TIDMMNTN
RNS Number : 4415J
Schiehallion Fund Limited (The)
09 April 2020
The Schiehallion Fund Limited
Legal Entity Identifier: 213800NQOLJA1JCWXQ56
Regulated Information Classification: Annual Financial and Audit
Reports
Annual Report and Financial Statements
Further to the preliminary statement of audited annual results
announced to the Stock Exchange on 20 March 2020, The Schiehallion
Fund Limited ("Schiehallion" or "the Company") announces that the
Company's Annual Report and Financial Statements for the period
from incorporation on 4 January 2019 to 31 January 2020, including
the Notice of Annual General Meeting, has today been posted to
shareholders and submitted electronically to the National Storage
Mechanism where it will shortly be available for inspection at
http://www.morningstar.co.uk/uk/NSM .
It is also available on the Schiehallion page of the Baillie
Gifford website at: www.schiehallionfund.com (as is the preliminary
statement of audited annual results announced by the Company on 20
March 2020).
Responsibility Statement of the Schiehallion Directors in
respect of the Annual Report and Financial Statements
The Schiehallion Fund Limited Directors confirm that, to the
best of their knowledge:
3/4 the Financial Statements set out in the Annual Report and
Financial Statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
3/4 the Strategic Report set out in the Annual Report and
Financial Statements includes a fair review of the development and
performance of the business and the position of the issuer,
together with a description of the principal risks and
uncertainties they face.
The Directors consider the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Company's position and performance, business model and
strategy.
Principal and Emerging Risks relating to the Company
As explained on pages 20 and 21 of the Annual Report and
Financial Statements, there is a process for identifying,
evaluating and managing the risks, including emerging risks, faced
by the Company on a regular basis. The Directors have carried out a
robust assessment of the principal and emerging risks facing the
Company, including those that would threaten its business model,
future performance, solvency or liquidity. A description of these
risks and how they are being managed or mitigated is set out
below:
Financial Risk - the Company's investments consist of private
investee companies' securities and its principal financial risks
are therefore market-related and include market risk (comprising
currency risk, interest rate risk and other price risk), liquidity
risk and credit risk. An explanation of those risks and how they
are managed is contained in note 14 on pages 42 to 45 of the Annual
Report and Financial Statements. As oversight of this risk, the
Board considers at each meeting various metrics including top and
bottom stock contributors to performance along with sales and
purchases of investments. Individual investments are discussed with
the portfolio managers together with their general views on the
various investment markets and sectors.
Investee Companies - the Company's investments in private
investee companies will not be liquid and there may be restrictions
on transfer of those investments. This may limit the Company's
ability to realise investments at short notice, at a fair value or
at all. A large proportion of the overall value of the portfolio
may at any time be accounted for by a relatively limited number of
investee companies. If the value of one or more such investee
companies were to be adversely affected, it could have a material
adverse impact on the overall value of the portfolio and the
Company's financial condition, results of operations and prospects,
with a consequential adverse effect on the market value of the
ordinary shares. Risk is diversified by having a portfolio of
investments which at the end of the initial investment period, two
years from the date of Admission of the ordinary shares to trading
on the Specialist Fund Segment of the Main Market of the London
Stock Exchange, is expected to number between 20 and 60 holdings in
investee companies.
Valuation Risk - the Company invests predominately in late stage
private businesses which are valued in accordance with
International Private Equity and Venture Capital Valuation ('IPEV')
Guidelines using appropriate valuation methods. Such methods
include an element of judgement which may lead to a material
misstatement of the valuation and consequently in the Company's net
asset value. The Investment Manager has a robust valuation
methodology which it applies consistently to make valuation
recommendations to the Board.
The Company's Directors meet with the Investment Manager at
special meetings solely to consider the valuations to be included
in the Interim and Annual Financial Statements. At these meetings,
valuation analysis on the Company's investments is provided by the
Investment Manager. The Directors have the opportunity to challenge
the valuations, request further information and make changes before
the valuations are finally approved.
Investment Strategy Risk - pursuing an investment strategy to
fulfil the Company's objective which the market perceives to be
unattractive or inappropriate, or the ineffective implementation of
an attractive or appropriate strategy, may lead to reduced returns
for shareholders and, as a result, a decreased demand for the
Company's shares. This may lead to the Company's shares trading at
a widening discount to their net asset value. To mitigate this
risk, the Board regularly reviews and monitors the Company's
objective and investment policy and strategy, the investment
portfolio and its performance, the level of discount/premium to net
asset value at which the shares trade and movements in the
share register. A strategy meeting is held annually.
Discount Risk - the discount/premium at which the Company's
shares trade relative to its net asset value can change. The risk
of a widening discount is that it may undermine investor confidence
in the Company. The Board monitors the level of discount/ premium
at which the shares trade and the Company has authority to buyback
its existing shares, when deemed by the Board to be in the best
interests of the Company and its shareholders.
Legal and Regulatory Risk - failure to comply with applicable
legal and regulatory requirements such as, the tax rules applicable
to Guernsey domiciled investment funds, the laws and regulations
applicable in Guernsey, and the continuing obligations imposed on
all investment companies whose shares are admitted to trading on
the Specialist Fund Segment of the Main Market of the London Stock
Exchange could lead to suspension of trading in the Company's
shares on the Specialist Fund Segment of the Main Market of the
Stock Exchange, financial penalties, a qualified audit report or
the Company being subject to tax on capital gains. To mitigate this
risk, Baillie Gifford's Business Risk, Internal Audit and
Compliance Departments and Alter Domus; the Administrator,
Secretary and Designated Manager ('Administrator'); provide regular
reports to the Audit Committee on their monitoring programmes.
Major regulatory change could impose disproportionate compliance
burdens on the Company. Shareholder documents and announcements,
including the Company's published Interim and Annual Report and
Financial Statements, are subject to stringent review processes and
procedures are in place to ensure adherence to the Transparency
Directive and the Market Abuse Directive with reference to inside
information.
Custody and Depositary Risk - safe custody of the Company's
assets may be compromised through control failures by the
Depositary, including breaches of cyber security. To monitor
potential risk, the Audit Committee receives six monthly reports
from the Depositary confirming safe custody of the Company's assets
held by the Custodian. Cash and portfolio holdings are
independently reconciled to the Custodian's records by the
Investment Manager. The Custodian's audited internal controls
reports are reviewed by Baillie Gifford's Business Risk Department
and a summary of the key points is reported to the Audit Committee
and any concerns investigated.
Operational Risk - failure of Baillie Gifford's systems or those
of other third-party service providers could lead to an inability
to provide accurate reporting and monitoring or a misappropriation
of assets. To mitigate this risk, Baillie Gifford has a
comprehensive business continuity plan which facilitates continued
operation of the business in the event of a service disruption or
major disaster. The Audit Committee reviews Baillie Gifford's
Report on Internal Controls and the reports by other key
third-party providers are reviewed by Baillie Gifford on behalf of
the Board.
Political and Associated Economic Risk - the Board is of the
view that political change in areas in which the Company invests or
may invest may have practical consequences for the Company.
Political developments are closely monitored and considered by the
Board. The Board has noted the UK's departure from the European
Union on 31 January 2020. Whilst considerable uncertainty remains,
the Board will continue to monitor developments as they occur and
assess the potential consequences for the Company's future
activities.
The investment portfolio has global reach and is exposed to
external and emerging threats such as cyber risk and Coronavirus.
These risks are mitigated by the Investment Manager's close links
to investee companies and their ability to ask questions on
contingency plans. The Investment Manager believes the impact of
such events may be to slow growth rather than to invalidate the
investment rationale.
Baillie Gifford & Co Limited
9 April 2020
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END
ACSILMFTMTMMBJM
(END) Dow Jones Newswires
April 09, 2020 12:05 ET (16:05 GMT)
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