The Schiehallion Fund Interim Financial Report

RNS Announcement

The Schiehallion Fund Limited

Legal Entity Identifier: 213800NQOLJA1JCWXQ56

Regulated Information Classification: Interim Financial Report

The following is the unaudited Interim Financial Report for the six months to 31 July 2025 which was approved by the Board on 3 October 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 six months to 31 July 2025, the Company's ordinary share net asset value* ('NAV') returned 9.9% and share price returned 11.1%. The share price discount† to NAV narrowed from 19.2% to 18.3%. Further commentary on performance is included in the Managers' report below.

Capital allocation

In November 2023, the Company announced that it intended to allocate up to US$20 million towards share repurchases, and that the Board would keep its capital allocation and associated share buyback policy under review. Since then, the Company has bought back 13.4 million shares for consideration of $12.1 million as at 31 July 2025. These repurchases have largely been funded from cash and the sale of listed investments. The discount narrowed from 46.8% to 18.3% over that period.

The Board intends to continue to allocate capital towards share repurchases. In considering whether to repurchase shares, the Board will take into account any supply and demand imbalance in the Company's shares, the discount at which the Company's shares trade, working capital requirements and the pipeline of investment opportunities.

Any share repurchases will be funded from the sale of listed investments or from partial returns of capital from material realisations from the Company's private company investments.

Tax residency & trading segment

As announced in May, the Board has begun the process to enable the Company to become UK tax resident and to be able to join the UK's investment trust regime. It is anticipated that this would take effect during the first quarter of 2026.

The Board also intends to apply to transfer the Company's ordinary shares of no par value (the "Shares") from trading on the Specialist Fund Segment of the London Stock Exchange (the "LSE") to trading on the LSE's Closed-Ended Investment Funds category of the Main Market, which would be expected to take effect at broadly the same time as any change in tax residency.

The Board intends to post a circular to shareholders later this month to convene a general meeting to seek the necessary shareholder approvals.

Dr Linda Yueh CBE

Chairperson

3 October 2025

Notes

*   For a definition of terms see Glossary of terms and Alternative Performance Measures below.

†   Alternative Performance Measure, see Glossary of terms and Alternative Performance Measures below.

All investment strategies have the potential for profit and loss. Past performance is not a guide to future performance.

Summary of unaudited results*

Period's high and low

Notes

*   For a definition of terms see Glossary of terms and Alternative Performance Measures below.

†   Alternative Performance Measure, see Glossary of terms and Alternative Performance Measures below.

All investment strategies have the potential for profit and loss. Past performance is not a guide to future performance.

Investment objective

The Schiehallion Fund Limited seeks to generate capital growth for investors through making 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.

Principal risks and uncertainties

The principal and emerging risks facing the Company are:

Investment and strategic risks - liquidity of investments; market, economic, political and environmental risks; valuation risk; investment strategy risk; discount risk; and Environmental, Social and Governance ('ESG') risk.

External risks - political and associated economic risk; legal and regulatory risk.

Operational risks - performance and reliance on third party service providers; cyber security threats; and key professionals.

Emerging risks - the Board has regular discussions on principal risks and uncertainties, including any risks which are not an immediate threat but could arise in the longer term.

An explanation of these risks and how they are managed is set out on pages 41 to 45 of the Company's Annual Report and Financial Statements for the year to 31 January 2025 which is available on the Company's website: schiehallionfund.com

Responsibility statement

The Directors of The Schiehallion Fund Limited confirm that to the best of their knowledge:

a.          the Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Directors have elected to prepare financial statements that comply with International Financial Reporting Standards as issued by the International Accounting Standards Board;

b.          the Interim Management Report includes a fair review of the information required by:

i.           DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

ii.          DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the enterprise during that period.

On behalf of the Board

Dr Linda Yueh CBE

Chairperson

3 October 2025

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, and for the preparation and dissemination of financial statements. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Interim management report

Reflections

The end of the Company's financial period coincided with the conclusion of the 2025 Tour de France which was won by the Slovenian rider, Tadej Pogacar, now a four-time champion. Only one other rider, Denmark's Jonas Vingegaard (a two-time champion), has consistently been able to match Pogacar's level in recent years. Together, these two riders have covered the top two steps of the podium (in different orders) in each of the last five Tours de France.

This sort of outsized impact by a very small subset of riders has been common throughout the history of the race. In fact, this does not merely apply to cycling, or sport in general, but can be observed in a range of everyday phenomena encapsulated by the so-called Pareto principle. The latter is named after the 19th century Italian economist Vilfredo Pareto, who at the time observed that a small percentage of Italy's population owned a large percentage of the country's wealth - roughly 80% of the wealth was controlled by 20% of the people. This then gave rise to the so-called 80/20 rule - or Pareto principle more formally - which states that roughly 80% of outcomes result from 20% of causes, highlighting the imbalance between inputs and results.

Similar asymmetric distributions are observed in fields as diverse as geosciences (where a minority of large earthquakes are responsible for the majority of damage), demographics (where country populations tend to be concentrated in a small number of large cities), and even Renaissance art (where a handful of painters commanded most of the recognition and value in the market). This principle also extends into the world of investing, where a small number of exceptional companies have historically delivered the majority of returns.

Which brings us to The Schiehallion Fund. Over the past six months we have seen the continued maturing of the vehicle as it has reached full deployment for the first time, coupled with the emergence of an increasingly asymmetric return profile within the Company. This has been driven by the three largest holdings, namely Bending Spoons (12.5% weight within the Company), SpaceX (9.9%) and ByteDance (7.8%) - all of which continue to showcase remarkable operational execution within their respective domains - true champions, if you will. Given the global nature of the Company, it is unsurprising to see the wide geographic spread across three different continents among these three names - an indication of the Company's ability to pursue the best private growth opportunities wherever they might be located.

As with the Tour de France, the bar for entry into the Schiehallion portfolio is similarly high. In 2024 only six of the more than 600 financing rounds we considered ultimately resulted in new investments, and over the course of the most recent six months we have seen three further names become new holdings within the Company. We continue to judiciously deploy capital only into those companies that we regard to represent the very best private growth opportunities on offer.

In addition to the champions of today - the large holdings that have already delivered strong returns - we also believe that there are potential future champions positioned within the proverbial peloton, ready to take their place in the spotlight in the coming years. Pogacar's dominance is set to continue for a while yet, but new rivals will inevitably emerge. We would expect the same to be true from the Company's wider portfolio of holdings, and we remain excited by the possibilities in this regard.

Market update

The first half of 2025 has seen a steady rebound in fundraising across private markets, coupled with increased optimism more recently despite continued macro and geopolitical uncertainty. There has also been an encouraging thawing of the IPO market, which has seen two Company holdings list so far this year. Chime, the US neobank, listed on the Nasdaq in June, and this was followed by HeartFlow - the California-based cardiovascular disease testing company - which also listed on the Nasdaq after the end of the reporting period. These developments give us cautious optimism regarding the direction of travel for the IPO market as we head into the second half of the year.

Performance

Performance over the first six months of the current financial year has been encouraging, with both the NAV (+9.9%) and share price (+11.1%) showing double digit gains despite encapsulating a period characterised by further macroeconomic turbulence - mostly relating to the current US administration's trade policy. As ever we cast our gaze over a longer time horizon, steadfast in our pursuit of finding private businesses capable of scaling to multiples of their current size through continued operational execution. Here we have broadly been encouraged by the performance of the majority of holdings within the Company - an aspect which has translated into the NAV performance over the period so far. Over a longer 12-month lookback performance has been similarly positive, with both NAV (+28.2%) and share price (+16.5%) returns being strong.

At a company level the NAV returns over the latest six months have primarily been driven by private holdings within the Company, most notably Bending Spoons, the Italian digital consumer product company. The company has continued to deliver on its strategy of applying its proprietary in-house tools and expertise across an expanding portfolio of exciting products, which now also includes recent acquisition, MileIQ, a US-based mileage‑tracking application. Another strong contributor to absolute performance was Tekever, the Portuguese unmanned aerial systems maker. First purchased for Schiehallion during the third quarter of 2024, the company recently completed a new funding round at a valuation approximately twice the size of our initial valuation.

The main detractor to absolute NAV performance over the period was Dailyhunt (VerSe Innovation), the Indian media holding company known for its applications Dailyhunt (news aggregation) and Josh (short form video). The company has recently seen a deterioration in its overall trajectory, including a decline in revenues, which led us to make a notable downward revaluation during the period. Among the listed names in the portfolio Warby Parker, the corrective eyewear retailer, was another detractor. The company's first quarter earnings and revenue fell short of analyst expectations, likely explaining the share price decline heading into April - although this recovered partially towards the end of the reporting period. Overall, the company has rebounded well over the last twelve months with the share price up approximately 50% since August 2024.

Activity

We have made three new additions to the Company so far this year, comprising the UK-based multinational neobank, Revolut, the US autonomous defence systems maker, Anduril, and US workforce management system company, Rippling. Revolut is a business which we had met on multiple occasions throughout its growth journey, and we recently made the decision to invest as we have been impressed by the rate at which the company has evolved its product offering, how it has scaled as a business and matured as an operation. In the case of Anduril, we see a company with a proven product-market fit, having established clear water between themselves and other startup competitors, and disrupting an industry - namely defence - that has remained largely unchanged for decades. Rippling is similarly exhibiting impressive growth, winning a wide array of customers in a range of sectors through its innovative modular product solution across three product clouds, namely HR, IT and Finance.

We made two complete sales over the course of the reporting period, namely that of online accommodation platform, Airbnb (listed), and online education platform, Masterclass (through a secondary transaction). While we still regard Airbnb as a good business, we had to consider potential upside from here as well as position sizing. We ultimately decided to use it as a source of funds for new investments. Airbnb generated a 135% return over the course of our holding period since December 2019. Masterclass, on the other hand, had not played out the way we had hoped, and we also decided to release this capital towards new opportunities that we are seeing. Elsewhere we made a reduction in the listed UK cross border payments provider, Wise, reducing its position size from 6.1% to 4.4% of net assets. It remains a top five holding within the Company and one where we continue to have a high degree of conviction.

Outlook

We continue to be enthused by the operational execution we are seeing across the portfolio. At an aggregate level revenue growth among holdings is strong - 45% on a trailing 12-month basis as at June 2025. This is more than double the 20% on offer within the Nasdaq 100 public market index, which serves as a useful reference point given the latter's US composition and growth technology bias. Existing holdings are therefore growing rapidly, and doing so with impressive gross margins (59% at an aggregate level, which is comparable to that of the Nasdaq 100). The cash runway for the private cohort of holdings with the Company also remains robust, with nearly 80% of this cohort having a runway of at least four years.

More broadly we remain optimistic about the opportunity for growth equity investing. We are excited by the breadth of the opportunities we are being presented with, both in terms of sector and geography, and we believe that the businesses growing up in the slightly more capital constrained environment of today (compared to recent years) will ultimately be better businesses for it due to the more disciplined and focused approach that the current environment commands.

The Schiehallion Fund continues to offer a compelling path for shareholders to gain exposure to some of the most important private growth businesses of our time, and some of the future champions of tomorrow.

Peter Singlehurst

Robert Natzler

Notes

For a definition of terms see Glossary of terms and Alternative Performance Measures below.

All investment strategies have the potential for profit and loss. Past performance is not a guide to future performance.

The principal risks and uncertainties facing the Company are set out above.

Portfolio executive summary

Performance

*   Inception date: 27 March 2019.

All figures are stated on a total return basis† for periods to 31 July 2025.

†   Alternative Performance Measure - see Glossary of terms and Alternative Performance Measures below.

Source: Baillie Gifford/LSEG. See disclaimer below.

Key contributors to and detractors from Company performance - six months to 31 July 2025

*   Alternative Performance Measure - see Glossary of terms and Alternative Performance Measures below.

#   Absolute performance (in US$ terms) has been calculated on a total return basis (including reinvestment of any dividends paid by portfolio holdings) over the period 1 February 2025 to 31 July 2025.

†   The contributors to and detractors from Company performance are listed in descending order.

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

Source: Revolution.

Distribution of total net assets* (unaudited)

Geographical as at 31 July 2025

Sectoral as at 31 July 2025

The above sectoral distribution is not derived from any index.

*For a definition of terms see Glossary of terms and Alternative Performance Measures below.

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'. Baillie Gifford's 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.

Baillie Gifford revalues 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. The valuations are also reviewed twice per year by the Board, which receives copies of Baillie Gifford's proposed valuations as well as the latest valuation reports from its external valuer. The valuations 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 indices 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.

Continued improvements in market conditions have sustained an increase in deal activity, but isolated pockets of heightened volatility remain. The data below quantifies the revaluations carried out during the six months to 31 July 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 period 1 February 2025 to 31 July 2025.

List of investments

as at 31 July 2025 (unaudited)

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

*   See Glossary of terms and Alternative Performance Measures below.

The Company may hold various classes of shares in investee companies, some of which may have a preference on winding up.