## Clean private and confidential ### Project: Pacific Horizon Investment Trust Annual Report ### Proof 10: 16.09.2024 ### Job. no: 3400 Annual Report and 31 July 2024 Financial Statements ## Pacific Horizon ## Investment Trust ## PLC Investor Disclosure Document The UK Alternative Investment Fund Managers Regulations require certain information to be made available to investors prior to their making an investment in the Company. The Company’s Investor Disclosure Document is available for viewing at pacifichorizon.co.uk. Notes None of the views expressed in this document should be construed as advice to buy or sell a particular investment. Investment trusts are UK public listed companies and as such comply with the requirements of the Financial Conduct Authority. They are not authorised or regulated by the Financial Conduct Authority. Pacific Horizon Investment Trust PLC currently conducts its affairs, and intends to continue to conduct its affairs, so that the Company’s ordinary shares can qualify to be considered as a mainstream investment product and can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the rules of the Financial Conduct Authority in relation to non-mainstream investment products. This document is important and requires your immediate attention. If you reside in the United Kingdom and you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other Independent Financial Adviser authorised under the Financial Services and Markets Act 2000 immediately. If you are outside the United Kingdom, you should consult an appropriately authorised financial adviser. If you have sold or otherwise transferred all of your ordinary shares in Pacific Horizon Investment Trust PLC, please forward this document, together with any accompanying documents, but not your personalised Form of Proxy, as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was or is being effected for delivery to the purchaser or transferee. Pacific Horizon Investment Trust PLC Introduction ## Contents Financial highlights 02 An introduction to Pacific Horizon Investment Trust PLC 03 Strategic report Chairman’s statement 06 Managers’ review 09 Environmental, social and governance engagement 15 Baillie Gifford stewardship principles 17 Baillie Gifford proxy voting 18 One year summary 19 Five year summary 20 Ten year record 22 Review of investments 24 Portfolio executive summary 28 Baillie Gifford – valuing private companies 32 List of investments 36 Business review 39 Governance report Directors and management 51 Directors’ report 54 Corporate governance report 60 Audit Committee report 67 Directors’ remuneration report 70 Statement of Directors’ responsibilities 74 Financial report Independent auditor’s report 77 Income statement 84 Balance sheet 85 Statement of changes in equity 86 Cash flow statement 87 Notes to the Financial Statements 88 Shareholder information Notice of Annual General Meeting 107 Further shareholder information 112 Communicating with shareholders 114 Sustainable Finance Disclosure Regulation 116 Third party data provider disclaimer 117 Glossary of terms and Alternative Performance Measures 118 Company information 120 01 Introduction # Financial highlights Year to 31 July 2024 ## Total returns\* Share price 5.1% NAV 4.8% Comparative index† 6.8% ## One year total return\* performance (figures rebased to 100 at 31 July 2023) ![img-0.jpeg](img-0.jpeg) ## Discount\* (figures plotted on a monthly basis) ![img-1.jpeg](img-1.jpeg) Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 117. All figures are stated on a total return basis. \* Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † The comparative index is the MSCI All Country Asia ex Japan Index (in sterling terms). Past performance is not a guide to future performance. 02 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## An introduction to ## Pacific Horizon ## Investment Trust PLC 2 Our philosophy ## Growth : embracing Long-term ## growth, disruption and This matters. Stock prices are wildly unpredictable in ## innovation. the short-term. Ultimately, however, prices do reflect the earnings capability of a company. So when we find a company that has the potential to grow its ## Pacific Horizon’s objective profits significantly over time, we must invest with the patience that allows a good decision to prove ## is to invest in the Asia- its worth. ## Pacific region (excluding Growth ## Japan) and in the Indian We have found the most persistent source of alpha to be those companies that can grow their profits ## Sub-continent in order to faster than the market, in hard currency terms, over ## achieve capital growth. the longterm. This trend persists irrespective of starting valuation. Active We would observe three particular features which emphasise the need for active management in the Asia-Pacific region (excluding Japan). Firstly, roughly a quarter of the index still consists of State Owned Enterprises, whose interests are not always aligned with minority shareholders. Secondly, some Asian countries grow sporadically, so there will be times when we want to take advantage of the tailwind provided by economic cycles in certain countries and times when we want to limit our exposure. Lastly, positive returns in the asset class are driven by a very small number of companies that do exceptionally well. Being highly selective is imperative. 03 Introduction Our structure Pacific Horizon is an investment trust but how does into shareholders keeping more of the returns this structure benefit our shareholders? generated from their investment. Our scale and commitment to low costs enables us to offer genuine Underpinning everything is a genuine commitment to value for money. Although there are benefits to low costs. We believe our duty to shareholders is to the investment trust structure, there are also risks limit fees. Put simply, lower charges directly translate involved. See bailliegifford.com. Our structure Company status Democratising access to unlisted (private) • Just like other public companies companies, Pacific Horizon can borrow • We offer shareholders Permanent capital Accessibility money to make additional liquid access to private • The closed-ended • Listed on the London investments. This financial companies – a distinct structure provides a pool Stock Exchange, Pacific gearing can amplify offering in today’s market. of permanent capital. Horizon provides intraday investment returns. • We own companies Unlike open-ended funds, liquid access, and • Our shareholders have uninterrupted on their the portfolio remains our shares are openly rights, and we seek their journey from private to intact and is not impacted tradeable for investors approval, via votes, if we public – shareholders by shareholder demand. from around the world. want to make significant benefit from long-term • We have the freedom to • There are no performance changes. compounded returns. invest for the long term fees or minimum • A board of directors looks • Access to private and hold assets that can investment restrictions. after the interests of our companies is dependent be harder to buy and • Shareholders could shareholders. They meet upon relationships sell – such as private benefit from simplified tax several times a year and and reputation – our companies. reporting when compared are responsible for various shareholders benefit • Our extended time with other structures that things, such as overseeing from the access we enjoy horizons are matched hold private companies. performance. but without paying fees by our companies. normally associated with This alignment underpins private equity funds. the prospect of enduring relationships. Although there are benefits to the investment trust structure, there are also risks involved. 04 Annual Report and Financial Statements 2024 ## Strategic ## report This strategic report, which includes pages 5 to 49 and incorporates the Chairman’s statement, has been prepared in accordance with the Companies Act 2006. Strategic report ## Chairman’s ## statement Board Composition Having been appointed to the Board on 13 March 2024 as Chairman, I would like to take this opportunity to thank, on behalf of the Company and its Directors, my predecessor, Angus Macpherson, for guiding the Company during a period of geopolitical uncertainty and market volatility. Subject Roger Yates to shareholders confirming my appointment, I look Chairman forward to working with the current Board and Appointed 2024 portfolio managers for the benefit of shareholders. Performance In the year to 31 July 2024, the Company’s net asset value (‘NAV’) per share total return was 4.8 per cent., compared to a 6.8 per cent. increase in the total return of the MSCI All Country Asia ex Japan Index in sterling terms. The share price rose by 4.4 per cent. and the discount ended the period at 7. 8 per cent.. The Company’s annual ongoing charge was 0.74 per cent. compared to 0.72 per cent. for the year to 31 July 2023, due largely as a consequence of increased expenses. The reporting period was marked by volatility, with negative returns in the first six months followed by a period of positive portfolio and index returns. The notable positive contributors to the portfolio’s relative performance over the year were the holdings in Indian property developers Prestige Estates Project, Equinox India Development and Phoenix Mills. The notable detractors to relative performance were the holdings in Li-Ning, a Chinese sportswear and sporting equipment company, and Ping An Insurance, a Chinese financial services company. Having an underweight position in TSMC, a Taiwanese semiconductor company, was also a notable detractor. The Managers’ Review, on pages 9 to 14, provides fuller comment on the drivers to returns, as well as thoughts on the investee companies and their prospects. 06 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Over the five years to 31 July 2024, the Company's NAV and share price total return were 96.1 per cent. and 93.6 per cent. respectively, whereas the Company's comparative index returned 17.0 per cent. in sterling terms during the same period. ## Gearing The deployment of gearing was considered regularly, and continues to be so. The Company was ungeared throughout the course of the last financial year. The Board sets the gearing parameters within which the portfolio managers are permitted to operate. At present, the agreed range of equity gearing is minus 15 per cent. (holding net cash) to plus 15 per cent.. The Company has a multi-currency revolving credit facility with the Royal Bank of Scotland International Limited for up to £100 million. This facility expires in March 2025 and provides for potential gearing of 16.6 per cent. at present. ## Earnings and Dividend As highlighted in the reports of my predecessors, it remains the case that investors should not invest in this Company if they require steady or growing income from their investment as the Company invests in growth stocks that will typically have little or no yield. Earnings per share this year were 3.82p, a decrease from the 4.56p per share reported last year. The Board is recommending that a final dividend of 2.65p per share be paid (3.25p per share paid in 2023), subject to shareholder approval at the Annual General Meeting ('AGM'). ## Issuance, Share Buybacks and Treasury At the Company's AGM in November, the Board will be seeking to renew the existing 10 per cent. non-pre-emptive issuance authority. The authority will also permit the re-issue of any shares held in treasury, of which there are currently 1,418,210. Any issuance, be it of new shares or from treasury, will only be undertaken at a premium to the NAV per share, so avoiding dilution for existing investors. Issuance at a premium enhances NAV per share, improves liquidity in the Company's shares and spreads the operating expenses of the Company across a broader base. The Board is also asking shareholders to renew the annual authority to repurchase up to 14.99 per cent. of the Company's outstanding shares on an *ad hoc* basis, either for cancellation or to be held in treasury. Over the course of the Company's financial year, 425,198 shares, 0.5 per cent. of the starting issued share capital, were bought back into treasury at a cost of £2.3 million. The buybacks were undertaken at a weighted average discount of 11.2 per cent.. The Board intends to use the authority opportunistically, considering not only the level of the discount relative to peers and in absolute terms, but also the underlying liquidity and trading volumes in the Company's shares. This approach to buybacks seeks to support liquidity whilst addressing, in part, any imbalance between the supply and demand for the Company's shares that results in a large discount to NAV. ## Sustainable Disclosure Requirements ('SDR') SDR is a package of measures that the Financial Conduct Authority ('FCA') finalised in November 2023. These measures include rules imposing conditions on the use of sustainability-related terms and labels in literature produced by FCA regulated entities, such as our Managers, Baillie Gifford & Co Limited, on behalf of 'products', such as investment trusts. SDR also establishes anti-greenwashing rules. The Managers' view is that a precondition of a long term investment is that businesses in which they invest must be sustainable, although Pacific Horizon itself does not have an explicit sustainability objective. Therefore, under SDR the Company will not be taking a label. The Board agrees with the Managers' approach of engaging and working with companies towards achieving improved practices and outcomes while being cognisant of the risks of imposing developed market standards on emerging market companies indiscriminately. ## Annual General Meeting I look forward to meeting shareholders at this year's AGM. This will take place on Thursday 21 November 2024 at the offices of Baillie Gifford & Co, in Edinburgh, at 11.30am. If attending, please endeavour to arrive by 11.20am to allow time to register. There will be a presentation from the portfolio managers who, along with the Directors, will answer questions from shareholders. 07 Strategic report Outlook The past year saw weakness in the Chinese economy, the recent unwinding of the Yen carry trade (borrowing Yen at a low rate of interest to invest in higher-yielding assets) and regional tensions on Taiwan. Notwithstanding these challenges, there remain a wealth of opportunities for the patient investor. These are based on both superior long-term economic growth rates and the range of attractive companies in the region. Valuations are at multi-year lows relative to developed markets. The very diversity of opportunities should encourage investors, as demonstrated in the range of Asian/Indian market returns in the past year – from 30 per cent. plus in Taiwan and India to negative 12 per cent. in China. Within the markets, our portfolio managers continue to find companies with strong prospects trading at reasonable valuations. The Managers’ report starting on page 9 provides examples. Based on the encouraging macroeconomic trends and stock specific opportunities, there is every reason to be optimistic about the long-term prospects for the portfolio. As always, it remains important that our portfolio managers (and shareholders) can see through the occasional and perhaps inevitable bouts of volatility in returns. Assuming that is the case then the outlook for the portfolio and the Company is a positive one. Roger Yates Chairman 16 September 2024 08 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC # Managers' review ![img-2.jpeg](img-2.jpeg) **Roderick Snell** Portfolio manager Appointed 2013 ![img-3.jpeg](img-3.jpeg) **Ben Durrant** Deputy portfolio manager Appointed 2023 ## Overview In the year to 31 July 2024, the Company's net asset value ('NAV') per share total return and the share price total return were 4.8% and 5.1% respectively. This compares to a 6.8% increase in the total return of the MSCI All Country Asia ex Japan Index in sterling terms. Geographic returns across the region showed significant disparity. India and Taiwan were top performers, with gains of 36.4% and 34.6% respectively. In contrast, Hong Kong and China experienced declines of 19.8% and 12.0%. Portfolio performance was primarily driven by substantial exposure to India, particularly in the real estate sector. Investments in Vietnam and limited exposure to Hong Kong also contributed to positive relative performance. However, stock selection in China and an underweight position in Taiwan's TSMC were the notable detractors. Despite regional challenges, such as a strong US dollar, ongoing weakness in the Chinese economy, and the reversal of the Yen carry trade, most Asian economies demonstrated resilience. Our holdings generally performed well operationally, and an increasing number of new investment opportunities led to higher portfolio turnover. The most notable changes involved increasing our holdings in 'rapid growth' companies, particularly within the technology sector. We significantly raised our exposure to online consumer businesses, including Kaspi.kz, a fintech and ecommerce super app from Kazakhstan; Pinduoduo Inc, a Chinese ecommerce platform; and Tencent Holdings, known for gaming and social media in China. Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Past performance is not a guide to future performance. 09 Strategic report Additionally, we increased our investments in We are particularly interested in three specific and the semiconductor industry, adding to memory persistent inefficiencies: chip makers SK hynix and Samsung Electronics, | semiconductor equipment manufacturers including | 1) Underappreciated growth duration | | --- | --- | | ASMPT, and the foundry sector, where we made | We believe one of the greatest investment | | substantial additions to TSMC. | inefficiencies is in companies with excellent long- | term earnings growth where profits are volatile Funding predominantly came from a reduction in from one quarter to the next. The market typically cyclical investments, including materials, shipbuilders shows an aversion to such companies, preferring and engineering businesses. By country, we the predictability of smooth profit generation even if continued to reduce our exposure to India and the long-term growth rate turns out to be a fraction increased our positioning in Taiwan. of that achieved by firms more willing to reinvest Despite global headwinds, we maintain a positive in their business and with greater ambition. This long-term outlook for the Asia ex Japan region. Most presents exciting investment opportunities, but it Asian economies boast favourable macroeconomic requires an approach that allows near-term volatility conditions and structurally faster growth rates to beignored. compared to developed markets, yet their valuations are at multi-year lows on a relative basis. A potential 2) Underappreciated growth pace catalyst for the region is the rate cutting cycle in most The market consistently underestimates the developed markets, which may lead to a weakening likelihood of rapid growth. The evidence shows US dollar. This would serve as a significant tailwind that most investors cluster around a narrow range for Asia and emerging markets more broadly. Perhaps of earnings growth predictions, which can in turn most encouragingly, we are discovering an increasing lead to significant mispricing of companies with the number of investment-worthy companies, particularly potential to grow very rapidly. Our process is focused ones with substantial growth opportunities. on finding those companies. By looking further out and searching for low probability but high impact Philosophy growth opportunities, we endeavour to outperform We are growth investors endeavouring to invest the broader market. in the top twenty percent of the fastest-growing 3) Underappreciated growth surprise companies in Asia. Across the region we have found the most persistent source of outperformance to be The final significant inefficiency lies in the interaction those companies which can grow their profits faster between top-down and bottom-up investing. As than the market, in hard currency terms, over the investors in Asia, ex Japan, and the Indian Sub- long term. This trend persists irrespective of starting continent, we do not have the luxury of ignoring valuations. Our research is singularly focused on macroeconomics. Purely bottom-up investment finding those companies whose share prices can at is a path to ruin in a universe where industrial and least double, in sterling terms, on a five-year view economic cycles can dominate investment returns and we expect most of this doubling to come from over multi-year periods. The long-term earnings of earnings growth. many companies – notably in the financial, materials and industrial sectors – are determined by exogenous macro factors beyond their control. This also providesopportunities. Our analysis shows that while it may pay to invest in companies that display consistently high levels of profitability, the strongest returns are to be found in those companies that transition from poor levels of profitability to high ones – a ‘growth surprise’. 10 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC This may seem obvious – rising levels of profitability are normally accompanied by a re-rating, thereby providing a two-fold kicker to share price performance. But identifying the drivers behind this change is the key and has been a significant source of outperformance for Pacific Horizon. We accept that timing these inflection points perfectly is impossible, but when you have an investment horizon measured over many years, anticipating the future direction of travel is possible. We are agnostic as to the type of growth inefficiency we are exploiting and will invest wherever we are finding the best opportunities. At times this will lead to a concentration in particular sectors or countries, and at others to a much broader, flatter portfolio, but growth will always be the common theme. | | Pacific Horizon | MSCI AC Asia ex Japan Index | | --- | --- | --- | | Historical earnings growth (5 years trailing compound annual growth to 31 July 2024) | 5.5% | 5.6% | | One year forecast earnings growth to 31 July 2025 | 38.5% | 16.0% | | Estimated p/e ratio for the year to 31 July 2025 | 13.1x | 12.6x | | Active share | 75% | n/a | | Portfolio turnover | 30.8% | n/a | Data as at 31 July 2024, source: Baillie Gifford, UBS PAS, APT, MSCI (see disclaimer at the end of this announcement). ## Review Asian markets demonstrated resilience in the face of significant challenges over the past few years. Despite headwinds including the strongest US dollar in decades, rising geopolitical tensions, armed conflicts in Europe and the Middle East, and most recently the dramatic unwinding of the Yen carry trade, Asian economies not only avoided crisis, but most prospered, outpacing growth in many Western nations. This resilience marks a significant shift from historical patterns, where such external pressures would likely have triggered economic turmoil in the region. Improved stability underscores the enhanced macroeconomic position of Asia today, particularly compared to many Western economies. Combining this favourable macroeconomic condition with Asia's structurally faster growth rates, and valuations at multi-year lows relative to developed markets, Asia ex Japan appears to be in a sweet spot. Despite this, however, Asian markets have yet to fully reflect the advantages in market performance. Several external headwinds persist, most notably the strength of Western currencies, particularly the US dollar. However, the economic landscape appears to be shifting. With inflation peaking in Western economies, developed markets should be on the cusp of a rate cutting cycle. The European Central Bank and the Bank of England already initiated rate cuts, and the US Federal Reserve seems poised to follow suit. Coupled with rising government spending and mounting debt in the US and Europe, Asian economies are likely to become increasingly appealing to investors. Within Asia, China remains a concern, with the MSCI China index still below half its early 2021 peak. As discussed in previous reports, many economic challenges persist. Of particular concern is the real estate sector, which accounts for roughly 30% of the economy and continues to struggle. Its ongoing weakness has further depressed consumer confidence, which combined with continued geopolitical pressures, created a challenging environment for investors. Despite these issues, we believe there are compelling investment opportunities in China. Firstly, valuations have reached extreme levels with many world class companies trading at low single digit multiples and others even below the cash on their balance sheets. Secondly, the macro situation is not as dire as valuations suggests. China remains a US$17 trillion economy growing at 5%, with considerable fiscal, monetary and policy room to support further growth. Throughout the year, the government shifted towards a more supportive approach, implementing interest rate cuts, fiscal stimulus and various measures to shore up the property market, including the easing of home purchase restrictions and the lowering of mortgage rates and down payment ratios. 11 Strategic report Thirdly, many companies continue to perform strongly operationally. In the internet sector, despite the negative headlines, companies are generating record revenues and profits. Large-cap firms like Tencent Holdings and Pinduoduo Inc reported impressive earnings growth of 79% and 350% year-over-year, respectively. These businesses are highly cash-generative and committed to significant shareholder returns through buybacks and/or dividends, potentially establishing a floor for their low valuations. We have been adding to the sector with new purchases of Tencent Holdings (3.8% holding at the end of the period), Pinduoduo Inc (2.6%) and Lufax Holdings (0.8%). We also increased our existing holdings in Baidu Inc and unlisted ByteDance, owner of Douyin and TikTok, the world's most popular short form video apps. These purchases were mostly funded by sales of other Chinese companies, including slower growing, non-technology businesses Geely Automobile (automotive manufacturer), China Oilfield Services Ltd (oil services), and Ningbo Peacebird Fashion (fashion retailer). A smaller portion of sales involved internet companies with deteriorating competitive positions, such as Alibaba Group. Despite the sales and purchases roughly matching, market movements in China took the portfolio's absolute China exposure down from 33.7% to 25.9% over the period. At the other end of the performance spectrum is India, where the index gained 36.4% over the year. The country continues to thrive under the business-friendly reforms of the Modi government, resulting in robust economic growth (GDP growth exceeding 8%) and a surge in foreign investment. Notably, in June 2024, Modi and his BJP party faced a setback in national elections. Despite securing a third term, the BJP lost its overall majority in parliament's lower house (Lok Sabha) and will rely on coalition partners to govern. While the new political landscape may pose challenges for future reforms, we believe it doesn't fundamentally alter India's growth trajectory. In fact, it may prove beneficial by tempering some of the BJP's more socially divisive policies. We remain optimistic about India's long-term outlook and continue to see attractive investment opportunities. Our largest exposure is in Indian real estate, comprising 10.0% of our total assets. This sector benefits from the most affordable house prices in decades, coupled with significant industry consolidation over the past ten years. Our other Indian holdings focus on new technology, either directly through investments in companies like Dailyhunt, one of the country's leading social media platforms, and PolicyBazaar, India's leading price comparison site, or indirectly through companies such as Delhivery, a dominant player in e-commerce logistics. We have, however, found valuations increasingly difficult to justify in a number of other sectors in India, particularly consumer and industrial companies, and in many small and mid-cap businesses. Consequently, we made significant reductions to several of our holdings, including large reductions to India industrials, where we sold Skipper (power transmissions) and Tata Motors (automotive), both of which had appreciated over five-fold since our initial purchases. We also greatly reduced our holding in Ramkrishna Forgings (auto parts manufacturer). Following their strong performance, we trimmed several Indian property holdings as well. These sales in India totalled roughly 15% of the portfolio. However, due to the robust performance of our remaining Indian holdings, the portfolio's overall position in India only decreased from 23.9% to 23.0% over the year. By sector, our most significant additions to the portfolio were in high growth, technology companies, primarily in two areas. Firstly, we increased our exposure to internet platforms. We already discussed the significant purchases of internet names in China, including Pinduoduo Inc and Tencent Holdings. Elsewhere, we initiated a new holding in Kaspi.kz, Kazakhstan's leading super app. Kaspi.kz is used by nearly the entire adult population of Kazakhstan and has a dominant market share of 70% or more in e-commerce, payments and fintech. The company became one of our top ten holdings, representing 2.8% of total assets. As a result of these changes, our exposure to information technology and communication services increased from 30.6% to 45.7% over the year. 12 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC The second main area of focus was semiconductor backed, saw the completion of a significant deal companies. We made significant additions to TSMC, whereby the company secured new capital, Embassy the Taiwanese foundry, increasing our holding from contributed a substantial portion of its assets and 1.1% to 8.8% over the course of the year. TSMC Blackstone emerged as a major shareholder (we has become an effective monopoly in advanced chip also participated in the capital raise). As a result, the manufacturing, with increasing pricing power, and shares underwent a notable re-rating. is central to many major technology advancements Our Indian industrial holdings delivered strong from AI to quantum computing. We also substantially performances as the country’s investment cycle increased our positions in Korean computer memory continued to accelerate. Ramkrishna Forgings makers Samsung Electronics and SK hynix. We also increased by 52% and Skipper rose by 59%. purchased SG Micro, a leading Chinese analogue Meanwhile, automotive company Tata Motors semiconductor company, and ASMPT, which gained over 50%, buoyed by robust domestic sales provides semiconductor manufacturing solutions. of its cars and trucks. In the technology sector, Throughout the year, our exposure to companies PolicyBazaar emerged as our standout holding, with significant revenues from semiconductors rose climbing 94%. The company continues to capture from approximately 15% to 27%. market share in insurance product sales, benefiting Overall, the number of names in the portfolio from increased online searches which drove rapid reduced to 59 from 72 in the year to 31 July 2024. sales growth of 60% year-over-year. Private companies, of which there were 5 in the Hong Kong and Vietnam emerged as significant portfolio as of 31 July 2024, accounted 7.1% of the relative contributors. Hong Kong was the weakest portfolio, and gearing was nil. market, falling 19.8%, and we benefitted from our significant underweight position in the country. Performance In contrast, Vietnam is our second largest active India emerged as the portfolio’s standout market, country position in the portfolio (+7.8%) which, accounting for all eight of our top-performing despite some political turbulence, performed well. companies. The Indian real estate sector was the Performance was led by HDBank, which continued primary driver of returns, contributing approximately to generate returns on equity in the mid-twenties 600 basis points. This was led by Prestige Estates and maintained good asset quality as concerns over Projects, Equinox India Developments (formerly various property exposures proved unfounded. IndiaBulls Real Estate), and Phoenix Mills, which China emerged as the worst performing country, ranked as our top three performing companies. detracting 300bp from performance. The most Performance was strong across the sector as the significant detractors were our holdings in Li-Ning, property cycle finally gained momentum after Ping An Insurance and Dada Nexus. Li-Ning’s share more than a decade of stagnation, with volumes price fell nearly 70% following the company’s and prices accelerating. The fundamentals look announcement of inventory management issues. robust, characterised by good affordability, long- However, after consulting with the company and term structural demand, and a consolidated numerous distributors, we believe this setback is market that has translated into strong operational temporary and expect growth to resume within the performanceat the developers. Prestige Estates next 12 months. exemplified this trend, with annual sales bookings Ping An Insurance faced concerns over tightening up over 60% and a record-breaking launch of financial regulations and its exposure to the property 40million square feet in new projects, representing market. In response, we reduced our position in the a 52% year-over-year increase. company over the year. Equinox India Developments unfolded as a more Dada Nexus was negatively impacted by two factors: intricate case, involving the Embassy Group’s (an the sluggish performance of JD.com, for which Indian developer base in Bengaluru) efforts to it provides logistics services, and revelations of acquire control, enhance corporate governance accounting irregularities. Consequently, we decided and consolidate its assets within the company. to divest our position entirely. This complex process, which we’ve consistently 13 Strategic report Taiwan detracted 280bp from performance, primarily due to our underweight position in TSMC whose share price rose nearly 60%. The company experienced robust growth as the semiconductor cycle rebounded. With its monopolistic position in leading-edge semiconductor manufacturing, TSMC emerged as the major beneficiary of demand driven by artificial intelligence, notably as the sole supplier for NVIDIA’s leading AI chips. By sector, our underweight exposure to TSMC led to information technology being our worst-performing sector, followed by financials. In contrast, real estate and materials were the top contributors toperformance. We remain excited by the prospects for companies across the region and the breadth and depth of investment opportunities in growth businesses that will reward long-term patient investors. Baillie Gifford & Co 16 September 2024 14 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Environmental, social and ## governance engagement Our long-term, active approach to investment is • We do not believe ‘one size fits all’: ESG based on identifying and holding high-quality growth practices need to be assessed on a businesses that enjoy sustainable competitive case-by-case basis, not reliant on formulaic and advantages in their marketplace. backward-lookingscreens. To identify these kinds of businesses, we often look • Not seeking ‘perfect’ companies: we prefer to beyond current financial performance, undertaking consider the likely direction of change in otherwise proprietary research to build up our in-depth promising investments and engage accordingly. knowledge of an individual company and form a view Company engagement is key to our process. We of its long-term prospects. Material environmental, encourage steps to maximise opportunities and social and governance (‘ESG’) matters which affect minimise risks where we believe it is material to the the financial condition or operating performance of success of the company. Engagement priorities are a company, can positively or negatively influence set through a combination of a subjective assessment long-term investment returns. Such issues are of the materiality of an issue and our ability to considered throughout the investment process influence, as well as use of more qualitative inputs through research, engagement and voting. to provide direction. We vote wherever possible and Our approach is guided by our ESG principles: will vote against management if we believe that its actions are not in the interests of shareholders. • Investment process founded on long-term ownership of growing businesses: we want We are supported by a dedicated emerging markets to help these companies fulfil their potential ESG analyst and a further 40 analysts who are part of and encourage them to ignore the short-term Baillie Gifford’s wider ESG resource. pressures of the market. By engaging with companies, we seek to build • Sustainability is central to our analytical task: constructive relationships with them, to better inform businesses engaging in practices that are harmful our investment activities and, where necessary, effect to society may be capable of generating attractive change within our holdings, ultimately with the goal returns in the short term but are unlikely to do so of achieving better returns for our shareholders. The over the periods we seek to invest. two following examples demonstrate our stewardship approach through constructive, ongoing engagement. 15 Strategic report Kaspi.kz During these discussions, we heard that Samsung is committed to improving its corporate governance Objective: We undertook additional research to standards and has undergone a three-year review to further assess sanctions risk, potential impact of key benchmark global-leading companies. In addition, personnel and how Kaspi.kz manage risk over and the board is enhancing pre-reporting, independent above regulation. director feedback and member contributions. We Discussion: Kaspi.kz plays a critical role in were also able to hear more about the distinct roles payments and ecommerce in Kazakhstan. We within the company’s leadership, mainly how the see opportunities for significant social benefits board’s chair and the executive chairman work through financial inclusion and merchant retail together. while recognising geopolitical and country risk. The company reiterated its commitment to reducing Following additional research we had commissioned greenhouse gas emissions, transitioning to on sanctions risk, we followed up with the company renewable energy and enhancing product efficiency, to better understand their governance mechanisms, but has more work to do on these topics. with a particular focus on KYC (Know Your Customer) controls and how they manage risk over Setting its environmental strategy in 2022 was a and above regulation. They have a digital onboarding milestone for the company, and it continues to process enhanced by facial recognition technology, work to achieve its targets. Different divisions face ensuring all customers are registered in Kazakhstan different opportunities and challenges, and the with multiple data sources and IDs. This system executive vice president of sustainability reflected balances speed and innovation with control, without on her extensive engagement with theboard and the relying on off-the-shelf solutions. various businessunits. Their core business focuses on domestic We also discussed Samsung’s continued work transactions between domestic users, with on environmental and human rights topics more Kaspi.kz’s products being designed with transaction broadly, which should enable them to be well- limits that prevent their use for moving large sums placed to meet evolving regulatory requirements of money. The limits are approximately US$ 500 per in different markets. Samsung has developed transaction and US$ 2,000 per month. This design and commercialised technologies for capturing choice makes their product unsuitable for breaking and utilising carbon emitted from semiconductor sanctions, as it cannot perform SWIFT transfers or manufacturing sites. Samsung’s scope 2 emissions open dollar or sterling accounts. (i.e.,grid electricity) continue to be its biggest challenge, and it is committed to efficiency Kaspi.kz has embraced digital innovation, moving measures and a transition to renewables with from cash to non-cash transactions, with 85% of a 2027 plan for a 100 per cent. transition to transactions now being non-cash and the discussion renewable energy at global and device division sites. shed light on Kaspi.kz’s digital transformation. The Samsung is working with industry peers through open API framework and the emphasis on keeping the Semiconductor Climate Consortium to develop fees competitive while ensuring merchant and a sector-based approach. Ithas a comprehensive customer satisfaction were also discussed. water management approach and shared examples Outcome: The detailed insights into Kaspi.kz’s KYC from the Hwaseong and Xian sites. Water from processes, coupled with additional independent semiconductor sites is recycled to meet the research findings, provided a more in-depth standards for largely two purposes: re-usage in the understanding of the company’s governance and chip manufacturing process and use in other on-site controls in place. facilities (eg, cooling towers and scrubbers). Outcomes: The meetings provided further insights Samsung Electronics into the company’s governance, the roles of the Objective: To learn more about the company’s chairman and the executive chairman, and strategic corporate governance and sustainability approach investment opportunities. and encourage continued progress. Despite the complexity of aligning diverse business Discussion: We met with the corporate executive vice units towards a unified strategy, Samsung has made presidents of sustainability and investor relations considerable progress on its sustainability strategy. to discuss the company’s sustainability strategy, We will continue to encourage progress. performance and targets. We also took part in a group meeting organised by the Asian Corporate Governance Association with the chairman of theboard. 16 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Baillie Gifford ## stewardship principles Baillie Gifford’s overarching ethos is that we are management. While assessing alignment with ‘Actual’ investors. That means we seek to invest management often comes down to intangible factors for the long term. Our role as an engaged owner and an understanding built over time, we look for is core to our mission to be effective stewards clear evidence of alignment in everything from for our clients. As an active manager, we invest in capital allocation decisions in moments of stress companies at different stages of their evolution to the details of executive remuneration plans and across many industries and geographies, and focus committed share ownership. We expect companies on their unique circumstances and opportunities. Our to deepen alignment with us, rather than weaken it, approach favours a small number of simple principles where the opportunity presents itself. rather than overly prescriptive policies. This helps shape our interactions with holdings and ensures our Governance fit for purpose investment teams have the freedom and retain the Corporate governance is a combination of structures responsibility to act in clients’ best interests. and behaviours; a careful balance between Where possible we consider all asset classes within systems, processes and people. Good governance the framework of our stewardship activities. We seek is the essential foundation for long-term company to apply the most appropriate ownership tools to success. We firmly believe that there is no single each holding in delivering our objectives. governance model that delivers the best long-term outcomes. We therefore strive to push back against one-dimensional global governance principles in Long-term value creation favour of a deep understanding of each company We believe that companies that are run for the we invest in. We look, very simply, for structures, long-term are more likely to be better investments people and processes which we think can maximise over our clients’ time horizons. We encourage our the likelihood of long-term success. We expect to holdings to be ambitious, focusing on long-term trust the boards and management teams of the value creation and capital deployment for growth. companies we select, but demand accountability if We know events will not always run according to that trust is broken. plan. In these instances we expect management to act deliberately and to provide appropriate transparency. We think helping management to Sustainable business practices resist short-term demands from shareholders often A company’s ability to grow and generate value for protects returns. We regard it as our responsibility to our clients relies on a network of interdependencies encourage holdings away from destructive financial between the company and the economy, society engineering towards activities that create genuine and environment in which it operates. We expect value over the long-run. Our value will often be in holdings to consider how their actions impact and supporting management when others don’t. rely on these relationships. We believe long-term success depends on maintaining a social licence Alignment in vision and practice to operate and look for holdings to work within the spirit and not just the letter of the laws and Alignment is at the heart of our stewardship regulations that govern them. Material factors should approach. We seek the fair and equitable treatment be addressed at the board level as appropriate. of all shareholders alongside the interests of 17 Strategic report ## 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 86 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 28 same way that our investment approach is based one against, withhold or abstain around empowered and independent teams, our Meeting not voted 2 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’s Number of votes for 90% page of the Managers’ website and can be viewed Number of votes against 4% atpacifichorizon.co.uk. Number of votes abstain 4% No Vote 2% 18 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## One year ## summary The following information 31 July 31 July illustrates how Pacific Horizon 2024 2023 % change has performed over the year to Shareholders’ funds* £602.0m £580.4m 31 July 2024. Net asset value per ordinary share* 664.01p 637.18p 4.2% Share price 612.00p 586.00p 4.4% MSCI All Country Asia ex Japan Index (in sterling terms) † 4.1% Dividend proposed per ordinary share in respect of the financial year 2.65p 3.25p Revenue earnings per ordinary share 3.82p 4.56p | Ongoing charges | | | #‡ | 0.74% 0.72% | | --- | --- | --- | --- | --- | | Discount | #‡ | | | (7.8%) (8.0%) | | Active share | | # | | 75% 82% | Year to 31 July 2024 2023 | Total return | # | | | | --- | --- | --- | --- | | Net asset value per ordinary share | | ‡ | 4.8% (3.6%) | | Share price | ‡ | | 5.1% (8.9%) | MSCI All Country Asia ex Japan Index (in sterling terms) † 6.8% 0.8% Year to 31 July 2024 2024 2023 2023 Year’s high and low High Low High Low Net asset value per ordinary share* 712.09p 579.28p 699.18p 556.69p Share price 657.00p 512.00p 693.00p 523.00p (Discount)/premium #‡ (5.0%) (14.5%) 2.7% (11.7%) Year to 31 July 2024 2023 Net return per ordinary share Revenue 3.82p 4.56p Capital 25.82p (30.05p) Total 29.64p (25.49p) Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. # Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. ‡ Key Performance Indicator. Past performance is not a guide to future performance. 19 Strategic report # Five year summary The following charts indicate how Pacific Horizon has performed relative to its comparative index* and the relationship between share price and net asset value over the five year period to 31 July 2024. ## Total return performance† (figures rebased to 100 at 31 July 2019, plotted on a quarterly basis) ![img-4.jpeg](img-4.jpeg) Source: Baillie Gifford/LSEG and relevant underlying index providers#. Dividends are reinvested. ## Annual share price and net asset value total returns† ![img-5.jpeg](img-5.jpeg) Source: Baillie Gifford/LSEG. Dividends are reinvested. * The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. # See disclaimer on page 117. Past performance is not a guide to future performance. 20 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC (Discount)/premium to net asset value † Relative annual share price and net asset value (figures plotted on a quarterly basis) total returns † (compared to the MSCI All Country Asia ex Japan Index (in sterling terms)* total returns) 15% 60% 10% 40% 5% 0% 20% (5%) 0% (10%) | (15%) | | | | (20%) | | | --- | --- | --- | --- | --- | --- | | | 2019 | 2020 2021 2022 2023 | 2024 | | 20242020 2021 2022 2023 | | | July | | July | | | Years to 31 July ● Pacific Horizon premium/(discount) † ● Relative NAV total return † ● Relative share price total return † Source: Baillie Gifford/LSEG # . # Source: Baillie Gifford/LSEG and relevant underlying index providers . Dividends are reinvested. Active share † Turnover ‡ (compared to the MSCI All Country Asia ex Japan Index (in sterling (rolling 12 months turnover, plotted on a monthly basis) terms)*, plotted on a monthly basis) 100% 40% 80% 30% 60% 20% 40% 10% 20% | 0% | | | | 0% | | | --- | --- | --- | --- | --- | --- | | | 2019 | 2020 2021 2022 2023 | 2024 | | 20242019 2020 2021 2022 2023 | | | July | | July | | | Years to 31 July ● Active share † ● Turnover ‡ Source: Baillie Gifford and relevant underlying index providers # . Source: Baillie Gifford. * The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. # See disclaimer on page 1 1 7. ‡ For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Past performance is not a guide to future performance. 21 Strategic report ## Ten year ## record Capital | | Total | | | Shareholders’ | | Net asset value | | | | | Premium/ | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | At | assets* | Borrowings | | | funds* | | per share* | | Share price | | (discount)* | | | 31 July | £’000 | | £’000 | | £’000 | | | p | | p | | % | 2014 145,063 4,146 140,917 200.95 1 7 7.7 5 (11.5) 2015 139,167 13,997 125,170 197.78 181.63 (8.2) 2016 132,702 5,000 127,702 223.58 201.00 (10.1) 2017 182,523 14,773 167,750 309.15 286.00 (7.5) 2018 225,063 20,183 204,880 351.26 363.00 3.3 2019 223,755 20,405 203,350 344.50 320.00 (7.1) 2020 329,044 24,641 304,403 481.92 504.00 4.6 2021 748,014 60,783 687,231 777.15 802.00 3.2 2022 610,550 – 610,550 664.65 647.00 (2.7) 2023 580,355 – 580,355 637.18 586.00 (8.0) 2024 601,970 – 601,970 664.01 612.00 (7.8) Revenue Gearing ratios | | | | | | | Revenue | | | Dividend paid | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Available | | earnings per | | | | and proposed | | | | | | | | | | | Gross | for ordinary | | | | ordinary | | | per ordinary | | | Ongoing | | | | Gross | | | Year to | revenue | shareholders | | | | | share | | | share (net) | | charges* | | Gearing* | | gearing* | | | 31 July | £’000 | | | £’000 | | | | p | | | p | | % | | % | | % | 2014 2,550 1,019 1.40 1.40 1.01 2 3 2015 1,886 231 0.35 0.35 1.02 8 11 2016 1,331 (182) (0.30) 0.35 1.13 3 4 2017 1,559 (211) (0.38) – 1.07 7 9 2018 2,032 (328) (0.60) – 1.02 8 10 2019 2,473 8 0.01 – 0.99 8 10 2020 3,128 564 0.95 0.25 0.92 4 8 2021 3,561 (402) (0.51) – 0.78 4 9 2022 11,067 3,830 4.21 3.00 0.74 (1) – 2023 9,580 4,166 4.56 3.25 0.72 (2) – 2024 8,987 3,464 3.82 2.65 0.74 (1) – * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Past performance is not a guide to future performance. 22 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Cumulative performance (taking 2014 as 100) | | Net asset | | Net asset | | | | | | | | Comparative | | | | Retail | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | At | value per | | value total | | | Share | Share price | Comparative | | | | | index | | price | | | 31 July | | share* | | return* | † | price | total return* | † | index | †# | | total return | | †# | index | † | 2014 100 100 100 100 100 100 100 2015 98 99 102 103 99 102 101 2016 111 112 113 114 112 118 103 2017 154 155 161 163 140 152 107 2018 175 177 204 207 145 161 110 2019 171 173 180 182 147 168 113 2020 240 242 284 287 151 176 115 2021 387 392 451 456 166 199 119 2022 331 334 364 368 149 182 134 2023 317 322 330 335 146 184 146 2024 330 338 344 353 152 196 151 Compound annual returns (%) 5 year 14.0 14.4 13.8 14.1 0.7 3.2 6.0 10 year 12.7 13.0 13.2 13.4 4.3 7. 0 4.2 Total return performance* (figures rebased to 100 at 31 July 2014, plotted on a quarterly basis) 600 500 400 300 200 100 0 20242014 2016 2019 2021 20232015 20182017 2020 2022 Cumulative to 31 July ● Pacific Horizon share price total return* † ● NAV total return* † ● MSCI All Country Asia ex Japan Index (in sterling terms) total return* † * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † Source: LSEG and relevant underlying index providers. See disclaimer on page 117. # The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. Past performance is not a guide to future performance. 23 Strategic report ## Review of ## investments A review of the Company’s ten largest investments as at 31 July 2024. © Samsung. © Taiwan Semiconductor Manufacturing Co., Ltd. Samsung Electronics TSMC Samsung is a global leader in Taiwan Semiconductor semiconductors and electronics. Manufacturing Company is Its core business is highly a semiconductor contract cash-generative, and the group manufacturer. It is the largest and has the financial and human most advanced foundry globally, capital that permits it to invest integral to the global electronics and innovate at scale. industry. Its lead in semiconductor process technology and partnerships with all key chip design companies result in both a multi-decade growth opportunity as well as enduring high returns on capital. | | | | Geography South Korea | | | | Geography Taiwan | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Valuation at 31 July 2024 £57,877,000 | | | | Valuation at 31 July 2024 £52,860,000 | | | | | | | | % of total assets* | | 9.6% | | % of total assets* | | | 8.8% | | | | | at 31 July 2024 | | | | at 31 July 2024 | | | | | | | | Valuation at 31 July 2023 £36,937,000 | | | | Valuation at 31 July 2023 £6,458,000 | | | | | | | | % of total assets* | | 6.4% | | % of total assets* | | | 1.1% | | | | | at 31 July 2023 | | | | at 31 July 2023 | | | | | | | | Net purchases in year | £15,495,000 | | | Net purchases in year | | £41,500,000 | | | | | | to 31 July 2024 | | | | to 31 July 2024 | | | | | * For a definition of terms see Glossary of | | t erms and Alternative Performance Measures on pages | | | | 118 and 119 | | . | | | | 24 | Annual Report and Financial Statements 2024 | | | | | | | | | | Pacific Horizon Investment Trust PLC © Alamy Stock Photo. © Shutterstock/Addictive Creative. Equinox India Developments Tencent Holdings Dailyhunt (VerSe Innovation) Equinox India Developments is Tencent Holdings operates A private company investment, an Indian property developer. It WeChat, China’s ubiquitous Dailyhunt is an Indian consumer has valuable existing assets in messaging platform and internet media company. Its short form Mumbai and future development services portal, as well as being video and news aggregator apps opportunities in Mumbai and China’s leading gaming publisher. are popular across the country. Bangalore. The company benefits It has an excellent record in Its localised and user-generated from both a buoyant property capital allocation and, sitting content ensures engagement, market in India, as well as a new at the heart of the Chinese which is valued by advertisers owner and management team that consumer internet, has a broad looking to reach the Indian will drive growth in the company. range of growth opportunities mass-market. from here. This was previously called Indiabulls Real Estate. | Geography India | | | Geography China | | | | Geography India | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Valuation at 31 July 2024 £23,158,000 | | | Valuation at 31 July 2024 £22,940,000 | | | | Valuation at 31 July 2024 £20,693,000 | | | | % of total assets* | 3.8% | | % of total assets* | | 3.8% | | % of total assets* | 3.5% | | | at 31 July 2024 | | | at 31 July 2024 | | | | at 31 July 2024 | | | | Valuation at 31 July 2023 £11,988,000 | | | Valuation at 31 July 2023 n/a | | | | Valuation at 31 July 2023 £17,921,000 | | | | % of total assets* | 2.1% | | % of total assets* | | | n/a | % of total assets* | 3.0% | | | at 31 July 2023 | | | at 31 July 2023 | | | | at 31 July 2023 | | | | Net purchases/sales in | | Nil | Net purchases in year to | £23,748,000 | | | Net purchases/sales in year | | Nil | | year to 31 July 2024 | | | 31 July 2024 | | | | to 31 July 2024 | | | * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. 25 Strategic report Delhivery Zijin Mining Group Kaspi.kz Zijin Mining Group is a diversified Kaspi.kz is a Kazakhstani Delhivery is an Indian logistics mining company, primarily payments, ecommerce and company, and the leading engaged in the exploration banking business, amongst independent provider of and processing of copper, gold other services. With a dominant end-to-end delivery services, and zinc. The company has a competitive position in its with a national network used by broad portfolio of high quality domestic market, it is arguably the all ecommerce players. The scale mining assets, which are likely broadest ‘super app’ globally. In a and modernity of its network to generate strong production country where online penetration has allowed it to deliver both growth over the coming five years. of services is still low, there is the lowest costs and a reliable ample growth there as well as delivery experience, making it one potentially across Central Asia in of the best-placed operators to the longer-term. benefit from the continued growth of Indian ecommerce. This was previously a private company investment. | Geography India | | | Geography China | | | Geography Khazakstan | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Valuation at 31 July 2024 £18,175,000 | | | Valuation at 31 July 2024 £18,142,000 | | | Valuation at 31 July 2024 £17,034,000 | | | | | % of total assets* | | 3.0% | % of total assets* | | 3.0% | % of total assets* | | 2.8% | | | at 31 July 2024 | | | at 31 July 2024 | | | at 31 July 2024 | | | | | Valuation at 31 July 2023 £18,399,000 | | | Valuation at 31 July 2023 £16,602,000 | | | Valuation at 31 July 2023 n/a | | | | | % of total assets* | | 3.2% | % of total assets* | | 2.9% | % of total assets* | | | n/a | | at 31 July 2023 | | | at 31 July 2023 | | | at 31 July 2023 | | | | | Net sales in year | £172,000 | | Net sales in year | £1,777,000 | | Net purchases in year | £14,009,000 | | | | to 31 July 2024 | | | to 31 July 2024 | | | to 31 July 2024 | | | | * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. 26 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC © Imaginechina Limited/Alamy Stock Photo. EO Technics Pinduoduo Inc EO Technics manufactures Pinduoduo Inc is a Chinese lasers used in the manufacturing ecommerce company, important process of semiconductors, both domestically and including wafer marking, drilling internationally through its Temu and dicing. As semiconductors subsidiary. Its price conscious and become smaller and more gamified approach has enticed complex, lasers will increasingly customers, while its savvy use be needed to replace more of bargaining power with its traditional equipment including Chinese supplier base has allowed ceramic blades and drills, leading it to drive both a bargain for its to rapid growth for EO Technics. customers and rapid profit growth for the company. | Geography South Korea | | | Geography China | | | | | --- | --- | --- | --- | --- | --- | --- | | Valuation at 31 July 2024 £15,692,000 | | | Valuation at 31 July 2024 £15,469,000 | | | | | % of total assets* | | 2.6% | % of total assets* | | 2.6% | | | at 31 July 2024 | | | at 31 July 2024 | | | | | Valuation at 31 July 2023 £15,526,000 | | | Valuation at 31 July 2023 n/a | | | | | % of total assets* | | 2.7% | % of total assets* | | | n/a | | at 31 July 2023 | | | at 31 July 2023 | | | | | Net sales in year | £143,000 | | Net purchases in year | £15,719,000 | | | | to 31 July 2024 | | | to 31 July 2024 | | | | * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. 27 Strategic report ## Portfolio executive ## summary Performance 1 year 3 years 5 years 10 years % % % % Share price 5.1 (22.8) 93.6 252.5 NAV 4.8 (13.6) 96.1 237.5 Comparative index* 6.8 (1.2) 1 7. 0 96.3 All figures are stated on a total return basis † for the period to 31 July 2024. * The comparative index is the MSCI All Country Asia ex Japan Index (in sterling terms). † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. Key contributors and detractors to performance – year to 31 July 2024 | | | Absolute | | | | | Absolute | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | performance | | | | | performance | | | | | Contributors | | | | %* | Detractors | | | | %* | | Prestige Estate Projects | | | 205.4 | | Li-Ning | | | (68.3) | | | Equinox India Developments 93.2 | | | | | Ping An Insurance (35.6) | | | | | | Tata Motors 52.5 | | | | | Baidu Inc (42.5) | | | | | | Phoenix Mills 103.1 | | | | | Dada Nexus ADR (76.4) | | | | | | Samsung Electronics 13.2 | | | | | Samsung Engineering (36.9) | | | | | * Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 August 2023 to 31 July 2024. For the definition of total return see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Source: Revolution. 28 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC New buys Additions ASMPT PT AKR Corporindo Tbk Baidu Inc Mobile World Investment Corporation | Chroma ATE | SG Micro | Binh Minh Plastics Joint | | | --- | --- | --- | --- | | | | Stock Company | PolicyBazaar | | Kaspi.kz | SK Square | | | | | | ByteDance Series E-1 | Samsung Electronics | | Luckin Coffee Inc ADR | Tencent Holdings | | | Preferred Silergy Lufax Holding FPT Corporation SK hynix MicroConnect Jio Financial Services TSMC Pinduoduo Inc MMG Complete sales Reductions Alibaba Group Ping An Bank A shares Accton Technology MediaTek Corporation China Oilfield Services PT Astra International Midea Group A shares AirTAC International Group CIMC Vehicles Samsung Engineering Military Commercial Joint Bank Rakyat Stock Bank Dada Nexus ADR Samsung SDI Brilliance China Automotive Phoenix Mills Geely Automobile SDI Corporation Chalice Ping An Insurance HDFC Skipper Coupang Precision Tsugami Hyundai Mipo Dockyard Tata Motors Delhivery Prestige Estate Projects KH Vatec Company TISCO EO Technics Ramkrishna Forgings Kingdee International Wuxi Lead Intelligent Software Equipment Co A Shares HDBank Reliance Industries LONGi Green Energy A Hoa Phat Group SEA ADR shares Jadestone Energy Techtronic Industries Meituan JD.com Vietnam Enterprise Merdeka Copper Gold Investments Limited KE Holdings Nexteer Automotive Vinh Hoan Corporation Koh Young Technology Ningbo Peacebird Fashion Zhejiang Supor Co A Shares Lemon Tree Hotels A Shares Zijin Mining Group Li-Ning Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. Philtown properties was written-off in the year to 31 July 2024. 29 Strategic report ## Distribution of total assets* and size splits ### Geographical 2024 ![img-6.jpeg](img-6.jpeg) | Geographical | 2024 % | 2023 % | | --- | --- | --- | | 1 India | 23.0 | 23.9 | | 2 China | 22.6 | 28.5 | | 3 South Korea | 17.0 | 18.3 | | 4 Taiwan | 14.7 | 5.7 | | 5 Vietnam | 8.7 | 6.7 | | 6 Singapore | 3.7 | 3.5 | | 9 China 'A' shares | 3.2 | 5.2 | | 7 Kazakhstan | 2.8 | - | | 8 Indonesia | 2.6 | 5.7 | | 10 Hong Kong | 2.4 | 0.3 | | 11 Thailand | - | 0.9 | | 12 Net liquid assets | (0.7) | 1.3 | ### Sectoral 2024 ![img-7.jpeg](img-7.jpeg) | Sectoral | 2024 % | 2023 % | | --- | --- | --- | | 1 Information Technology | 32.5 | 22.0 | | 2 Financials | 14.2 | 12.9 | | 3 Communication Services | 13.2 | 8.6 | | 4 Consumer Discretionary | 13.2 | 20.3 | | 5 Real Estate | 10.0 | 6.9 | | 6 Materials | 6.9 | 12.5 | | 7 Industrials | 6.0 | 10.6 | | 8 Energy | 4.2 | 4.3 | | 9 Consumer Staples | 0.5 | 0.5 | | 10 Healthcare | - | 0.1 | | 11 Net liquid assets | (0.7) | 1.3 | ### Size splits (market capitalisation of investments) As at 31 July 2024 ![img-8.jpeg](img-8.jpeg) Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. # The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. 30 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC 31 Strategic report ## Baillie Gifford – valuing ## private companies We aim to hold our private company investments The valuations group also monitors relevant at ‘fair value’, i.e. the price that would be paid market benchmarks on a weekly basis and updates in an open-market transaction. Valuations are valuations in a manner consistent with our external adjusted both during regular valuation cycles valuer’s (S&P Global) most recent valuation report and on an ad hoc basis in response to ‘trigger where appropriate. events’. Ourvaluation process ensures that Generally speaking, public markets have continued private companies are valued in both a fair and to be less volatile in the 12 months to 31 July 2024, timelymanner. and overall, an improvement in market conditions The valuation process is overseen by a valuations has led to an increase in private market deal activity. group at Baillie Gifford, which takes advice from an The data below quantifies the revaluations carried independent third party (S&P Global). The valuations out during the 12 months to 31 July 2024, however group is independent from the investment team with doesn’t reflect the ongoing monitoring of the private all voting members being from different operational investment portfolio which hasn’t resulted in a areas of the firm, and the investment managers only change in valuation. receive final valuation notifications once they have Pacific Horizon Investment Trust been applied. Instruments (lines of stock reviewed) 7 We revalue the private holdings on a three-month | rolling cycle, with one-third of the holdings | Revaluations performed | | 37 | | --- | --- | --- | --- | | reassessed each month. During stable market | Percentage of portfolio revalued up to 4 times | 29% | | | conditions, and assuming all else is equal, each | Percentage of portfolio revalued 5+ times 71% | | | investment would be valued four times in a twelve-month period. For investment trusts, the prices are also reviewed twice per year by the respective boards. Beyond the regular cycle, the valuations group also monitors the portfolio for certain ‘trigger events’. These may include changes in fundamentals, a takeover approach, an intention to carry out an Initial Public Offering (‘IPO’), company news which is identified by the valuation team or by the portfolio managers, or meaningful changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value (‘NAV’). There is no delay. 32 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Private companies summary ### Historical snapshot Since our first investment in private companies in 2007, Pacific Horizon Investment Trust has deployed £76,228,000 of capital in this area. ### Transaction value Showing all transactions in the year to 31 July (£'000). ![img-9.jpeg](img-9.jpeg) 04 private companies listed since initial purchase 05 private companies currently held ### Portfolio activity – year to 31 July 2024 £10,628,000 of new capital was deployed in private companies during the year. No private companies listed or were taken-over during the year. One private company was written-off during the year. ### Concentration At 31 July 2024 we held 5 private companies which equated to 7.1% of total assets. ![img-10.jpeg](img-10.jpeg) All figures stated as percentage of total assets, as at 31 July 2024. ### Private exposure (31 July 2024) ![img-11.jpeg](img-11.jpeg) | Dailyhunt (VerSe Innovation) | 3.5% (£20,693,000) | | --- | --- | | ByteDance | 2.5% (£15,232,000) | | MicroConnect | 1.1% (£6,782,000) | | Chime Biologics | <0.1% (£46,000) | | Eden Biologics | <0.1% (£10,000) | 33 Strategic report Performance of listed holdings held previously as private company investments from date of initial investment of each holding to 31 July 2024 (absolute performance in sterling terms as a %) Listed holdings at 31 July 2024 Delhivery -100 20 6040-80 -60 -40 -20 0 80 10 Absolute performance from initial investment to initial public offering Absolute performance from initial public offering to 31 July 2024 Total absolute performance from initial investment to 31 July 2024 te: Absolute performance returns cannot be added together as they are geometric. Private company investments and listed investments previously held as private company investments as a percentage of total assets* (plotted quarterly from July 2016) | 1,000 | 25 | | --- | --- | | 800 | 20 | | 600 | 15 | % | | 400 | | | | | | | | | | 10 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 200 | | | | | | | | | | 5 | | | | 0 | | | | | | | | | 0 | | | | Jul | Jul | Jul | Jul | Jul | Jul | Jul | Jul | Jul | | | Star Health | | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | | ord. Zomato Total assets in sterling (left hand axis) rivate company investments as a % of total assets (right hand axis) rivate company investments and listed investments previously held in the portfolio as private comany investments as a % of total assets (right hand axis) -100 20 6040-80 -60 -40 -20 0 80 100 See Glossary of terms and Alternative Performance Measures on pages 118 and 119 . £ million 0 Source: Baillie Giff | P | 34 | Annual Report and Financial Statements 2024 | | --- | --- | --- | | P No | | | | * Source: Revolution/Baillie Gifford. | | | Pacific Horizon Investment Trust PLC Size Overview Our private company exposure tends to be weighted 2024 2023 to the upper end of the maturity curve, focussed on £’000 £’000 late stage private companies who are scaling up and Opening balance 1 August 29,427 37,243 becoming profitable. Purchases at cost 10,628 – | | | | | | Disposals proceeds received | * | (5) – | | --- | --- | --- | --- | --- | --- | --- | --- | | | Total equity | Total asset | | Number of | | | | | Cap | value (USD) | | % | holdings | | | | Change in listing – – Micro <$300m <0.1 2 Change in fair value 2,713 (7,816) Small $300m–$2bn 1.1 1 Closing balance 31 July 42,763 29,427 Medium $2bn–$10bn 3.5 1 * Philtown properties was written-off in the year to 31 July 2024. Large >$10bn 2.5 1 7. 1 5 As at 31 July 2024. Valuation movements – year to 31 July 2024 40% | | Dailyhunt | | Pacific Horizon -13.0% | | --- | --- | --- | --- | | (VerSe Innovation) | | Pacific Horizon -1.4% | Average write-down per company | | | | Average change at company level | Year to 31 July 2024 | 20% (excluding companies revalued up) Year to 31 July 2024 ByteDance Eden Biologics MicroConnect Chime Biologics 0% (20%) 60% (40%) Private companies Source: Baillie Gifford. Pacific Horizon private company valuation changes, year to 31 July 2024. Valuation changes 35 Strategic report ## List of investments as at 31 July 2024 | | | | 2024 | | 2024 | 2023 | | --- | --- | --- | --- | --- | --- | --- | | | | | Value | % of total | | Value | | Name | Geography | Business | £’000 | | assets* | £’000 | | Samsung Electronics South Korea Memory, phones and electronic | | | 57,877 9.6 36,937 | | | | components manufacturer TSMC Taiwan Semiconductor manufacturer 52,860 8.8 6,458 Equinox India Developments India Real estate 23,158 3.8 11,988 Tencent Holdings China Internet services 22,940 3.8 – Dailyhunt (VerSe Innovation) India News aggregator application 15,417 2.6 13,428 Series I Preferred Dailyhunt (VerSe Innovation) India News aggregator application 3,078 0.5 2,462 Series Equity Dailyhunt (VerSe Innovation) India News aggregator application 2,198 0.4 2,031 Series J Preferred 20,693 3.5 17,921 Delhivery India Logistics and courier services 18,175 3.0 18,399 provider Zijin Mining Group China Gold and copper miner 18,142 3.0 16,602 Kaspi.kz Khazakstan Banking, ecommerce and payments 17,034 2.8 – platform EO Technics South Korea Manufacturer and distributor of 15,692 2.6 15,526 semiconductor laser markers Pinduoduo Inc China Ecommerce platform 15,469 2.6 – ByteDance Series E-1 Preferred  China Social media 15,232 2.5 11,413 Reliance Industries India Petrochemical company 14,290 2.4 12,397 SK hynix South Korea Semiconductor manufacturer 14,266 2.4 4,565 Prestige Estate Projects India Owner and operator of residential 13,985 2.3 7,611 real estate properties MMG China Copper miner 12,885 2.1 14,237 Phoenix Mills India Commercial property manager 12,263 2.0 9,448 Lemon Tree Hotels India Owner and operator of a chain of 11,583 1.9 9,559 Indian hotels and resorts SEA ADR Singapore Internet gaming and ecommerce 11,197 1.9 11,414 Mobile World Investment Vietnam Electronic and grocery retailer 11,052 1.8 3,400 Corporation Jio Financial Services India Financial service business 10,724 1.8 1,273 Accton Technology Corporation Taiwan Server network equipment 10,717 1.8 8,531 manufacturer * See Glossary of terms and Alternative Performance Measures on pages 118 and 119. Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. 36 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC | | | | 2024 | | 2024 | 2023 | | --- | --- | --- | --- | --- | --- | --- | | | | | Value | % of total | | Value | | Name | Geography | Business | £’000 | | assets* | £’000 | Bank Rakyat Indonesia Consumer bank 10,444 1.7 13,684 MediaTek Taiwan Electronic component manufacturer 10,216 1.7 6,100 HDBank Vietnam Consumer bank 9,751 1.6 9,521 PolicyBazaar India Online financial services platform 9,637 1.6 3,725 Baidu Inc China Internet provider 8,752 1.5 9,272 Luckin Coffee Inc ADR China Coffeehouse chain 8,456 1.4 – Silergy Taiwan Semiconductor manufacturer 8,428 1.4 4,979 Midea Group A shares China A Household appliance manufacturer 8,386 1.4 7,941 FPT Corporation Vietnam IT service provider 8,272 1.4 944 JD.com China Online mobile commerce 8,027 1.3 14,910 Ping An Insurance China Life insurance provider 7,345 1.2 21,418 MicroConnect  Hong Kong SME financing exchange 6,782 1.1 – Military Commercial Joint Vietnam Retail and corporate bank 6,578 1.1 5,448 Stock Bank KE Holdings China Real estate platform 5,722 1.0 7,303 KE Holdings ADR China Real estate platform 517 <0.1 655 6,239 1.0 7,958 Coupang South Korea Ecommerce business 6,239 1.0 5,490 Zhejiang Supor Co A Shares China A Manufacturer of cookware and 6,161 1.0 6,243 home appliance products SK Square South Korea Asset manager, investing in 5,835 1.0 – semiconductors and information and communciations technologies Hoa Phat Group Vietnam Steel and related products 5,767 1.0 8,150 manufacturer Jadestone Energy Singapore Oil and gas explorer and producer 5,616 1.0 5,932 PT AKR Corporindo Tbk Indonesia Logistics and supply chain 5,211 0.9 – ASMPT Hong Kong Semiconductor manufacturer 5,147 0.9 – SG Micro A Shares China A Semiconductor manufacturer 4,871 0.8 – PropertyGuru Singapore Real estate platform 4,850 0.8 3,148 Lufax Holding China Online financial services platform 4,615 0.8 – Binh Minh Plastics Joint Stock Vietnam Plastic piping manufacturer 4,555 0.8 1,235 Company * See Glossary of terms and Alternative Performance Measures on pages 118 and 119. Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. 37 Strategic report | | | | 2024 | | 2024 | 2023 | | --- | --- | --- | --- | --- | --- | --- | | | | | Value | % of total | | Value | | Name | Geography | Business | £’000 | | assets* | £’000 | Ramkrishna Forgings India Auto parts manufacturer 4,361 0.7 19,091 Chroma ATE Taiwan Manufacturer of electronic 4,285 0.7 – measuring instruments Li-Ning China Sportswear apparel supplier 3,548 0.6 11,503 Precision Tsugami China Industrial machinery manufacturer 3,170 0.5 2,877 Vietnam Enterprise Investments Vietnam Investment fund 3,090 0.5 8,232 Limited Vinh Hoan Corporation Vietnam Food producer 3,062 0.5 2,907 Techtronic Industries Hong Kong Power tool manufacturer 2,354 0.4 2,088 Koh Young Technology South Korea 3D inspection machine 2,328 0.4 5,169 manufacturer AirTAC International Group Taiwan Pneumatic components 1,909 0.3 2,243 manufacturer Brilliance China Automotive China Minibus and automotive 980 0.2 1,076 components manufacturer Chalice China Miner 616 0.1 3,311 Chime Biologics  China Biopharmaceutical company 46 <0.1 76 Eden Biologics  Taiwan Biopharmaceutical company 10 <0.1 17 Total investments 606,173 100.7 Net liquid assets* (4,203) (0.7) Total assets 601,970 100.0 Details of the ten largest investments are given on pages 24 to 27 along with comparative valuations. Listed Private company Net liquid Total equities investments † assets * assets * % % % % 31 July 2024 93.6 7.1 (0.7) 100.0 31 July 2023 93.6 5.1 1.3 100.0 Figures represent percentage of total assets. * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † Includes holdings in ordinary shares and preference shares. Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. 38 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Business review Business model (excluding Japan) and the Indian Sub-continent. The Company may also invest in companies based Business and status in the region and in investment funds specialising in The Company is an investment company within the the region or particular countries or sectors within meaning of section 833 of the Companies Act 2006 it even if they are listed elsewhere. The maximum and carries on business as an investment trust. permitted investment in one company is 15% of Investment trusts are UK public listed companies total assets at time of investment. and their shares are traded on the London Stock The portfolio contains companies which the portfolio Exchange. They invest in a portfolio of assets in managers have identified as offering the potential for order to spread risk. The Company has a fixed share long-term capital appreciation, irrespective of capital although, subject to shareholder approval, whether they comprise part of any index. The sought annually, it may purchase its own shares or portfolio is actively managed and will normally issue shares. The price of the Company’s shares is consist principally of quoted equity securities determined, like other listed shares, by supply and although unlisted companies, fixed interest holdings demand. The Company has been approved as an or other non-equity investments may be held. The investment trust by HM Revenue & Customs subject maximum exposure to unlisted investments is 15% to the Company continuing to meet the eligibility of total assets at the time of initial investment. The conditions. The Directors are of the opinion that the Company is also permitted to invest in other pooled Company has continued to conduct its affairs so as vehicles (general, country and sector specific) that to enable it to comply with the ongoing requirements invest in the markets of the region. of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) In constructing the equity portfolio a spread of Regulations 2011. risk is created through diversification and the portfolio will typically consist of between 40 and The Company is an Alternative Investment Fund 120 companies. Although sector concentration and (‘AIF’) for the purposes of the UK Alternative the thematic characteristics of the portfolio are Investment Fund Managers Regulations. carefully monitored, no maximum limits to stock or sector weights have been set by the Board except Purpose as imposed from time to time by banking covenants The Company’s purpose is to conduct business as an on borrowings. investment trust, investing its assets in accordance The Company may use derivatives which will be with its investment objective, in order to achieve principally, but not exclusively, for the purpose of capital growth for shareholders. reducing, transferring or eliminating investment risk Investment objective in its investments. These typically take the form of index futures, index options and currency forward The Company’s objective is to invest in the transactions. Asia-Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital The Company has a maximum approved equity growth. The Company is prepared to move freely gearing level of 50% of shareholders’ funds but, in between the markets of the region as opportunities the absence of exceptional market conditions, equity for growth vary. The portfolio will normally consist gearing is typically less than 25% of shareholders’ principally of quoted securities. funds. Borrowings are invested in securities when it is considered that investment opportunities Investment policy merit the Company taking a geared position. Pacific Horizon aims to achieve capital growth The Company is also permitted to be less than principally through investment in companies listed fully invested. Cash and equity gearing levels, on the stock markets of the Asia-Pacific region and the extent of gearing, are discussed by the Board and Managers at every Board meeting. 39 Strategic report ## Performance ### Key performance indicator The Board uses key performance indicators (KPIs) to measure the progress and performance of the Company over time when discharging its duties as set out on page 60. These KPIs are established industry measures. ### Share price and net asset value total returns (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. ![img-12.jpeg](img-12.jpeg) ### Share price discount/premium (APM) As stock markets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. If the share price is higher than the NAV per share, this situation is called a premium. ![img-13.jpeg](img-13.jpeg) ### Ongoing charges (APM) Ongoing charges are the total recurring expenses (excluding the Company's cost of dealing in investments and borrowing costs) incurred by the Company as a percentage of the daily average net asset value. ![img-14.jpeg](img-14.jpeg) The Board also has regard to the total return of the Company's principal comparative index (MSCI All Country Asia ex Japan Index (in sterling terms)) and considers the performance of comparable companies. Across these measures, the Board looks for relative outperformance over the long term, while remaining mindful that the nature of the investment policy and the growth characteristics of the portfolio investments may entail periods of underperformance over the short and medium term. The Board is satisfied with the Company's progress and performance. 40 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Culture In making this assessment regarding viability, the Directors have taken into account the Company’s As an externally managed investment company current position and have conducted a robust with no employees, Pacific Horizon’s culture is assessment of the Company’s principal and expressed through its Board and its third party emerging risks and uncertainties (as detailed on service providers, in particular its Managers, in pages 42 to 45), in particular the impact of market their interactions with shareholders and other risk where a significant fall in the Asia-Pacific stakeholders. The Board’s assessment of its (excluding Japan) and the Indian Sub-continent own interactions is described in its Section 172 equity markets would adversely impact the value of Statementon pages 46 to 48, and the Baillie Gifford the investment portfolio. The Directors have also Statement on Stewardship, which describes the considered the Company’s investment objective Managers’ culture of constructive engagement, and policy, the level of demand for the Company’s is set out on page 1 7. shares, the nature of its assets, its liabilities and its Borrowings projected income and expenditure. The vast majority of the Company’s investments are readily realisable Facility Lender Maturing 2024 2023 and can be sold to meet its liabilities as they fall | £100 | Royal Bank | 14 March | No | No | due. The Company’s primary third party suppliers, | | --- | --- | --- | --- | --- | --- | | million | of Scotland | 2025 | outstanding | outstanding | including its Managers and Secretaries, Custodian | | | International | | drawings | drawings | | and Depositary, Registrar, Auditor and Broker, are Limited not experiencing significant operational difficulties The main covenants relating to the loan are affecting their respective services to the Company. that borrowings should not exceed 30% of the In addition, as substantially all of the essential Company’s adjusted net asset value and the services required by the Company are outsourced to Company’s net asset value should be at least third party service providers, key service providers £300 million. There were no breaches in the loan can be replaced at relatively short notice where covenants during the year. necessary. Specific leverage and liquidity stress testing was Viability statement conducted during the year, including consideration Notwithstanding that the continuation of the of increasing geopolitical tensions. The stress Company is subject to approval of shareholders testing did not indicate any matters of material every five years, with the next vote at the Annual concern. General Meeting in 2026, the Directors have, in The Board monitors the level of discount/premium accordance with provision 31 of the UK Corporate at which the shares trade and the Company has Governance Code, published by the Financial authority to buy back its existing shares, when Reporting Council, assessed the prospects of the deemed by the Board to be in the best interests Company over a three year period. The Directors of the Company and its shareholders. In the year to continue to believe this period to be appropriate 31 July 2024, 425,198 ordinary shares, representing as it is reflective of the Company’s investment 0.5% of the issued share capital at 31 July 2023, approach. In the absence of any adverse change to were bought back at a total cost of £2,345,000. the regulatory environment and the favourable tax Based on the Company’s processes for monitoring treatment afforded to UK investment trusts, such a revenue projections, share price discount/premium, period is one over which they do not expect there the Managers’ compliance with the investment to be any significant change to the current principal objective, asset allocation, the portfolio risk profile, risks and to the adequacy of the mitigating controls leverage, counterparty exposure, liquidity risk and in place. The Directors do not envisage any change financial controls, the Directors have concluded that in the Company’s strategy or objectives nor do they there is a reasonable expectation that the Company foresee any events that would prevent the Company will be able to continue in operation and meet its from continuing in existence over that period. liabilities as they fall due over the next three years. 41 Strategic report Principal and emerging risks As explained on page 64 there is a process for identifying, evaluating and managing the risks faced by the Company on a regular basis. The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, regulatory compliance, solvency or liquidity. There have been no material changes to the principal risks during the year. A description of these risks and how they are being managed or mitigated is set out below. The Board considers the heightened macroeconomic and geopolitical concerns to be factors which exacerbate existing risks, rather than being new emerging risks, within the context of an investment trust. Their impact is considered within the relevant risks. | 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 is considered to | | | mainly of listed securities | considered the impact of | have increased. Although | | | (93.6% of the investment | heightened market volatility due | macroeconomic risks | | | portfolio) and its principal and | to macroeconomic factors such as | such as rising interest | | | emerging financial risks are | continued high interest rates and | rates have reduced, the | | | therefore market related and | geopolitical concerns. In order | prospect of market volatility | | | include market risk (comprising | to oversee this risk, the Board | remains from deteriorating | | | currency risk, interest rate | considers at each meeting various | geopoliticalstability. | | | risk and other price risk), | metrics including regional and | | | | liquidity risk and credit risk. | industrial sector weightings, top | | | | An explanation of those risks | and bottom stock contributors | | | | and how they are managed | to performance along with sales | | | | is contained in note 18 to | and purchases of investments. | | | | the Financial Statements on | Individual investments are | | | | pages98 to 105. | discussed with the portfolio | | manager together with general views on the various investment markets and sectors. A strategy session is held annually. Investment What is the risk? How is it managed? Current assessment of risk strategy risk Pursuit of an investment To mitigate this risk, the Board This risk is considered to strategy to fulfil the Company’s regularly reviews and monitors be stable as there are signs objective which the market the Company’s objective and that the market’s appetite for perceives to be unattractive or investment policy and strategy, growth stocks, typically held inappropriate, or the ineffective the investment portfolio and by the Company, is recovering implementation of an attractive its performance, the level of following the recent period of or appropriate strategy, may discount/premium to net asset heightened macroeconomic lead to reduced returns for value at which the shares trade and geopolitical concerns. shareholders and, as a result, and movements in the share a decreased demand for the register and raises any matters Company’s shares. This may of concern with the Managers. lead to the Company’s shares trading at a widening discount to their net asset value. Decreasing RiskIncreasing Risk No Change 42 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Political and What is the risk? How is it managed? Current assessment of risk associated The Board is of the view that Political developments are closely This risk is seen as increasing political change in areas in monitored and considered by the as deteriorating geopolitical economic which the Company invests or Board, for example in respect of stability increases the financial risk may invest may have financial tensions between the USA and prospect of trade conflict consequences for the Company. China regarding tariffs and unrest andsanctions. in Hong Kong, repercussions from the Russian invasion of Ukraine and the Israel and Palestine conflict. It monitors portfolio diversification by investee companies’ primary location, to mitigate against the negative impact of military action or trade barriers. The Board believes that the Company’s portfolio, which predominantly comprises companies listed on the stock markets of the Asia Pacific region (excluding Japan) and the Indian Sub-continent, partially helps to mitigate such political risks. Discount What is the risk? How is it managed? Current assessment of risk risk The discount/premium at To manage this risk, the The Company’s discount which the Company’s shares Board monitors the level of remained stable during trade relative to its net asset discount/premium at which the theyear. value can change. The risk of a shares trade and the Company widening discount is that it may has authority to buy back its undermine investor confidence existing shares, when deemed in the Company. by the Board to be in the best interests of the Company and its shareholders. 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 are applicable legal and regulatory Gifford’s Business Risk, working effectively. There requirements such as the Internal Audit and Compliance have been no material tax rules for investment trust Departments provide regular regulatory changes that companies, the UK Listing reports to the Audit Committee have impacted the Company Rules and the Companies Act on Baillie Gifford’s monitoring during the year. could lead to suspension of the programmes. Major regulatory Company’s Stock Exchange change could impose listing, financial penalties, a disproportionate compliance qualified audit report or the burdens on the Company. In such Company being subject to tax circumstances representation is on capital gains. made to ensure that the special circumstances of investment trusts are recognised. Shareholder documents and announcements, including the Company’s published Interim and Annual Report and Financial Statements, are subject to stringent review processes and procedures are in place to ensure adherence to the Transparency Directive and the Market Abuse Directive with reference to inside information. Decreasing RiskIncreasing Risk No Change 43 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 are 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 who also agree uncertificated private portfolio holdings to confirmations from investee companies. 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. Operational What is the risk? How is it managed? Current assessment of risk risk Failure of Baillie Gifford’s To mitigate this risk, Baillie Gifford All control procedures are systems or those of other has a comprehensive business working effectively. third party service providers continuity plan which facilitates could lead to an inability to continued operation of the provide accurate reporting business in the event of a service and monitoring or a disruption. The Audit Committee misappropriation of assets. reviews Baillie Gifford’s Report on Internal Controls and reports by other key third party providers are reviewed by Baillie Gifford on behalf of the Board and a summary of the key points is reported to the Audit Committee and any concerns investigated. The other key third party service providers have not experienced significant operational difficulties affecting their respective services to the Company. | Leverage risk | What is the risk? | How is it managed? | Current assessment of risk | | --- | --- | --- | --- | | | The Company may borrow | To mitigate this risk, all borrowings | The Company’s revolving loan | | | money for investment purposes. | require the prior approval of | facility remains undrawn. | | | If the investments fall in value, | the Board and leverage levels | | | | any borrowings will magnify | are discussed by the Board and | | | | the impact of this loss. If | Managers at every meeting. | | | | borrowing facilities are not | Covenant levels are monitored | | | | renewed, the Company may | regularly. The majority of the | | | | have to sell investments | Company’s investments are in | | | | to repay borrowings. The | quoted securities that are readily | | | | Company can also make use | realisable. Further information on | | | | of derivative contracts. | leverage can be found on page113 | | and the Glossary of terms and Alternative Performance Measures on pages118 and 119. Decreasing RiskIncreasing Risk No Change 44 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Climate and What is the risk? How is it managed? Current assessment of risk governance Perceived problems on This is mitigated by the Managers’ The Investment Manager environmental, social and strong ESG stewardship and continues to employ strong risk | governance (‘ESG’) matters | engagement policies which are | ESG stewardship and | | --- | --- | --- | | in an investee company | available to view on the Managers’ | engagement policies. | | could lead to that company’s | website, bailliegifford.com, and | | | shares being less attractive to | which have been reviewed and | | | investors, adversely affecting | endorsed by the Company, and | | | its share price, in addition | which have been fully integrated | | | to potential valuation issues | into the investment process. Due | | | arising from any direct impact of | diligence includes assessment | | | the failure to address the ESG | of the risks inherent in climate | | | weakness on the operations or | change (see page 49). | | management of the investee company (for example in the event of an industrial accident or spillage). Repeated failure by the Managers to identify ESG weaknesses in investee companies could lead to the Company’s own shares being less attractive to investors, adversely affecting its own shareprice. Cyber What is the risk? How is it managed? Current assessment of risk security risk A cyber attack on Baillie Gifford’s To mitigate this risk, the Audit All control procedures are network or that of a third party Committee reviews Reports working effectively. service provider could impact on Internal Controls published the confidentiality, integrity or by Baillie Gifford and other availability of data and systems. third party service providers. Emerging technologies, Cyber security due diligence including AI and quantum is performed by Baillie Gifford computing capabilities, may on third party service providers introduce new and increase which includes a review of crisis existing information security management and business risks that impact operations. continuity frameworks. Emerging risk As explained on page 64 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. Decreasing RiskIncreasing Risk No Change 45 Strategic report Promoting the success of the Company In this context, having regard to Pacific Horizon being an externally-managed investment company (section 172 statement) with no employees, the Board considers the Under section 172 of the Companies Act 2006, Company’s key stakeholders to be: its existing and the directors of a company must act in the way potential new shareholders; its externally-appointed they consider, in good faith, would be most likely Managers (Baillie Gifford); other professional service to promote the success of the company for the providers (corporate Broker, Registrar, Auditors benefit of its members as a whole, and in doing and Depositary); lenders; wider society and the so have regard (amongst other matters and to the environment. extent applicable) to: a) the likely consequences of any decision in the long term, b) the interests The Board considers that the interests of the of the company’s employees, c) the need to Company’s key stakeholders are aligned, in terms foster the company’s business relationships with of wishing to see the Company deliver sustainable suppliers, customers and others, d) the impact of long-term growth, in line with the Company’s the company’s operations on the community and stated objective and strategy, and meet the highest the environment, e) the desirability of the company standards of legal, regulatory, and commercial maintaining a reputation for high standards of conduct, with the differences between stakeholders business conduct, and f) the need to act fairly as being merely a matter of emphasis on those between members of the company. elements. 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 Shareholder Shareholders are, collectively, the The Board places great importance on communication Company’s owners: providing them with a with shareholders. The Annual General Meeting provides return for their investment in accordance an opportunity for the Board and Managers to present to with the Company’s investment policy and shareholders on the Company’s performance, future plans objective is the reason for its existence. and prospects. It also allows shareholders the opportunity to meet with the Board and Managers and raise questions and concerns. The Chair is available to meet with shareholders as appropriate. The Managers meet regularly with shareholders and their representatives, reporting their views back to the Board. Directors also attend certain shareholder presentations, in order to gauge shareholder sentiment first hand. Shareholders may also communicate with members of the Board at any time by writing to them at the Company’s registered office or to the Company’s broker. 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 The Board seeks to engage with its Managers, in a Managers and management of the Company’s portfolio, collaborative and collegiate manner, encouraging open and Secretaries and the administration of the Company’s constructive discussion and debate, while also ensuring that operations including fulfilment of regulatory appropriate and regular challenge is brought and evaluation and taxation reporting requirements, to conducted. This approach aims to enhance service levels and Baillie Gifford. Baillie Gifford is therefore strengthen relationships with the Company’s providers, with a responsible for the substantial activities of view to ensuring the interests of the Company’s shareholders the Company and has the most immediate are best served, by keeping cost levels proportionate and influence on its conduct towards the other competitive, and by maintaining the highest standards of stakeholders, subject to the oversight and business conduct. strategic direction provided by the Board. 46 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Stakeholder Why we engage How we engage and what we do Portfolio companies As all of the Company’s operations are The Board is cognisant of the need to consider the impact | conducted by third party professional | of the Company’s investment strategy and policy on wider | | --- | --- | | providers, it is the companies held in its | society and the environment. The Board considers that its | | investment portfolio which have the primary | oversight of environmental, social and governance (‘ESG’) | | real-world impact in terms of social and | matters is an important part of its responsibility to all | | environmental change, both positively | stakeholders. The Board’s review of the Managers includes | | and negatively, as well as generating, | an assessment of their ESG approach and its application in | | through their commercial success, the | making investment decisions. The Board regularly reviews | | investment growth sought by the Company’s | governance engagement reports, which document the | | shareholders. The investee companies | Managers’ interactions with investee companies on ESG | | have an interest in understanding their | matters (see pages 15 and 16). | shareholders’ investment rationale in order to assure themselves that long-term business strategies will be supported. Brokers The Company’s brokers provide an interface The Company’s brokers regularly attend Board meetings, between the Company’s Board and its and provide reports to those meetings, in order to keep the institutional shareholders. Board apprised of shareholder and wider market sentiment regarding the Company. They also arrange forums for shareholders to meet the Chair, or other Directors, outwith the normal general meeting cycle. Registrar The Company’s registrar provides an The Company Secretaries liaise with the registrar to interface with those shareholders who ensure the frequency and accuracy of communications hold the Company’s shares directly. to shareholders is appropriate, and monitor shareholder correspondence to ensure that the level of service provided by the registrar is acceptable. The Managers’ risk function reviews the registrars’ internal controls report and reports on the outcome of this review to the Board. | Auditor The Company’s Auditor has a responsibility to | | The Company’s Auditor meets with the Audit Committee, in | | --- | --- | --- | | | provide an opinion on whether the Company’s | the absence of the Managers where deemed necessary, and | | | Financial Statements as a whole are free from | the Managers undertake to provide all information requested | | | material misstatement, as set out in more | by the Auditor in connection with the Company’s annual audit | | | detail in the Auditor’s report to the Members | promptly and to ensure that it is complete and accurate in all | | | on pages 77 to 83. | respects. | | Depositary | The Depositary is responsible for the | The Depositary provides the Audit Committee with a report | | and Custodian | safekeeping of the Company’s financial | on its monitoring activities. The Board and Managers seek to | | | instruments, as set out in more detail on | engage with the Depositary and Custodian in a collaborative | | | page 55. | and collegiate manner, encouraging open and constructive | discussion and debate, while also ensuring that appropriate and regular challenge is brought and evaluation conducted. This approach aims to enhance service levels and strengthen relationships with the Company’s providers, with a view to ensuring the interests of the Company’s shareholders are best served by keeping cost levels proportionate and competitive, and by maintaining the highest standards of business conduct. Lenders Lenders such as holders of debt instruments The Company’s legal advisers review all legal agreements (debentures, bonds and private placement loan in connection with the Company’s debt arrangements notes) and banks providing fixed or revolving and advise the Board on the appropriateness of the terms credit facilities provide the Company’s gearing and covenants therein. The Managers and Secretaries as described on page 41 and have an interest ensure that the frequency and accuracy of reporting on, in the Company’s ongoing financial health for example, covenant certification, is appropriate and and viability. that correspondence from the lenders receives a prompt response. 47 Strategic report Stakeholder Why we engage How we engage and what we do AIC/industry peers The Association of Investment Companies The Company is a member of the AIC, and the Directors (‘AIC’) and the Company’s investment and/or the Managers and Secretaries (as appropriate) trust industry peers have an interest in the participate in technical reviews, requests for feedback on 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 platforms Investment platforms provide an interface The Managers liaise with the various investment platforms with shareholders who invest in the 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 page of the Managers’ website, for the ease of reference of such shareholders. Wider society and No entity, corporate or otherwise, can exist The Board and Managers’ interactions with the various the environment without having an influence on the society stakeholders as noted above form the principal forms of in which it operates or utilising the planet’s direct engagement with wider society and in respect of the resources. Through its third-party relationships, environment (commercial, financial, and in terms of planetary as noted above, the Company seeks to be a health and resources). positive influence and, in circumstances where that is not possible, to mitigate its negative impacts insofar as is possible. The Board recognises the importance of keeping Employees, human rights and community the interests of the Company and its stakeholders, issues in aggregate, firmly front of mind in its key decision The Board recognises the requirement to provide making. The Company Secretaries are available information about employees, human rights at all times to the Board to ensure that suitable and community issues. As the Company has no consideration is given to the range of factors to employees, all its Directors are non-executive which the Directors should have regard. In addition and all its functions are outsourced, there are no to ensuring that the Company’s stated investment disclosures to be made in respect of employees, objective was being pursued, key decisions and human rights and community issues. actions during the year which required the Directors to have regard to applicable section Gender representation 172 factors included: As at 31 July 2024, and the date of this report, the • the buying back of 425,198 of the Company’s own Board comprises five Directors, three male and shares into treasury at a discount to net asset two female. The Company has no employees. The value, for subsequent reissue, in order to ensure Board’s policy on diversity is set out on page 63. the Company’s shareholders found liquidity for their shares when natural market demand was insufficient, and on terms that enhance net asset value for remaining shareholders. • assessing Director remuneration to ensure that it is set at a level that attracts new Directors. 48 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Environmental, social and governance policy Although this can direct our efforts, the Managers believe that carbon footprint metrics in isolation are Details of the Company’s policy on socially unhelpful – that some firms pollute more than others is responsible investment can be found under a mostly meaningless observation. More significant is corporate governance and stewardship on page66 the ability of Pacific Horizon to deploy patient capital with more details of the Managers’ approach to into innovative new technologies with the potential to socially responsible investment set out in the Baillie accelerate the transition away from carbon. The Gifford statement on stewardship on page 17. The Managers utilise data sourced from a third-party Managers are signatories to the United Nations provider to map the carbon footprint of the portfolio. Principles for Responsible Investment and the Carbon This analysis estimates that the carbon intensity of Disclosure Project, the Net Zero Asset Managers Pacific Horizon is 66.4% less than the index (MSCI All Initiative and are also members of the International Country Asia ex Japan) and is based on 78.6% of the Corporate Governance Network and the Asian value of the Company’s equity portfolio which reports Corporate Governance Association. on carbon emissions and other carbon related The Company considers that it does not fall within characteristics. Under the Streamlined Energy and the scope of the Modern Slavery Act 2015 and it Carbon Reporting (‘SECR’) regulations, the Company is not, therefore, obliged to make a slavery and is not required to disclose energy and carbon human trafficking statement. In any event, the information (see page 59). Company considers its supply chains to be of low risk as its suppliers are typically professional Future developments of the Company advisers. A statement by the Managers under the The outlook for the Company is set out in the Act has been published on the Managers’ website Chairman’s statement on page 8 and in the at bailliegifford.com. Managers’ review on pages 9 to 14. The Strategic report which includes pages 5 to 49 was approved Climate change by the Board of Directors and signed on its behalf The Board recognises that climate change poses on16 September 2024. aserious threat to our environment, our society andto economies and companies around the globe.Addressing the underlying causes is likely to Roger Yates result in companies that are high emitters of carbon Chairman facing greater societal and regulatory scrutiny and higher costs to account for the true environmental impact of their activities. The Company’s TCFD report is available on the Company’s page of the Managers’ website at pacifichorizon.co.uk. Thisreport is a means by which the portfolio’s carbon footprint and exposure to climate risk are measured and reported. Companies disclosing their emission and communicating emissions plans will be a helpful place from which to begin more useful discussions with management teams, industry experts and regulators. 49 ## Governance ## report This governance report, which includes pages 50 to 75 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. Pacific Horizon Investment Trust PLC # Directors and management ## Directors ![img-15.jpeg](img-15.jpeg) **Roger Yates** Chairman Appointed 2024 Roger Yates was appointed a Director and Chairman in 2024. He was Chief Executive of Henderson Global Investors from 1999 to 2008, prior to which he had fund management roles at Invesco/LGT and Morgan Grenfell Asset Management. He is currently Senior Independent Director ('SID') of Jupiter Fund Management plc, Mitie Group plc and Chair of The Biotech Growth Trust PLC. He is the former SID of FTSE-100 St James's Place and of IG Group plc. Amongst his other roles, he is also a former Chair of Electra Private Equity plc and a former non-executive Director of JP Morgan Elect PLC. ![img-16.jpeg](img-16.jpeg) **Sir Robert Chote** Director Appointed 2020 Sir Robert Chote was appointed a Director in 2020. He became chairman of the Northern Ireland Fiscal Council in 2021, chairman of the UK Statistic Authority in 2022 and was chairman of the Office for Budget Responsibility to 2020. He previously served as Director of the Institute for Fiscal Studies, as an advisor to the International Monetary Fund and as Economics Editor of the Financial Times. He is a visiting professor at the Department of Political Economy, Kings College London and serves on an advisory board at the Centre for Economic Performance of the London School of Economics. ![img-17.jpeg](img-17.jpeg) **Wee-Li Hee** Director Appointed 2020 Wee-Li Hee was appointed a Director in 2020. She is an experienced Asian analyst and fund manager. Brought up in Singapore, she speaks fluent Mandarin and studied in the UK at the University of Leeds and the London School of Economics and Political Science. After graduation, in 2002 she joined First State Investments in Singapore as an analyst, subsequently moving to the firm's Edinburgh office in 2005. Having co-managed Scottish Oriental Smaller Companies Trust plc she became lead manager in 2014, stepping back as a result of family commitments to return to a co-manager role in 2017 and retiring at the end of 2019. She is a CFA Charterholder and a director of Melville Paisley Investments. 51 Governance report Angela Lane was appointed a Director in 2018. She is Chairman of the Audit Committee and is the Senior Independent Director. She is a qualified accountant and has held several non-executive and advisory roles for small and medium capitalised companies across a range of industries. Previously she spent 18 years working as a private equity investor for 3i plc. She is a non-executive director and Chair of the Audit Committee of BlackRock Throgmorton Trust plc, Seraphim Space Angela Lane Investment Trust plc and Dunedin Enterprise Investment Trust PLC. Audit Committee Chair Appointed 2018 Richard Frank (‘Joe’) Studwell was appointed a Director in 2018. He has spent over 25 years working in East Asia as a journalist, independent researcher at Dragonomics and author under the name of Joe Studwell. His published works include Asian Godfathers: Money and Power in Hong Kong and South-East Asia and How Asia Works: Success and Failure in the World’s Most Dynamic Region. Joe Studwell Director Appointed 2018 All of the Directors are members of the Nomination, Management Engagement and Audit Committee. 52 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Portfolio managers ![img-18.jpeg](img-18.jpeg) **Roderick Snell** Portfolio manager Appointed 2013 Roddy is a portfolio manager in the Emerging Markets Equity Team. He joined Baillie Gifford in 2006 and became a partner of the firm in 2023. He has managed the Baillie Gifford Pacific Fund since 2010 and has been manager of Pacific Horizon Investment Trust since 2021 (having been Deputy since 2013). Roddy also co-manages the China equity strategy. Prior to joining the team in 2008, he has also spent time in the UK and European Equity teams. Roddy graduated BSc (Hons) in Medical Biology from the University of Edinburgh in 2006. ![img-19.jpeg](img-19.jpeg) **Ben Durrant** Deputy portfolio manager Appointed 2023 Ben is a portfolio manager in the Emerging Markets Equity Team. He has co-managed the Baillie Gifford Pacific Fund since 2021, and became deputy manager of the Pacific Horizon Investment Trust in January 2023. He joined Baillie Gifford in 2017 and has also spent time in the UK, Global Discovery and Private Companies teams. Prior to joining Baillie Gifford, he previously worked for RBS in their Group Strategy and Corporate Finance Team. Ben is a Chartered Accountant and a CFA Charterholder, and graduated BSc (Hons) in Mathematics from the University of Edinburgh in 2012. The Company has appointed Baillie Gifford & Co Limited, a wholly-owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Managers ('AIFM') and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. Baillie Gifford & Co is an investment management firm formed in 1927 out of the legal firm Baillie & Gifford, WS, which had been involved in investment management since 1908. Baillie Gifford is one of the largest investment trust Managers in the UK and currently manages thirteen close-ended investment companies. Baillie Gifford also manages 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 totalled around £214 billion. Based in Edinburgh, it is one of the leading privately owned investment management firms in the UK, with 58 partners and a staff of around 1,700. Baillie Gifford & Co Limited and Baillie Gifford & Co are both authorised and regulated by the Financial Conduct Authority. 53 Governance report ## Directors’ report The Directors present their Corporate governance report together with the Financial The corporate governance report is set out on pages Statements of the Company for 60 to 66 and forms part of this report. the year to 31 July 2024. Managers and Company Secretaries Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company’s Alternative Investment Fund Managers (‘AIFM’) and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. The Investment Management Agreement sets out the matters over which the Managers have authority in accordance with the policies and directions of, and subject to restrictions imposed by, the Board. The Managers may terminate the Management Agreement on six months’ notice and the Company may terminate on three months’ notice. Compensation fees would only be payable in respect of the notice period if termination were to occur within a shorter notice period. The annual management fee is 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets. The Board is of the view that calculating the fee with reference to performance would be unlikely to exert a positive influence on performance. 54 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC The Board considers the Company’s investment The Depositary’s responsibilities include cash management and secretarial arrangements on an monitoring, safe keeping of the Company’s financial ongoing basis and a formal review is conducted by instruments, verifying ownership and maintaining the Management Engagement Committee annually. a record of other assets and monitoring the Company’s compliance with investment limits and The following topics, amongst others, are considered leverage requirements. The Company’s Depository in the review: also acts as the Company’s Custodian. • the quality of the personnel assigned to handle the Company’s affairs; Directors • the investment process and the results achieved Information about the Directors, including their to date; relevant experience, can be found on pages 51 and52. • the administrative services provided by the Secretaries; and All of the Directors are retiring at the Annual General Meeting (‘AGM’) and all are offering themselves • the marketing effort undertaken by the Managers. for re-election. Following formal performance Following the most recent review, it is the opinion evaluation, the Chairman confirms that the Board of the Management Engagement Committee that considers that each Director’s performance the continuing appointment of Baillie Gifford & Co continues to be effective and that they remain Limited as AIFM and Company Secretaries, and committed to the Company and capable of devoting the delegation of the investment management sufficient time to their roles. The Board therefore services to Baillie Gifford & Co and the further recommends their re-election to shareholders. sub-delegation of dealing activity and transaction reporting to Baillie Gifford Overseas Limited and Director indemnification and insurance Baillie Gifford Asia (Hong Kong) Limited, on the The Company has entered into qualifying third party terms agreed, is in the interests of shareholders deeds of indemnity in favour of each of its Directors. as a whole due to the strength of the investment The deeds, which were in force during the year to management team, the Managers’ commitment 31 July 2024 and up to the date of approval of this to the investment trust sector and the quality report, cover any liabilities that may arise to a third of the secretarial and administrative functions. party, other than the Company, for negligence, In undertaking the review, the Directors also default or breach of trust or duty. The Directors considered the execution of the agreed investment are not indemnified in respect of liabilities to the strategy and the relative performance over the Company, any regulatory or criminal fines, any costs medium term. incurred in connection with criminal proceedings in which the Director is convicted or civil proceedings Depositary brought by the Company in which judgement is given The Bank of New York Mellon (International) Limited against him/her. In addition, the indemnity does not has been appointed as the Company’s Depositary apply to any liability to the extent that it is recovered in accordance with the requirements of the UK from another person. The Company also maintains Alternative Investment Fund Managers Regulations. Directors’ and Officers’ liability insurance. 55 Governance report Conflicts of interest Capital entitlement Each Director submits a list of potential conflicts of On winding up, after meeting the liabilities of the interest to the Nomination Committee on an annual Company, the surplus assets will be paid to ordinary basis. The Committee considers these carefully, shareholders in proportion to their shareholdings. taking into account the circumstances surrounding them and makes a recommendation to the Board Voting on whether or not the potential conflicts should be Each ordinary shareholder present in person or by authorised. Board authorisation is for a period of proxy is entitled to one vote on a show of hands and, one year. on a poll, to one vote for every share held. Having considered the lists of potential conflicts Major interests disclosed in the Company’s shares there were no situations which gave rise to a direct or indirect interest of a Director which conflicted Ordinary 10p shares held % of with interests of the Company. Name at 31 July 2024 issue Sarasin and Partners LLP (indirect) * 7,75 7, 6 7 6 8.6% Dividends City of London Investment 4,832,086 5.3% The Company’s objective is that of generating Management Company Limited capital growth. Consequently, the Managers do not * Previously disclosed as A&OT Investments Limited (direct). invest in companies based on the level of income they may pay out as dividends. Analysis of shareholders at 31 July As highlighted previously, the Board does not intend | | | 2024 | | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | to draw on the Company’s revenue reserve to pay | Number of | | 2024 | | Number of | | 2023 | | | or maintain dividends. This year the net revenue | shares held | | | % | shares held | | | % | available for distribution to shareholders amounted Institutions 22,842,467 25.2 16,562,669 18.2 to £3,464,000, which is of sufficient magnitude Intermediaries 66,729,260 73.6 73,016,821 80.2 to require a distribution to be made to maintain Individuals 537,820 0.6 1,263,766 1.4 investment trust status. Marketmakers 547,204 0.6 238,693 0.2 The Directors are therefore recommending the 90,656,751 100.0 91,081,949 100.0 payment of a final dividend of 2.65 pence per share. If approved, the recommended final dividend on the Holdings above are stated as per the most ordinary shares will be paid on 28 November 2024 recent notification to a Regulatory Information to shareholders on the register at the close of Service. There have been no changes to the major business on 25 October 2024. The ex-dividend interests in the Company’s shares disclosed up to date is 24 October 2024. The Company’s Registrar 12September 2024. offers a Dividend Reinvestment Plan (see page 113) and the final date for elections for this dividend is Annual General Meeting 07 November 2024. The details of this year’s AGM, including the proposed resolutions and information on the Share capital deadlines for proxy appointments, can be found on Capital structure pages 107 to 111. Shareholders who hold shares in their own name on the main register will be provided The Company’s capital structure as at 31 July 2024 with a Form of Proxy. If you hold shares through a consists of 90,656,751 ordinary shares of 10p each share platform or other nominee, the Board would (2023 – 91,081,949 ordinary shares), see note13. encourage you to contact these organisations At31 July 2024, 1,418,210 shares were held in directly as soon as possible to arrange for you to treasury (2023 – 993,012 shares held in treasury). vote at the AGM. The resolutions relating to the There are no restrictions concerning the holding or renewal of the Directors’ authorities to issue and buy transfer of the Company’s ordinary shares and there back shares, are explained in more detail below. are no special rights attached to any of the shares. Issuance of shares Dividends At the last Annual General Meeting, the Directors The ordinary shares carry a right to receive were granted shareholders’ approval for a general dividends. Interim dividends are determined by the authority to issue shares and also an authority to Directors, whereas the proposed final dividend is issue shares or sell shares held in treasury on a non subject to shareholder approval. 56 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC pre-emptive basis (without first offering such shares to existing shareholders pro-rata to their existing holdings) for cash up to an aggregate nominal amount of £910,469. Both authorities expire at the forthcoming Annual General Meeting and the Directors are seeking shareholders' approval to renew them for a further year, as detailed below. During the year to 31 July 2024 the Company bought back 425,198 shares (representing 0.5% of the issued share capital at 31 July 2023) at a discount to net asset value at a cost of £2,345,000 which are held in treasury. The Company did not issue any ordinary shares from treasury. Between 1 August and 12 September 2024, no further shares were issued and 39,875 shares were bought back. 1,458,085 shares were held in treasury as at 12 September 2024. Resolution 11 in the Notice of Annual General Meeting seeks a general authority for the Directors to issue ordinary shares up to an aggregate nominal amount of £906,168. This amount represents approximately 10% of the Company's total ordinary share capital in issue at 12 September 2024, being the latest practicable date prior to the publication of this document, and meets institutional guidelines. No issue of ordinary shares will be made pursuant to the authorisation in Resolution 11 which would effectively alter the control of the Company without the prior approval of shareholders in general meeting. Resolution 12 which is being proposed as a special resolution, seeks to renew the Directors' authority to allot equity securities, or sell treasury shares, for cash without having to offer such shares to existing shareholders pro-rata to their existing holdings, up to a total nominal amount of £906,168 representing approximately 10% of the Company's total issued ordinary share capital as at 12 September 2024, being the latest practicable date prior to publication of this document. The Directors consider that the authority proposed to be granted by Resolution 12 continues to be advantageous when the Company's shares trade at a premium to net asset value and the level of natural liquidity in the market is unable to meet demand. The Directors do not intend to use this authority to sell or issue ordinary shares on a non pre-emptive basis at a discount to net asset value. While the level of the authority being sought is greater than the 5% recommended by the Pre-Emption Group in their Statement of Principles on disapplying pre-emption rights, it is specifically recognised in the Statement of Principles that, where an investment trust is seeking authority to issue shares at a premium to the underlying net asset value per share, this should not normally raise concerns and the Directors consider the greater flexibility provided by this authority to be justified in the circumstances. The authorities sought in Resolutions 11 and 12 will continue until the conclusion of the Annual General Meeting to be held in 2025 or on the expiry of 15 months from the passing of the resolutions, if earlier. Such authorities will only be used to issue shares or sell shares from treasury at a premium to net asset value and only when the Directors believe that it would be in the best interests of the Company to do so. The Directors believe that the ability to buy back shares at a discount and re-sell them or issue new shares at a premium are useful tools in smoothing supply and demand. ### **Market purchase of own shares by the Company** Resolution 13 seeks shareholders' approval (by way of a special resolution) to renew the authority to purchase up to 14.99 per cent. of the ordinary shares in issue (excluding treasury shares) as at 12 September 2024, being the latest practicable date prior to publication of this document (or, if less, up to 14.99 per cent. of the ordinary shares in issue (excluding treasury shares) on the date on which the resolution is passed). This authority will expire at the end of the Annual General Meeting of the Company to be held in 2025. Such purchases will only be made at a discount to the prevailing net asset value. The Company may hold bought back shares in treasury and then: - a. sell such shares (or any of them) for cash (or its equivalent under the Companies Act 2006); or - b. cancel such shares (or any of them). Shares will only be re-sold from treasury at (or at a premium to) the net asset value per ordinary share. Treasury shares do not receive distributions and the Company will not be entitled to exercise the voting rights attaching to them. In accordance with the Listing Rules, the maximum price (exclusive of expenses) that may be paid on the exercise of the authority shall be an amount equal to the higher of: - i. 5 per cent. above the average closing price on the London Stock Exchange of an ordinary share over the five business days immediately preceding the date of the purchase; and - ii. the higher of the price of the last independent trade and the highest current independent bid for such a share on the London Stock Exchange. The minimum price (again exclusive of expenses) that may be paid will be the nominal value of an ordinary share. Purchases of ordinary shares will be made within guidelines established, from time to 57 Governance report time, by the Board. The Company does not have any The Company’s assets, the majority of which warrants or options in issue. The Directors intend are investments in quoted securities which are that this authority, if conferred, will be exercised readily realisable, exceed its liabilities significantly. only if to do so would result in an increase in net All borrowings require the prior approval of asset value per ordinary share for the remaining the Board. The Board approves borrowing and shareholders and if it is in the best interest of gearing limits and reviews regularly the amounts shareholders generally. of any borrowing and the level of gearing as well as compliance with borrowing covenants. Stress Recommendation testing was performed in the year and no matters The Board considers that all the resolutions to be were raised. The Company has continued to comply proposed at the Annual General Meeting are in the with the investment trust status requirements of best interests of the Company and its shareholders section 1158 of the Corporation Tax Act 2010 and as a whole. Accordingly, the Board unanimously the Investment Trust (Approved Company) (Tax) recommends that you vote in favour of all of the Regulations 2011. The Company’s primary third party Resolutions, as the Directors intend to do in respect suppliers, including its Managers and Secretaries, of their own beneficial shareholdings. Custodian and Depositary, Registrar, Auditor and Broker, are not experiencing significant operational difficulties affecting their respective services to Financial instruments the Company. In accordance with the Company’s The Company’s financial instruments comprise Articles of Association, shareholders have the its investment portfolio, cash balances, bank right to vote on the continuation of the Company borrowings and debtors and creditors that arise every five years, the next vote being in 2026. The directly from its operations such as sales and Financial Statements have been prepared on the purchases awaiting settlement and accrued income. going concern basis; having assessed the principal The financial risk management objectives and and emerging risks and other matters set out in the policies arising from its financial instruments and Viability Statement on page 41 (which assesses the the exposure of the Company to risk are disclosed prospects of the Company over a period of three in note 18 to the Financial Statements. years) it is the Directors’ opinion that the Company will continue in operational existence for a period of Future developments of the Company at least twelve months from the date of approval of The outlook for the Company is set out in the these Financial Statements. Chairman’s statement on page 8 and the Managers’ review on pages 9 to 14. Articles of Association The Company’s Articles of Association may only be Going concern amended by special resolution at a general meeting In accordance with the Financial Reporting Council’s of shareholders. guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Disclosure of information to Auditor Company’s ability to continue as a going concern. The Directors confirm that so far as each of The Company’s principal and emerging risks are the Directors is aware there is no relevant audit market related. An explanation of these risks and information of which the Company’s auditor is how they are managed is contained on pages 42 to unaware and the Directors have taken all the steps 45 and in note 18 to the Financial Statements. The that they might reasonably be expected to have Board has, in particular, considered the impact of taken as Directors in order to make themselves heightened market volatility due to macroeconomic aware of any relevant audit information and to and geopolitical concerns, but it does not believe the establish that the Company’s Auditor is aware Company’s going concern is affected. of that information. 58 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Independent Auditor Bribery act The Auditor, BDO LLP, is willing to continue The Company has a zero tolerance policy towards in office and, in accordance with section 489 bribery and is committed to carrying out business and section 491(1) of the Companies Act 2006, fairly, honestly and openly. The Managers also adopt resolutions concerning BDO LLP’s reappointment a zero tolerance approach and have policies and procedures in place to prevent bribery. and remuneration will be submitted to the Annual General Meeting. Criminal Finances Act 2017 Post balance sheet events The Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion. The Directors confirm that there have been no post Balance Sheet events which require adjustment of, or disclosure in, the Financial Statements or notes On behalf of the Board thereto up to 16September 2024. Roger Yates Chairman Greenhouse Gas Emissions and Streamlined 16 September 2024 Energy & Carbon Reporting (‘SECR’) All of the Company’s activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. For the reasons set out above, the Company considers itself to be a low energy user under the SECR regulations and therefore, is not required to disclose energy and carbon information. 59 Governance report ## Corporate ## governance report The Board is committed to Compliance achieving and demonstrating The FRC has confirmed that AIC member companies high standards of corporate who report against the AIC Code will be meeting governance. This statement their obligations in relation to the UK Code (the outlines how the principles of the AIC Code can be found at theaic.co.uk). The Board 2018 UK Corporate Governance confirms that the Company has complied throughout Code (‘Code’), which can be found the year under review with the relevant provisions of at frc.org.uk, and the relevant the Code and the recommendations of the AIC Code principles of the Association of with the exception that the Company does not have Investment Companies (‘AIC’) a separate internal audit function as explained on Code of Corporate Governance page 68. (‘AIC Code’) issued in 2019 were applied throughout the financial The Board year. The AIC Code provides a The Board has overall responsibility for the framework of best practice for Company’s affairs. It has a number of matters investment companies and can formally reserved for its approval including be found at theaic.co.uk. strategy, investment policy, currency hedging, gearing, treasury matters, dividend and corporate governance policy. A strategy session is held annually. The Board also reviews the Financial Statements, investment transactions, revenue budgets and performance of the Company. Full and timely information is provided to the Board to enable the Board to function effectively and to allow Directors to discharge their responsibilities. As at 31 July 2024 and up to the date of this report the Board comprises five Directors all of whom are non-executive and independent. The Chairman, Mr RP Yates, is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda. Ms AC Lane is the Senior Independent Director (‘SID’) and, as such, available to shareholders if they have concerns not properly addressed to the Chairman. The SID leads the Chairman’s performance appraisal and chairs the Nomination Committee when it considers the Chairman’s succession. 60 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Board of Directors Comprises independent non-executive directors Chair: Roger Yates Senior Independent Director: Angela Lane Audit Management Engagement Nomination Committee Committee Committee Chair: Angela Lane Chair: Roger Yates Chair: Roger Yates Purpose: The primary purpose of a Purpose: The role of the Management Purpose: The main purpose of the company’s audit committee is to provide Engagement Committee is to ensure that Nomination Committee is to oversee Board oversight of the financial reporting process, the Managers remain suitable to manage recruitment and succession planning as the audit process, the Company’s system the portfolio, that the management well as Board appraisals including of internal controls and compliance with contract is competitive and reasonable for identifying training needs. laws and regulations. the shareholders, and that the Company maintains appropriate administrative and company secretarial support. 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 JP Morgan BDO LLP New York Mellon Investor Services Cazenove Auditor (International) Limited PLC Company Broker Depositary Registrar 61 Governance report The executive responsibility for investment Following a formal performance evaluation, the management has been delegated to the Company’s Board concluded that its members continued to be Alternative Investment Fund Managers (‘AIFM’), independent in character and judgement and their Baillie Gifford & Co Limited, and, in the context of skills and experience added significantly to the a Board comprising only non-executive Directors, strength of the Board. there is no chief executive officer. Meetings The Directors believe that the Board has a balance of skills and experience that enable it to provide There is an annual cycle of Board meetings which effective strategic leadership and proper governance is designed to address, in a systematic way, overall of the Company. Information about the Directors, strategy, review of investment policy, investment including their relevant experience, can be found performance, marketing, revenue budgets, dividend on pages 51 and 52. policy and communication with shareholders. The Board considers that it meets sufficiently regularly There is an agreed procedure for Directors to to discharge its duties effectively. The table below seek independent professional advice, if necessary, shows the attendance record for the core Board and at the Company’s expense. Committee Meetings held during the year, excluding ancillary and sub-committee meetings. The Annual Appointments to the Board General Meeting was attended by all Directors. New Directors are appointed by the Board, following recommendation to the Board by the Nomination Directors’ attendance at meetings Committee. The terms and conditions of Directors’ Management appointments are set out in formal letters of Audit Nomination Engagement appointment which are available for inspection Board Committee Committee Committee on request. Number of meetings 4 2 1 1 Under the provisions of the Company’s Articles of * RA Macpherson 3 2 – – Association, a Director appointed during the year is RW Chote 4 2 1 1 required to retire and seek approval by shareholders W Hee 4 2 1 1 at the next Annual General Meeting. AC Lane 4 2 1 1 In accordance with the AIC Code of Corporate RF Studwell 4 2 1 1 Governance, all Directors are subject to annual RP Yates † 2 1 1 1 re-election. * Retired on 13 March 2024 The names of Directors retiring and offering † Appointed on 13 March 2024 themselves for re-election together with the reasons why the Board supports this are set out on page 55. Chairperson and Directors’ tenure The Nomination Committee has considered the Independence of Directors question of tenure for directors and has concluded All the Directors are considered by the Board to that there should not be a set maximum time limit be independent of the Managers and free of any for a director or chairperson to serve on the Board. business or other relationship which could interfere The Nomination Committee keeps under review with the exercise of their independent judgement. the balance of skills, knowledge, experience, The Directors recognise the importance of performance and length of service of the Directors, succession planning for company boards and review ensuring the Board has the right combination of the Board’s composition annually. The Board is of skills and preservation of knowledge and experience, the view that length of service will not necessarily balanced with the appointment of new Directors, compromise the independence or contribution of bringing in fresh ideas and perspective. directors of an investment trust company, where Following the retirement of Mr RAMacpherson on continuity and experience can be a benefit to the 13March 2024, Mr RPYates joined the Board as Board. The Board concurs with the view expressed non-executive Director and Chairman. The Chairman in the AIC Code that long serving Directors should was considered independent on appointment not be prevented from being considered and the Board continues to consider Mr RPYates independent. independent. 62 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Management Engagement Committee Rules diversity targets more often than not but notes that an orderly succession plan can, when All Directors are members of the Management implemented thoughtfully and having regard to the Engagement Committee, which is chaired by the best interests of the Company and its shareholders, Chairman of the Board. The Board considers each take a significant period of time to develop and may member of the Committee to be independent. To result in periods when the diversity targets are not discharge its duties, the Committee met during the met. Furthermore, the particular circumstances year to consider: the performance and suitability of directors may prevent them from being able to of the Manager; the terms and conditions of undertake the responsibilities of a senior role. In the AIFM Agreement, including fees; and the such circumstances, the value brought to the Board Committee’s Terms of Reference. The Committee’s by their inclusion outweighs the ambition of meeting Terms of Reference are available on request from diversity targets. the Company and on the Company’s page of the Managers’ website: pacifichorizon.co.uk. Board composition Nomination Committee In order to fulfil its obligations, the Board recognises the importance of having a range of skilled and The Nomination Committee consists of all the experienced Directors, balancing the benefits of non-executive Directors and the Chairman of length of service and knowledge of the Company the Board is Chairman of the Committee. The with the desirability of ensuring regular refreshment Committee meets on an annual basis and at such of the Board. The Board reviews its composition other times as may be required. The Committee has annually. written terms of reference that include reviewing the composition of the Board, identifying and The following disclosures are provided in respect nominating new candidates for appointment to the of the UK Listing Rules targets that: i) 40% of a Board, Board appraisal, planning for an orderly board should be women; ii) at least one senior role succession including overseeing development of should be held by a woman; and iii) at least one a diverse pipeline for succession, and training. board member should be from a non-white ethnic The Committee also considers whether Directors background, as defined by the Office of National should be recommended for re-election by Statistics criteria. shareholders. The Committee is responsible for As an externally managed investment company considering Directors’ potential conflicts of interest with no chief executive officer or chief financial and for making recommendations to the Board on officer, the roles which qualify as senior under FCA whether or not potential conflicts are material to an guidance are Chair and Senior Independent Director individual Director’s performance. The Committee’s (‘SID’). The Board also considers Audit Committee Terms of Reference are available on request from Chair to represent a senior role within this context. the Company and on the Company’s page of the Managers’ website: pacifichorizon.co.uk. The Board currently complies in all respects with the UK Listing Rules targets. Diversity policy Senior Appointments to the Board are made on merit Gender Number % roles with due regard for the benefits of diversity Men 3 60 1 including gender, social and ethnic backgrounds, Women 2 40 1 cognitive and personal strengths. The priority in Prefer not to say – – – appointing new directors is to identify the candidate with the best range of skills and experience to complement existing Directors. Within the context Senior of a small, entirely non-executive Board, a single Ethnic background Number % roles appointment or retirement can have a significant White 4 80 2 impact on percentage representation, and a limited Asian/Asian British 1 20 – number of senior roles are available. The Board Prefer not to say – – – will endeavour to comply with the UK Listing 63 Governance report Performance evaluation Audit Committee During the year the Board appointed Lintstock Ltd, The report of the Audit Committee is set out on a firm which assists companies with the design pages 67 to 69. and execution of board evaluations, to facilitate the performance evaluation of the Chairman, each Internal controls and risk management Director, the Board as a whole and its Committees. The Directors acknowledge their responsibility Lintstock provided questionnaires which were for the Company’s risk management and tailored to the specific needs of the Company. internal controls systems and for reviewing their The questionnaires addressed, amongst other issues: effectiveness, including with regard to preparation of the Company’s Annual Report and Financial • Board and Committee composition and expertise; Statements. These systems are designed to manage • quality of Board documentation, administration rather than eliminate the risk of failure to achieve and third party relationships; business objectives and can only provide reasonable but not absolute assurance against material • trust oversight and priorities for change; and misstatement or loss. • personal development. The Board confirms that there is a continuing Each Director completed the questionnaires and the process for identifying, evaluating and managing Chairman discussed feedback with each Director. the significant risks faced by the Company in The results were considered by the Nomination accordance with the FRC guidance ‘Guidance on Committee. Lintstock reviewed the output from the Risk Management, Internal Control and Related evaluation process and judged the Company’s Board, Financial and Business Reporting’. Committees and Directors to be operating effectively. The practical measures to be taken in relation to the Following this process, it was concluded that the design, implementation and maintenance of control performance of each Director, the Chairman, the policies and procedures to safeguard the Company’s Board and its Committees continues to be effective assets and to manage its affairs properly, including and each Director and the Chairman are committed the maintenance of effective operational and to the Company. A review of the Chairman’s and compliance controls have been delegated to other Directors’ commitments was carried out the Managers and Secretaries. and the Board is satisfied that they are capable of devoting sufficient time to the Company. There The Board oversees the functions delegated to the were no significant changes to the Chairman’s other Managers and Secretaries and the controls managed commitments during the year. by the AIFM in accordance with the UK Alternative Investment Fund Managers Regulations (as detailed Induction and training below). Baillie Gifford & Co’s Internal Audit and Compliance Departments and the AIFM’s permanent New Directors are provided with an induction risk function provide the Audit Committee with programme which is tailored to the particular regular reports on their monitoring programmes. circumstances of the appointee. During the year The reporting procedures for these departments updates on industry and regulatory matters were are defined and formalised within a service level provided to the Board by the Managers and agreement. Baillie Gifford & Co conducts an annual Secretaries. Other relevant training for Directors is review of its system of internal controls which is provided as necessary. documented within an internal controls report which complies with ISAE 3402 – Assurance Reports Remuneration on Controls at a Service Organisation. This report As all the Directors are non-executive there is is independently reviewed by Baillie Gifford & no requirement for a separate Remuneration Co’s auditor and a copy is submitted to the Audit Committee. Directors’ fees are considered by the Committee. Board as a whole within the limits approved by shareholders. The Company’s policy on remuneration is set out in the Directors’ Remuneration Report on pages 70 to 73. 64 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC A report identifying the material risks faced by the The Depositary provides the Audit Committee with a Company and the key controls employed to manage report on its monitoring activities. these risks is reviewed by the Audit Committee. The AIFM has established a permanent risk These procedures ensure that consideration is given management function to ensure that effective risk regularly to the nature and extent of risks facing the management policies and procedures are in place Company and that they are being actively monitored. and to monitor compliance with risk limits. The AIFM Where changes in risk have been identified during has a risk management policy which covers the the year they also provide a mechanism to assess risks associated with the management of the whether further action is required to manage these portfolio, and the adequacy and effectiveness of risks. this policy is reviewed and approved at least annually. This review includes the risk management The Directors confirm that they have reviewed the processes and systems and limits for each risk area. effectiveness of the Company’s risk management and internal controls systems which accord with The risk limits, which are set by the AIFM and the FRC guidance ‘Guidance on Risk Management, approved by the Board, take into account the Internal Control and Related Financial and Business objectives, strategy and risk profile of the portfolio. Reporting’, and they have procedures in place to These limits including leverage (see page 113) are review their effectiveness on a regular basis. No monitored and the sensitivity of the portfolio to key significant weaknesses were identified in the year risks is undertaken periodically as appropriate to under review and up to the date of this Report. ascertain the impact of changes in key variables in the portfolio. Exceptions from limits monitoring The Board confirms that these procedures have and stress testing undertaken by Baillie Gifford’s been in place throughout the Company’s financial Business Risk Department are escalated to the year and continue to be in place up to the date of AIFM and reported to the Board along with remedial approval of this Report. measures being taken. To comply with the UK Alternative Investment Fund Managers Regulations, The Bank of New York Relations with shareholders Mellon (International) Limited act as the Company’s The Board places great importance on communication Depositary and Baillie Gifford & Co Limited as its with shareholders. The Company’s Managers meet AIFM. regularly with shareholders and their representatives The Depositary’s responsibilities include cash and report shareholders’ views to the Board. The monitoring, safe keeping of the Company’s financial Chairman and Directors also attend shareholder instruments, verifying ownership and maintaining a presentations in London and Edinburgh with the record of other assets and monitoring the Company’s Managers, as well as maintaining open lines of compliance with investment limits and leverage communication with market participants and investors requirements. The Depositary is liable for the loss of in the Company, separate of the Managers’ involvement, financial instruments held in custody. The Depositary in order to ascertain views on corporate matters. The will ensure that any delegate segregates the assets Chairman is available to meet with shareholders as of the Company. The Company’s Depositary also appropriate. Shareholders wishing to communicate acts as the Company’s Custodian. The Custodian with any members of the Board may do so by writing prepares reports on its key controls and safeguards to them at the Secretaries’ address or through the which are independently reviewed by its appointed Company’s Corporate Broker, JP Morgan Cazenove auditors, KPMG LLP. The reports are reviewed by (see contact details on page 120). Baillie Gifford’s Business Risk Department and a summary of the key points is reported to the Audit Committee and any concerns are investigated. 65 Governance report The Company’s Annual General Meeting provides a forum for communication with all shareholders. The level of proxies lodged for each resolution is announced at the meeting and is published on the Company’s page of the Managers’ website pacifichorizon.co.uk subsequent to the meeting. The notice period for the Annual General Meeting is at least twenty working days. Shareholders and potential investors may obtain up-to-date information on the Company at pacifichorizon.co.uk. Corporate governance and stewardship The Company has given discretionary voting powers to Baillie Gifford & Co. The Managers vote against resolutions they consider may damage shareholders’ rights or economic interests and report their actions to the Board. The Board believes that it is in the shareholders’ interests to consider environmental, social and governance (‘ESG’) factors when selecting and retaining investments and has asked the Managers to take these issues into account as long as the investment objectives are not compromised. The Managers do not exclude companies from their investment universe purely on the grounds of ESG factors but adopt a positive engagement approach whereby matters are discussed with management with the aim of improving the relevant policies and management systems and enabling the Managers to consider how ESG factors could impact long-term investment returns. The Managers’ statement of compliance with the UK Stewardship code can be found on the Managers’ website at bailliegifford.com. The Managers’ policy has been reviewed and endorsed by the Board. Baillie Gifford & Co Limited as the Company’s Manager has considered the Sustainable Finance Disclosures Regulation (‘SFDR’) and further details can be found on page 116. On behalf of the Board Roger Yates Chairman 16 September 2024 66 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Audit ## Committee report The Audit Committee consists of The Committee’s authority and duties are clearly all the Directors. The members defined within its written terms of reference of the Committee consider that which are available on request from the Company they have the requisite financial Secretaries and at pacifichorizon.co.uk. The terms skills and experience to fulfil the of reference are reviewed annually. responsibilities of the Committee. The Committee’s effectiveness is reviewed on an Ms AC Lane is Chairman of the annual basis as part of the Board’s performance Audit Committee. evaluation process. At least once a year the Committee meets with the external Auditor without any representative of the Managers being present. Main activities of the Committee The Committee met twice during the year and BDO LLP, the external Auditor, attended both of those meetings. Baillie Gifford & Co’s Internal Audit and Compliance Departments and the AIFM’s permanent risk function provided reports on their monitoring programmes for each of these meetings. The matters considered, monitored and reviewed by the Committee during the course of the year included the following: • the results announcements and the Annual and Interim Reports; • the Company’s accounting policies and practices; • the regulatory changes impacting the Company; • the fairness, balance and understandability of the Annual Report and Financial Statements and whether it provided the information necessary for shareholders to assess the Company’s performance, business model and strategy; • the effectiveness of the Company’s internal control environment; • the reappointment, remuneration and terms of engagement of the external Auditor; 67 Governance report • whether the audit services contract should be put The value of all the listed investments as at 31 July out to tender; 2024 were agreed to external price sources. The Committee reviewed the Manager’s valuation policy • the policy on the engagement of the external for investments in unlisted (private) companies (as auditor to supply non-audit services; described on page 32 ) and approved the valuation of • the independence and objectivity of the external the private investments following a detailed review Auditor and the effectiveness of the audit process; of the valuation of each investment and relevant challenge where appropriate. The listed portfolio • the need for the Company to have its own internal holdings were agreed to confirmations from the Audit function; Company’s C ustodian and the private company • the internal controls reports received from the holdings were agreed to confirmations from the Managers and Custodian; and investee companies. • the arrangements in place within Baillie Gifford The Committee reviewed the Managers’ Report on & Co whereby their staff may, in confidence, raise Internal Controls which details the controls in place concerns about possible improprieties in matters regarding completeness and accurate recording of of financial reporting or other matters. investment income. The accounting treatment of each special dividend received or receivable during Internal audit the year was reviewed by the Managers. The Committee continues to believe that the The Committee considered the factors, including the compliance and internal controls systems and the impact of increasing geopolitical tensions, that might internal audit function in place within the Investment affect the Company’s viability over a period of three Managers provide sufficient assurance that a years and its ability to continue as a going concern sound system of internal control, which safeguards for at least twelve months from the date of signing shareholders’ investment and the Company’s assets, of the Financial Statements, together with reports is maintained. An internal audit function, specific to from the Managers on the cash position and cash the Company, is therefore considered unnecessary. flow projections of the Company, the liquidity of The external Auditor has adopted a wholly its investment portfolio, compliance with debt substantive approach to testing and therefore the covenants, availability of borrowing facilities, absence of an internal audit function has not had an and the Company’s ability to meet its obligations impact on audit procedures. as they fall due. The Committee also reviewed the viability statement on page 41 and statement on going concern on page 58. Following this Financial reporting assessment, the Committee recommended to the The Committee considers that the most significant Board the appropriateness of the going concern areas of risk likely to impact the Financial Statements basis in preparing the Financial Statements and are the existence and valuation of investments, confirmed the accuracy of the viability statement as they represent 100.7% of total assets, and and statement on going concern. the accuracy and completeness of income from investments. The Managers and A uditor confirmed to the Committee that they were not aware of any material The majority of the investments are in quoted misstatements in the context of the Financial securities and market prices are readily available Statements as a whole and that the Financial from independent external pricing sources. The Statements are in accordance with applicable law Committee reviewed Baillie Gifford’s Report on and accounting standards. Internal Controls which details the controls in place regarding recording and pricing of investments and the reconciliation of investment holdings to third party data. 68 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC FRC Review Following a competitive tender process, BDO LLP were appointed as the Company’s Auditor at the The Financial Reporting Council (‘FRC’) reviewed the Annual General Meeting held on 15 November 2017. Company’s Annual Report and Financial Statements The audit partners responsible for the audit are to be for the year to 31 July 2023. There were no areas rotated at least once every five years in accordance identified for improvement based on the review. The with professional and regulatory standards in order FRC notes that its review does not provide assurance to protect independence and objectivity and to that the Annual Report and Financial Statements are provide fresh challenge to the business. Mr Chris correct in all material respects and that its role is not Meyrick, the current audit partner, has held this role to verify the information provided but to consider for two years. compliance with reporting requirements. BDO LLP has confirmed that it believes it is Internal controls and risk management independent within the meaning of regulatory and professional requirements and that the objectivity of The Committee reviewed the effectiveness of the the audit partner and staff is not impaired. Company’s risk management and internal controls systems as described on page 65. No significant Having carried out the review described above, weaknesses were identified in the year under review. the Committee is satisfied that the Auditor remains independent and effective for the purpose of this External Auditor year’s audit and, as such, has not considered it necessary to put the audit services contract out To fulfil its responsibility regarding the independence to tender. and objectivity of the external Auditor, the Committee reviewed: There are no contractual obligations restricting the Committee’s choice of Auditor. • the Auditor’s audit plan which includes a report from the Auditor describing its arrangements During the year, BDO LLP has been subject to to manage Auditor independence and received a review by the FRC Audit Quality Review team, confirmation of its independence; and as part of the FRC’s ongoing process for listed businesses, in respect of the audit for the year • the extent of non-audit services provided by the ended 31 July 2023. The report raised no significant external Auditor. There were no non-audit fees for findings however, certain areas of improvement the year to 31 July 2024. were identified. The Audit Committee has discussed To assess the effectiveness of the external Auditor, the observations with BDO LLP and are satisfied the Committee reviewed and considered: with the response and commitment to address the • the Auditor’s fulfilment of the agreed audit plan; findings raised. • feedback from the Secretaries on the performance Accountability and audit of the audit team; and The respective responsibilities of the Directors • the Audit Quality Inspection Report from the FRC. and the Auditor in connection with the Financial To fulfil its responsibility for oversight of the external Statements are set out on pages 74 and 75. audit process the Committee considered and reviewed: On behalf of the Board • the Auditor’s engagement letter; Angela Lane • the Auditor’s proposed audit strategy; Chair of the Audit Committee 16 September 2024 • the audit fee; and • a report from the Auditor on the conclusion of the audit. 69 Governance report ## Directors’ ## remuneration report This report has been prepared in The Directors’ Remuneration Policy is subject to accordance with the requirements shareholder approval every three years or sooner if an of the Companies Act 2006. alteration to the policy is proposed. The Remuneration Policy which is set out below was approved at the Annual General Meeting in November 2023 and no changes to the policy are proposed. Directors’ remuneration policy The Board is composed wholly of non-executive Directors, none of whom has a service contract with the Company. There is no separate remuneration committee and the Board as a whole considers changes to Directors’ fees from time to time. Baillie Gifford & Co Limited, the Company Secretaries, provide comparative information when the Board considers the level of Directors’ fees. The Board’s policy is that the remuneration of Directors should be set at a reasonable level that is commensurate with the duties and responsibilities of the role and consistent with the requirement to attract and retain Directors of the appropriate quality and experience. The Board believes that the fees paid to the Directors should reflect the experience of the Board as a whole, be fair and should take account of the level of fees paid by comparable investment trusts. Any views expressed by shareholders on the fees being paid to Directors will be taken into consideration by the Board when reviewing the Board’s policy on remuneration. Non-executive Directors are not eligible for any other remuneration or benefits apart from the reimbursement of allowable expenses. There are no performance conditions relating to Directors’ fees and there are no long-term incentive schemes or pension schemes. There is no notice period and no compensation is payable on loss of office. 70 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Statement by the Chairman The fees paid to Directors in respect of the year ended 31 July 2024 and the expected fees payable The Board reviewed the level of fees during the year in respect of the year ending 31 July 2025 are set and it was agreed that the principal consideration out in the table below. The fees payable to the when assessing the level of fees was balancing Directors in the subsequent financial periods will the cost of remuneration with ensuring that the be determined following an annual review of the Company had the ability to attract and retain Directors’ fees. directors with the necessary skills, knowledge and experience to fulfil the Board’s responsibilities. Expected fees for the Fees as at The Board were of the view that the investment | | year ending | | 31 July | | | --- | --- | --- | --- | --- | | policy of the Company was at least as complex, | 31 July 2025 | | 2024 | | | if not more complex, than the majority of investment | | £ | | £ | trusts, as the Company’s Managers invest in a Chairman’s fee 45,000 45,000 large number of developed, emerging and frontier Non-executive Director fee 30,000 30,000 markets on its behalf, each with a distinct legal Additional fee for Audit 7,500 7,500 and regulatory framework. The Company also had Committee Chair exposure to both listed and private equities and Total aggregate annual 200,000 200,000 could be exposed to complex securities such as fees that can be paid to the convertible bonds. The Board, which periodically Directors in any year under the undertakes a skills audit, was of the opinion that Directors’ Remuneration Policy, the scope of oversight required for this necessitated as set out in the Company’s Articles of Association a range of specialist skills to properly understand the investment activities of the Company. Following discussion and consideration of: Annual report on remuneration An ordinary resolution for the approval of this report • the change to CPI and RPI over the period; will be put to the members at the forthcoming • the levels of remuneration for AIC Asia Pacific and Annual General Meeting. also Baillie Gifford managed investment trusts; The law requires the Company’s auditor to audit certain and of the disclosures provided in this report. Where • the market level of directors’ fees as reported by disclosures have been audited, they are indicated Trust Associates in its October 2023 report; as such. The Auditor’s opinion is included in the Independent Auditor’s Report on pages 77 to 83. it was agreed that that there should be no change in the level of Directors’ fees paid by the Company. Fees were last increased on 1 August 2023. Limits on Directors’ remuneration The fees for the non-executive Directors are payable monthly in arrears and are determined within the limit set out in the Company’s Articles of Association which is currently £200,000 per annum in aggregate. Any change to this limit requires shareholder approval. 71 Governance report 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 | | | | | | | | | 2023 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | | Taxable | | | 2024 | | | | 2023 | | Taxable | | | 2023 | | | | Fees | | benefits* | | | Total | | % change | | Fees | | benefits* | | | Total | | | Name | | £ | | | £ | | £ | | in year | | £ | | | £ | | £ | RA Macpherson 27,857 828 28,685 (32.7) 42,000 654 42,654 RW Chote 30,000 4,011 34,011 7. 1 28,000 3,751 31,751 W Hee 30,000 315 30,315 8.3 28,000 – 28,000 AC Lane 37,500 4,145 41,645 10.0 35,000 2,876 37,876 RF Studwell 30,000 2,930 32,930 7. 6 28,000 2,606 30,606 RP Yates 17,321 2,224 19,545 n/a – – – 172,678 14,453 187,131 9.5 161,000 9,887 170,887 * Comprises travel and subsistence expenses incurred by or on behalf of the Directors in the course of travel to attend Board and Committee meetings held at the Edinburgh offices of Baillie Gifford & Co Limited, the Company’s Secretaries. These amounts have been grossed up for income tax. Annual percentage change in remuneration Directors’ interests (audited) This represents the annual percentage change The Directors at the end of the year under in the entire remuneration paid to the Directors. review and their interests in the Company are as shown in the following table. There have been no % from % from % from % from changes intimated in the Directors’ interests up to 2023 to 2022 to 2021 to 2020 to 12September 2024. | Name | 2024 | 2023 | 2022 | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | RA Macpherson (32.7) 12.7 9.7 10.6 | | | | | Ordinary 10p | Ordinary 10p | | | | | | | shares held | shares held | RW Chote* 7.1 9.2 85.3 n/a | | | | | | Nature | at 31 July | | at 1 August | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | W Hee | † | 8.3 10.9 9.8 500.1 | Name | of interest | | | 2024 | | 2023 | | AC Lane | # | 10.0 11.4 35.3 1.5 | | | | | | | | RW Chote Beneficial 500 500 RF Studwell 7. 6 6.8 24.6 (5.9) W Hee Beneficial 10,000 10,000 RP Yates + n/a n/a n/a n/a AC Lane Beneficial 8,897 8,862 RF Studwell Beneficial 5,000 5,000 * Appointed 25 November 2020, receiving 8 months of remuneration in the year to July 2021 of £15,687 and 12 months of remuneration the RP Yates Beneficial 15,000 – following year of £29,072, being an 85.3% increase. † Appointed 1 June 2020, receiving 2 months of remuneration in the year As per the Articles of Association, it is not a requirement for Directors to to July 2020 of £3,833 and 12 months of remuneration the following hold shares in the Company. year of £23,000, being a 500.1% increase. # Audit Committee Chair from 10 November 2020, receiving 8 months of an additional Audit Committee Chair fee of £5,000 in the year to July 2021 and 12 months of an additional £7,000 fee in the year to July 2022 being a 35.3% increase. + Appointed 13 March 2024, receiving 4 months of remuneration in the year to July 2024. 72 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Statement of voting at Annual General Meeting Performance graph At the last Annual General Meeting, of the Pacific Horizon’s share price, FTSE All-Share Index proxy votes received in respect of the Directors’ and comparative index (figures rebased to 100 at Remuneration Report, 99.2% were in favour, 0.5% 31 July 2014) were against and votes withheld were 0.3%. At the last Annual General Meeting at which the Directors’ 400 350 Remuneration Policy was considered (November 300 2023), 99.1% of the proxy votes were in favour, 250 0.5% were against and votes withheld were 0.4%. 200 150 Relative importance of spend on pay 100 50 The table below shows the actual expenditure during 0 the year in relation to Directors’ remuneration and 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 distributions to shareholders. Cumulative to 31 July | | | | | ● Pacific Horizon | | ● FTSE All-Share | | ● MSCI All Country Asia ex Japan | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2024 | 2023 | Change | | | | | | | | | | | | | | share price | | Index | | Index (in sterling terms) | | £’000 | £’000 | | % | | | | | | | Source: LSEG and underlying data providers. See disclaimer on page 117. Directors’ remuneration 187 171 9.5 All figures are total return (see glossary of terms and alternative performance measures on pages 118 and 119). Dividends paid 2,954 2,745 7. 6 to shareholders Past performance is not a guide to future performance. Share buy-backs 2,345 5,541 (57.7) Approval Company performance The Directors’ Remuneration Report on pages 70 to 73 was approved by the Board of Directors and The following graph compares, for the ten financial signed on its behalf on 16 September 2024. years ended 31 July 2024, the share price total return (assuming all dividends are reinvested) to Pacific Horizon ordinary shareholders compared to Roger Yates the total shareholder return on a notional investment Chairman made up of shares in the component parts of the FTSE All-Share Index. This index was chosen for comparison purposes as it is a widely used measure of performance for UK listed companies. The Company’s comparative index is provided for information purposes only. 450 73 Governance report ## Statement of Directors’ ## responsibilities in respect of the Annual Report and the Financial Statements The Directors are responsible for preparing the The Directors are responsible for keeping adequate Annual Report and the Financial Statements in accounting records that are sufficient to show and accordance with applicable law and regulations. explain the Company’s transactions and disclose with reasonable accuracy at any time the financial Company law requires the Directors to prepare position of the Company and enable them to ensure Financial Statements for each financial year. Under that the Financial Statements comply with the that law the Directors have prepared the Financial Companies Act 2006. They are also responsible for Statements in accordance with United Kingdom safeguarding the assets of the Company and hence Generally Accepted Accounting Practice (United for taking reasonable steps for the prevention and Kingdom Accounting Standards, comprising FRS detection of fraud and other irregularities. 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, and applicable law). The Directors are responsible for ensuring the Annual Report and the Financial Statements are Under company law the Directors must not approve made available on a website. Financial Statements the Financial Statements unless they are satisfied are published on the Company’s website in that they give a true and fair view of the state of accordance with legislation in the United Kingdom affairs of the Company and of the profit or loss of governing the preparation and dissemination the Company for that period. In preparing these of Financial Statements, which may vary from Financial Statements, the Directors are required to: legislation in other jurisdictions. The maintenance • select suitable accounting policies and then apply and integrity of the Company’s website is the them consistently; responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity • make judgements and accounting estimates that of the Financial Statements contained therein. are reasonable and prudent; The Directors have delegated responsibility to the • state whether applicable United Kingdom Managers for the maintenance and integrity of the Accounting Standards, comprising FRS 102 have Company’s page of the Managers’ website. been followed, subject to any material departures disclosed and explained in the Financial Statements; • prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and • prepare a Directors’ Report, a Strategic Report and a Directors’ Remuneration Report which comply with the requirements of the Companies Act 2006. 74 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Directors’ confirmations Each of the Directors, whose names and functions are listed within the Directors and Managers section confirm that, to the best of their knowledge: • the Financial Statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ give a true and fair view of the assets, liabilities, financial position and net return of the Company; • the Annual Report and Financial Statements taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy; and • the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. On behalf of the Board Roger Yates Chairman 16 September 2024 75 ## Financial ## report The Financial Statements for the year to 31 July 2024 are set out on pages 76 to 105 have been prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. Pacific Horizon Investment Trust PLC ## Independent ## auditor’s report to the members of Pacific Horizon Investment Trust PLC Opinion on the Financial Statements Basis for opinion In our opinion the Financial Statements: We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) • give a true and fair view of the state of the and applicable law. Our responsibilities under those Company’s affairs as at 31 July 2024 and of its standards are further described in the Auditor’s netreturn for the year then ended; responsibilities for the audit of the Financial • have been properly prepared in accordance with Statements section of our report. We believe that United Kingdom Generally Accepted Accounting the audit evidence we have obtained is sufficient Practice; and and appropriate to provide a basis for our opinion. Ouraudit opinion is consistent with the additional • have been prepared in accordance with the report to the Audit Committee. requirements of the Companies Act 2006. We have audited the Financial Statements of Pacific Independence Horizon Investment Trust PLC (the ‘Company’) for Following the recommendation of the Audit the year ended 31 July 2024 which comprise the Committee, we were appointed by the Board of Income statement, the Balance sheet, the Statement Directors on 15 November 2017 to audit the Financial of changes in equity, the Cash flow statement and Statements for the year ended 31 July 2018 and Notes to the Financial Statements, including a subsequent financial periods. The period of total summary of significant accounting policies. The uninterrupted engagement including retenders and financial reporting framework that has been applied reappointments is seven years, covering the years in their preparation is applicable law and United ended 31 July 2018 to 31 July 2024. We remain Kingdom Accounting Standard, including Financial independent of the Company in accordance with the Reporting Standard 102, the Financial Reporting ethical requirements that are relevant to our audit of Standard applicable in the UK and Republic of the Financial Statements in the UK, including the Ireland (United Kingdom Generally Accepted FRC’s Ethical Standard as applied to listed public Accounting Practice). interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. 77 Financial report Conclusions relating to going concern In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we In auditing the Financial Statements, we have have nothing material to add or draw attention to in concluded that the Directors’ use of the going relation to the Directors’ statement in the Financial concern basis of accounting in the preparation of the Statements about whether the Directors considered Financial Statements is appropriate. Our evaluation it appropriate to adopt the going concern basis of the Directors’ assessment of the Company’s ofaccounting. ability to continue to adopt the going concern basis of accounting included: Our responsibilities and the responsibilities of the Directors with respect to going concern are • Evaluating the appropriateness of the Directors’ described in the relevant sections of this report. method of assessing the going concern in light ofmarket volatility and the present uncertainties Overview in economic recovery by reviewing the information used by the Directors in completing their 2024 2023 assessment; Key audit Valuation and ownership • Reviewing the forecasted cash flows that support matters of investments the Directors’ assessment of going concern, Materiality Company Financial Statements as a whole challenging assumptions and judgements made £6.04m (2023: £5.80m) based in the forecasts, and scenarios considered, on 1% (2023: 1%) of net assets assessing them for reasonableness. In particular, we considered the liquidity of the portfolios and An overview of the scope of our audit the available cash resource relative to the forecast Our audit was scoped by obtaining an understanding expenditure which was assessed against the prior of the Company and its environment, including year for reasonableness; the Company’s system of internal control, and • Performing stress testing on forecasted assessing the risks of material misstatement in the cash flows to take into account the impact of Financial Statements. We also addressed the risk of increasedinflation; management override of internal controls, including assessing whether there was evidence of bias by • Assessing the accuracy of historical forecasting by the Directors that may have represented a risk of agreeing the actual results; and material misstatement. • Performing an assessment of the Company’s ability to meet its short-term obligations by assessing the net asset position and available cashbalance. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the Financial Statements are authorised for issue. 78 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Key audit matters Key audit matters are those matters that, in our allocation of resources in the audit, and directing the professional judgement, were of most significance in efforts of the engagement team. These matters were our audit of the Financial Statements of the current addressed in the context of our audit of the Financial period and include the most significant assessed Statements as a whole, and in forming our opinion risks of material misstatement (whether or not due to thereon, and we do not provide a separate opinion fraud) that we identified, including those which had on these matters. the greatest effect on: the overall audit strategy, the Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of investments (Note 1 and 9) We responded to this matter by testing the valuation and ownership of the portfolio of investments. We performed the The investment portfolio at the year-end comprised of listed following procedures: equity investments valued at £563.4m and unlisted private company investments valued at £42.8m. With respect of the listed equity investments we: We considered the valuation and ownership of investments to be • Confirmed the year-end bid price was used by agreeing to the most significant audit area as investments represent the most externally quoted prices; significant balance in the Financial Statements and underpin the • Assessed if there were contra indicators, such as liquidity principal activity of the entity. considerations, to suggest bid price is not the most Whilst we do not consider the valuation of the listed equity appropriate indication of fair value by considering the investments to be subject to a significant degree of estimation or realisation period for individual holdings; judgement, there is a risk that the prices used by the Company • Recalculated the valuation by multiplying the number of are not reflective of the fair value of those investments as at the shares held per the statement obtained from the Custodian year end. by the valuation per share; and The unlisted investments have significant judgement involved • Obtained direct confirmation of the number of shares held in selecting a valuation methodology and significant estimation per equity investment from the Custodian regarding all uncertainty involved in determining their valuations. investments held at the balance sheet date. For these reasons and the materiality of the balance in relation to With respect to valuation of unlisted private company the Financial Statements as a whole, we considered this to be a investments, we assessed the design and implementation key audit matter. of controls in relating to the valuation processes including assessment of management and its external experts. With respect to a sample of the unlisted private company investments, we performed the following procedures: • Considered the appropriateness of the valuation methodology applied under the International Private Equity and Venture Capital Valuation (‘IPEV’) Guidelines and the accounting framework; • Tested the accuracy of the application of the valuation methodology selected; • Corroborated factual inputs to the valuations to appropriate sources and challenged subjective inputs including comparison to independent information where appropriate and performing stress and reverse stress testing; and • Where management used inputs from external experts, we assessed the competence, and expertise of the expert including consideration of relevant experience and qualifications held. We considered the independence and objectivity of the expert. We considered the appropriateness of the methodology and assumptions employed by the expert through review of the accounting framework and valuation guidelines followed. We obtained direct confirmation from the Custodian regarding investments held at the balance sheet date. Where investments were not held with the Custodian, we obtained direct confirmation from the investee company regarding investments held at the balance sheet. Key observations: Based on our procedures performed we did not identify any matters to suggest the valuation or ownership of the listed equity investments or unlisted private company investments was not appropriate. 79 Financial report Our application of materiality Reporting threshold We apply the concept of materiality both in planning We agreed with the Audit Committee that we would and performing our audit, and in evaluating the report to them all individual audit differences in effect of misstatements. We consider materiality to excess of £301k (2023: £207k). We also agreed to be the magnitude by which misstatements, including report differences below this threshold that, in our omissions, could influence the economic decisions view, warranted reporting on qualitative grounds. of reasonable users that are taken on the basis of the Financial Statements. Other information The directors are responsible for the other In order to reduce to an appropriately low level information. The other information comprises the probability that any misstatements exceed the information included in the annual report and materiality, we use a lower materiality level, Financial Statements other than the Financial performance materiality, to determine the extent of Statements and our auditor’s report thereon. Our testing needed. Importantly, misstatements below opinion on the Financial Statements does not these levels will not necessarily be evaluated as cover the other information and, except to the immaterial as we also take account of the nature extent otherwise explicitly stated in our report, we of identified misstatements, and the particular do not express any form of assurance conclusion circumstances of their occurrence, when evaluating thereon. Our responsibility is to read the other their effect on the Financial Statements as a whole. information and, in doing so, consider whether the Based on our professional judgement, we other information is materially inconsistent with the determined materiality for the Financial Statements Financial Statements or our knowledge obtained as a whole and performance materiality as follows: in the course of the audit, or otherwise appears to be materially misstated. If we identify such material Company Financial Statements inconsistencies or apparent material misstatements, 2024 2023 we are required to determine whether this gives Materiality £6.04m £5.80m rise to a material misstatement in the Financial Basis for 1% of net assets 1% of net assets Statements themselves. If, based on the work we determining have performed, we conclude that there is a material materiality misstatement of this other information, we are Rationale for the As an investment trust, the net asset required to report that fact. | benchmark applied | value is the key measure of performance | | | --- | --- | --- | | | for users of the Financial Statements. | We have nothing to report in this regard. | | Performance | £4.53m £4.35m | | materiality Corporate governance statement Basis for determining 75% of materiality 75% of materiality The Listing Rules require us to review the Directors’ performance statement in relation to going concern, longer-term materiality viability and that part of the Corporate Governance Rationale for the The level of performance materiality Statement relating to the Company’s compliance percentage applied applied was set after having considered for performance a number of factors including the with the provisions of the UK Corporate Governance materiality expected total value of known and Code specified for our review. likely misstatements and the level of Based on the work undertaken as part of our audit, transactions in the year. we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the Financial Statements or our knowledge obtained during the audit. 80 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Going concern and longer-term viability Directors’ remuneration • The Directors’ statement with regards to the In our opinion, the part of the Directors’ remuneration appropriateness of adopting the going concern report to be audited has been properly prepared in basis of accounting and any material uncertainties accordance with the Companies Act 2006. identified; and Matters on which we are required to report • The Directors’ explanation as to their assessment byexception of the Company’s prospects, the period this We have nothing to report in respect of the following assessment covers and why the period is matters in relation to which the Companies Act 2006 appropriate. requires us to report to you if, in our opinion: Other Code provisions • adequate accounting records have not been kept, • Directors’ statement on fair, balanced and or returns adequate for our audit have not been understandable; received from branches not visited by us; or • Board’s confirmation that it has carried out a • the Financial Statements and the part of the robust assessment of the emerging and principal Directors’ remuneration report to be audited are risks; not in agreement with the accounting records and returns; or • The section of the annual report that describes the review of effectiveness of risk management and • certain disclosures of Directors’ remuneration internal control systems; and specified by law are not made; or • The section describing the work of the Audit • we have not received all the information and Committee. explanations we require for our audit. Other Companies Act 2006 reporting Responsibilities of Directors Based on the responsibilities described below and As explained more fully in the Statement of Directors’ our work performed during the course of the audit, Responsibilities, the Directors are responsible for we are required by the Companies Act 2006 and the preparation of the Financial Statements and for ISAs (UK) to report on certain opinions and matters being satisfied that they give a true and fair view, and as described below. for such internal control as the Directors determine is necessary to enable the preparation of Financial Strategic Report and Directors’ Report Statements that are free from material misstatement, In our opinion, based on the work undertaken in the whether due to fraud or error. course of the audit: In preparing the Financial Statements, the Directors • the information given in the Strategic report and are responsible for assessing the Company’s ability the Directors’ report for the financial year for to continue as a going concern, disclosing, as which the Financial Statements are prepared is applicable, matters related to going concern and consistent with the Financial Statements; and using the going concern basis of accounting unless the Directors either intend to liquidate the Company • the Strategic report and the Directors’ report have or to cease operations, or have no realistic alternative been prepared in accordance with applicable legal but to do so. requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or theDirectors’ report. 81 Financial report Auditor’s responsibilities for the audit of the • Agreement of the financial statement disclosures to underlying supporting documentation; Financial Statements Our objectives are to obtain reasonable assurance • Enquiries of management and those charged with about whether the Financial Statements as a whole governance relating to the existence of any non- are free from material misstatement, whether due to compliance with laws and regulations; fraud or error, and to issue an auditor’s report that • Reviewing minutes of meeting of those charged includes our opinion. Reasonable assurance is a with governance throughout the period for high level of assurance, but is not a guarantee that instances of non-compliance with laws and an audit conducted in accordance with ISAs (UK) regulations; and will always detect a material misstatement when it exists. Misstatements can arise from fraud or error • Reviewing the calculation in relation to Investment and are considered material if, individually or in the Trust compliance to check that the Company was aggregate, they could reasonably be expected to meeting its requirements to retain their Investment influence the economic decisions of users taken on Trust Status. the basis of these Financial Statements. Fraud Extent to which the audit was capable of detecting We assessed the susceptibility of the financial irregularities, including fraud statement to material misstatement including fraud. Irregularities, including fraud, are instances of Our risk assessment procedures included: non-compliance with laws and regulations. We • Enquiry with management and those charged with design procedures in line with our responsibilities, regarding any known or suspected instances of outlined above, to detect material misstatements in fraud; respect of irregularities, including fraud. The extent to which our procedures are capable of detecting • Review of minutes of meeting of those charged irregularities, including fraud is detailed below: with governance for any known or suspected instances of fraud; and Non-compliance with laws and regulations • Discussion amongst the engagement team as to Based on: how and where fraud might occur in the Financial • Our understanding of the Company and the Statements. industry in which it operates; Based on our risk assessment, we considered the • Discussion with management and those charged area most susceptible to be management override of with governance; and controls. • Obtaining and understanding of the Company’s Our procedures in respect of the above included: policies and procedures regarding compliance • The procedures set out in the Key Audit Matters with laws and regulations; section above for unlisted private company We considered the significant laws and regulations investments; to be Companies Act 2006, the FCA listing and DTR • Review of estimates and judgements applied by rules, the principles of the AIC Code of Corporate management in the Financial Statements to assess Governance, industry practice represented by the their appropriateness and the existence of any AIC SORP, the applicable accounting framework, systematic bias; and qualification as an Investment Trust under UK tax legislation as any non-compliance of this would • Review and consideration of the appropriateness lead to the Company losing various deductions and of adjustments made in the preparation of the exemptions from corporation tax. Financial Statements; We focused on laws and regulations that could give • Review for significant transactions outside the rise to a material misstatement in the Company normal course of business; and Financial Statements. Our procedures included, but • Review of unadjusted audit differences, if any, for were not limited to: indications of bias or deliberate misstatement. 82 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non- compliance with laws and regulations throughout theaudit. Our audit procedures were designed to respond to risks of material misstatement in the Financial Statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the Financial Statements, the less likely we are to become awareof it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: frc.org.uk/auditorsresponsibilities. Thisdescription forms part of our auditor’s report. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Chris Meyrick (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor Edinburgh, UK 16 September 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 83 Financial report ## Income ## statement For the year ended 31 July | | | 2024 | 2024 | 2024 | | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | Capital | Total | Revenue | | Capital | Total | | Notes | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Gains/(losses) on investments 9 – 33,438 33,438 – (25,404) (25,404) Currency losses 14 – (113) (113) – (791) (791) Income 2 8,987 – 8,987 9,580 – 9,580 Investment management fee 3 (3,458) – (3,458) (3,419) – (3,419) Other administrative expenses 4 (830) – (830) (762) – (762) Net return before finance costs 4,699 33,325 38,024 5,399 (26,195) (20,796) and taxation Finance costs of borrowings 5 (401) – (401) (403) – (403) Net return before taxation 4,298 33,325 37,623 4,996 (26,195) (21,199) Ta x 6 (834) (9,875) (10,709) (830) (1,256) (2,086) Net return after taxation 3,464 23,450 26,914 4,166 (27,451) (23,285) Net return per ordinary share 7 3.82p 25.82p 29.64p 4.56p (30.05p) (25.49p) The total column of this Statement represents the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in this Statement derive from continuing operations. A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is both the profit and comprehensive income for the year. The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. 84 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC # Balance sheet As at 31 July | | Notes | 2024 £'000 | 2024 £'000 | 2023 £'000 | 2023 £'000 | | --- | --- | --- | --- | --- | --- | | **Fixed assets** | | | | | | | Investments held at fair value through profit or loss | 9 | | 606,173 | | 572,748 | | **Current assets** | | | | | | | Debtors | 10 | 790 | | 420 | | | Cash and cash equivalents | 18 | 4,205 | | 12,442 | | | | | 4,995 | | 12,862 | | | **Creditors** | | | | | | | Amounts falling due within one year: | | | | | | | Other creditors and accruals | 11 | (1,507) | | (1,163) | | | **Net current assets** | | | 3,488 | | 11,699 | | **Total assets less current liabilities** | | | **609,661** | | **584,447** | | **Creditors** | | | | | | | Amounts falling due after more than one year: | | | | | | | Provision for tax liability | 12 | | (7,691) | | (4,092) | | **Net assets** | | | **601,970** | | **580,355** | | **Capital and reserves** | | | | | | | Share capital | 13 | | 9,208 | | 9,208 | | Share premium account | 14 | | 254,120 | | 254,120 | | Capital redemption reserve | 14 | | 20,367 | | 20,367 | | Capital reserve | 14 | | 308,888 | | 287,783 | | Revenue reserve | 14 | | 9,387 | | 8,877 | | **Total shareholders' funds** | | | **601,970** | | **580,355** | | **Net asset value per ordinary share** | **15** | | **664.01p** | | **637.18p** | The Financial Statements of Pacific Horizon Investment Trust PLC (Company Registration number 02342193) on pages 84 to 105 were approved and authorised for issue by the Board and were signed on 16 September 2024. Roger Yates Chairman The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. 85 Financial report ## Statement of ## changes in equity For the year ended 31 July 2024 | | | | Share | | Capital | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | redemption | | Capital | Revenue | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | funds | | Notes | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | Shareholders’ funds at 1 August 2023 9,208 254,120 20,367 287,783 8,877 580,355 Net return aftertaxation – – – 23,450 3,464 26,914 Ordinary shares bought back into treasury 13 – – – (2,345) – (2,345) Ordinary shares sold from treasury 13 – – – – – – Dividends paid during the year 8 – – – – (2,954) (2,954) Shareholders’ funds at 31 July 2024 9,208 254,120 20,367 308,888 9,387 601,970 For the year ended 31 July 2023 | | | | Share | | Capital | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | redemption | | Capital | Revenue | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | funds | | Notes | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | Shareholders’ funds at 1 August 2022 9,208 253,946 20,367 319,573 7,456 610,550 Net return after taxation – – – (27,451) 4,166 (23,285) Ordinary shares bought back into treasury 13 – – – (5,541) – (5,541) Ordinary shares sold from treasury 13 – 174 – 1,202 – 1,376 Dividends paid during the year 8 – – – – (2,745) (2,745) Shareholders’ funds at 31 July 2023 9,208 254,120 20,367 287,783 8,877 580,355 The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. 86 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC # Cash flow statement For the year ended 31 July | | Notes | 2024 £'000 | 2024 £'000 | 2023 £'000 | 2023 £'000 | | --- | --- | --- | --- | --- | --- | | **Cash flows from operating activities** | | | | | | | Net return before taxation | | 37,623 | | (21,199) | | | *Adjustments to reconcile company profit before tax to net cash flow from operating activities* | | | | | | | Net (gains)/losses on investments | | (33,438) | | 25,404 | | | Currency losses | | 113 | | 791 | | | Finance costs of borrowings | 5 | 401 | | 403 | | | *Other capital movements* | | | | | | | Overseas withholding tax incurred | | (785) | | (881) | | | Indian tax paid on transactions | | (6,276) | | (180) | | | Changes in debtors | | (465) | | 523 | | | Change in creditors | | 71 | | (11) | | | **Cash from operations*** | | (2,756) | | 4,850 | | | Non-utilisation fee paid | | (401) | | (403) | | | **Net cash (outflow)/inflow from operating activities** | | | **(3,157)** | | **4,447** | | **Cash flows from investing activities** | | | | | | | Acquisitions of investments | | (206,776) | | (89,277) | | | Disposals of investments | | 207,108 | | 99,574 | | | **Net cash inflow from investing activities** | | | **332** | | **10,297** | | **Cash flows from financing activities** | | | | | | | Ordinary shares bought back into treasury | 13 | (2,345) | | (5,541) | | | Ordinary shares sold from treasury | 13 | - | | 1,376 | | | Equity dividends paid | 8 | (2,954) | | (2,745) | | | **Net cash outflow from financing activities** | | | **(5,299)** | | **(6,910)** | | **(Decrease)/increase in cash and cash equivalents** | | | **(8,124)** | | **7,834** | | Exchange movements | | | (113) | | (791) | | Cash and cash equivalents at 1 August | | | 12,442 | | 5,399 | | **Cash and cash equivalents at 31 July** | | | **4,205** | | **12,442** | * Cash from operations includes dividends received of £8,362,000 (2023 – £9,925,000) and interest received of £160,000 (2023 – £163,000). The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. 87 Financial report # Notes to the Financial Statements ## 01 Principal accounting policies The Financial Statements for the year to 31 July 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 unchanged from the prior year and have been applied consistently. ### 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 Company's principal risks are market related and include market risk, liquidity risk and credit risk. An explanation of these risks and how they are managed is contained on pages 98 to 105 in note 18 to the Financial Statements. The Board has, in particular, considered the impact of heightened macroeconomic and geopolitical concerns, but does not believe that the Company's going concern status is affected. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowing and the level of gearing as well as compliance with borrowing covenants. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. The Company's primary third party suppliers, including its Managers and Secretaries, Custodian and Depositary, Registrar, Auditor and Broker, are not experiencing significant operational difficulties affecting their respective services to the Company. 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 in 2026. The Financial Statements have been prepared on the going concern basis; having assessed the principal and emerging risks and other matters set out in the Viability Statement on page 41 (which assesses the prospects of the Company over a period of three years) it is the Directors' opinion that the Company will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. The Financial Statements have been prepared in accordance with the Companies Act 2006, applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies ('AIC') in November 2014 and updated in July 2022 with consequential amendments. In order to reflect better the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the profit and loss account between items of a revenue and capital nature has been presented in the Income Statement. The allocation of items to revenue and capital is reviewed on an annual basis and is considered to remain appropriate for the current year. 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 portfolio managers, who are subject to the UK's regulatory environment, are also UK based. ### b. Financial instruments 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. ### c. Significant accounting estimates and judgements The preparation of the Financial Statements requires the use of estimates and judgements. These estimates, and judgements affect the reported amounts of assets and liabilities, at the reporting date. While estimates are based on best judgement using information and financial data available, the actual outcome may differ from these estimates. The key sources of estimation and uncertainty relate to the assumptions used in the determination of the fair value of the unlisted investments, which are detailed in note 9 on page 94. 88 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Judgements index to assist with the valuation validation or the application of valuation adjustments, particularly in the The Directors consider that the preparation of the absence of established earnings or closely comparable Financial Statements involves the following key peers; and judgements: vi. the calculation of valuation adjustments derived from i. the determination of the functional currency of the milestone analysis (i.e. incorporating operational Company as sterling (see rationale in 1(a) above); and success against the plan/forecasts of the business into ii. the fair valuation of the unlisted investments. the valuation). The key judgements in the fair valuation process are: d. Investments i. the Managers’ determination of the appropriate The Company’s investments are classified, recognised application of the International Private Equity and and measured at fair value through profit or loss Venture Capital Guidelines 2022 (‘IPEV’) to each in accordance with sections 11 and 12 of FRS 102. unlisted investment; and Investment purchases and sales are recognised on a trade date basis. Expenses incidental to purchase and sale are ii. the Directors’ consideration of whether each fair written off to capital at the time of acquisition or disposal. value is appropriate following detailed review and Gains and losses on investments are recognised in the challenge. The judgement applied in the selection of Income Statement as capital items. the methodology used for determining the fair value of each unlisted investment can have a significant impact Investments are designated as held at fair value through upon the valuation. profit or loss on initial recognition and are measured at subsequent reporting dates at fair value. The fair Estimates value of listed security investments is bid price or, in the The key estimate in the Financial Statements is the case of FTSE 100 constituents and holdings on certain determination of the fair value of the unlisted investments recognised overseas exchanges, last traded price. The by the Managers for consideration by the Directors. This fair value of suspended investments is the last traded estimate is key as it significantly impacts the valuation of price, adjusted for the estimated impact on the business the unlisted investments at the Balance Sheet date. The of the suspension. Unlisted investments are valued at fair valuation process involves estimation using subjective fair value by the Directors following a detailed review inputs that are unobservable (for which market data is and appropriate challenge of the valuations proposed by unavailable). The main estimates involved in the selection the Managers. The Managers’ unlisted investment policy of the valuation process inputs are: applies methodologies consistent with the International Private Equity and Venture Capital Valuation guidelines i. the selection of appropriate comparable companies (‘IPEV’). These methodologies can be categorised as in order to derive revenue multiples and meaningful follows: (a) market approach (multiples, industry valuation relationships between enterprise value, revenue and benchmarks and available market prices); (b) income earnings growth. Comparable companies are chosen on approach (discounted cash flows); and (c) replacement the basis of their business characteristics and growth cost approach (net assets). The valuation process patterns; recognises also, as stated in the IPEV Guidelines, that ii. the selection of a revenue metric (either historic the price of a recent investment may be an appropriate orforecast); starting point for estimating fair value, however it should be evaluated using the techniques described above. iii. the application of an appropriate discount factor to reflect the reduced liquidity of unlisted companies The Managers monitor the investment portfolio on a fair versus their listed peers; value basis and use the fair value basis for investments in making investment decisions and monitoring financial iv. the estimation of the probability assigned to an exit performance. being through an initial public offering (‘IPO’) or a company sale; v. the selection of an appropriate industry benchmark 89 Financial report e. Cash and cash equivalents j. Deferred taxation Cash and cash equivalents include cash in hand and Deferred taxation is provided on all timing differences, deposits repayable on demand. Deposits are repayable based on the taxable profit and the total comprehensive on demand if they can be withdrawn at any time without income as stated in the Financial Statements, calculated notice and without penalty or if they have a maturity or at the current tax rate relevant to the realisation of the period of notice of not more than one working day. benefit or liability. Deferred tax assets are recognised only to the extent that it will be more likely than not that f. Income there will be taxable profits from which underlying timing i. Income from equity investments is brought into account differences can be deducted. on the date on which the investments are quoted k. Foreign currencies ex-dividend or, where no ex-dividend date is quoted, when the Company’s right to receive payment Transactions involving foreign currencies are converted isestablished. at the rate ruling at the time of the transaction. Assets and liabilities in foreign currencies are translated at the ii. If scrip dividends are taken in lieu of dividends in closing rates of exchange at the balance sheet date. cash, the net amount of the cash dividend declared Any gain or loss arising from a change in exchange rate is credited to the revenue column of the Income subsequent to the date of the transaction is included as Statement. Any excess in the value of the shares an exchange gain or loss in the Income Statement as received over the amount of the cash dividend capital or revenue as appropriate. foregone is recognised in the capital column of the IncomeStatement. l. Capital redemption reserve The capital redemption reserve is a statutory, non- iii. Special dividends are treated as capital or income distributable reserve into which amounts are transferred depending on the facts of each particular case. following the redemption or purchase of a company’s iv. Unfranked investment income and overseas dividends ownshares. include the taxes deducted at source. m. Cap ital reserve v. Interest from fixed interest securities is recognised on Gains and losses on disposal of investments, changes an accruals basis using the effective interest rate basis. in the fair value of investments held and realised and vi. Underwriting commission and interest receivable on unrealised exchange differences of a capital nature are deposits are recognised on an accruals basis. dealt with in this reserve after being recognised in the Income Statement. Purchases of the Company’s own g. Expenses shares for cancellation, or to be held in treasury for All expenses are accounted for on an accruals basis subsequent reissue, may be funded from this reserve. and are charged through the revenue column of the n. Revenue reserve Income Statement, except for expenses incidental to the acquisition or sale of investments, which are written The revenue profit or loss for the year is taken to or from off to capital when incurred. this reserve. The revenue reserve may be distributed by way of dividend. h. Borrowing and finance costs o. Single segment reporting Interest bearing bank loans are recorded at the proceeds received, net of direct issue costs and subsequently The Company is engaged in a single segment of business, measured at amortised cost. Finance costs are accounted being investment business, consequently no business for on an accruals basis and are charged through the segmental analysis is provided. revenue column of the Income statement. p. Dividend distributions i. Taxation Final dividends are recognised in the period in which the Current tax assets and liabilities are measured at the dividends are approved by the Company’s shareholders. amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those enacted or substantively enacted at the reporting date. 90 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## 02 Income | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | **Income from investments** | | | | Overseas dividends | 8,827 | 9,417 | | **Other income** | | | | Deposit interest | 160 | 163 | | **Total income** | **8,987** | **9,580** | | **Total income comprises:** | | | | Dividends from financial assets designated at fair value through profit or loss | 8,827 | 9,417 | | Interest from financial assets not at fair value through profit or loss | 160 | 163 | | | **8,987** | **9,580** | ## 03 Investment management fee | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Investment management fee | **3,458** | **3,419** | Details of the Investment Management Agreement are set out on page 54. The annual management fee is 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets. Management fees are calculated and payable on a quarterly basis. ## 04 Other administrative expenses | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Custody fees | 242 | 255 | | General administrative expenses | 212 | 142 | | Directors' fees | 173 | 161 | | Marketing* | 90 | 71 | | Auditor's remuneration for audit services† | 50 | 50 | | Depository fees | 49 | 70 | | Registrar's fees | 14 | 13 | | | **830** | **762** | * 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. † Auditor's remuneration above is exclusive of VAT. There were no non-audit fees paid to the Auditor during the year (2023 – nil). ## 05 Finance costs of borrowings | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Royal Bank of Scotland International Limited non-utilisation fee (see note 11) | **401** | **403** | 91 Financial report 06 Tax | | 2024 | 2024 | 2024 | | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | | Capital | Total | Revenue | | Capital | Total | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Overseas taxation 834 – 834 830 – 830 Indian capital gains tax paid and – 9,875 9,875 – 1,256 1,256 provided for 834 9,875 10,709 830 1,256 2,086 2024 2023 £’000 £’000 Factors affecting the tax charge for the year The tax assessed for the year is lower (2023 – higher) than the average standard rate of corporation tax in the UK of 25% (2023 – 21%). The differences are explained below: Net return before taxation 37,623 (21,199) Net return multiplied by the average standard rate of corporation tax in the 9,406 (4,449) UK of 25% (2023 – 21%) Capital (gain)/loss not deductible (8,331) 5,498 Overseas dividends not taxable in the UK (2,207) (1,977) Current year management expenses and non-trade loan relationship deficits not utilised 1,132 928 Overseas withholding tax incurred 834 830 Revenue tax charge for the year 834 830 Increase in provision for tax liability in respect of Indian capital gains tax 3,599 1,076 Payments of Indian capital gains tax in the period 6,276 180 Capital tax charge for the year 9,875 1,256 Total tax 10,709 2,086 As an investment trust, the Company’s capital gains are not taxable in the United Kingdom. Interest on the corporation tax repayment is included within interest income. The capital tax charge results from the provision for tax liability in respect of Indian capital gains tax as detailed in note 12. Factors that may affect future tax charges At 31 July 2024 the Company had surplus management expenses and losses on non-trading loan relationships of £9,390,000 (2023 – £8,258,000) in 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. 92 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## 07 Net return per ordinary share | | 2024 Revenue | 2024 Capital | 2024 Total | 2023 Revenue | 2023 Capital | 2023 Total | | --- | --- | --- | --- | --- | --- | --- | | Net return after taxation | 3.82p | 25.82p | 29.64p | 4.56p | (30.05p) | (25.49p) | Revenue return per ordinary share is based on the net revenue profit after taxation of £3,464,000 (2023 – net revenue profit of £4,166,000) and on 90,804,045 (2023 – 91,364,427) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. Capital return per ordinary share is based on the net capital gain for the financial year of £23,450,000 (2023 – net capital loss of £27,451,000) and on 90,804,045 (2023 – 91,364,427) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. Total return per ordinary share is based on the total gain for the financial year of £26,914,000 (2023 – total loss of £23,285,000) and on 90,804,045 (2023 – 91,364,427) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the 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 30 November 2023) | 3.25p | 3.00p | 2,954 | 2,745 | We set out below the total dividends 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. There is a revenue surplus for the year to 31 July 2024 of £3,464,000 which is available for distribution by way of a dividend payment (2023 – a revenue surplus of £4,166,000). | | 2024 | 2023 | 2024 £'000 | 2023 £'000 | | --- | --- | --- | --- | --- | | **Amounts paid and payable in respect of the financial year:** | | | | | | Proposed final dividend per ordinary share (payable 28 November 2024) | 2.65p | 3.25p | 2,401 | 2,954 | ## 09 Fixed assets – investments | As at 31 July 2024 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Listed equities | 563,410 | – | – | 563,410 | | Unlisted company equities | – | – | 9,036 | 9,036 | | Unlisted company preference shares^{II} | – | – | 33,727 | 33,727 | | **Total financial asset investments** | **563,410** | **–** | **42,783** | **606,173** | | As at 31 July 2023 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Listed equities* | 542,048 | 1,273 | – | 543,321 | | Unlisted company equities | – | – | 2,555 | 2,555 | | Unlisted company preference shares^{II} | – | – | 26,872 | 26,872 | | **Total financial asset investments** | **542,048** | **1,273** | **29,427** | **572,748** | \* During the period, Brilliance China listed on the Hong Kong stock exchange having de-listed on 31 March 2021 and there was a demerger with Reliance Industries, where shares of Jio Financial Services were acquired but the company did not list until 21 August 2023. $^{II}$ The investments in preference shares include liquidation preference rights that determine the repayment (or multiple thereof) of the original investment in the event of a liquidation event such as a take-over. During the year to 31 July 2024 no investments (31 July 2023 – nil) were transferred from Level 3 to Level 1 on becoming listed. Investments in securities are financial assets held at fair value through profit or loss. In accordance with Financial Reporting Standard 102, the tables above provide an analysis of these investments based on the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value. 93 Financial report 09 Fixed assets – investments (continued) Fair value hierarchy The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows: Level 1 – using unadjusted quoted prices for identical instruments in an active market; Level 2 – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and Level 3 – using inputs that are unobservable (for which market data is unavailable). The Company’s unlisted ordinary share investments at 31 July 2023 were valued using a variety of techniques. These include using comparable company performance, comparable scenario analysis, and assessment of milestone achievement at investee companies. The determinations of fair value included assumptions that the comparable companies and scenarios chosen for the performance assessment provide a reasonable basis for the determination of fair value. In some cases the latest dealing price is considered to be the most appropriate valuation basis, but only following assessment using the techniques described above. | Listed | Unlisted | 2024 | 2023 | | --- | --- | --- | --- | | equities | equities | Total | Total | | £’000 | £’000 | £’000 | £’000 | Cost of investments at 1 August 2023 462,430 30,580 493,010 488,845 Investment holding gains/(losses) at 1 August 2023 80,891 (1,153) 79,738 119,694 Value of investments at 1 August 2023 543,321 29,427 572,748 608,539 Movements in year: Purchases at cost 196,421 10,628 207,049 88,831 Sales proceeds received * (188,297) (5) (188,302) (84,665) Changes in fair value 11,965 2,713 14,678 (39,957) Value of investments at 31 July 2024 563,410 42,763 606,173 572,748 Cost of investments at 31 July 2024 470,554 41,203 511,757 493,011 Investment holding gains at 31 July 2024 92,856 1,560 94,416 79,737 Value of investments at 31 July 2024 563,410 42,763 606,173 572,748 * The unlisted investment, Philtown Properties, was written off in the year to 31 July 2024. Transaction costs on purchases and sales were £206,000 (2023 – £118,000) and £399,000 (2023 – £188,000) respectively, total transaction costs being £605,000 (2023 – £306,000) expensed as per the accounting policy (see page 89). The Company received £207,062,000 (2023 – £99,218,000) from investments sold during the year. The book cost of these investments when they were purchased was £188,302,000 (2023 – £84,665,000). 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. 2024 2023 £’000 £’000 Net gains/(losses) on investments held at fair value through profit or loss Realised gains on sales 18,760 14,553 Changes in investment holding gains and losses 14,678 (39,957) 33,438 (25,404) Significant holdings disclosure requirements – AIC SORP Details are disclosed below in accordance with the requirements of paragraph 82 of the AIC Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (updated in July 2022) in relation to unlisted investments included in the ten largest holdings disclosed on page 24. As required, this disclosure includes turnover, pre-tax profits and net assets attributable to investors as reported within the most recently audited Financial Statements of the investee companies, where possible. 94 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC 09 Fixed assets – investments (continued) | As at 31 July 2024 | | | | | | | | | Income | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | recognised | | | | Pre-tax | | | Net assets | | | | | | Latest | | | | Market | from holding | | | | profit/ | | | attributable | | | | | Financial | | | Book cost | | Value | in the period | | Turnover | | | (loss) | to shareholders | | | | | | Statements | | | | £’000 | £’000 | | £’000 | | (‘000) | (‘000) | | | | (‘000)Name Business | | Dailyhunt | Indian news | | | n/a 20,987 20,693 Nil Information not publicly available | | | | | | | | | | | | | | (VerSe | aggregator | | | | | | | | | | | | | | | | | Innovation) | application | | | | | | | | | | | | | | | | | As at 31 July 2023 | | | | | | | | | Income | | | | | | | | | | | | | | | | | recognised | | | | Pre-tax | | | Net assets | | | | | | Latest | | | | Market | from holding | | | | | profit/ | | attributable | | | | | Financial | | | Book cost | | Value | in the period | | Turnover | | | (loss) | to shareholders | | | | | | Statements | | | | £’000 | £’000 | | £’000 | | (‘000) | | (‘000) | | | (‘000)Name Business | | Dailyhunt | Indian news | | | n/a 20,987 17,921 Nil Information not publicly available | | | | | | | | | | | | | | (VerSe | aggregator | | | | | | | | | | | | | | | | | Innovation) | application | | | | | | | | | | | | | | | | 10 Debtors 2024 2023 £’000 £’000 Amounts falling due within one year: Income accrued (net of withholding taxes) 651 234 Other debtors and prepayments 139 186 790 420 None of the above debtors are financial assets designated at fair value through profit or loss. The carrying amount of debtors is a reasonable approximation of fair value. There were no debtors that were past due or impaired at 31 July 2024 or 31 July 2023. 11 Creditors – amounts falling due within one year | | 2024 | 2023 | | --- | --- | --- | | | £’000 | £’000 | | Royal Bank of Scotland International Limited multi-currency revolving credit facility | 52 52 | | non-utilisation fee Investment purchases awaiting settlement 273 – Investment management fee 903 873 Other creditors and accruals 279 238 1,507 1,163 The Company has a multi-currency revolving credit facility with the Royal Bank of Scotland International Limited for up to £100 million, with a non-utilisation rate of 0.4%. This facility expires in March 2025. At 31 July 2024 there were no outstanding drawings (31 July 2023 – nil). The main covenants relating to the loan are that borrowings should not exceed 30% of the Company’s adjusted net asset value and the Company’s net asset value should be at least £300 million. There were no breaches in the loan covenants during the year. None of the above creditors at 31 July 2024 or 31 July 2023 are financial liabilities designated at fair value through profit or loss. 95 Financial report 12 Provision for tax liability The tax liability provision at 31 July 2024 of £7,691,000 (31 July 2023 – £4,092,000) relates to a potential liability for Indian capital gains tax that may arise on the Company’s Indian investments should they be sold in the future, based on the net unrealised taxable capital gain at the period end and on enacted Indian tax rates (long-term capital gains are taxed at 12.5% (2023 – 10%) and short term capital gains are taxed at 20% (2023 – 15%)). The amount of any future tax amounts payable may differ from this provision, depending on the value and timing of any future sales of such investments and future Indian tax rates. 13 Share capital 2024 2024 2023 2023 Number £’000 Number £’000 Allotted, called up and fully paid ordinary shares of 10p each 90,656,751 9,066 91,081,949 9,108 Treasury shares of 10p each 1,418,210 142 993,012 100 92,074,961 9,208 92,074,961 9,208 In the year to 31 July 2024, the Company issued no ordinary shares from treasury (2023 – 200,000 ordinary shares with a nominal value of £20,000, representing 0.2% of the issued share capital, raising net proceeds of £1,376,000). In the year to 31 July 2024, 425,198 ordinary shares, representing 0.5% of the issued share capital at 31 July 2023, were bought back at a total cost of £2,345,000 and are held in treasury (2023 – 979,012 shares, representing 1.1% of the issued share capital at 31 July 2022, were bought back during the year at a total cost of £5,541,000 and subsequently reissued from treasury). At 31 July 2024 the Company had authority to allot or sell from treasury 9,104,690 ordinary shares without application of pre- emption rights and to buy back 13,440,596 ordinary shares on an ad hoc basis. Under the provisions of the Company’s Articles of Association share buy-backs are funded from the capital reserve. Between 1 August 2024 and 12 September 2024, no further shares were issued and 39,875 shares were bought back. 14 Capital and reserves | | | | Share | | Capital | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | redemption | | Capital | Revenue | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | funds | | | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | Shareholders’ funds at | 9,208 254,120 20,367 287,783 8,877 580,355 | | | | | | | | | 1 August 2023 Net gains on sales of investments – – – 18,760 – 18,760 Changes in investment holding – – – 14,678 – 14,678 gains and losses | Other exchange differences – – – (113) – | | | (113) | | --- | --- | --- | --- | | Indian tax paid and provided for – – – (9,875) – | | (9,875) | | | Ordinary shares bought back | – – – (2,345) – (2,345) | | | intotreasury Revenue return after taxation – – – – 3,464 3,464 Dividends paid during the year – – – – (2,954) (2,954) Shareholders’ funds at 31 July 2024 9,208 254,120 20,367 308,888 9,387 601,970 96 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC 14 Capital and reserves (continued) | | | Share | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | redemption | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | At 1 August 2022 9,208 253,946 20,367 319,573 7,456 610,550 Net gains on sales of investments – – – 14,553 – 14,553 Changes in investment holding – – – (39,957) – (39,957) gains and losses Other exchange differences – – – (791) – (791) Indian CGT paid and provided for – – – (1,256) – (1,256) Ordinary shares bought back into – – – (5,541) – (5,541) treasury Ordinary shares sold from treasury – 174 – 1,202 – 1,376 Revenue return after taxation – – – – 4,166 4,166 Dividends paid during the year – – – – (2,745) (2,745) At 31 July 2023 9,208 254,120 20,367 287,783 8,877 580,355 The capital reserve includes non-distributable investment holding gains of £94,416,000 (2023 – gains of £79,737,000) as disclosed in note 9. The revenue reserve and capital reserve (to the extent it constitutes realised profits) may be distributed by way of dividend. 15 Shareholders’ funds The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows: | | 2024 | | 2023 | | 2024 | | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | Net asset | | Net asset | | Net assets | | Net assets | | | | value | | value | attributable | | attributable | | | per share | | per share | | | £’000 | | £’000 | Ordinary shares 664.01p 637.18p 601,970 580,355 The movements during the year of the assets attributable to the ordinary shares are shown in note 14. Net asset value per ordinary share is based on the net assets as shown above and 90,656,751 (2023 – 91,081,949) ordinary shares (excluding treasury shares), being the number of ordinary shares in issue at each date. 16 Analysis of change in net debt | At 1 August | | | | Exchange | | At 31 July | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | Cash flows | | movement | | | 2024 | | | £’000 | | £’000 | | £’000 | | £’000 | Cash and cash equivalents 12,442 (8,124) (113) 4,205 97 Financial report ## 17 Transactions with related parties and the Managers and Secretaries The Directors' fees for the year are detailed in the Directors' remuneration report on page 70. No Director has a contract of service with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006. Details of the management contract are set out in the Directors' report on page 54. The management fee payable to the Manager by the Company for the year, as disclosed in note 3, was £3,458,000 (2023 – £3,419,000) of which £903,000 (2023 – £873,000) was outstanding at the year end, as disclosed in note 11. The Company is part of a marketing programme which includes all the investment trusts managed by the Manager. The Company's marketing contribution, recharged by the Manager, was £90,000 (2023 – £71,000) as disclosed in note 4. ## 18 Financial instruments As an Investment Trust, the Company invests in equities and makes other investments so as to achieve its investment objective of maximising capital appreciation from a focused and actively managed portfolio of investments from the Asia-Pacific region including the Indian Sub-continent and excluding Japan. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests. These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board monitors closely the Company's exposures to these risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise short term volatility. Risk provides the potential for both losses and gains. In assessing risk, the Board encourages the Managers to exploit the opportunities that risk affords. The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period. ### Market risk The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks and the Company's Managers both assess the exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the investment portfolio on an ongoing basis. Details of the Company's investment portfolio are shown in note 9 and on pages 36 to 38. The Company may, from time to time, enter into derivative transactions to hedge specific market, currency or interest rate risk. During the years to 31 July 2024 and 31 July 2023 no such transactions were entered into. The Company's Managers may not enter into derivative transactions without the prior approval of the Board. ### i. Currency risk The majority of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling value of those items. The Managers monitor the Company's exposure to foreign currencies and report to the Board on a regular basis. The Managers assess the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the rates of exchange to which the Company's assets, liabilities, income and expenses are exposed. However, the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company's valuation than a simple translation of the currency in which the company is quoted. Foreign currency borrowings can limit the Company's exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. 98 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC 18 Financial instruments (continued) i. Currency risk (continued) Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below. | | | | Cash and cash | | | Other debtors | | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | | equivalents | | and creditors | | exposure | | | | At 31 July 2024 | | £’000 | | | £’000 | | £’000 | | £’000 | | Indian rupee 138,869 80 (7,691) 131,258 Hong Kong dollar 99,011 – – 99,011 Korean won 95,999 – 230 96,229 US dollar 90,437 3,407 (273) 93,571 Taiwan dollar 88,425 – 421 88,846 Vietnam dong 49,038 618 – 49,656 Chinese yuan 19,417 – – 19,417 Indonesian rupiah 15,655 – – 15,655 Australian dollar 616 – – 616 Thai baht – – – – Total exposure to currency risk 597,467 4,105 (7,313) 594,259 Sterling 8,706 100 (1,095) 7,711 606,173 4,205 (8,408) 601,970 | | | | Cash and cash | | | Other debtors | | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | | equivalents | | and creditors | | exposure | | | | At 31 July 2023 | | £’000 | | | £’000 | | £’000 | | £’000 | | Indian rupee 140,313 449 (4,052) 136,710 Hong Kong dollar 142,684 – – 142,684 Korean won 100,409 – 162 100,571 US dollar 39,512 9,948 – 49,460 Taiwan dollar 32,476 124 – 32,600 Vietnam dong 31,605 1,862 32 33,499 Chinese yuan 30,189 – – 30,189 Indonesian rupiah 32,637 – – 32,637 Australian dollar 3,311 – – 3,311 Thai baht 5,447 – – 5,447 Total exposure to currency risk 558,583 12,383 (3,858) 567,108 Sterling 14,165 59 (977) 13,247 572,748 12,442 (4,835) 580,355 99 Financial report 18 Financial instruments (continued) i. Currency risk (continued) Currency risk sensitivity At 31 July 2024, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total net assets and total return would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect on the Financial Statement amounts. The level of change is considered to be reasonable based on observations of current market conditions. The analysis is performed on the same basis for 2023. 2024 2023 £’000 £’000 Indian rupee 6,549 6,836 Hong Kong dollar 4,951 7,134 Korean won 4,811 5,029 US dollar 4,692 2,473 Taiwan dollar 4,442 1,630 Vietnam dong 2,483 1,675 Chinese yuan 971 1,509 Indonesian rupiah 783 1,632 Australian dollar 31 165 Thai baht – 272 29,713 28,355 ii. Interest rate risk Interest rate movements may affect directly: • the fair value of any investments in fixed interest rate securities; • the level of income receivable on cash deposits; • the fair value of any fixed-rate borrowings; and • the interest payable on any variable rate borrowings. Interest rate movements may also impact upon the market value of investments outwith fixed income securities. The effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company’s equity. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the amount of investments in cash and fixed income securities and the income receivable on cash deposits, floating rate notes and other similar investments. The Company may finance part of its activities through borrowings at approved levels. The amount of any such borrowings and the approved levels are monitored and reviewed regularly by the Board. Movements in interest rates, to the extent that they affect the market value of the Company’s fixed rate borrowings, may also affect the amount by which the Company’s share price is at a discount or a premium to the net asset value (assuming that the Company’s share price is unaffected by movements in interest rates). The interest rate risk profile of the Company’s financial assets and liabilities at 31 July is shown below. Financial assets | | | | | 2024 | | | 2024 | | | | | 2023 | | | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | | Weighted | | | Weighted | | | 2023 | | Weighted | | | Weighted | | | Fair value | | | average | | average fixed | | | Fair value | | | average | | average fixed | | | | | £’000 | interest rate | | | | rate period* | | | £’000 | interest rate | | | | rate period* | | Cash and cash equivalents: Overseas currencies 4,105 3.9% n/a 12,383 3.9% n/a Sterling 100 4.5% n/a 59 4.3% n/a 4,205 12,442 * Based on expected redemption date. 100 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC 18 Financial Instruments (continued) ii. Interest rate risk (continued) Financial liabilities The interest rate risk profile of the Company’s financial liabilities and the maturity profile of the undiscounted future cash flows in respect of the Company’s contractual financial liabilities at 31 July are shown below. Maturity profile | 2024 | 2023 | | --- | --- | | Within | Within | | 1 year | 1 year | | £’000 | £’000 | Royal Bank of Scotland International Limited non-utilisation fee 52 52 Interest rate risk sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates at the Balance Sheet date and with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. An increase of 100 basis points in interest rates, with all other variables being held constant, would have increased the Company’s total net assets and total return for the year ended 31 July 2024 by £42,000 (2023 – an increase of £124,000). This is mainly due to the Company’s exposure to interest rates on its floating rate bank loan and cash balances. A decrease of 100 basis points would have had an equal but opposite effect. iii. Other price risk Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Managers. The Company’s portfolio of unlisted level 3 investments is not necessarily affected by market performance, however the valuations are affected by the performance of the underlying securities in line with the valuation criteria in note 1(c). The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company’s objectives and investment policies. The portfolio does not seek to reproduce the index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge from the comparative index. Other price risk sensitivity A full list of the Company’s investments is given on pages 36 to 38. In addition, a geographical analysis of the portfolio and an analysis of the investment portfolio by broad industrial or commercial sector are contained on page 30. 93.6% (2023 – 93.6%) of the Company’s net assets are invested in quoted equities. A 5% (2023 – 5%) increase in quoted equity valuations at 31 July 2024 would have increased total assets and total return on ordinary activities by £28,170,000 (2023 – £27,166,000). A decrease of 5% would have had an equal but opposite effect. The level of change is considered to be reasonable based on observations of current market conditions. 7.1 % (2023 – 5.1%) of the Company’s net assets are invested in private company investments. The fair valuation of the private company investments is influenced by the estimates, assumptions and judgements made in the fair valuation process (see note 1(c) on page 88). A sensitivity analysis is provided below which recognises that the valuation methodologies employed involve different levels of subjectivity in their significant unobservable inputs and illustrates the sensitivity of the valuations to these inputs as it involves more significant subjective estimation than the recent transaction method. The inputs have been flexed by +/-10%. The table also provides the range of values for the key unobservable inputs. 101 Financial report 18 Financial Instruments (continued) iii. Other price risk (continued) Other price risk sensitivity (continued) As at 31 July 2024 Significant unobservable inputs* Fair value | | as at 31 July | Key | | Other | | | Weighted | | | Sensitivity to changes | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Valuation | 2024 | unobservable | | unobservable | | | average | | Sensitivity | in significant | | technique | £’000 | inputs | | inputs | † | Range | range | # | % | unobservable inputs | | Market | 35,925 EV/LTM | | | a,b,c,d 1.6x – 4.8x 3.4x 10% If EV/LTM multiples | | | | | | | | approach | | revenue | | | | | | | | changed by +/-10%, | | using | | multiple | ‡ | | | | | | | the fair value would | | comparable | | | | | | | | | | change by £2,990,239 | | trading | | | | | | | | | | and -£2,956,975. | multiples | Transaction | g 86% n/a 10% If the transaction implied | | | --- | --- | --- | | implied | | premium is changed | | premium and | | by +/-10%, the fair | | discounts | | value would change | by £944,746 and -£931,908. Illiquidity e 10% n/a 10% If the illiquidity discounts discount is changed by +/-10%, the fair value would change by £169,603 and -£168,895. | Benchmark | 6,838 | Selection of | | a,b,c,f -10.2% to | | -19% 10% If input comparable | | | --- | --- | --- | --- | --- | --- | --- | --- | | performance | | comparable | | | 19.1% | | company performance | | | | companies | § | | | | | changed by +/-10%, the fair value would change by £691,873 and -£686,614. * Significant unobservable inputs The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(c) on page 88. † See explanation for other unobservable inputs on page 104. # Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication of the typical multiple or adjustment being applied across the portfolio. ‡ Enterprise value (EV) divided by the last twelve months (LTM) revenue. § See explanation for the selection of comparable companies on page 104 section ‘c’. The percentage movements reflect the movement in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. 102 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC 18 Financial Instruments (continued) iii. Other price risk (continued) Other price risk sensitivity (continued) As at 31 July 2023 Significant unobservable inputs* Fair value | | as at 31 July | Key | | Other | | | Weighted | | | Sensitivity to changes | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Valuation | 2023 | unobservable | | unobservable | | | average | | Sensitivity | in significant | | technique | £’000 | inputs | | inputs | † | Range | range | # | % | unobservable inputs | | Market | 29,351 EV/LTM | | | a,b,c,d 2.4x – 4.3x 3.6x 10% If EV/LTM multiples | | | | | | | | approach | | revenue | | | | | | | | changed by +/-10%, | | using | | multiple | ‡ | | | | | | | the fair value would | | comparable | | | | | | | | | | change by £2,339,045 | | trading | | | | | | | | | | and -£2,337,300. | multiples | Transaction | g 88% n/a 10% If the transaction implied | | | --- | --- | --- | | implied | | premium is changed | | premium and | | by +/-10%, the fair | | discounts | | value would change | by £845,528 and -£843,783. Illiquidity e -10% n/a 10% If the illiquidity discounts discount is changed by +/-10%, the fair value would change by +/-£126,999. | Benchmark | 76 | Selection of | | a,b,c,f -4.7% n/a 10% If input comparable | | | --- | --- | --- | --- | --- | --- | | performance | | comparable | | | company performance | | | | companies | § | | | changed by +/-10%, the fair value would change by +/-£16,080. * Significant unobservable inputs The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(c) on page 88. † See explanation for other unobservable inputs on page 104. # Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication of the typical multiple or adjustment being applied across the portfolio. ‡ Enterprise value (EV) divided by the last twelve months (LTM) revenue. § See explanation for the selection of comparable companies on page 104 section ‘c’. The percentage movements reflect the movement in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. 103 Financial report 18 Financial Instruments (continued) iii. Other price risk (continued) Other price risk sensitivity (continued) a. Application of valuation basis Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each investment. When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks and companies. For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as appropriate for the investment, and where a suitable correlation can be identified with the comparable companies then a regression analysis will be performed. Discounted cash flows will also be considered where appropriate forecasts are available. b. Probability estimation of liquidation events The probability of a liquidation event such as a company sale, or alternatively an initial public offering (‘IPO’), is a key variable input in the Transaction-based and Multiples-based valuation techniques. The probability of an IPO versus a company sale is typically estimated from the outset to be 50:50 if there has been no indication by the company of pursuing either of these routes. If the company has indicated an intention to IPO, the probability is increased accordingly to 75% and if an IPO has become a certainty the probability is increased to 100%. Likewise, in a scenario where a company is pursuing a trade sale the weightings will be adjusted accordingly in favour of a sale scenario, or in a situation where a company is underperforming expectations significantly and therefore deemed very unlikely to pursue an IPO. The Company typically invests in higher ranking preference shares which carry more protection, and this can therefore influence the end valuation. 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. Estimated sustainable earnings The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings may be used instead. e. Application of illiquidity discount The application of an illiquidity discount will be applied either through the calibration of a valuation against the most recent transaction, or by application of a specific discount. The discount applied where a calibration (see ‘g’ below) is not appropriate is typically 10%, reflecting that the majority of the investments held are substantial companies with some secondary market activity. f. 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. g. Transaction implied premium and discount Where there is an implied company valuation available as a result of an external arm’s length transaction, the ongoing valuation will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable companies and comparing this to a transaction implied valuation, and could result in an implied premium or discount compared to comparable companies at the point of transaction. This discount or premium will be considered in future valuations, and may be reduced due to factors such as period of time since the transaction and company performance. Where a calibrated approach is not appropriate, a discount for illiquidity will be applied as noted in (e) above. 104 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## 18 Financial Instruments (continued) ### 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 investments in quoted securities that are readily realisable. The Board provides guidance to the Managers as to the maximum exposure to any one holding and to the maximum aggregate exposure to substantial holdings. The Company has the power to take out borrowings, which give it access to additional funding when required. The Company's current borrowing facility is detailed in note 11 and the maturity profile of its borrowings is set out above. Under the terms of the borrowing facility, borrowings are repayable on demand at their current carrying value. ### 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 Managers make 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 Managers monitor 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 Managers. 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 Managers; and - cash is only held at banks that are regularly reviewed by the Managers. ### Credit risk exposure The maximum exposure to credit risk at 31 July was: | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Cash and cash equivalents | 4,205 | 12,442 | | Debtors and prepayments | 790 | 420 | | | **4,995** | **12,862** | None of the Company's financial assets are past due or impaired (2023 – none). ### Fair value of financial assets and financial liabilities The Directors are of the opinion that the carrying amount of financial assets and liabilities of the Company in the Balance Sheet approximate their fair value. ### Capital management The capital of the Company is its share capital and reserves as set out in note 14 together with its borrowings (see note 11). The objective of the Company is to invest in the Asia-Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital growth. The Company's investment policy is set out on page 39. In pursuit of the Company's objective, the Board has a responsibility for ensuring the Company's ability to continue as a going concern and details of the related risks and how they are managed are set out on pages 42 to 45. The Company has the authority to issue and buy back its shares (see pages 57 and 58) and changes to the share capital during the year are set out in notes 13 and 14. The Company does not have any externally imposed capital requirements other than the covenants on its loan which are detailed in note 11. 105 ## Shareholder ## information Pacific Horizon Investment Trust PLC ## Notice of Annual ## General Meeting Tram Stop Leith Walk Calton Square Omni Centre York Place John w Queen Street o Bus Lewis Station e R i d s n e r e St Andrew Square G Tram t e C a Stop e r l t o n H t i l l S e Street t h e i Balmoral L c e The Annual General Meeting of the Company will St Andrew Square o P l a St Andrew Square Hotel t e r l o W a C be held at the offices of Baillie Gifford & Co, Calton a l t o n R o a d A7 North Bridge Square, 1 Greenside Row, Edinburgh EH1 3AN, on A8 Princes Street Thursday, 21 November 2024 at 11.30am. Edinburgh Waverley Station To accurately reflect the views of shareholders of the By Rail: Edinburgh Waverley – approximately a 5 minute walk away Company, the Board intends to hold the AGM voting on a poll, rather than on a show of hands as has By Bus: been customary. Lothian Buses local services include: 1, 3, 5, 7, 8, 10, 14, 15, 16, 25, 34 The Board encourages all shareholders to submit proxy voting forms as soon as possible and, in any By Tram: event, by no later than 11.30am on 19 November Stops at St Andrew Square and Picardy Place 2024. We would encourage shareholders to monitor Access to Waverley Train Station on foot the Company’s page of the Managers’ website at pacifichorizon.co.uk. Should shareholders have questions for the Board or the Managers or any queries as to how to vote, or how to attend the meeting, 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. Georg 107 Shareholder information | Notice is hereby given that an Annual General | grant rights to subscribe for or convert any | | --- | --- | | Meeting of Pacific Horizon Investment Trust PLC | security into shares in the Company, up to a | | (the ‘Company’) will be held at the offices of Baillie | maximum nominal amount of £906,168; and | Gifford & Co, Calton Square, 1 Greenside Row, b. the authority given by this Resolution: Edinburgh EH1 3AN on Thursday, 21 November 2024 at 11.30am for the purposes of considering i. shall be in addition to all pre-existing and, if thought fit, passing the following Resolutions, authorities under section 551 of the Act; of which Resolutions 1 to 11 will be proposed as and ordinary resolutions and Resolutions 12 and 13 ii. unless renewed, revoked or varied in will be proposed as special resolutions: accordance with the Act, shall expire on 21 February 2026 or, if earlier, at the | Ordinary business | | conclusion of the Annual General Meeting | | --- | --- | --- | | 01. To receive and adopt the Company’s Annual | | of the Company to be held in 2025 save | | | Report and Financial Statements for the | that the Company may, before such expiry, | | | financial year ended 31 July 2024, together | make any offer or enter into an agreement | | | with the Reports of the Directors and the | which would or might require the allotment | | | Independent auditor’s report thereon. | of shares in the Company, or the grant of | rights to subscribe for or to convert any 02. To approve the Directors’ Annual Report on security into shares in the Company, after Remuneration for the financial year ended such expiry. 31July 2024. 12. That, subject to the passing of Resolution 11 03. To declare a final dividend of 2.65p per ordinary above, (the ‘Allotment Authority’), the Directors share. be given power pursuant to sections 570 and 04. To elect Mr RP Yates as a Director of the 573 of the Companies Act 2006 (the ‘Act’) to Company. allot equity securities (within the meaning of section 560(1) of the Act) for cash pursuant 05. To re-elect Sir RW Chote as a Director of the to the Allotment Authority, and to sell treasury Company. shares for cash, as if section 561(1) of the Act 06. To re-elect Ms W Hee as a Director of the did not apply to such allotment or sale, provided Company. that such power: 07. To re-elect Ms AC Lane as a Director of the a. shall be limited to the allotment of equity Company. securities or the sale of treasury shares up to an aggregate nominal amount of £906,168; 08. To re-elect Mr RF Studwell as a Director of the Company. b. shall be in addition to all pre-existing powers under sections 570 and 573 of the Act; and 09. To reappoint BDO LLP as Independent auditor of the Company to hold office until the conclusion c. shall expire at the same time as the Allotment of the next Annual General Meeting at which Authority, save that the Company may the Financial Statements are laid before the before expiry of the power conferred on the Company. Directors by this Resolution make an offer or agreement which would or might require 10. To authorise the Directors to determine the equity securities to be allotted after such remuneration of the Independent auditor of expiry. theCompany. 13. That, in substitution for any existing authority, 11. That: but without prejudice to the exercise of any such a. the Directors be generally and authority prior to the date hereof, the Company unconditionally authorised pursuant to be generally and unconditionally authorised, in section 551 of the Companies Act 2006 (the accordance with section 701 of the Companies ‘Act’) to allot shares in the Company, or to 108 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Act 2006 (the ‘Act’) to make market purchases (within the meaning of section 693(4) of the Act) of its ordinary shares, (either for retention as treasury shares for future reissue, resale, transfer or for cancellation), provided that: a. the maximum number of ordinary shares hereby authorised to be purchased is 13,583,469 or, if less, the number representing approximately 14.99 per cent. of the issued share capital of the Company on the date on which this Resolution is passed; b. the minimum price (excluding expenses) which may be paid for each ordinary share shall be the nominal value of that share; c. the maximum price (excluding expenses) which may be paid for any ordinary share purchased pursuant to this authority shall not be more than the higher of: i. 5 per cent. above the average closing price on the London Stock Exchange of an ordinary share over the five business days immediately preceding the date of purchase; and ii. the higher price of the last independent trade of an ordinary share and the highest current independent bid for such a share on the London Stock Exchange; and d. unless previously varied, revoked or renewed by the Company in general meeting, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2025 save that the Company may, prior to the expiry of such authority, enter into a contract or contracts to purchase ordinary shares under such authority which will or might be completed or executed wholly or partly after the expiration of such authority and may make a purchase of ordinary shares pursuant to any such contract or contracts. By Order of the Board Baillie Gifford & Co Limited Company Secretaries 16 September 2024 109 Shareholder information Notes personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his/her CREST 01. As a member you are entitled to appoint a proxy or proxies sponsor or voting service provider(s) take(s)) such action as to exercise all or any of your rights to attend, speak and vote shall be necessary to ensure that a message is transmitted at the AGM. A proxy need not be a member of the Company by means of the CREST service by any particular time. In this but must attend the AGM to represent you. You may appoint connection, CREST members and, where applicable, their more than one proxy provided each proxy is appointed CREST sponsors or voting service provider(s) are referred, to exercise rights attached to different shares. You can in particular, to those sections of the CREST Manual only appoint a proxy using the procedure set out in these concerning practical limitations of the CREST system notes and the notes to the proxy form. You may not use andtimings. any electronic address provided either in this notice or any related documents (including the Financial Statements 06. The Company may treat as invalid a CREST Proxy Instruction and proxy form) to communicate with the Company for any in the circumstances set out in Regulation 35(5)(a) of the purpose other than those expressly stated. Uncertificated Securities Regulations 2001. 02. To be valid any proxy form or other instrument appointing a 07. The return of a completed proxy form or other instrument of proxy, together with any power of attorney or other authority proxy will not prevent you attending the AGM and voting in under which it is signed or a certified copy thereof, must be person if you wish. received by post or (during normal business hours only) by 08. Pursuant to Regulation 41 of the Uncertificated Securities hand at the Registrars of the Company at Computershare Regulations 2001 and section 311 of the Companies Investor Services PLC, The Pavilions, Bridgwater Road, Act 2006 the Company specifies that to be entitled to Bristol BS99 6ZY or eproxyappointment.com no later than attend and vote at the AGM (and for the purpose of the 11.30am on 19 November 2024 (or 48 hours (excluding determination by the Company of the votes they may non-working days) before any adjourned meeting). cast), shareholders must be registered in the Register of 03. CREST members who wish to appoint a proxy or proxies Members of the Company no later than 48 hours (excluding through the CREST electronic proxy appointment service non-working days) prior to the commencement of the AGM may do so by using the procedures described in the or any adjourned meeting. Changes to the Register of CREST Manual and/or by logging on to the website Members after the relevant deadline shall be disregarded in euroclear.com/CREST. CREST personal members or other determining the rights of any person to attend and vote at CREST sponsored members, and those CREST members the meeting. who have appointed a voting service provider(s), should refer 09. Any person to whom this notice is sent who is a person to their CREST sponsor or voting service provider(s), who nominated under section 146 of the Companies Act 2006 to will be able to take the appropriate action on their behalf. enjoy information rights (a ‘Nominated Person’) may, under 04. In order for a proxy appointment or instruction made an agreement between him/her and the shareholder by using the CREST service to be valid, the appropriate whom he/she was nominated, have a right to be appointed CREST message (a ‘CREST Proxy Instruction’) must be (or to have someone else appointed) as a proxy for the properly authenticated in accordance with Euroclear UK & Annual General Meeting. If a Nominated Person has no such International Limited’s specifications, and must contain the proxy appointment right or does not wish to exercise it, he/ information required for such instruction, as described in she may, under any such agreement, have a right to give the CREST Manual. The message, regardless of whether it instructions to the shareholder as to the exercise of voting constitutes the appointment of a proxy or is an amendment rights. to the instruction given to a previously appointed proxy 10. The statement of the rights of shareholders in relation to must, in order to be valid, be transmitted so as to be received the appointment of proxies in Notes 1 and 2 above does by the Company’s registrar (ID 3RA50) no later than 11.30am not apply to Nominated Persons. The rights described in on 19 November 2024 (or 48 hours (excluding non-working those Notes can only be exercised by shareholders of the days) before any adjourned meeting). For this purpose, the Company. time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST 11. Under section 338 of the Companies Act 2006, members Application Host) from which the Company’s registrar is meeting the qualification criteria set out in note 14 below able to retrieve the message by enquiry to CREST in the may, subject to certain conditions, require the Company manner prescribed by CREST. After this time any change of to circulate to members notice of a resolution which may instructions to proxies appointed through CREST should be properly be moved and is intended to be moved at that communicated to the appointee through othermeans. meeting. The conditions are that: (a) the resolution must not, if passed, be ineffective (whether by reason of inconsistency 05. CREST members and, where applicable, their CREST with any enactment or the Company’s constitution or sponsors or voting service provider(s) should note that otherwise); (b) the resolution must not be defamatory of any Euroclear UK & International Limited does not make person, frivolous or vexatious; and (c) the request: (i) may available special procedures in CREST for any particular be in hard copy form or in electronic form; (ii) must identify message. Normal system timings and limitations will, the resolution of which notice is to be given by either setting therefore, apply in relation to the input of CREST Proxy out the resolution in full or, if supporting a resolution sent by Instructions. It is the responsibility of the CREST member another member, clearly identifying the resolution which is concerned to take (or, if the CREST member is a CREST 110 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC being supported; (iii) must be authenticated by the person or persons making it; and (iv) must be received by the Company not later than 9 October 2024. 12. Under section 338A of the Companies Act 2006, members meeting the qualification criteria set out at note 14 below may require the Company to include in the business to be dealt with at the Annual General Meeting a matter (other than a proposed resolution) which may properly be included in the business (a matter of business). The request must have been received by the Company no later than 9 October 2024. The conditions are that the matter of business must not be defamatory of any person, frivolous or vexatious. The request must identify the matter of business by either setting it out in full or, if supporting a statement sent by another member, clearly identify the matter of business which is being supported. The request must be accompanied by a statement setting out the grounds for the request. Members seeking to do this should write to the Company providing their full name and address. 13. Under section 527 of the Companies Act 2006, members meeting the qualification criteria set out at note 12 below may require the Company to publish, on its website, (without payment) a statement (which is also passed to the Auditor) setting out any matter relating to the audit of the Company's Financial Statements, including the auditor's Report and the conduct of the audit. Such requests must be made in writing and must state your full name and address. 14. In order to be able to exercise the members' rights in note 11 to 13, the relevant request must be made by: (a) members representing at least 5% of the total voting rights of all the members who have a right to vote on the resolution to which the requests relate; or (b) at least 100 members who have a right to vote on the resolution to which the requests relate and hold shares in the Company on which there has been paid up an average sum, per member, of at least £100. Such requests should be sent to the Company at Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN. 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 pacifichorizon.co.uk. 16. Members have the right to ask questions 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 September 2024 (being the last practicable date prior to the publication of this notice) the Company's issued share capital consisted of 90,616,876 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 12 September 2024 were 90,616,876 votes. 19. Any person holding 3 per cent. 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 Guidance and Transparency Rules. 20. No Director has a contract of service with the Company. 111 Shareholder information # Further shareholder information Pacific Horizon is an investment trust. Investment trusts offer investors the following: - participation in a diversified portfolio of shares; - constant supervision by experienced professional managers; and - the Company is free from UK capital gains tax on capital profits realised within its portfolio although investors are still liable for capital gains tax on profits when selling their investment. How to invest The Company's shares are traded on the London Stock Exchange. They can be bought by placing an order with a stockbroker, or by asking a professional adviser to do so. If you are interested in investing directly in Pacific Horizon, you can do so online. There are a number of companies offering real time online dealing services. Sources of further information on the Company The price of shares is quoted daily in the Financial Times (under 'Investment Companies') and can also be found on the Company's page of the Managers' website at pacifichorizon.co.uk, Trustnet at trustnet.com and on other financial websites. Monthly factsheets are also available on the Baillie Gifford website. These are available from Baillie Gifford on request. Pacific Horizon Share Identifiers ISIN GB0006667470 Sedol 0666747 Ticker PHI Legal Entity Identifier VLGEI9B8R0REWKB0LN95 Key dates Any dividend in respect of a financial year will be paid by way of a single final payment shortly after the Annual General Meeting. The Annual General Meeting is normally held in October or November. Capital gains tax For Capital Gains Tax purposes, the cost to shareholders who subscribed for the conversion shares, subsequently converted into new ordinary shares (with warrants attached), is apportioned between the ordinary shares and the warrants as set out in the placing and offer document dated 5 March 1996. The attributable costs are: | Cost of each ordinary share | 53.45p | | --- | --- | | Cost of each warrant | 16.52p | Market values on 17 April 1996 (first day of dealing) were as follows (Source: Thomson Reuters): | Ordinary share | 55.00p | | --- | --- | | Warrant | 17.00p | Share register enquiries Computershare Investor Services PLC maintains the share register on behalf of the Company. In the event of queries regarding shares registered in your own name, please contact the Registrars on 0370 707 1229. This helpline also offers an automated self-service functionality (available 24 hours a day, 7 days a week) which allows you to: - hear the latest share price; - confirm your current share holding balance; - confirm your payment history; and - order Change of Address, Dividend Bank Mandate and Stock Transfer forms. You can also check your holding on the Registrars' website at investorcentre.co.uk. They also offer a free, secure share management website service which allows you to: - view your share portfolio and see the latest market price of your shares; - calculate the total market price of each shareholding; - view price histories and trading graphs; - register to receive communications from the Company, including the Annual Report and Financial Statements, in electronic format; - update bank mandates and change address details; and - use online dealing services. To take advantage of this service, please log in at investorcentre.co.uk and enter your Shareholder Reference Number and Company Code (this information can be found on the last dividend voucher or your share certificate). 112 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Dividend reinvestment plan Computershare operate a Dividend Reinvestment Plan which can be used to buy additional shares instead of receiving your dividend via cheque or into your bank account. For further information log on to investorcentre.co.uk and follow the instructions or telephone 0370 702 0000. ## Electronic proxy voting If you hold stock in your own name you can choose to vote by returning proxies electronically at eproxyappointment.com. If you have any questions about this service please contact Computershare on 0370 707 1229. ## CREST proxy voting If you are a user of the CREST system (including a CREST Personal Member), you may appoint one or more proxies or give an instruction to a proxy by having an appropriate CREST message transmitted. For further information please refer to the CREST Manual. ## Data protection The Company is committed to ensuring the confidentiality and security of any personal data provided to it. Further details on how personal data is held and processed on behalf of the Company can be found in the privacy policy available on the Company's page of the Managers' website pacifichorizon.co.uk. ## Alternative Investment Fund Managers Regulations (AIFMR) In accordance with the UK Alternative Investment Fund Managers Regulations, information in relation to the Company's leverage and the remuneration of the Company's AIFM, Baillie Gifford & Co Limited, is required to be made available to investors. In accordance with the Regulations, the AIFM's remuneration policy is available on the Managers' website at bailliegifford.com or on request (see contact details on page 120). The numerical remuneration disclosures in respect of the AIFM's relevant reporting period (year ended 31 March 2024) are also available at bailliegifford.com. The Company's maximum and actual leverage (see Glossary of terms and Alternative Performance Measures on pages 118 and 119.) levels at 31 July 2024 are shown below: ### Leverage exposure | | Gross method | Commitment method | | --- | --- | --- | | Maximum limit | 2.50:1 | 2.50:1 | | Actual | 1.01:1 | 1.01:1 | ## Automatic Exchange of Information In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Pacific Horizon Investment Trust PLC is required to collect and report certain information about certain shareholders. The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, Pacific Horizon Investment Trust PLC will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities. All new shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information. For further information, please see HMRC's Quick Guide: Automatic Exchange of Information – information for account holders gov.uk/guidance/automatic-exchange-of-information-account-holders. 113 Shareholder information ## Communicating ## with shareholders Trust magazine Pacific Horizon Investment Trust web page at pacifichorizon.co.uk Trust magazine Pacific Horizon on the Web Trust is the Baillie Gifford investment trust magazine which is Up-to-date information about Pacific Horizon, can be found on the published twice a year. It provides an insight to our investment Company’s page of the Managers’ website at pacifichorizon co.uk. approach by including interviews with our portfolio managers, You will find full details on Pacific Horizon, including recent as well as containing investment trust news, investment features portfolio information and performance figures. and articles about the trusts managed by Baillie Gifford, including Pacific Horizon. Trust plays an important role in helping to explain Client relations team contact details our products so that readers can really understand them. You can contact the Baillie Gifford Client Relations Team by You can subscribe to Trust magazine or view a digital copy at telephone, email or post: bailliegifford.com/trust Telephone: 0800 917 2112 Your call may be recorded for training or monitoring purposes. Suggestions and questions Email: trustenquiries@bailliegifford.com Any suggestions on how communications with shareholders can Website: bailliegifford.com be improved are welcomed. Please contact the Baillie Gifford Client Relations Team and give them your suggestions. They will Address: also be very happy to answer questions that you may have about Baillie Gifford Client Relations Team Pacific Horizon. Calton Square 1 Greenside Row Edinburgh EH1 3AN Please note that Baillie Gifford is not permitted to give financial advice. If you would like advice, please ask an authorised intermediary. 114 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC Pacific Horizon: capturing growth Trip notes: Vietnam South-east Asia’s rising in Asia’s evolving markets exportstars by Roderick Snell by Roderick Snell by Ben Durrant The remarkable turnaround and future Visiting Saigon, Roderick Snell explores Join Ben Durrant, deputy portfolio strategies of the Baillie Gifford Pacific what went right for the pro-business manager of Pacific Horizon Investment Horizon Investment Trust. communist country. Trust PLC as he discusses unearthing growth companies in Vietnam, Indonesia and Thailand. 115 Shareholder information ## Sustainable Finance Disclosure ## Regulation (‘SFDR’) The EU Sustainable Finance Disclosure Regulation (‘SFDR’) Whilst consideration is given to sustainability matters, there are does not have a direct impact in the UK due to Brexit, however, no restrictions on the investment universe of the Company, unless it applies to third-country products marketed in the EU. As Pacific otherwise stated within in its Investment Objective & Policy. Horizon is marketed in the EU by the AIFM, BG & Co Limited, Baillie Gifford & Co can invest in any companies it believes could via the National Private Placement Regime (‘NPPR’) the following create beneficial long-term returns for investors. However, this might disclosures have been provided to comply with the high-level result in investments being made in companies that ultimately requirements of SFDR. cause a negative outcome for the environment or society. The AIFM has adopted Baillie Gifford & Co’s ESG Principles and More detail on the Investment Manager’s approach to Guidelines as its policy on integration of sustainability risks in sustainability can be found in the ESG Principles and Guidelines investment decisions. document, available publicly on the Baillie Gifford website bailliegifford.com and by scanning the QR code below. Baillie Gifford & Co believes that a company cannot be financially sustainable in the long run if its approach to business is The underlying investments do not take into account the EU fundamentally out of line with changing societal expectations. criteria for environmentally sustainable economic activities It defines ‘sustainability’ as a deliberately broad concept which established under the EU Taxonomy Regulation. encapsulates a company’s purpose, values, business model, culture, and operating practices. Baillie Gifford & Co’s approach to investment is based on identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To do this it looks beyond current financial performance, undertaking proprietary research to build up an in-depth knowledge of an individual company and a view on its long-term prospects. This includes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment. The likely impact on the return of the portfolio from a potential or actual material decline in the value of investment due to the occurrence of an environmental, social or governance event or condition will vary and will depend on several factors including but not limited to the type, extent, complexity and duration of an event or condition, prevailing market conditions and existence of any mitigating factors. 116 Annual Report and Financial Statements 2024 Pacific Horizon Investment Trust PLC ## Third party data ## provider disclaimer No third party data provider (‘Provider’) makes any warranty, Historical data and analysis should not be taken as an indication express or implied, as to the accuracy, completeness or timeliness or guarantee of any future performance analysis, forecast or of the data contained herewith nor as to the results to be obtained prediction. The MSCI information is provided on an ‘as is’ basis by recipients of the data. 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FTSE Russell conclusions, or any course of action determined, by you or any is a trading name of certain LSE Group companies. ‘FTSE®’ third party, whether or not based on the content, information or ‘Russell®’, ‘FTSE Russell®’, is/are a trade mark(s) of the relevant materials contained herein. LSE Group companies and is/are used by any other LSE Group company under license. All rights in the FTSE Russell indexes MSCI Index data or data vest in the relevant LSE Group company which owns the Source: MSCI. The MSCI information may only be used for your index or the data. Neither LSE Group nor its licensors accept internal use, may not be reproduced or redisseminated in any any liability for any errors or omissions in the indexes or data form and may not be used as a basis for or a component of any and no party may rely on any indexes or data contained in this financial instruments or products or indices. None of the MSCI communication. No further distribution of data from the LSE information is intended to constitute investment advice or a Group is permitted without the relevant LSE Group company’s recommendation to make (or refrain from making) any kind of express written consent. The LSE Group does not promote, investment decision and may not be relied on as such. sponsor or endorse the content of this communication. 117 Shareholder information # Glossary of terms and Alternative Performance Measures ('APM') ## 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). ## Shareholders' funds and net asset value Also described as shareholders' funds, net asset value ('NAV') is the value of all assets held less all liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares (excluding treasury shares) in issue. ## Net liquid assets Net liquid assets comprise current assets less current liabilities (excluding borrowings) and provisions for deferred liabilities. ## Discount/premium (APM) As stock markets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium. | | 2024 | 2023 | | --- | --- | --- | | Net asset value per ordinary share (a) | 664.01p | 637.18p | | Share price (b) | 612.00p | 586.00p | | **(Discount)/premium ((b) - (a)) ÷ (a)** | **(7.8%)** | **(8.0%)** | ## Turnover Turnover is calculated as the minimum of purchases and sales in a month, divided by the average market value of the portfolio, summed to get rolling 12 month turnover data. ## Compound annual return (APM) The compound annual return converts the return over a period of longer than one year to a constant annual rate of return applied to the compound value at the start of each year. ## Ongoing charges (APM) The total recurring expenses (excluding the Company's cost of dealing in investments and borrowing costs) incurred by the Company as a percentage of the daily average net asset value, as detailed below: | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Investment management fee | 3,458 | 3,419 | | Other administrative expenses | 830 | 762 | | **Total expenses (a)** | **4,288** | **4,181** | | Average net asset value (b) | 580,820 | 578,071 | | **Ongoing charges ((a) ÷ (b) expressed as a percentage)** | **0.74%** | **0.72%** | ## China 'A' shares 'A' Shares are shares of mainland China-based companies that trade on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Since 2003, select foreign institutions have been able to purchase them through the Qualified Foreign Institutional Investor system. ## Treasury shares The Company has the authority to make market purchases of its ordinary shares for retention as Treasury Shares for future reissue, resale, transfer, or for cancellation. Treasury Shares do not receive distributions and the Company is not entitled to exercise the voting rights attaching to them. ## Unlisted (private) company An unlisted or private company means a company whose shares are not available to the general public for trading and are not listed on a stock exchange. ## 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. 118 Annual Report and Financial Statements 2024 Pacific Horizon Investment 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. In periods where no dividend is paid, the total return equates to the capital return. | | | | 2024 | | 2024 | 2023 | | | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | NAV | Share price | | NAV | Share price | | | | Closing NAV per share/share price (a) 664.01p 612.00p | | | | | | 637.18p | | 586.00p | | | Dividend adjustment factor | * | (b) 1.0060 1.0060 1.0056 1.0057 | | | | | | | | Adjusted closing NAV per share/share price (c) = (a) x (b) 667.99p 615.67p 640.75p 589.34p Opening NAV per share/share price (d) 637.18p 586.00p 664.65p 647.00p Total return (c) ÷ (d) -1 4.8% 5.1% (3.6%) (8.9%) * The dividend adjustment factor is calculated on the assumption that the final dividend of 3.25p (31 July 2023 – 3.00p) paid by the Company during the period was reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date. Gearing (APM) Gross gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds. At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest 2024 2023 in additional investments for its portfolio. The effect of the £’000 £’000 borrowing on the shareholders’ assets is called ‘gearing’. If the Company’s assets grow, the shareholders’ assets grow Borrowings (at book value) (a) – – proportionately more because the debt remains the same. But if Shareholders’ funds (b) 601,970 580,355 the value of the Company’s assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but Gross gearing: – – can adversely impact performance in falling markets. (a) as a percentage of (b) Gearing is borrowings at book less cash and brokers’ balances expressed as a percentage of shareholders’ funds. Leverage (APM) For the purposes of the Alternative Investment Fund Managers 2024 2023 Regulations leverage is any method which increases the £’000 £’000 Company’s exposure, including the borrowing of cash and the use Borrowings (at book cost) (a) – – of derivatives. It is expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on a Less: cash and cash equivalents (4,205) (12,442) gross and a commitment method. Under the gross method, Less: sales for subsequent – – exposure represents the sum of the Company’s positions after the settlement deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment Add: purchases for subsequent 273 – method, exposure is calculated without the deduction of sterling settlement cash balances and after certain hedging and netting positions are Adjusted borrowings (b) (3,932) (12,442) offset against each other. Shareholders’ funds (c) 601,970 580,355 Gearing: (1%) (2%) (b) as a percentage of (c) 119 Shareholder information # Company information Directors Chairman: RP Yates RW Chote W Hee AC Lane RF Studwell Registrar Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ T: +44 (0)370 707 1229 Independent Auditor BDO LLP 55 Baker Street London W1U 7EU Registered office Computershare Investor Services PLC Moor House 120 London Wall London EC2Y 5ET Depository The Bank of New York Mellon (International) Limited 160 Queen Victoria Street London EC4V 4LA 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 Alternative Investment Fund Managers and Company Secretaries Baillie Gifford & Co Limited Calton Square 1 Greenside Row Edinburgh EH1 3AN T: +44 (0)131 275 2000 bailliegifford.com Company Broker JP Morgan Cazenove 25 Bank Street Canary Wharf London E14 5JP Company details pacifichorizon.co.uk Company Registration No. 02342193 ISIN: GB0006667470 Sedol: 0666747 Ticker: PHI Legal Entity Identifier: VLGEI9B8R0REWKB0LN95 120 Annual Report and Financial Statements 2024 ## pacifichorizon.co.uk Calton Square, 1 Greenside Row, Edinburgh EH1 3AN Telephone +44 (0)131 275 2000