REG - Baillie GiffordChina - Baillie Gifford China Growth Trst Half Year Report
01/10/2024 07:00
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RNS Number : 3328G Baillie Gifford China Grwth TrstPLC 01 October 2024
RNS Announcement
Baillie Gifford China Growth Trust plc
Legal entity identifier: 213800KOK5G3XYI7ZX18
Regulated information classification: Interim financial report.
Results for the six months to 31 July 2024
The following is the unaudited Interim Financial Report for the six months to
31 July 2024 which was approved by the Board on 30 September 2024.
Summary of unaudited results
31 July 31 January 2024 % change
2024 (audited)
Total assets (before deduction of bank loans) £133.3m £125.3m
Bank loans £5.9m £5.9m
Shareholders' funds £127.4m £119.4m
Net asset value per ordinary share 210.88p 193.06p 9.2
Share price 186.50p 181.00p 3.0
Benchmark(†#) 9.5
Discount (11.6%) (6.2%)
Active share(‡) 69% 72%
Six months to Six months to
31 July 2024 31 July 2023
Revenue earnings per ordinary share 2.40p 2.15p
Six months to Six months to
31 July 2024 31 July 2023
Total returns (%)(#‡)
Net asset value per ordinary share 10.2 (18.7)
Share price 4.1 (20.5)
Benchmark(†) 12.0 (11.0)
Six months to 31 July 2024 Year to 31 January 2024
Period's high and low High Low High Low
Share price 228.00p 178.50p 325.00p 176.00p
Net asset value per ordinary share 243.79p 193.64p 334.82p 193.29p
(Discount)/premium(‡) (6.3%) (12.6%) (2.6%) (15.5%)
Notes
(*) For a definition of terms see Glossary of terms and
alternative performance measures below.
(†) The benchmark is the MSCI China All Shares Index (in
sterling terms).
(#) Source: Baillie Gifford/LSEG and relevant underlying index
providers. See disclaimer below.
(‡) Alternative performance measure see Glossary of terms
and alternative performance measures below.
Past performance is not a guide to future performance.
Interim management report
After an unprecedented three consecutive years of drawdowns in Chinese
equities, the six months to 31 July 2024 saw our index, MSCI China All Shares
Index (total return in sterling terms), rise by 12.0%. The portfolio
underperformed against a rising index, up 10.2% and the share price rise was
4.1% as the Company's share price discount to NAV expanded from 6.2% to 11.6%.
The Company bought back 1,450,295 shares (2.3% of 31 January 2024 share
capital) which are held in treasury. An increased focus on shareholder returns
by large corporates, incrementally supportive policy from Beijing, and
markedly low valuations at the beginning of the financial year all contributed
to this positive return.
The Chinese economy, however, remains relatively lacklustre, with downbeat
consumer spending and weak industrial demand. The biggest drag on growth
remains the property sector, where the government continued its incrementalist
approach to policy support. The People's Bank of China cut policy rates by 10
basis points and earmarked an RMB300bn relending facility to fund local
government purchases of unsold new housing and secondary market units. Towards
the end of the period, there were tentative signs of stabilisation: nationwide
real-estate transactions were still negative, but downward momentum eased.
Moreover, there were fewer developer defaults this year. Indeed, without a
deterioration in the three factors that have driven growth this year -
exports, manufacturing investment and infrastructure investment - it appears
that Beijing sees little incentive to adopt a more radical course.
Taking a step back, it's important to remember that China is in the process of
transitioning away from property-fuelled growth to a new model of growth. This
model relies on what the government calls "new quality productive forces,"
closely entwined with technological progress. Indeed, the Third Plenum of the
Chinese Communist Party in July reinforced technology investment as the top
priority for 2024 and the main driver of long-term growth, with industrial
policy taking priority over macro policy.
The country's long-term aim is to become a science and technology superpower
by 2035. Indeed, in terms of China's research and development (R&D)
spending, at 2.6% of GDP, it has almost reached the level of OECD countries.
This new model of growth is particularly relevant to the portfolio, where
several holdings should benefit.
For example, one of China's aims is to consolidate and expand its leading
position in electric vehicles (EVs) and autonomous driving. BYD, a holding in
the Trust, is crucial to this effort. In May, it launched a hybrid model that
boasts the best fuel efficiency in the world by a significant margin. Another
of China's aims is to develop an innovative materials sector. Sinocera,
another of the Trust's holdings, is leading the charge here with its
investments in innovative materials used in optical communication parts and
fuel cells. Beijing also hopes to promote digital transformation in the
manufacturing and service industries, while deepening R&D in big data and
artificial intelligence (AI). Two of our largest holdings, Meituan and
ByteDance, are contributing to this effort. Meituan is rapidly digitalising
China's service industry, while ByteDance is renowned for its AI and big data
capabilities.
But China's increased global competitiveness comes with challenges, namely
geopolitical tension and the threat of protectionism. These are likely to
continue being a feature of the country's rise. In June, we saw the EU raise
tariffs on Chinese EVs of between 17.4% and 37.6%, on top of a 10% duty
already in place. In April, President Biden signed into law a bill that may
force ByteDance either to shut down its US business or sell it to an approved
buyer by January 2025.
Navigating these headwinds is crucial both to us as investors in Chinese
companies, and to the Chinese companies themselves. For example, because of
BYD's cooperation with the EU, its EVs are now subject to the lowest possible
tariff. And because of BYD's technological edge in fuel efficiency, we do not
believe the tariff will materially impact demand for its vehicles. In
addition, the company is accelerating its investments in factories in low-cost
countries within the EU. In the case of ByteDance, it is currently unclear
whether the company will succeed in overturning the divestment bill in the US
Supreme Court on constitutional grounds. However, we have long considered
scenarios that exclude the US business from our investment thesis. The
company's growth potential within China, and outside the US more widely, is
large enough and potentially profitable enough to justify a holding at the
current valuation.
This brings us back to our core philosophy and process of investing in the
best growth companies in China. Our research agenda is currently focused on
four key areas of potential opportunity.
● AI and semiconductors - China's attempt to secure
self-sufficiency in semiconductors is nothing new. But the US government's
sanctioning of YMTC, one of China's leading memory manufacturers in 2022, and
the export controls that followed, have given Chinese companies across the
supply chain an extra incentive to push for localisation. Enforced creativity
has already led to breakthroughs previously thought impossible. We already own
analog semiconductor companies SG Micro and Silergy, but we believe there may
be other opportunities if we cast the net wider.
● Going overseas - Manufacturing competitiveness in China has
been achieved in a wide range of sectors, from EVs to home appliances to grid
infrastructure to transformers. We own companies such as BYD, CATL and Midea,
but there may be others that we are missing.
● Consumption polarisation - With the property market
continuing to depress consumer confidence, we are seeing a bifurcation in
demand. The wealthiest consumers appear relatively immune to the slowdown,
while the middle class seems to be trading down. A focus on both the very high
end and the very low end appears appropriate. We own Kweichow Moutai as
China's only domestic luxury goods company at one end, with companies such as
Proya Cosmetics and PDD Holdings at the other.
● Resource scarcity - A successful energy transition is likely
to require a wider set of companies and resources than we initially thought.
We retain our positions in the more traditional green power companies, CATL in
batteries and Sungrow in solar. And we also own Zijin Mining in this context
which continues to report record copper production, critical in solutions to
the climate challenges in coming decades. However, we also bought a holding in
China Oilfield Services as an acknowledgement that oil will likely remain part
of the energy mix even as we transition away from it.
A full research agenda and strong competition for capital from new ideas
suggest that the opportunity to find growing companies in China remains
strong, even if the macroeconomic and geopolitical backdrop may provide
headwinds for the broader asset class. We are being asked to pay very low
multiples for what appear to be solid growth opportunities. Some will be
ephemeral because China is a competitive market but for the long-term winners,
the rewards on offer to patient investors will be outsized and the risks worth
taking.
Portfolio
We continue to believe that the Trust's portfolio represents a collection of
the best listed and unlisted companies in China. Our positioning remains
relatively consistent compared to last year. We retain exposure to the sectors
and companies that offer the best long-term growth potential and upside. We
have large overweight positions in consumer discretionary, communication
services and industrials, and large underweights in lower growth sectors such
as financials, energy and utilities. We believe the portfolio is geared
towards the themes likely to drive China's next decade of growth including the
energy transition, advanced manufacturing and digitalisation.
Portfolio turnover during the period was 29% as we decided to take advantage
of recent share price volatility to add to some of our highest conviction
holdings, build positions in new ideas, and move on from companies where the
investment case was challenged. Turnover was high relative to our stated
five-year investment horizon but this should be viewed in the context of
single-digit turnover in preceding years(*).
In terms of transactions, we bought new holdings in Luckin Coffee, Shanxi
Xinghuacun Fen Wine, and China Oilfield Services. Luckin Coffee is the largest
coffee company in China, having recently overtaken Starbucks. In 2020, the
company was delisted and the founder expelled after fraudulent sales were
revealed. However, the new management team and backers have saved the business
and built an exceptional mass-market beverage brand. We met the company in
China earlier in the year and believe it still has a significant growth
opportunity ahead of it. As a result of its controversial past, it is still
traded off-exchange in the US, but ample liquidity is available to invest.
Continued operational growth and the prospect of a substantial rerating in the
event of relisting make this a potentially very attractive investment.
Shanxi Xinghuacun Fen Wine (Fenjiu) is a baijiu (white spirit) maker with a
long heritage. Its most important brand is Qinghua 20, an undisputed leader in
the 'mild aroma' baijiu market and increasingly popular in the mid-priced
segment outside of the company's home province. In addition, the company has
launched a high-end 'mild aroma' brand, Qinghua 30, to further capitalise on
its brand heritage. Success here could provide a further tailwind to growth.
In addition, the company has been chosen as a model company for
state-owned-enterprise reform. Improved returns to shareholders are therefore
also a feature of the investment case. Overall, we do not believe the
company's valuation reflects the attractions of the business or the growth
opportunity.
China Oilfield Services (COSL) is a leading provider of drilling, well and
technological services to oil and gas majors globally. We believe the
long-term demand-supply outlook for oil and gas is likely to remain favourable
even as the world transitions to renewable energy sources. COSL is likely to
benefit from continued investments in oil and gas exploration and drilling
given its technical competence and growing global reputation. The recent
suspension of four of its rigs in the Middle East is providing us with an
attractive entry point at a time when many other oil and gas companies are
trading at far higher valuations. However, we are also aware of the cyclical
nature of this industry and the recent strength of oil prices.
At the portfolio level, we remain strongly exposed to companies enabling a
reduction in fossil fuel usage globally via companies such as CATL (the
world's largest battery manufacturer, BYD (a leading EV maker), Zhejiang
Sanhua Intelligent Controls (a key supplier to the EV industry), and Sungrow
(a leading solar inverter maker). The holding in COSL therefore adds
diversification to the portfolio and, more broadly, is likely to be relatively
uncorrelated with the rest of our holdings. This is another of its
attractions.
We also took this opportunity to add to some existing holdings where our
conviction had increased. One notable example is Tencent, our largest holding
in the portfolio at 12.6% of total assets, a leading social media and gaming
company. We have materially added to our position during the period after a
number of meetings with the management team and significant internal work on
the share price upside. We believe the company has a varied collection of
assets with strong monetisation potential ahead of them. These assets include
a dominant social media and messaging platform, a leading gaming business
with growth potential in China and overseas, a disruptive video platform that
is regaining share in advertising, and a dominant payments business. With the
regulatory backdrop improving in China and the government reiterating its
support for innovative companies, the biggest challenge to the investment case
has moderated. In addition, the management team are putting in place measures
to increase shareholder returns via dividends and buybacks. We believe that
low double-earnings growth, in addition to capital return, should result in
attractive returns for shareholders.
Other notable additions include CATL and Meituan. CATL is one of the world's
largest manufacturers of EV and energy storage batteries. The shares had
derated on the back of concerns around excess industry capacity and as part of
a general sell-off in growth stocks in China. Our recent review of the company
highlighted its impressive operational performance and robust competitive
advantage, a function of continued scale and technological leadership. The
valuation assumes little in the way of profitable growth and therefore we
decided to add to our position. Meituan is one of China's leading food
delivery and online services companies. It was a significant detractor from
performance in 2023 after posting a 60% reduction in the share price. After a
review of the company and a number of meetings with management, we decided to
add to our position at the beginning of 2024. Meituan is discussed in further
detail in the performance section below.
Our transactions in terms of sales were varied. We decided to further reduce
our exposure to the healthcare sector given increased geopolitical risk and a
continuing domestic anti-corruption campaign. This resulted in the sales of
Asymchem and WuXi AppTec, both contract research organisations with large
revenue exposure to US pharmaceutical clients. We also decided to move on from
Topchoice Medical, China's largest private dental hospital operator, and Hua
Medicine, a Type 2 diabetes drug company. Hua Medicine's key drug was approved
in China last year, but its take-up so far has been below expectations and
unlikely to improve. The sale of Topchoice was largely due to our increasing
concerns about the controlling shareholder's capital allocation discipline.
Other sales included JD.com, LONGi Green Energy, and Beijing United
Information Technology (BUIT). JD.com is an ecommerce platform and retailer
with particular strength in logistics, and in tier one and two cities (those
with populations above 3 million). The ecommerce market has entered a
relatively mature phase of growth, and competition between platform companies
has increased. JD's historic focus on the wealthier areas of China is likely
to result in lower rates of growth than its competitors, while increased
competition from low-cost operators may put pressure on profitability. As a
result, we have decided to sell the position and consolidate into ecommerce
holdings better placed to deliver profitable growth over the long term. The
reduction of Alibaba from 7.4% to 5.8% of total assets was also conducted with
this rationale and the proceeds were reinvested into PDD, an ecommerce company
with greater exposure to lower tier and faster growing subsegments of the
market.
LONGi Green Energy is the world's leading producer of solar wafers and
modules. We continue to believe that volume growth in the industry will be
strong given the increasing adoption of solar power globally. However, the
industry has proven more cyclical, and barriers to entry lower than we
originally anticipated. This has led to severe over-supply, unfavourable
competitive dynamics and poor share price performance. With an improvement in
the industry backdrop unlikely in the medium term, we have sold the position.
BUIT is a B2B ecommerce platform for industrial products. While it has
delivered solid growth in revenues and earnings over the period we have held
it, the company saw a significant valuation derating when regulators
questioned the credibility of its reporting. Despite uncovering little of
concern throughout numerous meetings with the company, plus our own internal
research and various third‑party forensic analyses we commissioned,
regulatory scrutiny could severely impact BUIT's ability to finance future
growth. This significantly distorts the investment case. We have little
insight into how the investigation will play out, or how long it may take.
This shift in expected outcomes and the lack of visibility led us to sell the
holding.
Performance
The portfolio underperformed marginally against a rising index. The benchmark
for the period rose 12.0% (total return in sterling terms), NAV was up 10.2%
and the share price was up 4.1%. As one would expect for a largely bottom-up
portfolio, the drivers were largely stock-specific.
Top relative contributors included Brilliance China and Meituan, where
improved shareholder returns were a theme. Brilliance China is a special
situation. The company owns a 25% stake in the Brilliance-BMW automotive JV.
But the near-term investment case has centred on improved capital discipline
and return of cash to shareholders. During the quarter, the company announced
a special dividend payout of HK$4.3/share which exceeded the market's
expectations and led to significant share price appreciation. This is in
addition to the HK$1.5 special dividend paid earlier this year. To put this in
context, the share price has ranged between HK$4-8 over the period. From here,
fundamentals should increasingly drive returns, with the focus turning to the
value of Brilliance's stake in the BMW JV, which we feel is still not captured
in the current valuation.
The Trust made a timely addition to Meituan in January after meeting founder
Wang Xing in Beijing. Our core contention was that Meituan would continue to
grow and that fears over the competitive threat, especially from
ByteDance/Douyin, were excessive. Additionally, we believed that management's
commitment to reduce losses from new business areas, optimise underperforming
regions, and reduce subsidies were positive and should accelerate earnings
growth. The company's operational performance since then has been strong,
while the announcement of a U$2bn buyback programme (in addition to the U$1bn
buyback announced in Nov 2023 and completed this year) has driven the shares
to perform well.
Pop Mart and Zijin Mining were also top contributors to performance. Pop Mart
is a character-based entertainment company most known for its 'blind box'
concept toys, where customers can't tell until they buy it which character is
inside the packaging. The company is rapidly building a broader product and IP
lineup while successfully expanding overseas. Its domestic business is growing
rapidly, driven by store openings and the continued popularity of some of its
flagship toys and collectibles. Its international business has beaten
expectations as the products appear to be gaining unexpected traction,
particularly in southeast Asia. Operational performance has been strong with
2023 revenues and net profits growing 36% and 128% respectively, while
management expects 2024 sales to continue growing at above 30% per annum.
Zijin Mining is a gold and copper miner with a worldclass production growth
track record. The shares have been relatively strong recently on the back of
expectations about pricing for its key metals. In the medium term, our
investment case for Zijin Mining centres on both pricing and volume growth as
the drivers for the share price. Zijin Mining is likely to grow volumes at a
double-digit rate, supplemented by bolt-on mergers and acquisitions, while the
outlier potential for the shares comes from the potential for a markedly
higher copper price. Copper is integral to the green transition and the
supply-demand outlook is attractive, given limited investment for the last
decade. We believe Zijin Mining is an enabler of the green transition and a
key beneficiary.
Other contributors to performance included gearing (effective gearing of 3.8%
as at 31 July 2024 versus 4.2% at 31 January 2024), which was a positive
driver adding 0.7% to performance in the context of a rising market. In
addition, relative performance was also helped by our decision to not own
companies such as Baidu, a search engine, Li Auto, an EV startup, and WuXi
Biologics, a biologic drugs manufacturing company.
Top relative detractors over the period included Guangzhou Kingmed and
Kweichow Moutai. Guangzhou Kingmed is a leading player in China's independent
clinical laboratory (ICL) industry. Its revenue and profit numbers have been
weak as it continues to digest Covid-related revenues, while the
anti-corruption campaign in healthcare has impacted near-term demand.
Kingmed's lab testing business relies on economies of scale for profitability
due to its high fixed costs (capex, labour costs, and part of the reagent
costs). In the face of weak revenue growth, profitability has also been
impacted. The company's shares have reacted poorly, and the stock has derated.
There is very little growth factored into the company's valuation while the
long-term drivers for the business including increased volume and frequency of
testing remain intact. As such, we continue to hold the shares.
Kweichow Moutai manufactures and sells high-end baijiu (white spirit) and is
perhaps China's most famous consumer brand. The shares have been impacted by a
short-term demand-supply mismatch which has driven down wholesale prices of
its flagship product, Feitian, and resulted in weak share price performance
over the period. The company is implementing several supply-side measures to
stabilise pricing and to protect the brand, which we welcome. The company also
saw a change of management. More than 1,700 investors attended Moutai's
shareholder meeting in Guizhou in May to hear from the new chairperson, Mr
Zhang Deqin. The phrase 'steady, healthy, sustainable long-term' appeared many
times in his speech. It reminds us that this is a long-term growth story.
Moutai enjoys the strongest branding power, highest margins, best
return-on-capital and strongest free cash flow in China's baijiu industry. The
current valuation does not reflect this and therefore we continue to believe
that the company should deliver attractive returns to shareholders in the long
run.
Other notable detractors include Sanhua Intelligent Controls, ByteDance and
Yifeng Pharmacy. Sanhua is one of the world's largest manufacturers of
refrigeration control components and thermal management parts. The company's
share price was negatively impacted by media reports of potential US
restrictions on the imports of Chinese-made cars. Sanhua held a conference
call in February to address these concerns confirming there are no data
security issues with their products, and that it has around 14% of sales from
US customers (including HVAC customers). Sanhua highlighted the period in
2018-19 when the US government raised tariffs to 25%, but it saw no margin
deterioration and US customers bore part of the tariff cost. Despite concerns
over slowing growth in the EV supply chain domestically in 2024, Sanhua is
likely to go on outperforming the end market with its diverse customer base,
global production footprint and content value gain potential. With US
elections later this year, we expect geopolitical risks will remain a concern
for a number of Chinese companies, albeit that the long-term structural
opportunities continue.
ByteDance is one of our largest holdings and our only private investment. Its
valuation increased during the period but at a lower rate than the index. This
resulted in the holding contributing negatively to our relative performance.
Fundamentally, ByteDance's operational performance continues to be best in
class. The traction of the platform remains strong with monthly active users
across Douyin and TikTok growing at a double-digit rate. Revenue and profits
grew faster than users as monetisation was strong, and operating leverage
contributed positively. With regard to ByteDance's US business, the company
continues to challenge the US government's potential ban or forced sale in the
US courts. Our view is that ByteDance remains attractive given its growth
potential and exceptional financial characteristics even if one excludes the
US business. As such, we are happy to continue holding the shares.
Yifeng Pharmacy is a leading private pharmacy chain in China. It has been
impacted recently by concerns around pricing after a price comparison system,
initially introduced by the Shenzhen Healthcare Security Bureau, led to a
small number of products having to lower prices. Regulation and domestic
policy are likely to dampen sentiment, but our investment thesis is built on
the ongoing trend of traffic flowing from hospitals to retail pharmacies and
the offline consolidation of pharmacy chains where leaders such as Yifeng are
set to benefit. We took the opportunity of a weaker share price to add to the
position.
Outlook
After the 12.0% rise over the period, our benchmark MSCI China All Shares is
still trading at an extremely low multiple relative to the last 20 years and
at nearly a 60% discount to the US. At the same time, its forecast earnings
growth is expected to be one of the highest among major equity markets. There
are, of course, risks to those forecast earnings given that the economy
continues to transition from its old model of property-led growth to one
driven by technological development and scientific progress. In addition,
geopolitics, particularly in the context of the US election in November, is
likely to create additional volatility. We believe that the market has largely
factored in a continuation of the current protectionist trend in US-China
relations. Whilst a Harris win might lead to more predictable US policy
towards China, a Trump win could, counterintuitively, result in the potential
for greater positive surprise given Trump's historic penchant for deal making
and relative ideological flexibility.
Overall, we remain cautiously optimistic that China will successfully navigate
this transition and that the companies it produces will become increasingly
world-class as a result. Indeed, with the regulatory overhauls of the big
technology platforms behind us, and with policy support becoming incrementally
clearer, the very depressed valuations of Chinese companies - and the Trust's
portfolio - leave plenty of room for material uplift. As such, we remain
optimistic about the long-term outlook for the asset class and the Trust.
Baillie Gifford & Co
* Annualised portfolio turnover in the 12 months to 31 July 2024 was c. 17%.
The principal risks and uncertainties facing the Company are set out below.
Related party transaction disclosures are set out in note 9 below.
For a definition of terms see Glossary of terms and alternative performance
measures below.
Past performance is not a guide to future performance.
Baillie Gifford - valuing private companies
We aim to hold our private company investments at 'fair value', i.e. the price
that would be paid in an open-market transaction. Valuations are adjusted both
during regular valuation cycles and on an ad hoc basis in response to 'trigger
events'. Our valuation process ensures that private companies are valued in
both a fair and timely manner.
The valuation process is overseen by a valuations group at Baillie Gifford,
which takes advice from an independent third party (S&P Global). The
valuations group is independent from the investment team with all voting
members being from different operational areas of the firm, and the investment
managers only receive final valuation notifications once they have been
applied.
We revalue the private holdings on a three-month rolling cycle, with one-third
of the holdings reassessed each month. During stable market conditions, and
assuming all else is equal, each investment would be valued two times in a
six-month period. For investment trusts, the prices are also reviewed twice
per year by the respective boards and are subject to the scrutiny of external
auditors in the annual audit process.
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. There
is no delay.
The valuations group also monitors relevant market benchmarks on a weekly
basis and updates valuations in a manner consistent with our external valuer's
(S&P Global) most recent valuation report where appropriate.
Distribution of total assets(†) (unaudited)
Sectoral analysis at 31 July 2024
Sector % at % at
31 July
31 January
2024
2024
1 Consumer discretionary 27 25
2 Communication services 24 18
3 Industrials 14 15
4 Consumer staples 8 9
5 Financials 8 8
6 Information technology 7 8
7 Healthcare 5 8
8 Materials 4 5
9 Utilities 1 2
10 Real estate 1 1
11 Net liquid assets 1 1
(†) Total assets before deduction of loans.
List of investments
at 31 July 2024 (unaudited)
Name Business Value % of total
£'000 assets (*)
Tencent Social media and entertainment company 16,763 12.6
ByteDance(§) Social media and entertainment company 11,229 8.4
Alibaba Group Online retailer, payments and cloud business 7,729 5.8
Kweichow Moutai Luxury baijiu maker 6,435 4.8
Meituan Online food delivery company 6,224 4.7
China Merchants Bank Consumer lending and wealth management 4,452 3.3
Ping An Insurance Life and health insurance 3,839 2.9
PDD Holdings Online retailer 3,667 2.8
CATL Electric vehicle battery maker 3,560 2.7
Midea Group White goods and robotics manufacturer 3,216 2.4
Zijin Mining Group Renewable energy enabler 3,190 2.4
NetEase Gaming and entertainment business 3,059 2.3
BeiGene Immunotherapy biotechnology company 2,957 2.2
Silergy Semiconductors & semiconductor equipment 2,943 2.2
Fuyao Glass Industry Group Automotive glass manufacturer 2,710 2.0
PROYA Cosmetics and personal care company 2,603 2.0
Weichai Power Construction machinery and heavy duty trucks 2,484 1.9
Shenzhen Megmeet Electrical Power electronics manufacturer 2,433 1.8
BYD Hybrid and EV automobiles 2,418 1.8
Shandong Sinocera Functional Material Advanced materials manufacturer 2,198 1.6
Shenzhou International Garment manufacturer 2,135 1.6
ENN Energy Gas distributor and provider 1,986 1.5
Zhejiang Sanhua Intelligent Controls Heating and cooling component manufacturer 1,894 1.4
Centre Testing International Testing and inspection company 1,848 1.4
Ping An Bank SME and consumer lender 1,793 1.3
KE Holdings(†) Online real estate 1,760 1.3
Anker Innovations Consumer electronics 1,716 1.3
SG Micro Corp Semiconductor designer 1,509 1.1
Shenzhen Inovance Technology Factory automation company 1,481 1.1
Hangzhou Tigermed Consulting Clinical trial contract research organisation 1,471 1.1
Estun Automation Robotics and factory automation company 1,437 1.1
Li-Ning Domestic sportswear manufacturer 1,392 1.0
Jiangsu Azure Small form batteries 1,342 1.0
Luckin Coffee(†) Coffee retailer 1,214 0.9
Pop Mart Toy and collectibles maker 1,191 0.9
Sungrow Power Supply Component supplier to renewables industry 1,143 0.9
Yifeng Pharmacy Chain Drug retailer 1,095 0.8
Brilliance China Automotive Automotive makers and BMW partner 1,078 0.8
Guangzhou Kingmed Diagnostics Diagnostics company 1,062 0.8
Sinocare Diagnostics and diabetes company 1,061 0.8
Robam Appliances White goods manufacturer 1,019 0.8
Shanxi Xinghuacun Fen Wine Factory Distiller and distributer of liquor products 1,015 0.8
Yonyou Network Technology Software for SMEs and corporates 963 0.7
Kingsoft Software for SMEs and corporates 944 0.7
Kingdee International Software Software for SMEs and corporates 874 0.7
Sunny Optical Technology Electronic components for smartphones and autos 829 0.6
Medlive Technology Medical dictionary and marketing organisation 693 0.5
Minth Automotive parts manufacturer 687 0.5
China Oilfield Services Oilfield service provider 640 0.5
Dongguan Yiheda Automation Co Automation components 455 0.4
New Horizon Health(#) Early cancer detection 280 0.2
Kinlong Building products 270 0.2
Total investments 132,386 99.3
Net liquid assets 871 0.7
Total assets 133,257 100.0
Borrowings (5,880) (4.4)
Shareholders' funds 127,377 95.6
(*) Total assets before deduction of loans.
(§) Denotes unlisted investment (private company).
(†) Includes investment in American Depositary Receipt (ADR).
(#) Suspended.
Income statement (unaudited)
For the six months ended For the six months to For the year ended
31 July 2024
31 July 2023
31 January 2024 (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments - 11,117 11,117 - (39,036) (39,036) - (83,606) (83,606)
Currency gains/(losses) - 81 81 - 172 172 - 105 105
Income 2,138 - 2,138 1,932 - 1,932 2,599 - 2,599
Investment management fee 3 (115) (346) (461) (140) (421) (561) (255) (765) (1,020)
Other administrative expenses (298) - (298) (244) - (244) (523) - (523)
Net return before finance costs and taxation 1,725 10,852 12,577 1,548 (39,285) (37,737) 1,821 (84,266) (82,445)
Finance cost of borrowings (88) (265) (353) (65) (193) (258) (136) (408) (544)
Net return before taxation 1,637 10,587 12,224 1,483 (39,478) (37,995) 1,685 (84,674) (82,989)
Tax (168) - (168) (148) - (148) (187) - (187)
Net return after taxation 1,469 10,587 12,056 1,335 (39,478) (38,143) 1,498 (84,674) (83,176)
Net return per ordinary share 4 2.40p 17.28p 19.68p 2.15p (63.66p) (61.51p) 2.42p (136.61p) (134.19p)
Note:
Dividends paid and payable per share 5 nil nil 2.00p
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 period.
The accompanying notes below are an integral part of the Financial Statements.
Balance sheet (unaudited)
Notes At 31 July At 31 January
2024 2024
£'000 £'000
Fixed assets
Investments held at fair value through profit or loss 6 132,386 124,751
Current assets
Debtors 743 23
Cash and cash equivalents 2,714 926
3,457 949
Creditors
Amounts falling due within one year 7 (8,466) (6,289)
Net current liabilities (5,009) (5,340)
Net assets 127,377 119,411
Capital and reserves
Share capital 17,087 17,087
Share premium account 31,780 31,780
Capital redemption reserve 41,085 41,085
Capital reserve 30,492 22,775
Revenue reserve 6,933 6,684
Shareholders' funds 127,377 119,411
Net asset value per ordinary share(*) 210.88p 193.06p
Shares in issue 8 60,401,987 61,852,282
(*) See Glossary of terms and alternative performance measures
below.
Statement of changes in equity (unaudited)
Six months to 31 July 2024
Notes Share Share Capital Capital Revenue Share-holders'
capital premium redemption reserve (*) reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 February 2024 17,087 31,780 41,085 22,775 6,684 119,411
Ordinary shares bought back into treasury - - - (2,870) - (2,870)
Net return after taxation - - - 10,587 1,469 12,056
Dividends paid during the year 5 - - - - (1,220) (1,220)
Shareholders' funds at 31 July 2024 17,087 31,780 41,085 30,492 6,933 127,377
Six months to 31 July 2023
Notes Share Share Capital Capital Revenue Share-holders'
capital premium redemption reserve (*) reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 February 2023 17,087 31,780 41,085 107,748 6,240 203,940
Net return after taxation - - - (39,478) 1,335 (38,143)
Dividends paid 5 - - - - (1,054) (1,054)
Shareholders' funds at 31 July 2023 17,087 31,780 41,085 68,270 6,521 164,743
(*) The Capital reserve as at 31 July 2024 includes
investment holding losses of £65,132,000 (31 July 2023 - losses of
£64,882,000).
Condensed statement of cash flows (unaudited)
Six months Six months
to 31 July 2024 to 31 July 2023
£'000 £'000
Cash flows from operating activities
Net return before taxation 12,224 (37,995)
Net (gains)/losses on investments (11,117) 39,036
Currency gains (81) (172)
Finance costs of borrowings 353 258
Overseas withholding tax suffered (170) (159)
Overseas withholding tax reclaims received 2 11
Changes in debtors (280) (248)
Changes in creditors 26 (149)
Cash from operations(*) 957 582
Interest paid (299) (257)
Net cash inflow from operating activities 658 325
Cash flows from investing activities
Acquisitions of investments (13,514) (1,814)
Disposals of investments 18,661 3,206
Net cash inflow from investing activities 5,147 1,392
Cash flows from financing activities
Ordinary shares bought back (2,869) -
Bank loans repaid (5,906) -
Bank loans drawn down 5,970 -
Equity dividends paid (note 5) (1,220) (1,054)
Net cash outflow from financing activities (4,025) (1,054)
Increase in cash and cash equivalents 1,780 663
Exchange movements 8 (91)
Cash and cash equivalents at start of period 926 1,000
Cash and cash equivalents at end of period(†) 2,714 1,572
(*) Cash from operations includes dividends received in the
period of £1,833,000 (31 July 2023 - £1,614,000) and deposit interest
received of £9,000 (31 July 2023 - £9,000).
(†) Cash and cash equivalents represent cash at bank and
short term money market deposits repayable on demand.
Notes to the financial statements (unaudited)
1. Basis of accounting
The condensed Financial Statements for the six months to 31 July 2024
comprise the statements set out above together with the related notes below.
They have been prepared in accordance with FRS 104 'Interim Financial
Reporting' and the AIC's Statement of Recommended Practice issued in November
2014 and updated in July 2022 with consequential amendments. They have not
been audited or reviewed by the Auditor pursuant to the Auditing Practices
Board Guidance on 'Review of Interim Financial Information'. The Financial
Statements for the six months to 31 July 2024 have been prepared on the basis
of the same accounting policies as set out in the Company's Annual Report and
Financial Statements at 31 January 2024.
Going concern
The Directors have considered the nature of the Company's assets, its
liabilities, projected income and expenditure together with its investment
objective and policy, dividend policy and principal risks and uncertainties,
as set out below. The Board has, in particular, considered the impact of
heightened market volatility due to macroeconomic and geopolitical concerns,
and reviewed the results of specific leverage and liquidity stress testing but
does not believe the Company's going concern status is affected. The Company's
assets, 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. Gearing levels and compliance with
borrowing covenants are reviewed by the Board on a regular basis. 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. Accordingly, the Directors consider
it appropriate to adopt the going concern basis of accounting in preparing
these Financial Statements and confirm that they are not aware of any material
uncertainties which may affect the Company's ability to continue to do so over
a period of at least twelve months from the date of approval of these
Financial Statements.
2. Financial information
The financial information contained within this Interim Financial Report does
not constitute statutory accounts as defined in sections 434 to 436 of the
Companies Act 2006. The financial information for the year ended 31 January
2024 has been extracted from the statutory accounts which have been filed with
the Registrar of Companies. The Auditor's Report on those accounts was not
qualified, did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying the report, and did not
contain a statement under sections 498(2) or (3) of the Companies Act 2006.
3. Investment manager
Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford
& Co, was appointed by the Company as its Alternative Investment Fund
Manager and Company Secretaries on 16 September 2020. The investment
management function has been delegated 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
management agreement is terminable on not less than three months notice or on
shorter notice in certain circumstances. The annual management fee is (i)
0.75% of the first £50 million of net asset value; plus (ii) 0.65% of net
asset value between £50 million and £250 million; plus (iii) 0.55% of net
asset value in excess of £250 million, calculated and payable quarterly.
4. Net return per ordinary share
Six months to Six months to Year to
31 July 2024 31 July 2023 31 January 2024
£'000 £'000 £'000
Revenue return after taxation 1,469 1,335 1,498
Capital return after taxation 10,587 (39,478) (84,674)
Total net return 12,056 (38,143) (83,176)
Weighted average number of ordinary shares in issue 61,279,594 62,012,982 61,981,380
Net return per ordinary share is based on the above totals of revenue and
capital and the weighted average number of ordinary shares in issue during
each period.
There are no dilutive or potentially dilutive shares in issue.
5. Dividends
Six months to Six months to
31 July 2024 31 July 2023
£'000 £'000
Amounts recognised as distributions in the period: 1,220 1,054
Previous year's final dividend of 2.00p (2023 - 1.70p)
paid on 20 July 2024
6. Fixed assets - investments
Fair value hierarchy
The fair value hierarchy used to analyse the basis on which the fair values of
financial instruments held at fair value through the profit or loss account
are measured is described below. Fair value measurements 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).
As at 31 July 2024 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed equities 120,877 - - 120,877
Unlisted ordinary shares - - 11,229 11,229
Suspended ordinary shares - 280 - 280
Total financial asset investments 120,877 280 11,229 132,386
As at 31 January 2024 (audited) Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed equities 114,200 - - 114,200
Unlisted equities - - 10,551 10,551
Total financial asset investments 114,200 - 10,551 124,751
Investments in securities are financial assets designated at fair value
through profit or loss on initial recognition. In accordance with FRS 102 the
tables above provide an analysis of these investments based on the fair value
hierarchy described above which reflects the reliability and significance of
the information used to measure their fair value. During the six months, a
listed equity investment with a fair value at 31 January 2024 of £449,000 was
transferred from Level 1 to Level 2 when its shares were suspended and a write
down from the last traded price was applied, to reflect the reputational
impact of the suspension on the underlying business.
7. Bank loans
The Company has a two year US$25 million revolving credit facility with The
Royal Bank of Scotland (International) Limited which expires on 11 April
2026. At 31 July 2024 creditors falling due within one year include
borrowings of £5.9 million (HKD59 million) (31 January 2024 - £5.9 million
(US$7.6 million)) drawn down under the facility.
8. Share capital
The Company has authority to allot shares under section 551 of the Companies
Act 2006 or sell shares held in treasury. Such authorities will only be used
to issue shares or sell shares from treasury at, or 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. In the six months to 31 July 2024 no
ordinary shares were issued from treasury (in the year to 31 January 2024 no
shares were issued from treasury).
The Company also has authority to buy back shares. In the six months to
31 July 2024, 1,450,295 ordinary shares were bought back and held in treasury
(in the year to 31 January 2024, 160,700 ordinary shares were bought and held
in treasury). At 31 July 2024, the Company had authority remaining to buy
back a further 8,547,513 ordinary shares.
9. Related party transactions
There have been no transactions with related parties during the first six
months of the current financial year that have materially affected the
financial position or the performance of the Company during that period and
there have been no changes in the related party transactions described in the
last Annual Report and Financial Statements that could have had such an effect
on the Company during that period.
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
10. Contingent asset
HMRC have indicated they will repay overpaid taxes for the accounting periods
ending 2008 and 2009 of £1.1 million plus interest. As the repayment is
probable, but not virtually certain, the Company is disclosing £1.1 million
as a contingent asset.
Principal risks and uncertainties
The principal risks facing the Company are investment strategy risk, single
country risk, emerging market risk, unlisted securities, discount risk,
leverage risk, custody and depository risk, operational risk, financial risk,
regulatory risk, cyber security risk, climate and governance risk, and
emerging risks. An explanation of these risks and how they are managed is set
out on pages 32 to 38 of the Company's Annual Report and Financial Statements
for the year to 31 January 2024 which is available on the Company's website:
bailliegiffordchinagrowthtrust.com. The principal risks and uncertainties have
not changed since the date of the Annual Report.
The Board is mindful of the risk that geopolitical developments could
adversely impact companies held within the Company's investment portfolio,
including the potential impact of sanctions, and such matters are evaluated
both in conjunction with the manager and, where appropriate, with input from
external advisers.
Responsibility statement
We confirm that to the best of our knowledge:
a. the condensed set of Financial Statements has been prepared in
accordance with FRS 104 'Interim Financial Reporting';
b. the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.7R
(indication of important events during the first six months, their impact on
the Financial Statements and a description of the principal risks and
uncertainties for the remaining six months of the year); and
c. the Interim Financial Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes therein).
On behalf of the Board
Nicholas Pink
Chair
30 September 2024
Glossary of terms and alternative performance measures ('APM')
An alternative performance measure is a financial measure of historical or
future financial performance, financial position, or cash flows, other than a
financial measure defined or specified in the applicable financial reporting
framework.
Total assets
This is the Company's definition of adjusted total assets, being the total of
all assets less current liabilities, before deduction of all borrowings.
Net asset value
Net asset value is the value of total assets less liabilities (including
borrowings). The net asset value per share ('NAV') is calculated by dividing
this amount by the number of ordinary shares in issue (excluding treasury
shares).
Net liquid assets
Net liquid assets comprise current assets less current liabilities, excluding
borrowings.
Net asset value (borrowings at book value) (APM)
The APMs noted below are commonly used measures within the investment trust
industry and serve to improve comparability between investment trusts.
31 July 31 January
2024 2024
Shareholders' funds (borrowings at book value) £127,377,000 £119,411,000
Shares in issue 60,401,987 61,852,282
Net asset value per ordinary share (borrowings at book value) 210.88p 193.06p
Discount/premium (APM)
As stockmarkets and share prices vary, an investment trust's share price is
rarely the same as its NAV. When the share price is lower than the NAV it is
said to be trading at a discount. The size of the discount is calculated by
subtracting the NAV from the share price and is usually expressed as a
percentage of the NAV. If the share price is higher than the NAV it is said to
be trading at a premium.
31 July 31 January
2024 2024
Closing NAV per share 210.88p 193.06p
Closing share price 186.50p 181.00p
Discount (11.6%) (6.2%)
Total return (APM)
The total return is the return to shareholders after reinvesting the dividend
on the date that the share price goes ex-dividend.
31 July 31 July 31 January 31 January
2024 2024 2024 2024
NAV Share price NAV Share price
Closing NAV per share/share price (a) 210.88p 186.50p 193.06p 181.00p
Dividend adjustment factor(*) (b) 1.008783 1.009852 1.006801 1.007763
Adjusted closing NAV per share/share price (c = a x b) 212.73p 188.34p 194.37p 182.41p
Opening NAV per share/share price (d) 193.06p 181.00p 328.87p 308.00p
Total return (c ÷ d) -1 10.2% 4.1% (40.9%) (40.8%)
(*) The dividend adjustment factor is calculated on the
assumption that the dividends paid out by the Company are reinvested into the
shares of the Company at the cum income NAV at the ex-dividend date.
Ongoing charges (APM)
The total expenses (excluding borrowing costs) incurred by the Company as a
percentage of the average net asset value. The ongoing charges are calculated
on the basis prescribed by the Association of Investment Companies.
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other public company, an
investment trust can borrow money to invest in additional investments for its
portfolio. The effect of the borrowing on the shareholders' assets is called
'gearing'. If the Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the value of
the Company's assets falls, the situation is reversed. Gearing can therefore
enhance performance in rising markets but can adversely impact performance in
falling markets.
Gross gearing is the Company's borrowings expressed as a percentage of
shareholders' funds.
Gearing is the Company's borrowings adjusted for cash and cash equivalents
including any outstanding investment and share buy‑back/issuance
transactions awaiting settlement) expressed as a percentage of shareholders'
funds.
Leverage (APM)
For the purposes of the UK Alternative Investment Fund Managers Regulations,
leverage is any method which increases the Company's exposure, including the
borrowing of cash and the use of derivatives. It is expressed as a ratio
between the Company's exposure and its net asset value and can be calculated
on a gross and a commitment method. Under the gross method, exposure
represents the sum of the Company's positions after the deduction of sterling
cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the
deduction of sterling cash balances and after certain hedging and netting
positions are offset against each other.
Active share (APM)
Active share, a measure of how actively a portfolio is managed, is the
percentage of the portfolio that differs from its comparative index. It is
calculated by deducting from 100 the percentage of the portfolio that overlaps
with the comparative index. An active share of 100 indicates no overlap with
the index and an active share of zero indicates a portfolio that tracks the
index.
Unlisted (Private) Company
An unlisted (private) company means a company whose shares are not available
to the general public for trading and not listed on a stock exchange.
Variable Interest Entity ('VIE')
VIE structures are used by some Chinese companies to facilitate access to
foreign investors in sectors of the Chinese domestic economy which prohibit
foreign ownership. The purpose of the VIE structure is to give the economic
benefits and operational control of ownership without direct equity ownership
itself. The structures are bound together by contracts and foreign investors
are not directly invested in the underlying company.
Third party data provider disclaimer
No third party data provider ('Provider') makes any warranty, express or
implied, as to the accuracy, completeness or timeliness of the data contained
herewith nor as to the results to be obtained by recipients of the data. No
Provider shall in any way be liable to any recipient of the data for any
inaccuracies, errors or omissions in the index data included in this document,
regardless of cause, or for any damages (whether direct or indirect) resulting
therefrom.
No Provider has any obligation to update, modify or amend the data or to
otherwise notify a recipient thereof in the event that any matter stated
herein changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have any liability
whatsoever to you, whether in contract (including under an indemnity), in tort
(including negligence), under a warranty, under statute or otherwise, in
respect of any loss or damage suffered by you as a result of or in connection
with any opinions, recommendations, forecasts, judgements, or any other
conclusions, or any course of action determined, by you or any third party,
whether or not based on the content, information or materials contained
herein.
MSCI index data
Source: MSCI. The MSCI information may only be used for your internal use, may
not be reproduced or redisseminated in any form and may not be used as a basis
for or a component of any financial instruments or products or indices. None
of the MSCI information is intended to constitute investment advice or a
recommendation to make (or refrain from making) any kind of investment
decision and may not be relied on as such. Historical data and analysis should
not be taken as an indication or guarantee of any future performance analysis,
forecast or prediction.
The MSCI information is provided on an 'as is' basis and the user of this
information assumes the entire risk of any use made of this information. MSCI,
each of its affiliates and each other person involved in or related to
compiling, computing or creating any MSCI information (collectively, the 'MSCI
Parties') expressly disclaims all warranties (including, without limitation,
any warranties of originality, accuracy, completeness, timeliness,
non-infringement, merchantability and fitness for a particular purpose) with
respect to this information. Without limiting any of the foregoing, in no
event shall any MSCI Party have any liability or any direct, indirect,
special, incidental, punitive, consequential (including, without limitation,
lost profits) or any other damages. (msci.com).
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
Baillie Gifford China Growth Trust aims to achieve long term capital growth
through investment principally in Chinese companies which are believed to have
above average prospects for growth. At 31 July 2024 the Company had total
assets of £133.3m.
You can find up-to-date performance information about Baillie Gifford China
Growth Trust at bailliegiffordchinagrowthtrust.com(‡).
Baillie Gifford China Growth Trust is managed by Baillie Gifford, the
Edinburgh based fund management group with around £220 billion under
management and advice in active equity and bond portfolios for clients in the
UK and throughout the world (as at 30 September 2024).
Investment Trusts are UK public limited companies and are not authorised or
regulated by the Financial Conduct Authority.
(‡) Neither the contents of the Managers' website nor the
contents of any website accessible from hyperlinks on the Managers' website
(or any other website) is incorporated into, or forms part of, this
announcement.
Past performance is not a guide to future performance. The value of an
investment and any income from it is not guaranteed and may go down as well as
up and investors may not get back the amount invested. This is because the
share price is determined by the changing conditions in the relevant stock
markets in which the Company invests and by the supply and demand for the
Company's shares.
For further information please contact:
Naomi Cherry, Baillie Gifford & Co Tel: 0131 275 2000
Jonathan Atkins, Director, Four Communications Tel: 0203 920 0555 or 07872
495396
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