TIDMBGEU
RNS Number : 4274I
Baillie Gifford European Grw Ts PLC
11 December 2020
Baillie Gifford European Growth Fund plc
Legal Entity Identifier: 213800QNN9EHZ4SC1R12
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 25 November 2020 , Baillie
Gifford European Growth Trust PLC ("the Company") announces that
the Company's Annual Report and Financial Statements for the year
ended 30 September 2020, including the Notice of Annual General
Meeting, has been posted to shareholders and submitted
electronically to the National Storage Mechanism where it will
shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
It is also available on the Company's page of the Baillie
Gifford website at: www.bgeuropeangrowth.com (as is the preliminary
statement of audited annual results announced by the Company on 25
November 2020).
Covid-19 coronavirus - Important note regarding arrangements for
the Annual General Meeting (AGM)
The Board of Baillie Gifford European Growth Trust PLC ("the
Company") recognises the public health risk associated with the
Covid-19 outbreak arising from public gatherings and notes the
Government's measures restricting such gatherings, travel and
attendances at workplaces.
At the same time, the Board is conscious of the legal
requirement for the Company to hold its AGM before the end of March
2021. Given the current uncertainty around when public health
concerns will have abated, the Board has for the time being decided
to follow the Company's customary corporate timetable and,
accordingly, the Company's AGM is being convened to take place as
scheduled at 11am on Thursday 21 January 2021 at the offices of
Baillie Gifford & Co, Calton Square, 1 Greenside Row, Edinburgh
EH1 3AN, but without access for shareholders. The Board will,
however, continue to monitor developments and any changes will be
advised to shareholders and details will be updated on the
Company's website.
In the meantime, the Board encourages all shareholders to submit
proxy voting forms as soon as possible and, in any event, by no
later than 11am on 19 January 2021.
We would encourage shareholders to monitor the Company's page of
the Managers' website www.bgeuropeangrowth.com . Should
shareholders have questions for the Board or the Managers or any
queries as to how to vote, they are welcome as always to submit
them by email to trustenquiries@bailliegifford.com or call 0800 917
2112. Baillie Gifford may record your call.
Statement of Directors' Responsibilities in respect of the
Annual Report and the Financial Statements
Each of the Directors, whose names and functions are listed
within the Directors and Managers section of the Annual Report and
Financial Statements, confirm that, to the best of their
knowledge:
3/4 the Financial Statements, prepared in accordance with the
set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and net return of the
Company;
3/4 the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces (as also set out below);
3/4 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 Risks relating to the Company
As explained on pages 25 and 26 of the Annual Report and
Financial Statements there is an ongoing process for identifying,
evaluating and managing the risks faced by the Company. The
Directors have undertaken a robust assessment of the principal and
emerging risks facing the Company, including those that would
threaten the 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 assets at present consist mainly
of listed securities. Its principal and emerging risks are
therefore market related and include market risk (comprising
currency risk, interest rate risk and other price risk), liquidity
risk and credit risk. Explanations of those risks and how they are
managed or mitigated are contained in note 18 to the Financial
Statements on pages 49 to 52. The Board has, in particular,
considered the impact of heightened market volatility since the
Covid-19 outbreak. In monitoring this risk, the Board considers at
each meeting various portfolio metrics including individual stock
performance, the composition and diversification of the portfolio
by sector, purchases and sales of investments and the top and
bottom contributors to performance. The Manager provides rationale
for stock selection decisions.
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.
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. To manage this, the Board monitors the level of
discount/premium at which the shares trade and the Company has
authority to buy back its existing shares when deemed by the Board
to be in the best interests of the Company and its shareholders in
aggregate.
Regulatory Risk - failure to comply with applicable legal and
regulatory requirements such as the tax rules for investment
companies, the FCA Listing Rules and the Companies Act could lead
to suspension of the Company's Stock Exchange listing, financial
penalties, a qualified audit report or the Company being subject to
tax on capital gains. To mitigate this risk, Baillie Gifford's
Business Risk, Internal Audit and Compliance Departments provide
regular reports to the Company's Audit Committee on Baillie
Gifford's monitoring programmes. Major regulatory change could
impose disproportionate compliance burdens on the Company. In such
circumstances representation is made to ensure that the special
circumstances of investment trusts are recognised. Shareholder
documents and announcements, including the Company's published
Interim and Annual Report and Financial Statements, are subject to
stringent review processes and procedures are in place to ensure
adherence to the Transparency 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 cyber security incidents. To mitigate this
risk, the Audit Committee receives bi-annual 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 Managers. 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. In addition, the existence of assets is subject to
annual external audit.
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
(including any disruption resulting from the Covid-19 outbreak) or
major disaster. Since the introduction of the Covid-19
restrictions, almost all Baillie Gifford staff have been working
from home and operations have continued largely as normal. The
Board 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. In the year under review, the other
key third party service providers have not experienced significant
operational difficulties affecting their respective services to the
Company.
Leverage Risk - the Company may borrow money for investment
purposes (sometimes known as 'gearing' or 'leverage'). If the
investments fall in value, any invested borrowings will magnify the
extent of this loss. If borrowing facilities are not renewed, the
Company may have to sell investments to repay borrowings. To
mitigate this, all borrowings require the prior approval of the
Board and leverage levels are discussed by the Board and Managers
at every meeting. Covenant levels are monitored regularly. The
majority of the Company's investments are in quoted securities that
are readily realisable. Further information on leverage can be
found on page 59 and in the Glossary of Terms and Alternative
Measures on pages 60 and 61 of the Annual Report and Financial
Statements.
Political Risk - political developments are closely monitored
and considered by the Board as they occur, such as the departure of
the UK from the European Union on 31 December 2020. Any portfolio
of European equities will be exposed to the outcome of the Brexit
negotiations, positively or negatively, and the Board and Managers
remain alert to developments at both a macro-economic and a stock
specific level.
Baillie Gifford & Co Limited
Company Secretaries
11 December 2020
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END
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