Scottish American Investment Company PLC

Quarterly Report • Aug 12, 2022

THE SCOTTISH AMERICAN INVESTMENT COMPANY P.L.C.

SAINTS Income again and again

Interim Financial Report 30 June 2022

Objective

SAINTS' objective is to deliver real dividend growth by increasing capital and growing income.

Investment Policy

SAINTS' policy is to invest mainly in equity markets, but other investments may be held from time to time including bonds, property and other asset classes.

Benchmark

The portfolio benchmark against which performance has been measured is the FTSE All-World Index (in sterling terms).

In comparing NAV performance to the benchmark, the Company's assets and liabilities are measured at fair value.

Principal Risks and Uncertainties

The principal risks facing the Company are financial risk, investment strategy risk, climate and governance risk, regulatory risk, custody and depositary risk, operational risk, discount risk, leverage risk, political risk and emerging risks. An explanation of these risks and how they are managed is set out on pages 7 and 8 of the Company's Annual Report and Financial Statements for the year to 31 December 2021 which is available on the Company's website: saints-it.com. The principal risks and uncertainties have not changed since the date of that report.

Responsibility Statement

We confirm that to the best of our knowledge:

• a) the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';
• b) the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months, their impact on the Financial Statements and a description of principal risks and uncertainties for the remaining six months of the year); and
• c) the Interim Financial Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board Lord Macpherson of Earl's Court Chairman 27 July 2022

Summary of Unaudited Results

	30 June 2022	31 December 2021 (audited)	% change
Shareholders' funds	£831.7m	£930.2m
Net asset value per ordinary share (borrowings at fair value)*	481.6p	528.4p	(8.9)
Net asset value per ordinary share (borrowings at book value)	471.7p	529.7p	(10.9)
Share price	464.0p	541.0p	(14.2)
FTSE All-World Index (in sterling terms)†			(11.6)
(Discount)/premium – borrowings at fair value*	(3.7%)	2.4%
(Discount)/premium – borrowings at book value	(1.6%)	2.1%
Active share*	89%	89%

	Six months to 30 June 2022	Six months to 30 June 2021	% change
Revenue earnings per share	7.78p	6.74p	15.4
Dividends paid and payable in respect of the period	6.65p	6.125p	8.6

Dividend versus Inflation

Ten Year Cumulative to 30 June 2022 (figures rebased to 100 at 30 June 2012)

	Six months to 30 June 2022	Year to 31 December 2021
Total return performance (%)*†
Net asset value (borrowings at fair value)	(7.6)	21.5
Net asset value (borrowings at book value)	(9.7)	20.8
Share price	(13.0)	19.5
FTSE All-World Index (in sterling terms)	(10.5)	20.0

* Alternative Performance Measure, see Glossary of Terms and Alternative Performance Measures on pages 20 and 21.

†Source: Refinitiv/Baillie Gifford and relevant underlying data providers. See disclaimer on page 22.

Interim Management Report

SAINTS' assets have shown marked resilience against an uncertain backdrop over the first six months of 2022, holding up better than equities generally in a period in which the invasion of Ukraine by Russia, combined with rising inflation and interest rates, has led to a rapid decline in share prices as investors' risk appetite sharply reduced. SAINTS' net asset value total return (with borrowings at fair value) for the first six months of 2022 was -7.6%. This was ahead of the total return on global equities (-10.5%) as measured by the FTSE All-World Index. The share price total return was -13.0%, as the Company's share price moved from a premium to a modest discount to net asset value towards the end of the period.

The world economy still faces a great deal of uncertainty. It is at times like this that it is helpful to look back at the longer-term performance of the Company's portfolio to put this in context, and to look forward with confidence in the future growth prospects of the Company's equity holdings. During the past five years, we have seen the sharpest recession in the history of the world economy, rising political uncertainty and extensive business and travel shutdowns. Despite those challenges, the equity holdings in the Company's portfolio have delivered average compound annual growth in earnings per share of 9% per annum, well ahead of inflation over the same five-year period. Dividends from these equity holdings have also grown ahead of inflation.

Russia's invasion of Ukraine has triggered a large and sudden increase in energy and food prices. Combined with persistent supply chain issues and a still elevated demand in developed markets, this has led inflation to accelerate further and hit levels not seen for a very long time. With persistent, and accelerating inflation, Central Banks around the world have moved into tightening mode and raised interest rates faster than investors expected just a few months ago.

Leading the charge is the US Federal Reserve, which raised its benchmark rate by 75bp in June and hinted at further increases later this year. This was the largest increase in interest rates since 1994 and further evidence of a new era in Central Banking. The credibility of Central Banks, so essential to keep inflation expectations in check, is at stake.

In turn, investors have started to anticipate a sharp slowdown in economic growth, if not a recession, in the coming months. This is not a supportive background for financial markets in general, and both global equity and bond markets fell in the period.

The Company's equity portfolio showed negative returns but outperformed global equity markets. In relative performance terms, the absence of oil and gas producers from the portfolio – companies whose long-term outlook we are convinced remains poor – was a headwind, but it was more than offset by the strong performance of individual holdings.

Danish pharmaceutical company Novo Nordisk was a strong contributor to performance as its obesity drug remains in high demand in the US. This led the company to raise its revenue guidance for the year after the publication of its first quarter results. To make matters better, trial results released recently showed positive trial data for a once-weekly insulin product. If confirmed by further studies, the convenience provided by this new product would be the first real innovation in this market for nearly two decades.

Deutsche Boerse was another strong contributor as it benefited from increased market volatility and the associated volume growth in derivatives trading, a core business for the company. With large cash reserves in their settlement operations, rising interest rates are also a tailwind for the company.

In falling equity markets, consumer staples companies tend to be more resilient and the first half of 2022 was no exception. Pepsico and Coca Cola are two holdings whose share prices rose in the period, on the back of strong results. Both are a good illustration of what is happening with many companies in the portfolio: input costs are rising but the companies are able to raise prices without affecting demand much. Often price increases are achieved by managing their portfolio of products rather than raising the price of every product. And this is where innovation comes into play: by promoting new and healthier snacks at higher prices, Pepsico can raise the average price of its portfolio of products. This has led to some strong revenue growth rates for staples companies, with Pepsico and Coca Cola publishing organic growth rates of, respectively, 7% and 15%. Demand for their products is relatively insensitive to the economic cycle, which is precisely what makes them resilient holdings.

Some of the more cyclical companies in the portfolio, however, had a difficult first half. The Swiss alternative asset manager Partners Group is a good example: with market volatility and interest rates rising, investors were quick to assume lower demand for less liquid asset classes like the private equity funds that the group manages. Partners is an outstanding company with a long-term investment horizon and a very impressive track-record. Volatility may reduce demand for their products, but it will also create good investment opportunities for managers like Partners who are willing to take the long view.

Shares in the UK drinks company Fevertree declined after the company announced half-year results showing continued pressure on its operating margins due to rising input costs. Swedish industrial company Atlas Copco was another detractor as investors paid more attention to the negative impact of supply chain issues than to the very strong order book. In both cases we remain confident in their long-term growth prospects.

Portfolio Activity

In terms of key transactions in the first half of the year, we purchased new holdings in the US-listed software company Intuit and the French-listed beauty products company L'Oréal.

L'Oréal is a global leader in the beauty industry. We are longstanding admirers of its management, who have an impressive track record of continued innovation, and the company has an anchor shareholder who helps the management remain focused on long-term success. We expect the company to continue compounding its revenue and earnings for many years, underpinned by market growth, market share gains and steady margin improvement. The shares have recently fallen significantly on macro-economic concerns, which has provided us with an opportunity to invest in the shares at an attractive valuation.

The other new holding, the software company Intuit, has two well-established products in the US: QuickBooks, an online accounting service for small businesses, and TurboTax, an online tax service for consumers. Over the next decade, we expect Intuit's online services to add more functionality, and with more and more insight into their customers, to develop these services into a core financial platform for their customers. We expect this to lead to strong revenue and profit growth for several years to come. With strong prospects for a resilient dividend thanks to the healthy cashflows generated, we believe that the company is a good fit for the Company's portfolio.

These new purchases were funded by the sale of Kimberly-Clark de México and Hiscox.

Kimberly-Clark de México is the leading manufacturer of nappies, tissues and other sanitary products in Mexico. Our investment case was based on the assumption that rising household incomes in Mexico would drive growth in spending on the company's products, both in volume terms and through increased pricing power. In practice, however, the company has struggled to grow its earnings due to sustained pressure on its input costs, limited success in gaining market share and the depreciation of the Mexican currency. With little prospect that these headwinds will reverse and better opportunities elsewhere in the portfolio, we have sold out of the company.

More recently, we have sold out of UK insurer Hiscox, as we have come to the conclusion that it is no longer an ideal fit for the Company's portfolio. The most challenging aspect is the volatility of Hiscox's dividend, which tends to be correlated with periods of economic stress. By investing the proceeds into some of the more robust companies mentioned above, we have upgraded the overall dividend resilience of the Company's equity portfolio.

Beyond equities

One advantage of being an investment trust is the ability to add a prudent amount of long-dated borrowings at fixed rates. The Company uses these borrowings to invest in a diverse portfolio of commercial properties, infrastructure companies and fixed income securities, with the goal of generating returns above the cost of borrowing, to the benefit of shareholders.

This task has become considerably easier, as in April new long-term private placement debt of £80m replaced SAINTS previous debenture, which had borne a coupon of 8%. The overall cost of the Company's borrowings, including the further £15m of private placement debt which was added in April 2021, has now fallen to just below 3%. The opportunity set of potential investments which would yield more than the Company's cost of borrowings has therefore increased significantly.

During the first half of the year the property portfolio delivered a total return above 5%. One property was sold during the period, being the industrial warehouse in Basingstoke at a price more than 20% above the valuation at the end of 2021. Through the remainder of this year, the property manager is anticipating a difficult backdrop for commercial property valuations due to rising interest rates and slowing economic growth, and has been strengthening the portfolio accordingly. Inflation linkages in the portfolio's rental contracts remain strong, and the portfolio continues to have no voids.

The infrastructure companies delivered a total return above 6%. In a slowing economy with rising inflation, the value of infrastructure assets such as those managed by Terna, the Italian grid network, was increasingly evident to investors and this supported valuations. The dividend yield of the Company's infrastructure investments continues to exceed the Company's cost of borrowings.

The return from the fixed income portfolio was very slightly positive during the first half of 2022. The most notable contributions came from the early redemptions of two bond holdings, issued by Cogent Communications and First Quantum. Both redeemed at prices above par. We continue to look for opportunities to generate attractive returns from bonds where the risk is low because the underlying issuer is, in our view, well-managed and cash generative, much like these two companies.

Outlook

Since the start of 2022, we have seen a number of SAINTS' equity holdings announce quarterly results. So far we have seen little to suggest that SAINTS' holdings are being de-railed by the war in Ukraine, or the rise in inflation rates, or the increase in central bank rates, or the collapse of cryptocurrencies. The Company's holdings have been selected in part because we believe their resilience is unusually strong, for example with debt ratios far lower than the average company, cash flows that tend to be less volatile, and growth prospects that are significantly stronger than the average company.

We remain optimistic that over the long term the future of the Company's holdings, and the potential for inflation-beating growth in their earnings, remains strong. Underpinned by this earnings growth, the Board and the Managers remain confident in SAINTS' long term prospects for resilient dividend growth.

Baillie Gifford & Co 27 July 2022

The principal risks and uncertainties facing the Company are set out on the inside front cover. Related party transaction disclosures are set out in note 10 on page 18.

For a definition of terms see Glossary of Terms and Alternative Performance Measures on pages 20 and 21. Past performance is not a guide to future performance.

Portfolio Pyramid Update

It is now about five years since we first introduced a new way of illustrating SAINTS' equity holdings, known colloquially as the 'Portfolio Pyramid'. It has consistently proven one of the most popular features of our communications, providing a one-stop overview of every stock held by the Company. Keen to ensure its ongoing relevance, we recently re-visited the Pyramid to see if we could make it better. In most respects we concluded it is best left untouched, but we identified a couple of evolutions which we feel will make our reporting even clearer. In this note we describe the tweaks to the latest version of the Pyramid, which we intend to adopt going forward. The updated Pyramid is shown below, alongside an early version used in a similar strategy we manage that makes for an interesting comparison.

SAINTS portfolio pyramid at 30 June 2022

% of Portfolio		Cullen/Frost Bankers		Types of growth:
0–1% of Holding		Pernod Ricard				Weighted
1–2% of Holding		SAP			Portfolio	Average Yield
2–3% of Holding		Glaxosmithkline			%	%
		Hong Kong Exchanges & Clearing		Compounding Machines	73.0	2.4
3%+ of Holding		Kering
		Midea		Exceptional Revenue	17.4	2.4
Box height represents		Silicon Motion Technology		Opportunity
stock portfolio weight.		Starbucks		Management	6.1	2.8
		USS		Acceleration
		Atlas Copco		Long-Cycle	3.5	6.3
		Carsales.com		Returns
		Edenred
		McDonald's
		Schneider Electric
		Coca Cola
	Fevertree Drinks	Nestlé
	NetEase
	ANTA Sports Products	Pepsico
	Dolby Laboratories	Roche
	AJ Gallagher
	Analog Devices	Sonic Healthcare	Cisco Systems
	CH Robinson	TSMC	Medtronic
Intuit	Experian		National Instruments			Rio Tinto
Albemarle	Wolters Kluwer	Fastenal	Man Wah			Hargreaves Lansdown
Amadeus IT Group	L'Oréal		T. Rowe Price			TCI
		Procter & Gamble	Kuehne & Nagel			B3 AVI
Apple	Deutsche Boerse		Want Want China			Valmet
	Novo Nordisk			United Overseas Bank		Admiral
Microsoft		United Parcel Service	Watsco	Linea Directa Aseguradora		Partners
0–1%	1–2%	2–3%	3–4%	4–5%		>5%

Current Year Forecast Dividend Yield

Source: IBES, Bloomberg, Baillie Gifford & Co. Holding sizes and forecast yields are as at 30 June 2022. Totals may not sum due to rounding.

Yields are based on market consensus and Baillie Gifford estimates of ordinary dividends, on a 12 month forward basis, net of withholding taxes. Excludes cash, weights have been rebalanced to 100%.

The following holdings are classified as Infrastructure investments, and therefore are not included in the chart: Assura, BBGI, Greencoat UK Wind, Jiangsu Expressway and Terna.

Earlier version for comparison: the pyramid in 2014

Current Year Forecast Dividend Yield

First, a brief reminder of the Pyramid's function. Its goals remain the same as when we introduced it. Now as then, we want our investors to see every holding in the portfolio, not just the top ten names as typically found on Investment Trust Factsheets. We believe many investors find it helpful to see every company in which we have invested their capital. This transparency is achieved by the Pyramid, with each holding represented by a rectangular block with the company's name on it.

The holdings are arranged in columns from left to right on the horizontal axis, by order of their forecast dividend yield. This helps reassure our investors that most of their capital is invested in the centre, rather than the tails, of the yield spectrum. We say 'reassure' because our observation is that one of the biggest risks that dividend fund managers take (sometimes unbeknownst to their clients) is concentrating too much of their portfolio in high-yielding names, that is ones which would appear on the right end of the yield spectrum. Our Pyramid shows investors that this is not the case with the Company's equity portfolio: the peak of the pyramid is in the 2–3% yield column.

Further reassurance comes from the holding sizes themselves. These are indicated by the height of each building block. We deliberately keep the portfolio relatively 'flat', rather than betting heavily on a few names. This supports the resilience of both the dividend stream and total returns generated by the portfolio. We recognise that shareholders prefer steady compounding, rather than a more concentrated and less reliable portfolio. (As do we, the managers, speaking as shareholders alongside our clients).

Finally, the Pyramid gives our investors a sense of the Growth case that motivates each holding. We believe the Company's objective of resilient long-term growth in both capital and dividends is best served when every holding in the equity portfolio plays a part in delivering that objective. This means that not only must every holding pay a dividend (as shown on the horizontal axis) but every holding must also have behind it a compelling case for long-term growth in its earnings. The four colours of the building blocks give a sense of the Growth case behind each investment.

The blue blocks – what we call our Compounding Machines – have consistently represented the bulk of the portfolio since the launch of the Portfolio Pyramid, accounting for about two thirds of invested capital. These are companies which we judge to have strong and enduring competitive positions within markets that have solid long-term growth prospects. We expect these companies to be run by capable, long-term oriented management teams, and display excellent financial characteristics (typically capital-light business models, which produce excess cash flow as they grow). We expect these Compounding Machines to deliver attractive compound growth in earnings and dividends for many years to come. As a rough indication, we anticipate these companies are capable of delivering at least 7–10% annualised profit growth over the long-term. If we are right in our assessment, and assuming we haven't overpaid for these investments, then they should deliver similar levels of growth in capital and dividends. Compounded over long periods, these investments should generate higher returns than a passive investment in the stock market. An example of this type of holding is Deutsche Boerse, the German financial exchange, which has compounded its earnings at 9% per annum since we invested in 2014 and which, together with a steadily growing dividend, has produced a double-digit annual total return that has beaten the stock market by more than 4% per annum.

The purple blocks are what we call our Exceptional Revenue Opportunities. These companies have rare potential for long-term growth. Sometimes their starting dividend yield will be lower than the Compounding Machines. But our expectation is that companies in this bucket can grow their earnings and dividends at 10 or even 20% per annum for the foreseeable future. If we are right about their long-term potential, then over a decade and more the wonders of compounding at these higher growth rates should ensure these investments deliver excellent total returns for the portfolio, as well as producing a rising income. An example is Anta Sports, which since we invested eight years ago has grown its earnings and dividends four-fold, or about 19% per annum.

Returns from this category are typically a bit less resilient, and perhaps a little riskier, than our Compounding Machines. But we believe this is compensated by their excellent potential for growth. The category accounts for around 20% of our portfolio.

Evolutions of the Pyramid

The third and fourth categories of our Portfolio Pyramid have consistently been the smallest portions. The green-coloured blocks are what we have historically called 'Profitability Transformation' companies. The original intention behind this bucket was to find companies which had poor profitability, where a catalyst of some kind would lead to substantial improvement in their profit margins in the future. Typically, these companies were lowly-valued, and if the increase in their profitability came to pass, the returns to shareholders could be spectacular.

What we have found over the years, however, is that companies in this bucket usually fall into two different camps: one of which is situated on firm ground, and the other of which is infested with flies. The latter camp is inhabited by companies with truly woeful profitability and returns on capital. These companies are usually very difficult to improve: often their poor profitability reflects structural issues in their industry, such as low barriers to competition or relentlessly falling volume. We have had little success with this type of investment.

Where we have enjoyed far more success is in the former camp. These are the types of company that make up the green building blocks in our portfolio today. In this camp are companies whose profitability and returns are solid rather than poor, yet still falling short of their potential. When the foundations of a company are solid, a new management team with a renewed focus has a much better chance of improving the company's operational performance over the subsequent period of years. Rather than trying to make a bad company into a good one, these 'turnarounds' involve new management finding ways to accelerate revenue growth and improve profitability from 'solid' to 'strong'.

An example is Procter & Gamble, which has delivered attractive returns to our portfolio thanks to the new management team that was assembled some years ago under David Taylor. After a period of sub-par performance, Taylor has refocused the company and accelerated its revenue growth and margins. That growth has flowed through to capital and dividend growth. Over time we would expect successful Management Acceleration investment cases to migrate into Compounding Machines, as we have seen at Procter & Gamble.

With this experience under our belts, we have found ourselves favouring the first camp over the second. Reflecting this evolution, we believe a more accurate label for this category going forward is 'Management Acceleration'. The Growth case for these green blocks is as much about rejuvenated sales growth as it is about improved profitability: higher margins will often follow, but the result is more often an acceleration rather than a 'transformation'. These names account for less than 10% of our portfolio, but we have a good deal more confidence in these companies delivering strong returns to shareholders. We will adopt this new label going forward.

The fourth category in our Portfolio Pyramid has historically been called 'Capital Decisions'. The idea behind these yellow building blocks was a simple one: to invest in companies which had recently completed an elevated period of investment, allowing them to take the important decision to return more cash to shareholders through dividends. Over the years we have discovered that a particular subset of these companies is especially rewarding to own, and these have evolved to become our focus.

The most rewarding companies in this category are those which operate on their own 'long-cycle'. By definition this means a cycle which can take a decade or more to play out. Often these long cycles are entirely uncorrelated with the rest of the Company's portfolio. The result is that returns from these companies have a particularly strong diversification benefit. During Covid-19, for example, some of these companies raised their dividends at a time when dividends elsewhere in our portfolio were under pressure. An example is Rio Tinto, which has been a holding in the portfolio since 2011 to benefit from the 'long cycle' of iron ore supply and demand. The company paid out a substantial increase in dividends during 2020: a helpful diversifier. More recently we have seen our two bank holdings, Cullen Frost and UOB, benefiting from a different long cycle start to play out: the end of 'free' money. We hope this will allow them to start deploying their substantial deposits into more profitable loans.

One clarification here. Investors often talk about 'cyclicals', meaning companies which are sensitive to the general economic cycle. Many of the Company's holdings are cyclical to a greater or lesser extent, including some of the Compounding Machines, but that is not what we are talking about in this category. We are talking instead about long cycles, ones that take many years to play out. The stock market often ignores these long cycles but identifying these and patiently holding on while the cycle plays out is exactly what creates an opportunity for long-term investors. The diversification benefits of these uncorrelated long cycles make them especially attractive to a portfolio like the Company's, which seeks to deliver resilience in its dividend and capital returns. Recognising this attraction, we have re-named this category 'Long-cycle returns'.

Reflections on the Evolution of the Pyramid

After re-visiting the Portfolio Pyramid and re-labelling two of the Growth categories to clarify the type of investment case, we also double-checked that all of the individual holdings were appropriately classified in each category. In the vast majority of cases the answer is yes. But in a handful of cases we decided to change the growth category of an individual company.

Two examples are our insurance holdings, Admiral and Línea Directa Aseguradora. The Growth case for both companies contains elements of Compounding Machines and Capital Decisions. Following our decision to re-label the Capital Decisions as Long Cycle returns, we feel the two companies sit more accurately in the Compounding Machines category, and so we have re-labelled them as such. In both cases we hope to see steady growth in their book value in the years ahead, as they continue growing their market share in motor insurance, and gradually move into new business lines such as health and home insurance.

Beyond these tweaks to individual company categorisation, the more striking thought that has emerged to us as we have re-visited the Portfolio Pyramid is just how much a portfolio can change over long periods of time, even with low turnover like ours. The portfolio today looks substantially different from the Company's portfolio in 2014. About a third of our current holdings have been owned for more than a decade, but the rest have been purchased more recently.

Cumulatively, perhaps the biggest change we have effected has been a deliberate and steady move towards companies with greater resilience and stronger growth prospects. Ten years ago, the portfolio held companies such as Vodafone, Aker Solutions and Aviva. These were companies which had some prospects for growth but, having refined and strengthened our process, none of them would make it into the Company's portfolio today. The current portfolio has, we believe, significantly more resilience built into it from the bottom-up, as well as stronger growth prospects. We have retained many names that have proven their ability to grow strongly, such as Analog Devices and Taiwan Semiconductor Manufacturing. But we have upgraded many of the less resilient, slower-growing companies by replacing them with new holdings in companies such as Kering, L'Oréal and Valmet. We feel confident that the results over the next decade, in terms of the portfolio's underlying growth in earnings and dividends, should be even stronger than in the past decade.

Recent Results

One way we monitor this is through the discipline of tracking the annual results from each of the Company's holdings over long periods of time. Whenever their financial results are published, we adjust the headline figures for any one-offs that distort the numbers, to make sure we get a clean read on how each company is performing in terms of revenue and profit growth. We compare these results to our expectations, to make sure each holding is on track. Companies which are falling short are put into review, and if we judge the investment case to be failing, we replace the holding. For example, in the past few months we have dis-invested from Hiscox, which had fallen short of our expectations, and invested in Intuit, where we think the future prospects look far stronger.

In the past quarter we have seen a flurry of annual results published by our holdings. This has allowed us to update the numbers and see how our companies are doing. So what are we seeing?

The short version is that, happily, most of the Company's holdings are performing operationally much as we would have hoped and expected. We have seen good earnings and dividend growth across the portfolio in the past year. Indeed, only one of our holdings has reduced its dividend (the Brazilian securities exchange, B3 S.A.). The median company in the portfolio delivered growth in earnings per share in 2021, year over year, of 15%.

Of course, 2021 was an unusual year because business in the prior year was hit hard by Covid-19 lockdowns. Many companies therefore saw profits bounce back in 2021, and no doubt this helped the average company in the Company's portfolio deliver strong growth. To adjust for this bounceback effect, and to see more clearly the underlying growth rate across the portfolio, it is more helpful to look at the performance of these holdings over a longer period of time than just 12 months. This is shown in the chart below, which illustrates growth in compound earnings per share over the past five years.

Compounding Machines	Exceptional Revenue Opportunities	Management Acceleration	Long-Cycle Returns
9%	13%	4%	7%

What can be seen from this chart is that the Company's holdings are performing as expected. In the period 2016–2021, the average holding in the Compounding Machines category has grown its earnings per share at 9% per annum. The average company in the Exceptional Revenue Opportunities category has grown faster, at 13% per annum. The Management Acceleration names, as would be expected, have been growing slower at only 4% per annum. And the median growth rate in the Long-Cycle Returns category has been 7%.

Across the portfolio as a whole, the average compound growth rate in earnings per share has been 9% per annum.

Conclusion

Ultimately our Portfolio Pyramid is no more than a way of describing the equity holdings and putting them into context. What matters more is that, as bottom-up stockpickers, we continue to search the world for excellent investments that can meet the Company's objectives and bring those into the portfolio whenever we see an opportunity to strengthen it.

The recent weakness in equity markets is producing many such opportunities for us to invest. We are confident that the Company's portfolio already consists of names which should deliver resilient growth in income and capital, ahead of inflation over the long-term. But we are always alert to opportunities to improve the portfolio further. As and when we add new names, such as L'Oréal and Intuit in the first half of this year, we will continue to update the Portfolio Pyramid so that shareholders can see how they fit into the portfolio's wider context.

Six Months Total Return* Performance

(figures plotted on a monthly basis and rebased to 100 at 31 December 2021)

Premium/(Discount)* to Net Asset Value

(figures plotted on a monthly basis)

* See Glossary of Terms and Alternative Performance Measures on pages 20 and 21.

Performance Attribution for the Six Months to 30 June 2022

Portfolio breakdown	Average allocation SAINTS %	Average allocation Benchmark † %	Total return SAINTS %	Total return Benchmark † %
Global Equities	95.5	100.0	(10.2)	(10.5)
Bonds	5.5		0.2
Direct Property	9.4		5.9
Deposits	0.6		–
Borrowings at book value	(11.0)		2.4
Portfolio Total Return (borrowings at book value)			(9.5)	(10.5)
Other items*			(0.2)
Fund Total Return (borrowings at book value)			(9.7)
Adjustment for change in fair value of borrowings			2.1
Fund Total Return (borrowings at fair value)			(7.6)	(10.5)

The above returns are calculated on a total returns basis with net income reinvested. Source: Baillie Gifford and relevant underlying index providers.

* Includes Baillie Gifford and OLIM management fees.

†See disclaimer on page 22.

Past performance is not a guide to future performance.

Twenty Largest Equity Holdings at 30 June 2022

Name	Business	Value £'000	% of total assets *
Novo Nordisk	Pharmaceutical company	32,240	3.5
United Parcel Service	Courier services	29,450	3.2
Procter & Gamble	Household product manufacturer	26,012	2.8
Microsoft	Computer software	25,494	2.8
Fastenal	Distribution and sales of industrial supplies	25,240	2.7
Taiwan Semiconductor Manufacturing	Semiconductor manufacturer	23,490	2.5
Roche	Pharmaceuticals and diagnostics	23,488	2.5
Pepsico	Snack and beverage company	22,771	2.5
Sonic Healthcare	Laboratory testing	21,116	2.3
Watsco	Distributes air conditioning, heating and refrigeration equipment	20,454	2.2
Nestlé	Food producer	20,330	2.2
Albemarle	Producer of speciality and fine chemicals	19,286	2.1
Deutsche Boerse	Securities exchange owner/operator	19,127	2.0
Coca Cola	Beverage company	18,865	2.0
Apple	Consumer technology	17,653	1.9
Anta Sports	Sportswear manufacturer and retailer	16,837	1.8
Analog Devices	Integrated circuits	15,730	1.7
Partners Group	Asset management	15,505	1.7
Schneider Electric	Electrical power products	13,956	1.5
McDonald's	Fast food restaurants	13,910	1.5
		420,954	45.4

* Before deduction of borrowings.

Distribution of Portfolio

Geographical at 30 June 2022

(31 December 2021)

Equities by Sector at 30 June 2022

(31 December 2021)

Income Statement (unaudited)

The accompanying notes on pages 17 and 18 are an integral part of the Financial Statements.

The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital columns are prepared

under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statements derive from continuing operations.

A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

	For the six months ended 30 June 2022		For the six months ended 30 June 2021			For the year ended 31 December 2021 (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on sales of investments – securities	–	1,586	1,586	–	9,989	9,989	–	30,487	30,487
Gains on sales of investments – property	–	607	607	–	7,419	7,419	–	7,419	7,419
Changes in fair value of investments – securities	–	(105,210)	(105,210)	–	54,848	54,848	–	97,486	97,486
Changes in fair value of investments – property	–	1,543	1,543	–	860	860	–	6,260	6,260
Currency gains/(losses)	–	71	71	–	64	64	–	(21)	(21)
Income – dividends and interest	14,486	–	14,486	11,963	–	11,963	23,059	–	23,059
Income – rent and other	2,412	–	2,412	2,677	–	2,677	4,921	–	4,921
Management fees (note 3)	(494)	(1,481)	(1,975)	(465)	(1,394)	(1,859)	(973)	(2,920)	(3,893)
Other administrative expenses	(574)	–	(574)	(737)	–	(737)	(1,252)	–	(1,252)
Net return before finance costs and taxation	15,830	(102,884)	(87,054)	13,438	71,786	85,224	25,755	138,711	164,466
Finance costs of borrowings	(565)	(1,695)	(2,260)	(692)	(2,076)	(2,768)	(1,426)	(4,278)	(5,704)
Net return on ordinary activities before taxation	15,265	(104,579)	(89,314)	12,746	69,710	82,456	24,329	134,433	158,762
Tax on ordinary activities	(1,562)	429	(1,133)	(1,473)	415	(1,058)	(2,509)	732	(1,777)
Net return on ordinary activities after taxation	13,703	(104,150)	(90,447)	11,273	70,125	81,398	21,820	135,165	156,985
Net return per ordinary share (note 4)	7.78p	(59.16p)	(51.38p)	6.74p	41.94p	48.68p	12.79p	79.20p	91.99p
Note: Dividends paid and payable per share (note 5)	6.65p			6.125p			12.675p

Balance Sheet (unaudited)

	At 30 June 2022 £'000	At 31 December 2021 (audited) £'000
Non-current assets
Investments – securities	836,691	938,357
Investments – property	81,700	74,900
Deferred expenses	–	207
	918,391	1,013,464
Current assets
Debtors	3,846	3,710
Cash and deposits	6,935	11,263
	10,781	14,973
Creditors
Amounts falling due within one year:
Debenture stock (note 7)	–	(80,236)
Other creditors and accruals	(2,784)	(3,091)
	(2,784)	(83,327)
Net current assets/(liabilities)	7,997	(68,354)
Total assets less current liabilities	926,388	945,110
Creditors Amounts falling due after more than one year: Loan notes (note 7)	(94,707)	(14,925)
Net assets	831,681	930,185
Capital and reserves
Share capital	44,075	43,900
Share premium account	176,010	172,576
Capital redemption reserve	22,781	22,781
Capital reserve	569,590	673,740
Revenue reserve	19,225	17,188
Shareholders' funds	831,681	930,185
Net asset value per ordinary share*	471.7p	529.7p
Ordinary shares in issue (note 8)	176,300,943	175,600,943

* See Glossary of Terms and Alternative Performance Measures on pages 20 and 21.

The accompanying notes on pages 17 and 18 are an integral part of the Financial Statements.

Statement of Changes in Equity (unaudited)

For the six months ended 30 June 2022

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve * £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 January 2022	43,900	172,576	22,781	673,740	17,188	930,185
Shares issued	175	3,434	–	–	–	3,609
Net return on ordinary activities after taxation	–	–	–	(104,150)	13,703	(90,447)
Dividends paid (note 5)	–	–	–	–	(11,666)	(11,666)
Shareholders' funds at 30 June 2022	44,075	176,010	22,781	569,590	19,225	831,681

For the six months ended 30 June 2021

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve * £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 January 2021	40,649	112,751	22,781	538,575	16,406	731,162
Shares issued	2,297	41,125	–	–	–	43,422
Net return on ordinary activities after taxation	–	–	–	70,125	11,273	81,398
Dividends paid (note 5)	–	–	–	–	(10,169)	(10,169)
Shareholders' funds at 30 June 2021	42,946	153,876	22,781	608,700	17,510	845,813

* The Capital Reserve balance at 30 June 2022 includes investment holding gains of £276,512,000 (30 June 2021 – gains of £332,141,000).

Cash Flow Statement (unaudited)

	Six months to 30 June 2022 £'000	Six months to 30 June 2021 £'000
Cash flows from operating activities
Net return on ordinary activities before taxation	(89,314)	82,456
Net losses/(gains) on investments – securities	103,624	(64,837)
Net gains on investments – property	(2,150)	(8,279)
Currency gains	(71)	(64)
Finance costs of borrowings	2,260	2,768
Overseas withholding tax	(1,140)	(1,004)
Changes in debtors and creditors	441	(1,661)
Other non-cash changes	120	106
Cash from operations	13,770	9,485
Interest paid	(3,368)	(3,200)
Net cash inflow from operating activities	10,402	6,285
Cash flows from investing activities
Acquisitions of investments	(46,491)	(81,333)
Disposals of investments	39,763	39,574
Net cash outflow from investing activities	(6,728)	(41,759)
Cash flows from financing activities
Equity dividends paid	(11,666)	(10,169)
Shares issued	3,609	43,423
Loan notes drawn down	80,000	15,000
Debenture stock repaid	(80,000)	–
Costs of issuance of debt	(16)	–
Net cash (outflow)/inflow from financing activities	(8,073)	48,254
(Decrease)/increase in cash and cash equivalents	(4,399)	12,780
Exchange movements	71	64
Cash and cash equivalents at start of period*	11,263	9,701
Cash and cash equivalents at end of period*	6,935	22,545

* Cash and cash equivalents represent cash at bank and short term money market deposits repayable on demand.

The accompanying notes on pages 17 and 18 are an integral part of the Financial Statements.

Notes to the Condensed Financial Statements (unaudited)

1 The condensed Financial Statements for the six months to 30 June 2022 comprise the statements set out on the previous pages together with the related notes below. They have been prepared in accordance with FRS 104 'Interim Financial Reporting' and the AIC's Statement of Recommended Practice issued in November 2014 and updated in April 2021 with consequential amendments and have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance 'Review of Interim Financial Information'. The Financial Statements for the six months to 30 June 2022 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 December 2021.

Going Concern

The Directors have considered the nature of the Company's principal risks and uncertainties, as set out on the inside front cover, together with its current position. The Board has, in particular, considered the ongoing impact of market volatility during the Covid-19 pandemic, the hostilities in Ukraine and current economic conditions but does not believe the Company's going concern status is affected. In addition, the Company's investment objective and policy, its assets and liabilities and projected income and expenditure, together with the Company's dividend policy, have been taken into consideration and it is the Directors' opinion that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. The Company has no short term borrowings. The redemption dates for the Company's loan notes are June 2036, April 2045 and April 2049. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements and confirm that they are not aware of any material uncertainties which may affect the Company's ability to continue to do so over a period of at least twelve months from the date of approval of these Financial Statements.

• 2 The financial information contained within this Interim Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 31 December 2021 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditor's Report on those accounts was not qualified, and did not contain statements under sections 498(2) or (3) of the Companies Act 2006.
• 3 Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed by the Company as its Alternative Investment Fund Manager (AIFM) and Company Secretary. The investment management function has been delegated to Baillie Gifford & Co. The management agreement can be terminated on six months' notice. The annual management fee, calculated quarterly, is 0.45% on the first £500m of total assets and 0.35% on the remaining total assets, where 'total assets' is defined as the total value of the assets held, excluding the value of the property portfolio, less all liabilities (other than any liability in the form of debt intended for investment purposes).

As AIFM, Baillie Gifford & Co Limited has delegated the management of the property portfolio to OLIM Property Limited. OLIM receives an annual fee from SAINTS of 0.5% of the value of the property portfolio, subject to a minimum quarterly fee of £6,250. The agreement can be terminated on three months' notice.

4 Net Return per Ordinary Share

	Six months to 30 June 2022 £'000	Six months to 30 June 2021 £'000
Revenue return on ordinary activities after taxation	13,703	11,273
Capital return on ordinary activities after taxation	(104,150)	70,125
Total net return	(90,447)	81,398
Weighted average number of ordinary shares in issue	176,051,800	167,223,429

5 Dividends

	Six months to 30 June 2022 £'000	Six months to 30 June 2021 £'000
Amounts recognised as distributions in the period:
Previous year's final of 3.375p (2021 – 3.00p), paid 8 April 2022	5,936	4,965
First interim of 3.25p (2021 – 3.05p), paid 22 June 2022	5,730	5,204
	11,666	10,169
Amounts paid and payable in respect of the period:
First interim of 3.25p (2021 – 3.05p), paid 22 June 2022	5,730	5,204
Second interim of 3.40p (2021 – 3.075p)	5,994	5,308
	11,724	10,512

The second interim dividend was declared after the period end date and therefore has not been included as a liability in the Balance Sheet. It is payable on 20 September 2022 to shareholders on the register at the close of business on 12 August 2022. The ex-dividend date is 11 August 2022. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for elections for this dividend is 30 August 2022.

Notes to the Condensed Financial Statements (continued)

6 Fair Value Hierarchy

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement.

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).

An analysis of the Company's financial asset investments based on the fair value hierarchy described above is shown below.

As at 30 June 2022	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Securities
Listed equities/funds	797,279	–	–	797,279
Bonds	10,559	28,853	–	39,412
Property
Freehold	–	–	81,700	81,700
Total financial asset investments	807,838	28,853	81,700	918,391
As at 31 December 2021	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Securities
Listed equities/funds	889,142	–	265	889,407
Bonds	11,984	36,966	–	48,950
Property
Freehold	–	–	74,900	74,900
Total financial asset investments	901,126	36,966	75,165	1,013,257

There have been no transfers between levels of the fair value hierarchy during the period. The fair value of listed investments is bid value or, in the case of holdings on certain recognised overseas exchanges, last traded price. They are categorised as Level 1 if they are valued using unadjusted quoted prices for identical instruments in an active market and Level 2 if they do not meet all these criteria but are, nonetheless, valued using market data. The fair value of unlisted investments is determined using valuation techniques, determined by the Directors, based upon observable and/or non-observable data such as latest dealing prices, stockbroker valuations, net asset values and other information, as appropriate. The Company's holdings in unlisted investments are categorised as Level 3 as the valuation techniques applied include the use of non-observable data.

• 7 At 30 June 2022, the book value of the borrowings was £94,707,000 (31 December 2021 £95,161,000) and the fair value was £77,331,000 (31 December 2021 – £97,422,000). The debt comprises long-term private placement loan notes: £15 million with a coupon of 2.23% issued during 2021; and £80 million with a coupon of 3.12% issued to refinance the 8% Debenture Stock which matured on 10 April 2022.
• 8 At 30 June 2022, the Company had the authority to buy back 26,367,551 ordinary shares and to issue 17,190,094 ordinary shares without application of pre-emption rights in accordance with the authorities granted at the AGM in April 2022. During the six months to 30 June 2022, 700,000 (31 December 2021 – 13,005,000) shares were issued at a premium to net asset value raising proceeds of £3,609,000 (31 December 2021 – £63,076,000). No further shares were issued between 1 July 2022 and 26 July 2022. No shares were bought back (31 December 2021 – nil).
• 9 During the period, transaction costs on purchases amounted to £534,000 (30 June 2021 £77,000) and on sales £52,000 (30 June 2021 – £253,000). Of these transaction costs, £489,000 related to the purchase of property (30 June 2021 – nil) and £36,000 related to the sale of property (30 June 2021 – £240,000).

10 Related Party Transactions

There have been no transactions with related parties during the first six months of the current financial year that have materially affected the financial position or the performance of the Company during that period and there have been no changes in the related party transactions described in the last Annual Report and Financial Statements that could have had such an effect on the Company during that period.

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

Further Shareholder Information

How to Invest

The Company's shares are traded on the London Stock Exchange. They can be bought through a stockbroker or by asking a professional adviser to do so. If you are interested in investing directly in SAINTS you can do so online. There are a number of companies offering real time online dealing services – find out more by visiting the investment trust pages at bailliegifford.com.

Client Relations Team Contact Details

You can contact the Baillie Gifford Client Relations Team by telephone (your call may be recorded for training or monitoring purposes), email or post. See contact details in the 'Further Information' box on the back cover.

Share Register Enquiries

Computershare Investor Services PLC maintains the share register on behalf of the Company. In the event of queries regarding shares registered in your own name, please contact the Registrars on 0370 707 1282.

Dividend Reinvestment Plan

Computershare operate a Dividend Reinvestment Plan which can be used to buy additional shares instead of receiving your dividend via cheque or into your bank account. For further information log in to investorcentre.co.uk and follow the instructions or telephone 0370 707 1694.

Automatic Exchange of Information

In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, The Scottish American Investment Company P.L.C. is required to collect and report certain information about certain shareholders.

The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, The Scottish American Investment Company P.L.C. will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.

New shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information – information for account holders gov.uk/government/publications/exchange-ofinformation-account-holders.

Risk Warnings

Past performance is not a guide to future performance.

SAINTS is a listed UK Company. The value of its shares and any income from them can fall as well as rise and investors may not get back the amount invested.

SAINTS has borrowed money to make further investments (sometimes known as 'gearing' or 'leverage'). The risk is that when this money is repaid by the Company, the value of these investments may not be enough to cover the borrowing and interest costs, and the Company will make a loss. If the Company's investments fall in value, any borrowings will increase the amount of this loss.

SAINTS can buy back its own shares. The risks from borrowing, referred to above, are increased when a company buys back its own shares.

Market values for securities which have become difficult to trade may not be readily available, and there can be no assurance that any value assigned to such securities will accurately reflect the price the Company might receive upon their sale.

SAINTS can make use of derivatives which may impact upon its performance.

SAINTS invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.

SAINTS invests in emerging markets where difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment.

SAINTS invests in corporate bonds which are generally perceived to carry a greater possibility of capital loss than investment in, for example, higher rated UK government bonds. Bonds issued by companies and governments may be adversely affected by changes in interest rates and expectations of inflation.

SAINTS has some direct property investments which may be difficult to sell. Valuations of property are only estimates based on the valuer's opinion. These estimates may not be achieved when the property is sold.

Share prices may either be below (at a discount) or above (at a premium) the net asset value (NAV). The Company may issue new shares when the price is at a premium which may reduce the share price. Shares bought at a premium may have a greater risk of loss than those bought at a discount.

SAINTS charges 75% of its investment management fee, borrowing costs and property management fee to capital, which reduces the capital value. Also, where income is low, the remaining expenses may be greater than the total income received, meaning the Company may not pay a dividend and the capital value would be further reduced.

You should note that tax rates and reliefs may change at any time and their value depends on your circumstances.

The favourable tax treatment of ISAs may change.

The Company is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority.

The staff of Baillie Gifford & Co and SAINTS Directors may hold shares in SAINTS and may buy or sell such shares from time to time.

Further details of the risks associated with investing in the Company, including how charges are applied, can be found at saints-it.com, or by calling Baillie Gifford on 0800 917 2112. (Your call may be recorded for training or monitoring purposes.)

The information and opinions expressed within this Interim Financial Report are subject to change without notice. This information has been issued and approved by Baillie Gifford & Co Limited, the Managers and Secretaries, and does not in any way constitute investment advice.

Glossary of Terms and Alternative Performance Measures (APM)

Total Assets

Total assets less current liabilities, before deduction of all borrowings.

Net Asset Value

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 in issue.

Net Asset Value (Borrowings at Fair Value) (APM)

Borrowings are valued at an estimate of their market worth.

Net Asset Value (Borrowings at Book Value)

Borrowings are valued at adjusted net issue proceeds. Book value approximates amortised cost.

	30 June 2022	31 December 2021
Shareholders' funds (borrowings at book value)	£831,681,000	£930,185,000
Add: book value of borrowings	£94,707,000	£95,161,000
Less: fair value of borrowings	(£77,331,000)	(£97,422,000)
Shareholders' funds (borrowings at fair value)	£849,057,000	£927,924,000
Shares in issue	176,300,943	175,600,943
Net Asset Value per ordinary share (borrowings at fair value)	481.6p	528.4p

Discount/Premium (APM)

As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share 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.

	30 June 2022 NAV (book)	30 June 2022 NAV (fair)	31 December 2021 NAV (book)	31 December 2021 NAV (fair)
Closing NAV per share	471.7p	481.6p	529.7p	528.4p
Closing share price	464.0p	464.0p	541.0p	541.0p
(Discount)/premium	(1.6%)	(3.7%)	2.1%	2.4%

Total Return (APM)

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

		30 June 2022 NAV (book)	30 June 2022 NAV (fair)	30 June 2022 share price	31 December 2021 NAV (book)	31 December 2021 NAV (fair)	31 December 2021 share price
Opening NAV per share/share price	(a)	529.7p	528.4p	541.0p	449.7p	446.1p	464.0p
Closing NAV per share/share price	(b)	471.7p	481.6p	464.0p	529.7p	528.4p	541.0p
Dividend adjustment factor*	(c)	1.013992	1.013704	1.014440	1.025486	1.025738	1.024954
Adjusted closing NAV per share/share price (d = b x c)		478.3p	488.2p	470.7p	543.2p	542.0p	554.5p
Total return	(d ÷ a)-1	(9.7%)	(7.6%)	(13.0%)	20.8%	21.5%	19.5%

* The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the cum income NAV/share price, as appropriate, at the ex-dividend date.

Ongoing Charges (APM)

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value (with borrowings at fair value). The ongoing charges have been calculated on the basis prescribed by the Association of Investment Companies.

Performance Attribution (APM)

Analysis of how the Company achieved its performance relative to its benchmark.

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Gearing represents borrowings at book less cash and cash equivalents expressed as a percentage of shareholders' funds.

Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

Equity gearing is the Company's borrowings adjusted for cash, bonds and property expressed as a percentage of shareholders' funds.

Leverage (APM)

For the purposes of the Alternative Investment Fund Managers (AIFM) Directive, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Active Share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the listed equity portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Third Party Data Provider Disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.

No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate. Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

FTSE Index Data

London Stock Exchange Group plc and its group undertakings (collectively, the 'LSE Group'). ©LSE Group 2022. FTSE Russell is a trading name of certain LSE Group companies. 'FTSE®' 'Russell®', 'FTSE Russell®', is/are a trade mark(s) of the relevant LSE Group companies and is/are used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the

index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

Sustainable Finance Disclosure Regulation ('SFDR')

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 The Scottish American Investment Company P.L.C. is marketed in the EU by the AIFM, BG & 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 Governance and Sustainable Principles and Guidelines as its policy on integration of sustainability risks in investment decisions.

Baillie Gifford & Co's approach to investment is based on identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To do this it looks beyond current financial performance, undertaking proprietary research to build an in-depth knowledge of an individual company and a view on its long-term prospects. This includes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment.

More detail on the Managers' approach to sustainability can be found in the Governance and Sustainability Principles and Guidelines document, available publicly on the Baillie Gifford website (bailliegifford.com).

Taxonomy Regulation

The Taxonomy Regulation establishes an EU-wide framework of criteria for environmentally sustainable economic activities in respect of six environmental objectives. It builds on the disclosure requirements under SFDR by introducing additional disclosure obligations in respect of Alternative Investment Funds that invest in an economic activity that contributes to an environmental objective. The Company does not commit to make sustainable investments as defined under SFDR. As such, the underlying investments do not take into account the EU criteria for environmentally sustainable economic activities.

Directors

Chairman: Lord Macpherson of Earl's Court, GCB

Bronwyn Curtis, OBE Karyn Lamont Dame Mariot Leslie Christine Montgomery

Company Broker

Winterflood Investment Trusts The Atrium Building Cannon Bridge 25 Dowgate Hill London EC4R 2GA

Alternative Investment Fund Managers, Secretaries and Registered Office

Baillie Gifford & Co Limited Calton Square 1 Greenside Row Edinburgh EH1 3AN Tel: 0131 275 2000 bailliegifford.com

Independent Auditor

Ernst & Young LLP Chartered Accountants and Statutory Auditors Atria One 144 Morrison Street Edinburgh EH3 8EX

Registrar

Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Tel: 0370 707 1282

Depositary

The Bank of New York Mellon (International) Limited

1 Canada Square London E14 5AL

Company Details

Email: saints@bailliegifford.com saints-it.com Company Registration No. SC000489 ISIN GB0007873697 Sedol 0787369 Ticker SAIN

Legal Entity Identifier: 549300NF03XVC5IFB447

Further Information

Client Relations Team Calton Square 1 Greenside Row Edinburgh EH1 3AN Tel: 0800 917 2112 Email: trustenquiries@bailliegifford.com