The Schiehallion Fund Limited Annual Results

RNS Announcement

The Schiehallion Fund Limited

Regulated Information Classification: Annual Financial and Audit Reports

Legal Entity Identifier: 213800NQOLJA1JCWXQ56

Results for the year to 31 January 2025

For further information please contact:

Alex Blake, Baillie Gifford & Co

Tel: 0131 275 2000

Jonathan Atkins, Four Communications

Tel: 0203 920 0555 or 07872 495396

26 March 2025

The following is the Preliminary Results Announcement for the year to 31 January 2025 which was approved by the Board on 25 March 2025.

Chairperson's statement

The Schiehallion Fund Limited (the 'Company' or 'Schiehallion') seeks to generate capital growth for investors through long-term minority investments in later stage private businesses that the Company considers to have transformational growth potential and to have the potential to become publicly traded.

Investment performance

During the financial year to 31 January 2025, the Company's ordinary share net asset value ('NAV') returned 12.9% and share price returned 51.0%. The share price discount to NAV narrowed from 39.6% to 19.2%. Further commentary on performance is included in the Investment Manager's report below.

Over the period from 27 March 2019 (launch date) to 31 January 2025, the Company's ordinary share NAV returned 34.1% and price returned 8.0%.

Capital allocation

In November 2023, the Board announced a capital allocation update, noting that:

•         its priority is to ensure that the Company has sufficient capital to deliver on its objectives, including supporting existing investments and satisfying the Company's ongoing working capital requirements;

•         it believed that the ordinary shares represented an attractive investment opportunity at a deep discount to NAV;

•         the Company intended to allocate up to US$20m towards share repurchases given the limited available capital at the current time; and

•         it would keep this capital allocation and associated share buyback policy under review.

Following this announcement, over the year to 31 January 2025, the Company bought back 5.2 million shares at a cost of approximately $4.2 million. Since the year end, the Company has bought back an additional 2.75 million shares. In aggregate, the Company has bought back 10.5 million shares, for consideration of $9.1 million, since November 2023.

The Company will be seeking authority to renew the buyback authority for the ordinary shares at the forthcoming Annual General Meeting ('AGM'). This authority will expire at the conclusion of the AGM in 2026.

Costs and charges

The ongoing charges for the ordinary shares as at 31 January 2025 were 0.92% (2024 - 0.85%).

The Company has a tiered management fee, which means that the benefits of scale are shared with investors. In addition, no management fee is charged on cash. The Managers absorb the valuation costs and legal costs associated with making private company investments.

Earnings and dividend

The Company's priority is to generate capital growth over the long-term. The Company therefore has no dividend target and will not seek to provide shareholders with a particular level of distribution. This period the net revenue return per ordinary share was negative 0.39 cents (year to 31 January 2024, negative 0.12 cents). The Board is recommending that no final dividend be paid.

Board

Members of the Board come from a broad variety of backgrounds and the Board can draw on a very extensive pool of knowledge and experience. Directors' biographies can be found on pages 51 and 52 of the Annual Report and Financial Statements.

All the Directors are subject to annual re-election at the AGM in May.

Annual General Meeting

The AGM will be held at 11.15am GMT on Thursday 22 May 2025 at the offices of Alter Domus (Guernsey) Limited, North Suite First Floor, Regency Court, Glategny Esplanade, GY1 1WW. Shareholders are reminded that they are able to submit proxy voting forms before the applicable deadline on Tuesday 20 May 2025 and also to direct any questions for the Board or Managers in advance by email to [email protected] or call Alter Domus (Guernsey) Limited on +44 (0) 1481 742 250.

The Board is seeking approval for amendments to the Company's Articles of Incorporation. Resolution 10 of the Notice of Annual General Meeting, which will be proposed as a special resolution, seeks shareholder approval for the adoption of new Articles of Incorporation (the 'New Articles'). As permitted by section 153(2) of The Companies (Guernsey) Law, 2008, the Board is proposing to amend 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.

Information on the resolutions can be found on pages 57 and 58 of the Annual Report and Financial Statements. The Directors consider that all resolutions to be put to shareholders are in their and the Company's best interests as a whole and recommend that shareholders vote in their favour.

Investment outlook

This past year has been another year of geo-political tensions and uncertainties in the global economy. The decline in inflation and thus interest rates and the cost of capital have, however, supported markets and helped companies plan for growth.

Despite ongoing geo-economic uncertainties, the Board and the Investment Manager are optimistic about the outlook for the Company with its focus on the long-term and investing in companies which have exceptional growth potential. The Company invests in companies which are not widely accessible in public markets. The Board is also positive about the pipeline of private companies that the Investment Manager has access to. The Board and the Investment Manager are confident in the investment outlook for the Company.

As the Company enters into its sixth year since its initial public offering ('IPO'), the Board continually reviews its trading segment and domicile in order to ensure that both remain appropriate to deliver shareholder value. After carefully reviewing the Company's global portfolio, including having taken initial professional tax advice, the Board intends to seek further legal and tax advice on potentially becoming UK tax resident and joining the UK's investment trust regime. The Board will provide further updates to shareholders in due course, including seeking any necessary approvals.

Dr Linda Yueh CBE
Chairperson
25 March 2025

For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.

Past performance is not a guide to future performance.

Investment Manager's review

Reflections

When reflecting on global developments during the twelve months to 31 January 2025, a potentially instructive historical comparison could well be the year 1968. This was a year marked by a major political realignment in the United States, where the Democratic Party - facing internal divisions exacerbated by the Vietnam War and civil rights issues - ceded power to the Republicans under Richard Nixon. This would turn out to be a key shift in the political landscape of the United States and arguably marked the rise of modern conservatism. On the geopolitical front the Vietnam War was proving increasingly fractious, and represented the most active theatre of the wider Cold War which saw two superpowers vie for global ideological, technological and military dominance. Notably the technological dimension of this conflict extended into space, and the year 1968 saw significant developments in this area as well, with the United States achieving a major milestone by sending the first crewed mission, Apollo 8, to orbit the moon. This achievement was a significant step in efforts to surpass the Soviet Union in space exploration.

Back on Earth developments were well underway in 1968 for the launch of the Advanced Research Projects Agency Network ('ARPANET') the following year. This was a pioneering computer network project initiated by the United States Department of Defence in the late 1960s and laid the groundwork for the modern internet, introducing key technologies and concepts still in use today. Tangentially related to this was the founding - also in 1968 - of Intel by Robert Noyce and Gordon Moore. Intel would go on to become a cornerstone of the semiconductor industry and this development would prove crucial for the evolution of computing technology more broadly.

So, when trying to summarise notable historical developments in 1968, we have a year which saw a major political realignment in the United States, active military conflicts around the globe, a tense Cold War between superpowers, important strides in mankind's relationship with space, and technological advancements in computing that would ultimately shape the globe in ways that were hard to fully fathom at the time. We would posit that such a description can just as easily be applied to 2024. This has been a year in which we have witnessed a drastic and sudden realignment of American politics with the arrival of Donald Trump's second term in office. We have seen the continuation of military conflicts in the Ukraine and the Middle East, coupled with elevated tensions between the United States and China in what can broadly be characterised as a potentially new Cold War. Meanwhile, in the skies above us, portfolio holding SpaceX has continued to redefine what might be possible in space; and closer to home, continued developments in computing and artificial intelligence are shaping the world in ways that are difficult to quantify accurately.

But what are we to make of these historical parallels beyond the well-trodden observation that while history does not necessarily repeat itself, it often rhymes? We would argue that at times of significant turbulence and uncertainty, it is natural - and sometimes necessary from a societal point of view - to be more focused on shorter-term concerns. However, from an investment perspective, we have the luxury to remain steadfastly focused on the long term, knowing that short-term uncertainty can often mask long-term opportunity. The Schiehallion Fund exists to find precisely such opportunities, and despite the uncertain historical moment that we arguably find ourselves in currently, we are excited about the continued progress being made by the Company's holdings in shaping the world around us, as well as by the range of new opportunities currently being presented to us.

Performance

The twelve months to 31 January 2025 represented a strong period for public markets, particularly within the United States, while private markets saw an increase in acquisitions, exits and overall deal volume compared to the prior year. This improvement in sentiment was largely the result of a moderation of previous headwinds such as elevated interest rates and volatile markets more broadly. The net asset value ('NAV') total return for Schiehallion over the period was +12.9%, while the share price total return was +51.0%. The Company enjoyed a particularly strong final quarter of its financial year, driven in part by a significant valuation uplift in its largest holding, SpaceX, as well as notable share price increases among public holdings, Affirm, Wise and Warby Parker, over this three-month period.

Performance for the full twelve-month period to 31 January 2025 was similarly driven by a combination of valuation increases in private holdings and positive share price movements among selected public holdings. In this regard SpaceX (+86% valuation increase) continues to showcase remarkable operational progress - most strikingly through the mechanised capture of its giant Starship booster rockets in recent months. Other notable private contributors to performance included Italian digital consumer application acquirer, Bending Spoons (+89%), and the Chinese social media giant, ByteDance (+33%). Among the public holdings, the US point-of-sale credit provider, Affirm (+51%), was also a top five contributor to Company performance as it continues to expand its offering, most notably into the United Kingdom.

The largest detractors from NAV performance over the period were German online real estate platform, McMakler, and Swedish electric vehicle battery maker, Northvolt. Both holdings saw their valuations close to fully written down during the period. In the case of McMakler, the company has been facing a challenging German macroeconomic environment which has particularly affected the real estate market. This necessitated a recapitalisation of the business during the second half of the year, with the focus directed towards cost management in the pursuit of profitability. Northvolt has experienced significant operational challenges with regards to scaling manufacturing across its facilities. This, coupled with increased competition from China and a slowdown in electric vehicle demand more broadly, led to the company filing for Chapter 11 bankruptcy in the US during the fourth quarter of 2024. Other detractors to performance included financial solutions provider, Brex (-30% valuation decrease), Australian online pet supply company, Pet Circle (-44%) and German bus and train operator, Flix (-27%).

Portfolio

From an overall perspective, the Company holdings remain well capitalised. More than 80% of the private cohort within the portfolio (by capital weight) has a cash runway of more than two years. The painful but necessary re-set associated with the 2020-2022 capital cycle has seen businesses emerge in a healthier state characterised by more disciplined spending and more efficient operations. We remain confident about the resilience of the existing names within the Company, as well as by their growth prospects going forward.

Aggregate revenue growth (weighted by capital) remains strong across the portfolio, standing at 34%. This figure was 42% for the top ten holdings within the Company specifically. These growth rates are accompanied by a healthy average gross margin profile: 47% for the portfolio as a whole, and 58% for the top ten holdings. Approximately 40% of the portfolio was EBITDA-profitable at the reporting date.

The top five holdings within the Company continue to showcase our ability to find varying types of growth across different geographies. SpaceX remains one of the highest conviction holdings as it pursues an enormous market opportunity by generating large and growing revenues coupled with compelling profitability dynamics. Its truly differentiated product, which straddles both its core launch business and Starlink satellite business, underpins arguably one of the most robust competitive advantages we have ever seen. Towards the end of 2024 the company reached a publicly disclosed valuation of $350 billion after an employee tender offer, thereby making it the most valuable private company in the world. Having first invested in SpaceX in 2019, it has generated a more than six times return over the course of our holding period.

ByteDance continues to generate significant news flow regarding the potential banning of its short-form video application, TikTok, in the United States. As always, we believe it is important to take a step back and remain focused on the wider picture. Our investment case continues to rest on the scale of ByteDance's domestic opportunity in China, and the company is now generating similar revenues to public market US peer, Meta, but growing faster. Elsewhere we see continued strong operational execution from Italian application acquirer, Bending Spoons, as it proceeds at pace with its core strategy of acquiring digital applications and improving the underlying products, monetisation and growth of these applications. Public financial technology holdings, Wise and Affirm, also continue to improve and expand their respective offerings.

While the IPO market remained muted over the course of 2024, we continue to believe that it is available to the right companies at the right price. One such example during the period was medical diagnostics solution provider, Tempus AI, which listed on the Nasdaq in June. While it is still early in its public market journey, revenues continue to grow at more than 30%, and it has been one of the top contributors within the Company since inception.

While we saw mostly strong operational performance across the Company's holdings during the period, some holdings did, however, face significant challenges. Outside the aforementioned circumstances pertaining to McMakler and Northvolt, another detractor from performance was blockchain technology company, Blockstream, which faced operational challenges that led to a recapitalisation of the business that we opted not to take part in. When reflecting on some of these individual struggles experienced by certain holdings, we are cognisant that the pursuit of high growth opportunities - particularly those within private markets - will at times bring about disappointing outcomes. While it is important to take relevant learnings from each individual instance, it should also be borne in mind that investing in opportunities with genuine asymmetric upside carries inherent uncertainty. We will continue to pursue precisely these opportunities.

It is inarguable that some of the most important global companies now reside within private markets - something which is likely to increasingly be the case in the future. At the reporting date, Schiehallion had holdings in half of the world's ten largest private companies, namely, SpaceX, ByteDance, Stripe, Databricks and Chime. The Company therefore offers a compelling path for shareholders to gain exposure to some of the most important private businesses of our time. At the same time, we continue to hunt for the next generation of names that will make their way onto this list in the future.

Deployment

We continue to balance three capital deployment options, namely initiating new investments, making further investments into the existing portfolio, and conducting share buybacks. Our core task remains the efficient deployment of capital across these three levers. In this regard our pace of deployment stepped up during the period - largely a function of the opportunity set that we are currently being presented with. While the broad structural change of companies staying private for longer continues to define the shape of our pipeline, the recent cyclical change during the 2020-2022 period is also having an effect. On the one hand, we have seen businesses emerge stronger and more disciplined after the previous over-abundance of capital during 2020 and 2021 particularly. However, there has also been an accompanying re-set in valuations, meaning that we have been able to invest in better, faster growing businesses at much more attractive prices, especially compared to public market peers in many cases.

Over the course of 2024, we considered more than 600 financing rounds, which led to 60 first cuts of research, followed by 30 deep dives and ultimately six of these names making their way into the Company as new holdings. Once again there was a range of geographies and industries on display as we continue to find opportunities both inside and outside of traditional fertile hunting grounds such as the United States. New US holdings comprised Tenstorrent, a semiconductor design company, and Runway AI, a generative-AI video laboratory assisting creators at every step of their process. Elsewhere we made investments in Vinted (a Lithuania-based peer‑to-peer online second-hand marketplace operating primarily across Europe), Tekever (a Portuguese surveillance drone maker), Bolttech (a Singapore-based embedded insurance platform), and Zetwerk (an Indian outsourced manufacturing marketplace).

In addition to these new holdings, we also made follow-on investments in Bending Spoons and data intelligence platform, Databricks, coupled with the recapitalisation of McMakler. Two realisations were made during the period, comprising a listed sale of sustainable apparel maker, Allbirds, and an acquisition of the UK semiconductor company, Graphcore, by Softbank. Allbirds ultimately proved to be a disappointing investment as the company struggled to diversify its offering which led to significant inventory write-offs. We sold the shares in May. In the case of Graphcore we had historically written down the valuation on account of lacklustre operational performance, but were ultimately able to recover the majority of the investment on account of being senior ranking shareholders. During the final quarter of 2024 we also trimmed our position in SpaceX for portfolio management reasons, but we retain strong conviction in the company's upside potential from here. Throughout the period we also continued to execute on the share buy-back programme which was announced during the latter part of 2023. During the year to 31 January 2025 the Company bought back a total of 5.2 million shares as part of this programme.

The combined net result of these transactions is that Schiehallion's overall deployment level rose during the period, with cash equivalents and cash now only comprising approximately 6% of the Company at the reporting date. Consequently, the bar for entry into the portfolio remains high, but we will continue to capitalise on opportunities which clear this bar from within our pipeline.

Looking forward

We regard the current outlook for private growth markets as extremely compelling. At a fundamental level there are three ingredients which make up any good investment, namely a good product; a good business model underpinned by excellent management; and a good price. We believe we are seeing all three in abundance. As far as products are concerned, there is an argument that never before have so many early-stage companies brought this much innovation to bear on creating exceptional products - whether this be satellite internet provision, frictionless cross-border transacting, data-driven medical diagnostics, or AI-assisted video creation, to name but a few. At the same time, we believe we are seeing an environment which is very much conducive for excellent business model creation, with companies having access to sufficient financial capital as well as a dense pool of human capital in the form of experienced entrepreneurs and business leaders. Finally, all of this is available at compelling valuations, thereby presenting The Schiehallion Fund with the opportunity to continue making investments in not only some of the most transformational companies of today, but also some of the most transformational companies of tomorrow.

Peter Singlehurst
Robert Natzler
25 March 2025

For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.

Past performance is not a guide to future performance.

Environmental, social and governance ('ESG') considerations

Baillie Gifford's integrated approach towards the consideration of Environmental, Social and Governance ('ESG') factors when pursuing investments in high growth private companies is articulated below:

ESG in our philosophy

The Schiehallion Fund invests in companies with a minimum time horizon of five years. Using a genuine long-term approach to investment means looking beyond the narrow scope of traditional financial analysis to consider a range of factors that may affect the ability of the fund's holdings to thrive over the long term. In this regard good governance is crucial towards enabling companies to deliver on their potential. Over our investment horizon, we also believe that scalability and profitability depend not only on a company's ability to serve customers well and execute on its business model, but also on its ability to do this without jeopardising its social licence to operate. As such, we do not separate consideration of a company's role in the broader investment ecosystem from our investment work, under ESG or any other rubric. These considerations are core to long-term investing. It is the long-term nature of the growth ambition within our investment philosophy that leads us to pay special attention to the external effects of a company's operations, both positive and negative. Over periods of five years or longer these can have a profound impact on a company's relationship with customers, regulators and staff, ultimately serving as either a significant contributor or detractor to the growth of a business. Our approach is not about being a moral conscience for our clients. Instead, it is a vital part of practising the philosophy that we believe will grow the value of their capital over the long term.

ESG in our process

The consideration of material ESG factors - those that are likely to affect the financial condition or operating performance of portfolio companies - is well-suited to Baillie Gifford's approach to investing in private markets due to its long-term investment horizon and emphasis on active ownership. Baillie Gifford's Private Companies Team focuses its research into potential investments through a proprietary 10-Question research framework. These questions aim to address issues such as the scale of the opportunity, the competitive edge and potential returns, while others focus specifically on ESG-related elements.

For example, Question Four of the framework ("How will the leadership and cultural attributes help this business achieve its long-term business vision?") considers the leadership within a firm, the broader stakeholders within the workplace and whether the firm cultivates an effective organisational mindset capable of delivering the mission. Question Five then focuses on external stakeholders ("Do the company's customers like them?"). This question is geared towards broader ecosystem impact and considers, among other aspects, whether the company is listening and responding well to the developing needs of a growing and changing customer base. Question Six of the framework specifically explores any material environmental and social factors in greater depth ("How do environmental and social factors create opportunities and risks?").

Beyond the research framework we also consider how we can assist specific companies, with the focus often being on governance. While we do not take active board seats, we occasionally take observer seats and frequently provide encouragement, input and introductions as companies look to evolve a stronger governance structure that is better suited for public markets.

The Private Companies Team is also supported by a wider network within and outside of Baillie Gifford. As far as ESG topics are concerned specifically, we benefit from the research and expertise of Baillie Gifford's broader team of ESG professionals, academic networks and impact and climate-focused investment teams.

ESG engagement

The Company has given discretionary voting powers to Baillie Gifford. For public holdings within the Company, the Investment Manager votes against resolutions they consider may damage shareholders' rights or economic interests.

The Company believes that it is in the shareholders' interests to consider ESG factors when selecting and retaining investments and has asked the Investment Manager to take these issues into account. The Investment Manager does not exclude companies from their investment universe purely on the grounds of ESG factors but adopts a positive engagement approach whereby matters are discussed with management with the aim of improving the relevant policies and management systems and enabling the Investment Manager to consider how ESG factors could impact long-term investment returns. The Investment Manager considers governance factors across the portfolio as part of the investment case and addresses environmental and social factors in terms of material risks and opportunities. The Investment Manager's Statement of Compliance with the UK Stewardship Code can be found on the Investment Manager's website: bailliegifford.com. The Investment Manager's policy has been reviewed and endorsed by the Board. The Investment Manager, Baillie Gifford & Co, are signatories to the United Nations Principles for Responsible Investment.

By engaging with both the private and public companies within Schiehallion's portfolio, the Investment Manager seeks to build constructive relationships with these companies to better inform investment activities and, where necessary, effect changes within holdings, ultimately with the goal of achieving better returns for shareholders. As owners of these companies at an earlier point in their overall growth journey - i.e. while they are still private - the Investment Manager is able to gain deeper and longer-term insight due to the length of these relationships. The potential continuation of these relationships through the Initial Public Offering ('IPO') and into public markets is a key reason why these companies choose the Company as a partner.

Engagement topics

Due to the private nature of the majority of companies within Schiehallion, we are unable to disclose the exact nature of our discussions with specific management teams. That said, there are common themes that we engage companies on, and these can be grouped as follows:

Portfolio company board composition

Where the Investment Manager can add value is on board composition and, more specifically, board transition. Companies within the portfolio are often transitioning from an investor-led board to an independent board as they grow. The Investment Manager supports companies to build a board of directors that is useful in the long term. Owing to Baillie Gifford's decades-long experience investing in and engaging with public companies, it has a network of potential board members that can be introduced to relevant companies and can engage our internal Governance team to advise on good board composition more broadly. At a practical level Baillie Gifford recently held a Board Forum event for key individuals representing several of our portfolio companies - including ten holdings within the portfolio - with the aim of helping their companies prepare for life in public markets. Participants were able to hear from a range of stakeholders across Baillie Gifford's global network of founders, CEOs, board members, investors and academics. Session topics included the role of board chairpersons, share structures, compensation, and the transition from investor-led to independent boards, among others. This event built on the CFO forum held in 2023, and feedback was again overwhelmingly positive.

The IPO process

The Investment Manager often engages with portfolio companies that are thinking about the IPO process. From a practical perspective Baillie Gifford is well placed to advise on aspects such as where to list, the range of reporting that is necessary, and employee stock options, for example. More generally advice also pertains to what kind of public company these private companies eventually want to be. Baillie Gifford is a useful conversation partner in such discussions on account of its long heritage investing in public markets.

Capital structures

The Investment Manager has continued to discuss capital structures with investee companies that have been exploring a range of different options in this regard. Schiehallion's long-term horizon enables the Investment Manager to offer well-aligned advice with the intention of limiting unintended and potentially destructive consequences that can arise from complicated capital structures. When negotiating terms, the Investment Manager seeks straightforward terms that are well aligned with the long-term interests of shareholders.

One year summary

The following information illustrates how The Schiehallion Fund Limited performed over the year ended 31 January 2025.

Period's high and low

For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.

*   Key performance indicator.

†   Alternative Performance Measure, see Glossary of terms and Alternative Performance Measures at the end of this announcement.

¶ The C shares converted on 8 September 2023.

Source: Baillie Gifford/LSEG. See disclaimer at the end of this announcement.

Review of investments

A review of the Company's ten largest investments as at 31 January 2025.

Space Exploration Technologies (SpaceX)

SpaceX designs, manufactures and launches spacecraft while also operating an internet satellite constellation known as Starlink. Towards the end of 2024 the company reached a publicly disclosed valuation of $350 billion, making it the largest private company in the word. It has built its business around simplicity, innovation and affordability leading to a vertically integrated, lean and nimble organisation that can iterate and manufacture quickly. It continues to pursue an enormous market opportunity, coupled with large and growing revenues underpinned by compelling profitability dynamics.

Bending Spoons

Bending Spoons is a developer and acquirer of digital consumer applications. The company leverages its shared set of tools to use across different applications, with the shared goal of maximising long-term value creation while simultaneously minimising customer acquisition cost and improving the product for consumers. Scaling its current suite of applications and strategically acquiring new ones will be the key enabler of its continued success.

ByteDance

ByteDance is well known for its video-sharing social networking platforms TikTok and Douyin, as well as the news aggregator application, Toutiao. The company uses machine learning to deliver relevant and individualised content. Further innovations include enabling advertisers to target customers with precision. TikTok is one of the few Chinese companies to grow a successful overseas operation. Performance remains strong, with earnings growth exceeding that of peers and active user numbers approaching those of US public market peer, Meta. Some regulatory challenges remain outside of China.

Wise^P

Wise, the international money transfer business, enables customer and business payments while eliminating intermediaries and limiting transaction costs. Wise listed in July 2021 at a market capitalisation of c.US$11 billion after successive years of successful execution. The company continues to expand its global footprint and currently boasts six direct connections to domestic payment systems, coupled with 65+ licenses and 90+ banking partnerships globally.

Affirm^P

Affirm is a digital financial services company that offers simple consumer loans to buy an array of consumer goods. The company experienced impressive growth up to its IPO in 2021 and has continued this as a public company. It continues to expand its user base and merchant partners, most recently through a partnership with Apple Pay launched in the latter half of 2024, as well as through an expansion into the United Kingdom.

Tempus AI^P

Healthcare technology company Tempus AI, boasts the world's largest library of clinical and molecular data. This is a key underpinning to the company's efforts to advance precision medicine by integrating artificial intelligence into healthcare, enabling data-driven decisions for personalised care. The company listed on the Nasdaq in June 2024 and has been one of the top contributors within the portfolio since inception.

Stripe

Stripe, the global payments processing company, continues to focus on making its services more accessible and beneficial for customers. Recent areas of progress include the expansion of support for more payment providers, upgrades to the Stripe Billing offering, as well as a new partnership with chip giant NVIDIA. The increased interoperability, coupled with the upgrades to Stripe Billing, are further examples of how the company continues to evolve and improve its overall offering.

Databricks

Databricks is a data infrastructure, management and AI SaaS company with a mission to democratise AI for enterprises. Its machine learning-as-a-service platform enables any company to use this set of technologies. Usage also extends beyond business intelligence based on historical data, but also to predictions and automated real-time decision-making. As such the platform has the potential to have a positive impact on every line of a user company's profit and loss statement.

Wayve Technologies

Wayve is developing software for autonomous vehicles, using end‑to-end deep learning. Using an entirely machine-learnt approach and training their system in central London, Wayve promises to safely meet the edge cases (i.e. uncommon scenarios that automated systems need to be prepared for) that have previously hampered the self-driving industry. The company also recently expanded its operations into the United States, marking the first on‑road trials outside the United Kingdom. Wayve's strong team, partnerships and track record put it in a unique position to lead the commercialisation of safe autonomous driving.

Warby Parker^P

Corrective eyewear retailer, Warby Parker, remains focused on increasing revenue per customer and driving footfall into its stores through its eye test offering. The company went public in September 2021, and after a difficult initial journey in public markets during the market correction experienced in 2022, it saw a strong share price recovery during the most recent twelve-month reporting period (+117%).

^P    Denotes listed investment previously held in the portfolio as a private company investment.

Baillie Gifford's approach to valuing private companies

We 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 portfolio 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 four times in a twelve‑month period. For Schiehallion and our 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 team 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.

The valuations team 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.

Renewed investor sentiment and improved market conditions have led to an increase in deal activity during 2024. Whilst global markets have tended to be more stable, isolated pockets of heightened volatility remain. The data below quantifies the revaluations carried out during the twelve months to 31 January 2025, however it does not reflect the ongoing monitoring of the private investment portfolio which has not resulted in a change in valuation.

* Data reflecting year to 31 January 2025.

List of investments

As at 31 January 2025

^P    Denotes listed investment previously held in the portfolio as a private company investment.

Allocation of net assets

*   Alternative Performance Measure, see Glossary of terms and Alternative Performance Measures at the end of this announcement.

Distribution of net assets

Geographical

Sectoral

Statement of comprehensive income

For the year ended 31 January

The total column of this statement represents the Statement of Comprehensive Income 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.

The accompanying notes below are an integral part of the Financial Statements.

Statement of financial position

As at 31 January

The Financial Statements of The Schiehallion Fund Limited (Company registration number 65915) were approved and authorised for issue by the Board of Directors and were signed on 25 March 2025.

Dr Linda Yueh CBE
Chairperson

The accompanying notes below are an integral part of the Financial Statements.

Statement of changes in equity

For the year ended 31 January 2025

For the year ended 31 January 2024

The accompanying notes below are an integral part of the Financial Statements.

Statement of cash flows

For the year ended 31 January

The accompanying notes below are an integral part of the Financial Statements.

Notes to the Financial Statements

1.       Principal accounting policies

The Financial Statements for the year ended 31 January 2025 have been prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB').

2.       Income

3.       Investment management fee

Details of the Investment Management Agreement are set out on page 54 of the Annual Report and Financial Statements. Under the terms of the Investment Management Agreement and with effect from the date the Company's ordinary shares were admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange, the Investment Manager is entitled to an annual fee (exclusive of VAT, which shall be added where applicable) of: 0.9% on the net asset value excluding cash or cash equivalent assets up to and including US$650 million; 0.8% on the net asset value excluding cash or cash equivalent assets exceeding US$650 million up to and including US$1.3 billion; and 0.7% on the net asset value excluding cash or cash equivalent assets exceeding US$1.3 billion. Management fees are calculated and payable quarterly. For the purpose of calculating the management fee, cash equivalents include US Treasury Bills.

4.       Other administrative expenses

*   The Company is part of a marketing programme which includes all the investment trusts managed by the Investment 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 Investment Manager. The Investment Manager matches the Company's marketing contribution and provide the resource to manage and run the programme.

In the year to 31 January 2025 there was nil (31 January 2024 - US$21,000) paid to the Auditor, KPMG Channel Islands Limited, in respect of non-audit services (included within 'General administrative expenses' above). The non-audit fees incurred in the year to 31 January 2024 of US$21,000 were related to the engagement of KPMG Channel Islands Limited to verify that the C share conversion ratio was calculated correctly and in accordance with the prospectus.

5.       Earnings per share

6.       Ordinary dividends

There were no dividends paid or proposed in respect of the year to 31 January 2025 (2024 - nil).

7.       Financial instruments

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 valuation techniques used by the Company are explained in the accounting policies on pages 85 and 86 of the Annual Report and Financial Statements. Transfers between levels of the fair value hierarchy take place when the criteria for recognition in another level are met, such as the listing of an investment.

*   The investments in preference shares are not classified as equity holdings as they 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 ended 31 January 2025, the investment in Tempus AI with a book cost of $18,468,000 and a fair value (IPO price) of US$32,858,000 was transferred from Level 3 to Level 1 on becoming listed. During the prior year the investment in Oddity with a fair value (IPO price) of US$11,800,000 was 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 IFRS 13, the table above provides 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.

*   Includes holdings in preference shares, promissory notes, ordinary shares and warrants.

†   The purchases and sales figures above include transaction costs of nil (2024 - nil).

8.       Share capital

          By way of a special resolution dated 15 March 2019 the Directors had a general authority to allot up to 720,000,000 ordinary shares or C shares, such figure to include the ordinary shares issued at the initial placing. 477,250,000 ordinary shares were issued at the Company's initial placing, with a further 23,180,002 ordinary shares subsequently issued. The remaining authority expired on 15 March 2024.

          By way of a special resolution dated 18 March 2021 the Directors have a general authority to allot up to 700,000,000 C shares. On 26 April 2021, the Company issued 700,000,000 C shares of US$1 each and raised gross proceeds of US$700,000,000. The issue costs in respect of the C share issue were US$5,198,000. These costs consisted of mainly broker commission (US$4,066,000), legal fees (US$601,000) and listing fees (US$396,000). The C shares converted on 8 September 2023 with 532,069,905 new ordinary shares being admitted to trading on 12 September 2023. The conversion was triggered by the C share capital deployment crossing the 85% threshold outlined in the prospectus. The C shares were converted proportionately based on respective NAV at the calculation date 31 August 2023, the nearest practicable date selected by the Board. As a result the conversion ratio was calculated to be 0.7601 ordinary shares per C share in issue on 8 September 2023.

          By way of a special resolution passed on 10 May 2024 the Directors of the Company were granted a general authority to issue or sell from treasury, ordinary or C shares, without regard to pre-emption rights up to 102,882,390 shares. This authority will expire immediately prior to the 2029 Annual General Meeting (or, if earlier, five years from the date of the passing of the resolution). During the year to 31 January 2025 no shares were issued (2024 - nil). In the period from 31 January 2025 to 21 March 2025 no shares were issued.

By way of a special resolution passed on 10 May 2024 the Directors of the Company have general authority to make market purchases of up to 154,145,753 ordinary shares, being 14.99% of the ordinary shares in issue as at 10 May 2024, being the date the resolution passed. This will expire at the conclusion of the Annual General Meeting to be held on 22 May 2025. 5,160,000 ordinary shares were bought back during the year ended 31 January 2025 at a cost of US$4,246,000 (31 January 2024 - 2,601,000 ordinary shares at a cost of US$1,851,000) hence the remaining authority is 150,560,753 ordinary shares. At 31 January 2025 the Company held 465,000 shares in treasury (2024 - nil). In the period from 31 January 2025 to 21 March 2025 2,750,000 ordinary shares were bought back to treasury. The total cost of shares bought back is charged to the capital reserve. The nominal value of the shares that were bought back and cancelled were transferred from the share capital to the capital redemption reserve.

Holders of ordinary shares have the right to receive income and capital from assets attributable to such share class. Ordinary shareholders have the right to receive notice of general meetings of the Company and have the right to attend and vote at all general meetings.

9.       The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 January 2025 but is derived from those accounts.

10.     The Annual Report and Financial Statements will be available on the Company website schiehallionfund.com‡ on or around 9 April 2025.

‡        Neither the contents of the Company website nor the contents of any website accessible from hyperlinks on the Company website (or any other website) is incorporated into, or forms part of, this announcement.

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 net assets

Total value of all assets held less current liabilities, other than liabilities in the form of borrowings.

Net asset value

Also described as shareholders' funds, net asset value ('NAV') is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares or C shares, as applicable, in issue.

Net current assets

Net current assets comprise current assets less current liabilities excluding borrowings.

Premium/(discount) (APM)

As stock markets and share prices vary, the Company'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 NAV per share from the share price 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.

Total Return

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. The Company does not pay a dividend, therefore, the one year total returns for the share price and NAV per share at book and fair value are the same as the percentage movements in the share price and NAV per share at book and fair value as detailed above.

Capital deployed (APM)

Capital deployed reflects cumulative amounts invested since inception of the Company.

Internal rate of return (IRR) (APM)

The IRR indicates the annualised rate of return for the Company's investment portfolio.

Gross multiple on invested capital (MOIC) (APM)

The MOIC expresses, as a multiple, how much return the Company has made on investment realisations and income, relative to its book cost.

Ongoing charges (APM)

The total recurring expenses (excluding the Company's costs of dealing in investments and borrowing costs) incurred by the Company as a percentage of the average net asset value.

Leverage (APM)

For the purposes of the 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 US dollar 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.

Average revenue growth rate (APM)

Calculated by taking an average of each investee company's last twelve months revenue growth (as a percentage).

Average movement in company valuation/share price (APM)

Calculated by taking an average of all valuation movements (as a percentage) by portfolio company and by line of portfolio company share class.

Contribution (APM)

Contribution to absolute performance (in US$ terms) is used to illustrate how an individual stock has contributed to the overall return. It is calculated by taking the average portfolio company weight for the period multiplied by the absolute return. This is calculated on a daily basis and compounded to provide the overall contribution of a portfolio company to the performance of the full portfolio. The absolute return of a portfolio company is determined by calculating the share price movements in that holding whilst taking into account any purchase or sale transactions that have occurred in the period. The absolute return is in US$ terms and therefore takes into account the foreign exchange movement between the portfolio company's local currency and US dollar.

Sustainable Finance Disclosure Regulation ('SFDR')

The EU Sustainable Finance Disclosure Regulation ('SFDR') does not have a direct impact in the UK due to Brexit, however, it applies to third-country products marketed in the EU. As Schiehallion is marketed in the EU by the AIFM, Baillie Gifford & Co Limited, via the National Private Placement Regime ('NPPR') the following disclosures have been provided to comply with the high-level requirements of SFDR.

The AIFM has adopted Baillie Gifford & Co's Stewardship Principles and Guidelines as its policy on integration of sustainability risks in investment decisions.

More detail on the Investment Manager's approach to sustainability can be found in the Stewardship Principles and Guidelines document, available publicly on the Baillie Gifford website bailliegifford.com‡.

The Schiehallion Fund Limited is managed by Baillie Gifford, the Edinburgh based fund management group with around £206 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 21 March 2025). The Administrator, Secretary and Designated Manager is Alter Domus (Guernsey) Limited.

‡        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.

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

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