Pacific Horizon Investment Trust PLC

Annual Report • Sep 25, 2024

Clean private and confidential Project: Pacific Horizon Investment Trust Annual Report Proof 10: 16.09.2024 Job. no: 3400 Annual Report and Financial Statements Pacific Horizon Investment Trust PLC 31 July 2024 Notes None of the views expressed in this document should be construed as advice to buy or sell a particular investment. Investment trusts are UK public listed companies and as such comply with the requirements of the Financial Conduct Authority. They are not authorised or regulated by the Financial Conduct Authority. Pacific Horizon Investment Trust PLC currently conducts its affairs, and intends to continue to conduct its affairs, so that the Company’s ordinary shares can qualify to be considered as a mainstream investment product and can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the rules of the Financial Conduct Authority in relation to non-mainstream investment products. This document is important and requires your immediate attention. If you reside in the United Kingdom and you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other Independent Financial Adviser authorised under the Financial Services and Markets Act 2000 immediately. If you are outside the United Kingdom, you should consult an appropriately authorised financial adviser. If you have sold or otherwise transferred all of your ordinary shares in Pacific Horizon Investment Trust PLC, please forward this document, together with any accompanying documents, but not your personalised Form of Proxy, as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was or is being effected for delivery to the purchaser or transferee. Investor Disclosure Document The UK Alternative Investment Fund Managers Regulations require certain information to be made available to investors prior to their making an investment in the Company. The Company’s Investor Disclosure Document is available for viewing at pacifichorizon.co.uk. Pacific Horizon Investment Trust PLC 01 Contents Introduction Financial highlights 02 An introduction to Pacific Horizon Investment Trust PLC 03 Strategic report Chairman’s statement 06 Managers’ review 09 Environmental, social and governance engagement 15 Baillie Gifford stewardship principles 17 Baillie Gifford proxy voting 18 One year summary 19 Five year summary 20 Ten year record 22 Review of investments 24 Portfolio executive summary 28 Baillie Gifford – valuing private companies 32 List of investments 36 Business review 39 Governance report Directors and management 51 Directors’ report 54 Corporate governance report 60 Audit Committee report 67 Directors’ remuneration report 70 Statement of Directors’ responsibilities 74 Financial report Independent auditor’s report 77 Income statement 84 Balance sheet 85 Statement of changes in equity 86 Cash flow statement 87 Notes to the Financial Statements 88 Shareholder information Notice of Annual General Meeting 107 Further shareholder information 112 Communicating with shareholders 114 Sustainable Finance Disclosure Regulation 116 Third party data provider disclaimer 117 Glossary of terms and Alternative Performance Measures 118 Company information 120 Introduction Annual Report and Financial Statements 2024 02 Financial highlights Year to 31 July 2024 Share price 5.1% NAV 4.8% Comparative index † 6.8% Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 117. All figures are stated on a total return basis. * Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † The comparative index is the MSCI All Country Asia ex Japan Index (in sterling terms). Past performance is not a guide to future performance. Total returns * One year total return * performance (figures rebased to 100 at 31 July 2023) Discount * (figures plotted on a monthly basis) 2024 2023 JA SONDJFMAMJJ ● NAV total return ● Share price total return ● Comparative index † total return 85 90 95 100 105 110 115 2024 2023 JA SONDJFMAMJJ ● Discount -14% -12% -10% -8% -6% Pacific Horizon Investment Trust PLC 03 Growth 2 : embracing growth, disruption and innovation. Pacific Horizon’s objective is to invest in the Asia- Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital growth. An introduction to Pacific Horizon Investment Trust PLC Our philosophy Long-term This matters. Stock prices are wildly unpredictable in the short-term. Ultimately, however, prices do reflect the earnings capability of a company. So when we find a company that has the potential to grow its profits significantly over time, we must invest with the patience that allows a good decision to prove its worth. Growth We have found the most persistent source of alpha to be those companies that can grow their profits faster than the market, in hard currency terms, over the longterm. This trend persists irrespective of starting valuation. Active We would observe three particular features which emphasise the need for active management in the Asia-Pacific region (excluding Japan). Firstly, roughly a quarter of the index still consists of State Owned Enterprises, whose interests are not always aligned with minority shareholders. Secondly, some Asian countries grow sporadically, so there will be times when we want to take advantage of the tailwind provided by economic cycles in certain countries and times when we want to limit our exposure. Lastly, positive returns in the asset class are driven by a very small number of companies that do exceptionally well. Being highly selective is imperative. Introduction Annual Report and Financial Statements 2024 04 Our structure Pacific Horizon is an investment trust but how does this structure benefit our shareholders? Underpinning everything is a genuine commitment to low costs. We believe our duty to shareholders is to limit fees. Put simply, lower charges directly translate into shareholders keeping more of the returns generated from their investment. Our scale and commitment to low costs enables us to offer genuine value for money. Although there are benefits to the investment trust structure, there are also risks involved. See bailliegifford.com. Although there are benefits to the investment trust structure, there are also risks involved. Our structure Company status • Just like other public companies, Pacific Horizon can borrow money to make additional investments. This financial gearing can amplify investment returns. • Our shareholders have rights, and we seek their approval, via votes, if we want to make significant changes. • A board of directors looks after the interests of our shareholders. They meet several times a year and are responsible for various things, such as overseeing performance. Democratising access to unlisted (private) companies • We offer shareholders liquid access to private companies – a distinct offering in today’s market. • We own companies uninterrupted on their journey from private to public – shareholders benefit from long-term compounded returns. • Access to private companies is dependent upon relationships and reputation – our shareholders benefit from the access we enjoy but without paying fees normally associated with private equity funds. Accessibility • Listed on the London Stock Exchange, Pacific Horizon provides intraday liquid access, and our shares are openly tradeable for investors from around the world. • There are no performance fees or minimum investment restrictions. • Shareholders could benefit from simplified tax reporting when compared with other structures that hold private companies. Permanent capital • The closed-ended structure provides a pool of permanent capital. Unlike open-ended funds, the portfolio remains intact and is not impacted by shareholder demand. • We have the freedom to invest for the long term and hold assets that can be harder to buy and sell – such as private companies. • Our extended time horizons are matched by our companies. This alignment underpins the prospect of enduring relationships. This strategic report, which includes pages 5 to 49 and incorporates the Chairman’s statement, has been prepared in accordance with the Companies Act 2006. Strategic report Strategic report Annual Report and Financial Statements 2024 06 Chairman’s statement Board Composition Having been appointed to the Board on 13 March 2024 as Chairman, I would like to take this opportunity to thank, on behalf of the Company and its Directors, my predecessor, Angus Macpherson, for guiding the Company during a period of geopolitical uncertainty and market volatility. Subject to shareholders confirming my appointment, I look forward to working with the current Board and portfolio managers for the benefit of shareholders. Performance In the year to 31 July 2024, the Company’s net asset value (‘NAV’) per share total return was 4.8 per cent., compared to a 6.8 per cent. increase in the total return of the MSCI All Country Asia ex Japan Index in sterling terms. The share price rose by 4.4 per cent. and the discount ended the period at 7. 8 per cent.. The Company’s annual ongoing charge was 0.74 per cent. compared to 0.72 per cent. for the year to 31 July 2023, due largely as a consequence of increased expenses. The reporting period was marked by volatility, with negative returns in the first six months followed by a period of positive portfolio and index returns. The notable positive contributors to the portfolio’s relative performance over the year were the holdings in Indian property developers Prestige Estates Project, Equinox India Development and Phoenix Mills. The notable detractors to relative performance were the holdings in Li-Ning, a Chinese sportswear and sporting equipment company, and Ping An Insurance, a Chinese financial services company. Having an underweight position in TSMC, a Taiwanese semiconductor company, was also a notable detractor. The Managers’ Review, on pages 9 to 14, provides fuller comment on the drivers to returns, as well as thoughts on the investee companies and their prospects. Roger Yates Chairman Appointed 2024 Pacific Horizon Investment Trust PLC 07 Over the five years to 31 July 2024, the Company’s NAV and share price total return were 96.1 per cent. and 93.6 per cent. respectively, whereas the Company’s comparative index returned 17.0 per cent. in sterling terms during the same period. Gearing The deployment of gearing was considered regularly, and continues to be so. The Company was ungeared throughout the course of the last financial year. The Board sets the gearing parameters within which the portfolio managers are permitted to operate. At present, the agreed range of equity gearing is minus 15 per cent. (holding net cash) to plus 15 per cent.. The Company has a multi-currency revolving credit facility with the Royal Bank of Scotland International Limited for up to £100 million. This facility expires in March 2025 and provides for potential gearing of 16.6 per cent. at present. Earnings and Dividend As highlighted in the reports of my predecessors, it remains the case that investors should not invest in this Company if they require steady or growing income from their investment as the Company invests in growth stocks that will typically have little or no yield. Earnings per share this year were 3.82p, a decrease from the 4.56p per share reported last year. The Board is recommending that a final dividend of 2.65p per share be paid (3.25p per share paid in 2023), subject to shareholder approval at the Annual General Meeting (‘AGM’). Issuance, Share Buybacks and Treasury At the Company’s AGM in November, the Board will be seeking to renew the existing 10 per cent. non-pre-emptive issuance authority. The authority will also permit the re-issue of any shares held in treasury, of which there are currently 1,418,210. Any issuance, be it of new shares or from treasury, will only be undertaken at a premium to the NAV per share, so avoiding dilution for existing investors. Issuance at a premium enhances NAV per share, improves liquidity in the Company’s shares and spreads the operating expenses of the Company across a broader base. The Board is also asking shareholders to renew the annual authority to repurchase up to 14.99 per cent. of the Company’s outstanding shares on an ad hoc basis, either for cancellation or to be held in treasury. Over the course of the Company’s financial year, 425,198 shares, 0.5 per cent. of the starting issued share capital, were bought back into treasury at a cost of £2.3 million. The buybacks were undertaken at a weighted average discount of 11.2 per cent.. The Board intends to use the authority opportunistically, considering not only the level of the discount relative to peers and in absolute terms, but also the underlying liquidity and trading volumes in the Company’s shares. This approach to buybacks seeks to support liquidity whilst addressing, in part, any imbalance between the supply and demand for the Company’s shares that results in a large discount to NAV. Sustainable Disclosure Requirements (‘SDR’) SDR is a package of measures that the Financial Conduct Authority (‘FCA’) finalised in November 2023. These measures include rules imposing conditions on the use of sustainability-related terms and labels in literature produced by FCA regulated entities, such as our Managers, Baillie Gifford & Co Limited, on behalf of ‘products’, such as investment trusts. SDR also establishes anti-greenwashing rules. The Managers’ view is that a precondition of a long term investment is that businesses in which they invest must be sustainable, although Pacific Horizon itself does not have an explicit sustainability objective. Therefore, under SDR the Company will not be taking a label. The Board agrees with the Managers’ approach of engaging and working with companies towards achieving improved practices and outcomes while being cognisant of the risks of imposing developed market standards on emerging market companies indiscriminately. Annual General Meeting I look forward to meeting shareholders at this year’s AGM. This will take place on Thursday 21November 2024 at the offices of Baillie Gifford & Co, in Edinburgh, at 11.30am. If attending, please endeavour to arrive by 11.20am to allow time to register. There will be a presentation from the portfolio managers who, along with the Directors, will answer questions from shareholders. Strategic report Annual Report and Financial Statements 2024 08 Outlook The past year saw weakness in the Chinese economy, the recent unwinding of the Yen carry trade (borrowing Yen at a low rate of interest to invest in higher-yielding assets) and regional tensions on Taiwan. Notwithstanding these challenges, there remain a wealth of opportunities for the patient investor. These are based on both superior long-term economic growth rates and the range of attractive companies in the region. Valuations are at multi-year lows relative to developed markets. The very diversity of opportunities should encourage investors, as demonstrated in the range of Asian/Indian market returns in the past year – from 30 per cent. plus in Taiwan and India to negative 12 per cent. in China. Within the markets, our portfolio managers continue to find companies with strong prospects trading at reasonable valuations. The Managers’ report starting on page 9 provides examples. Based on the encouraging macroeconomic trends and stock specific opportunities, there is every reason to be optimistic about the long-term prospects for the portfolio. As always, it remains important that our portfolio managers (and shareholders) can see through the occasional and perhaps inevitable bouts of volatility in returns. Assuming that is the case then the outlook for the portfolio and the Company is a positive one. Roger Yates Chairman 16 September 2024 Pacific Horizon Investment Trust PLC 09 Managers’ review Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Past performance is not a guide to future performance. Overview In the year to 31 July 2024, the Company’s net asset value (‘NAV’) per share total return and the share price total return were 4.8% and 5.1% respectively. This compares to a 6.8% increase in the total return of the MSCI All Country Asia ex Japan Index in sterlingterms. Geographic returns across the region showed significant disparity. India and Taiwan were top performers, with gains of 36.4% and 34.6% respectively. In contrast, Hong Kong and China experienced declines of 19.8% and 12.0%. Portfolio performance was primarily driven by substantial exposure to India, particularly in the real estate sector. Investments in Vietnam and limited exposure to Hong Kong also contributed to positive relative performance. However, stock selection in China and an underweight position in Taiwan’s TSMC were the notable detractors. Despite regional challenges, such as a strong US dollar, ongoing weakness in the Chinese economy, and the reversal of the Yen carry trade, most Asian economies demonstrated resilience. Our holdings generally performed well operationally, and an increasing number of new investment opportunities led to higher portfolio turnover. The most notable changes involved increasing our holdings in ‘rapid growth’ companies, particularly within the technology sector. We significantly raised our exposure to online consumer businesses, including Kaspi.kz, a fintech and ecommerce super app from Kazakhstan; Pinduoduo Inc, a Chinese ecommerce platform; and Tencent Holdings, known for gaming and social media in China. Roderick Snell Portfolio manager Appointed 2013 Ben Durrant Deputy portfolio manager Appointed 2023 Strategic report Annual Report and Financial Statements 2024 10 Additionally, we increased our investments in the semiconductor industry, adding to memory chip makers SK hynix and Samsung Electronics, semiconductor equipment manufacturers including ASMPT, and the foundry sector, where we made substantial additions to TSMC. Funding predominantly came from a reduction in cyclical investments, including materials, shipbuilders and engineering businesses. By country, we continued to reduce our exposure to India and increased our positioning in Taiwan. Despite global headwinds, we maintain a positive long-term outlook for the Asia ex Japan region. Most Asian economies boast favourable macroeconomic conditions and structurally faster growth rates compared to developed markets, yet their valuations are at multi-year lows on a relative basis. A potential catalyst for the region is the rate cutting cycle in most developed markets, which may lead to a weakening US dollar. This would serve as a significant tailwind for Asia and emerging markets more broadly. Perhaps most encouragingly, we are discovering an increasing number of investment-worthy companies, particularly ones with substantial growth opportunities. Philosophy We are growth investors endeavouring to invest in the top twenty percent of the fastest-growing companies in Asia. Across the region we have found the most persistent source of outperformance to be those companies which can grow their profits faster than the market, in hard currency terms, over the long term. This trend persists irrespective of starting valuations. Our research is singularly focused on finding those companies whose share prices can at least double, in sterling terms, on a five-year view and we expect most of this doubling to come from earnings growth. We are particularly interested in three specific and persistent inefficiencies: 1) Underappreciated growth duration We believe one of the greatest investment inefficiencies is in companies with excellent long- term earnings growth where profits are volatile from one quarter to the next. The market typically shows an aversion to such companies, preferring the predictability of smooth profit generation even if the long-term growth rate turns out to be a fraction of that achieved by firms more willing to reinvest in their business and with greater ambition. This presents exciting investment opportunities, but it requires an approach that allows near-term volatility to beignored. 2) Underappreciated growth pace The market consistently underestimates the likelihood of rapid growth. The evidence shows that most investors cluster around a narrow range of earnings growth predictions, which can in turn lead to significant mispricing of companies with the potential to grow very rapidly. Our process is focused on finding those companies. By looking further out and searching for low probability but high impact growth opportunities, we endeavour to outperform the broader market. 3) Underappreciated growth surprise The final significant inefficiency lies in the interaction between top-down and bottom-up investing. As investors in Asia, ex Japan, and the Indian Sub- continent, we do not have the luxury of ignoring macroeconomics. Purely bottom-up investment is a path to ruin in a universe where industrial and economic cycles can dominate investment returns over multi-year periods. The long-term earnings of many companies – notably in the financial, materials and industrial sectors – are determined by exogenous macro factors beyond their control. This also providesopportunities. Our analysis shows that while it may pay to invest in companies that display consistently high levels of profitability, the strongest returns are to be found in those companies that transition from poor levels of profitability to high ones – a ‘growth surprise’. Pacific Horizon Investment Trust PLC 11 This may seem obvious – rising levels of profitability are normally accompanied by a re-rating, thereby providing a two-fold kicker to share price performance. But identifying the drivers behind this change is the key and has been a significant source of outperformance for Pacific Horizon. We accept that timing these inflection points perfectly is impossible, but when you have an investment horizon measured over many years, anticipating the future direction of travel is possible. We are agnostic as to the type of growth inefficiency we are exploiting and will invest wherever we are finding the best opportunities. At times this will lead to a concentration in particular sectors or countries, and at others to a much broader, flatter portfolio, but growth will always be the common theme. Pacific Horizon MSCI AC Asia ex Japan Index Historical earnings growth (5 years trailing compound annual growth to 31 July 2024) 5.5% 5.6% One year forecast earnings growth to 31 July 2025 38.5% 16.0% Estimated p/e ratio for the year to 31July 2025 13.1x 12.6x Active share 75% n/a Portfolio turnover 30.8% n/a Data as at 31 July 2024, source: Baillie Gifford, UBS PAS, APT, MSCI (see disclaimer at the end of this announcement). Review Asian markets demonstrated resilience in the face of significant challenges over the past few years. Despite headwinds including the strongest US dollar in decades, rising geopolitical tensions, armed conflicts in Europe and the Middle East, and most recently the dramatic unwinding of the Yen carry trade, Asian economies not only avoided crisis, but most prospered, outpacing growth in many Westernnations. This resilience marks a significant shift from historical patterns, where such external pressures would likely have triggered economic turmoil in the region. Improved stability underscores the enhanced macroeconomic position of Asia today, particularly compared to many Western economies. Combining this favourable macroeconomic condition with Asia’s structurally faster growth rates, and valuations at multi-year lows relative to developed markets, Asia ex Japan appears to be in a sweet spot. Despite this, however, Asian markets have yet to fully reflect the advantages in market performance. Several external headwinds persist, most notably the strength of Western currencies, particularly the US dollar. However, the economic landscape appears to be shifting. With inflation peaking in Western economies, developed markets should be on the cusp of a rate cutting cycle. The European Central Bank and the Bank of England already initiated rate cuts, and the US Federal Reserve seems poised to follow suit. Coupled with rising government spending and mounting debt in the US and Europe, Asian economies are likely to become increasingly appealing to investors. Within Asia, China remains a concern, with the MSCI China index still below half its early 2021 peak. As discussed in previous reports, many economic challenges persist. Of particular concern is the real estate sector, which accounts for roughly 30% of the economy and continues to struggle. Its ongoing weakness has further depressed consumer confidence, which combined with continued geopolitical pressures, created a challenging environment for investors. Despite these issues, we believe there are compelling investment opportunities in China. Firstly, valuations have reached extreme levels with many world class companies trading at low single digit multiples and others even below the cash on their balance sheets. Secondly, the macro situation is not as dire as valuations suggests. China remains a US$17 trillion economy growing at 5%, with considerable fiscal, monetary and policy room to support further growth. Throughout the year, the government shifted towards a more supportive approach, implementing interest rate cuts, fiscal stimulus and various measures to shore up the property market, including the easing of home purchase restrictions and the lowering of mortgage rates and down paymentratios. Strategic report Annual Report and Financial Statements 2024 12 Thirdly, many companies continue to perform strongly operationally. In the internet sector, despite the negative headlines, companies are generating record revenues and profits. Large-cap firms like Tencent Holdings and Pinduoduo Inc reported impressive earnings growth of 79% and 350% year-over-year, respectively. These businesses are highly cash-generative and committed to significant shareholder returns through buybacks and/or dividends, potentially establishing a floor for their low valuations. We have been adding to the sector with new purchases of Tencent Holdings (3.8% holding at the end of the period), Pinduoduo Inc (2.6%) and Lufax Holdings (0.8%). We also increased our existing holdings in Baidu Inc and unlisted ByteDance, owner of Douyin and TikTok, the world’s most popular short form video apps. These purchases were mostly funded by sales of other Chinese companies, including slower growing, non-technology businesses Geely Automobile (automotive manufacturer), China Oilfield Services Ltd (oil services), and Ningbo Peacebird Fashion (fashion retailer). A smaller portion of sales involved internet companies with deteriorating competitive positions, such as Alibaba Group. Despite the sales and purchases roughly matching, market movements in China took the portfolio’s absolute China exposure down from 33.7% to 25.9% over the period. At the other end of the performance spectrum is India, where the index gained 36.4% over the year. The country continues to thrive under the business- friendly reforms of the Modi government, resulting in robust economic growth (GDP growth exceeding 8%) and a surge in foreign investment. Notably, in June 2024, Modi and his BJP party faced a setback in national elections. Despite securing a third term, the BJP lost its overall majority in parliament’s lower house (Lok Sabha) and will rely on coalition partners to govern. While the new political landscape may pose challenges for future reforms, we believe it doesn’t fundamentally alter India’s growth trajectory. In fact, it may prove beneficial by tempering some of the BJP’s more socially divisive policies. We remain optimistic about India’s long-term outlook and continue to see attractive investment opportunities. Our largest exposure is in Indian real estate, comprising 10.0% of our total assets. This sector benefits from the most affordable house prices in decades, coupled with significant industry consolidation over the past ten years. Our other Indian holdings focus on new technology, either directly through investments in companies like Dailyhunt, one of the country’s leading social media platforms, and PolicyBazaar, India’s leading price comparison site, or indirectly through companies such as Delhivery, a dominant player in e-commercelogistics. We have, however, found valuations increasingly difficult to justify in a number of other sectors in India, particularly consumer and industrial companies, and in many small and mid-cap businesses. Consequently, we made significant reductions to several of our holdings, including large reductions to India industrials, where we sold Skipper (power transmissions) and Tata Motors (automotive), both of which had appreciated over five-fold since our initial purchases. We also greatly reduced our holding in Ramkrishna Forgings (auto parts manufacturer). Following their strong performance, we trimmed several Indian property holdings as well. These sales in India totalled roughly 15% of the portfolio. However, due to the robust performance of our remaining Indian holdings, the portfolio’s overall position in India only decreased from 23.9% to 23.0% over the year. By sector, our most significant additions to the portfolio were in high growth, technology companies, primarily in two areas. Firstly, we increased our exposure to internet platforms. We already discussed the significant purchases of internet names in China, including Pinduoduo Inc and Tencent Holdings. Elsewhere, we initiated a new holding in Kaspi.kz, Kazakhstan’s leading super app. Kaspi.kz is used by nearly the entire adult population of Kazakhstan and has a dominant market share of 70% or more in ecommerce, payments and fintech. The company became one of our top ten holdings, representing 2.8% of total assets. As a result of these changes, our exposure to information technology and communication services increased from 30.6% to 45.7% over the year. Pacific Horizon Investment Trust PLC 13 The second main area of focus was semiconductor companies. We made significant additions to TSMC, the Taiwanese foundry, increasing our holding from 1.1% to 8.8% over the course of the year. TSMC has become an effective monopoly in advanced chip manufacturing, with increasing pricing power, and is central to many major technology advancements from AI to quantum computing. We also substantially increased our positions in Korean computer memory makers Samsung Electronics and SK hynix. We also purchased SG Micro, a leading Chinese analogue semiconductor company, and ASMPT, which provides semiconductor manufacturing solutions. Throughout the year, our exposure to companies with significant revenues from semiconductors rose from approximately 15% to 27%. Overall, the number of names in the portfolio reduced to 59 from 72 in the year to 31 July 2024. Private companies, of which there were 5 in the portfolio as of 31 July 2024, accounted 7.1% of the portfolio, and gearing was nil. Performance India emerged as the portfolio’s standout market, accounting for all eight of our top-performing companies. The Indian real estate sector was the primary driver of returns, contributing approximately 600 basis points. This was led by Prestige Estates Projects, Equinox India Developments (formerly IndiaBulls Real Estate), and Phoenix Mills, which ranked as our top three performing companies. Performance was strong across the sector as the property cycle finally gained momentum after more than a decade of stagnation, with volumes and prices accelerating. The fundamentals look robust, characterised by good affordability, long- term structural demand, and a consolidated market that has translated into strong operational performanceat the developers. Prestige Estates exemplified this trend, with annual sales bookings up over 60% and a record-breaking launch of 40million square feet in new projects, representing a 52% year-over-year increase. Equinox India Developments unfolded as a more intricate case, involving the Embassy Group’s (an Indian developer base in Bengaluru) efforts to acquire control, enhance corporate governance and consolidate its assets within the company. This complex process, which we’ve consistently backed, saw the completion of a significant deal whereby the company secured new capital, Embassy contributed a substantial portion of its assets and Blackstone emerged as a major shareholder (we also participated in the capital raise). As a result, the shares underwent a notable re-rating. Our Indian industrial holdings delivered strong performances as the country’s investment cycle continued to accelerate. Ramkrishna Forgings increased by 52% and Skipper rose by 59%. Meanwhile, automotive company Tata Motors gained over 50%, buoyed by robust domestic sales of its cars and trucks. In the technology sector, PolicyBazaar emerged as our standout holding, climbing 94%. The company continues to capture market share in insurance product sales, benefiting from increased online searches which drove rapid sales growth of 60% year-over-year. Hong Kong and Vietnam emerged as significant relative contributors. Hong Kong was the weakest market, falling 19.8%, and we benefitted from our significant underweight position in the country. In contrast, Vietnam is our second largest active country position in the portfolio (+7.8%) which, despite some political turbulence, performed well. Performance was led by HDBank, which continued to generate returns on equity in the mid-twenties and maintained good asset quality as concerns over various property exposures proved unfounded. China emerged as the worst performing country, detracting 300bp from performance. The most significant detractors were our holdings in Li-Ning, Ping An Insurance and Dada Nexus. Li-Ning’s share price fell nearly 70% following the company’s announcement of inventory management issues. However, after consulting with the company and numerous distributors, we believe this setback is temporary and expect growth to resume within the next 12 months. Ping An Insurance faced concerns over tightening financial regulations and its exposure to the property market. In response, we reduced our position in the company over the year. Dada Nexus was negatively impacted by two factors: the sluggish performance of JD.com, for which it provides logistics services, and revelations of accounting irregularities. Consequently, we decided to divest our position entirely. Strategic report Annual Report and Financial Statements 2024 14 Taiwan detracted 280bp from performance, primarily due to our underweight position in TSMC whose share price rose nearly 60%. The company experienced robust growth as the semiconductor cycle rebounded. With its monopolistic position in leading-edge semiconductor manufacturing, TSMC emerged as the major beneficiary of demand driven by artificial intelligence, notably as the sole supplier for NVIDIA’s leading AI chips. By sector, our underweight exposure to TSMC led to information technology being our worst-performing sector, followed by financials. In contrast, real estate and materials were the top contributors toperformance. We remain excited by the prospects for companies across the region and the breadth and depth of investment opportunities in growth businesses that will reward long-term patient investors. Baillie Gifford & Co 16 September 2024 Pacific Horizon Investment Trust PLC 15 Environmental, social and governance engagement Our long-term, active approach to investment is based on identifying and holding high-quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To identify these kinds of businesses, we often look beyond current financial performance, undertaking proprietary research to build up our in-depth knowledge of an individual company and form a view of its long-term prospects. Material environmental, social and governance (‘ESG’) matters which affect the financial condition or operating performance of a company, can positively or negatively influence long-term investment returns. Such issues are considered throughout the investment process through research, engagement and voting. Our approach is guided by our ESG principles: • Investment process founded on long-term ownership of growing businesses: we want to help these companies fulfil their potential and encourage them to ignore the short-term pressures of the market. • Sustainability is central to our analytical task: businesses engaging in practices that are harmful to society may be capable of generating attractive returns in the short term but are unlikely to do so over the periods we seek to invest. • We do not believe ‘one size fits all’: ESG practices need to be assessed on a case-by-case basis, not reliant on formulaic and backward-lookingscreens. • Not seeking ‘perfect’ companies: we prefer to consider the likely direction of change in otherwise promising investments and engage accordingly. Company engagement is key to our process. We encourage steps to maximise opportunities and minimise risks where we believe it is material to the success of the company. Engagement priorities are set through a combination of a subjective assessment of the materiality of an issue and our ability to influence, as well as use of more qualitative inputs to provide direction. We vote wherever possible and will vote against management if we believe that its actions are not in the interests of shareholders. We are supported by a dedicated emerging markets ESG analyst and a further 40 analysts who are part of Baillie Gifford’s wider ESG resource. By engaging with companies, we seek to build constructive relationships with them, to better inform our investment activities and, where necessary, effect change within our holdings, ultimately with the goal of achieving better returns for our shareholders. The two following examples demonstrate our stewardship approach through constructive, ongoing engagement. Strategic report Annual Report and Financial Statements 2024 16 Kaspi.kz Objective: We undertook additional research to further assess sanctions risk, potential impact of key personnel and how Kaspi.kz manage risk over and above regulation. Discussion: Kaspi.kz plays a critical role in payments and ecommerce in Kazakhstan. We see opportunities for significant social benefits through financial inclusion and merchant retail while recognising geopolitical and country risk. Following additional research we had commissioned on sanctions risk, we followed up with the company to better understand their governance mechanisms, with a particular focus on KYC (Know Your Customer) controls and how they manage risk over and above regulation. They have a digital onboarding process enhanced by facial recognition technology, ensuring all customers are registered in Kazakhstan with multiple data sources and IDs. This system balances speed and innovation with control, without relying on off-the-shelf solutions. Their core business focuses on domestic transactions between domestic users, with Kaspi.kz’s products being designed with transaction limits that prevent their use for moving large sums of money. The limits are approximately US$ 500 per transaction and US$ 2,000 per month. This design choice makes their product unsuitable for breaking sanctions, as it cannot perform SWIFT transfers or open dollar or sterling accounts. Kaspi.kz has embraced digital innovation, moving from cash to non-cash transactions, with 85% of transactions now being non-cash and the discussion shed light on Kaspi.kz’s digital transformation. The open API framework and the emphasis on keeping fees competitive while ensuring merchant and customer satisfaction were also discussed. Outcome: The detailed insights into Kaspi.kz’s KYC processes, coupled with additional independent research findings, provided a more in-depth understanding of the company’s governance and controls in place. Samsung Electronics Objective: To learn more about the company’s corporate governance and sustainability approach and encourage continued progress. Discussion: We met with the corporate executive vice presidents of sustainability and investor relations to discuss the company’s sustainability strategy, performance and targets. We also took part in a group meeting organised by the Asian Corporate Governance Association with the chairman of theboard. During these discussions, we heard that Samsung is committed to improving its corporate governance standards and has undergone a three-year review to benchmark global-leading companies. In addition, the board is enhancing pre-reporting, independent director feedback and member contributions. We were also able to hear more about the distinct roles within the company’s leadership, mainly how the board’s chair and the executive chairman work together. The company reiterated its commitment to reducing greenhouse gas emissions, transitioning to renewable energy and enhancing product efficiency, but has more work to do on these topics. Setting its environmental strategy in 2022 was a milestone for the company, and it continues to work to achieve its targets. Different divisions face different opportunities and challenges, and the executive vice president of sustainability reflected on her extensive engagement with theboard and the various businessunits. We also discussed Samsung’s continued work on environmental and human rights topics more broadly, which should enable them to be well- placed to meet evolving regulatory requirements in different markets. Samsung has developed and commercialised technologies for capturing and utilising carbon emitted from semiconductor manufacturing sites. Samsung’s scope 2 emissions (i.e.,grid electricity) continue to be its biggest challenge, and it is committed to efficiency measures and a transition to renewables with a 2027 plan for a 100 per cent. transition to renewable energy at global and device division sites. Samsung is working with industry peers through the Semiconductor Climate Consortium to develop a sector-based approach. Ithas a comprehensive water management approach and shared examples from the Hwaseong and Xian sites. Water from semiconductor sites is recycled to meet the standards for largely two purposes: re-usage in the chip manufacturing process and use in other on-site facilities (eg, cooling towers and scrubbers). Outcomes: The meetings provided further insights into the company’s governance, the roles of the chairman and the executive chairman, and strategic investment opportunities. Despite the complexity of aligning diverse business units towards a unified strategy, Samsung has made considerable progress on its sustainability strategy. We will continue to encourage progress. Pacific Horizon Investment Trust PLC 17 Baillie Gifford stewardship principles Baillie Gifford’s overarching ethos is that we are ‘Actual’ investors. That means we seek to invest for the long term. Our role as an engaged owner is core to our mission to be effective stewards for our clients. As an active manager, we invest in companies at different stages of their evolution across many industries and geographies, and focus on their unique circumstances and opportunities. Our approach favours a small number of simple principles rather than overly prescriptive policies. This helps shape our interactions with holdings and ensures our investment teams have the freedom and retain the responsibility to act in clients’ best interests. Where possible we consider all asset classes within the framework of our stewardship activities. We seek to apply the most appropriate ownership tools to each holding in delivering our objectives. Long-term value creation We believe that companies that are run for the long-term are more likely to be better investments over our clients’ time horizons. We encourage our holdings to be ambitious, focusing on long-term value creation and capital deployment for growth. We know events will not always run according to plan. In these instances we expect management to act deliberately and to provide appropriate transparency. We think helping management to resist short-term demands from shareholders often protects returns. We regard it as our responsibility to encourage holdings away from destructive financial engineering towards activities that create genuine value over the long-run. Our value will often be in supporting management when others don’t. Alignment in vision and practice Alignment is at the heart of our stewardship approach. We seek the fair and equitable treatment of all shareholders alongside the interests of management. While assessing alignment with management often comes down to intangible factors and an understanding built over time, we look for clear evidence of alignment in everything from capital allocation decisions in moments of stress to the details of executive remuneration plans and committed share ownership. We expect companies to deepen alignment with us, rather than weaken it, where the opportunity presents itself. Governance fit for purpose Corporate governance is a combination of structures and behaviours; a careful balance between systems, processes and people. Good governance is the essential foundation for long-term company success. We firmly believe that there is no single governance model that delivers the best long-term outcomes. We therefore strive to push back against one-dimensional global governance principles in favour of a deep understanding of each company we invest in. We look, very simply, for structures, people and processes which we think can maximise the likelihood of long-term success. We expect to trust the boards and management teams of the companies we select, but demand accountability if that trust is broken. Sustainable business practices A company’s ability to grow and generate value for our clients relies on a network of interdependencies between the company and the economy, society and environment in which it operates. We expect holdings to consider how their actions impact and rely on these relationships. We believe long-term success depends on maintaining a social licence to operate and look for holdings to work within the spirit and not just the letter of the laws and regulations that govern them. Material factors should be addressed at the board level as appropriate. Strategic report Annual Report and Financial Statements 2024 18 Baillie Gifford proxy voting We believe that ‘active ownership’ of our clients’ holdings is as important as selecting the right investments in the first instance. These guidelines are aligned with our stewardship principles and describe our approach to proxy voting and company engagement, the key levers of active ownership, often described as ‘stewardship’. While these guidelines are intended to provide an insight into how we approach voting on our clients’ behalf, it is important to note that we assess every company individually. In voting, we will always evaluate proposals on a case-by-case basis, based on what we believe to be in the best long-term interests of our clients, rather than rigidly applying a policy. A broad cross section of our investment staff are involved in our ongoing work on stewardship. In the same way that our investment approach is based around empowered and independent teams, our voting and engagement is led by the individual investment teams. In keeping with our decentralised and autonomous culture, our investment teams will, on occasion, elect to vote differently on the same general meeting resolutions. Where this happens, we report accordingly in the proxy voting disclosure on our website. We also have clear processes in place to identify, prevent and manage potential proxy voting related conflicts of interest to ensure that in all cases the firm acts in the clients’ best interest. Baillie Gifford’s firm-wide conflict of interest disclosure is available on our website. Prior to taking any voting action, we usually address specific ESG concerns by engaging directly with the company, using voting as an escalation mechanism ifwe have not seen sufficient progress. Voting activity and the reasons for any resolutions voted against in the period is disclosed on the Company’s page of the Managers’ website and can be viewed atpacifichorizon.co.uk. Company meeting record Voting distribution Number of meetings voted with management 86 Number of meetings with at least one against, withhold or abstain 28 Meeting not voted 2 Number of votes for 90% Number of votes against 4% Number of votes abstain 4% No Vote 2% Pacific Horizon Investment Trust PLC 19 31 July 2024 31 July 2023 % change Shareholders’ funds £602.0m £580.4m Net asset value per ordinary share 664.01p 637.18p 4.2% Share price 612.00p 586.00p 4.4% MSCI All Country Asia ex Japan Index (in sterling terms) † 4.1% Dividend proposed per ordinary share in respect of the financial year 2.65p 3.25p Revenue earnings per ordinary share 3.82p 4.56p Ongoing charges #‡ 0.74% 0.72% Discount #‡ (7.8%) (8.0%) Active share # 75% 82% Year to 31 July 2024 2023 Total return # Net asset value per ordinary share ‡ 4.8% (3.6%) Share price ‡ 5.1% (8.9%) MSCI All Country Asia ex Japan Index (in sterling terms) † 6.8% 0.8% Year to 31 July 2024 2024 2023 2023 Year’s high and low High Low High Low Net asset value per ordinary share 712.09p 579.28p 699.18p 556.69p Share price 657.00p 512.00p 693.00p 523.00p (Discount)/premium #‡ (5.0%) (14.5%) 2.7% (11.7%) Year to 31 July 2024 2023 Net return per ordinary share Revenue 3.82p 4.56p Capital 25.82p (30.05p) Total 29.64p (25.49p) The following information illustrates how Pacific Horizon has performed over the year to 31 July 2024. Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. # Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. ‡ Key Performance Indicator. Past performance is not a guide to future performance. One year summary Strategic report Annual Report and Financial Statements 2024 20 * The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. # See disclaimer on page 1 1 7. Past performance is not a guide to future performance. Five year summary Total return performance † (figures rebased to 100 at 31 July 2019, plotted on a quarterly basis) 20242019 2020 2021 2022 2023 Cumulative to 31 July ● NAV total return † ● Share price total return † ● Comparative index total return † Source: Baillie Gifford/LSEG and relevant underlying index providers # . Dividends are reinvested. 50 300 200 150 100 250 Annual share price and net asset value total returns † 2024 2020 2021 2022 2023 Years to 31 July ● NAV total return † ● Share price total return † Source: Baillie Gifford/LSEG. Dividends are reinvested. (40%) 80% 60% 40% 20% (20%) 0% The following charts indicate how Pacific Horizon has performed relative to its comparative index * and the relationship between share price and net asset value over the five year period to 31 July 2024. Pacific Horizon Investment Trust PLC 21 20242020 2021 2022 2023 Years to 31 July ● Relative NAV total return † ● Relative share price total return † Source: Baillie Gifford/LSEG and relevant underlying index providers # . Dividends are reinvested. (20%) 60% 40% 20% 0% (Discount)/premium to net asset value † (figures plotted on a quarterly basis) Relative annual share price and net asset value total returns † (compared to the MSCI All Country Asia ex Japan Index (in sterling terms) total returns) 2024 July 2019 July 2020 2021 2022 2023 ● Pacific Horizon premium/(discount) † Source: Baillie Gifford/LSEG # . (15%) 15% 10% 5% 0% (10%) (5%) * The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. # See disclaimer on page 1 1 7. ‡ For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Past performance is not a guide to future performance. Active share † (compared to the MSCI All Country Asia ex Japan Index (in sterling terms), plotted on a monthly basis) 2024 July 2019 July 2020 2021 2022 2023 ● Active share † Source: Baillie Gifford and relevant underlying index providers # . 0% 100% 80% 60% 20% 40% Turnover ‡ (rolling 12 months turnover, plotted on a monthly basis) 20242019 2020 2021 2022 2023 Years to 31 July ● Turnover ‡ Source: Baillie Gifford. 0% 40% 20% 30% 10% Strategic report Annual Report and Financial Statements 2024 22 Capital At 31 July Total assets £’000 Borrowings £’000 Shareholders’ funds £’000 Net asset value per share p Share price p Premium/ (discount) % 2014 145,063 4,146 140,917 200.95 1 7 7.7 5 (11.5) 2015 139,167 13,997 125,170 197.78 181.63 (8.2) 2016 132,702 5,000 127,702 223.58 201.00 (10.1) 2017 182,523 14,773 167,750 309.15 286.00 (7.5) 2018 225,063 20,183 204,880 351.26 363.00 3.3 2019 223,755 20,405 203,350 344.50 320.00 (7.1) 2020 329,044 24,641 304,403 481.92 504.00 4.6 2021 748,014 60,783 687,231 777.15 802.00 3.2 2022 610,550 – 610,550 664.65 647.00 (2.7) 2023 580,355 – 580,355 637.18 586.00 (8.0) 2024 601,970 – 601,970 664.01 612.00 (7.8) Revenue Gearing ratios Year to 31 July Gross revenue £’000 Available for ordinary shareholders £’000 Revenue earnings per ordinary share p Dividend paid and proposed per ordinary share (net) p Ongoing charges % Gearing % Gross gearing % 2014 2,550 1,019 1.40 1.40 1.01 2 3 2015 1,886 231 0.35 0.35 1.02 8 11 2016 1,331 (182) (0.30) 0.35 1.13 3 4 2017 1,559 (211) (0.38) – 1.07 7 9 2018 2,032 (328) (0.60) – 1.02 8 10 2019 2,473 8 0.01 – 0.99 8 10 2020 3,128 564 0.95 0.25 0.92 4 8 2021 3,561 (402) (0.51) – 0.78 4 9 2022 11,067 3,830 4.21 3.00 0.74 (1) – 2023 9,580 4,166 4.56 3.25 0.72 (2) – 2024 8,987 3,464 3.82 2.65 0.74 (1) – Ten year record * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Past performance is not a guide to future performance. Pacific Horizon Investment Trust PLC 23 Cumulative performance (taking 2014 as 100) At 31 July Net asset value per share Net asset value total return † Share price Share price total return † Comparative index †# Comparative index total return †# Retail price index † 2014 100 100 100 100 100 100 100 2015 98 99 102 103 99 102 101 2016 111 112 113 114 112 118 103 2017 154 155 161 163 140 152 107 2018 175 177 204 207 145 161 110 2019 171 173 180 182 147 168 113 2020 240 242 284 287 151 176 115 2021 387 392 451 456 166 199 119 2022 331 334 364 368 149 182 134 2023 317 322 330 335 146 184 146 2024 330 338 344 353 152 196 151 Compound annual returns (%) 5 year 14.0 14.4 13.8 14.1 0.7 3.2 6.0 10 year 12.7 13.0 13.2 13.4 4.3 7. 0 4.2 Cumulative to 31 July 20242014 2016 2019 2021 20232015 20182017 2020 2022 ● Pacific Horizon share price total return † ● NAV total return † ● MSCI All Country Asia ex Japan Index (in sterling terms) total return † 0 600 300 200 100 500 400 Total return performance (figures rebased to 100 at 31 July 2014, plotted on a quarterly basis) * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † Source: LSEG and relevant underlying index providers. See disclaimer on page 117. # The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. Past performance is not a guide to future performance. Strategic report Annual Report and Financial Statements 2024 24 Review of investments A review of the Company’s ten largest investments as at 31 July 2024. * For a definition of terms see Glossary of t erms and Alternative Performance Measures on pages 118 and 119 . Samsung Electronics Samsung is a global leader in semiconductors and electronics. Its core business is highly cash-generative, and the group has the financial and human capital that permits it to invest and innovate at scale. TSMC Taiwan Semiconductor Manufacturing Company is a semiconductor contract manufacturer. It is the largest and most advanced foundry globally, integral to the global electronics industry. Its lead in semiconductor process technology and partnerships with all key chip design companies result in both a multi-decade growth opportunity as well as enduring high returns on capital. Geography South Korea Valuation at 31 July 2024 £57,877,000 % of total assets at 31 July 2024 9.6% Valuation at 31 July 2023 £36,937,000 % of total assets at 31 July 2023 6.4% Net purchases in year to 31 July 2024 £15,495,000 Geography Taiwan Valuation at 31 July 2024 £52,860,000 % of total assets at 31 July 2024 8.8% Valuation at 31 July 2023 £6,458,000 % of total assets at 31 July 2023 1.1% Net purchases in year to 31 July 2024 £41,500,000 © Samsung. © Taiwan Semiconductor Manufacturing Co., Ltd. Pacific Horizon Investment Trust PLC 25 * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Equinox India Developments Equinox India Developments is an Indian property developer. It has valuable existing assets in Mumbai and future development opportunities in Mumbai and Bangalore. The company benefits from both a buoyant property market in India, as well as a new owner and management team that will drive growth in the company. This was previously called Indiabulls Real Estate. Tencent Holdings Tencent Holdings operates WeChat, China’s ubiquitous messaging platform and internet services portal, as well as being China’s leading gaming publisher. It has an excellent record in capital allocation and, sitting at the heart of the Chinese consumer internet, has a broad range of growth opportunities from here. Dailyhunt (VerSe Innovation) A private company investment, Dailyhunt is an Indian consumer media company. Its short form video and news aggregator apps are popular across the country. Its localised and user-generated content ensures engagement, which is valued by advertisers looking to reach the Indian mass-market. Geography China Valuation at 31 July 2024 £22,940,000 % of total assets at 31 July 2024 3.8% Valuation at 31 July 2023 n/a % of total assets at 31 July 2023 n/a Net purchases in year to 31 July 2024 £23,748,000 Geography India Valuation at 31 July 2024 £23,158,000 % of total assets at 31 July 2024 3.8% Valuation at 31 July 2023 £11,988,000 % of total assets at 31 July 2023 2.1% Net purchases/sales in year to 31 July 2024 Nil Geography India Valuation at 31 July 2024 £20,693,000 % of total assets at 31 July 2024 3.5% Valuation at 31 July 2023 £17,921,000 % of total assets at 31 July 2023 3.0% Net purchases/sales in year to 31 July 2024 Nil © Shutterstock/Addictive Creative. © Alamy Stock Photo. Strategic report Annual Report and Financial Statements 2024 26 Delhivery Delhivery is an Indian logistics company, and the leading independent provider of end-to-end delivery services, with a national network used by all ecommerce players. The scale and modernity of its network has allowed it to deliver both the lowest costs and a reliable delivery experience, making it one of the best-placed operators to benefit from the continued growth of Indian ecommerce. This was previously a private company investment. Zijin Mining Group Zijin Mining Group is a diversified mining company, primarily engaged in the exploration and processing of copper, gold and zinc. The company has a broad portfolio of high quality mining assets, which are likely to generate strong production growth over the coming five years. Kaspi.kz Kaspi.kz is a Kazakhstani payments, ecommerce and banking business, amongst other services. With a dominant competitive position in its domestic market, it is arguably the broadest ‘super app’ globally. In a country where online penetration of services is still low, there is ample growth there as well as potentially across Central Asia in the longer-term. * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Geography India Valuation at 31 July 2024 £18,175,000 % of total assets at 31 July 2024 3.0% Valuation at 31 July 2023 £18,399,000 % of total assets at 31 July 2023 3.2% Net sales in year to 31 July 2024 £172,000 Geography China Valuation at 31 July 2024 £18,142,000 % of total assets at 31 July 2024 3.0% Valuation at 31 July 2023 £16,602,000 % of total assets at 31 July 2023 2.9% Net sales in year to 31 July 2024 £1,777,000 Geography Khazakstan Valuation at 31 July 2024 £17,034,000 % of total assets at 31 July 2024 2.8% Valuation at 31 July 2023 n/a % of total assets at 31 July 2023 n/a Net purchases in year to 31 July 2024 £14,009,000 Pacific Horizon Investment Trust PLC 27 * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. EO Technics EO Technics manufactures lasers used in the manufacturing process of semiconductors, including wafer marking, drilling and dicing. As semiconductors become smaller and more complex, lasers will increasingly be needed to replace more traditional equipment including ceramic blades and drills, leading to rapid growth for EO Technics. Pinduoduo Inc Pinduoduo Inc is a Chinese ecommerce company, important both domestically and internationally through its Temu subsidiary. Its price conscious and gamified approach has enticed customers, while its savvy use of bargaining power with its Chinese supplier base has allowed it to drive both a bargain for its customers and rapid profit growth for the company. Geography South Korea Valuation at 31 July 2024 £15,692,000 % of total assets at 31 July 2024 2.6% Valuation at 31 July 2023 £15,526,000 % of total assets at 31 July 2023 2.7% Net sales in year to 31 July 2024 £143,000 Geography China Valuation at 31 July 2024 £15,469,000 % of total assets at 31 July 2024 2.6% Valuation at 31 July 2023 n/a % of total assets at 31 July 2023 n/a Net purchases in year to 31 July 2024 £15,719,000 © Imaginechina Limited/Alamy Stock Photo. Strategic report Annual Report and Financial Statements 2024 28 Performance 1 year % 3 years % 5 years % 10 years % Share price 5.1 (22.8) 93.6 252.5 NAV 4.8 (13.6) 96.1 237.5 Comparative index 6.8 (1.2) 1 7. 0 96.3 All figures are stated on a total return basis † for the period to 31 July 2024. * The comparative index is the MSCI All Country Asia ex Japan Index (in sterling terms). † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. Portfolio executive summary Contributors Absolute performance % Prestige Estate Projects 205.4 Equinox India Developments 93.2 Tata Motors 52.5 Phoenix Mills 103.1 Samsung Electronics 13.2 Detractors Absolute performance % Li-Ning (68.3) Ping An Insurance (35.6) Baidu Inc (42.5) Dada Nexus ADR (76.4) Samsung Engineering (36.9) Key contributors and detractors to performance – year to 31 July 2024 * Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 August 2023 to 31 July 2024. For the definition of total return see Glossary of terms and Alternative Performance Measures on pages 118 and 119. Source: Revolution. Pacific Horizon Investment Trust PLC 29 Complete sales Alibaba Group China Oilfield Services CIMC Vehicles Dada Nexus ADR Geely Automobile HDFC Hyundai Mipo Dockyard KH Vatec Company Kingdee International Software LONGi Green Energy A shares Meituan Merdeka Copper Gold Nexteer Automotive Ningbo Peacebird Fashion A Shares Ping An Bank A shares PT Astra International Samsung Engineering Samsung SDI SDI Corporation Skipper Tata Motors TISCO Wuxi Lead Intelligent Equipment Co A Shares Baidu Inc Binh Minh Plastics Joint Stock Company ByteDance Series E-1 Preferred  FPT Corporation Jio Financial Services MMG Mobile World Investment Corporation PolicyBazaar Samsung Electronics Silergy SK hynix TSMC Additions Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. Philtown properties was written-off in the year to 31 July 2024. ASMPT Chroma ATE Kaspi.kz Luckin Coffee Inc ADR Lufax Holding MicroConnect  Pinduoduo Inc PT AKR Corporindo Tbk SG Micro SK Square Tencent Holdings New buys Reductions Accton Technology Corporation AirTAC International Group Bank Rakyat Brilliance China Automotive Chalice Coupang Delhivery  EO Technics HDBank Hoa Phat Group Jadestone Energy JD.com KE Holdings Koh Young Technology Lemon Tree Hotels Li-Ning MediaTek Midea Group A shares Military Commercial Joint Stock Bank Phoenix Mills Ping An Insurance Precision Tsugami Prestige Estate Projects Ramkrishna Forgings Reliance Industries SEA ADR Techtronic Industries Vietnam Enterprise Investments Limited Vinh Hoan Corporation Zhejiang Supor Co A Shares Zijin Mining Group Strategic report Annual Report and Financial Statements 2024 30 Distribution of total assets * and size splits Geographical 2024 Sectoral 2024 1 2 3 4 6 5 7 8 * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. # The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. Size splits (market capitalisation of investments) As at 31 July 2024 <£1bn>£25bn £10–25bn £1–2bn£2–5bn£5–10bn Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 117. ● Pacific Horizon ● MSCI All Country Asia ex Japan index # % of portfolio and index stocks 0% 60% 50% 40% 30% 10% 20% 3 4 5 8 7 2 6 1 9 Geographical 2024 % 2023 % 1 India 23.0 23.9 2 China 22.6 28.5 3 South Korea 1 7. 0 18.3 4 Taiwan 14.7 5.7 5 Vietnam 8.7 6.7 6 Singapore 3.7 3.5 9 China ‘A’ shares 3.2 5.2 7 Kazakhstan 2.8 – 8 Indonesia 2.6 5.7 10 Hong Kong 2.4 0.3 11 Thailand – 0.9 12 Net liquid assets (0.7) 1.3 Sectoral 2024 % 2023 % 1 Information Technology 32.5 22.0 2 Financials 14.2 12.9 3 Communication Services 13.2 8.6 4 Consumer Discretionary 13.2 20.3 5 Real Estate 10.0 6.9 6 Materials 6.9 12.5 7 Industrials 6.0 10.6 8 Energy 4.2 4.3 9 Consumer Staples 0.5 0.5 10 Healthcare – 0.1 11 Net liquid assets (0.7) 1.3 Pacific Horizon Investment Trust PLC 31 Strategic report Annual Report and Financial Statements 2024 32 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’. Ourvaluation process ensures that private companies are valued in both a fair and timelymanner. The valuation process is overseen by a valuations group at Baillie Gifford, which takes advice from an independent third party (S&P Global). The valuations group is independent from the investment team with all voting members being from different operational areas of the firm, and the investment managers only receive final valuation notifications once they have been applied. We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. During stable market conditions, and assuming all else is equal, each investment would be valued four times in a twelve-month period. For investment trusts, the prices are also reviewed twice per year by the respective boards. Beyond the regular cycle, the valuations group 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 group also monitors relevant market benchmarks on a weekly basis and updates valuations in a manner consistent with our external valuer’s (S&P Global) most recent valuation report where appropriate. Generally speaking, public markets have continued to be less volatile in the 12 months to 31 July 2024, and overall, an improvement in market conditions has led to an increase in private market deal activity. The data below quantifies the revaluations carried out during the 12 months to 31 July 2024, however doesn’t reflect the ongoing monitoring of the private investment portfolio which hasn’t resulted in a change in valuation. Pacific Horizon Investment Trust Instruments (lines of stock reviewed) 7 Revaluations performed 37 Percentage of portfolio revalued up to 4 times 29% Percentage of portfolio revalued 5+ times 71% Baillie Gifford – valuing private companies Pacific Horizon Investment Trust PLC 33 Private companies summary Transaction value Showing all transactions in the year to 31 July (£’000). Historical snapshot Since our first investment in private companies in 2007, Pacific Horizon Investment Trust has deployed £76,228,000 of capital in this area. 0 40,000 30,000 20,000 10,000 Follow on Buy Listed 20222021 202020182017 2023 2024 04 private companies listed since initial purchase 05 private companies currently held Portfolio activity – year to 31 July 2024 £10,628,000 of new capital was deployed in private companies during the year. No private companies listed or were taken-over during the year. One private company was written-off during the year. Concentration At 31 July 2024 we held 5 private companies which equated to 7.1 % of total assets. Private exposure (31 July 2024) Total private company exposure Private company exposure within the top five – 3.5% All figures stated as percentage of total assets, as at 31 July 2024. Dailyhunt (VerSe Innovation) 3.5% (£20,693,000) ByteDance 2.5% (£15,232,000) MicroConnect 1.1% (£6,782,000) Chime Biologics <0.1% (£46,000) Eden Biologics <0.1% (£10,000) Total private company exposure 7.1 % Strategic report Annual Report and Financial Statements 2024 34 Jul 2024 Jul 2022 Jul 2016 Jul 2017 Jul 2018 Jul 2019 Jul 2020 Jul 2021 Jul 2023 Source: Baillie Giff ord. Total assets in sterling (left hand axis) P rivate company investments as a % of total assets (right hand axis) P rivate company investments and listed investments previously held in the portfolio as private comany investments as a % of total assets (right hand axis) * See Glossary of terms and Alternative Performance Measures on pages 118 and 119 . £ million 25 0 10 15 % 20 5 1,000 200 800 400 600 0 Private company investments and listed investments previously held as private company investments as a percentage of total assets (plotted quarterly from July 2016) Performance of listed holdings held previously as private company investments from date of initial investment of each holding to 31 July 2024 (absolute performance in sterling terms as a %) Absolute performance from initial investment to initial public offering Absolute performance from initial public offering to 31 July 2024 Total absolute performance from initial investment to 31 July 2024 No te: Absolute performance returns cannot be added together as they are geometric. Source: Revolution/Baillie Gifford. Star Health Zomato Delhivery 80 100 -100 20 6040-80 -60 -40 -20 0 80 10 0 -100 20 6040-80 -60 -40 -20 0 Listed holdings at 31 July 2024 Pacific Horizon Investment Trust PLC 35 2024 £’000 2023 £’000 Opening balance 1 August 29,427 37,243 Purchases at cost 10,628 – Disposals proceeds received * (5) – Change in listing – – Change in fair value 2,713 (7,816) Closing balance 31 July 42,763 29,427 * Philtown properties was written-off in the year to 31 July 2024. Overview Valuation movements – year to 31 July 2024 Size Our private company exposure tends to be weighted to the upper end of the maturity curve, focussed on late stage private companies who are scaling up and becoming profitable. Pacific Horizon -1.4% Average change at company level Year to 31 July 2024 Private companies ByteDance Chime Biologics Dailyhunt (VerSe Innovation) Eden Biologics MicroConnect Valuation changes (40%) 60% 0% 20% 40% (20%) Pacific Horizon -13.0% Average write-down per company Year to 31 July 2024 (excluding companies revalued up) Source: Baillie Gifford. Pacific Horizon private company valuation changes, year to 31 July 2024. Cap Total equity value (USD) Total asset % Number of holdings Micro <$300m <0.1 2 Small $300m–$2bn 1.1 1 Medium $2bn–$10bn 3.5 1 Large >$10bn 2.5 1 7. 1 5 As at 31 July 2024. Strategic report Annual Report and Financial Statements 2024 36 List of investments as at 31 July 2024 Name Geography Business 2024 Value £’000 2024 % of total assets 2023 Value £’000 Samsung Electronics South Korea Memory, phones and electronic components manufacturer 57,877 9.6 36,937 TSMC Taiwan Semiconductor manufacturer 52,860 8.8 6,458 Equinox India Developments India Real estate 23,158 3.8 11,988 Tencent Holdings China Internet services 22,940 3.8 – Dailyhunt (VerSe Innovation) Series I Preferred  India News aggregator application 15,417 2.6 13,428 Dailyhunt (VerSe Innovation) Series Equity  India News aggregator application 3,078 0.5 2,462 Dailyhunt (VerSe Innovation) Series J Preferred  India News aggregator application 2,198 0.4 2,031 20,693 3.5 17,921 Delhivery   India Logistics and courier services provider 18,175 3.0 18,399 Zijin Mining Group China Gold and copper miner 18,142 3.0 16,602 Kaspi.kz Khazakstan Banking, ecommerce and payments platform 17,034 2.8 – EO Technics South Korea Manufacturer and distributor of semiconductor laser markers 15,692 2.6 15,526 Pinduoduo Inc China Ecommerce platform 15,469 2.6 – ByteDance Series E-1 Preferred  China Social media 15,232 2.5 11,413 Reliance Industries India Petrochemical company 14,290 2.4 12,397 SK hynix South Korea Semiconductor manufacturer 14,266 2.4 4,565 Prestige Estate Projects India Owner and operator of residential real estate properties 13,985 2.3 7,611 MMG China Copper miner 12,885 2.1 14,237 Phoenix Mills India Commercial property manager 12,263 2.0 9,448 Lemon Tree Hotels India Owner and operator of a chain of Indian hotels and resorts 11,583 1.9 9,559 SEA ADR Singapore Internet gaming and ecommerce 11,197 1.9 11,414 Mobile World Investment Corporation Vietnam Electronic and grocery retailer 11,052 1.8 3,400 Jio Financial Services India Financial service business 10,724 1.8 1,273 Accton Technology Corporation Taiwan Server network equipment manufacturer 10,717 1.8 8,531 * See Glossary of terms and Alternative Performance Measures on pages 118 and 119. Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. Pacific Horizon Investment Trust PLC 37 Name Geography Business 2024 Value £’000 2024 % of total assets 2023 Value £’000 Bank Rakyat Indonesia Consumer bank 10,444 1.7 13,684 MediaTek Taiwan Electronic component manufacturer 10,216 1.7 6,100 HDBank Vietnam Consumer bank 9,751 1.6 9,521 PolicyBazaar India Online financial services platform 9,637 1.6 3,725 Baidu Inc China Internet provider 8,752 1.5 9,272 Luckin Coffee Inc ADR China Coffeehouse chain 8,456 1.4 – Silergy Taiwan Semiconductor manufacturer 8,428 1.4 4,979 Midea Group A shares China A Household appliance manufacturer 8,386 1.4 7,941 FPT Corporation Vietnam IT service provider 8,272 1.4 944 JD.com China Online mobile commerce 8,027 1.3 14,910 Ping An Insurance China Life insurance provider 7,345 1.2 21,418 MicroConnect  Hong Kong SME financing exchange 6,782 1.1 – Military Commercial Joint Stock Bank Vietnam Retail and corporate bank 6,578 1.1 5,448 KE Holdings China Real estate platform 5,722 1.0 7,303 KE Holdings ADR China Real estate platform 517 <0.1 655 6,239 1.0 7,958 Coupang South Korea Ecommerce business 6,239 1.0 5,490 Zhejiang Supor Co A Shares China A Manufacturer of cookware and home appliance products 6,161 1.0 6,243 SK Square South Korea Asset manager, investing in semiconductors and information and communciations technologies 5,835 1.0 – Hoa Phat Group Vietnam Steel and related products manufacturer 5,767 1.0 8,150 Jadestone Energy Singapore Oil and gas explorer and producer 5,616 1.0 5,932 PT AKR Corporindo Tbk Indonesia Logistics and supply chain 5,211 0.9 – ASMPT Hong Kong Semiconductor manufacturer 5,147 0.9 – SG Micro A Shares China A Semiconductor manufacturer 4,871 0.8 – PropertyGuru Singapore Real estate platform 4,850 0.8 3,148 Lufax Holding China Online financial services platform 4,615 0.8 – Binh Minh Plastics Joint Stock Company Vietnam Plastic piping manufacturer 4,555 0.8 1,235 * See Glossary of terms and Alternative Performance Measures on pages 118 and 119. Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. Strategic report Annual Report and Financial Statements 2024 38 Name Geography Business 2024 Value £’000 2024 % of total assets 2023 Value £’000 Ramkrishna Forgings India Auto parts manufacturer 4,361 0.7 19,091 Chroma ATE Taiwan Manufacturer of electronic measuring instruments 4,285 0.7 – Li-Ning China Sportswear apparel supplier 3,548 0.6 11,503 Precision Tsugami China Industrial machinery manufacturer 3,170 0.5 2,877 Vietnam Enterprise Investments Limited Vietnam Investment fund 3,090 0.5 8,232 Vinh Hoan Corporation Vietnam Food producer 3,062 0.5 2,907 Techtronic Industries Hong Kong Power tool manufacturer 2,354 0.4 2,088 Koh Young Technology South Korea 3D inspection machine manufacturer 2,328 0.4 5,169 AirTAC International Group Taiwan Pneumatic components manufacturer 1,909 0.3 2,243 Brilliance China Automotive China Minibus and automotive components manufacturer 980 0.2 1,076 Chalice China Miner 616 0.1 3,311 Chime Biologics  China Biopharmaceutical company 46 <0.1 76 Eden Biologics  Taiwan Biopharmaceutical company 10 <0.1 17 Total investments 606,173 100.7 Net liquid assets (4,203) (0.7) Total assets 601,970 100.0 Details of the ten largest investments are given on pages 24 to 27 along with comparative valuations. Listed equities % Private company investments † % Net liquid assets * % Total assets * % 31 July 2024 93.6 7.1 (0.7) 100.0 31 July 2023 93.6 5.1 1.3 100.0 Figures represent percentage of total assets. * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 118 and 119. † Includes holdings in ordinary shares and preference shares. Denotes listed investment previously held in the portfolio as an unlisted (private company) investment. Denotes unlisted (private company) investment. Pacific Horizon Investment Trust PLC 39 Business model Business and status The Company is an investment company within the meaning of section 833 of the Companies Act 2006 and carries on business as an investment trust. Investment trusts are UK public listed companies and their shares are traded on the London Stock Exchange. They invest in a portfolio of assets in order to spread risk. The Company has a fixed share capital although, subject to shareholder approval, sought annually, it may purchase its own shares or issue shares. The price of the Company’s shares is determined, like other listed shares, by supply and demand. The Company has been approved as an investment trust by HM Revenue & Customs subject to the Company continuing to meet the eligibility conditions. The Directors are of the opinion that the Company has continued to conduct its affairs so as to enable it to comply with the ongoing requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. The Company is an Alternative Investment Fund (‘AIF’) for the purposes of the UK Alternative Investment Fund Managers Regulations. Purpose The Company’s purpose is to conduct business as an investment trust, investing its assets in accordance with its investment objective, in order to achieve capital growth for shareholders. Investment objective The Company’s objective is to invest in the Asia-Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital growth. The Company is prepared to move freely between the markets of the region as opportunities for growth vary. The portfolio will normally consist principally of quoted securities. Investment policy Pacific Horizon aims to achieve capital growth principally through investment in companies listed on the stock markets of the Asia-Pacific region (excluding Japan) and the Indian Sub-continent. The Company may also invest in companies based in the region and in investment funds specialising in the region or particular countries or sectors within it even if they are listed elsewhere. The maximum permitted investment in one company is 15% of total assets at time of investment. The portfolio contains companies which the portfolio managers have identified as offering the potential for long-term capital appreciation, irrespective of whether they comprise part of any index. The portfolio is actively managed and will normally consist principally of quoted equity securities although unlisted companies, fixed interest holdings or other non-equity investments may be held. The maximum exposure to unlisted investments is 15% of total assets at the time of initial investment. The Company is also permitted to invest in other pooled vehicles (general, country and sector specific) that invest in the markets of the region. In constructing the equity portfolio a spread of risk is created through diversification and the portfolio will typically consist of between 40 and 120 companies. Although sector concentration and the thematic characteristics of the portfolio are carefully monitored, no maximum limits to stock or sector weights have been set by the Board except as imposed from time to time by banking covenants on borrowings. The Company may use derivatives which will be principally, but not exclusively, for the purpose of reducing, transferring or eliminating investment risk in its investments. These typically take the form of index futures, index options and currency forward transactions. The Company has a maximum approved equity gearing level of 50% of shareholders’ funds but, in the absence of exceptional market conditions, equity gearing is typically less than 25% of shareholders’ funds. Borrowings are invested in securities when it is considered that investment opportunities merit the Company taking a geared position. The Company is also permitted to be less than fully invested. Cash and equity gearing levels, and the extent of gearing, are discussed by the Board and Managers at every Board meeting. Business review Strategic report Annual Report and Financial Statements 2024 40 The Board also has regard to the total return of the Company’s principal comparative index (MSCI All Country Asia ex Japan Index (in sterling terms)) and considers the performance of comparable companies. Across these measures, the Board looks for relative outperformance over the long term, while remaining mindful that the nature of the investment policy and the growth characteristics of the portfolio investments may entail periods of underperformance over the short and medium term. The Board is satisfied with the Company’s progress and performance. Key performance indicator The Board uses key performance indicators (KPIs) to measure the progress and performance of the Company over time when discharging its duties as set out on page 60. These KPIs are established industry measures. Share price and net asset value total returns (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. 0 50 100 150 20 0 25 0 300 ● NAV total return ● Share price total return 1 year 5 years10 years Share price discount/premium (APM) As stock markets 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. If the share price is higher than the NAV per share, this situation is called a premium. -12 -10 -8 -6 -4 -2 0 ● Average discount/premium of NAV to share price 1 year 5 years10 yea rs % Ongoing charges (APM) Ongoing charges are the total recurring expenses (excluding the Company’s cost of dealing in investments and borrowing costs) incurred by the Company as a percentage of the daily average net asset value. 0.0 0.5 1.0 1.5 2.0 Ongoing charges movement 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 % Performance Pacific Horizon Investment Trust PLC 41 Culture As an externally managed investment company with no employees, Pacific Horizon’s culture is expressed through its Board and its third party service providers, in particular its Managers, in their interactions with shareholders and other stakeholders. The Board’s assessment of its own interactions is described in its Section 172 Statementon pages 46 to 48, and the Baillie Gifford Statement on Stewardship, which describes the Managers’ culture of constructive engagement, is set out on page 1 7. Borrowings Facility Lender Maturing 2024 2023 £100 million Royal Bank of Scotland International Limited 14 March 2025 No outstanding drawings No outstanding drawings The main covenants relating to the loan are that borrowings should not exceed 30% of the Company’s adjusted net asset value and the Company’s net asset value should be at least £300 million. There were no breaches in the loan covenants during the year. Viability statement Notwithstanding that the continuation of the Company is subject to approval of shareholders every five years, with the next vote at the Annual General Meeting in 2026, the Directors have, in accordance with provision 31 of the UK Corporate Governance Code, published by the Financial Reporting Council, assessed the prospects of the Company over a three year period. The Directors continue to believe this period to be appropriate as it is reflective of the Company’s investment approach. In the absence of any adverse change to the regulatory environment and the favourable tax treatment afforded to UK investment trusts, such a period is one over which they do not expect there to be any significant change to the current principal risks and to the adequacy of the mitigating controls in place. The Directors do not envisage any change in the Company’s strategy or objectives nor do they foresee any events that would prevent the Company from continuing in existence over that period. In making this assessment regarding viability, the Directors have taken into account the Company’s current position and have conducted a robust assessment of the Company’s principal and emerging risks and uncertainties (as detailed on pages 42 to 45), in particular the impact of market risk where a significant fall in the Asia-Pacific (excluding Japan) and the Indian Sub-continent equity markets would adversely impact the value of the investment portfolio. The Directors have also considered the Company’s investment objective and policy, the level of demand for the Company’s shares, the nature of its assets, its liabilities and its projected income and expenditure. The vast majority of the Company’s investments are readily realisable and can be sold to meet its liabilities as they fall due. The Company’s primary third party suppliers, including its Managers and Secretaries, Custodian and Depositary, Registrar, Auditor and Broker, are not experiencing significant operational difficulties affecting their respective services to the Company. In addition, as substantially all of the essential services required by the Company are outsourced to third party service providers, key service providers can be replaced at relatively short notice where necessary. Specific leverage and liquidity stress testing was conducted during the year, including consideration of increasing geopolitical tensions. The stress testing did not indicate any matters of material concern. 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 the year to 31 July 2024, 425,198 ordinary shares, representing 0.5% of the issued share capital at 31 July 2023, were bought back at a total cost of £2,345,000. Based on the Company’s processes for monitoring revenue projections, share price discount/premium, the Managers’ compliance with the investment objective, asset allocation, the portfolio risk profile, leverage, counterparty exposure, liquidity risk and financial controls, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three years. Strategic report Annual Report and Financial Statements 2024 42 Principal and emerging risks As explained on page 64 there is a process for identifying, evaluating and managing the 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, regulatory compliance, solvency or liquidity. There have been no material changes to the principal risks during the year. A description of these risks and how they are being managed or mitigated is set out below. The Board considers the heightened macroeconomic and geopolitical concerns to be factors which exacerbate existing risks, rather than being new emerging risks, within the context of an investment trust. Their impact is considered within the relevant risks. Financial risk What is the risk? The Company’s assets consist mainly of listed securities (93.6% of the investment portfolio) and its principal and emerging 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 18 to the Financial Statements on pages98 to 105. How is it managed? The Board has, in particular, considered the impact of heightened market volatility due to macroeconomic factors such as continued high interest rates and geopolitical concerns. In order to oversee this risk, the Board considers at each meeting various metrics including regional and industrial sector weightings, top and bottom stock contributors to performance along with sales and purchases of investments. Individual investments are discussed with the portfolio manager together with general views on the various investment markets and sectors. A strategy session is held annually. Current assessment of risk This risk is considered to have increased. Although macroeconomic risks such as rising interest rates have reduced, the prospect of market volatility remains from deteriorating geopoliticalstability. Investment strategy risk What is the risk? Pursuit of 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. How is it managed? 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 and raises any matters of concern with the Managers. Current assessment of risk This risk is considered to be stable as there are signs that the market’s appetite for growth stocks, typically held by the Company, is recovering following the recent period of heightened macroeconomic and geopolitical concerns. Decreasing RiskIncreasing Risk No Change Pacific Horizon Investment Trust PLC 43 Political and associated economic financial risk What is the risk? The Board is of the view that political change in areas in which the Company invests or may invest may have financial consequences for the Company. How is it managed? Political developments are closely monitored and considered by the Board, for example in respect of tensions between the USA and China regarding tariffs and unrest in Hong Kong, repercussions from the Russian invasion of Ukraine and the Israel and Palestine conflict. It monitors portfolio diversification by investee companies’ primary location, to mitigate against the negative impact of military action or trade barriers. The Board believes that the Company’s portfolio, which predominantly comprises companies listed on the stock markets of the Asia Pacific region (excluding Japan) and the Indian Sub-continent, partially helps to mitigate such political risks. Current assessment of risk This risk is seen as increasing as deteriorating geopolitical stability increases the prospect of trade conflict andsanctions. Discount risk What is the 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. How is it managed? To manage this risk, 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. Current assessment of risk The Company’s discount remained stable during theyear. Regulatory risk What is the risk? Failure to comply with applicable legal and regulatory requirements such as the tax rules for investment trust companies, the UK 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. How is it managed? To mitigate this risk, Baillie Gifford’s Business Risk, Internal Audit and Compliance Departments provide regular reports to the 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. Current assessment of risk All control procedures are working effectively. There have been no material regulatory changes that have impacted the Company during the year. Decreasing RiskIncreasing Risk No Change Strategic report Annual Report and Financial Statements 2024 44 Custody and depositary risk What is the risk? Safe custody of the Company’s assets may be compromised through control failures by the Depositary, including breaches of cyber security. How is it managed? To mitigate this 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 Managers who also agree uncertificated private portfolio holdings to confirmations from investee companies. The Custodian’s assured 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. Current assessment of risk All control procedures are working effectively. Operational risk What is the 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. How is it managed? 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. The Audit Committee reviews Baillie Gifford’s Report on Internal Controls and reports by other key third party providers are reviewed by Baillie Gifford on behalf of the Board and a summary of the key points is reported to the Audit Committee and any concerns investigated. The other key third party service providers have not experienced significant operational difficulties affecting their respective services to the Company. Current assessment of risk All control procedures are working effectively. Leverage risk What is the risk? The Company may borrow money for investment purposes. If the investments fall in value, any borrowings will magnify the impact of this loss. If borrowing facilities are not renewed, the Company may have to sell investments to repay borrowings. The Company can also make use of derivative contracts. How is it managed? To mitigate this risk, 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113 and the Glossary of terms and Alternative Performance Measures on pages118 and 119. Current assessment of risk The Company’s revolving loan facility remains undrawn. Decreasing RiskIncreasing Risk No Change Pacific Horizon Investment Trust PLC 45 Climate and governance risk What is the risk? Perceived problems on environmental, social and governance (‘ESG’) matters in an investee company could lead to that company’s shares being less attractive to investors, adversely affecting its share price, in addition to potential valuation issues arising from any direct impact of the failure to address the ESG weakness on the operations or management of the investee company (for example in the event of an industrial accident or spillage). Repeated failure by the Managers to identify ESG weaknesses in investee companies could lead to the Company’s own shares being less attractive to investors, adversely affecting its own shareprice. How is it managed? This is mitigated by the Managers’ strong ESG stewardship and engagement policies which are available to view on the Managers’ website, bailliegifford.com, and which have been reviewed and endorsed by the Company, and which have been fully integrated into the investment process. Due diligence includes assessment of the risks inherent in climate change (see page 49). Current assessment of risk The Investment Manager continues to employ strong ESG stewardship and engagement policies. Cyber security risk What is the risk? A cyber attack on Baillie Gifford’s network or that of a third party service provider could impact the confidentiality, integrity or availability of data and systems. Emerging technologies, including AI and quantum computing capabilities, may introduce new and increase existing information security risks that impact operations. How is it managed? To mitigate this risk, the Audit Committee reviews Reports on Internal Controls published by Baillie Gifford and other third party service providers. Cyber security due diligence is performed by Baillie Gifford on third party service providers which includes a review of crisis management and business continuity frameworks. Current assessment of risk All control procedures are working effectively. Emerging risk As explained on page 64 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. Decreasing RiskIncreasing Risk No Change Strategic report Annual Report and Financial Statements 2024 46 Promoting the success of the Company (section 172 statement) Under section 172 of the Companies Act 2006, the directors of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters and to the extent applicable) to: a) the likely consequences of any decision in the long term, b) the interests of the company’s employees, c) the need to foster the company’s business relationships with suppliers, customers and others, d) the impact of the company’s operations on the community and the environment, e) the desirability of the company maintaining a reputation for high standards of business conduct, and f) the need to act fairly as between members of the company. In this context, having regard to Pacific Horizon being an externally-managed investment company with no employees, the Board considers the Company’s key stakeholders to be: its existing and potential new shareholders; its externally-appointed Managers (Baillie Gifford); other professional service providers (corporate Broker, Registrar, Auditors and Depositary); lenders; wider society and the environment. The Board considers that the interests of the Company’s key stakeholders are aligned, in terms of wishing to see the Company deliver sustainable long-term growth, in line with the Company’s stated objective and strategy, and meet the highest standards of legal, regulatory, and commercial conduct, with the differences between stakeholders being merely a matter of emphasis on those elements. The Board’s methods for assessing the Company’s progress in the context of its stakeholders’ interests are set out below. Stakeholder Why we engage How we engage and what we do Shareholder Shareholders are, collectively, the Company’s owners: providing them with a return for their investment in accordance with the Company’s investment policy and objective is the reason for its existence. The Board places great importance on communication with shareholders. The Annual General Meeting provides an opportunity for the Board and Managers to present to shareholders on the Company’s performance, future plans and prospects. It also allows shareholders the opportunity to meet with the Board and Managers and raise questions and concerns. The Chair is available to meet with shareholders as appropriate. The Managers meet regularly with shareholders and their representatives, reporting their views back to the Board. Directors also attend certain shareholder presentations, in order to gauge shareholder sentiment first hand. Shareholders may also communicate with members of the Board at any time by writing to them at the Company’s registered office or to the Company’s broker. These communication opportunities help inform the Board when considering how best to promote the success of the Company for the benefit of all shareholders over the long term. Baillie Gifford – Managers and Secretaries The Company’s Board has delegated the management of the Company’s portfolio, and the administration of the Company’s operations including fulfilment of regulatory and taxation reporting requirements, to Baillie Gifford. Baillie Gifford is therefore responsible for the substantial activities of the Company and has the most immediate influence on its conduct towards the other stakeholders, subject to the oversight and strategic direction provided by the Board. The Board seeks to engage with its Managers, in a collaborative and collegiate manner, encouraging open and constructive discussion and debate, while also ensuring that appropriate and regular challenge is brought and evaluation conducted. This approach aims to enhance service levels and strengthen relationships with the Company’s providers, with a view to ensuring the interests of the Company’s shareholders are best served, by keeping cost levels proportionate and competitive, and by maintaining the highest standards of business conduct. Pacific Horizon Investment Trust PLC 47 Stakeholder Why we engage How we engage and what we do Portfolio companies As all of the Company’s operations are conducted by third party professional providers, it is the companies held in its investment portfolio which have the primary real-world impact in terms of social and environmental change, both positively and negatively, as well as generating, through their commercial success, the investment growth sought by the Company’s shareholders. The investee companies have an interest in understanding their shareholders’ investment rationale in order to assure themselves that long-term business strategies will be supported. The Board is cognisant of the need to consider the impact of the Company’s investment strategy and policy on wider society and the environment. The Board considers that its oversight of environmental, social and governance (‘ESG’) matters is an important part of its responsibility to all stakeholders. The Board’s review of the Managers includes an assessment of their ESG approach and its application in making investment decisions. The Board regularly reviews governance engagement reports, which document the Managers’ interactions with investee companies on ESG matters (see pages 15 and 16). Brokers The Company’s brokers provide an interface between the Company’s Board and its institutional shareholders. The Company’s brokers regularly attend Board meetings, and provide reports to those meetings, in order to keep the Board apprised of shareholder and wider market sentiment regarding the Company. They also arrange forums for shareholders to meet the Chair, or other Directors, outwith the normal general meeting cycle. Registrar The Company’s registrar provides an interface with those shareholders who hold the Company’s shares directly. The Company Secretaries liaise with the registrar to ensure the frequency and accuracy of communications to shareholders is appropriate, and monitor shareholder correspondence to ensure that the level of service provided by the registrar is acceptable. The Managers’ risk function reviews the registrars’ internal controls report and reports on the outcome of this review to the Board. Auditor The Company’s Auditor has a responsibility to provide an opinion on whether the Company’s Financial Statements as a whole are free from material misstatement, as set out in more detail in the Auditor’s report to the Members on pages 77 to 83. The Company’s Auditor meets with the Audit Committee, in the absence of the Managers where deemed necessary, and the Managers undertake to provide all information requested by the Auditor in connection with the Company’s annual audit promptly and to ensure that it is complete and accurate in all respects. Depositary and Custodian The Depositary is responsible for the safekeeping of the Company’s financial instruments, as set out in more detail on page 55. The Depositary provides the Audit Committee with a report on its monitoring activities. The Board and Managers seek to engage with the Depositary and Custodian in a collaborative and collegiate manner, encouraging open and constructive discussion and debate, while also ensuring that appropriate and regular challenge is brought and evaluation conducted. This approach aims to enhance service levels and strengthen relationships with the Company’s providers, with a view to ensuring the interests of the Company’s shareholders are best served by keeping cost levels proportionate and competitive, and by maintaining the highest standards of business conduct. Lenders Lenders such as holders of debt instruments (debentures, bonds and private placement loan notes) and banks providing fixed or revolving credit facilities provide the Company’s gearing as described on page 41 and have an interest in the Company’s ongoing financial health and viability. The Company’s legal advisers review all legal agreements in connection with the Company’s debt arrangements and advise the Board on the appropriateness of the terms and covenants therein. The Managers and Secretaries ensure that the frequency and accuracy of reporting on, for example, covenant certification, is appropriate and that correspondence from the lenders receives a prompt response. Strategic report Annual Report and Financial Statements 2024 48 Stakeholder Why we engage How we engage and what we do AIC/industry peers The Association of Investment Companies (‘AIC’) and the Company’s investment trust industry peers have an interest in the Company’s conduct and performance, as adverse market sentiment towards one investment trust can affect attitudes towards the wider industry. The Company is a member of the AIC, and the Directors and/or the Managers and Secretaries (as appropriate) participate in technical reviews, requests for feedback on proposed legislation or regulatory developments, corporate governance discussions and/or training. Investment platforms Investment platforms provide an interface with shareholders who invest in the Company indirectly. The Managers liaise with the various investment platforms on strategies for improving communications with the Company’s shareholders who hold their shares via these platforms. An annual timetable of key dates is published on the Company’s page of the Managers’ website, for the ease of reference of such shareholders. Wider society and the environment No entity, corporate or otherwise, can exist without having an influence on the society in which it operates or utilising the planet’s resources. Through its third-party relationships, as noted above, the Company seeks to be a positive influence and, in circumstances where that is not possible, to mitigate its negative impacts insofar as is possible. The Board and Managers’ interactions with the various stakeholders as noted above form the principal forms of direct engagement with wider society and in respect of the environment (commercial, financial, and in terms of planetary health and resources). The Board recognises the importance of keeping the interests of the Company and its stakeholders, in aggregate, firmly front of mind in its key decision making. The Company Secretaries are available at all times to the Board to ensure that suitable consideration is given to the range of factors to which the Directors should have regard. In addition to ensuring that the Company’s stated investment objective was being pursued, key decisions and actions during the year which required the Directors to have regard to applicable section 172 factors included: • the buying back of 425,198 of the Company’s own shares into treasury at a discount to net asset value, for subsequent reissue, in order to ensure the Company’s shareholders found liquidity for their shares when natural market demand was insufficient, and on terms that enhance net asset value for remaining shareholders. • assessing Director remuneration to ensure that it is set at a level that attracts new Directors. Employees, human rights and community issues The Board recognises the requirement to provide information about employees, human rights and community issues. As the Company has no employees, all its Directors are non-executive and all its functions are outsourced, there are no disclosures to be made in respect of employees, human rights and community issues. Gender representation As at 31 July 2024, and the date of this report, the Board comprises five Directors, three male and two female. The Company has no employees. The Board’s policy on diversity is set out on page 63. Pacific Horizon Investment Trust PLC 49 Environmental, social and governance policy Details of the Company’s policy on socially responsible investment can be found under corporate governance and stewardship on page66 with more details of the Managers’ approach to socially responsible investment set out in the Baillie Gifford statement on stewardship on page 17. The Managers are signatories to the United Nations Principles for Responsible Investment and the Carbon Disclosure Project, the Net Zero Asset Managers Initiative and are also members of the International Corporate Governance Network and the Asian Corporate Governance Association. The Company considers that it does not fall within the scope of the Modern Slavery Act 2015 and it is not, therefore, obliged to make a slavery and human trafficking statement. In any event, the Company considers its supply chains to be of low risk as its suppliers are typically professional advisers. A statement by the Managers under the Act has been published on the Managers’ website at bailliegifford.com. Climate change The Board recognises that climate change poses aserious threat to our environment, our society andto economies and companies around the globe.Addressing the underlying causes is likely to result in companies that are high emitters of carbon facing greater societal and regulatory scrutiny and higher costs to account for the true environmental impact of their activities. The Company’s TCFD report is available on the Company’s page of the Managers’ website at pacifichorizon.co.uk. Thisreport is a means by which the portfolio’s carbon footprint and exposure to climate risk are measured and reported. Companies disclosing their emission and communicating emissions plans will be a helpful place from which to begin more useful discussions with management teams, industry experts and regulators. Although this can direct our efforts, the Managers believe that carbon footprint metrics in isolation are unhelpful – that some firms pollute more than others is a mostly meaningless observation. More significant is the ability of Pacific Horizon to deploy patient capital into innovative new technologies with the potential to accelerate the transition away from carbon. The Managers utilise data sourced from a third-party provider to map the carbon footprint of the portfolio. This analysis estimates that the carbon intensity of Pacific Horizon is 66.4% less than the index (MSCI All Country Asia ex Japan) and is based on 78.6% of the value of the Company’s equity portfolio which reports on carbon emissions and other carbon related characteristics. Under the Streamlined Energy and Carbon Reporting (‘SECR’) regulations, the Company is not required to disclose energy and carbon information (see page 59). Future developments of the Company The outlook for the Company is set out in the Chairman’s statement on page 8 and in the Managers’ review on pages 9 to 14. The Strategic report which includes pages 5 to 49 was approved by the Board of Directors and signed on its behalf on16 September 2024. Roger Yates Chairman Governance report This governance report, which includes pages 50 to 75 outlines the Board’s approach to the governance of your Company. We believe that good governance builds better outcomes and we are committed to high standards of corporate governance and transparency. Pacific Horizon Investment Trust PLC 51 Directors and management Roger Yates Chairman Appointed 2024 Sir Robert Chote Director Appointed 2020 Roger Yates was appointed a Director and Chairman in 2024. He was Chief Executive of Henderson Global Investors from 1999 to 2008, prior to which he had fund management roles at Invesco/ LGT and Morgan Grenfell Asset Management. He is currently Senior Independent Director (‘SID’) of Jupiter Fund Management plc, Mitie Group plc and Chair of The Biotech Growth Trust PLC. He is the former SID of FTSE-100 St James’s Place and of IG Group plc. Amongst his other roles, he is also a former Chair of Electra Private Equity plc and a former non-executive Director of JP Morgan Elect PLC. Sir Robert Chote was appointed a Director in 2020. He became chairman of the Northern Ireland Fiscal Council in 2021, chairman of the UK Statistic Authority in 2022 and was chairman of the Office for Budget Responsibility to 2020. He previously served as Director of the Institute for Fiscal Studies, as an advisor to the International Monetary Fund and as Economics Editor of the Financial Times. He is a visiting professor at the Department of Political Economy, Kings College London and serves on an advisory board at the Centre for Economic Performance of the London School of Economics. Directors Wee-Li Hee was appointed a Director in 2020. She is an experienced Asian analyst and fund manager. Brought up in Singapore, she speaks fluent Mandarin and studied in the UK at the University of Leeds and the London School of Economics and Political Science. After graduation, in 2002 she joined First State Investments in Singapore as an analyst, subsequently moving to the firm’s Edinburgh office in 2005. Having co-managed Scottish Oriental Smaller Companies Trust plc she became lead manager in 2014, stepping back as a result of family commitments to return to a co-manager role in 2017 and retiring at the end of 2019. She is a CFA Charterholder and a director of Melville Paisley Investments. Wee-Li Hee Director Appointed 2020 Governance report Annual Report and Financial Statements 2024 52 Angela Lane Audit Committee Chair Appointed 2018 Angela Lane was appointed a Director in 2018. She is Chairman of the Audit Committee and is the Senior Independent Director. She is a qualified accountant and has held several non-executive and advisory roles for small and medium capitalised companies across a range of industries. Previously she spent 18 years working as a private equity investor for 3i plc. She is a non-executive director and Chair of the Audit Committee of BlackRock Throgmorton Trust plc, Seraphim Space Investment Trust plc and Dunedin Enterprise Investment Trust PLC. Joe Studwell Director Appointed 2018 Richard Frank (‘Joe’) Studwell was appointed a Director in 2018. He has spent over 25 years working in East Asia as a journalist, independent researcher at Dragonomics and author under the name of Joe Studwell. His published works include Asian Godfathers: Money and Power in Hong Kong and South-East Asia and How Asia Works: Success and Failure in the World’s Most Dynamic Region. All of the Directors are members of the Nomination, Management Engagement and Audit Committee. Pacific Horizon Investment Trust PLC 53 Roddy is a portfolio manager in the Emerging Markets Equity Team. He joined Baillie Gifford in 2006 and became a partner of the firm in 2023. He has managed the Baillie Gifford Pacific Fund since 2010 and has been manager of Pacific Horizon Investment Trust since 2021 (having been Deputy since 2013). Roddy also co-manages the China equity strategy. Prior to joining the team in 2008, he has also spent time in the UK and European Equity teams. Roddy graduated BSc (Hons) in Medical Biology from the University of Edinburgh in 2006. Roderick Snell Portfolio manager Appointed 2013 Ben is a portfolio manager in the Emerging Markets Equity Team. He has co-managed the Baillie Gifford Pacific Fund since 2021, and became deputy manager of the Pacific Horizon Investment Trust in January 2023. He joined Baillie Gifford in 2017 and has also spent time in the UK, Global Discovery and Private Companies teams. Prior to joining Baillie Gifford, he previously worked for RBS in their Group Strategy and Corporate Finance Team. Ben is a Chartered Accountant and a CFA Charterholder, and graduated BSc (Hons) in Mathematics from the University of Edinburgh in 2012. Ben Durrant Deputy portfolio manager Appointed 2023 Portfolio managers The Company has appointed Baillie Gifford & Co Limited, a wholly-owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Managers (‘AIFM’) and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (HongKong) Limited. Baillie Gifford & Co is an investment management firm formed in 1927 out of the legalfirm Baillie & Gifford, WS, which had been involved in investment management since 1908. Baillie Gifford is one of the largest investment trust Managers in the UK and currently manages thirteen close-ended investment companies. Baillie Gifford also manages open-ended investment companies, together with investment portfolios on behalf of pension funds, charities and other institutional clients, both in the UK and overseas. Funds under the management or advice of Baillie Gifford totalled around £214billion. Based in Edinburgh, it is one of the leading privately owned investment management firms in the UK, with 58 partners and a staff of around 1,700. Baillie Gifford & Co Limited and Baillie Gifford & Co are both authorised and regulated by the Financial Conduct Authority. Governance report Annual Report and Financial Statements 2024 54 The Directors present their report together with the Financial Statements of the Company for the year to 31 July 2024. Directors’ report Corporate governance The corporate governance report is set out on pages 60 to 66 and forms part of this report. Managers and Company Secretaries Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company’s Alternative Investment Fund Managers (‘AIFM’) and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. The Investment Management Agreement sets out the matters over which the Managers have authority in accordance with the policies and directions of, and subject to restrictions imposed by, the Board. The Managers may terminate the Management Agreement on six months’ notice and the Company may terminate on three months’ notice. Compensation fees would only be payable in respect of the notice period if termination were to occur within a shorter notice period. The annual management fee is 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets. The Board is of the view that calculating the fee with reference to performance would be unlikely to exert a positive influence on performance. Pacific Horizon Investment Trust PLC 55 The Board considers the Company’s investment management and secretarial arrangements on an ongoing basis and a formal review is conducted by the Management Engagement Committee annually. The following topics, amongst others, are considered in the review: • the quality of the personnel assigned to handle the Company’s affairs; • the investment process and the results achieved to date; • the administrative services provided by the Secretaries; and • the marketing effort undertaken by the Managers. Following the most recent review, it is the opinion of the Management Engagement Committee that the continuing appointment of Baillie Gifford & Co Limited as AIFM and Company Secretaries, and the delegation of the investment management services to Baillie Gifford & Co and the further sub-delegation of dealing activity and transaction reporting to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited, on the terms agreed, is in the interests of shareholders as a whole due to the strength of the investment management team, the Managers’ commitment to the investment trust sector and the quality of the secretarial and administrative functions. In undertaking the review, the Directors also considered the execution of the agreed investment strategy and the relative performance over the medium term. Depositary The Bank of New York Mellon (International) Limited has been appointed as the Company’s Depositary in accordance with the requirements of the UK Alternative Investment Fund Managers Regulations. The Depositary’s responsibilities include cash monitoring, safe keeping of the Company’s financial instruments, verifying ownership and maintaining a record of other assets and monitoring the Company’s compliance with investment limits and leverage requirements. The Company’s Depository also acts as the Company’s Custodian. Directors Information about the Directors, including their relevant experience, can be found on pages 51 and52. All of the Directors are retiring at the Annual General Meeting (‘AGM’) and all are offering themselves for re-election. Following formal performance evaluation, the Chairman confirms that the Board considers that each Director’s performance continues to be effective and that they remain committed to the Company and capable of devoting sufficient time to their roles. The Board therefore recommends their re-election to shareholders. Director indemnification and insurance The Company has entered into qualifying third party deeds of indemnity in favour of each of its Directors. The deeds, which were in force during the year to 31 July 2024 and up to the date of approval of this report, cover any liabilities that may arise to a third party, other than the Company, for negligence, default or breach of trust or duty. The Directors are not indemnified in respect of liabilities to the Company, any regulatory or criminal fines, any costs incurred in connection with criminal proceedings in which the Director is convicted or civil proceedings brought by the Company in which judgement is given against him/her. In addition, the indemnity does not apply to any liability to the extent that it is recovered from another person. The Company also maintains Directors’ and Officers’ liability insurance. Governance report Annual Report and Financial Statements 2024 56 Conflicts of interest Each Director submits a list of potential conflicts of interest to the Nomination Committee on an annual basis. The Committee considers these carefully, taking into account the circumstances surrounding them and makes a recommendation to the Board on whether or not the potential conflicts should be authorised. Board authorisation is for a period of one year. Having considered the lists of potential conflicts there were no situations which gave rise to a direct or indirect interest of a Director which conflicted with interests of the Company. Dividends The Company’s objective is that of generating capital growth. Consequently, the Managers do not invest in companies based on the level of income they may pay out as dividends. As highlighted previously, the Board does not intend to draw on the Company’s revenue reserve to pay or maintain dividends. This year the net revenue available for distribution to shareholders amounted to £3,464,000, which is of sufficient magnitude to require a distribution to be made to maintain investment trust status. The Directors are therefore recommending the payment of a final dividend of 2.65 pence per share. If approved, the recommended final dividend on the ordinary shares will be paid on 28 November 2024 to shareholders on the register at the close of business on 25 October 2024. The ex-dividend date is 24 October 2024. The Company’s Registrar offers a Dividend Reinvestment Plan (see page 113) and the final date for elections for this dividend is 07 November 2024. Share capital Capital structure The Company’s capital structure as at 31 July 2024 consists of 90,656,751 ordinary shares of 10p each (2023 – 91,081,949 ordinary shares), see note13. At31 July 2024, 1,418,210 shares were held in treasury (2023 – 993,012 shares held in treasury). There are no restrictions concerning the holding or transfer of the Company’s ordinary shares and there are no special rights attached to any of the shares. Dividends The ordinary shares carry a right to receive dividends. Interim dividends are determined by the Directors, whereas the proposed final dividend is subject to shareholder approval. Capital entitlement On winding up, after meeting the liabilities of the Company, the surplus assets will be paid to ordinary shareholders in proportion to their shareholdings. Voting Each ordinary shareholder present in person or by proxy is entitled to one vote on a show of hands and, on a poll, to one vote for every share held. Major interests disclosed in the Company’s shares Name Ordinary 10p shares held at 31 July 2024 % of issue Sarasin and Partners LLP (indirect) * 7,75 7, 6 7 6 8.6% City of London Investment Management Company Limited 4,832,086 5.3% * Previously disclosed as A&OT Investments Limited (direct). Analysis of shareholders at 31 July 2024 Number of shares held 2024 % 2023 Number of shares held 2023 % Institutions 22,842,467 25.2 16,562,669 18.2 Intermediaries 66,729,260 73.6 73,016,821 80.2 Individuals 537,820 0.6 1,263,766 1.4 Marketmakers 547,204 0.6 238,693 0.2 90,656,751 100.0 91,081,949 100.0 Holdings above are stated as per the most recent notification to a Regulatory Information Service. There have been no changes to the major interests in the Company’s shares disclosed up to 12September 2024. Annual General Meeting The details of this year’s AGM, including the proposed resolutions and information on the deadlines for proxy appointments, can be found on pages 107 to 111. Shareholders who hold shares in their own name on the main register will be provided with a Form of Proxy. If you hold shares through a share platform or other nominee, the Board would encourage you to contact these organisations directly as soon as possible to arrange for you to vote at the AGM. The resolutions relating to the renewal of the Directors’ authorities to issue and buy back shares, are explained in more detail below. Issuance of shares At the last Annual General Meeting, the Directors were granted shareholders’ approval for a general authority to issue shares and also an authority to issue shares or sell shares held in treasury on a non Pacific Horizon Investment Trust PLC 57 pre-emptive basis (without first offering such shares to existing shareholders pro-rata to their existing holdings) for cash up to an aggregate nominal amount of £910,469. Both authorities expire at the forthcoming Annual General Meeting and the Directors are seeking shareholders’ approval to renew them for a further year, as detailed below. During the year to 31 July 2024 the Company bought back 425,198 shares (representing 0.5% of the issued share capital at 31 July 2023) at a discount to net asset value at a cost of £2,345,000 which are held in treasury. The Company did not issue any ordinary shares from treasury. Between 1 August and 12September 2024, no further shares were issued and 39,875 shares were bought back. 1,458,085 shares were held in treasury as at 12September 2024. Resolution 11 in the Notice of Annual General Meeting seeks a general authority for the Directors to issue ordinary shares up to an aggregate nominal amount of £906,168. This amount represents approximately 10% of the Company’s total ordinary share capital in issue at 12September 2024, being the latest practicable date prior to the publication of this document, and meets institutional guidelines. No issue of ordinary shares will be made pursuant to the authorisation in Resolution 11 which would effectively alter the control of the Company without the prior approval of shareholders in general meeting. Resolution 12 which is being proposed as a special resolution, seeks to renew the Directors’ authority to allot equity securities, or sell treasury shares, for cash without having to offer such shares to existing shareholders pro-rata to their existing holdings, up to a total nominal amount of £906,168 representing approximately 10% of the Company’s total issued ordinary share capital as at 12September 2024, being the latest practicable date prior to publication of this document. The Directors consider that the authority proposed to be granted by Resolution 12 continues to be advantageous when the Company’s shares trade at a premium to net asset value and the level of natural liquidity in the market is unable to meet demand. The Directors do not intend to use this authority to sell or issue ordinary shares on a non pre-emptive basis at a discount to net asset value. While the level of the authority being sought is greater than the 5% recommended by the Pre-Emption Group in their Statement of Principles on disapplying pre-emption rights, it is specifically recognised in the Statement of Principles that, where an investment trust is seeking authority to issue shares at a premium to the underlying net asset value per share, this should not normally raise concerns and the Directors consider the greater flexibility provided by this authority to be justified in the circumstances. The authorities sought in Resolutions 11 and 12 will continue until the conclusion of the Annual General Meeting to be held in 2025 or on the expiry of 15 months from the passing of the resolutions, if earlier. Such authorities will only be used to issue shares or sell shares from treasury at a premium to net asset value and only when the Directors believe that it would be in the best interests of the Company to do so. The Directors believe that the ability to buy back shares at a discount and re-sell them or issue new shares at a premium are useful tools in smoothing supply and demand. Market purchase of own shares by the Company Resolution 13 seeks shareholders’ approval (by way of a special resolution) to renew the authority to purchase up to 14.99 per cent. of the ordinary shares in issue (excluding treasury shares) as at 12September 2024, being the latest practicable date prior to publication of this document (or, if less, up to 14.99 per cent. of the ordinary shares in issue (excluding treasury shares) on the date on which the resolution is passed). This authority will expire at the end of the Annual General Meeting of the Company to be held in 2025. Such purchases will only be made at a discount to the prevailing net asset value. The Company may hold bought back shares in treasury and then: a. sell such shares (or any of them) for cash (or its equivalent under the Companies Act 2006); or b. cancel such shares (or any of them). Shares will only be re-sold from treasury at (or at a premium to) the net asset value per ordinary share. Treasury shares do not receive distributions and the Company will not be entitled to exercise the voting rights attaching to them. In accordance with the Listing Rules, the maximum price (exclusive of expenses) that may be paid on the exercise of the authority shall be an amount equal to the higher of: i. 5 per cent. above the average closing price on the London Stock Exchange of an ordinary share over the five business days immediately preceding the date of the purchase; and ii. the higher of the price of the last independent trade and the highest current independent bid for such a share on the London Stock Exchange. The minimum price (again exclusive of expenses) that may be paid will be the nominal value of an ordinary share. Purchases of ordinary shares will be made within guidelines established, from time to Governance report Annual Report and Financial Statements 2024 58 time, by the Board. The Company does not have any warrants or options in issue. The Directors intend that this authority, if conferred, will be exercised only if to do so would result in an increase in net asset value per ordinary share for the remaining shareholders and if it is in the best interest of shareholders generally. Recommendation The Board considers that all the resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and its shareholders as a whole. Accordingly, the Board unanimously recommends that you vote in favour of all of the Resolutions, as the Directors intend to do in respect of their own beneficial shareholdings. Financial instruments The Company’s financial instruments comprise its investment portfolio, cash balances, bank borrowings and debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement and accrued income. The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 18 to the Financial Statements. Future developments of the Company The outlook for the Company is set out in the Chairman’s statement on page 8 and the Managers’ review on pages 9 to 14. Going concern In accordance with the Financial Reporting Council’s guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company’s ability to continue as a going concern. The Company’s principal and emerging risks are market related. An explanation of these risks and how they are managed is contained on pages 42 to 45 and in note 18 to the Financial Statements. The Board has, in particular, considered the impact of heightened market volatility due to macroeconomic and geopolitical concerns, but it does not believe the Company’s going concern is affected. 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. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowing and the level of gearing as well as compliance with borrowing covenants. Stress testing was performed in the year and no matters were raised. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. The Company’s primary third party suppliers, including its Managers and Secretaries, Custodian and Depositary, Registrar, Auditor and Broker, are not experiencing significant operational difficulties affecting their respective services to the Company. In accordance with the Company’s Articles of Association, shareholders have the right to vote on the continuation of the Company every five years, the next vote being in 2026. The Financial Statements have been prepared on the going concern basis; having assessed the principal and emerging risks and other matters set out in the Viability Statement on page 41 (which assesses the prospects of the Company over a period of three years) it is the Directors’ opinion that the Company will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. Articles of Association The Company’s Articles of Association may only be amended by special resolution at a general meeting of shareholders. Disclosure of information to Auditor The Directors confirm that so far as each of the Directors is aware there is no relevant audit information of which the Company’s auditor is unaware and the Directors have taken all the steps that they might reasonably be expected to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information. Pacific Horizon Investment Trust PLC 59 Independent Auditor The Auditor, BDO LLP, is willing to continue in office and, in accordance with section 489 and section 491(1) of the Companies Act 2006, resolutions concerning BDO LLP’s reappointment and remuneration will be submitted to the Annual General Meeting. Post balance sheet events The Directors confirm that there have been no post Balance Sheet events which require adjustment of, or disclosure in, the Financial Statements or notes thereto up to 16September 2024. Greenhouse Gas Emissions and Streamlined Energy & Carbon Reporting (‘SECR’) All of the Company’s activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. For the reasons set out above, the Company considers itself to be a low energy user under the SECR regulations and therefore, is not required to disclose energy and carbon information. Bribery act The Company has a zero tolerance policy towards bribery and is committed to carrying out business fairly, honestly and openly. The Managers also adopt a zero tolerance approach and have policies and procedures in place to prevent bribery. Criminal Finances Act 2017 The Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion. On behalf of the Board Roger Yates Chairman 16 September 2024 Governance report Annual Report and Financial Statements 2024 60 Compliance The FRC has confirmed that AIC member companies who report against the AIC Code will be meeting their obligations in relation to the UK Code (the AIC Code can be found at theaic.co.uk). The Board confirms that the Company has complied throughout the year under review with the relevant provisions of the Code and the recommendations of the AIC Code with the exception that the Company does not have a separate internal audit function as explained on page 68. The Board The Board has overall responsibility for the Company’s affairs. It has a number of matters formally reserved for its approval including strategy, investment policy, currency hedging, gearing, treasury matters, dividend and corporate governance policy. A strategy session is held annually. The Board also reviews the Financial Statements, investment transactions, revenue budgets and performance of the Company. Full and timely information is provided to the Board to enable the Board to function effectively and to allow Directors to discharge their responsibilities. As at 31 July 2024 and up to the date of this report the Board comprises five Directors all of whom are non-executive and independent. The Chairman, Mr RP Yates, is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda. Ms AC Lane is the Senior Independent Director (‘SID’) and, as such, available to shareholders if they have concerns not properly addressed to the Chairman. The SID leads the Chairman’s performance appraisal and chairs the Nomination Committee when it considers the Chairman’s succession. Corporate governance report The Board is committed to achieving and demonstrating high standards of corporate governance. This statement outlines how the principles of the 2018 UK Corporate Governance Code (‘Code’), which can be found at frc.org.uk, and the relevant principles of the Association of Investment Companies (‘AIC’) Code of Corporate Governance (‘AIC Code’) issued in 2019 were applied throughout the financial year. The AIC Code provides a framework of best practice for investment companies and can be found at theaic.co.uk. Pacific Horizon Investment Trust PLC 61 Board of Directors Comprises independent non-executive directors Chair: Roger Yates Senior Independent Director: Angela Lane Audit Committee Chair: Angela Lane Purpose: The primary purpose of a company’s audit committee is to provide oversight of the financial reporting process, the audit process, the Company’s system of internal controls and compliance with laws and regulations. Management Engagement Committee Chair: Roger Yates Purpose: The role of the Management Engagement Committee is to ensure that the Managers remain suitable to manage the portfolio, that the management contract is competitive and reasonable for the shareholders, and that the Company maintains appropriate administrative and company secretarial support. Nomination Committee Chair: Roger Yates Purpose: The main purpose of the Nomination Committee is to oversee Board recruitment and succession planning as well as Board appraisals including identifying training needs. Third-party service providers appointed by the Board Alternative Investment Fund Managers and Company Secretaries: Baillie Gifford & Co Limited (wholly owned subsidiary of Baillie Gifford & Co) Dealing activity and transaction reporting: Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited BDO LLP Auditor The Bank of New York Mellon (International) Limited Depositary Computershare Investor Services PLC Registrar JP Morgan Cazenove Company Broker Governance report Annual Report and Financial Statements 2024 62 The executive responsibility for investment management has been delegated to the Company’s Alternative Investment Fund Managers (‘AIFM’), Baillie Gifford & Co Limited, and, in the context of a Board comprising only non-executive Directors, there is no chief executive officer. The Directors believe that the Board has a balance of skills and experience that enable it to provide effective strategic leadership and proper governance of the Company. Information about the Directors, including their relevant experience, can be found on pages 51 and 52. There is an agreed procedure for Directors to seek independent professional advice, if necessary, at the Company’s expense. Appointments to the Board New Directors are appointed by the Board, following recommendation to the Board by the Nomination Committee. The terms and conditions of Directors’ appointments are set out in formal letters of appointment which are available for inspection on request. Under the provisions of the Company’s Articles of Association, a Director appointed during the year is required to retire and seek approval by shareholders at the next Annual General Meeting. In accordance with the AIC Code of Corporate Governance, all Directors are subject to annual re-election. The names of Directors retiring and offering themselves for re-election together with the reasons why the Board supports this are set out on page 55. Independence of Directors All the Directors are considered by the Board to be independent of the Managers and free of any business or other relationship which could interfere with the exercise of their independent judgement. The Directors recognise the importance of succession planning for company boards and review the Board’s composition annually. The Board is of the view that length of service will not necessarily compromise the independence or contribution of directors of an investment trust company, where continuity and experience can be a benefit to the Board. The Board concurs with the view expressed in the AIC Code that long serving Directors should not be prevented from being considered independent. Following a formal performance evaluation, the Board concluded that its members continued to be independent in character and judgement and their skills and experience added significantly to the strength of the Board. Meetings There is an annual cycle of Board meetings which is designed to address, in a systematic way, overall strategy, review of investment policy, investment performance, marketing, revenue budgets, dividend policy and communication with shareholders. The Board considers that it meets sufficiently regularly to discharge its duties effectively. The table below shows the attendance record for the core Board and Committee Meetings held during the year, excluding ancillary and sub-committee meetings. The Annual General Meeting was attended by all Directors. Directors’ attendance at meetings Board Audit Committee Nomination Committee Management Engagement Committee Number of meetings 4 2 1 1 RA Macpherson * 3 2 – – RW Chote 4 2 1 1 W Hee 4 2 1 1 AC Lane 4 2 1 1 RF Studwell 4 2 1 1 RP Yates † 2 1 1 1 * Retired on 13 March 2024 † Appointed on 13 March 2024 Chairperson and Directors’ tenure The Nomination Committee has considered the question of tenure for directors and has concluded that there should not be a set maximum time limit for a director or chairperson to serve on the Board. The Nomination Committee keeps under review the balance of skills, knowledge, experience, performance and length of service of the Directors, ensuring the Board has the right combination of skills and preservation of knowledge and experience, balanced with the appointment of new Directors, bringing in fresh ideas and perspective. Following the retirement of Mr RAMacpherson on 13March 2024, Mr RPYates joined the Board as non-executive Director and Chairman. The Chairman was considered independent on appointment and the Board continues to consider Mr RPYates independent. Pacific Horizon Investment Trust PLC 63 Management Engagement Committee All Directors are members of the Management Engagement Committee, which is chaired by the Chairman of the Board. The Board considers each member of the Committee to be independent. To discharge its duties, the Committee met during the year to consider: the performance and suitability of the Manager; the terms and conditions of the AIFM Agreement, including fees; and the Committee’s Terms of Reference. The Committee’s Terms of Reference are available on request from the Company and on the Company’s page of the Managers’ website: pacifichorizon.co.uk. Nomination Committee The Nomination Committee consists of all the non-executive Directors and the Chairman of the Board is Chairman of the Committee. The Committee meets on an annual basis and at such other times as may be required. The Committee has written terms of reference that include reviewing the composition of the Board, identifying and nominating new candidates for appointment to the Board, Board appraisal, planning for an orderly succession including overseeing development of a diverse pipeline for succession, and training. The Committee also considers whether Directors should be recommended for re-election by shareholders. The Committee is responsible for considering Directors’ potential conflicts of interest and for making recommendations to the Board on whether or not potential conflicts are material to an individual Director’s performance. The Committee’s Terms of Reference are available on request from the Company and on the Company’s page of the Managers’ website: pacifichorizon.co.uk. Diversity policy Appointments to the Board are made on merit with due regard for the benefits of diversity including gender, social and ethnic backgrounds, cognitive and personal strengths. The priority in appointing new directors is to identify the candidate with the best range of skills and experience to complement existing Directors. Within the context of a small, entirely non-executive Board, a single appointment or retirement can have a significant impact on percentage representation, and a limited number of senior roles are available. The Board will endeavour to comply with the UK Listing Rules diversity targets more often than not but notes that an orderly succession plan can, when implemented thoughtfully and having regard to the best interests of the Company and its shareholders, take a significant period of time to develop and may result in periods when the diversity targets are not met. Furthermore, the particular circumstances of directors may prevent them from being able to undertake the responsibilities of a senior role. In such circumstances, the value brought to the Board by their inclusion outweighs the ambition of meeting diversity targets. Board composition In order to fulfil its obligations, the Board recognises the importance of having a range of skilled and experienced Directors, balancing the benefits of length of service and knowledge of the Company with the desirability of ensuring regular refreshment of the Board. The Board reviews its composition annually. The following disclosures are provided in respect of the UK Listing Rules targets that: i) 40% of a board should be women; ii) at least one senior role should be held by a woman; and iii) at least one board member should be from a non-white ethnic background, as defined by the Office of National Statistics criteria. As an externally managed investment company with no chief executive officer or chief financial officer, the roles which qualify as senior under FCA guidance are Chair and Senior Independent Director (‘SID’). The Board also considers Audit Committee Chair to represent a senior role within this context. The Board currently complies in all respects with the UK Listing Rules targets. Gender Number % Senior roles Men 3 60 1 Women 2 40 1 Prefer not to say – – – Ethnic background Number % Senior roles White 4 80 2 Asian/Asian British 1 20 – Prefer not to say – – – Governance report Annual Report and Financial Statements 2024 64 Performance evaluation During the year the Board appointed Lintstock Ltd, a firm which assists companies with the design and execution of board evaluations, to facilitate the performance evaluation of the Chairman, each Director, the Board as a whole and its Committees. Lintstock provided questionnaires which were tailored to the specific needs of the Company. The questionnaires addressed, amongst other issues: • Board and Committee composition and expertise; • quality of Board documentation, administration and third party relationships; • trust oversight and priorities for change; and • personal development. Each Director completed the questionnaires and the Chairman discussed feedback with each Director. The results were considered by the Nomination Committee. Lintstock reviewed the output from the evaluation process and judged the Company’s Board, Committees and Directors to be operating effectively. Following this process, it was concluded that the performance of each Director, the Chairman, the Board and its Committees continues to be effective and each Director and the Chairman are committed to the Company. A review of the Chairman’s and other Directors’ commitments was carried out and the Board is satisfied that they are capable of devoting sufficient time to the Company. There were no significant changes to the Chairman’s other commitments during the year. Induction and training New Directors are provided with an induction programme which is tailored to the particular circumstances of the appointee. During the year updates on industry and regulatory matters were provided to the Board by the Managers and Secretaries. Other relevant training for Directors is provided as necessary. Remuneration As all the Directors are non-executive there is no requirement for a separate Remuneration Committee. Directors’ fees are considered by the Board as a whole within the limits approved by shareholders. The Company’s policy on remuneration is set out in the Directors’ Remuneration Report on pages 70 to 73. Audit Committee The report of the Audit Committee is set out on pages 67 to 69. Internal controls and risk management The Directors acknowledge their responsibility for the Company’s risk management and internal controls systems and for reviewing their effectiveness, including with regard to preparation of the Company’s Annual Report and Financial Statements. These systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss. The Board confirms that there is a continuing process for identifying, evaluating and managing the significant risks faced by the Company in accordance with the FRC guidance ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’. The practical measures to be taken in relation to the design, implementation and maintenance of control policies and procedures to safeguard the Company’s assets and to manage its affairs properly, including the maintenance of effective operational and compliance controls have been delegated to the Managers and Secretaries. The Board oversees the functions delegated to the Managers and Secretaries and the controls managed by the AIFM in accordance with the UK Alternative Investment Fund Managers Regulations (as detailed below). Baillie Gifford & Co’s Internal Audit and Compliance Departments and the AIFM’s permanent risk function provide the Audit Committee with regular reports on their monitoring programmes. The reporting procedures for these departments are defined and formalised within a service level agreement. Baillie Gifford & Co conducts an annual review of its system of internal controls which is documented within an internal controls report which complies with ISAE 3402 – Assurance Reports on Controls at a Service Organisation. This report is independently reviewed by Baillie Gifford & Co’s auditor and a copy is submitted to the Audit Committee. Pacific Horizon Investment Trust PLC 65 A report identifying the material risks faced by the Company and the key controls employed to manage these risks is reviewed by the Audit Committee. These procedures ensure that consideration is given regularly to the nature and extent of risks facing the Company and that they are being actively monitored. Where changes in risk have been identified during the year they also provide a mechanism to assess whether further action is required to manage these risks. The Directors confirm that they have reviewed the effectiveness of the Company’s risk management and internal controls systems which accord with the FRC guidance ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’, and they have procedures in place to review their effectiveness on a regular basis. No significant weaknesses were identified in the year under review and up to the date of this Report. The Board confirms that these procedures have been in place throughout the Company’s financial year and continue to be in place up to the date of approval of this Report. To comply with the UK Alternative Investment Fund Managers Regulations, The Bank of New York Mellon (International) Limited act as the Company’s Depositary and Baillie Gifford & Co Limited as its AIFM. The Depositary’s responsibilities include cash monitoring, safe keeping of the Company’s financial instruments, verifying ownership and maintaining a record of other assets and monitoring the Company’s compliance with investment limits and leverage requirements. The Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates the assets of the Company. The Company’s Depositary also acts as the Company’s Custodian. The Custodian prepares reports on its key controls and safeguards which are independently reviewed by its appointed auditors, KPMG LLP. The 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 are investigated. The Depositary provides the Audit Committee with a report on its monitoring activities. The AIFM has established a permanent risk management function to ensure that effective risk management policies and procedures are in place and to monitor compliance with risk limits. The AIFM has a risk management policy which covers the risks associated with the management of the portfolio, and the adequacy and effectiveness of this policy is reviewed and approved at least annually. This review includes the risk management processes and systems and limits for each risk area. The risk limits, which are set by the AIFM and approved by the Board, take into account the objectives, strategy and risk profile of the portfolio. These limits including leverage (see page 113) are monitored and the sensitivity of the portfolio to key risks is undertaken periodically as appropriate to ascertain the impact of changes in key variables in the portfolio. Exceptions from limits monitoring and stress testing undertaken by Baillie Gifford’s Business Risk Department are escalated to the AIFM and reported to the Board along with remedial measures being taken. Relations with shareholders The Board places great importance on communication with shareholders. The Company’s Managers meet regularly with shareholders and their representatives and report shareholders’ views to the Board. The Chairman and Directors also attend shareholder presentations in London and Edinburgh with the Managers, as well as maintaining open lines of communication with market participants and investors in the Company, separate of the Managers’ involvement, in order to ascertain views on corporate matters. The Chairman is available to meet with shareholders as appropriate. Shareholders wishing to communicate with any members of the Board may do so by writing to them at the Secretaries’ address or through the Company’s Corporate Broker, JP Morgan Cazenove (see contact details on page 120). Governance report Annual Report and Financial Statements 2024 66 The Company’s Annual General Meeting provides a forum for communication with all shareholders. The level of proxies lodged for each resolution is announced at the meeting and is published on the Company’s page of the Managers’ website pacifichorizon.co.uk subsequent to the meeting. The notice period for the Annual General Meeting is at least twenty working days. Shareholders and potential investors may obtain up-to-date information on the Company at pacifichorizon.co.uk. Corporate governance and stewardship The Company has given discretionary voting powers to Baillie Gifford & Co. The Managers vote against resolutions they consider may damage shareholders’ rights or economic interests and report their actions to the Board. The Board believes that it is in the shareholders’ interests to consider environmental, social and governance (‘ESG’) factors when selecting and retaining investments and has asked the Managers to take these issues into account as long as the investment objectives are not compromised. The Managers do not exclude companies from their investment universe purely on the grounds of ESG factors but adopt a positive engagement approach whereby matters are discussed with management with the aim of improving the relevant policies and management systems and enabling the Managers to consider how ESG factors could impact long-term investment returns. The Managers’ statement of compliance with the UK Stewardship code can be found on the Managers’ website at bailliegifford.com. The Managers’ policy has been reviewed and endorsed by the Board. Baillie Gifford & Co Limited as the Company’s Manager has considered the Sustainable Finance Disclosures Regulation (‘SFDR’) and further details can be found on page 116. On behalf of the Board Roger Yates Chairman 16 September 2024 Pacific Horizon Investment Trust PLC 67 The Audit Committee consists of all the Directors. The members of the Committee consider that they have the requisite financial skills and experience to fulfil the responsibilities of the Committee. Ms AC Lane is Chairman of the Audit Committee. Audit Committee report The Committee’s authority and duties are clearly defined within its written terms of reference which are available on request from the Company Secretaries and at pacifichorizon.co.uk. The terms of reference are reviewed annually. The Committee’s effectiveness is reviewed on an annual basis as part of the Board’s performance evaluation process. At least once a year the Committee meets with the external Auditor without any representative of the Managers being present. Main activities of the Committee The Committee met twice during the year and BDO LLP, the external Auditor, attended both of those meetings. Baillie Gifford & Co’s Internal Audit and Compliance Departments and the AIFM’s permanent risk function provided reports on their monitoring programmes for each of these meetings. The matters considered, monitored and reviewed by the Committee during the course of the year included the following: • the results announcements and the Annual and Interim Reports; • the Company’s accounting policies and practices; • the regulatory changes impacting the Company; • the fairness, balance and understandability of the Annual Report and Financial Statements and whether it provided the information necessary for shareholders to assess the Company’s performance, business model and strategy; • the effectiveness of the Company’s internal control environment; • the reappointment, remuneration and terms of engagement of the external Auditor; Governance report Annual Report and Financial Statements 2024 68 • whether the audit services contract should be put out to tender; • the policy on the engagement of the external auditor to supply non-audit services; • the independence and objectivity of the external Auditor and the effectiveness of the audit process; • the need for the Company to have its own internal Audit function; • the internal controls reports received from the Managers and Custodian; and • the arrangements in place within Baillie Gifford & Co whereby their staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. Internal audit The Committee continues to believe that the compliance and internal controls systems and the internal audit function in place within the Investment Managers provide sufficient assurance that a sound system of internal control, which safeguards shareholders’ investment and the Company’s assets, is maintained. An internal audit function, specific to the Company, is therefore considered unnecessary. The external Auditor has adopted a wholly substantive approach to testing and therefore the absence of an internal audit function has not had an impact on audit procedures. Financial reporting The Committee considers that the most significant areas of risk likely to impact the Financial Statements are the existence and valuation of investments, as they represent 100.7% of total assets, and the accuracy and completeness of income from investments. The majority of the investments are in quoted securities and market prices are readily available from independent external pricing sources. The Committee reviewed Baillie Gifford’s Report on Internal Controls which details the controls in place regarding recording and pricing of investments and the reconciliation of investment holdings to third party data. The value of all the listed investments as at 31 July 2024 were agreed to external price sources. The Committee reviewed the Manager’s valuation policy for investments in unlisted (private) companies (as described on page 32 ) and approved the valuation of the private investments following a detailed review of the valuation of each investment and relevant challenge where appropriate. The listed portfolio holdings were agreed to confirmations from the Company’s C ustodian and the private company holdings were agreed to confirmations from the investee companies. The Committee reviewed the Managers’ Report on Internal Controls which details the controls in place regarding completeness and accurate recording of investment income. The accounting treatment of each special dividend received or receivable during the year was reviewed by the Managers. The Committee considered the factors, including the impact of increasing geopolitical tensions, that might affect the Company’s viability over a period of three years and its ability to continue as a going concern for at least twelve months from the date of signing of the Financial Statements, together with reports from the Managers on the cash position and cash flow projections of the Company, the liquidity of its investment portfolio, compliance with debt covenants, availability of borrowing facilities, and the Company’s ability to meet its obligations as they fall due. The Committee also reviewed the viability statement on page 41 and statement on going concern on page 58. Following this assessment, the Committee recommended to the Board the appropriateness of the going concern basis in preparing the Financial Statements and confirmed the accuracy of the viability statement and statement on going concern. The Managers and A uditor confirmed to the Committee that they were not aware of any material misstatements in the context of the Financial Statements as a whole and that the Financial Statements are in accordance with applicable law and accounting standards. Pacific Horizon Investment Trust PLC 69 FRC Review The Financial Reporting Council (‘FRC’) reviewed the Company’s Annual Report and Financial Statements for the year to 31 July 2023. There were no areas identified for improvement based on the review. The FRC notes that its review does not provide assurance that the Annual Report and Financial Statements are correct in all material respects and that its role is not to verify the information provided but to consider compliance with reporting requirements. Internal controls and risk management The Committee reviewed the effectiveness of the Company’s risk management and internal controls systems as described on page 65. No significant weaknesses were identified in the year under review. External Auditor To fulfil its responsibility regarding the independence and objectivity of the external Auditor, the Committee reviewed: • the Auditor’s audit plan which includes a report from the Auditor describing its arrangements to manage Auditor independence and received confirmation of its independence; and • the extent of non-audit services provided by the external Auditor. There were no non-audit fees for the year to 31 July 2024. To assess the effectiveness of the external Auditor, the Committee reviewed and considered: • the Auditor’s fulfilment of the agreed audit plan; • feedback from the Secretaries on the performance of the audit team; and • the Audit Quality Inspection Report from the FRC. To fulfil its responsibility for oversight of the external audit process the Committee considered and reviewed: • the Auditor’s engagement letter; • the Auditor’s proposed audit strategy; • the audit fee; and • a report from the Auditor on the conclusion of the audit. Following a competitive tender process, BDO LLP were appointed as the Company’s Auditor at the Annual General Meeting held on 15 November 2017. The audit partners responsible for the audit are to be rotated at least once every five years in accordance with professional and regulatory standards in order to protect independence and objectivity and to provide fresh challenge to the business. Mr Chris Meyrick, the current audit partner, has held this role for two years. BDO LLP has confirmed that it believes it is independent within the meaning of regulatory and professional requirements and that the objectivity of the audit partner and staff is not impaired. Having carried out the review described above, the Committee is satisfied that the Auditor remains independent and effective for the purpose of this year’s audit and, as such, has not considered it necessary to put the audit services contract out to tender. There are no contractual obligations restricting the Committee’s choice of Auditor. During the year, BDO LLP has been subject to a review by the FRC Audit Quality Review team, as part of the FRC’s ongoing process for listed businesses, in respect of the audit for the year ended 31 July 2023. The report raised no significant findings however, certain areas of improvement were identified. The Audit Committee has discussed the observations with BDO LLP and are satisfied with the response and commitment to address the findings raised. Accountability and audit The respective responsibilities of the Directors and the Auditor in connection with the Financial Statements are set out on pages 74 and 75. On behalf of the Board Angela Lane Chair of the Audit Committee 16 September 2024 Governance report Annual Report and Financial Statements 2024 70 Directors’ remuneration report The Directors’ Remuneration Policy is subject to shareholder approval every three years or sooner if an alteration to the policy is proposed. The Remuneration Policy which is set out below was approved at the Annual General Meeting in November 2023 and no changes to the policy are proposed. Directors’ remuneration policy The Board is composed wholly of non-executive Directors, none of whom has a service contract with the Company. There is no separate remuneration committee and the Board as a whole considers changes to Directors’ fees from time to time. Baillie Gifford & Co Limited, the Company Secretaries, provide comparative information when the Board considers the level of Directors’ fees. The Board’s policy is that the remuneration of Directors should be set at a reasonable level that is commensurate with the duties and responsibilities of the role and consistent with the requirement to attract and retain Directors of the appropriate quality and experience. The Board believes that the fees paid to the Directors should reflect the experience of the Board as a whole, be fair and should take account of the level of fees paid by comparable investment trusts. Any views expressed by shareholders on the fees being paid to Directors will be taken into consideration by the Board when reviewing the Board’s policy on remuneration. Non-executive Directors are not eligible for any other remuneration or benefits apart from the reimbursement of allowable expenses. There are no performance conditions relating to Directors’ fees and there are no long-term incentive schemes or pension schemes. There is no notice period and no compensation is payable on loss of office. This report has been prepared in accordance with the requirements of the Companies Act 2006. Pacific Horizon Investment Trust PLC 71 Statement by the Chairman The Board reviewed the level of fees during the year and it was agreed that the principal consideration when assessing the level of fees was balancing the cost of remuneration with ensuring that the Company had the ability to attract and retain directors with the necessary skills, knowledge and experience to fulfil the Board’s responsibilities. The Board were of the view that the investment policy of the Company was at least as complex, if not more complex, than the majority of investment trusts, as the Company’s Managers invest in a large number of developed, emerging and frontier markets on its behalf, each with a distinct legal and regulatory framework. The Company also had exposure to both listed and private equities and could be exposed to complex securities such as convertible bonds. The Board, which periodically undertakes a skills audit, was of the opinion that the scope of oversight required for this necessitated a range of specialist skills to properly understand the investment activities of the Company. Following discussion and consideration of: • the change to CPI and RPI over the period; • the levels of remuneration for AIC Asia Pacific and also Baillie Gifford managed investment trusts; and • the market level of directors’ fees as reported by Trust Associates in its October 2023 report; it was agreed that that there should be no change in the level of Directors’ fees paid by the Company. Fees were last increased on 1 August 2023. Limits on Directors’ remuneration The fees for the non-executive Directors are payable monthly in arrears and are determined within the limit set out in the Company’s Articles of Association which is currently £200,000 per annum in aggregate. Any change to this limit requires shareholder approval. The fees paid to Directors in respect of the year ended 31 July 2024 and the expected fees payable in respect of the year ending 31 July 2025 are set out in the table below. The fees payable to the Directors in the subsequent financial periods will be determined following an annual review of the Directors’ fees. Expected fees for the year ending 31 July 2025 £ Fees as at 31 July 2024 £ Chairman’s fee 45,000 45,000 Non-executive Director fee 30,000 30,000 Additional fee for Audit Committee Chair 7,500 7,500 Total aggregate annual fees that can be paid to the Directors in any year under the Directors’ Remuneration Policy, as set out in the Company’s Articles of Association 200,000 200,000 Annual report on remuneration An ordinary resolution for the approval of this report will be put to the members at the forthcoming Annual General Meeting. The law requires the Company’s auditor to audit certain of the disclosures provided in this report. Where disclosures have been audited, they are indicated as such. The Auditor’s opinion is included in the Independent Auditor’s Report on pages 77 to 83. Governance report Annual Report and Financial Statements 2024 72 Directors’ remuneration for the year (audited) The Directors who served during the year received the following remuneration in the form of fees and taxable benefits. This represents the entire remuneration paid to the Directors. Name 2024 Fees £ 2024 Taxable benefits £ 2024 Total £ % change in year 2023 Fees £ 2023 Taxable benefits £ 2023 Total £ RA Macpherson 27,857 828 28,685 (32.7) 42,000 654 42,654 RW Chote 30,000 4,011 34,011 7. 1 28,000 3,751 31,751 W Hee 30,000 315 30,315 8.3 28,000 – 28,000 AC Lane 37,500 4,145 41,645 10.0 35,000 2,876 37,876 RF Studwell 30,000 2,930 32,930 7. 6 28,000 2,606 30,606 RP Yates 17,321 2,224 19,545 n/a – – – 172,678 14,453 187,131 9.5 161,000 9,887 170,887 * Comprises travel and subsistence expenses incurred by or on behalf of the Directors in the course of travel to attend Board and Committee meetings held at the Edinburgh offices of Baillie Gifford & Co Limited, the Company’s Secretaries. These amounts have been grossed up for income tax. Annual percentage change in remuneration This represents the annual percentage change in the entire remuneration paid to the Directors. Name % from 2023 to 2024 % from 2022 to 2023 % from 2021 to 2022 % from 2020 to 2021 RA Macpherson (32.7) 12.7 9.7 10.6 RW Chote 7.1 9.2 85.3 n/a W Hee † 8.3 10.9 9.8 500.1 AC Lane # 10.0 11.4 35.3 1.5 RF Studwell 7. 6 6.8 24.6 (5.9) RP Yates + n/a n/a n/a n/a * Appointed 25 November 2020, receiving 8 months of remuneration in the year to July 2021 of £15,687 and 12 months of remuneration the following year of £29,072, being an 85.3% increase. † Appointed 1 June 2020, receiving 2 months of remuneration in the year to July 2020 of £3,833 and 12 months of remuneration the following year of £23,000, being a 500.1% increase. # Audit Committee Chair from 10 November 2020, receiving 8 months of an additional Audit Committee Chair fee of £5,000 in the year to July 2021 and 12 months of an additional £7,000 fee in the year to July 2022 being a 35.3% increase. + Appointed 13 March 2024, receiving 4 months of remuneration in the year to July 2024. Directors’ interests (audited) The Directors at the end of the year under review and their interests in the Company are as shown in the following table. There have been no changes intimated in the Directors’ interests up to 12September 2024. Name Nature of interest Ordinary 10p shares held at 31 July 2024 Ordinary 10p shares held at 1 August 2023 RW Chote Beneficial 500 500 W Hee Beneficial 10,000 10,000 AC Lane Beneficial 8,897 8,862 RF Studwell Beneficial 5,000 5,000 RP Yates Beneficial 15,000 – As per the Articles of Association, it is not a requirement for Directors to hold shares in the Company. Pacific Horizon Investment Trust PLC 73 Statement of voting at Annual General Meeting At the last Annual General Meeting, of the proxy votes received in respect of the Directors’ Remuneration Report, 99.2% were in favour, 0.5% were against and votes withheld were 0.3%. At the last Annual General Meeting at which the Directors’ Remuneration Policy was considered (November 2023), 99.1% of the proxy votes were in favour, 0.5% were against and votes withheld were 0.4%. Relative importance of spend on pay The table below shows the actual expenditure during the year in relation to Directors’ remuneration and distributions to shareholders. 2024 £’000 2023 £’000 Change % Directors’ remuneration 187 171 9.5 Dividends paid to shareholders 2,954 2,745 7. 6 Share buy-backs 2,345 5,541 (57.7) Company performance The following graph compares, for the ten financial years ended 31 July 2024, the share price total return (assuming all dividends are reinvested) to Pacific Horizon ordinary shareholders compared to the total shareholder return on a notional investment made up of shares in the component parts of the FTSE All-Share Index. This index was chosen for comparison purposes as it is a widely used measure of performance for UK listed companies. The Company’s comparative index is provided for information purposes only. Performance graph Pacific Horizon’s share price, FTSE All-Share Index and comparative index (figures rebased to 100 at 31 July 2014) Past performance is not a guide to future performance. Approval The Directors’ Remuneration Report on pages 70 to 73 was approved by the Board of Directors and signed on its behalf on 16 September 2024. Roger Yates Chairman Cumulative to 31 July 2023 2014 2015 2018 2020 2022 2017 2016 2019 2021 2024 ● Pacific Horizon share price Source: LSEG and underlying data providers. See disclaimer on page 117. All figures are total return (see glossary of terms and alternative performance measures on pages 118 and 119). ● FTSE All-Share Index ● MSCI All Country Asia ex Japan Index (in sterling terms) 0 50 100 150 200 250 300 350 400 450 Governance report Annual Report and Financial Statements 2024 74 The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the Financial Statements contained therein. The Directors have delegated responsibility to the Managers for the maintenance and integrity of the Company’s page of the Managers’ website. The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have prepared the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these Financial Statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, subject to any material departures disclosed and explained in the Financial Statements; • prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and • prepare a Directors’ Report, a Strategic Report and a Directors’ Remuneration Report which comply with the requirements of the Companies Act 2006. Statement of Directors’ responsibilities in respect of the Annual Report and the Financial Statements Pacific Horizon Investment Trust PLC 75 Directors’ confirmations Each of the Directors, whose names and functions are listed within the Directors and Managers section confirm that, to the best of their knowledge: • the Financial Statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ give a true and fair view of the assets, liabilities, financial position and net return of the Company; • 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 performance, business model and strategy; and • 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. On behalf of the Board Roger Yates Chairman 16 September 2024 Financial report The Financial Statements for the year to 31 July 2024 are set out on pages 76 to 105 have been prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. Pacific Horizon Investment Trust PLC 77 Independent auditor’s report to the members of Pacific Horizon Investment Trust PLC Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Ouraudit opinion is consistent with the additional report to the Audit Committee. Independence Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 15 November 2017 to audit the Financial Statements for the year ended 31 July 2018 and subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is seven years, covering the years ended 31 July 2018 to 31 July 2024. We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. Opinion on the Financial Statements In our opinion the Financial Statements: • give a true and fair view of the state of the Company’s affairs as at 31 July 2024 and of its netreturn for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the Financial Statements of Pacific Horizon Investment Trust PLC (the ‘Company’) for the year ended 31 July 2024 which comprise the Income statement, the Balance sheet, the Statement of changes in equity, the Cash flow statement and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standard, including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). Financial report Annual Report and Financial Statements 2024 78 In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the Financial Statements about whether the Directors considered it appropriate to adopt the going concern basis ofaccounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview 2024 2023 Key audit matters Valuation and ownership of investments Materiality Company Financial Statements as a whole £6.04m (2023: £5.80m) based on 1% (2023: 1%) of net assets An overview of the scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the Financial Statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Conclusions relating to going concern In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: • Evaluating the appropriateness of the Directors’ method of assessing the going concern in light ofmarket volatility and the present uncertainties in economic recovery by reviewing the information used by the Directors in completing their assessment; • Reviewing the forecasted cash flows that support the Directors’ assessment of going concern, challenging assumptions and judgements made in the forecasts, and scenarios considered, assessing them for reasonableness. In particular, we considered the liquidity of the portfolios and the available cash resource relative to the forecast expenditure which was assessed against the prior year for reasonableness; • Performing stress testing on forecasted cash flows to take into account the impact of increasedinflation; • Assessing the accuracy of historical forecasting by agreeing the actual results; and • Performing an assessment of the Company’s ability to meet its short-term obligations by assessing the net asset position and available cashbalance. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the Financial Statements are authorised for issue. Pacific Horizon Investment Trust PLC 79 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of investments (Note 1 and 9) The investment portfolio at the year-end comprised of listed equity investments valued at £563.4m and unlisted private company investments valued at £42.8m. We considered the valuation and ownership of investments to be the most significant audit area as investments represent the most significant balance in the Financial Statements and underpin the principal activity of the entity. Whilst we do not consider the valuation of the listed equity investments to be subject to a significant degree of estimation or judgement, there is a risk that the prices used by the Company are not reflective of the fair value of those investments as at the year end. The unlisted investments have significant judgement involved in selecting a valuation methodology and significant estimation uncertainty involved in determining their valuations. For these reasons and the materiality of the balance in relation to the Financial Statements as a whole, we considered this to be a key audit matter. We responded to this matter by testing the valuation and ownership of the portfolio of investments. We performed the following procedures: With respect of the listed equity investments we: • Confirmed the year-end bid price was used by agreeing to externally quoted prices; • Assessed if there were contra indicators, such as liquidity considerations, to suggest bid price is not the most appropriate indication of fair value by considering the realisation period for individual holdings; • Recalculated the valuation by multiplying the number of shares held per the statement obtained from the Custodian by the valuation per share; and • Obtained direct confirmation of the number of shares held per equity investment from the Custodian regarding all investments held at the balance sheet date. With respect to valuation of unlisted private company investments, we assessed the design and implementation of controls in relating to the valuation processes including assessment of management and its external experts. With respect to a sample of the unlisted private company investments, we performed the following procedures: • Considered the appropriateness of the valuation methodology applied under the International Private Equity and Venture Capital Valuation (‘IPEV’) Guidelines and the accounting framework; • Tested the accuracy of the application of the valuation methodology selected; • Corroborated factual inputs to the valuations to appropriate sources and challenged subjective inputs including comparison to independent information where appropriate and performing stress and reverse stress testing; and • Where management used inputs from external experts, we assessed the competence, and expertise of the expert including consideration of relevant experience and qualifications held. We considered the independence and objectivity of the expert. We considered the appropriateness of the methodology and assumptions employed by the expert through review of the accounting framework and valuation guidelines followed. We obtained direct confirmation from the Custodian regarding investments held at the balance sheet date. Where investments were not held with the Custodian, we obtained direct confirmation from the investee company regarding investments held at the balance sheet. Key observations: Based on our procedures performed we did not identify any matters to suggest the valuation or ownership of the listed equity investments or unlisted private company investments was not appropriate. allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Financial report Annual Report and Financial Statements 2024 80 Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the Financial Statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the Financial Statements as a whole. Based on our professional judgement, we determined materiality for the Financial Statements as a whole and performance materiality as follows: Company Financial Statements 2024 2023 Materiality £6.04m £5.80m Basis for determining materiality 1% of net assets 1% of net assets Rationale for the benchmark applied As an investment trust, the net asset value is the key measure of performance for users of the Financial Statements. Performance materiality £4.53m £4.35m Basis for determining performance materiality 75% of materiality 75% of materiality Rationale for the percentage applied for performance materiality The level of performance materiality applied was set after having considered a number of factors including the expected total value of known and likely misstatements and the level of transactions in the year. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £301k (2023: £207k). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and Financial Statements other than the Financial Statements and our auditor’s report thereon. Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the Financial Statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the Financial Statements or our knowledge obtained during the audit. Pacific Horizon Investment Trust PLC 81 Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are required to report byexception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • the Financial Statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Going concern and longer-term viability • The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified; and • The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate. Other Code provisions • Directors’ statement on fair, balanced and understandable; • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks; • The section of the annual report that describes the review of effectiveness of risk management and internal control systems; and • The section describing the work of the Audit Committee. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic Report and Directors’ Report In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic report and the Directors’ report for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements; and • the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or theDirectors’ report. Financial report Annual Report and Financial Statements 2024 82 Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Non-compliance with laws and regulations Based on: • Our understanding of the Company and the industry in which it operates; • Discussion with management and those charged with governance; and • Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations; We considered the significant laws and regulations to be Companies Act 2006, the FCA listing and DTR rules, the principles of the AIC Code of Corporate Governance, industry practice represented by the AIC SORP, the applicable accounting framework, and qualification as an Investment Trust under UK tax legislation as any non-compliance of this would lead to the Company losing various deductions and exemptions from corporation tax. We focused on laws and regulations that could give rise to a material misstatement in the Company Financial Statements. Our procedures included, but were not limited to: • Agreement of the financial statement disclosures to underlying supporting documentation; • Enquiries of management and those charged with governance relating to the existence of any non- compliance with laws and regulations; • Reviewing minutes of meeting of those charged with governance throughout the period for instances of non-compliance with laws and regulations; and • Reviewing the calculation in relation to Investment Trust compliance to check that the Company was meeting its requirements to retain their Investment Trust Status. Fraud We assessed the susceptibility of the financial statement to material misstatement including fraud. Our risk assessment procedures included: • Enquiry with management and those charged with regarding any known or suspected instances of fraud; • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; and • Discussion amongst the engagement team as to how and where fraud might occur in the Financial Statements. Based on our risk assessment, we considered the area most susceptible to be management override of controls. Our procedures in respect of the above included: • The procedures set out in the Key Audit Matters section above for unlisted private company investments; • Review of estimates and judgements applied by management in the Financial Statements to assess their appropriateness and the existence of any systematic bias; • Review and consideration of the appropriateness of adjustments made in the preparation of the Financial Statements; • Review for significant transactions outside the normal course of business; and • Review of unadjusted audit differences, if any, for indications of bias or deliberate misstatement. Pacific Horizon Investment Trust PLC 83 We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non- compliance with laws and regulations throughout theaudit. Our audit procedures were designed to respond to risks of material misstatement in the Financial Statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the Financial Statements, the less likely we are to become awareof it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: frc.org.uk/auditorsresponsibilities. Thisdescription forms part of our auditor’s report. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Chris Meyrick (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor Edinburgh, UK 16 September 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Financial report Annual Report and Financial Statements 2024 84 For the year ended 31 July Notes 2024 Revenue £’000 2024 Capital £’000 2024 Total £’000 2023 Revenue £’000 2023 Capital £’000 2023 Total £’000 Gains/(losses) on investments 9 – 33,438 33,438 – (25,404) (25,404) Currency losses 14 – (113) (113) – (791) (791) Income 2 8,987 – 8,987 9,580 – 9,580 Investment management fee 3 (3,458) – (3,458) (3,419) – (3,419) Other administrative expenses 4 (830) – (830) (762) – (762) Net return before finance costs and taxation 4,699 33,325 38,024 5,399 (26,195) (20,796) Finance costs of borrowings 5 (401) – (401) (403) – (403) Net return before taxation 4,298 33,325 37,623 4,996 (26,195) (21,199) Ta x 6 (834) (9,875) (10,709) (830) (1,256) (2,086) Net return after taxation 3,464 23,450 26,914 4,166 (27,451) (23,285) Net return per ordinary share 7 3.82p 25.82p 29.64p 4.56p (30.05p) (25.49p) The total column of this Statement represents 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 this Statement derive from continuing operations. A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is both the profit and comprehensive income for the year. The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. Income statement Pacific Horizon Investment Trust PLC 85 As at 31 July Notes 2024 £’000 2024 £’000 2023 £’000 2023 £’000 Fixed assets Investments held at fair value through profit or loss 9 606,173 572,748 Current assets Debtors 10 790 420 Cash and cash equivalents 18 4,205 12,442 4,995 12,862 Creditors Amounts falling due within one year: Other creditors and accruals 11 (1,507) (1,163) Net current assets 3,488 11,699 Total assets less current liabilities 609,661 584,447 Creditors Amounts falling due after more than one year: Provision for tax liability 12 (7,691) (4,092) Net assets 601,970 580,355 Capital and reserves Share capital 13 9,208 9,208 Share premium account 14 254,120 254,120 Capital redemption reserve 14 20,367 20,367 Capital reserve 14 308,888 287,783 Revenue reserve 14 9,387 8,877 Total shareholders’ funds 601,970 580,355 Net asset value per ordinary share 15 664.01p 637.18p The Financial Statements of Pacific Horizon Investment Trust PLC (Company Registration number 02342193) on pages 84 to 105 were approved and authorised for issue by the Board and were signed on 16 September 2024. Roger Yates Chairman The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. Balance sheet Financial report Annual Report and Financial Statements 2024 86 For the year ended 31 July 2024 Notes Share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Revenue reserve £’000 Shareholders’ funds £’000 Shareholders’ funds at 1 August 2023 9,208 254,120 20,367 287,783 8,877 580,355 Net return aftertaxation – – – 23,450 3,464 26,914 Ordinary shares bought back into treasury 13 – – – (2,345) – (2,345) Ordinary shares sold from treasury 13 – – – – – – Dividends paid during the year 8 – – – – (2,954) (2,954) Shareholders’ funds at 31 July 2024 9,208 254,120 20,367 308,888 9,387 601,970 For the year ended 31 July 2023 Notes Share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Revenue reserve £’000 Shareholders’ funds £’000 Shareholders’ funds at 1 August 2022 9,208 253,946 20,367 319,573 7,456 610,550 Net return after taxation – – – (27,451) 4,166 (23,285) Ordinary shares bought back into treasury 13 – – – (5,541) – (5,541) Ordinary shares sold from treasury 13 – 174 – 1,202 – 1,376 Dividends paid during the year 8 – – – – (2,745) (2,745) Shareholders’ funds at 31 July 2023 9,208 254,120 20,367 287,783 8,877 580,355 The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. Statement of changes in equity Pacific Horizon Investment Trust PLC 87 The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. For the year ended 31 July Notes 2024 £’000 2024 £’000 2023 £’000 2023 £’000 Cash flows from operating activities Net return before taxation 37,623 (21,199) Adjustments to reconcile company profit before tax to netcashflow from operating activities Net (gains)/losses on investments (33,438) 25,404 Currency losses 113 791 Finance costs of borrowings 5 401 403 Other capital movements Overseas withholding tax incurred (785) (881) Indian tax paid on transactions (6,276) (180) Changes in debtors (465) 523 Change in creditors 71 (11) Cash from operations (2,756) 4,850 Non-utilisation fee paid (401) (403) Net cash (outflow)/inflow from operating activities (3,157) 4,447 Cash flows from investing activities Acquisitions of investments (206,776) (89,277) Disposals of investments 207,108 99,574 Net cash inflow from investing activities 332 10,297 Cash flows from financing activities Ordinary shares bought back into treasury 13 (2,345) (5,541) Ordinary shares sold from treasury 13 – 1,376 Equity dividends paid 8 (2,954) (2,745) Net cash outflow from financing activities (5,299) (6,910) (Decrease)/increase in cash and cash equivalents (8,124) 7,834 Exchange movements (113) (791) Cash and cash equivalents at 1 August 12,442 5,399 Cash and cash equivalents at 31 July 4,205 12,442 * Cash from operations includes dividends received of £8,362,000 (2023 – £9,925,000 ) and interest received of £160,000 (2023 – £163,000). Cash flow statement Financial report Annual Report and Financial Statements 2024 88 01 Principal accounting policies The Financial Statements for the year to 31 July 2024 have been prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ on the basis of the accounting policies set out below which are unchanged from the prior year and have been applied consistently. a. Basis of accounting All of the Company’s operations are of a continuing nature and the Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include the revaluation of fixed asset investments at fair value through profit or loss, and on the assumption that approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 will be retained. The Company’s principal risks are market related and include market risk, liquidity risk and credit risk. An explanation of these risks and how they are managed is contained on pages 98 to 105 in note 18 to the Financial Statements. The Board has, in particular, considered the impact of heightened macroeconomic and geopolitical concerns, but does not believe that the Company’s going concern status is affected. 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. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowing and the level of gearing as well as compliance with borrowing covenants. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. The Company’s primary third party suppliers, including its Managers and Secretaries, Custodian and Depositary, Registrar, Auditor and Broker, are not experiencing significant operational difficulties affecting their respective services to the Company. In accordance with the Company’s Articles of Association, shareholders have the right to vote on the continuation of the Company every five years, the next vote being in 2026. The Financial Statements have been prepared on the going concern basis; having assessed the principal and emerging risks and other matters set out in the Viability Statement on page 41 (which assesses the prospects of the Company over a period of three years) it is the Directors’ opinion that the Company will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. The Financial Statements have been prepared in accordance with the Companies Act 2006, applicable UK Accounting Standards and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ issued by the Association of Investment Companies (‘AIC’) in November 2014 and updated in July 2022 with consequential amendments. In order to reflect better the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the profit and loss account between items of a revenue and capital nature has been presented in the Income Statement. The allocation of items to revenue and capital is reviewed on an annual basis and is considered to remain appropriate for the current year. The Directors consider the Company’s functional currency to be sterling as the Company’s shareholders are predominantly based in the UK, and the Company and its portfolio managers, who are subject to the UK’s regulatory environment, are also UK based. b. Financial instruments Financial assets and financial liabilities are recognised in the Company’s Balance Sheet when it becomes a party to the contractual provisions of the instrument. c. Significant accounting estimates and judgements The preparation of the Financial Statements requires the use of estimates and judgements. These estimates, and judgements affect the reported amounts of assets and liabilities, at the reporting date. While estimates are based on best judgement using information and financial data available, the actual outcome may differ from these estimates. The key sources of estimation and uncertainty relate to the assumptions used in the determination of the fair value of the unlisted investments, which are detailed in note 9 on page 94. Notes to the Financial Statements Pacific Horizon Investment Trust PLC 89 Judgements The Directors consider that the preparation of the Financial Statements involves the following key judgements: i. the determination of the functional currency of the Company as sterling (see rationale in 1(a) above); and ii. the fair valuation of the unlisted investments. The key judgements in the fair valuation process are: i. the Managers’ determination of the appropriate application of the International Private Equity and Venture Capital Guidelines 2022 (‘IPEV’) to each unlisted investment; and ii. the Directors’ consideration of whether each fair value is appropriate following detailed review and challenge. The judgement applied in the selection of the methodology used for determining the fair value of each unlisted investment can have a significant impact upon the valuation. Estimates The key estimate in the Financial Statements is the determination of the fair value of the unlisted investments by the Managers for consideration by the Directors. This estimate is key as it significantly impacts the valuation of the unlisted investments at the Balance Sheet date. The fair valuation process involves estimation using subjective inputs that are unobservable (for which market data is unavailable). The main estimates involved in the selection of the valuation process inputs are: i. the selection of appropriate comparable companies in order to derive revenue multiples and meaningful relationships between enterprise value, revenue and earnings growth. Comparable companies are chosen on the basis of their business characteristics and growth patterns; ii. the selection of a revenue metric (either historic orforecast); iii. the application of an appropriate discount factor to reflect the reduced liquidity of unlisted companies versus their listed peers; iv. the estimation of the probability assigned to an exit being through an initial public offering (‘IPO’) or a company sale; v. the selection of an appropriate industry benchmark index to assist with the valuation validation or the application of valuation adjustments, particularly in the absence of established earnings or closely comparable peers; and vi. the calculation of valuation adjustments derived from milestone analysis (i.e. incorporating operational success against the plan/forecasts of the business into the valuation). d. Investments The Company’s investments are classified, recognised and measured at fair value through profit or loss in accordance with sections 11 and 12 of FRS 102. Investment purchases and sales are recognised on a trade date basis. Expenses incidental to purchase and sale are written off to capital at the time of acquisition or disposal. Gains and losses on investments are recognised in the Income Statement as capital items. Investments are designated as held at fair value through profit or loss on initial recognition and are measured at subsequent reporting dates at fair value. The fair value of listed security investments is bid price or, in the case of FTSE 100 constituents and holdings on certain recognised overseas exchanges, last traded price. The fair value of suspended investments is the last traded price, adjusted for the estimated impact on the business of the suspension. Unlisted investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by the Managers. The Managers’ unlisted investment policy applies methodologies consistent with the International Private Equity and Venture Capital Valuation guidelines (‘IPEV’). These methodologies can be categorised as follows: (a) market approach (multiples, industry valuation benchmarks and available market prices); (b) income approach (discounted cash flows); and (c) replacement cost approach (net assets). The valuation process recognises also, as stated in the IPEV Guidelines, that the price of a recent investment may be an appropriate starting point for estimating fair value, however it should be evaluated using the techniques described above. The Managers monitor the investment portfolio on a fair value basis and use the fair value basis for investments in making investment decisions and monitoring financial performance. Financial report Annual Report and Financial Statements 2024 90 e. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits repayable on demand. Deposits are repayable on demand if they can be withdrawn at any time without notice and without penalty or if they have a maturity or period of notice of not more than one working day. f. Income i. Income from equity investments is brought into account on the date on which the investments are quoted ex-dividend or, where no ex-dividend date is quoted, when the Company’s right to receive payment isestablished. ii. If scrip dividends are taken in lieu of dividends in cash, the net amount of the cash dividend declared is credited to the revenue column of the Income Statement. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised in the capital column of the IncomeStatement. iii. Special dividends are treated as capital or income depending on the facts of each particular case. iv. Unfranked investment income and overseas dividends include the taxes deducted at source. v. Interest from fixed interest securities is recognised on an accruals basis using the effective interest rate basis. vi. Underwriting commission and interest receivable on deposits are recognised on an accruals basis. g. Expenses All expenses are accounted for on an accruals basis and are charged through the revenue column of the Income Statement, except for expenses incidental to the acquisition or sale of investments, which are written off to capital when incurred. h. Borrowing and finance costs Interest bearing bank loans are recorded at the proceeds received, net of direct issue costs and subsequently measured at amortised cost. Finance costs are accounted for on an accruals basis and are charged through the revenue column of the Income statement. i. Taxation Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those enacted or substantively enacted at the reporting date. j. Deferred taxation Deferred taxation is provided on all timing differences, based on the taxable profit and the total comprehensive income as stated in the Financial Statements, calculated at the current tax rate relevant to the realisation of the benefit or liability. Deferred tax assets are recognised only to the extent that it will be more likely than not that there will be taxable profits from which underlying timing differences can be deducted. k. Foreign currencies Transactions involving foreign currencies are converted at the rate ruling at the time of the transaction. Assets and liabilities in foreign currencies are translated at the closing rates of exchange at the balance sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the Income Statement as capital or revenue as appropriate. l. Capital redemption reserve The capital redemption reserve is a statutory, non- distributable reserve into which amounts are transferred following the redemption or purchase of a company’s ownshares. m. Cap ital reserve Gains and losses on disposal of investments, changes in the fair value of investments held and realised and unrealised exchange differences of a capital nature are dealt with in this reserve after being recognised in the Income Statement. Purchases of the Company’s own shares for cancellation, or to be held in treasury for subsequent reissue, may be funded from this reserve. n. Revenue reserve The revenue profit or loss for the year is taken to or from this reserve. The revenue reserve may be distributed by way of dividend. o. Single segment reporting The Company is engaged in a single segment of business, being investment business, consequently no business segmental analysis is provided. p. Dividend distributions Final dividends are recognised in the period in which the dividends are approved by the Company’s shareholders. Pacific Horizon Investment Trust PLC 91 02 Income 2024 £’000 2023 £’000 Income from investments Overseas dividends 8,827 9,417 Other income Deposit interest 160 163 Total income 8,987 9,580 Total income comprises: Dividends from financial assets designated at fair value through profit or loss 8,827 9,417 Interest from financial assets not at fair value through profit or loss 160 163 8,987 9,580 03 Investment management fee 2024 £’000 2023 £’000 Investment management fee 3,458 3,419 Details of the Investment Management Agreement are set out on page 54. The annual management fee is 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets. Management fees are calculated and payable on a quarterly basis. 04 Other administrative expenses 2024 £’000 2023 £’000 Custody fees 242 255 General administrative expenses 212 142 Directors’ fees 173 161 Marketing 90 71 Auditor’s remuneration for audit services † 50 50 Depositary fees 49 70 Registrar’s fees 14 13 830 762 * The Company is part of a marketing programme which includes all the investment trusts managed by the Manager. The marketing strategy has an ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy is borne in partnership by the Company and the Manager. The Manager matches the Company’s marketing contribution and provides the resource to manage and run the programme. † Auditor’s remuneration above is exclusive of VAT. There were no non-audit fees paid to the Auditor during the year (2023 – nil). 05 Finance costs of borrowings 2024 £’000 2023 £’000 Royal Bank of Scotland International Limited non-utilisation fee (see note 11) 401 403 Financial report Annual Report and Financial Statements 2024 92 06 Tax 2024 Revenue £’000 2024 Capital £’000 2024 Total £’000 2023 Revenue £’000 2023 Capital £’000 2023 Total £’000 Overseas taxation 834 – 834 830 – 830 Indian capital gains tax paid and provided for – 9,875 9,875 – 1,256 1,256 834 9,875 10,709 830 1,256 2,086 2024 £’000 2023 £’000 Factors affecting the tax charge for the year The tax assessed for the year is lower (2023 – higher) than the average standard rate of corporation tax in the UK of 25% (2023 – 21%). The differences are explained below: Net return before taxation 37,623 (21,199) Net return multiplied by the average standard rate of corporation tax in the UK of 25% (2023 – 21%) 9,406 (4,449) Capital (gain)/loss not deductible (8,331) 5,498 Overseas dividends not taxable in the UK (2,207) (1,977) Current year management expenses and non-trade loan relationship deficits not utilised 1,132 928 Overseas withholding tax incurred 834 830 Revenue tax charge for the year 834 830 Increase in provision for tax liability in respect of Indian capital gains tax 3,599 1,076 Payments of Indian capital gains tax in the period 6,276 180 Capital tax charge for the year 9,875 1,256 Total tax 10,709 2,086 As an investment trust, the Company’s capital gains are not taxable in the United Kingdom. Interest on the corporation tax repayment is included within interest income. The capital tax charge results from the provision for tax liability in respect of Indian capital gains tax as detailed in note 12. Factors that may affect future tax charges At 31 July 2024 the Company had surplus management expenses and losses on non-trading loan relationships of £9,390,000 (2023 – £8,258,000) in which have not been recognised as a deferred tax asset. This is because the Company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses. Pacific Horizon Investment Trust PLC 93 07 Net return per ordinary share 2024 Revenue 2024 Capital 2024 Total 2023 Revenue 2023 Capital 2023 Total Net return after taxation 3.82p 25.82p 29.64p 4.56p (30.05p) (25.49p) Revenue return per ordinary share is based on the net revenue profit after taxation of £3,464,000 (2023 – net revenue profit of £4,166,000) and on 90,804,045 (2023 – 91,364,427) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. Capital return per ordinary share is based on the net capital gain for the financial year of £23,450,000 (2023 – net capital loss of £27,451,000) and on 90,804,045 (2023 – 91,364,427) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. Total return per ordinary share is based on the total gain for the financial year of £26,914,000 (2023 – total loss of £23,285,000) and on 90,804,045 (2023 – 91,364,427) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. There are no dilutive or potentially dilutive shares in issue. 08 Ordinary dividends 2024 2023 2024 £’000 2023 £’000 Amounts recognised as distributions in the year: Previous year’s final dividend (paid 30 November 2023) 3.25p 3.00p 2,954 2,745 We set out below the total dividends proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. There is a revenue surplus for the year to 31 July 2024 of £3,464,000 which is available for distribution by way of a dividend payment (2023 – a revenue surplus of £4,166,000). 2024 2023 2024 £’000 2023 £’000 Amounts paid and payable in respect of the financial year: Proposed final dividend per ordinary share (payable 28 November 2024) 2.65p 3.25p 2,401 2,954 09 Fixed assets – investments As at 31 July 2024 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000 Listed equities 563,410 – – 563,410 Unlisted company equities – – 9,036 9,036 Unlisted company preference shares # – – 33,727 33,727 Total financial asset investments 563,410 – 42,763 606,173 As at 31 July 2023 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000 Listed equities 542,048 1,273 – 543,321 Unlisted company equities – – 2,555 2,555 Unlisted company preference shares # – – 26,872 26,872 Total financial asset investments 542,048 1,273 29,427 572,748 * During the period, Brilliance China listed on the Hong Kong stock exchange having de-listed on 31 March 2021 and there was a demerger with Reliance Industries, where shares of Jio Financial Services were acquired but the company did not list until 21 August 2023. # The investments in preference shares include liquidation preference rights that determine the repayment (or multiple thereof) of the original investment in the event of a liquidation event such as a take-over. During the year to 31 July 2024 no investments (31 July 2023 – nil) were transferred from Level 3 to Level 1 on becoming listed. Investments in securities are financial assets held at fair value through profit or loss. In accordance with Financial Reporting Standard 102, the tables above provide an analysis of these investments based on the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value. Financial report Annual Report and Financial Statements 2024 94 09 Fixed assets – investments (continued) Fair value hierarchy The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows: Level 1 – using unadjusted quoted prices for identical instruments in an active market; Level 2 – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and Level 3 – using inputs that are unobservable (for which market data is unavailable). The Company’s unlisted ordinary share investments at 31 July 2023 were valued using a variety of techniques. These include using comparable company performance, comparable scenario analysis, and assessment of milestone achievement at investee companies. The determinations of fair value included assumptions that the comparable companies and scenarios chosen for the performance assessment provide a reasonable basis for the determination of fair value. In some cases the latest dealing price is considered to be the most appropriate valuation basis, but only following assessment using the techniques described above. Listed equities £’000 Unlisted equities £’000 2024 Total £’000 2023 Total £’000 Cost of investments at 1 August 2023 462,430 30,580 493,010 488,845 Investment holding gains/(losses) at 1 August 2023 80,891 (1,153) 79,738 119,694 Value of investments at 1 August 2023 543,321 29,427 572,748 608,539 Movements in year: Purchases at cost 196,421 10,628 207,049 88,831 Sales proceeds received * (188,297) (5) (188,302) (84,665) Changes in fair value 11,965 2,713 14,678 (39,957) Value of investments at 31 July 2024 563,410 42,763 606,173 572,748 Cost of investments at 31 July 2024 470,554 41,203 511,757 493,011 Investment holding gains at 31 July 2024 92,856 1,560 94,416 79,737 Value of investments at 31 July 2024 563,410 42,763 606,173 572,748 * The unlisted investment, Philtown Properties, was written off in the year to 31 July 2024. Transaction costs on purchases and sales were £206,000 (2023 – £118,000) and £399,000 (2023 – £188,000) respectively, total transaction costs being £605,000 (2023 – £306,000) expensed as per the accounting policy (see page 89). The Company received £207,062,000 (2023 – £99,218,000) from investments sold during the year. The book cost of these investments when they were purchased was £188,302,000 (2023 – £84,665,000). These investments have been revalued over time and, until they were sold, any unrealised gains/losses were included in the fair value of the investments. 2024 £’000 2023 £’000 Net gains/(losses) on investments held at fair value through profit or loss Realised gains on sales 18,760 14,553 Changes in investment holding gains and losses 14,678 (39,957) 33,438 (25,404) Significant holdings disclosure requirements – AIC SORP Details are disclosed below in accordance with the requirements of paragraph 82 of the AIC Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (updated in July 2022) in relation to unlisted investments included in the ten largest holdings disclosed on page 24. As required, this disclosure includes turnover, pre-tax profits and net assets attributable to investors as reported within the most recently audited Financial Statements of the investee companies, where possible. Pacific Horizon Investment Trust PLC 95 09 Fixed assets – investments (continued) As at 31 July 2024 Latest Financial Statements Book cost £’000 Market Value £’000 Income recognised from holding in the period £’000 Turnover (‘000) Pre-tax profit/ (loss) (‘000) Net assets attributable to shareholders (‘000)Name Business Dailyhunt (VerSe Innovation) Indian news aggregator application n/a 20,987 20,693 Nil Information not publicly available As at 31 July 2023 Latest Financial Statements Book cost £’000 Market Value £’000 Income recognised from holding in the period £’000 Turnover (‘000) Pre-tax profit/ (loss) (‘000) Net assets attributable to shareholders (‘000)Name Business Dailyhunt (VerSe Innovation) Indian news aggregator application n/a 20,987 17,921 Nil Information not publicly available 10 Debtors 2024 £’000 2023 £’000 Amounts falling due within one year: Income accrued (net of withholding taxes) 651 234 Other debtors and prepayments 139 186 790 420 None of the above debtors are financial assets designated at fair value through profit or loss. The carrying amount of debtors is a reasonable approximation of fair value. There were no debtors that were past due or impaired at 31 July 2024 or 31 July 2023. 11 Creditors – amounts falling due within one year 2024 £’000 2023 £’000 Royal Bank of Scotland International Limited multi-currency revolving credit facility non-utilisation fee 52 52 Investment purchases awaiting settlement 273 – Investment management fee 903 873 Other creditors and accruals 279 238 1,507 1,163 The Company has a multi-currency revolving credit facility with the Royal Bank of Scotland International Limited for up to £100 million, with a non-utilisation rate of 0.4%. This facility expires in March 2025. At 31 July 2024 there were no outstanding drawings (31 July 2023 – nil). The main covenants relating to the loan are that borrowings should not exceed 30% of the Company’s adjusted net asset value and the Company’s net asset value should be at least £300 million. There were no breaches in the loan covenants during the year. None of the above creditors at 31 July 2024 or 31 July 2023 are financial liabilities designated at fair value through profit or loss. Financial report Annual Report and Financial Statements 2024 96 12 Provision for tax liability The tax liability provision at 31 July 2024 of £7,691,000 (31 July 2023 – £4,092,000) relates to a potential liability for Indian capital gains tax that may arise on the Company’s Indian investments should they be sold in the future, based on the net unrealised taxable capital gain at the period end and on enacted Indian tax rates (long-term capital gains are taxed at 12.5% (2023 – 10%) and short term capital gains are taxed at 20% (2023 – 15%)). The amount of any future tax amounts payable may differ from this provision, depending on the value and timing of any future sales of such investments and future Indian tax rates. 13 Share capital 2024 Number 2024 £’000 2023 Number 2023 £’000 Allotted, called up and fully paid ordinary shares of 10p each 90,656,751 9,066 91,081,949 9,108 Treasury shares of 10p each 1,418,210 142 993,012 100 92,074,961 9,208 92,074,961 9,208 In the year to 31 July 2024, the Company issued no ordinary shares from treasury (2023 – 200,000 ordinary shares with a nominal value of £20,000, representing 0.2% of the issued share capital, raising net proceeds of £1,376,000). In the year to 31 July 2024, 425,198 ordinary shares, representing 0.5% of the issued share capital at 31 July 2023, were bought back at a total cost of £2,345,000 and are held in treasury (2023 – 979,012 shares, representing 1.1% of the issued share capital at 31 July 2022, were bought back during the year at a total cost of £5,541,000 and subsequently reissued from treasury). At 31 July 2024 the Company had authority to allot or sell from treasury 9,104,690 ordinary shares without application of pre- emption rights and to buy back 13,440,596 ordinary shares on an ad hoc basis. Under the provisions of the Company’s Articles of Association share buy-backs are funded from the capital reserve. Between 1 August 2024 and 12 September 2024, no further shares were issued and 39,875 shares were bought back. 14 Capital and reserves Share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Revenue reserve £’000 Shareholders’ funds £’000 Shareholders’ funds at 1 August 2023 9,208 254,120 20,367 287,783 8,877 580,355 Net gains on sales of investments – – – 18,760 – 18,760 Changes in investment holding gains and losses – – – 14,678 – 14,678 Other exchange differences – – – (113) – (113) Indian tax paid and provided for – – – (9,875) – (9,875) Ordinary shares bought back intotreasury – – – (2,345) – (2,345) Revenue return after taxation – – – – 3,464 3,464 Dividends paid during the year – – – – (2,954) (2,954) Shareholders’ funds at 31 July 2024 9,208 254,120 20,367 308,888 9,387 601,970 Pacific Horizon Investment Trust PLC 97 14 Capital and reserves (continued) Share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Revenue reserve £’000 Shareholders’ funds £’000 At 1 August 2022 9,208 253,946 20,367 319,573 7,456 610,550 Net gains on sales of investments – – – 14,553 – 14,553 Changes in investment holding gains and losses – – – (39,957) – (39,957) Other exchange differences – – – (791) – (791) Indian CGT paid and provided for – – – (1,256) – (1,256) Ordinary shares bought back into treasury – – – (5,541) – (5,541) Ordinary shares sold from treasury – 174 – 1,202 – 1,376 Revenue return after taxation – – – – 4,166 4,166 Dividends paid during the year – – – – (2,745) (2,745) At 31 July 2023 9,208 254,120 20,367 287,783 8,877 580,355 The capital reserve includes non-distributable investment holding gains of £94,416,000 (2023 – gains of £79,737,000) as disclosed in note 9. The revenue reserve and capital reserve (to the extent it constitutes realised profits) may be distributed by way of dividend. 15 Shareholders’ funds The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows: 2024 Net asset value per share 2023 Net asset value per share 2024 Net assets attributable £’000 2023 Net assets attributable £’000 Ordinary shares 664.01p 637.18p 601,970 580,355 The movements during the year of the assets attributable to the ordinary shares are shown in note 14. Net asset value per ordinary share is based on the net assets as shown above and 90,656,751 (2023 – 91,081,949) ordinary shares (excluding treasury shares), being the number of ordinary shares in issue at each date. 16 Analysis of change in net debt At 1 August 2023 £’000 Cash flows £’000 Exchange movement £’000 At 31 July 2024 £’000 Cash and cash equivalents 12,442 (8,124) (113) 4,205 Financial report Annual Report and Financial Statements 2024 98 17 Transactions with related parties and the Managers and Secretaries The Directors’ fees for the year are detailed in the Directors’ remuneration report on page 70. No Director has a contract of service with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006. Details of the management contract are set out in the Directors’ report on page 54. The management fee payable to the Manager by the Company for the year, as disclosed in note 3, was £3,458,000 (2023 – £3,419,000) of which £903,000 (2023 – £873,000) was outstanding at the year end, as disclosed in note 11. The Company is part of a marketing programme which includes all the investment trusts managed by the Manager. The Company’s marketing contribution, recharged by the Manager, was £90,000 (2023 - £71,000) as disclosed in note 4. 18 Financial instruments As an Investment Trust, the Company invests in equities and makes other investments so as to achieve its investment objective of maximising capital appreciation from a focused and actively managed portfolio of investments from the Asia-Pacific region including the Indian Sub-continent and excluding Japan. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests. These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise short term volatility. Risk provides the potential for both losses and gains. In assessing risk, the Board encourages the Managers to exploit the opportunities that risk affords. The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period. Market risk The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks and the Company’s Managers both assess the exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the investment portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown in note 9 and on pages 36 to 38. The Company may, from time to time, enter into derivative transactions to hedge specific market, currency or interest rate risk. During the years to 31 July 2024 and 31 July 2023 no such transactions were entered into. The Company’s Managers may not enter into derivative transactions without the prior approval of the Board. i. Currency risk The majority of the Company’s assets, liabilities and income are denominated in currencies other than sterling (the Company’s functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling value of those items. The Managers monitor the Company’s exposure to foreign currencies and report to the Board on a regular basis. The Managers assess the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed. However, the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company’s valuation than a simple translation of the currency in which the company is quoted. Foreign currency borrowings can limit the Company’s exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. Pacific Horizon Investment Trust PLC 99 18 Financial instruments (continued) i. Currency risk (continued) Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below. At 31 July 2024 Investments £’000 Cash and cash equivalents £’000 Other debtors and creditors £’000 Net exposure £’000 Indian rupee 138,869 80 (7,691) 131,258 Hong Kong dollar 99,011 – – 99,011 Korean won 95,999 – 230 96,229 US dollar 90,437 3,407 (273) 93,571 Taiwan dollar 88,425 – 421 88,846 Vietnam dong 49,038 618 – 49,656 Chinese yuan 19,417 – – 19,417 Indonesian rupiah 15,655 – – 15,655 Australian dollar 616 – – 616 Thai baht – – – – Total exposure to currency risk 597,467 4,105 (7,313) 594,259 Sterling 8,706 100 (1,095) 7,711 606,173 4,205 (8,408) 601,970 At 31 July 2023 Investments £’000 Cash and cash equivalents £’000 Other debtors and creditors £’000 Net exposure £’000 Indian rupee 140,313 449 (4,052) 136,710 Hong Kong dollar 142,684 – – 142,684 Korean won 100,409 – 162 100,571 US dollar 39,512 9,948 – 49,460 Taiwan dollar 32,476 124 – 32,600 Vietnam dong 31,605 1,862 32 33,499 Chinese yuan 30,189 – – 30,189 Indonesian rupiah 32,637 – – 32,637 Australian dollar 3,311 – – 3,311 Thai baht 5,447 – – 5,447 Total exposure to currency risk 558,583 12,383 (3,858) 567,108 Sterling 14,165 59 (977) 13,247 572,748 12,442 (4,835) 580,355 Financial report Annual Report and Financial Statements 2024 100 18 Financial instruments (continued) i. Currency risk (continued) Currency risk sensitivity At 31 July 2024, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total net assets and total return would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect on the Financial Statement amounts. The level of change is considered to be reasonable based on observations of current market conditions. The analysis is performed on the same basis for 2023. 2024 £’000 2023 £’000 Indian rupee 6,549 6,836 Hong Kong dollar 4,951 7,134 Korean won 4,811 5,029 US dollar 4,692 2,473 Taiwan dollar 4,442 1,630 Vietnam dong 2,483 1,675 Chinese yuan 971 1,509 Indonesian rupiah 783 1,632 Australian dollar 31 165 Thai baht – 272 29,713 28,355 ii. Interest rate risk Interest rate movements may affect directly: • the fair value of any investments in fixed interest rate securities; • the level of income receivable on cash deposits; • the fair value of any fixed-rate borrowings; and • the interest payable on any variable rate borrowings. Interest rate movements may also impact upon the market value of investments outwith fixed income securities. The effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company’s equity. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the amount of investments in cash and fixed income securities and the income receivable on cash deposits, floating rate notes and other similar investments. The Company may finance part of its activities through borrowings at approved levels. The amount of any such borrowings and the approved levels are monitored and reviewed regularly by the Board. Movements in interest rates, to the extent that they affect the market value of the Company’s fixed rate borrowings, may also affect the amount by which the Company’s share price is at a discount or a premium to the net asset value (assuming that the Company’s share price is unaffected by movements in interest rates). The interest rate risk profile of the Company’s financial assets and liabilities at 31 July is shown below. Financial assets 2024 Fair value £’000 2024 Weighted average interest rate 2024 Weighted average fixed rate period 2023 Fair value £’000 2023 Weighted average interest rate 2023 Weighted average fixed rate period Cash and cash equivalents: Overseas currencies 4,105 3.9% n/a 12,383 3.9% n/a Sterling 100 4.5% n/a 59 4.3% n/a 4,205 12,442 * Based on expected redemption date. Pacific Horizon Investment Trust PLC 101 18 Financial Instruments (continued) ii. Interest rate risk (continued) Financial liabilities The interest rate risk profile of the Company’s financial liabilities and the maturity profile of the undiscounted future cash flows in respect of the Company’s contractual financial liabilities at 31 July are shown below. Maturity profile 2024 Within 1 year £’000 2023 Within 1 year £’000 Royal Bank of Scotland International Limited non-utilisation fee 52 52 Interest rate risk sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates at the Balance Sheet date and with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. An increase of 100 basis points in interest rates, with all other variables being held constant, would have increased the Company’s total net assets and total return for the year ended 31 July 2024 by £42,000 (2023 – an increase of £124,000). This is mainly due to the Company’s exposure to interest rates on its floating rate bank loan and cash balances. A decrease of 100 basis points would have had an equal but opposite effect. iii. Other price risk Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Managers. The Company’s portfolio of unlisted level 3 investments is not necessarily affected by market performance, however the valuations are affected by the performance of the underlying securities in line with the valuation criteria in note 1(c). The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company’s objectives and investment policies. The portfolio does not seek to reproduce the index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge from the comparative index. Other price risk sensitivity A full list of the Company’s investments is given on pages 36 to 38. In addition, a geographical analysis of the portfolio and an analysis of the investment portfolio by broad industrial or commercial sector are contained on page 30. 93.6% (2023 – 93.6%) of the Company’s net assets are invested in quoted equities. A 5% (2023 – 5%) increase in quoted equity valuations at 31 July 2024 would have increased total assets and total return on ordinary activities by £28,170,000 (2023 – £27,166,000). A decrease of 5% would have had an equal but opposite effect. The level of change is considered to be reasonable based on observations of current market conditions. 7.1 % (2023 – 5.1%) of the Company’s net assets are invested in private company investments. The fair valuation of the private company investments is influenced by the estimates, assumptions and judgements made in the fair valuation process (see note 1(c) on page 88). A sensitivity analysis is provided below which recognises that the valuation methodologies employed involve different levels of subjectivity in their significant unobservable inputs and illustrates the sensitivity of the valuations to these inputs as it involves more significant subjective estimation than the recent transaction method. The inputs have been flexed by +/-10%. The table also provides the range of values for the key unobservable inputs. Financial report Annual Report and Financial Statements 2024 102 18 Financial Instruments (continued) iii. Other price risk (continued) Other price risk sensitivity (continued) As at 31 July 2024 Significant unobservable inputs Valuation technique Fair value as at 31 July 2024 £’000 Key unobservable inputs Other unobservable inputs † Range Weighted average range # Sensitivity % Sensitivity to changes in significant unobservable inputs Market approach using comparable trading multiples 35,925 EV/LTM revenue multiple ‡ a,b,c,d 1.6x – 4.8x 3.4x 10% If EV/LTM multiples changed by +/-10%, the fair value would change by £2,990,239 and -£2,956,975. Transaction implied premium and discounts g 86% n/a 10% If the transaction implied premium is changed by +/-10%, the fair value would change by £944,746 and -£931,908. Illiquidity discounts e 10% n/a 10% If the illiquidity discount is changed by +/-10%, the fair value would change by £169,603 and -£168,895. Benchmark performance 6,838 Selection of comparable companies § a,b,c,f -10.2% to 19.1% -19% 10% If input comparable company performance changed by +/-10%, the fair value would change by £691,873 and -£686,614. * Significant unobservable inputs The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(c) on page 88. † See explanation for other unobservable inputs on page 104. # Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication of the typical multiple or adjustment being applied across the portfolio. ‡ Enterprise value (EV) divided by the last twelve months (LTM) revenue. § See explanation for the selection of comparable companies on page 104 section ‘c’. The percentage movements reflect the movement in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. Pacific Horizon Investment Trust PLC 103 18 Financial Instruments (continued) iii. Other price risk (continued) Other price risk sensitivity (continued) As at 31 July 2023 Significant unobservable inputs Valuation technique Fair value as at 31 July 2023 £’000 Key unobservable inputs Other unobservable inputs † Range Weighted average range # Sensitivity % Sensitivity to changes in significant unobservable inputs Market approach using comparable trading multiples 29,351 EV/LTM revenue multiple ‡ a,b,c,d 2.4x – 4.3x 3.6x 10% If EV/LTM multiples changed by +/-10%, the fair value would change by £2,339,045 and -£2,337,300. Transaction implied premium and discounts g 88% n/a 10% If the transaction implied premium is changed by +/-10%, the fair value would change by £845,528 and -£843,783. Illiquidity discounts e -10% n/a 10% If the illiquidity discount is changed by +/-10%, the fair value would change by +/-£126,999. Benchmark performance 76 Selection of comparable companies § a,b,c,f -4.7% n/a 10% If input comparable company performance changed by +/-10%, the fair value would change by +/-£16,080. * Significant unobservable inputs The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(c) on page 88. † See explanation for other unobservable inputs on page 104. # Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication of the typical multiple or adjustment being applied across the portfolio. ‡ Enterprise value (EV) divided by the last twelve months (LTM) revenue. § See explanation for the selection of comparable companies on page 104 section ‘c’. The percentage movements reflect the movement in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. Financial report Annual Report and Financial Statements 2024 104 18 Financial Instruments (continued) iii. Other price risk (continued) Other price risk sensitivity (continued) a. Application of valuation basis Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each investment. When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks and companies. For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as appropriate for the investment, and where a suitable correlation can be identified with the comparable companies then a regression analysis will be performed. Discounted cash flows will also be considered where appropriate forecasts are available. b. Probability estimation of liquidation events The probability of a liquidation event such as a company sale, or alternatively an initial public offering (‘IPO’), is a key variable input in the Transaction-based and Multiples-based valuation techniques. The probability of an IPO versus a company sale is typically estimated from the outset to be 50:50 if there has been no indication by the company of pursuing either of these routes. If the company has indicated an intention to IPO, the probability is increased accordingly to 75% and if an IPO has become a certainty the probability is increased to 100%. Likewise, in a scenario where a company is pursuing a trade sale the weightings will be adjusted accordingly in favour of a sale scenario, or in a situation where a company is underperforming expectations significantly and therefore deemed very unlikely to pursue an IPO. The Company typically invests in higher ranking preference shares which carry more protection, and this can therefore influence the end valuation. c. Selection of comparable companies The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable companies are the industry sector in which they operate, the geography of the company’s operations, the respective revenue and earnings growth rates and the operating margins. Typically, between 4 and 10 comparable companies will be selected for each investment, depending on how many relevant comparable companies are identified. The resultant revenue or earnings multiples or share price movements derived will vary depending on the companies selected and the industries they operate in. d. Estimated sustainable earnings The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings may be used instead. e. Application of illiquidity discount The application of an illiquidity discount will be applied either through the calibration of a valuation against the most recent transaction, or by application of a specific discount. The discount applied where a calibration (see ‘g’ below) is not appropriate is typically 10%, reflecting that the majority of the investments held are substantial companies with some secondary market activity. f. Selection of appropriate benchmarks The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of each company are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used for comparison. g. Transaction implied premium and discount Where there is an implied company valuation available as a result of an external arm’s length transaction, the ongoing valuation will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable companies and comparing this to a transaction implied valuation, and could result in an implied premium or discount compared to comparable companies at the point of transaction. This discount or premium will be considered in future valuations, and may be reduced due to factors such as period of time since the transaction and company performance. Where a calibrated approach is not appropriate, a discount for illiquidity will be applied as noted in (e) above. Pacific Horizon Investment Trust PLC 105 18 Financial Instruments (continued) Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not significant as the majority of the Company’s assets are investments in quoted securities that are readily realisable. The Board provides guidance to the Managers as to the maximum exposure to any one holding and to the maximum aggregate exposure to substantial holdings. The Company has the power to take out borrowings, which give it access to additional funding when required. The Company’s current borrowing facility is detailed in note 11 and the maturity profile of its borrowings is set out above. Under the terms of the borrowing facility, borrowings are repayable on demand at their current carrying value. Credit risk This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. This risk is managed as follows: • where the Managers make an investment in a bond or other security with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question; • the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates the assets of the Company. The Managers monitor the Company’s risk by reviewing the Custodian’s internal control reports and reporting its findings to the Board; • investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Managers. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s Custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed; • the creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject to rigorous assessment by the Managers; and • cash is only held at banks that are regularly reviewed by the Managers. Credit risk exposure The maximum exposure to credit risk at 31 July was: 2024 £’000 2023 £’000 Cash and cash equivalents 4,205 12,442 Debtors and prepayments 790 420 4,995 12,862 None of the Company’s financial assets are past due or impaired (2023 – none). Fair value of financial assets and financial liabilities The Directors are of the opinion that the carrying amount of financial assets and liabilities of the Company in the Balance Sheet approximate their fair value. Capital management The capital of the Company is its share capital and reserves as set out in note 14 together with its borrowings (see note 11). The objective of the Company is to invest in the Asia-Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital growth. The Company’s investment policy is set out on page 39. In pursuit of the Company’s objective, the Board has a responsibility for ensuring the Company’s ability to continue as a going concern and details of the related risks and how they are managed are set out on pages 42 to 45. The Company has the authority to issue and buy back its shares (see pages57 and 58) and changes to the share capital during the year are set out in notes 13 and 14. The Company does not have any externally imposed capital requirements other than the covenants on its loan which are detailed in note 11. Shareholder information Pacific Horizon Investment Trust PLC 107 Notice of Annual General Meeting To accurately reflect the views of shareholders of the Company, the Board intends to hold the AGM voting on a poll, rather than on a show of hands as has been customary. The Board encourages all shareholders to submit proxy voting forms as soon as possible and, in any event, by no later than 11.30am on 19 November 2024. We would encourage shareholders to monitor the Company’s page of the Managers’ website at pacifichorizon.co.uk. Should shareholders have questions for the Board or the Managers or any queries as to how to vote, or how to attend the meeting, 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. The Annual General Meeting of the Company will be held at the offices of Baillie Gifford & Co, Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, on Thursday, 21 November 2024 at 11.30am. John Lewis A8 Princes Street Georg e Street Calton Square Bus Station Omni Centre Balmoral Hotel L e i t h S t r e e t Queen Street W a t e r l o o P l a c e C a l t o n H i l l C a l t o n R o a d St Andrew Square Edinburgh Waverley Station Leith Walk A7 North Bridge York Place G r e e n s i d e R o w Tram Stop St Andrew Square St Andrew Square Tram Stop By Rail: Edinburgh Waverley – approximately a 5 minute walk away By Bus: Lothian Buses local services include: 1, 3, 5, 7, 8, 10, 14, 15, 16, 25, 34 By Tram: Stops at St Andrew Square and Picardy Place Access to Waverley Train Station on foot Shareholder information Annual Report and Financial Statements 2024 108 Notice is hereby given that an Annual General Meeting of Pacific Horizon Investment Trust PLC (the ‘Company’) will be held at the offices of Baillie Gifford & Co, Calton Square, 1 Greenside Row, Edinburgh EH1 3AN on Thursday, 21 November 2024 at 11.30am for the purposes of considering and, if thought fit, passing the following Resolutions, of which Resolutions 1 to 11 will be proposed as ordinary resolutions and Resolutions 12 and 13 will be proposed as special resolutions: Ordinary business 01. To receive and adopt the Company’s Annual Report and Financial Statements for the financial year ended 31 July 2024, together with the Reports of the Directors and the Independent auditor’s report thereon. 02. To approve the Directors’ Annual Report on Remuneration for the financial year ended 31July 2024. 03. To declare a final dividend of 2.65p per ordinary share. 04. To elect Mr RP Yates as a Director of the Company. 05. To re-elect Sir RW Chote as a Director of the Company. 06. To re-elect Ms W Hee as a Director of the Company. 07. To re-elect Ms AC Lane as a Director of the Company. 08. To re-elect Mr RF Studwell as a Director of the Company. 09. To reappoint BDO LLP as Independent auditor of the Company to hold office until the conclusion of the next Annual General Meeting at which the Financial Statements are laid before the Company. 10. To authorise the Directors to determine the remuneration of the Independent auditor of theCompany. 11. That: a. the Directors be generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the ‘Act’) to allot shares in the Company, or to grant rights to subscribe for or convert any security into shares in the Company, up to a maximum nominal amount of £906,168; and b. the authority given by this Resolution: i. shall be in addition to all pre-existing authorities under section 551 of the Act; and ii. unless renewed, revoked or varied in accordance with the Act, shall expire on 21 February 2026 or, if earlier, at the conclusion of the Annual General Meeting of the Company to be held in 2025 save that the Company may, before such expiry, make any offer or enter into an agreement which would or might require the allotment of shares in the Company, or the grant of rights to subscribe for or to convert any security into shares in the Company, after such expiry. 12. That, subject to the passing of Resolution 11 above, (the ‘Allotment Authority’), the Directors be given power pursuant to sections 570 and 573 of the Companies Act 2006 (the ‘Act’) to allot equity securities (within the meaning of section 560(1) of the Act) for cash pursuant to the Allotment Authority, and to sell treasury shares for cash, as if section 561(1) of the Act did not apply to such allotment or sale, provided that such power: a. shall be limited to the allotment of equity securities or the sale of treasury shares up to an aggregate nominal amount of £906,168; b. shall be in addition to all pre-existing powers under sections 570 and 573 of the Act; and c. shall expire at the same time as the Allotment Authority, save that the Company may before expiry of the power conferred on the Directors by this Resolution make an offer or agreement which would or might require equity securities to be allotted after such expiry. 13. That, in substitution for any existing authority, but without prejudice to the exercise of any such authority prior to the date hereof, the Company be generally and unconditionally authorised, in accordance with section 701 of the Companies Pacific Horizon Investment Trust PLC 109 Act 2006 (the ‘Act’) to make market purchases (within the meaning of section 693(4) of the Act) of its ordinary shares, (either for retention as treasury shares for future reissue, resale, transfer or for cancellation), provided that: a. the maximum number of ordinary shares hereby authorised to be purchased is 13,583,469 or, if less, the number representing approximately 14.99 per cent. of the issued share capital of the Company on the date on which this Resolution is passed; b. the minimum price (excluding expenses) which may be paid for each ordinary share shall be the nominal value of that share; c. the maximum price (excluding expenses) which may be paid for any ordinary share purchased pursuant to this authority shall not be more than the higher of: i. 5 per cent. above the average closing price on the London Stock Exchange of an ordinary share over the five business days immediately preceding the date of purchase; and ii. the higher price of the last independent trade of an ordinary share and the highest current independent bid for such a share on the London Stock Exchange; and d. unless previously varied, revoked or renewed by the Company in general meeting, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2025 save that the Company may, prior to the expiry of such authority, enter into a contract or contracts to purchase ordinary shares under such authority which will or might be completed or executed wholly or partly after the expiration of such authority and may make a purchase of ordinary shares pursuant to any such contract or contracts. By Order of the Board Baillie Gifford & Co Limited Company Secretaries 16 September 2024 Shareholder information Annual Report and Financial Statements 2024 110 personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his/her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST service by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system andtimings. 06. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 07. The return of a completed proxy form or other instrument of proxy will not prevent you attending the AGM and voting in person if you wish. 08. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 and section 311 of the Companies Act 2006 the Company specifies that to be entitled to attend and vote at the AGM (and for the purpose of the determination by the Company of the votes they may cast), shareholders must be registered in the Register of Members of the Company no later than 48 hours (excluding non-working days) prior to the commencement of the AGM or any adjourned meeting. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting. 09. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a ‘Nominated Person’) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/ she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. 10. The statement of the rights of shareholders in relation to the appointment of proxies in Notes 1 and 2 above does not apply to Nominated Persons. The rights described in those Notes can only be exercised by shareholders of the Company. 11. Under section 338 of the Companies Act 2006, members meeting the qualification criteria set out in note 14 below may, subject to certain conditions, require the Company to circulate to members notice of a resolution which may properly be moved and is intended to be moved at that meeting. The conditions are that: (a) the resolution must not, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise); (b) the resolution must not be defamatory of any person, frivolous or vexatious; and (c) the request: (i) may be in hard copy form or in electronic form; (ii) must identify the resolution of which notice is to be given by either setting out the resolution in full or, if supporting a resolution sent by another member, clearly identifying the resolution which is Notes 01. As a member you are entitled to appoint a proxy or proxies to exercise all or any of your rights to attend, speak and vote at the AGM. A proxy need not be a member of the Company but must attend the AGM to represent you. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You can only appoint a proxy using the procedure set out in these notes and the notes to the proxy form. You may not use any electronic address provided either in this notice or any related documents (including the Financial Statements and proxy form) to communicate with the Company for any purpose other than those expressly stated. 02. To be valid any proxy form or other instrument appointing a proxy, together with any power of attorney or other authority under which it is signed or a certified copy thereof, must be received by post or (during normal business hours only) by hand at the Registrars of the Company at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or eproxyappointment.com no later than 11.30am on 19 November 2024 (or 48 hours (excluding non-working days) before any adjourned meeting). 03. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual and/or by logging on to the website euroclear.com/CREST. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 04. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & International Limited’s specifications, and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company’s registrar (ID 3RA50) no later than 11.30am on 19 November 2024 (or 48 hours (excluding non-working days) before any adjourned meeting). For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the Company’s registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through othermeans. 05. CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & International Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST Pacific Horizon Investment Trust PLC 111 being supported; (iii) must be authenticated by the person or persons making it; and (iv) must be received by the Company not later than 9 October 2024. 12. Under section 338A of the Companies Act 2006, members meeting the qualification criteria set out at note 14 below may require the Company to include in the business to be dealt with at the Annual General Meeting a matter (other than a proposed resolution) which may properly be included in the business (a matter of business). The request must have been received by the Company no later than 9 October 2024. The conditions are that the matter of business must not be defamatory of any person, frivolous or vexatious. The request must identify the matter of business by either setting it out in full or, if supporting a statement sent by another member, clearly identify the matter of business which is being supported. The request must be accompanied by a statement setting out the grounds for the request. Members seeking to do this should write to the Company providing their full name and address. 13. Under section 527 of the Companies Act 2006, members meeting the qualification criteria set out at note 12 below may require the Company to publish, on its website, (without payment) a statement (which is also passed to the Auditor) setting out any matter relating to the audit of the Company’s Financial Statements, including the auditor’s Report and the conduct of the audit. Such requests must be made in writing and must state your full name and address. 14. In order to be able to exercise the members’ rights in note 11 to 13, the relevant request must be made by: (a) members representing at least 5% of the total voting rights of all the members who have a right to vote on the resolution to which the requests relate; or (b) at least 100 members who have a right to vote on the resolution to which the requests relate and hold shares in the Company on which there has been paid up an average sum, per member, of at least £100. Such requests should be sent to the Company at Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN. 15. Information regarding the Annual General Meeting, including information required by section 311A of the Companies Act 2006, is available from the Company’s page of the Managers’ website at pacifichorizon.co.uk. 16. Members have the right to ask questions at the meeting in accordance with section 319A of the Companies Act 2006. 17. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. 18. As at 12September 2024 (being the last practicable date prior to the publication of this notice) the Company’s issued share capital consisted of 90,616,876 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 12September 2024 were 90,616,876 votes. 19. Any person holding 3 per cent. or more of the total voting rights of the Company who appoints a person other than the Chairman of the meeting as his/her proxy will need to ensure that both he/she and his/her proxy complies with their respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules. 20. No Director has a contract of service with the Company. Shareholder information Annual Report and Financial Statements 2024 112 Pacific Horizon is an investment trust. Investment trusts offer investors the following: • participation in a diversified portfolio of shares; • constant supervision by experienced professional managers; and • the Company is free from UK capital gains tax on capital profits realised within its portfolio although investors are still liable for capital gains tax on profits when selling their investment. How to invest The Company’s shares are traded on the London Stock Exchange. They can be bought by placing an order with a stockbroker, or by asking a professional adviser to do so. If you are interested in investing directly in Pacific Horizon, you can do so online. There are a number of companies offering real time online dealing services. Sources of further information on the Company The price of shares is quoted daily in the Financial Times (under ‘Investment Companies’) and can also be found on the Company’s page of the Managers’ website at pacifichorizon.co.uk, Trustnet at trustnet.com and on other financial websites. Monthly factsheets are also available on the Baillie Gifford website. These are available from Baillie Gifford on request. Pacific Horizon Share Identifiers ISIN GB0006667470 Sedol 0666747 Ticker PHI Legal Entity Identifier VLGEI9B8R0REWKB0LN95 Key dates Any dividend in respect of a financial year will be paid by way of a single final payment shortly after the Annual General Meeting. The Annual General Meeting is normally held in October or November. Capital gains tax For Capital Gains Tax purposes, the cost to shareholders who subscribed for the conversion shares, subsequently converted into new ordinary shares (with warrants attached), is apportioned between the ordinary shares and the warrants as set out in the placing and offer document dated 5 March 1996. The attributable costs are: Cost of each ordinary share 53.45p Cost of each warrant 16.52p Market values on 17 April 1996 (first day of dealing) were as follows (Source: Thomson Reuters): Ordinary share 55.00p Warrant 17.00p 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 1229. This helpline also offers an automated self-service functionality (available 24 hours a day, 7 days a week) which allows you to: • hear the latest share price; • confirm your current share holding balance; • confirm your payment history; and • order Change of Address, Dividend Bank Mandate and Stock Transfer forms. You can also check your holding on the Registrars’ website at investorcentre.co.uk. They also offer a free, secure share management website service which allows you to: • view your share portfolio and see the latest market price of your shares; • calculate the total market price of each shareholding; • view price histories and trading graphs; • register to receive communications from the Company, including the Annual Report and Financial Statements, in electronic format; • update bank mandates and change address details; and • use online dealing services. To take advantage of this service, please log in at investorcentre.co.uk and enter your Shareholder Reference Number and Company Code (this information can be found on the last dividend voucher or your share certificate). Further shareholder information Pacific Horizon Investment Trust PLC 113 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 on to investorcentre.co.uk and follow the instructions or telephone 0370 702 0000. Electronic proxy voting If you hold stock in your own name you can choose to vote by returning proxies electronically at eproxyappointment.com. If you have any questions about this service please contact Computershare on 0370 707 1229. CREST proxy voting If you are a user of the CREST system (including a CREST Personal Member), you may appoint one or more proxies or give an instruction to a proxy by having an appropriate CREST message transmitted. For further information please refer to the CREST Manual. Data protection The Company is committed to ensuring the confidentiality and security of any personal data provided to it. Further details on how personal data is held and processed on behalf of the Company can be found in the privacy policy available on the Company’s page of the Managers’ website pacifichorizon.co.uk. Alternative Investment Fund Managers Regulations (AIFMR) In accordance with the UK Alternative Investment Fund Managers Regulations, information in relation to the Company’s leverage and the remuneration of the Company’s AIFM, Baillie Gifford & Co Limited, is required to be made available to investors. In accordance with the Regulations, the AIFM’s remuneration policy is available on the Managers’ website at bailliegifford.com or on request (see contact details on page 120). The numerical remuneration disclosures in respect of the AIFM’s relevant reporting period (year ended 31 March 2024) are also available at bailliegifford.com. The Company’s maximum and actual leverage (see Glossary of terms and Alternative Performance Measures on pages 118 and 119.) levels at 31 July 2024 are shown below: Leverage exposure Gross method Commitment method Maximum limit 2.50:1 2.50:1 Actual 1.01:1 1.01:1 Automatic Exchange of Information In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Pacific Horizon Investment Trust PLC 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, Pacific Horizon Investment Trust PLC 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. All 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/guidance/automatic-exchange-of-information- account-holders. Shareholder information Annual Report and Financial Statements 2024 114 Communicating with shareholders Trust magazine Pacific Horizon Investment Trust web page at pacifichorizon.co.uk Trust magazine Trust is the Baillie Gifford investment trust magazine which is published twice a year. It provides an insight to our investment approach by including interviews with our portfolio managers, as well as containing investment trust news, investment features and articles about the trusts managed by Baillie Gifford, including Pacific Horizon. Trust plays an important role in helping to explain our products so that readers can really understand them. You can subscribe to Trust magazine or view a digital copy at bailliegifford.com/trust Suggestions and questions Any suggestions on how communications with shareholders can be improved are welcomed. Please contact the Baillie Gifford Client Relations Team and give them your suggestions. They will also be very happy to answer questions that you may have about Pacific Horizon. Pacific Horizon on the Web Up-to-date information about Pacific Horizon, can be found on the Company’s page of the Managers’ website at pacifichorizon co.uk. You will find full details on Pacific Horizon, including recent portfolio information and performance figures. Client relations team contact details You can contact the Baillie Gifford Client Relations Team by telephone, email or post: Telephone: 0800 917 2112 Your call may be recorded for training or monitoring purposes. Email: trustenquiries@bailliegifford.com Website: bailliegifford.com Address: Baillie Gifford Client Relations Team Calton Square 1 Greenside Row Edinburgh EH1 3AN Please note that Baillie Gifford is not permitted to give financial advice. If you would like advice, please ask an authorised intermediary. Pacific Horizon Investment Trust PLC 115 South-east Asia’s rising exportstars by Ben Durrant Join Ben Durrant, deputy portfolio manager of Pacific Horizon Investment Trust PLC as he discusses unearthing growth companies in Vietnam, Indonesia and Thailand. Pacific Horizon: capturing growth in Asia’s evolving markets by Roderick Snell The remarkable turnaround and future strategies of the Baillie Gifford Pacific Horizon Investment Trust. Trip notes: Vietnam by Roderick Snell Visiting Saigon, Roderick Snell explores what went right for the pro-business communist country. Shareholder information Annual Report and Financial Statements 2024 116 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 Pacific Horizon 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 ESG Principles and Guidelines as its policy on integration of sustainability risks in investment decisions. Baillie Gifford & Co believes that a company cannot be financially sustainable in the long run if its approach to business is fundamentally out of line with changing societal expectations. It defines ‘sustainability’ as a deliberately broad concept which encapsulates a company’s purpose, values, business model, culture, and operating practices. 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 up 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. The likely impact on the return of the portfolio from a potential or actual material decline in the value of investment due to the occurrence of an environmental, social or governance event or condition will vary and will depend on several factors including but not limited to the type, extent, complexity and duration of an event or condition, prevailing market conditions and existence of any mitigating factors. Sustainable Finance Disclosure Regulation (‘SFDR’) Whilst consideration is given to sustainability matters, there are no restrictions on the investment universe of the Company, unless otherwise stated within in its Investment Objective & Policy. Baillie Gifford & Co can invest in any companies it believes could create beneficial long-term returns for investors. However, this might result in investments being made in companies that ultimately cause a negative outcome for the environment or society. More detail on the Investment Manager’s approach to sustainability can be found in the ESG Principles and Guidelines document, available publicly on the Baillie Gifford website bailliegifford.com and by scanning the QR code below. The underlying investments do not take into account the EU criteria for environmentally sustainable economic activities established under the EU Taxonomy Regulation. Pacific Horizon Investment Trust PLC 117 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. MSCI Index data Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an ‘as is’ basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the ‘MSCI Parties’) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (msci.com). FTSE Index data London Stock Exchange Group plc and its group undertakings (collectively, the ‘LSE Group’). ©LSE Group 2024. 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. Shareholder information Annual Report and Financial Statements 2024 118 Total assets This is the Company’s definition of adjusted total assets, being the total value of all assets held less all liabilities (other than liabilities in the form of borrowings). Shareholders’ funds and net asset value Also described as shareholders’ funds, net asset value (‘NAV’) is the value of all assets held less all liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares (excluding treasury shares) in issue. Net liquid assets Net liquid assets comprise current assets less current liabilities (excluding borrowings) and provisions for deferred liabilities. Discount/premium (APM) As stock markets 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. 2024 2023 Net asset value per ordinary share (a) 664.01p 637.18p Share price (b) 612.00p 586.00p (Discount)/premium ((b) – (a)) ÷ (a) (7.8%) (8.0%) Turnover Turnover is calculated as the minimum of purchases and sales in a month, divided by the average market value of the portfolio, summed to get rolling 12 month turnover data. Compound annual return (APM) The compound annual return converts the return over a period of longer than one year to a constant annual rate of return applied to the compound value at the start of each year. Glossary of terms and Alternative Performance Measures (‘APM’) Ongoing charges (APM) The total recurring expenses (excluding the Company’s cost of dealing in investments and borrowing costs) incurred by the Company as a percentage of the daily average net asset value, as detailed below: 2024 £’000 2023 £’000 Investment management fee 3,458 3,419 Other administrative expenses 830 762 Total expenses (a) 4,288 4,181 Average net asset value (b) 580,820 578,071 Ongoing charges ((a) ÷ (b) expressed as a percentage) 0.74% 0.72% China ‘A’ shares ‘A’ Shares are shares of mainland China-based companies that trade on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Since 2003, select foreign institutions have been able to purchase them through the Qualified Foreign Institutional Investor system. Treasury shares The Company has the authority to make market purchases of its ordinary shares for retention as Treasury Shares for future reissue, resale, transfer, or for cancellation. Treasury Shares do not receive distributions and the Company is not entitled to exercise the voting rights attaching to them. Unlisted (private) company An unlisted or private company means a company whose shares are not available to the general public for trading and are not listed on a stock exchange. Active share (APM) Active share, a measure of how actively a portfolio is managed, is the percentage of the 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. Pacific Horizon Investment Trust PLC 119 Gross gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds. 2024 £’000 2023 £’000 Borrowings (at book value) (a) – – Shareholders’ funds (b) 601,970 580,355 Gross gearing: (a) as a percentage of (b) – – Leverage (APM) For the purposes of the Alternative Investment Fund Managers Regulations leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s positions after the deduction of 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. 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 is borrowings at book less cash and brokers’ balances expressed as a percentage of shareholders’ funds. 2024 £’000 2023 £’000 Borrowings (at book cost) (a) – – Less: cash and cash equivalents (4,205) (12,442) Less: sales for subsequent settlement – – Add: purchases for subsequent settlement 273 – Adjusted borrowings (b) (3,932) (12,442) Shareholders’ funds (c) 601,970 580,355 Gearing: (b) as a percentage of (c) (1%) (2%) 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. In periods where no dividend is paid, the total return equates to the capital return. 2024 NAV 2024 Share price 2023 NAV 2023 Share price Closing NAV per share/share price (a) 664.01p 612.00p 637.18p 586.00p Dividend adjustment factor * (b) 1.0060 1.0060 1.0056 1.0057 Adjusted closing NAV per share/share price (c) = (a) x (b) 667.99p 615.67p 640.75p 589.34p Opening NAV per share/share price (d) 637.18p 586.00p 664.65p 647.00p Total return (c) ÷ (d) -1 4.8% 5.1% (3.6%) (8.9%) * The dividend adjustment factor is calculated on the assumption that the final dividend of 3.25p (31 July 2023 – 3.00p) paid by the Company during the period was reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date. Shareholder information Annual Report and Financial Statements 2024 120 Company information Directors Chairman: RP Yates RW Chote W Hee AC Lane RF Studwell Registrar Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ T: +44 (0)370 707 1229 Alternative Investment Fund Managers and Company Secretaries Baillie Gifford & Co Limited Calton Square 1 Greenside Row Edinburgh EH1 3AN T: +44 (0)131 275 2000 bailliegifford.com Depositary The Bank of New York Mellon (International) Limited 160 Queen Victoria Street London EC4V 4LA Company Broker JP Morgan Cazenove 25 Bank Street Canary Wharf London E14 5JP Independent Auditor BDO LLP 55 Baker Street London W1U 7EU Company details pacifichorizon.co.uk Company Registration No. 02342193 ISIN: GB0006667470 Sedol: 0666747 Ticker: PHI Legal Entity Identifier: VLGEI9B8R0REWKB0LN95 Further information Client Relations Team Baillie Gifford & Co Calton Square 1 Greenside Row Edinburgh EH1 3AN T: +44 (0)800 917 2112 trustenquiries@bailliegifford.com Registered office Computershare Investor Services PLC Moor House 120 London Wall London EC2Y 5ET Calton Square, 1 Greenside Row, Edinburgh EH1 3AN Telephone +44 (0)131 275 2000 pacifichorizon.co.uk