The Schiehallion Fund Limited
Legal Entity Identifier: 213800NQOLJA1JCWXQ56
Regulated Information Classification: Annual Financial and Audit Reports
Annual Report and Financial Statements
Further to the preliminary statement of audited annual results announced to the Stock Exchange on 26 March 2025, The Schiehallion Fund Limited ("Schiehallion" or "the Company") announces that the Company's Annual Report and Financial Statements for the year ended 31 January 2025, including the Notice of Annual General Meeting, has today been posted to shareholders and submitted electronically to the National Storage Mechanism where it will shortly be available for inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism.
It is also available on the Schiehallion page of the Baillie Gifford website at: schiehallionfund.com (as is the preliminary statement of audited annual results announced by the Company on 26 March 2025).
Proposed Amendment to Articles of Incorporation
A special resolution is being proposed at the AGM, Resolution 10, which seeks shareholder approval for the
adoption of new Articles of Incorporation (the 'New Articles'). The proposed amendment being introduced in the New Articles relates to an amendment of article 122(5) of the existing Articles of Incorporation so as to allow the Directors (acting in their entire discretion) to determine the location of board meetings rather than, as is currently the case, the location of the meeting being deemed to take place from where the Chairperson participates at the start of the meeting.
A copy of the existing Articles and the proposed amended Articles are available on the Company page of the Baillie Gifford website at: schiehallionfund.com
The Company's Annual General Meeting (AGM) is being convened at 11.15am on Thursday, 22 May 2025, at the offices of Alter Domus (Guernsey) Limited, North Suite First Floor, Regency Court Glategny Esplanade, St Peter Port, Guernsey, Channel Islands GY1 1WW.
The Board encourages all shareholders to submit proxy voting forms, appointing the chairperson of the AGM, as soon as possible and, in any event, by no later than 11.15am on 20 May 2025.
We would encourage shareholders to monitor the Company's website at schiehallionfund.com. Should shareholders have questions for the Board or the Investment Manager or any queries as to how to vote, they are welcome as always to submit them by email to
adgg-aafa-f@alterdomus.com or call Alter Domus (Guernsey) Limited on +44 (0) 1481 742 250.
Alter Domus (Guernsey) Limited may record your call.
If you or, if appointed, your proxy wish to attend the Annual General Meeting electronically you, or your proxy, will have the same right to attend, be counted in the quorum, participate in the business of the Annual General Meeting, speak and vote as if you, or your proxy, had attended the meeting in person. Details of how to attend the Annual General Meeting electronically can be obtained from Alter Domus (Guernsey) Limited on the contact details provided above.
Responsibility Statement of the Directors in respect of the Annual Report and Financial Statements
The Schiehallion Fund Limited Directors confirm that, to the best of their knowledge:
¾ the Financial Statements set out in the Annual Report and Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
¾ the Strategic Report set out in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties they face.
The Directors consider the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
Principal and emerging risks relating to the Company
As explained on pages 41 to 45 of the Annual Report and Financial Statements, there is a process for identifying, evaluating and managing the risks, including emerging risks, faced by the Company on a regular basis. The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. A description of these risks and how they are being managed or mitigated is set out in the table below.
| What is the risk? | How is it managed? |
| Current assessment of risk |
| Investment and strategic risk | | | |
| Liquidity of investments The Company's investments are predominantly in private investee companies or companies which have recently completed an IPO. Such investments may not be liquid or may have restrictions on sale or transfer of shares. This may limit the Company's ability to realise investments at short notice or at all.
| By diversification of the portfolio, in accordance with the Company's investment limits and risk diversification policies.
|
| Risk Level: Moderate
Stable: The Company has not seen any significant impact on underlying liquidity of investments, however, the economic climate, in a continuation of trends observed in the previous year, has continued to depress IPO activity. |
| Market, economic, political and environmental risks From time to time a large proportion of the total value of the Company's portfolio could be concentrated in a limited number of investee companies, which could be adversely affected by an unexpected change in their markets, by governmental intervention or by a reputational issue. This could have a material impact on the overall value of the Company's portfolio and consequential adverse effects on the Company's share price.
| The Board assesses this risk by considering, at each meeting, metrics which have contributed to performance as well as discussion with the portfolio managers on specific conditions which the underlying investee companies face. This risk is also managed by the Company's investment diversification policy. |
| Risk Level: High
Increasing: This risk is considered to be increasing as governments and consumers around the world continue to assess the impact of heightened geopolitical tensions and conflicts as well as challenging macroeconomic conditions. |
| Valuation risk The Company invests in late stage private businesses which are valued in accordance with International Private Equity and Venture Capital Valuation ('IPEV') Guidelines using appropriate valuation methods. Such methods include an element of judgement which may lead to a material mis‑statement of the valuation and consequently of the Company's net asset value. | The Investment Manager has a robust valuation methodology, which is applied consistently. The Investment Manager's valuation process revalues each of the private company investments every 3 months and additional valuations are carried out in response to trigger events to ensure the investments are carried at fair value. The valuation process is overseen by the Private Companies Valuations Group at Baillie Gifford which is independent from the portfolio managers and which takes advice from an independent third party (S&P Global). The valuations are subject to review and challenge by the Board every 6 months and are subject to scrutiny annually by the external Auditor. |
| Risk Level: Moderate
Stable: This risk is seen as stable. In periods of market volatility the Private Company Valuations Group will perform trigger analyses and, if appropriate, revalue the affected investments, as described in the report on page 31 of the Annual Report and Financial Statements. |
| Investment strategy risk Pursuing an investment strategy to fulfil the Company's objective which the market perceives to be unattractive or inappropriate, or ineffective implementation of the Company's investment strategy, may lead to reduced returns for shareholders and, as a result, decreased demand for the Company's shares. This may lead to the Company's shares trading at a widening discount to their net asset value.
| The Board regularly reviews and monitors the Company's investment policy and strategy, the investment portfolio and its performance, the level of discount/premium to net asset value at which the shares trade and movements in the share register. A strategy meeting is also held annually. In addition, the Investment Manager keeps in close contact with key shareholders and provides regular feedback to the Board.
|
| Risk Level: High
Increasing: The risk is seen as increasing as the market's appetite for direct or indirect investment in growth stocks is reduced due to ongoing macroeconomic and geopolitical concerns. |
| Discount risk The discount/premium at which the Company's shares trade relative to its net asset value can change. Such an imbalance can diminish the attractiveness of the Company's shares to existing investors and lead to a lack of liquidity in the Company's share trading.
| The Board monitors the level of discount/premium at each Board meeting. The Company has authorities in place to buy back or issue shares, when deemed to be in the best interests of the Company and its shareholders.
|
| Risk Level: High
Decreasing: The discount narrowed over the year to 31 January 2025. The Directors continue to buy back shares when it is deemed to be in the best interests of the Company and its shareholders. |
| Climate and governance risk Perceived problems on environmental, social and governance ('ESG') matters in an investee company could lead to that company's shares being less attractive to investors, adversely affecting its share price, in addition to potential valuation issues arising from any direct impact of the failure to address the ESG weakness on the operations or management of the investee company (for example in the event of an industrial accident or spillage). Repeated failure by the Investment Manager to identify ESG weaknesses in investee companies could lead to the Company's own shares being less attractive to investors, adversely affecting its own share price. In addition, the valuation of investments could be impacted by climate change due to climate-related operational challenges, changes in end demand or failure to identify a pathway to Net Zero. | This is mitigated by the Investment Manager's ESG stewardship and engagement policies, which are integrated into the investment process, as well as the extensive upfront and ongoing due diligence which the Investment Manager undertakes on each investee company. This includes the risk inherent in climate change (see page 66 of the Annual Report and Financial Statements).
|
| Risk Level: Moderate
Stable: The Investment Manager continues to employ strong ESG stewardship and engagement policies. |
| External risks | | | |
| Political and associated economic risk Global political changes resulting in policy changes in areas in which the Company invests or may invest may have practical consequences for the Company and impact financial performance.
| Political developments and other social trends are closely monitored by the Board and are regularly discussed at Board meetings.
|
| Risk Level: High
Increasing: This risk is increasing as governments and consumers around the world continue to assess the impact of ongoing conflicts and global economic and political tensions. |
| Legal and regulatory risk Changes to the regulatory environment could negatively impact the Company. Failure to comply with applicable legal, regulatory and tax requirements could lead to suspension of the Company's Stock Exchange listing, financial penalties, a qualified Audit Report or the Company being subject to tax on capital gains.
| To mitigate this risk, Baillie Gifford's Business Risk, Internal Audit and Compliance Departments provide regular reports to the Audit Committee on Baillie Gifford's monitoring programmes. The Administrator provides regular compliance reports to the Audit Committee to confirm the relevant Guernsey submissions are made to protect the legal and tax status of the Company. Major regulatory change could impose disproportionate compliance burdens on the Company. In such circumstances representation is made to ensure that the special circumstances of investment companies 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 Rules and the Market Abuse Regulations with reference to inside information. |
| Risk Level: Low
Stable: All control procedures are deemed to be working effectively. There have been no material regulatory changes that have occurred during the year. |
| Operational risks | | | |
| Performance and reliance on third party service providers In common with most other investment companies the Company has no direct employees and relies entirely for its operations on third party service providers. Failure of the Investment Manager's systems or those of another service provider, such as the Custodian and Depositary, could lead to an inability to accurately report or lead to a misappropriation of assets.
| The Audit Committee receives six monthly reports from the Investment Manager's Business Risk Department on their monitoring programme of internal controls. The Audit Committee also receives ISAE 3402 or equivalent reports on the Investment Manager and other service providers. These reports are reviewed by Baillie Gifford's Business Risk Department and a summary of the key points is reported to the Audit Committee and any concerns are investigated.
|
| Risk Level: Low
Stable: All control procedures are deemed to be working effectively. Portfolio management and all regulatory and administrative tasks have continued uninterrupted during the year. |
| Cyber security threats Errors, fraud or control failures by the Company's key service providers or loss of data through increasing cyber threats or business continuity interruptions could damage the Company's reputation or investors' interests or result in losses.
| The Audit Committee receives confirmation that key service providers have appropriate cyber/ IT policies to ensure that controls are in place including business continuity and disaster recovery arrangements.
|
| Risk Level: Moderate
Increasing: This risk is seen as increasing due to recent indications that the continuation of geopolitical tensions could lead to more cyber attacks. Emerging technologies, including AI, could potentially increase information security risks. In addition, service providers operate a hybrid approach of remote and office working, thereby increasing the potential of a cyber security threat. |
| Key professionals Loss of key professionals, particularly in relation to the Investment Manager could impact the Company's ability to implement its investment strategy.
| The Board reviews the Investment Manager's performance annually as well as the resources of the Investment Manager for attracting and retaining talent. |
| Risk Level: Low
Stable: All procedures are satisfactory. |
| Emerging Risks As explained on pages 64 to 65 of the Annual Report and Financial Statements 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. Emerging risks are considered under the categories noted above rather than included as discrete risks. | |||
Increasing risk Decreasing risk No change
Baillie Gifford & Co Limited
9 April 2025
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
