report and Financial Statements. As explained on pages 55 and 56 there is an The Board considers heightened macroeconomic ongoing process for identifying, evaluating and and geopolitical concerns to be factors which managing the risks faced by the Company on a exacerbate existing areas of risk as categorised and regular basis. The Directors have carried out a further explained below. | Financial | What is the risk? | How is it managed? | Current assessment of risk | | --- | --- | --- | --- | | risk | The Company’s assets consist | The Board has, in particular, | This risk increased due | | | predominately of listed | considered the impact of | to increased market volatility | | | securities and its principal and | heightened market volatility due | as a result of heightened | | | emerging risks are therefore | to macroeconomic factors such | geopolitical concerns and | | | market related and include | as higher inflation and interest | macroeconomic factors, | | | market risk (comprising currency | rates and geopolitical concerns, | as well as the UK market | | | risk, interest rate risk and other | including the Russia-Ukraine | being seemingly out of | | | price risk), liquidity risk and | conflict. To monitor and, where | favour with investors. | | | credit risk. An explanation of | possible, mitigate these risks the | | | | those risks and how they are | Board considers at each meeting | | | | managed is contained in note 18 | various portfolio metrics including | | | | on pages 87 to 91. | 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. Investment What is the risk? How is it managed? Current assessment of risk strategy risk Pursuing an investment strategy To mitigate this risk, the Board This risk increased as the to fulfil the Company’s objective regularly reviews and monitors: market’s appetite for growth which the market perceives to be the Company’s objective and stocks, typically held by the unattractive or inappropriate, or investment policy and strategy; Company, declined during the the ineffective implementation of the investment portfolio and recent period of heightened an attractive or appropriate its performance; the level of macroeconomic and strategy, may lead to reduced discount/premium to net asset geopolitical concern. returns for shareholders and, as value at which the shares trade; a result, a decreased demand for and movements in the share the Company’s shares. This may register and raise any matters of lead to the Company’s shares concern with the Managers. trading at a widening discount to their net asset value. Decreased RiskIncreased Risk No Change 34 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc | Discount risk | What is the risk? | How is it managed? | Current assessment of risk | | --- | --- | --- | --- | | | The discount/premium at | To manage this risk, the | The Company’s shares | | | which the Company’s shares | Board monitors the level of | continued to trade at a | | | trade relative to its net asset | discount/premium at which the | discount. In the year to | | | value can change. The risk of a | shares trade and the Company | 30 April 2024, the | | | widening discount is that it may | has authority to buy back its | Company bought back | | | undermine investor confidence | existing shares when deemed | 3,841,977 shares. | | | in the Company. | by the Board to be in the best | | interests of the Company and its shareholders. Climate and What is the risk? How is it managed? Current assessment of risk governance Perceived problems on This is mitigated by the The Investment Manager Environmental, Social and Investment Managers’ thorough continued to employ strong risk | Governance (‘ESG’) matters | ESG stewardship and engagement | ESG stewardship and | | --- | --- | --- | | in an investee company could | policies, which are available to | engagement policies. | | lead to that company’s shares | view on the Managers’ website: | | | being less attractive to investors, | bailliegifford.com and have been | | | adversely affecting its share | reviewed and endorsed by the | | | price, in addition to potential | Company, and are fully integrated | | | valuation issues arising from any | into the investment process as | | | direct impact of the failure to | well as the extensive upfront and | | | address the ESG weakness on | ongoing due diligence which the | | | the operations or management | Investment Managers undertake | | | of the investee company (for | on each investee company. | | | example in the event of an | This due diligence includes | | | industrial accident or spillage). | assessment of the risks inherent | | | Repeated failure by the | in climate change (see page 57). | | | Investment Manager to identify | The Directors have considered | | | ESG weaknesses in investee | the impact of climate change on | | | companies could lead to the | the Financial Statements of the | | | Company’s own shares being less | Company and this is included in | | | attractive to investors, adversely | note 1 to the Financial Statements | | | affecting its own share price. | on page 79. | | Regulatory What is the risk? How is it managed? Current assessment of risk risk Failure to comply with To mitigate this risk, Baillie All control procedures were applicable legal and regulatory Gifford’s Business Risk, working effectively. requirements such as the tax Internal Audit and Compliance rules for investment companies, Departments provide regular the FCA Listing Rules and the reports to the Audit Committee Companies Act could lead to on Baillie Gifford’s monitoring suspension of the Company’s programmes. Major regulatory change could impose Stock Exchange listing, disproportionate compliance financial penalties, a qualified burdens on the Company. In such audit report or the Company circumstances representation is being subject to tax on made to ensure that the special capital gains. 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. Decreased RiskIncreased Risk No Change 35 Strategic report Custody and What is the risk? How is it managed? Current assessment of risk depositary Safe custody of the Company’s To mitigate this risk, the Audit All control procedures were assets may be compromised Committee receives six monthly working effectively. risk through control failures by the reports from the Depositary Depositary, including breaches confirming safe custody of the of cyber security. 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. Operational What is the risk? How is it managed? Current assessment of risk risk Failure of Baillie Gifford’s To mitigate this risk, Baillie All control procedures were systems or those of other Gifford has a comprehensive working effectively. third party service providers business continuity plan which could lead to an inability to facilitates continued operation provide accurate reporting of the business in the event of and monitoring or a a service disruption or major misappropriation of assets. 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. | Leverage | What is the risk? | How is it managed? | Current assessment of risk | | --- | --- | --- | --- | | risk | The Company may borrow | To mitigate this risk, all borrowing | Whilst lenders’ willingness | | | money for investment purposes | facilities require the prior approval | to initiate and maintain | | | (sometimes known as ‘gearing’ | of the Board and leverage levels | lending facilities reduced | | | or ‘leverage’). If the investments | are discussed by the Board and | during the year, the one year | | | fall in value, any borrowings | Managers at every meeting. | £30m revolving credit facility | | | will magnify the impact of this | Covenant levels are monitored | was replaced with another | | | loss. If borrowing facilities are | regularly. The Company’s | one year £30m revolving | | | not renewed, the Company | investments are predominately | credit facility which expires | | | may have to sell investments to | in listed securities, at present, | in July 2024. Negotiations | | | repay borrowings. | that are readily realisable. | are underway to replace this | | | | Further information on leverage | facility. | can be found on page 103 and in the Glossary of terms and Alternative Performance Measures on pages 104 to 106. Decreased RiskIncreased Risk No Change 36 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Political What is the risk? How is it managed? Current assessment of risk risk Political change in areas in Political developments are This risk increased as which the Company invests or monitored and considered governments and consumers may invest may have practical by the Board. The Board around the world continue consequences for the Company. continues to assess the potential to assess the impact of consequences for the Company’s heightened geopolitical future activities including those tensions. that may arise from further constitutional change. Cyber What is the risk? How is it managed? Current assessment of risk security A cyber attack on Baillie Gifford’s To mitigate this risk, the Audit This risk is seen as increasing network or that of a third party Committee reviews Reports due to recent indications risk service provider could impact on Internal Controls published that the continuation of the confidentiality, integrity or by Baillie Gifford and other geopolitical tensions could availability of data and systems. third party service providers. lead to cyber attacks. Baillie Gifford’s Business Risk Emerging technologies, Department report to the Audit including AI, could potentially Committee on the effectiveness increase information security of information security controls risks. In addition, service in place at Baillie Gifford and its providers operate a hybrid business continuity framework. approach of remote and Cyber security due diligence office working, thereby is performed by Baillie Gifford increasing the potential of on third party service providers a cyber security threat. which includes a review of crisis management and business continuity frameworks. Emerging 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 risks 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. Decreased RiskIncreased Risk No Change 37 Strategic report ## 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. 38 Annual Report and Financial Statements 2024 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 Great importance is placed by the Board on communication Company’s owners: providing them with a with shareholders and the Annual General Meeting provides return for their investment in accordance the key forum for the Board and Managers to present to with the Company’s investment policy and shareholders on the performance of the Company and on the objective is the reason for its existence. 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, The Company’s Board has delegated The Board seeks to engage with its Managers and Secretaries, Managers and the management of the Company’s and other service providers in a collaborative and collegiate Secretaries portfolio and the administration of manner, encouraging open and constructive discussion and the Company’s operations including debate, while also ensuring that appropriate and regular challenge fulfilment of regulatory and taxation is brought and evaluation conducted. This approach aims to reporting requirements to Baillie Gifford. enhance service levels and strengthen relationships with the Baillie Gifford is therefore responsible Company’s providers, with a view to ensuring the interests of the for the substantial activities of the Company’s shareholders are best served by keeping cost levels Company and have the most immediate proportionate and competitive, and by maintaining the highest influence on its conduct towards the other standards of business conduct. stakeholders, subject to the oversight and strategic direction provided by the Board. | Portfolio | As all of the Company’s operations are | The Board is cognisant of the need to consider the impact of | | --- | --- | --- | | companies | conducted by third party professional | the Company’s investment strategy and policy on wider society | | | providers, it is the companies held in | and the environment. The Board considers that its oversight | | | its investment portfolio which have the | of environmental, social and governance (‘ESG’) matters is an | | | primary real-world impact in terms of | important part of its responsibility to all stakeholders. The Board’s | | | social and environmental change, both | review of the Investment Manager includes an assessment of their | | | positively and negatively, as well as | ESG approach and its application in making investment decisions. | | | generating, through their commercial | The Board reviews Governance Engagement reports, which | | | success, the investment growth sought | document the Investment Manager’s interactions with investee | | | by the Company’s shareholders. | companies on ESG matters (see pages 17 to 20). The portfolio | | | The investee companies have an interest | managers regularly report to the Board on discussions with | | | in understanding their shareholders’ | portfolio companies on operational and strategic matters. | investment rationale in order to assure themselves that long-term business strategies will be supported. Registrar The Company’s registrars provide an The Investment Manager liaises with the registrars to ensure the interface with those shareholders who frequency and accuracy of communications to shareholders is hold the Company’s shares directly. 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. 39 Strategic report Stakeholder Why we engage How we engage and what we do Auditor The Company’s Auditor has a responsibility The Company’s Auditor meets with the Audit Commitee, in the to provide an opinion on whether the absence of the Managers where deemed necessary, and the Company’s Financial Statements as a Managers undertake to provide all information requested by the whole are free from material misstatement, Auditor in connection with the Company’s annual audit promptly as set out in more detail in the Auditor’s and to ensure that it is complete and accurate in all respects. report to the members on pages 67 to 74. Brokers The Company’s brokers provide an The Company’s brokers regularly attend Board meetings, and interface between the Company’s Board provide reports to those meetings, in order to keep the Board and its institutional shareholders. 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 | The depositary is responsible for the | The Depositary provides the Audit Committee with a report on | | --- | --- | --- | | and Custodian | safekeeping of the Company’s financial | its monitoring activities. The Investment Manager’s Business | | | instruments, as set out in more detail on | Risk team reviews the relevant Bank of New York Mellon | | | page 56. | 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 The Association of Investment Companies The Company is a member of the AIC, and the Directors peers (‘AIC’) and the Company’s investment and/or the Investment Manager and Secretaries (as appropriate) trust industry peers have an interest in participate in technical reviews, requests for feedback on the Company’s conduct and performance, proposed legislation or regulatory developments, corporate as adverse market sentiment towards governance discussions and/or training. one investment trust can affect attitudes towards the wider industry. Investment Investment platforms provide an interface The Investment Manager liaises with the various investment platforms with shareholders who invest in the platforms on strategies for improving communications with the Company indirectly. 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 The Company’s legal advisers review all legal agreements in instruments (debentures and private connection with the Company’s debt arrangements and advise the placement loan notes) and banks providing Board on the appropriateness of the terms and covenants therein. fixed or revolving credit facilities provide The Managers and Secretaries ensure that the frequency and the Company’s gearing and have an accuracy of reporting on, for example, covenant certification, is interest in the Company’s ongoing appropriate and that correspondence from the lenders receives a financial health and viability. prompt response. Wider society and No entity, corporate or otherwise, The Board and Investment Manager’s interactions with the the environment can exist without having an influence various stakeholders as noted above form the principal forms on the society in which it operates of direct engagement with wider society and in respect of the or utilising the planet’s resources. environment (commercial, financial, and in terms of planetary Through its third-party relationships, health and resources). 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. 40 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc The Board recognises the importance of keeping Employees, human rights and community the interests of the Company’s shareholders, issues and of acting fairly between them, firmly front of The Board recognises the requirement to provide mind in its key decision making and the Company information about employees, human rights Secretaries are at all times available to the Board and community issues. As the Company has no to ensure that suitable consideration is given to the employees, all its Directors are non-executive range of factors to which the Directors should have and all its functions are outsourced, there are no regard. In addition to ensuring that the Company’s disclosures to be made in respect of employees, stated investment objective was being pursued, key human rights and community issues. Further decisions and actions during the year which have information on the Company’s approach to required the Directors to have regard to applicable environmental, social and governance (‘ESG’) section 172 factors include: matters is provided on page 57. • In July 2023, the Company replaced its one year £30 million revolving credit facility with Gender representation The Royal Bank of Scotland International Limited The Board comprises five Directors, two female with another £30 million revolving one year and three male. The Company has no employees. credit facility with The Royal Bank of Scotland The Board’s policy on diversity is set out on page 54. International Limited which provides the Company a borrowing capacity in order to generate Environmental, social and governance policy improved returns to shareholders through the Details of the Company’s policy on socially deployment of gearing; responsible investment can be found under • As part of the Board’s succession planning, Corporate governance and stewardship on page 57. the Board completed its recruitment process The Company considers that it does not fall within and appointed Neil Rogan on 1 January 2024. the scope of the Modern Slavery Act 2015 and it is This appointment is consistent with the AIC not, therefore, obliged to make a slavery and human Corporate Governance Code principle that a trafficking statement. In any event, the Company ‘successful company is led by an effective board, considers its supply chains to be of low risk as whose role is to promote the long-term sustainable its suppliers are typically professional advisers. success of the company, generating value for A statement by the Managers under the Act shareholders and contributing to wider society’; and has been published on the Managers’ website • The buying back of £6.2 million of the Company’s at bailliegifford.com. own shares during the year to 30 April 2024. These shares were bought back into treasury for Future developments of the company subsequent reissue at a later date, at a discount to The outlook for the Company for the next 12 months net asset value, on terms that enhance NAV/share is set out in the Chairman’s Statement on pages 05 for remaining shareholders. 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 41 Strategic report King’s Cross Tunnel. London, UK 42 Annual Report and Financial Statements 2024 ## Governance ## report 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 ## Directors and ## management 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 Carolan Dobson Discovery Trust plc and abrdn Smaller Companies Income Trust plc. Chairman Appointed 2014, Appointed Chairman in 2016 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 Andrew Investments and held senior finance roles at Barclays Capital and Westenberger Deutsche Bank. He is a Chartered Accountant. Director Appointed 2017 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. Ruary Neill Director Appointed 2018 44 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc 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. Cathy Pitt Director Appointed 2021 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. Neil Rogan Director Appointed 2024 Managers and secretaries The Company has appointed Baillie Gifford & Co The Managers of Baillie Gifford UK Growth plc’s Limited, a wholly owned subsidiary of Baillie Gifford portfolio are Iain McCombie and Milena Mileva. Iain & Co, as its Alternative Investment Fund Manager and Milena are both partners at Baillie Gifford. (‘AIFM’) and Company Secretary. Baillie Gifford Baillie Gifford & Co and Baillie Gifford & Co Limited & Co Limited has delegated investment management are both authorised and regulated by the Financial services to Baillie Gifford & Co. Baillie Gifford & Co is Conduct Authority. an investment management firm formed in 1927 out of the legal firm Baillie Gifford, WS, which has been All of the Directors are members of the following involved in investment management since 1908. Committees: Nomination, Remuneration and Management Engagement. All Directors are Baillie Gifford is one of the largest investment trust members of the Audit Committee with the exception managers in the UK and currently manages twelve of Carolan Dobson, who stepped down from the investment trusts. Baillie Gifford also manage a listed Committee in December 2018. 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. 45 Governance report ## Directors’ ## report The Directors present their Report together with the Careful consideration has been given by the Board audited Financial Statements of the Company for the as to the basis on which the management fee is year to 30 April 2024. charged. The Board considers that maintaining a relatively low ongoing charges ratio is in the Corporate governance best interests of shareholders. The Board is also of the view that calculating the fee with reference to The Corporate Governance Report is set out on performance would be unlikely to exert a positive pages 51 to 58 and forms part of this Report. influence over the long-term performance. Managers and company secretaries The Board considers the Company’s investment management and secretarial arrangements on an Baillie Gifford & Co Limited, a wholly owned ongoing basis and a formal review is conducted by subsidiary of Baillie Gifford & Co, has been the Management Engagement Committee annually. appointed as the Company’s Alternative Investment The Committee considered, amongst others, the Fund Manager (‘AIFM’) and Company Secretary. following topics in its review: the quality of the Baillie Gifford & Co Limited has delegated portfolio personnel assigned to handle the Company’s affairs; management services to Baillie Gifford & Co. the investment process and the results achieved to Dealing activity and transaction reporting has been date; investment performance; the administrative further sub-delegated to Baillie Gifford Overseas services provided by the Secretaries and the quality Limited and Baillie Gifford Asia (Hong Kong) Limited. of information provided; the marketing efforts The Investment Management Agreement between undertaken by the Managers; the relationship with the AIFM and the Company sets out the matters over the Managers; and, comparative peer group charges which the Managers have authority in accordance and fees. with the policies and directions of, and subject to Following the most recent review, the Management restrictions imposed by, the Board. The Investment Engagement Committee concluded that the Management Agreement is terminable by the continuing appointment of Baillie Gifford & Co Managers on not less than six months’ notice or on Limited as AIFM and Secretaries, and the delegation shorter notice in certain circumstances. With effect of investment management services to Baillie from 6 June 2024, the Investment Management Gifford & Co and the further sub-delegation of Agreement is terminable by the Company on dealing activity and transaction reporting to Baillie not less than three months’ notice or on shorter Gifford Overseas Limited, on the terms agreed, is notice in certain circumstances. Prior to this, the in the interests of the Company and shareholders Investment Management Agreement was terminable as a whole. This was subsequently approved by the by the Company on not less than six months’ notice Board. 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. 46 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Depository 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. 47 Governance report Major interests in the company’s shares Resolution 11, which is proposed as a special resolution, seeks authority for the Directors to The Company has received notifications in issue shares or sell shares held in treasury on a accordance with the Financial Conduct Authority’s non pre-emptive basis for cash up to an aggregate Disclosure and Transparency Rules of the following nominal amount of £3,651,087.50 (representing interests in the voting rights attached to the 10% of the issued ordinary share capital of the Company’s issued share capital. Company as at 12 June 2024). This authority will only be used to issue shares or sell shares from No of treasury at a premium to net asset value on the ordinary 25p | | shares held | | | basis of debt valued at par value and only when | | --- | --- | --- | --- | --- | | | at 30 April | | % of | the Directors believe that it would be in the best | | Name | | 2024 | issue * | | interests of the Company to do so. This authority will 1607 Capital Partners, LLC (indirect) 16,388,293 11.2 continue until the conclusion of the Annual General Meeting to be held in 2025 or on the expiry of 15 Rathbone Investment Management Ltd months from the passing of the resolutions, if earlier. and Rathbone Investment Management International Ltd (combined, indirect) 15,402,823 10.5 Market purchases of own shares Tilney Smith & Williamson Limited At the last Annual General Meeting the Company † and Smith & Williamson Holdings Limited was granted authority to purchase up to 22,513,553 (combined, indirect) 15,329,125 10.5 ordinary shares (equivalent to 14.99% of its City of London Investment Management issued share capital), such authority to expire at Company Limited (indirect) 14,738,847 10.0 the 2024 Annual General Meeting. The Directors are seeking shareholders’ approval at the Annual Subsequent to the year end, City of London Investment Management Company Limited (indirect) advised they held 16,084,808 shares General Meeting to renew the authority to make (11.0% of shares issued). There have been no other changes to the market purchases up to 21,891,921 ordinary major interests in the Company’s shares intimated up to 12 June 2024. shares representing approximately 14.99% of the * Ordinary shares in issue excluding treasury shares. Company’s ordinary shares in issue at the date of † After the date of the notification of major holdings, the names of Tilney Smith & Williamson Limited and Smith & Williamson Holdings passing of the resolution, such authority to expire at Limited were changed to Evelyn Partners Group Limited and Evelyn the Annual General Meeting of the Company to be Partners Professional Services Group Limited, respectively. held in 2025. 3,841,977 shares (2023 – 2,975,000 shares) were Annual general meeting bought back during the year under review and as Share issuance authority at 30 April 2024 14,238,677 shares were held in At the last Annual General Meeting, the Directors treasury (2023 – 10,396,700). Between 1 May and were granted shareholders’ approval for a general 12 June 2024, the Company bought back 635,000 authority to allot shares and also an authority to shares into treasury at a cost of £1,115,000 shares issue shares or sell shares held in treasury on a non were held in treasury as at 12 June 2024. pre-emptive basis (without first offering such shares The share buy-back policy seeks to operate in the to existing shareholders pro-rata to their existing best interests of shareholders by taking into account holdings). No shares were issued during the year the relative level of the Company’s share price (2023 – no shares were issued). discount when compared with peer group trusts, the Both authorities expire at the forthcoming Annual absolute level of discount and the impact from share General Meeting and the Directors are seeking buy-back activity on the long-term liquidity of the shareholders’ approval to renew them for a further Company’s issued shares. year, as detailed below. The Company may hold bought-back shares ‘in Resolution 10 in the Notice of Annual General treasury’ and then: Meeting seeks a general authority for the Directors i. sell such shares (or any of them) for cash (or its to allot shares up to an aggregate nominal amount equivalent under the Companies Act 2006); or of £3,651,087.50. This amount represents 10% of the Company’s total ordinary share capital in issue ii. cancel the shares (or any of them). at 12 June 2024 and meets institutional guidelines. All buy-backs will initially be held in treasury. Shares This authority will continue until the conclusion of will only be resold from treasury at a premium to net the Annual General Meeting to be held in 2025 or asset value per ordinary share. on the expiry of 15 months from the passing of the resolutions, if earlier. 48 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc The Company shall not be entitled to exercise the Articles of Association voting rights attaching to treasury shares. The Company’s Articles of Association may only be In accordance with the Listing Rules of the Financial amended by special resolution at a general meeting Conduct Authority, the maximum price (excluding of shareholders. expenses) that may be paid on the exercise of the authority must not exceed the higher of: Disclosure of information to auditors i. 5 per cent. above the average closing price on the The Directors confirm that, so far as each of London Stock Exchange of an ordinary share over the Directors is aware, there is no relevant audit the five business days immediately preceding the information of which the Company’s Auditor is date of purchase; and unaware and the Directors have taken all the steps that they might reasonably be expected to have ii. an amount equal to the higher of the price of taken as Directors in order to make themselves the last independent trade of an Ordinary Share aware of any relevant audit information and to and the highest current independent bid for an establish that the Company’s Auditor is aware Ordinary Share on the trading venue where the of that information. purchase is carried out. The minimum price (exclusive of expenses) that may Independent auditor be paid will be 25p per share. Purchases of shares The Auditor, Ernst & Young LLP, is willing to will be made within guidelines established, from continue in office and in accordance with section time to time, by the Board. Your attention is drawn 489 and section 491(1) of the Companies Act to Resolution 12 in the Notice of Annual General 2006, resolutions concerning their re-appointment Meeting. This authority, if conferred, will only be and remuneration will be submitted to the Annual exercised if to do so would result in an increase in General Meeting. net asset value per ordinary share for the remaining shareholders and if it is considered in the best Post balance sheet events interests of shareholders generally. The Directors confirm that there have been Continuation vote no significant post Balance Sheet events up to 13 June 2024 that require disclosure in the The Company’s Articles of Association require that Financial Statements. 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 Stakeholder engagement the Notice of Annual General Meeting and more Although the Company has no employees, trade detail is set out in the Chairman’s statement on suppliers or customers, the Directors give regular pages 05 to 08. consideration to the need to foster the Company’s business relationships with its stakeholders, in Financial instruments particular with shareholders, its externally appointed The Company’s financial instruments comprise its Managers, other professional service providers investment portfolio, cash balances and debtors and lenders. The effect of this consideration upon and creditors that arise directly from its operations the key decisions taken by the Company during such as sales and purchases awaiting settlement the financial year is set out in further detail in the and accrued income. The financial risk management Strategic Report on pages 04 to 42. 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. 49 Governance report Greenhouse Gas Emissions and Streamlined Criminal Finances Act 2017 Energy & Carbon Reporting (‘SECR’) The Company has a commitment to zero tolerance All of the Company’s activities are outsourced towards the criminal facilitation of tax evasion. to third parties. The Company therefore has no greenhouse gas emissions to report from its Recommendation operations, nor does it have responsibility for The Directors unanimously recommend you vote any other emissions producing sources under in favour of the resolutions to be proposed at the the Companies Act 2006 (Strategic Report and Annual General Meeting as it is their view that the Directors’ Report) Regulations 2013. For the same resolutions are in the best interests of shareholders reasons as set out above, the Company considers as a whole. itself to be a low energy user under the SECR regulations and therefore is not required to disclose energy and carbon information. On behalf of the Board Carolan Dobson Bribery Act Chairman The Company has a zero tolerance policy towards 13 June 2024 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. 50 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Corporate ## governance report The Board is committed to achieving and The Board also reviews the Financial Statements, demonstrating high standards of corporate investment transactions, revenue budgets and governance. The Association of Investment performance of the Company. Full and timely Companies (‘AIC’) Code of Corporate Governance information is provided to the Board to enable it (‘AIC Code’) provides a framework of best practice to function effectively and to allow Directors to for investment companies and can be found at discharge their responsibilities. theaic.co.uk. The Financial Reporting Council (‘FRC’) The Board comprises five Directors, all of whom has confirmed that AIC members who report against are non-executive. The Chairman is responsible for the AIC Code, as is the case with the Company, will organising the business of the Board, ensuring its be meeting their obligations in relation to the 2018 effectiveness and setting its agenda. The executive UK Corporate Governance Code (‘UK Code’) which responsibility for investment management has been can be found at frc.org.uk. delegated to the Company’s Alternative Investment Fund Manager (‘AIFM’), Baillie Gifford & Co Limited, Compliance and, in the context of a Board comprising only The Board confirms that the Company has complied non-executive Directors, there is no chief executive throughout the year under review with the relevant officer. The Senior Independent Director is Ruary Neill. provisions of the Code and the recommendation of The Directors believe that the Board has a balance the AIC Code. The Code includes provisions relating of skills and experience that enables it to provide to the role of the chief executive, executive directors’ effective strategic leadership and proper governance remuneration and the need for an internal audit of the Company. Information about the Directors, function. Given that the Company is an externally including their relevant experience, can be found on managed investment trust, the Board considers pages 44 and 45. these provisions are not relevant to the Company. The need for an internal audit function specific to There is an agreed procedure for Directors to seek the Company has been addressed on page 59. independent professional advice, if necessary, at the Company’s expense. The Board The Board has overall responsibility for the Appointments to the Board Company’s affairs. It has a number of matters The terms and conditions of Directors’ appointments formally reserved for its approval including strategy, are set out in formal letters of appointment which are investment policy, gearing, share buy-back and available for inspection on request. issuance policy, treasury matters, dividend and Under the provisions of the Company’s Articles of corporate governance policy. A separate session Association, a Director appointed during the year is devoted to strategy is held each year. The Board required to retire and seek election by shareholders seeks to contribute to the delivery of the Company’s at the next Annual General Meeting. The Board strategy by engaging with the Managers in a has agreed that all Directors will retire at each collaborative and collegiate manner with open and Annual General Meeting and, if appropriate, offer respectful discussion and debate being encouraged, themselves for re-election. whilst also ensuring that appropriate and regular challenge is brought and evaluation is conducted. 51 Governance report Board of Directors Comprises independent non-executive directors* Chairman: Carolan Dobson Senior Independent Director: Ruary Neill Audit Management Remuneration Nomination Committee Engagement Committee Committee Committee Chairman: Chairman: Chairman: Chairman: Andrew Westenberger Carolan Dobson Ruary Neill Carolan Dobson Purpose: The primary purpose Purpose: The primary purpose Purpose: The primary purpose Purpose: The main purpose of of the Company’s Audit of the Management of the Remuneration Committee the Nomination Committee is to Committee is to provide Engagement Committee is to is to review and make oversee Board recruitment and oversight of the financial ensure that the investment recommendations to the Board succession planning as well as reporting process, the audit management, administrative in respect of the level of Board appraisals including process, the Company’s system and company secretarial remuneration paid to Directors identifying training needs. of internal controls and services provided to the within the limits approved by compliance with laws and Company remain appropriate shareholders. regulations. and competitive. 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 The Bank of Computershare Winterflood Ernst & Young New York Mellon Investor Services Securities Ltd LLP (International) Limited PLC Company broker Auditor Depositary Registrar * 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. 52 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Independence of Directors Nomination Committee All the Directors are considered by the Board to The Nomination Committee consists of all the be independent of the Managers and free of any Directors and Carolan Dobson is the Chairman of business or other relationship which could interfere the Committee. The Committee meets on an annual with the exercise of their independent judgement. basis and at such other times as may be required. The Committee has written terms of reference The Directors recognise the importance of succession which include reviewing the composition of the planning for company boards and review the Board Board, identifying and nominating new candidates composition annually. The Board is of the view that for appointment to the Board, Board appraisal, length of service will not necessarily compromise succession planning and training. The Committee the independence or contribution of Directors of also considers whether Directors should be an investment trust company, where continuity and recommended for re-election by shareholders. experience can be a benefit to the Board. The Committee’s Terms of Reference are available on request from the Company and on Meetings the Company’s page of the Managers’ website: There is an annual cycle of Board meetings which bgukgrowthtrust.com. is designed to address, in a systematic way, overall During the year, the Committee, chaired by strategy, review of investment policy, investment Andrew Westenberger, engaged an external search performance, marketing, revenue budgets, dividend consultancy, Trust Associates, to recruit a new policy and communication with shareholders. The Director to join the Board. Neil Rogan was identified Board considers that it meets sufficiently regularly as the preferred candidate and was appointed with to discharge its duties effectively. The table below effect from 1 January 2024. Trust Associates has no shows the attendance record for the core Board and other connection with the Company. Committee meetings held during the year, excluding ancillary and sub-committee meetings. The Annual Policy on Chairman’s tenure General Meeting was attended by all the Directors. 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 Board Audit Committee Nomination Committee Remuneration Comittee Management Engagement Committee stands down from the Board. Carolan Dobson will stand down from the Board on 14 June 2024 and Number of meetings 4 2 1 1 1 Neil Rogan will take on the role of Chairman on 14 Carolan Dobson* 4 – 1 1 1 June 2024. Ruary Neill 4 2 1 1 1 Performance evaluation Cathy Pitt 4 2 1 1 1 An appraisal of the Chairman, each Director and a Neil Rogan † 1 – 1 1 1 performance evaluation and review of the Board as a whole and its Committees was carried out during Andrew 4 2 1 1 1 the year. Each Director and the Chairman responded Westenberger to an evaluation questionnaire which was discussed * Carolan Dobson stepped down as a member of the Audit Committee in appropriately with the Chairman. The Chairman’s December 2018 but attends by invitation. appraisal was led by Ruary Neill, the Senior † Neil Rogan did not attend all of the meetings during the year because Independent Director. The appraisals and evaluations he was appointed on 1 January 2024. He attended all of the meetings held following his appointment and therefore attended all applicable considered, amongst other criteria, the balance meetings. 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. 53 Governance report A review of the Chairman’s and the other Directors’ Diversity of the board commitments was carried out and the Nomination The Directors consider Board composition in Committee is satisfied that they are capable of terms of the overall value the Board offers to devoting sufficient time to the Company. There shareholders; this means that it seeks to ensure were no significant changes to the Chairman’s other that (i) the Directors, between them, have diverse commitments during the year. expertise allowing them to bring an appropriate range of skills to the performance of their duties; Diversity policy and (ii) the Directors represent a diverse range of Appointments to the Board are made on merit with backgrounds and characteristics, which enables a due regard for the benefits of diversity including the range of perspectives to contribute to governance requirements of the Listing Rules. The priority in and decision-making. appointing new Directors is to identify the candidate The FCA Listing Rules on diversity and inclusion with the best range of skills and experience to set out the targets which should be met as follows: complement existing Directors. (i) at least 40% of individuals on a board should be The Board believes that maintaining a diversity of women; (ii) at least one senior board position should thought and experience on the Board and at an be held by a woman; and (iii) at least one individual operational level within Baillie Gifford represents on its board should be from a minority ethnic the best way of discharging its responsibilities to background (as defined by the Office of National shareholders. 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 Number of Number in Percentage of Number of Percentage of Senior Positions Executive Executive Sex Board Members the Board on the Board Management 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. | | | | | | | | Number of | | Number in | Percentage of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Number of | | Percentage of | | Senior Positions | | | Executive | | Executive | | Ethnicity | Board Members | | | | the Board | | on the Board | Management | | Management | | | White British or other White | | | 5 100% 2 * n/a n/a | | | | | | | | | (including minority white groups) Mixed/Multiple Ethnic Groups – – – n/a n/a Asian/Asian British – – – n/a n/a Black/African/Caribbean/Black – – – n/a n/a British Other ethnic group, including – – – n/a n/a Arab 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. 54 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc As shown in the Board composition tables, the To discharge its duties, the Committee met on Company met the targets on percentage of women one occasion during the year to consider: the and women in senior roles, but did not meet the performance and suitability of the Manager; the terms target in relation to the ethnic background of the and conditions of the AIFM Agreement, including Board. While there have been no changes to Board fees; and, the Committee’s Terms of Reference. membership between 30 April 2024 and 13 June The Committee’s Terms of Reference are available 2024, Carolan Dobson is not seeking re-election and on request from the Company and on the Company’s will step down from the Board on 14 June 2024. Neil page of the Managers’ website: bgukgrowthtrust.com. Rogan will take on the role of Chairman of the Board on 14 June 2024. Audit Committee The Board considers that its small size is the The report of the Audit Committee is set out on principal reason why the other Listing Rule targets were not met. The Board supports, and is ambitious pages 59 to 60. to meet, all the Listing Rule diversity targets and will continue to review its size and composition both as Internal controls and risk management part of its refreshment cycle and more widely. The Directors acknowledge their responsibility for All recruitment for new board members will be the Company’s risk management and internal control external, through the use of search agencies or systems and for reviewing their effectiveness. platforms. Recruitment consultants will be asked to The systems are designed to manage rather than put forward candidates with the desired skillset but eliminate the risk of failure to achieve business also with a diverse range of characteristics. objectives and can only provide reasonable but not absolute assurance against material misstatement Induction and training or loss. New Directors are provided with an induction The Board confirms that there is an ongoing programme which is tailored to the particular process for identifying, evaluating and managing circumstances of the appointee. Regular briefings the significant risks faced by the Company in were provided during the year on industry accordance with the FRC guidance ‘Guidance on and regulatory matters. Directors receive other Risk Management, Internal Control and Related relevant training as necessary. Financial and Business Reporting’. The practical measures in relation to the design, implementation Remuneration Committee and maintenance of control policies and procedures to safeguard the Company’s assets and to manage The Remuneration Committee consists of all its affairs properly, including the maintenance of Directors and Ruary Neill is the Chairman of the effective operational and compliance controls have Committee. The Remuneration Committee reviews been delegated to the Managers and Secretaries. and makes recommendations to the Board in respect of the level of remuneration paid to Directors within The Board oversees the functions delegated the limits approved by shareholders. The Company’s to the Managers and Secretaries and the policy on remuneration is set out in the Directors’ controls managed by the AIFM in accordance Remuneration Report on pages 61 to 64. with the Alternative Investment Fund Managers Regulations (as detailed below). Baillie Gifford & The Committee’s Terms of Reference are available Co’s Internal Audit and Compliance Departments on request from the Company and on the Company’s and the AIFM’s permanent risk function provide page of the Managers’ website: bgukgrowthtrust.com. the Audit Committee with regular reports on their monitoring programmes. The reporting procedures Management Engagement Committee for these departments are defined and formalised The role of the Management Engagement within a service level agreement. Baillie Gifford & Co Committee is to ensure that the Manager conducts an annual review of its system of remains suitable to manage the portfolio, that internal controls which is documented within an the management contract is competitive and internal controls report which complies with reasonable for shareholders, and that the Company ISAE 3402 – Assurance Reports on Internal Controls maintains appropriate administrative and company of Service Organisations made available to Third secretarial support. All Directors are members of Parties. This report is independently reviewed the Management Engagement Committee which is by Baillie Gifford & Co’s Auditor and a copy is chaired by the Chairman of the Board. The Board submitted to the Audit Committee. considers each member of the Committee to be independent. 55 Governance report A report identifying the material risks faced by the and the adequacy and effectiveness of this policy Company and the key controls employed to manage is reviewed and approved at least annually. This these risks is reviewed by the Audit Committee. review includes the risk management processes and These procedures ensure that consideration is systems and limits for each risk area. given regularly to the nature and extent of risks The risk limits, which are set by the AIFM and facing the Company and that they are being approved by the Board, take into account the actively monitored. Where changes in risk have objectives, strategy and risk profile of the portfolio. been identified during the year they also provide These limits, including leverage (see page 103), a mechanism to assess whether further action is are monitored and the sensitivity of the portfolio to required to manage these risks. key risks is undertaken periodically as appropriate The Directors confirm that they have reviewed the to ascertain the impact of changes in key variables effectiveness of the Company’s risk management in the portfolio. Exceptions from limits monitoring and internal controls systems, which accord with the and stress testing undertaken by Baillie Gifford’s FRC ‘Guidance on Risk Management, Internal Control Business Risk Department are escalated to the AIFM and Related Financial and Business Reporting’ and reported to the Board along with any remedial and they have procedures in place to review their measures being taken. effectiveness on a regular basis. No significant weaknesses were identified in the year under review Going concern and up to the date of this Report. In accordance with the Financial Reporting Council’s The Board confirms that these procedures have guidance on going concern and liquidity risk, the been in place throughout the Company’s financial Directors have undertaken a rigorous review of the year and continue to be in place up to the date of Company’s ability to continue as a going concern. approval of this Report. The Company’s principal and emerging risks are market related and include market risk, liquidity risk To comply with the Alternative Investment Fund and credit risk. An explanation of these risks and Managers Regulations, The Bank of New York how they are managed is contained in note 18 to the Mellon (International) Limited acts as the Financial Statements. The Board has, in particular, Company’s Depositary and Baillie Gifford & Co considered recent heightened geopolitical tensions Limited as its AIFM. and conflicts and macroeconomic concerns, The Depositary’s responsibilities include cash including increased inflation and interest rates. It monitoring, safe keeping of the Company’s financial has reviewed specific leverage and liquidity stress instruments, verifying ownership and maintaining testing but does not believe the Company’s going a record of other assets and monitoring the concern status is affected. The Company’s assets, Company’s compliance with investment limits and the vast majority of which are investments in quoted leverage requirements. The Depositary is liable for securities which are readily realisable, exceed its the loss of financial instruments held in custody. The liabilities significantly. All borrowings require the Depositary will ensure that any delegate segregates prior approval of the Board. Gearing levels and the assets of the Company. The Company’s compliance with borrowing covenants are reviewed Depositary also acts as the Company’s Custodian. by the Board on a regular basis. Details of the The Custodian prepares reports on its key controls Company’s one year loan facility with The Royal and safeguards which are independently reviewed Bank of Scotland International Limited which is by KPMG LLP. The reports are reviewed by Baillie due to be repaid in July 2024 are shown in note 11 Gifford’s Business Risk Department and a summary on page 85. Negotiations are underway to of the key points is reported to the Audit Committee replace this facility. The Company has continued and any concerns are investigated. to comply with the investment trust status requirements of section 1158 of the Corporation The Depositary provides the Audit Committee with Tax Act 2010 and the Investment Trust (Approved a report on its monitoring activities. Company) Regulations 2011. 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, 56 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc In accordance with the Company’s Articles of Corporate governance and stewardship Association, shareholders have the right to vote The Company believes that it is in the shareholders’ on the continuation of the Company every five interests to consider environmental, social and years, the next vote being at the Annual General governance (‘ESG’) factors when selecting and Meeting to be held on 4 September 2024. The retaining investments and has asked the Managers Company’s Board, Managers and brokers engage to take these issues into account. The Managers with shareholders on an ongoing basis. The Board do not exclude companies from their investment has considered the feedback received regarding universe purely on the grounds of ESG factors but shareholders’ voting intentions, the composition adopt a positive engagement approach whereby of the Company’s shareholder register and the matters are discussed with management with outcome of the previous continuation vote held in the aim of improving the relevant policies and 2019, and concluded that, at the date of signing management systems and enabling the Managers to these Annual Report and Financial Statements, it is consider how ESG factors could impact long-term likely that the vote on continuation of the Company investment returns. The Managers’ Stewardship will be in favour of continuation. Principles and examples of portfolio company Accordingly, the Financial Statements have been engagement are set out on pages 13 to 20 and the prepared on the going concern basis as it is the Statement of Compliance with the UK Stewardship Directors’ opinion, having assessed the principal Code can be found on the Managers’ website: risks and other matters, as set out in the Viability bailliegifford.com. The Managers’ approach has Statement on page 38 and revenue estimates been reviewed and endorsed by the Board. prepared to 30 June 2025, that the Company will The Company has given discretionary voting powers continue in operational existence for a period of at to Baillie Gifford & Co. The Managers vote against least twelve months from the date of approval of resolutions they consider may damage shareholders’ these Financial Statements. rights or economic interests. The Board reviews regular reports on voting and engages with the Relations with shareholders Managers on these matters. The Board places great importance on Baillie Gifford & Co, the Company’s Managers, has communication with shareholders. The Chairman considered the Sustainable Finance Disclosures meets shareholders independently of the Managers Regulation (‘SFDR’) and further details can be found and reports shareholders’ views to the Board. on page 107. Shareholders wishing to communicate with | any members of the Board may do so by writing | The Managers, Baillie Gifford & Co, are signatories | | --- | --- | | to them at the Company’s registered office or | to the United Nations Principles for Responsible | | through the Company’s broker, Winterflood | Investment and are also members of the | | Investment Trusts (see contact details on page 108). | International Corporate Governance Network. | All correspondence addressed to the Chairman is dealt with directly by the Chairman. The Company’s Climate change Managers also meet regularly with shareholders and The Board recognises that climate change poses a their representatives. serious threat to our environment, our society and to economies and companies around the globe. The Company’s Annual General Meeting provides Addressing the underlying causes is likely to result a further forum for communication with all in companies that are high emitters of carbon shareholders. The level of proxies lodged for each facing greater societal and regulatory scrutiny and resolution is announced at the Meeting and is higher costs to account for the true environmental published at bgukgrowthtrust.com subsequent impact of their activities. The Managers utilise to the meeting. The notice period for the Annual data sourced from a third-party provider to map General Meeting is at least twenty working days. the carbon footprint of the equity portfolio using Shareholders and potential investors may obtain the information to prioritise engagement and up-to-date information on the Company from the understand what higher emitting companies are Managers’ website at bgukgrowthtrust.com. 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). 57 Governance report 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 58 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Audit Committee ## report The Audit Committee consists of all independent • the regulatory changes impacting the Company; Directors except for the Chairman of the Board, • the fairness, balance and understandability of Carolan Dobson. The members of the Committee the Annual Report and Financial Statements and consider that they have the requisite financial skills whether it provided the information necessary and experience to fulfil the responsibilities of the for shareholders to assess the Company’s Committee. Andrew Westenberger, Chairman of performance, business model and strategy; the Committee, is a Chartered Accountant. The Committee’s authority and duties are clearly defined • the effectiveness of the Company’s internal within its written Terms of Reference which are control environment; available on request from the Company and on • the appointment/re-appointment, remuneration the Company’s page of the Managers’ website: and terms of engagement of the external Auditor; bgukgrowthtrust.com. The Terms of Reference are • whether the audit services contract should be put reviewed annually. out to tender; The Committee’s effectiveness is reviewed on an • the policy on the engagement of the external annual basis as part of the Board’s performance Auditor to supply non-audit services; evaluation process (see page 53). • the independence and objectivity of the external At least once a year the Committee meets with the Auditor and the effectiveness of the audit process; external Auditor without any representative of the Manager being present. • the need for the Company to have its own internal audit function; Main activities of the committee • internal controls reports received from the The Committee met twice during the year to Managers and other service providers; and 30 April 2024 and the external Auditor attended • the arrangements in place within both meetings. Baillie Gifford & Co’s Internal Audit Baillie Gifford & Co whereby its staff may, and Compliance Departments and the AIFM’s in confidence, raise concerns about possible permanent risk function provided reports on their improprieties in matters of financial reporting monitoring programmes for these meetings. The or other matters. external auditor also met with the Chairman of the Audit Committee separately twice during the year. Internal audit The matters considered, monitored and reviewed The Committee continues to believe that the by the Committee during the course of the year compliance and internal control systems and the included the following: internal audit function in place within the Investment • the results announcements and the Annual and Managers provide sufficient assurance that a Interim reports; sound system of internal control, which safeguards shareholders’ investment and the Company’s assets, • the Company’s accounting policies and practices is maintained. An internal audit function, specific to and the implementation of the Managers’ valuation the Company, is therefore considered unnecessary. policy for investments in unlisted (private) companies; 59 Governance report Financial reporting • the extent of non-audit services provided by the external Auditor. There were no non-audit fees for The Committee considers that the most significant the year to 30 April 2024. issues likely to affect the Financial Statements are the existence and valuation of investments, as they To assess the effectiveness of the external Auditor, represent 99.0% of total assets, and the accuracy the Committee reviewed and considered: and completeness of income from investments. • the Auditor’s fulfilment of the agreed audit plan; The majority of the investments are in quoted • feedback from the Secretaries on the performance securities and market prices are readily available of the audit team; from independent external pricing sources. The Committee reviewed Baillie Gifford’s Report • the Audit Quality Inspection Report on Ernst & on Internal Controls which details the controls Young LLP issued by the FRC’s Audit Quality in place regarding the recording and pricing of Review team; and investments. The Managers agreed the prices of all • detailed discussion with audit personnel to the listed investments at 30 April 2024 to external challenge audit processes and deliverables. price sources and the holdings were agreed to confirmations from the Company’s Custodian. To fulfil its responsibility for oversight of the external audit process the Committee considered and The Committee reviewed the Managers’ valuation reviewed: approach for investments in unlisted companies (as described on pages 79 and 80) and approved • the Auditor’s engagement letter; the valuation of the unlisted investment following • the Auditor’s proposed audit strategy; a detailed review of the valuation of the investment • the audit fee; and and relevant challenge where appropriate. The Managers agreed the holding in certificated form • a report from the Auditor on the conclusion of the to confirmations from the Company’s Custodian. audit. The Committee reviewed the Managers’ report on The audit partner responsible for the audit will be Internal Controls which details the controls in place rotated at least every five years in accordance with regarding completeness and accurate recording of professional and regulatory standards in order to investment income. The accounting treatment of protect independence and objectivity and to provide each special dividend received or receivable during fresh challenge to the business. Ms Mercer, the the year was reviewed by the Managers. current partner, will continue as audit partner until the conclusion of the 2025 audit. The year under audit The Managers confirmed to the Committee that they represents Ms Mercer’s fourth year as audit partner. were not aware of any material misstatements in the context of the Financial Statements as a whole and Ernst & Young LLP has confirmed that it believes it that the Financial Statements are in accordance with is independent within the meaning of regulatory and applicable law and accounting standards. professional requirements and that the objectivity of the audit partner and staff is not impaired. Internal controls and risk management Having carried out the review process described The Committee reviewed the effectiveness above, the Committee is satisfied that the Auditor of the Company’s risk management and has remained independent and effective for the internal controls systems as described on purposes of this year’s audit. pages 55 and 56. No significant weaknesses There are no contractual obligations restricting the were identified in the year under review. Committee’s choice of external Auditor. External auditor Accountability and audit To fulfil its responsibility regarding the The respective responsibilities of the Directors independence and objectivity of the external and the Auditor in connection with the Financial auditor, the Committee reviewed: Statements are set out on pages 65 to 74. • the audit plan for the current year; • a report from the Auditor describing their On behalf of the Board arrangements to manage auditor independence Andrew Westenberger and received confirmation of its independence; Audit Committee Chairman and 13 June 2024 60 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Directors’ ## remuneration report This report has been prepared in accordance with The Board and its Committees exclusively comprise the requirements of the Companies Act 2006. non-executive Directors. No Director past or present has an entitlement to a Company pension, and the Statement by the Chairman Company has not, and does not intend to operate a share scheme for Directors or to award any share The Directors’ Remuneration Policy is subject options or long-term performance incentives to any to shareholder approval every three years or Director. No Director has a service contract with sooner if an alteration to the policy is proposed. the Company. However, Directors have a letter of The Remuneration Policy which is set out below appointment. Directors do not receive exit payments was last approved at the Annual General Meeting and are not provided with any compensation for loss in September 2023 and no changes are proposed to of office. No other payments are made to Directors the policy for the Annual General Meeting to be other than the reimbursement of reasonable held in 2024. out-of-pocket expenses incurred in attending The Board reviewed the level of fees during the year to the Company’s business. and concluded that there would be no change to the The terms of Directors’ letters of appointment are fees. The fees were last increased with effect from 1 available for inspection at the Company’s registered May 2023. office address during normal business hours and during the Annual General Meeting at the location Directors’ remuneration policy of such meeting. The determination of the Directors’ fees is a matter The Board did not seek the views of shareholders considered by the Remuneration Committee and in setting this Remuneration Policy. Any comments recommended to the Board for adoption. on the Policy received from shareholders would be It is the Board’s policy to determine the level of considered on a case-by-case basis. Directors’ remuneration having regard to amounts As the Company does not have any employees, no payable to non-executive Directors in the industry employee pay and employment conditions were generally, the role that individual Directors fulfil in taken into account when setting this Remuneration respect of Board and Committee responsibilities, Policy and no employees were consulted in its and time committed to the Company’s affairs, construction. taking into account the aggregate limit of fees set out in the Company’s Articles of Association. Directors’ fees are reviewed annually and take into This aggregate limit of Directors’ fees is currently account research from third parties on the fee set at £200,000 per annum and any increase in levels of directors of peer group companies, as this level requires approval by the Board and the well as industry norms and factors affecting the Company’s shareholders. The Chairman of the time commitment expected of the Directors. New Board, the Chairman of the Audit Committee and the Directors are subject to the provisions set out in this Senior Independent Director each receive fees at a Remuneration Policy. 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. 61 Governance report Limits on Directors’ remuneration Annual report on remuneration The fees for the non-executive Directors are payable An ordinary resolution for the approval of this report monthly in arrears and the fees paid in respect of will be put to the members at the forthcoming the year ended 30 April 2024 together with the Annual General Meeting. expected fees payable in respect of the year ending The law requires the Company’s Auditor to audit 30 April 2025 are set out in following table. The fees certain disclosures provided in this report. Where payable to the Directors in the subsequent financial disclosures have been audited, they are indicated years will be determined following an annual review as such. The Auditor’s opinion is included in the of the Directors’ fees. Independent Auditor’s Report on pages 67 to 74. Expected Statement of voting at Annual General Meeting | fees for year | Fees paid for | | | --- | --- | --- | | ending 30 | the year to 30 | At the last Annual General Meeting, of the | | April 2025 | April 2024 | | proxy votes received in respect of the Directors’ Name £ £ remuneration report, 99.8% were in favour, 0.1% Carolan Dobson 5,100 42,500 were against and votes withheld were 0.1%. At the last Annual General Meeting at which the Directors’ Ruary Neill 31,500 31,500 Remuneration Policy was considered (September Cathy Pitt 30,000 30,000 2023), 99.7% of the proxy votes received were in Neil Rogan 41,000 10,000 favour, 0.2% were against and 0.1% votes were withheld. Andrew Westenberger 35,000 35,000 Total aggregate annual 200,000 200,000 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 62 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc 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. | | | | 2024 taxable | | | | | | | 2023 taxable | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 fees | | | benefits* | | 2024 total | | 2023 fees | | | benefits* | | 2023 total | | | Name | | £ | | | £ | | £ | | £ | | | £ | | £ | 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 10,000 1,998 11,998 – – – (appointed 1 January 2024) 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 * 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. Annual Percentage Change in Remuneration This represents the annual percentage change in the remuneration paid to the Directors. | | | | | 2024 | | | | 2023 | | | | | 2022 | | | | | 2021 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | | taxable | | | 2023 | | taxable | | 2022 | | taxable | | | 2021 | | taxable | | | | | fees | | benefits | | | fees | | benefits | | fees | | benefits | | | fees | | benefits | | | | Name | | % | | | % | | % | | % | | % | | | % | | % | | | % | 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 3.1 103.6 43.0 46.6 n/a n/a n/a n/a (appointed 5 August 2021) Neil Rogan n/a n/a n/a n/a n/a n/a n/a n/a (appointed 1 January 2024) Andrew Westenberger 5.7 27.4 7.8 659.8 1.7 n/a 0.7 (100.0) 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. 63 Governance report Directors’ Interests (audited) Company performance The Directors at the end of the year under review, The following graph compares the share price and their interests in the Company, are shown in total return (assuming all dividends are reinvested) the following table. There have been no changes to ordinary shareholders compared with the intimated in the Directors’ interests up to 13 June total shareholder return on a notional investment 2024. made up of shares in the component parts of the FTSE All-Share Index. This index was chosen for Ordinary 25p Ordinary 25p comparison purposes as it is a widely used measure shares held shares held of performance for UK listed companies and also Nature of at 30 April at 30 April the index against which the Company measures its Name interest 2024 2023 performance. Carolan Dobson Beneficial 26,949 26,949 Performance graph Ruary Neill Beneficial 20,000 20,000 (figures rebased to 100 at 30 April 2014) Cathy Pitt Beneficial 5,362 5,362 Neil Rogan Beneficial 15,328 – Andrew Beneficial 20,000 20,000 Westenberger 150 100 Relative importance of spend on Pay The table below shows the actual expenditure during the year in relation to Directors’ remuneration and 50 | distributions to shareholders. | | | | | | | 20222020201820162014 | | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | 2023 | Change | | | | | | | £’000 | £’000 | | % | | BG UK Growth Share Price FTSE All-Share Index | | | Directors’ remuneration 167 144 16.0 | | | | | Source: LSEG and relevant underlying index providers. | | | See disclaimer on page 103. Dividends 5,410 5,951 (9.1) 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. Approval The Directors’ remuneration report on pages 61 to 200 64 was approved by the Board of Directors and signed on its behalf on 13 June 2024. Ruary Neill Remuneration Committee Chairman 2024 64 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Statement of ## Directors’ responsibilities The Directors are responsible for preparing steps as are reasonably open to them to safeguard the Annual Report and Financial Statements in the assets of the Company and to prevent and accordance with applicable law and regulations. detect fraud and other irregularities. Company law requires the Directors to prepare Under applicable laws and regulations, the Directors Financial Statements for each financial year. Under are also responsible for preparing a Strategic report, that law they have elected to prepare the Financial Directors’ report, Directors’ remuneration report and Statements in accordance with applicable law and Corporate governance statement that complies with United Kingdom Accounting Standards, comprising that law and those regulations. Financial Reporting Standard 102 the Financial The Directors have delegated responsibility to Reporting Standard Applicable in the UK and the Managers for the maintenance and integrity Republic of Ireland (‘FRS 102’). Under company of the Company’s page of the Managers’ website. law the Directors must not approve the Financial Legislation in the United Kingdom governing Statements unless they are satisfied that they give the preparation and dissemination of Financial a true and fair view of the state of affairs of the Statements may differ from legislation in other Company and of its profit or loss for that year. In jurisdictions. preparing these Financial Statements, the Directors are required to: Responsibility statement of the Directors in • select suitable accounting policies and then apply respect of the annual financial report them consistently; We confirm that, to the best of our knowledge: • state whether applicable United Kingdom • the Financial Statements, prepared in accordance Accounting Standards, comprising FRS 102, have with the applicable set of accounting standards, been followed, subject to any material departures give a true and fair view of the assets, liabilities, disclosed and explained in the Financial financial position and net return of the Company; Statements; • the Strategic report includes a fair review of the • make judgements and accounting estimates that development and performance of the business are reasonable and prudent; and and the position of the issuer, together with a • prepare the Financial Statements on the going description of the principal risks and uncertainties concern basis unless it is inappropriate to presume they face; and that the Company will continue in business. • the Annual Report and Financial Statements taken The Directors are responsible for keeping adequate as a whole, is fair, balanced and understandable accounting records that are sufficient to show and and provides the information necessary for explain the Company’s transactions and disclose shareholders to assess the Company’s position with reasonable accuracy at any time the financial and performance, business model and strategy. position of the Company and enable them to ensure that the Financial Statements and the Directors’ | remuneration report comply with the Companies | On behalf of the Board | | --- | --- | | Act 2006. They are responsible for such internal | Carolan Dobson | | control as they determine is necessary to enable | 13 June 2024 | the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general authority for taking such 65 ## 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’. Baillie Gifford UK Growth Trust plc ## Independent ## auditor’s report to the members of Baillie Gifford UK Growth Trust plc Opinion Independence We have audited the financial statements of Baillie We are independent of the Company in accordance Gifford UK Growth Trust plc (‘the Company’) for with the ethical requirements that are relevant to the year ended 30 April 2024 which comprise our audit of the financial statements in the UK, the Income Statement, the Balance Sheet, the including the FRC’s Ethical Standard as applied to Statement of Changes in Equity, the Cash Flow public interest entities, and we have fulfilled our Statement, and the related notes 1 to 19, including other ethical responsibilities in accordance with a summary of significant accounting policies. The these requirements. financial reporting framework that has been applied The non-audit services prohibited by the FRC’s in their preparation is applicable law and United Ethical Standard were not provided to the Company Kingdom Accounting Standards including FRS 102 and we remain independent of the Company in “The Financial Reporting Standard applicable in conducting the audit. the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice). Conclusions relating to going concern In our opinion, the financial statements: In auditing the financial statements, we have • give a true and fair view of the Company’s affairs concluded that the Directors’ use of the going as at 30 April 2024 and of its profit for the year concern basis of accounting in the preparation then ended; of the financial statements is appropriate. Our evaluation of the Directors’ assessment of • have been properly prepared in accordance with the Company’s ability to continue to adopt the United Kingdom Generally Accepted Accounting going concern basis of accounting included: Practice; and • Confirmation of our understanding of the • have been prepared in accordance with the Company’s going concern assessment process requirements of the Companies Act 2006. and engaged with the Directors and the Company Secretary to determine if all key factors that we Basis for opinion have become aware of during our audit were We conducted our audit in accordance considered in their assessment. with International Standards on Auditing (UK) • Inspection of the Directors’ assessment of going (ISAs (UK)) and applicable law. Our responsibilities concern, including the revenue forecast, for the under those standards are further described in the period to 30 June 2025 which is at least twelve Auditor’s responsibilities for the audit of the financial months from the date these financial statements statements section of our report. We believe that the were authorised for issue. In preparing the revenue audit evidence we have obtained is sufficient and forecast, the Company has concluded that it is appropriate to provide a basis for our opinion. able to continue to meet its ongoing costs as they fall due. 67 Financial report • Review of the factors and assumptions, including Based on the work we have performed, we have the impact of the current economic environment, not identified any material uncertainties relating to as applied to the revenue forecast and the liquidity events or conditions that, individually or collectively, assessment of the investments. We considered may cast significant doubt on the Company’s ability the appropriateness of the methods used to to continue as a going concern for a period to 30 calculate the revenue forecast and the liquidity June 2025 which is at least twelve months from the assessment and determined, through testing date these financial statements were authorised for of the methodology and calculations, that the issue. methods, inputs and assumptions utilised were In relation to the Company’s reporting on how they appropriate to be able to make an assessment for have applied the UK Corporate Governance Code, the Company. we have nothing material to add or draw attention to • Assessment of the risk of breaching the debt in relation to the Directors’ statement in the financial covenants as a result of a reduction in the value statements about whether the Directors considered of the Company’s portfolio. We calculated the it appropriate to adopt the going concern basis of Company’s compliance with debt covenants and accounting. we performed reverse stress testing in order to Our responsibilities and the responsibilities of identify what factors would lead to the Company the Directors with respect to going concern are breaching the financial covenants. described in the relevant sections of this report. • Consideration of the mitigating factors included in However, because not all future events or conditions the revenue forecasts that are within the control can be predicted, this statement is not a guarantee of the Company. We reviewed the Company’s as to the Company’s ability to continue as a going assessment of the liquidity of investments held concern. and evaluated the Company’s ability to sell those investments in order to cover working capital Overview of our audit approach requirements should revenue decline significantly. • Assessment of the impact of the continuation vote Risk of incomplete or inaccurate revenue at the September 2024 AGM on the going concern recognition, including the classification of special dividends as revenue or capital basis of preparation, by considering the current items in the Income Statement and historical performance of the Company, reviewing minutes from the Broker’s and Directors’ Risk of incorrect valuation or ownership discussion with certain shareholders about their Key audit matters of the investment portfolio current intentions in relation to the continuation Overall materiality of £2.83m which vote and assessing the Directors’ analysis of the Materiality represents 1% of shareholders’ funds. 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. 68 Annual Report and Financial Statements 2024 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 Our audit effort in considering climate change materiality and our allocation of performance was focused on the adequacy of the Company’s materiality determine our audit scope for the disclosures in the financial statements as set out in Company. This enables us to form an opinion on note 1(a) and conclusion there was no further impact the financial statements. We take into account of climate change to be taken into account as in line size, risk profile, the organisation of the Company with FRS 102 listed investments are valued at fair and effectiveness of controls, the potential impact value, which for the Company are quoted bid prices of climate change and changes in the business for investments in active markets at the balance environment when assessing the level of work to be sheet date and therefore reflect market participants performed. All audit work was performed directly view of climate change risk. The unlisted investment by the audit engagement team and our valuation has been valued with reference to a recent purchase specialists. price which reflects market participants view of climate change risk. We also challenged the Climate change Directors’ considerations of climate change in their Stakeholders are increasingly interested in how assessment of viability and associated disclosures. climate change will impact companies. The Key audit matters Company has determined that the most significant future impacts from climate change on its operations Key audit matters are those matters that, in our will be from how climate change could affect the professional judgment, were of most significance in Company’s investments and overall investment our audit of the financial statements of the current process. This is explained on page 35 in the principal period and include the most significant assessed and emerging risks section. This disclosure forms risks of material misstatement (whether or not due part of the “Other information,” rather than the to fraud) that we identified. These matters included audited financial statements. Our procedures on those which had the greatest effect on: the overall these unaudited disclosures therefore consisted audit strategy, the allocation of resources in the solely of considering whether they are materially audit; and directing the efforts of the engagement inconsistent with the financial statements or our team. These matters were addressed in the context knowledge obtained in the course of the audit or of our audit of the financial statements as a whole, otherwise appear to be materially misstated, in line and in our opinion thereon, and we do not provide a with our responsibilities on “Other information”. separate opinion on these matters. 69 Financial report Risk Our response Key observations communicated to the Audit Committee Incomplete or inaccurate revenue We have performed the following The results of our procedures identified recognition, including the classification procedures: no material misstatement in relation to the of special dividends as revenue or capital risk of incomplete or inaccurate revenue items in the Income Statement We obtained an understanding of recognition, including through incorrect Baillie Gifford’s processes and controls classification of special dividends as Refer to the Audit Committee Report surrounding revenue recognition by revenue or capital items in the Income (pages 59 and 60); Accounting policies performing walkthrough procedures. Statement. (page 79 to 81); and Note 2 of the Financial Statements (page 81) For all dividends received and accrued, we recalculated the dividend income by The total revenue for the year to 30 multiplying the investment holdings at April 2024 was £9.79m (2023: £7.26m), the ex-dividend date, traced from the consisting primarily of dividend income accounting records, by the dividend from listed equity investments. per share, which was agreed to an independent data vendor. We also agreed, The investment income receivable by for a sample of dividends received and the Company during the year directly dividends accrued, amounts to bank affects the Company’s revenue return. statements. There is a risk of incomplete or inaccurate recognition of revenue through the failure To test completeness of recorded income, to recognise proper income entitlements we tested that expected dividends for each or to apply an appropriate accounting investee company held during the year had treatment. been recorded as income with reference to an external source. In addition, the Directors may be required to exercise judgment in determining For all dividends accrued at the year whether income receivable in the form end, we reviewed the investee company of special dividends should be classified announcements to assess whether the as ‘revenue’ or ‘capital’ in the Income entitlement arose prior to 30 April 2024. Statement. 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. 70 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Risk Our response Key observations communicated to the Audit Committee Incorrect valuation or ownership of the We have performed the following The results of our procedures identified investment portfolio procedures: no material misstatement in relation to the risk of incorrect valuation or ownership of We obtained an understanding of the Refer to the Audit Committee Report the investment portfolio. Manager’s processes and controls (pages 59 an 60); Accounting policies surrounding investment valuation and (pages 79 to 81); and Note 9 of the legal title, including an understanding Financial Statements (pages 83 and 84) of the operation of the Manager’s Unlisted Valuation Securities Group | The valuation of the investment portfolio | and the Directors’ process for review of | | --- | --- | | at 30 April 2024 was £296.59m (2023: | the unlisted investment valuations, by | | £302.54m) consisting of listed equities | performing walkthrough procedures. | with an aggregate value of £293.25m For all listed investments in the portfolio, (2023: £301.91m) and an unlisted equity we compared the market prices to investment amounting to £3.34m (2023: an independent pricing vendor and £0.63m). recalculated the investment valuations as at the year end. The valuation of the assets held in the investment portfolio is the key driver of We inspected the stale price reports the Company’s net asset value and total produced by Baillie Gifford to identify return. Incorrect investment pricing, or prices that have not changed and verified failure to maintain proper legal title of the whether the listed price is a valid fair value. We did not identify any listed investments investments held by the Company could with stale prices. have a significant impact on the portfolio valuation and the return generated for For the unlisted investment held as at shareholders. the year-end we utilised our specialist Valuations team to review and challenge The fair value of listed investments is the valuation. This included: determined using quoted market bid prices at close of business on the reporting date. • Reviewing the valuation papers prepared by the Manager as at the year end; The unlisted investment is valued at fair value by the Directors following a detailed • Assessing whether the valuation has been performed in line with the IPEV review and appropriate challenge of the guidelines; valuations proposed by the Investment Manager. The unlisted investment policy • Assessing whether the valuation has been performed in accordance with the applies methodologies consistent with the accounting policy; International Private Equity and Venture • Assessing the appropriateness of Capital Valuation guidelines (“IPEV”). the data inputs and challenging the assumptions used to support the The valuation of the unlisted investment, valuations; and and the resultant impact on the unrealised • Assessing other facts and gains/(losses), is the area requiring the circumstances, such as market most significant judgement and estimation movement and comparative company in the preparation of the financial information, that have an impact on statements. 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. 71 Financial report ## 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. 72 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Matters on which we are required to report • Board’s confirmation that it has carried out a robust assessment of the emerging and principal by exception risks set out on pages 34 to 37; In the light of the knowledge and understanding of the Company and its environment obtained in the • The section of the annual report that describes the course of the audit, we have not identified material review of effectiveness of risk management and misstatements in the strategic report or Directors’ internal control systems set out on page 55 and report. 56; and; We have nothing to report in respect of the following • The section describing the work of the audit matters in relation to which the Companies Act 2006 committee set out on pages 59 and 60; requires us to report to you if, in our opinion: Responsibilities of directors • adequate accounting records have not been kept, or returns adequate for our audit have not been As explained more fully in the Directors’ received from branches not visited by us; or responsibilities statement set out on page 65, the Directors are responsible for the preparation • the financial statements and the part of the of the financial statements and for being satisfied Directors’ Remuneration Report to be audited are that they give a true and fair view, and for such not in agreement with the accounting records and internal control as the directors determine is returns; or necessary to enable the preparation of financial • certain disclosures of Directors’ remuneration statements that are free from material misstatement, specified by law are not made; or whether due to fraud or error. • we have not received all the information and In preparing the financial statements, the Directors explanations we require for our audit. are responsible for assessing the Company’s ability to continue as a going concern, disclosing, Corporate Governance Statement as applicable, matters related to going concern and using the going concern basis of accounting We have reviewed the Directors’ statement in unless the Directors either intend to liquidate the relation to going concern, longer-term viability and Company or to cease operations, or have no realistic that part of the Corporate Governance Statement alternative but to do so. relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules. Auditors’ responsibilities for the audit of the financial statements Based on the work undertaken as part of our audit, Our objectives are to obtain reasonable assurance we have concluded that each of the following about whether the financial statements as a whole elements of the Corporate Governance Statement is are free from material misstatement, whether due to materially consistent with the financial statements or fraud or error, and to issue an auditor’s report that our knowledge obtained during the audit: includes our opinion. Reasonable assurance is a • Directors’ statement with regards to the high level of assurance, but is not a guarantee that appropriateness of adopting the going concern an audit conducted in accordance with ISAs (UK) basis of accounting and any material uncertainties will always detect a material misstatement when it identified set out on pages 56 and 57; exists. Misstatements can arise from fraud or error • Directors’ explanation as to its assessment of the and are considered material if, individually or in the Company’s prospects, the period this assessment aggregate, they could reasonably be expected to covers and why the period is appropriate set out influence the economic decisions of users taken on on page 38; the basis of these financial statements. • 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; 73 Financial report Explanation as to what extent the audit • Based on this understanding we designed our audit procedures to identify non-compliance was considered capable of detecting with such laws and regulations. Our procedures irregularities, including fraud involved review of the reporting to the Directors Irregularities, including fraud, are instances of non- with respect to the application of the documented compliance with laws and regulations. We design policies and procedures and review of the financial procedures in line with our responsibilities, outlined statements to ensure compliance with the above, to detect irregularities, including fraud. The reporting requirements of the Company. risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one A further description of our responsibilities for resulting from error, as fraud may involve deliberate the audit of the financial statements is located on concealment by, for example, forgery or intentional the Financial Reporting Council’s website at misrepresentations, or through collusion. The extent https://www.frc.org.uk/auditorsresponsibilities. to which our procedures are capable of detecting This description forms part of our auditor’s report. irregularities, including fraud is detailed below. Other matters we are required to address However, the primary responsibility for the prevention and detection of fraud rests with both • Following the recommendation from the audit those charged with governance of the Company and committee, we were appointed by the Company on management. 5 August 2020 to audit the financial statements for the year ending 30 April 2021 and subsequent • We obtained an understanding of the legal and financial periods. regulatory frameworks that are applicable to the Company and determined that the most significant The period of total uninterrupted engagement are United Kingdom Generally Accepted including previous renewals and reappointments Accounting Practice, the Companies Act 2006, is four years, covering the years ending 30 April the Listing Rules, UK Corporate Governance Code, 2021 to 30 April 2024. the Association of Investment Companies’ Code • The audit opinion is consistent with the additional and Statement of Recommended Practice, Section report to the audit committee. 1158 of the Corporation Tax Act 2010 and The Companies (Miscellaneous Reporting) Regulations Use of our report 2018. This report is made solely to the Company’s • We understood how the Company is complying members, as a body, in accordance with Chapter with those frameworks through discussions with 3 of Part 16 of the Companies Act 2006. Our audit the Audit Committee and Company Secretary work has been undertaken so that we might state and review of Board minutes and the Company’s to the Company’s members those matters we are documented policies and procedures. required to state to them in an auditor’s report and • We assessed the susceptibility of the Company’s for no other purpose. To the fullest extent permitted financial statements to material misstatement, by law, we do not accept or assume responsibility to including how fraud might occur by considering anyone other than the Company and the Company’s the key risks impacting the financial statements. members as a body, for our audit work, for this We identified a fraud risk with respect to the report, or for the opinions we have formed. incomplete or inaccurate revenue recognition through incorrect classification of special Caroline Mercer (Senior statutory auditor) dividends as revenue or capital items in the for and on behalf of Ernst & Young LLP, Income Statement and incorrect valuation of the Statutory Auditor unquoted investment and the resultant impact Edinburgh on unrealised losses. Further discussion of our 13 June 2024 approach is set out in the section on key audit matters above. 74 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Income ## statement for the year ended 30 April 2024 (with comparatives for the year ended 30 April 2023) For the year ended 30 April | | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | | | Revenue | Capital | Total | Revenue | Capital | Total | | Notes | £’000 | £’000 | £’000 | £’000 | £’000 | £’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 8,798 (7,363) 1,435 6,295 (3,551) 2,744 and taxation Finance costs of borrowings 5 (314) (732) (1,046) (150) (349) (499) Net return on ordinary activities 8,484 (8,095) 389 6,145 (3,900) 2,245 before taxation Tax on ordinary activities 6 – – – – – – Net return of ordinary activities 8,484 (8,095) 389 6,145 (3,900) 2,245 after taxation Net return per ordinary share 7 5.68p (5.42p) 0.26p 4.05p (2.57p) 1.48p 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. 75 Financial report # 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. 76 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Statement of ## changes in equity For the year ended 30 April 2024 | | | | | Share | | Capital | Warrant | | Share | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | premium | | redemption | | exercise | purchase | | Capital | Revenue | Shareholders’ | | | | | capital | account | | | reserve | reserve | reserve | | reserve | reserve | | funds | | | Notes | £’000 | | £’000 | | £’000 | £’000 | | £’000 | £’000 | £’000 | | £’000 | | Shareholders’ funds | | 40,229 11,664 19,759 417 55,628 151,603 15,122 294,422 | | | | | | | | | | | | at 1 May 2023 Ordinary shares bought 12 – – – – (6,248) – – (6,248) back into treasury Dividends paid during the 8 – – – – – – (5,410) (5,410) year Net return on ordinary 7 – – – – – (8,095) 8,484 389 activities after taxation Shareholders’ funds 40,229 11,664 19,759 417 49,380 143,508 18,196 283,153 at 30 April 2024 For the year ended 30 April 2023 | | | | | Share | | Capital | Warrant | | Share | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | premium | | redemption | | exercise | purchase | | Capital | Revenue | Shareholders’ | | | | | capital | account | | | reserve | reserve | | reserve | reserve | reserve | | funds | | | Notes | £’000 | | £’000 | | £’000 | £’000 | | £’000 | £’000 | £’000 | | £’000 | | Shareholders’ funds | | 40,229 11,664 19,759 417 60,433 155,503 14,928 302,933 | | | | | | | | | | | | at 1 May 2022 Ordinary shares bought back 12 – – – – (4,805) – – (4,805) into treasury Dividends paid during the 8 – – – – – – (5,951) (5,951) year Net return on ordinary 7 – – – – – (3,900) 6,145 2,245 activities after taxation Shareholders’ funds 40,229 11,664 19,759 417 55,628 151,603 15,122 294,422 at 30 April 2023 The accompanying notes on pages 79 to 91 are an integral part of the Financial Statements. 77 Financial report # Cash flow statement 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*** | | | 7,676 | | 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** | \* 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. 78 Annual Report and Financial Statements 2024 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. 79 Financial report b. Significant accounting estimates and judgements Unlisted investments are valued at fair value following a detailed review and appropriate challenge of the The preparation of the Financial Statements requires valuations. The Managers’ unlisted investment policy the use of estimates, assumptions and judgements. applies methodologies consistent with the International These estimates, assumptions and judgements affect Private Equity and Venture Capital Valuation guidelines the reported amounts and liabilities, at the reporting date. (‘IPEV’). These methodologies can be categorised While estimates are based on best judgement as follows: (a) market approach (multiples, industry using information and financial data available, the valuation benchmarks and available market prices); actual outcome may differ from these estimates. (b) income approach (discounted cash flows); and The key sources of estimation and uncertainty relate (c) replacement cost approach (net assets). The to the assumptions used in the determination of the fair valuation process recognises also, as stated in the IPEV value of the unlisted investment. Guidelines, that the price of a recent investment may be Judgements an appropriate starting point for estimating fair value, however it should be evaluated using the techniques The Directors consider that the preparation of the described above. Financial Statements involves the key judgements in relation to the fair valuation of the unlisted investment. d. Cash and cash equivalents The key judgements in the fair valuation process are: Cash and cash equivalents include cash in hand and deposits repayable on demand. Deposits are repayable i. the Managers’ determination of the appropriate on demand if they can be withdrawn at any time without application of the International Private Equity and notice and without penalty or if they have a maturity or Venture Capital Guidelines 2022 (‘IPEV Guidelines’) period of notice of not more than one working day. to each unlisted investment; and e. Income ii. the Directors’ consideration of whether each fair i. Income from equity investments is brought into value is appropriate following detailed review and account on the date on which the investments are challenge. The judgement applied in the selection of the quoted ex-dividend or, where no ex-dividend date is methodology used for determining the fair value of each quoted, when the Company’s right to receive payment unlisted investment can have a significant impact upon is established. the valuation. ii. Special dividends are treated as repayments of Estimates capital or income depending on the facts of each The key estimate in the Financial Statements is the particular case. determination of the fair value of the unlisted investment by the Managers for consideration by the Directors. This iii. Interest receivable/payable on bank deposits is estimate is key as it significantly impacts the valuation of recognised on an accruals basis. the unlisted investment at the Balance sheet date. The fair valuation process involves estimation using subjective iv. If scrip is taken in lieu of dividends in cash, the net inputs that are unobservable (for which market data is amount of the cash dividend declared is credited to the unavailable). The main estimates involved in the selection revenue account. Any excess in the value of the shares of the valuation process inputs are: received over the amount of the cash dividend foregone i. the selection of appropriate comparable companies to is recognised as capital. assist with the valuation validation or the application f. Expenses of valuation adjustments. Comparable companies are chosen on the basis of their business characteristics All expenses are accounted for on an accruals basis. and growth patterns; and Expenses are charged through the revenue account except as follows: ii. the estimation of the probability assigned to an exit being through an initial public offering (‘IPO’) or a i. Where they relate directly to the acquisition or disposal company sale. of an investment, in which case they are charged to capital. These expenses are commonly referred to as c. Investments transaction costs and comprise brokerage commission The Company’s investments are classified as held at fair and stamp duty. value through profit and loss in accordance with sections 11 and 12 of FRS 102. ii. The management fee is allocated 30% to revenue and 70% to capital in line with the Board’s expected Purchases and sales of investments are recognised on a long-term split of revenue and capital return from the trade date basis. Company’s investment portfolio. Upon initial recognition investments in securities are g. Borrowings and finance costs recognised at fair value, which is transaction value. Finance costs are accounted for on an accruals basis. Subsequently, investments are included at fair value Finance costs are allocated 30% to revenue and 70% which are quoted bid prices for investments traded in to capital in line with the Board’s expected long-term active markets. Changes in the fair value of investments split of revenue and capital return from the Company’s and gains and losses on disposal are recognised as capital investment portfolio. items in the Income statement. 80 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc 01 Principal accounting policies (continued) h. Deferred taxation m. Warrant exercise reserve In accordance with FRS 102, deferred taxation is provided The premium arising on issue of shares where there were on all timing differences which have originated but not warrants attached was apportioned between shares and reversed by the Balance sheet date, calculated on a non- warrants as part of shareholders’ funds on the basis of discounted basis at the tax rates expected to apply when the market values of the shares and warrants on the first the timing differences reverse, based on what has been day of dealing. The warrant element was referred to as enacted or substantially enacted, relevant to the benefit the warrant reserve. On exercise of these warrants, the or liability. Deferred tax assets are recognised only to premium relating to the warrants exercised is transferred the extent that it is more likely than not that there will be from the warrant reserve to a warrant exercise reserve. taxable profits from which underlying timing differences n. Share purchase reserve can be deducted. The cost of repurchasing ordinary shares including related i. Value Added Tax (VAT) stamp duty and transaction costs are taken directly to Expenses are disclosed inclusive of the related share purchase reserve. Share purchase transactions are irrecoverable VAT. accounted for on a trade date basis. j. Dividend Distributions o. Capital reserve Final dividends are recognised in the year in which the Gains and losses on disposal of investments, changes in dividends are approved by the Company’s shareholders. the fair value of investments held, exchange differences of a capital nature and the amount by which other assets k. Share premium account and liabilities valued at fair value differ from their book The balance classified as share premium represents: cost are dealt with in the capital reserve. The sales proceeds of treasury shares reissued are treated as a • the proceeds of sales of shares held in treasury in realised profit up to the amount of the weighted average excess of the weighted average purchase price paid by purchase price of those shares and is transferred to the Company to repurchase the shares; and capital reserves. • the excess of the proceeds of issuance of new shares p. Revenue reserve over the nominal value. The revenue profit or loss for the year is taken to or from l. Capital redemption reserve this reserve. The revenue reserve may be distributed by The nominal value of ordinary share capital repurchased way of a dividend. and cancelled is transferred out of the called-up share capital and into the capital redemption reserve. 02 Income 2024 2023 £’000 £’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 | 2024 | 2024 | | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | | Capital | Total | Revenue | | Capital | Total | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’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. 81 Financial report 04 Other administrative expenses 2024 2023 £’000 £’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 | 2024 | 2024 | | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | | Capital | Total | Revenue | | Capital | Total | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Interest on bank loan 314 732 1,046 150 349 499 06 Tax 2024 2023 £’000 £’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 97 438 25% (2023 – 19.5%*) 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. 82 Annual Report and Financial Statements 2024 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 | Level 2 £'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 | Level 2 £'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. 83 Financial report 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 | Unlisted | 2024 | 2023 | | --- | --- | --- | --- | --- | | securities | | securities* | total | total | | | £’000 | £’000 | £’000 | £’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 2023 £’000 £’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 2023 £’000 £’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. 84 Annual Report and Financial Statements 2024 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 | | | **17,595** | **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. 85 Financial report 13 Capital and reserves | | | Share | | Capital | Warrant | | Share | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | redemption | | exercise | purchase | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | £’000 | | £’000 | | £’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 – – – – (6,248) – – (6,248) back into treasury Investment management – – – – – (982) – (982) fee charged to capital Finance costs of borrowings – – – – – (732) – (732) charged to capital Other exchange differences – – – – – (93) – (93) Dividends paid in year – – – – – – (5,410) (5,410) Revenue return on ordinary – – – – – – 8,484 8,484 activities after taxation At 30 April 2024 40,229 11,664 19,759 417 49,380 143,508 18,196 283,153 | | | Share | | Capital | Warrant | | Share | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | redemption | | exercise | purchase | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | £’000 | | £’000 | | £’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 – – – – (4,805) _ _ (4,805) back into treasury Investment management – – – – - (1,009) _ (1,009) fee charged to capital Finance costs of borrowings – – – – - (349) _ (349) charged to capital Dividends paid in year – – – – - - (5,951) (5,951) Revenue return on ordinary – – – – - - 6,145 6,145 activities after taxation 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 2023 £’000 £’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. 86 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc 15 Analysis of change in net debt | | At 1 May | | | | Exchange | | At 30 April | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | Cash flows | | movement | | | 2024 | | | | £’000 | | £’000 | | £’000 | | £’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 | | | | Exchange | | At 30 April | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | Cash flows | | movement | | | 2023 | | | | £’000 | | £’000 | | £’000 | | £’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. 87 Financial report ## 18 Financial instruments (continued) The interest rate 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. 88 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc 18 Financial instruments (continued) Significant unobservable inputs* Fair values | | as at 30 April | | | Key | | | Other | | | | | Sensitivity to | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | At 30 April 2024 | | 2024 | unobservable | | | unobservable | | | Sensitivity | | changes in significant | | | Valuation approach | | £’000 | | inputs | | | inputs | † | | % | unobservable inputs | | | Recent transaction price 3,338 n/a | | | | | # | | | a,b n/a n/a | | | | | Significant unobservable inputs* Fair values | | as at 30 April | | | Key | | | Other | | | | | Sensitivity to | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | At 30 April 2023 | | 2023 | unobservable | | | unobservable | | | Sensitivity | | changes in significant | | | Valuation approach | | £’000 | | inputs | | | inputs | † | | % | unobservable inputs | | | Comparable company performance 627 Selection of | | | | | | | a,b,c,d 10 If input comparable | | | | | | | | | | comparable | | | | | | | | company performance | | | | | | companies | | ‡ | | | | | | 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. 89 Financial report ## 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. 90 Annual Report and Financial Statements 2024 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. 91 ## Shareholder ## information Baillie Gifford UK Growth Trust plc ## Notice of ## Annual General Meeting Leonardo Royal Hotel London City Hilton DoubleTree Hotel Pepys Street Four Seasons Trinity House Hotel Tower Hill TRINTY SQUARE GARDEN B y w a r d S t r e e t Tower Hill | The Annual General Meeting of the Company will be | Notice is hereby given that an Annual General | | --- | --- | | held at the Leonardo Royal Hotel London City, 8-14 | Meeting of Baillie Gifford UK Growth Trust plc | | Cooper’s Row, London, EC3N 2BQ on Wednesday 4 | will be held at Leonardo Royal Hotel London | | September 2024, at 12.00 noon. | 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 for the following purposes. 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. 93 S Shareholder information Ordinary business Special business To consider and, if thought fit, to pass the following To consider and, if thought fit, to pass Resolutions Resolutions as Ordinary Resolutions. 10 and 13 as Ordinary Resolutions and Resolutions 11 and 12 as Special Resolutions. 01. To receive and adopt the Financial Statements of the Company for the year to 30 April 2024 10. That, in substitution for any existing authority, with the Reports of the Directors and of the but without prejudice to the exercise of any such Independent Auditor thereon. authority prior to the date hereof, the Directors of the Company be and they are hereby 02. To approve the Directors’ annual report on generally and unconditionally authorised in remuneration for the year to 30 April 2024. accordance with section 551 of the Companies 03. To declare a final dividend of 5.60p per Act 2006 (the ‘Act’) to exercise all the powers of ordinary share. the Company to allot shares in the Company and to grant rights to subscribe for or to convert any 04. To re-elect Andrew Westenberger as a Director. security into shares in the Company (‘Securities’) 05. To re-elect Ruary Neill as a Director. provided that such authority shall be limited to the allotment of shares and the grant of rights 06. To re-elect Cathy Pitt as a Director. in respect of shares with an aggregate nominal 07. To elect Neil Rogan is a Director. value of up to £3,651,087.50, such authority 08. To re-appoint Ernst & Young LLP as Independent to expire at the conclusion of the next Annual | Auditor of the Company to hold office from the | General Meeting of the Company after the | | --- | --- | | conclusion of this meeting until the conclusion | passing of this resolution or on the expiry of | | of the next Annual General Meeting at which | 15 months from the passing of this resolution, | | the Financial Statements are laid before the | whichever is the earlier, unless previously | | Company. | revoked, varied or extended by the Company in | a general meeting, save that the Company may 09. To authorise the Directors to determine the at any time prior to the expiry of this authority remuneration of the Independent Auditor of the make an offer or enter into an agreement which Company. 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. 94 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc | 11. That, subject to the passing of Resolution 10 | | a. the maximum aggregate number of ordinary | | --- | --- | --- | | | above, and in substitution for any existing power | shares hereby authorised to be purchased | | | but without prejudice to the exercise of any such | is 21,891,921, or, if less, the number | | | power prior to the date hereof, the Directors of | representing approximately 14.99% of | | | the Company be and they are hereby generally | the issued ordinary share capital of the | | | empowered, pursuant to sections 570 and 573 | Company as at the date of the passing of this | | | of the Companies Act 2006 (the ‘Act’), to allot | Resolution; | equity securities (within the meaning of section b. the minimum price (excluding expenses) which 560(1) of the Act), for cash pursuant to the may be paid for each ordinary share is 25 authority given by Resolution 10 above, and to pence; sell treasury shares for cash, as if section 561(1) of the Act did not apply to any such allotment or c. the maximum price (excluding expenses) sale, provided that this power: which may be paid for each ordinary share shall not be more than the higher of: a. expires at the conclusion of the next Annual | General Meeting of the Company after | i. 5 per cent above the average closing | | | --- | --- | --- | | the passing of this Resolution or on the | | price on the London Stock Exchange of | | expiry of 15 months from the passing of this | | an ordinary share over the five business | | Resolution, whichever is the earlier, save that | | days immediately preceding the date of | | the Company may, before such expiry, make | | purchase; and | an offer or agreement which would or might ii. an amount equal to the higher of the price require equity securities to be allotted or of the last independent trade of an Ordinary treasury shares to be sold after such expiry Share and the highest current independent and the Directors may allot equity securities or bid for an Ordinary Share on the trading sell treasury shares in pursuance of any such venue where the purchase is carried out; offer or agreement as if the power conferred and hereby had not expired; and d. unless previously varied, revoked or renewed b. shall be limited to the allotment of equity by the Company in a general meeting, the securities or the sale of treasury shares up to authority hereby conferred shall expire at the an aggregate nominal value of £3,651,087.50, conclusion of the Annual General Meeting of being approximately 10% of the nominal value the Company to be held in respect of the year of the issued share capital of the Company, ending 30 April 202 5, save that the Company as at 12 June 2024. may, prior to such expiry, enter into a contract 12. That, in substitution for any existing authority to purchase ordinary shares under such but without prejudice to the exercise of any such authority which will or might be completed or authority prior to the date hereof, the Company executed wholly or partly after the expiration be and is hereby generally and unconditionally of such authority and may make a purchase of authorised, pursuant to and in accordance ordinary shares pursuant to any such contract. with section 701 of the Companies Act 2006 13. That, for the purposes of, and in accordance (the ‘Act’) to make market purchases (within with Article 176 of the Company’s Articles the meaning of section 693(4) of the Act) of of Association, approval is sought for the fully paid ordinary shares of 25 pence each in continuance of the Company until the Annual the capital of the Company (‘ordinary shares’) General Meeting of the Company to be held in (either for retention as treasury shares for respect of the year to 30 April 2029. future reissue, resale, transfer or cancellation), provided that: By order of the Board Baillie Gifford & Co Limited Managers and Secretaries 4 July 2024 95 Shareholder information Notes | 01. As a member you are entitled to appoint a proxy | | (ID 3RA50) no later than two days (excluding | | --- | --- | --- | | | or proxies to exercise all or any of your rights | non-working days) before the time of the | | | to attend, speak and vote at the AGM. A proxy | meeting or any adjournment. For this purpose, | | | need not be a member of the Company but | the time of receipt will be taken to be the time | | | must attend the AGM to represent you. You may | (as determined by the timestamp applied to | | | appoint more than one proxy provided each | the message by the CREST Application Host) | | | proxy is appointed to exercise rights attached to | from which the Company’s registrar is able to | | | different shares. You can only appoint a proxy | retrieve the message by enquiry to CREST in | | | using the procedure set out in these notes and | the manner prescribed by CREST. After this time | | | the notes to the proxy form. You may not use | any change of instructions to proxies appointed | | | any electronic address provided either in this | through CREST should be communicated to the | | | notice or any related documents (including the | appointee through other means. | circular and proxy form) to communicate with 05. CREST members and, where applicable, the Company for any purpose other than those their CREST sponsors, or voting service expressly stated. providers should note that Euroclear UK & | 02. To be valid any proxy form or other instrument | | International Limited does not make available | | --- | --- | --- | | | appointing a proxy, together with any power | special procedures in CREST for any particular | | | of attorney or other authority under which it | message. Normal system timings and | | | is signed or a certified copy thereof, must be | limitations will, therefore, apply in relation to | | | received by post or (during normal business | the input of CREST Proxy Instructions. It is the | | | hours only) by hand at the Registrars of the | responsibility of the CREST member concerned | | | Company at Computershare Investor Services | to take (or, if the CREST member is a CREST | | | PLC, The Pavilions, Bridgwater Road, Bristol, | personal member, or sponsored member, or | | | BS99 6ZY or eproxyappointment.com no later | has appointed a voting service provider(s), to | | | than 2 days (excluding non-working days) | procure that his/her CREST sponsor or voting | | | before the time of the meeting or any adjourned | service provider(s) take(s)) such action as | | | meeting. | shall be necessary to ensure that a message | is transmitted by means of the CREST system 03. CREST members who wish to appoint a by any particular time. In this connection, proxy or proxies through the CREST electronic CREST members and, where applicable, their proxy appointment service may do so by CREST sponsors or voting system providers are using the procedures described in the CREST referred, in particular, to those sections of the Manual and/or by logging on to the website CREST Manual concerning practical limitations euroclear.com/CREST. CREST personal of the CREST system and timings. members or other CREST sponsored members, | and those CREST members who have appointed | 06. The Company may treat as invalid a CREST | | | --- | --- | --- | | a voting service provider(s), should refer to their | | Proxy Instruction in the circumstances set out | | CREST sponsor or voting service provider(s), | | in Regulation 35(5)(a) of the Uncertificated | | who will be able to take the appropriate action | | Securities Regulations 2001. | on their behalf. 07. The return of a completed proxy form or | 04. In order for a proxy appointment or instruction | | other instrument of proxy will not prevent | | --- | --- | --- | | | made using the CREST service to be valid, the | you attending the AGM and voting in person | | | appropriate CREST message (a ‘CREST Proxy | if you wish. | 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 96 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc | 08. Pursuant to Regulation 41 of the Uncertificated | | 12. Under section 338A of the Companies Act | | | --- | --- | --- | --- | | | Securities Regulations 2001 and section 311 of | | 2006, members meeting the qualification | | | the Companies Act 2006 the Company specifies | | criteria set out at note 14 below may require the | | | that to be entitled to attend and vote at the | | Company to include in the business to be dealt | | | Annual General Meeting (and for the purpose of | | with at the Annual General Meeting a matter | | | the determination by the Company of the votes | | (other than a proposed resolution) which may | | | they may cast), shareholders must be registered | | properly be included in the business (a matter of | | | in the Register of Members of the Company no | | business). The request must have been received | | | later than 2 days (excluding non-working days) | | by the Company not later than 23 July 2024. | | | prior to the commencement of the AGM or any | | The conditions are that the matter of business | | | adjourned meeting. Changes to the Register | | must not be defamatory of any person, frivolous | | | of Members after the relevant deadline shall | | or vexatious. The request must identify the | | | be disregarded in determining the rights of any | | matter of business by either setting it out in full | | | person to attend and vote at the meeting. | | or, if supporting a statement sent by another | member, clearly identify the matter of business 09. Any person to whom this notice is sent who is which is being supported. The request must be a person nominated under section 146 of the accompanied by a statement setting out the Companies Act 2006 to enjoy information rights grounds for the request. Members seeking to do (a ‘Nominated Person’) may, under an agreement this should write to the Company providing their between him/her and the shareholder by whom full name and address. he/she was nominated, have a right to be appointed (or to have someone else appointed) 13. Under section 527 of the Companies Act 2006, as a proxy for the Annual General Meeting. members meeting the qualification criteria set If a Nominated Person has no such proxy out in note 14 below may require the Company appointment right or does not wish to exercise it, to publish, on its website, (without payment) a he/she may, under any such agreement, have a statement (which is also passed to the Auditor) right to give instructions to the shareholder as to setting out any matter relating to the audit of the the exercise of voting rights. Company’s Financial Statements, including the Auditor’s Report and the conduct of the audit. 10. The statement of the rights of shareholders in Such requests must be made in writing and must relation to the appointment of proxies in Notes state your full name and address. 1 and 2 above does not apply to Nominated | Persons. The rights described in those Notes | 14. In order to be able to exercise the members’ | | | --- | --- | --- | | can only be exercised by shareholders of the | | rights in notes 11 to 13, the relevant request | | Company. | | must be made by: (a) members representing | at least 5% of the total voting rights of all 11. Under section 338 of the Companies Act 2006, the members who have a right to vote on the members meeting the qualification criteria set resolution to which the requests relate; or out in note 14 below may, subject to certain (b) at least 100 members who have a right to conditions, require the Company to circulate vote on the resolution to which the requests to members notice of a resolution which may | properly be moved and is intended to be moved | relate and hold shares in the Company on | | --- | --- | | at that meeting. The conditions are that: (a) the | which there has been paid up an average sum, | | resolution must not, if passed, be ineffective | per member, of at least £100. Such requests | | (whether by reason of inconsistency with any | should be sent to the Company at Calton | | enactment or the Company’s constitution | Square, 1 Greenside Row, Edinburgh, EH1 3AN. | | or otherwise); (b) the resolution must not | Electronic requests permitted under section | | be defamatory of any person, frivolous or | 338 (see note 11) should be sent to | | vexatious; and (c) the request: (i) may be in hard | trustenquiries@bailliegifford.com. | 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. 97 Shareholder information 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. 98 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Further shareholder ## information | Baillie Gifford UK Growth Trust plc is an | Baillie Gifford UK Growth Trust | | --- | --- | | investment trust. Investment trusts offer | share identifiers | | investors the following: | ISIN GB0007913485 | • participation in a diversified portfolio of shares; Sedol 0791348 • constant supervision by experienced professional Ticker BGUK managers; and Legal Entity Identifier 549300XX386SYWX8XW22 • the Company is free from capital gains tax on The ordinary shares of the Company are listed on capital profits realised within its portfolio, although the London Stock Exchange and their price is shown investors are still liable for capital gains tax on in the Financial Times. profits when selling their investment. Key dates How to invest Ordinary shareholders normally receive one dividend The Company’s shares are traded on the London in respect of each financial year paid in September. Stock Exchange. They can be bought by placing an The Annual Report and Financial Statements are order with a stockbroker, or by asking a professional normally issued in July and the AGM is held in adviser to do so. If you are interested in investing September. 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 Share register enquiries out more by visiting the investment trust pages at Computershare Investor Services PLC maintains bailliegifford.com. the share register on behalf of the Company. In the event of queries regarding shares registered in your | Sources of further information | own name, please contact the Registrars on | | --- | --- | | on the Company | 0370 703 0025. | | The price of shares is quoted daily in the | This helpline also offers an automated self-service | | Financial Times and can also be found on the | functionality (available 24 hours a day, 7 days a | | Company’s page of the Managers’ website at | week) which allows you to: | bgukgrowthtrust.com, Trustnet at trustnet.com and • hear the latest share price; on other financial websites. Company factsheets are also available on the Baillie Gifford website and are • confirm your current share holding balance; and updated monthly. These are available from Baillie • order Change of Address and Stock Transfer Gifford on request. forms. 99 Shareholder information 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. ### Analysis of shareholders at 30 April | | 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** | 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. 100 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Communicating ## with shareholders Trust magazine UK Growth Investment Trust plc web page at bgukgrowthtrust.com Trust magazine UK Growth Trust on the Web Trust is the Baillie Gifford investment trust magazine Up-to-date information about Baillie Gifford which is published twice a year. It provides an insight UK Growth Trust plc, is on the Baillie Gifford to our investment approach by including interviews UK Growth Trust plc pages of the Managers’ website with our fund managers, as well as containing at bgukgrowthtrust.com. You will find full details investment trust news, investment features and of Baillie Gifford UK Growth Trust plc, including articles about the trusts managed by Baillie Gifford, recent portfolio information and performance figures. including Baillie Gifford UK Growth Trust plc. Trust plays an important role in helping to explain our Client relations team contact details products so that readers can really understand them. You can contact the Baillie Gifford Client Relations For a copy of Trust, please contact the Baillie Gifford Team by telephone, email or post: Client Relations Team (see contact details opposite). Telephone: 0800 917 2112 You can subscribe to Trust magazine or view a digital Your call may be recorded for training or monitoring copy at bailliegifford.com/trust. purposes. Email: trustenquiries@bailliegifford.com Suggestions and questions Website: bailliegifford.com Any suggestions on how communications with | shareholders can be improved are welcomed, so | Address: | | --- | --- | | please contact the Baillie Gifford Client Relations | Baillie Gifford Client Relations Team | | Team and give them your suggestions. They will also | Calton Square | | be very happy to answer questions that you may | 1 Greenside Row | | have about Baillie Gifford UK Growth Trust. | 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. 101 Shareholder information ## Insights | UK equities: | Ashtead: | UK Growth | | --- | --- | --- | | growth on our doorstep | hiding in plain sight | Stewardship Report | | Our specialist approach is | This little-known equipment rental | Genus and Rio Tinto case | | well-placed to take advantage of | company is one of the UK’s most | studies provide examples of | | early-stage British businesses. | exciting growth stories. | the UK Equities Team 2022 | and 2023 engagements. 102 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc Alternative Investment Fund Managers Third party data provider disclaimer (‘AIFM’) regulations No third party data provider (‘Provider’) makes any In accordance with the AIFM Regulations, warranty, express or implied, as to the accuracy, information in relation to the Company’s leverage completeness or timeliness of the data contained and the remuneration of the Company’s AIFM, herewith nor as to the results to be obtained by Baillie Gifford & Co Limited, is required to be made recipients of the data. available to investors. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors AIFM Remuneration or omissions in the index data included in this In accordance with the Regulations, the document, regardless of cause, or for any damages AIFM remuneration policy is available at (whether direct or indirect) resulting therefrom. No bailliegifford.com or on request (see contact Provider has any obligation to update, modify or details on page 108). The numerical remuneration amend the data or to otherwise notify a recipient disclosures in respect of the AIFM’s reporting period thereof in the event that any matter stated herein are available at bailliegifford.com. changes or subsequently becomes inaccurate. Leverage Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract The Company’s maximum and actual leverage levels (including under an indemnity), in tort (including (see Glossary of terms and Alternative Performance negligence), under a warranty, under statute or Measures on pages 104 to 106) at 30 April 2024 are otherwise, in respect of any loss or damage suffered shown below: by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, Gross method Commitment method or any other conclusions, or any course of action Maximum limit 2.00:1 2.00:1 determined, by you or any third party, whether or not based on the content, information or materials Actual 1.05:1 1.05:1 contained herein. FTSE Index data Automatic exchange of information London Stock Exchange Group plc and its group In order to fulfil its obligations under UK Tax undertakings (collectively, the ‘LSE Group’). © Legislation relating to the automatic exchange of LSE Group 2024 FTSE Russell is a trading name information, the Company is required to collect of certain of the LSE Group companies. ‘FTSE®’ and report certain information about certain ‘Russell®’, ‘FTSE Russell®’, is/are a trade mark(s) of shareholders. the relevant LSE Group companies and is/are used The legislation will require investment trust by any other LSE Group company under license. All companies to provide personal information to rights in the FTSE Russell indexes or data vest in the HMRC on certain investors who purchase shares in relevant LSE Group company which owns the index investment trusts. As an affected company, Baillie or the data. Neither LSE Group nor its licensors Gifford UK Growth Trust plc will have to provide accept any liability for any errors or omissions in information annually to the local tax authority on the indexes or data and no party may rely on any the tax residencies of a number of non-UK based indexes or data contained in this communication. certificated shareholders and corporate entities. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s Shareholders, excluding those whose shares are express written consent. The LSE Group does not held in CREST, who come on to the share register promote, sponsor or endorse the content of this will be sent a certification form for the purposes of communication. 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. 103 Shareholder information ## Glossary of terms and Alternative ## Performance Measures (‘APM’) An alternative performance measure (‘APM’) is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified 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%) 104 Annual Report and Financial Statements 2024 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 | | 2024 | 2023 | | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | | | NAV | share price | | NAV | 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. 105 Shareholder information 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. 106 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc ## Sustainable Finance Disclosure ## Regulation (‘SFDR’) The EU Sustainable Finance Disclosure Regulation The likely impact on the return of the portfolio (‘SFDR’) does not have a direct impact in the UK from a potential or actual material decline in the due to Brexit, however, it applies to third-country value of investment due to the occurrence of products marketed in the EU. As Baillie Gifford UK an environmental, social or governance event Growth Trust plc is marketed in the EU by the AIFM, or condition will vary and will depend on several Baillie Gifford & Co Limited, via the National Private factors including but not limited to the type, extent, Placement Regime (‘NPPR’) the following disclosures complexity and duration of an event or condition, have been provided to comply with the high-level prevailing market conditions and existence of any requirements of SFDR. mitigating factors. The AIFM has adopted Baillie Gifford & Co’s Whilst consideration is given to sustainability stewardship principles and guidelines as its policy matters, there are no restrictions on the investment on integration of sustainability risks in investment universe of the Company, unless otherwise stated decisions. within in its investment objective & policy. Baillie Gifford & Co can invest in any companies it believes Baillie Gifford & Co believes that a company could create beneficial long-term returns for cannot be financially sustainable in the long run if investors. However, this might result in investments its approach to business is fundamentally out of being made in companies that ultimately cause a line with changing societal expectations. It defines negative outcome for the environment or society. ‘sustainability’ as a deliberately broad concept which encapsulates a company’s purpose, values, business More detail on the Manager’s approach to model, culture, and operating practices. sustainability can be found in the stewardship principles and guidelines document, available publicly Baillie Gifford & Co’s approach to investment is on the Baillie Gifford website bailliegifford.com and by based on identifying and holding high quality growth scanning the QR code below. businesses that enjoy sustainable competitive advantages in their marketplace. To do this it The underlying investments do not take into account looks beyond current financial performance, the EU criteria for environmentally sustainable undertaking proprietary research to build up an economic activities established under the EU in-depth knowledge of an individual company Taxonomy Regulation. 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. 107 Shareholder information # Company information ## Directors **Chairman:** Carolan Dobson Ruary Neill Cathy Pitt Neil Rogan Andrew Westenberger ## 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 ## Depository **The Bank of New York Mellon (International) Limited** 160 Queen Victoria Street London EC4V 4LA ## Company details bgukgrowthtrust.com Company Registration No. 2894077 ISIN: GB0007913485 Sedol: 0791348 Ticker: BGUK Legal Entity Identifier: 549300XX386SYWX8XW22 ## 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 108 Annual Report and Financial Statements 2024 Baillie Gifford UK Growth Trust plc 109 ## bgukgrowthtrust.com Calton Square, 1 Greenside Row, Edinburgh EH1 3AN Telephone +44 (0)131 275 2000