RNS
Announcement
The
Baillie Gifford Japan Trust PLC
Legal Entity Identifier:
54930037AGTKN765Y741
Regulated Information
Classification: Interim Financial Report
Results for the six months to 29 February
2024
The following is the unaudited
Interim Financial Report for the six months to 29 February 2024
which was approved by the Board on 21 March 2024.
In the six months to 29 February
2024, The Baillie Gifford Japan Trust's net asset value total
return per share was +7.8%. The share price total return was +2.5%.
The TOPIX total return (in sterling terms) was +13.1%.
- During
the period the Company bought back 3,135,000 shares representing
3.5% of the issued share capital as at 29 February 2024.
- The
Company continues to deploy gearing, a key benefit of being a
closed ended vehicle, and the gearing level sits at approximately
17.7%. Gearing contributed +1.5% to performance over the
period.
- The
five largest positive contributors to relative performance were
Rakuten (+1.0%), SoftBank Group (+1.0%) SBI Holdings (+0.7%), Rizap
(+0.6%) and MS&AD Insurance (+0.5%). Of note, Rakuten continued
to make progress towards profitability in its mobile business by
gaining more subscribers and SoftBank Group successfully listed 10%
of its investment in Arm Holdings which went on to have very strong
share performance.
- During
the period, Itochu (large general trading company) and Outsourcing
(staffing company) were sold and the proceeds were reinvested in
existing names where the Managers have higher conviction.
Outsourcing received a bid at a significant premium from a private
equity firm.
- Sentiment towards Japanese stocks has improved, particularly
in the large-cap space. The Topix 100 delivered a total return of
17% whereas the Topix 400 delivered a total return of
5%.
Summary of Unaudited
Results
|
29 February
2024
|
31 August 2023
(audited)
|
% change
|
Shareholders' funds
|
£753.5m
|
£733.0m
|
|
Net asset value per
share*
|
838.0p
|
787.7p
|
6.4
|
Share price
|
742.0p
|
735.0p
|
1.0
|
Discount*
|
(11.5%)
|
(6.7%)
|
|
Active share*
|
84%
|
83%
|
|
|
Six months to
29 February
2024
|
Six months to
28 February
2023
|
|
Revenue earnings per
share
|
4.31p
|
5.28p
|
|
Total returns (%)*†
|
|
|
|
Net asset value per share
|
7.8
|
(1.2)
|
|
Share price
|
2.5
|
(0.6)
|
|
TOPIX total return (in sterling
terms)
|
13.1
|
0.6
|
|
|
Six months to
29 February 2024
|
Year to
31 August 2023
|
Period's high and low
|
High
|
Low
|
High
|
Low
|
Net asset value per
share*
|
838.2p
|
715.5p
|
876.0p
|
749.0p
|
Share price
|
755.0p
|
641.0p
|
827.0p
|
703.0p
|
(Discount)/premium*
|
(6.5%)
|
(12.1%)
|
0.2%
|
(11.9%)
|
* Alternative Performance Measure -
see Glossary of Terms and Alternative Performance Measures at the
end of this announcement.
† Source: Baillie Gifford/LSEG and
relevant underlying data providers. See disclaimer at the end of
this announcement.
Past performance is not a guide to
future performance.
Interim Management Report
The six month period to the end of
February 2024 was a positive one for the Japanese stock market.
During the period the NAV total return of your Company was +7.8%
whilst the share price return was +2.5% and the TOPIX total return
(in sterling terms) was +13.1%.
The Japanese macro-economic
environment continues to provide a solid background for investing.
Companies have maintained a good focus on the importance of
shareholder returns. Inflation has persisted and workers are
increasingly benefiting from wage rises. Meanwhile the weak yen has
continued to buoy the profits of exporters. Consequently, the Bank
of Japan has ended the negative interest rate and yield curve
control policies. After a long wait this move clearly signals the
final step in Japan's long journey back out of
deflation.
In general, sentiment towards
Japanese stocks improved over the period and, unusually, this
improvement was disproportionately biased towards larger-cap
companies. For example, the Topix 100 (the largest 100
companies in Japan) delivered a total return of 17% whereas the
Topix 400 (the next largest 400 companies in Japan) delivered a
total return of 5%. Generally, larger Japanese companies tend
to have more export exposure and so benefitted from solid global
demand and the weak yen. At the end of the period the Topix
100 comprised 66% of total Japanese market capitalisation whereas
these larger companies were 42% of your Company. We are
looking for companies with the ability to grow sales and profits
significantly over the long-term which means that we are naturally
orientated towards a higher weighting in medium and smaller
companies. These companies are often using more innovative
business models and have a longer growth runway ahead of
them.
Turning to individual stocks, the
five largest positive contributors to relative performance were
Rakuten (+1.0%), SoftBank Group (+1.0%), SBI Holdings (+0.7%),
Rizap (+0.6%) and MS&AD Insurance (+0.5%). The five largest
negative contributors to relative performance were Shiseido
(-1.1%), TKP (-0.8%) and Pola Orbis (-0.7%) as well as not holding
Toyota Motor (-1.1%) and Tokyo Electron (-0.7%). Finally, gearing
contributed +1.5% to relative performance.
Each of the positive contributors
experienced solid business performance over the period. Rakuten
continued to make progress towards achieving profitability in its
mobile business by gaining more subscribers. SoftBank Group
successfully listed 10% of its investment in Arm Holdings, which
went on to have very strong share price performance as it has been
benefiting from increased demand due to the requirements of AI. SBI
Holdings benefited from expansion in the NISA market (Nippon
Individual Savings Account) and increased interest in Japanese
stocks. Rizap has been successfully rolling out its ChocoZap
community gym offering. Finally, MS&AD Insurance looks set to
realise some of the value of its substantial portfolio of
cross-holdings.
On the negative side Shiseido and
Pola Orbis are both waiting for a full return of Chinese tourists
to Japan, while TKP has been adjusting its business model to focus
on large room rental again. Toyota Motor and Tokyo Electron (both
not held) performed strongly as they benefited from good demand and
a weak Yen backdrop.
During the period we sold two
holdings and reinvested the proceeds in existing names where we
have higher conviction. The two sold were Itochu and Outsourcing.
Itochu is a large general trading company that has been re-rated
significantly in recent years and where we no longer see sufficient
opportunity to continue holding the shares. Outsourcing is a
staffing company that received a bid at a significant premium by a
private equity company.
We continue to be positive about the
outlook for the portfolio of stocks held by your Company.
Whilst these types of businesses have not been the short-term focus
of the market, many continue to make solid operational progress and
benefit from longer-term secular trends such as the moves towards
digitalisation, automation and AI. Consequently, we have
maintained net gearing at the significant level of
17.7%.
The principal risks and
uncertainties facing the Company are set out in Note 10
below.
Past performance is not a guide to future
performance
Total return information sourced
from LSEG/Baillie Gifford. See disclaimer at end of this
document.
See Glossary of Terms and
Alternative Performance Measures at the end of this
announcement
Responsibility Statement
We confirm that to the best of our
knowledge:
a. the
condensed set of Financial Statements has been prepared in
accordance with FRS 104 'Interim Financial Reporting';
b. the
Interim Management Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.7R (being
an indication of important events that have
occurred during the first six months of the financial year, their
impact on the condensed set of Financial Statements and a
description of the principal risks and uncertainties for the
remaining six months of the year); and
c. the
Interim Financial Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes
therein).
On behalf of the Board
David Kidd
Chairman
21 March 2024
List of Investments
As at 29 February 2024
(unaudited)
Name
|
Business
|
Value
£'000
|
% of
total
investments
|
Secular Growth*
|
|
|
|
Rakuten
|
Commerce and services
|
39,927
|
4.5
|
SBI Holdings
|
Financials
|
39,313
|
4.4
|
GMO Internet
|
Information, communication and
utilities
|
26,569
|
3.0
|
FANUC
|
Electricals and
electronics
|
24,744
|
2.8
|
CyberAgent
|
Commerce and services
|
23,798
|
2.7
|
Kubota
|
Manufacturing and
machinery
|
20,490
|
2.3
|
Recruit Holdings
|
Commerce and services
|
19,218
|
2.2
|
Keyence
|
Electricals and
electronics
|
17,757
|
2.0
|
Oisix
|
Retail
|
17,276
|
1.9
|
Sato
|
Manufacturing and
machinery
|
17,241
|
1.9
|
Sysmex
|
Electricals and
electronics
|
16,411
|
1.9
|
GA Technologies
|
Information, communication and
utilities
|
15,196
|
1.7
|
Misumi
|
Commerce and services
|
14,703
|
1.7
|
Seria
|
Retail
|
11,367
|
1.3
|
SMC
|
Manufacturing and
machinery
|
9,809
|
1.1
|
Topcon
|
Manufacturing and
machinery
|
9,732
|
1.1
|
MonotaRO
|
Retail
|
9,290
|
1.0
|
TKP
|
Real estate and
construction
|
8,622
|
1.0
|
Rizap
|
Commerce and services
|
8,438
|
1.0
|
Nidec
|
Electricals and
electronics
|
8,024
|
0.9
|
Raksul
|
Information, communication and
utilities
|
7,149
|
0.8
|
M3
|
Commerce and services
|
6,882
|
0.8
|
LY Corporation
|
Commerce and services
|
6,567
|
0.7
|
Demae-can
|
Information, communication and
utilities
|
6,546
|
0.7
|
Broadleaf
|
Information, communication and
utilities
|
6,322
|
0.7
|
Lifenet Insurance
|
Financials
|
6,136
|
0.7
|
Nihon M&A Center
|
Commerce and services
|
5,879
|
0.7
|
Mercari
|
Information, communication and
utilities
|
5,711
|
0.6
|
freee K.K.
|
Information, communication and
utilities
|
5,671
|
0.6
|
Vector
|
Information, communication and
utilities
|
4,820
|
0.5
|
Pigeon
|
Manufacturing and
machinery
|
4,490
|
0.5
|
Noritsu Koki
|
Manufacturing and
machinery
|
4,357
|
0.5
|
Infomart
|
Commerce and services
|
4,214
|
0.5
|
Digital Garage
|
Information, communication and
utilities
|
3,818
|
0.4
|
Bengo4.com
|
Commerce and services
|
3,586
|
0.4
|
BASE
|
Information, communication and
utilities
|
3,351
|
0.4
|
PeptiDream
|
Pharmaceuticals and food
|
3,347
|
0.4
|
Istyle
|
Information, communication and
utilities
|
3,122
|
0.4
|
Nippon Ceramic
|
Electricals and
electronics
|
2,863
|
0.3
|
|
|
452,756
|
51.0
|
Growth Stalwarts†
|
|
|
|
Calbee
|
Pharmaceuticals and food
|
26,925
|
3.0
|
Nintendo
|
Manufacturing and
machinery
|
20,307
|
2.3
|
Shiseido
|
Manufacturing and
machinery
|
15,831
|
1.8
|
Unicharm
|
Chemicals and other
materials
|
15,609
|
1.8
|
Pola Orbis
|
Chemicals and other
materials
|
13,169
|
1.5
|
Sugi
|
Retail
|
7,535
|
0.9
|
Park24
|
Real estate and
construction
|
7,121
|
0.8
|
Kao
|
Chemicals and other
materials
|
6,646
|
0.7
|
Sawai Pharmaceutical
|
Pharmaceuticals and food
|
3,277
|
0.4
|
|
|
116,420
|
13.2
|
Special Situations#
|
|
|
|
SoftBank Group
|
Information, communication and
utilities
|
59,117
|
6.7
|
Sony
|
Electricals and
electronics
|
24,670
|
2.8
|
mixi
|
Commerce and services
|
20,838
|
2.4
|
MS&AD Insurance
|
Financials
|
20,348
|
2.3
|
Tokyo Tatemono
|
Real estate and
construction
|
11,587
|
1.3
|
Colopl
|
Information, communication and
utilities
|
9,684
|
1.1
|
Olympus
|
Pharmaceuticals and food
|
7,981
|
0.9
|
|
|
154,225
|
17.5
|
Cyclical Growth‡
|
|
|
|
Sumitomo Mitsui Trust
Bank
|
Financials
|
33,805
|
3.8
|
DMG Mori
|
Manufacturing and
machinery
|
22,593
|
2.4
|
Bridgestone
|
Manufacturing and
machinery
|
16,346
|
1.8
|
Sumitomo Metal Mining
|
Chemicals and other
materials
|
13,803
|
1.6
|
Murata Manufacturing
|
Electricals and
electronics
|
13,753
|
1.6
|
Rohm
|
Electricals and
electronics
|
12,846
|
1.4
|
Chugoku Marine Paints
|
Chemicals and other
materials
|
12,429
|
1.4
|
DENSO
|
Manufacturing and
machinery
|
11,400
|
1.3
|
Nifco
|
Chemicals and other
materials
|
11,311
|
1.3
|
SWCC Showa
|
Electricals and
electronics
|
7,737
|
0.9
|
Iida Group Holdings
|
Real estate and
construction
|
4,171
|
0.5
|
Shima Seiki
|
Manufacturing and
machinery
|
2,700
|
0.3
|
|
|
162,894
|
18.3
|
Total investments
|
|
886,295
|
100.0
|
Growth category
* Secular Growth - opportunity to
grow rapidly but where there are a number of potential
outcomes.
† Growth Stalwarts - growth is less
rapid but more predictable.
# Special Situations - performance
has not been good but there is a reason to believe improvements are
underway.
‡ Cyclical Growth - earnings do not
rise every year but are expected to be higher from one cycle to the
next.
Stocks highlighted in bold are the
20 largest holdings.
Income Statement
(unaudited)
|
For the six months ended 29 February
2024
|
For the six months ended 28 February
2023
|
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Gains/(losses) on
investments
|
-
|
43,761
|
43,761
|
-
|
(18,450)
|
(18,450)
|
Currency gains
|
-
|
3,470
|
3,470
|
-
|
3,102
|
3,102
|
Income from investments and interest
receivable
|
8,066
|
-
|
8,066
|
9,352
|
-
|
9,352
|
Investment management fee
|
(2,118)
|
-
|
(2,118)
|
(2,260)
|
-
|
(2,260)
|
Other administrative
expenses
|
(345)
|
-
|
(345)
|
(326)
|
-
|
(326)
|
Net return before finance costs and
taxation
|
5,603
|
47,231
|
52,834
|
6,766
|
(15,348)
|
(8,582)
|
Finance costs of
borrowings
|
(861)
|
-
|
(861)
|
(885)
|
-
|
(885)
|
Net return before
taxation
|
4,742
|
47,231
|
51,973
|
5,881
|
(15,348)
|
(9,467)
|
Tax
|
(806)
|
-
|
(806)
|
(935)
|
-
|
(935)
|
Net return after taxation
|
3,936
|
47,231
|
51,167
|
4,946
|
(15,348)
|
(10,402)
|
Net return per ordinary share
(note 5)
|
4.31p
|
51.74p
|
56.05p
|
5.28p
|
(16.39p)
|
(11.11p)
|
The total column of this statement
is the profit and loss account of the Company. The supplementary
revenue and capital columns are prepared under
guidance published by the
Association of Investment Companies.
All revenue and capital items in
this statement derive from continuing operations.
A Statement of Comprehensive Income
is not required as all gains and losses of the Company have been
reflected in the above statement.
The accompanying notes below are an
integral part of the Financial Statements.
Balance Sheet (unaudited)
|
Notes
|
At 29 February 2024
£'000
|
At 31 August 2023 (audited)
£'000
|
Fixed assets
|
|
|
|
Investments
|
6
|
886,295
|
858,486
|
Current assets
|
|
|
|
Debtors
|
|
2,424
|
1,811
|
Cash and cash equivalents
|
|
9,401
|
6,030
|
|
|
11,825
|
7,841
|
Creditors
|
|
|
|
Amounts falling due within one
year
|
|
(65,432)
|
(1,641)
|
Net current
(liabilities)/assets
|
|
(53,607)
|
6,200
|
Total assets less current
liabilities
|
|
832,688
|
864,686
|
Creditors
|
|
|
|
Amounts falling due after more than
one year: bank loans
|
|
(79,229)
|
(131,723)
|
Net assets
|
|
753,459
|
732,963
|
Capital and reserves
|
|
|
|
Share capital
|
|
4,717
|
4,717
|
Share premium account
|
|
213,902
|
213,902
|
Capital redemption
reserve
|
|
203
|
203
|
Capital reserve
|
|
522,682
|
496,965
|
Revenue reserve
|
|
11,955
|
17,176
|
Shareholders' funds
|
|
753,459
|
732,963
|
Net asset value per ordinary
share*
|
|
838.0p
|
787.7p
|
Ordinary shares in issue
|
8
|
89,912,614
|
93,047,614
|
* See
Glossary of Terms and Alternative Performance Measures at the end
of this announcement.
The accompanying notes below are an
integral part of the Financial Statements.
Statement of Changes in Equity
(unaudited)
For the six months ended 29 February
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 September
2023
|
|
4,717
|
213,902
|
203
|
496,965
|
17,176
|
732,963
|
Shares bought back
|
|
-
|
-
|
-
|
(21,514)
|
-
|
(21,514)
|
Net return on ordinary activities
after taxation
|
|
-
|
-
|
-
|
47,231
|
3,936
|
51,167
|
Dividends paid during the
period
|
4
|
-
|
-
|
-
|
-
|
(9,157)
|
(9,157)
|
Shareholders' funds at 29 February
2024
|
|
4,717
|
213,902
|
203
|
522,682
|
11,955
|
753,459
|
For the six months ended 28 February
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 September
2022
|
|
4,717
|
213,902
|
203
|
556,414
|
15,770
|
791,006
|
Shares bought back
|
|
-
|
-
|
-
|
(2,058)
|
-
|
(2,058)
|
Net return on ordinary
activities
after taxation
|
|
-
|
-
|
-
|
(15,348)
|
4,946
|
(10,402)
|
Dividends paid during the
period
|
4
|
-
|
-
|
-
|
-
|
(8,426)
|
(8,426)
|
Shareholders' funds at 28 February
2023
|
|
4,717
|
213,902
|
203
|
539,008
|
12,290
|
770,120
|
* The capital reserve balance at 29
February 2024 includes investment holding gains on investments of
£59,740,000 (28 February 2023 - gains of £116,236,000).
The accompanying notes below are an
integral part of the Financial Statements.
Condensed Cash Flow Statement
(unaudited)
|
Notes
|
Six months to
29 February 2024
£'000
|
Six months to
28 February 2023
£'000
|
Cash flows from operating
activities
|
|
|
|
Net return before
taxation
|
|
51,973
|
(9,467)
|
Net (gains)/losses on
investments
|
|
(43,761)
|
18,450
|
Currency gains
|
|
(3,470)
|
(3,102)
|
Finance costs of
borrowings
|
|
861
|
885
|
Overseas withholding tax
|
|
(738)
|
(870)
|
Changes in debtors and
creditors
|
|
(684)
|
(2,249)
|
Cash from operations
|
|
4,181
|
3,647
|
Interest paid
|
|
(866)
|
(901)
|
Net cash inflow from operating
activities
|
|
3,315
|
2,746
|
Cash flows from investing
activities
|
|
|
|
Acquisitions of
investments
|
|
(39,296)
|
(29,585)
|
Disposals of investments
|
|
55,966
|
34,763
|
Exchange differences on settlement
of investment transactions
|
|
-
|
446
|
Net cash inflow from investing
activities
|
|
16,670
|
5,624
|
Shares bought back
|
8
|
(21,288)
|
(2,058)
|
Equity dividends paid
|
4
|
(9,157)
|
(8,426)
|
Bank loans drawn down
|
|
92,498
|
15,624
|
Bank loans repaid
|
|
(78,620)
|
(16,189)
|
Net cash outflow from financing
activities
|
|
(16,567)
|
(11,049)
|
Increase/(decrease) in cash and cash
equivalents
|
|
3,418
|
(2,679)
|
Exchange movements
|
|
(47)
|
(45)
|
Cash and cash equivalents at start
of period*
|
|
6,030
|
11,017
|
Cash and cash equivalents at end of
period*
|
|
9,401
|
8,293
|
* Cash
and cash equivalents represent cash at bank and short term money
market deposits repayable on demand.
Notes to the Financial
Statements
1. Basis of Accounting
The condensed Financial Statements
for the six months to 29 February 2024 comprise the statements set
out above together with the related notes below. They have been
prepared in accordance with FRS 104 'Interim Financial Reporting'
and the AIC's Statement of Recommended Practice issued in November
2014 and updated in July 2022 with consequential
amendments.
They have not been audited or
reviewed by the Auditor pursuant to the Auditing Practices Board
Guidance on 'Review of Interim Financial Information'. The
Financial Statements for the six months to 29 February 2024 have
been prepared on the basis of the same accounting policies as set
out in the Company's Annual Report and Financial Statements at 31
August 2023.
Going Concern
Having considered the Company's
principal risks and uncertainties, as set out in Note 10, together
with its current position, investment objective and policy, its
assets and liabilities, and projected income and expenditure,
together with the Company's dividend policy, it is the Directors'
opinion that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Board has
considered severe but plausible downside scenarios, including the
impact of heightened market volatility and macroeconomic and
geopolitical concerns, including rising inflation and interest
rates, but it does not believe 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. Gearing levels and compliance with
borrowing covenants are reviewed by the Board on a regular basis.
In accordance with the Company's Articles
of Association, shareholders have
the right to vote annually at the Annual General Meeting on whether
to continue the Company. The next continuation vote will be in
December 2024. The Directors have no reason to believe that the
continuation resolution will not be passed at the Annual General
Meeting. 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. Accordingly, the Directors consider it
appropriate to adopt the going concern basis of accounting in
preparing these Financial Statements and confirm that they are not
aware of any material uncertainties which may affect the Company's
ability to continue to do so over a period of at least twelve
months from the date of approval of these Financial
Statements.
2. Financial Information
The financial information contained
within this Interim Financial Report does not constitute statutory
accounts as defined in sections 434 to 436 of the Companies Act
2006. The financial information for the year ended 31 August 2023
has been extracted from the statutory accounts which have been
filed with the Registrar of Companies. The Auditor's Report on
those accounts was not qualified, did not include a reference to
any matters to which the Auditor drew attention by way of emphasis
without qualifying its report and did not contain statements under
sections 498(2) or (3) of the Companies Act 2006.
3. Investment
Manager
Baillie Gifford & Co Limited, a
wholly owned subsidiary of Baillie Gifford & Co, has been
appointed by the Company as its Alternative Investment Fund Manager
and Company Secretary. The investment management function has been
delegated to Baillie Gifford & Co. The management agreement can
be terminated on not less than 6 months' notice, or on shorter
notice in certain circumstances. 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,
calculated and payable quarterly.
4. Dividends
|
|
|
Six months to
29 February
2024
£'000
|
Six months to
28 February
2023
£'000
|
Amounts recognised as a distribution
in the period:
Previous year's final dividend of
10.00p paid 20 December 2023
(2023 - 9.00p paid on 21 December 2022)
|
|
|
9,157
|
8,426
|
No interim dividend has been
declared.
5. Net Return per Ordinary
Share
|
Six months to
29 February
2024
£'000
|
Six months to
28 February
2023
£'000
|
Revenue return after
taxation
|
3,936
|
4,946
|
Capital return after
taxation
|
47,231
|
(15,348)
|
Total net return
|
51,167
|
(10,402)
|
Weighted average number of ordinary
shares in issue
|
91,294,290
|
93,667,547
|
Net return per ordinary share is
based on the above totals of revenue and capital and the weighted
average number of ordinary shares in issue during each period.
There are no dilutive or potentially dilutive shares in
issue.
6. Fair Value Hierarchy
The fair value hierarchy used to
analyse the basis on which the fair values of financial instruments
held at fair value through the profit or loss account are measured
is described below. Fair value measurements are categorised on the
basis of the lowest level input that is significant to the fair
value measurement.
Level 1 - using unadjusted quoted
prices for identical instruments in an active market;
Level 2 - using inputs, other than
quoted prices included within Level 1, that are directly or
indirectly observable (based on market data); and
Level 3 - using inputs that are
unobservable (for which market data is unavailable).
The fair value of listed investments
is the last traded price which is equivalent to the bid price on
Japanese markets.
The financial assets designated as
valued at fair value through profit or loss are all categorised as
Level 1 in the above hierarchy. None of the financial liabilities
are designated at fair value through profit or loss in the
Financial Statements.
All of the Company's investments
fall into Level 1 for the periods reported.
7. Bank Loans
Bank loans of £142.1m million (¥26.9
billion) have been drawn down under yen loan facilities which are
repayable between May 2024 and August 2025 (31 August 2023 - £131.7
million (¥24.3 billion)).
8. Share Capital
The Company has the authority to
issue shares/sell treasury shares at a premium to net asset value
as well as to buy back shares at a discount to net asset value.
During the period, no shares were issued and 3,135,000 shares were
bought back into Treasury (28 February 2023 - nil issued and
276,845 bought back). There were 4,415,595 shares held in Treasury
at 29 February 2024 (28 February 2023 - 705,595). Between 1 March
2024 and 20 March 2024, the Company bought back a further 90,000
shares into Treasury. The Company has authority remaining to buy
back 12,605,808 ordinary shares.
9. Related Party Transactions
There have been no transactions with
related parties during the first six months of the current
financial year that have materially affected the financial position
or the performance of the Company during that period and there have
been no changes in the related party transactions described in the
last Annual Report and Financial Statements that could have had
such an effect on the Company during that period.
10. Principal Risks and
Uncertainties
The principal risks facing the
Company are financial risk, investment strategy risk, discount
risk, smaller company risk, climate and governance risk, leverage
risk, regulatory risk, political and associated economic risk,
custody and depositary risk, reliance on third party service
provider risk, cyber security risk and emerging risks. An
explanation of these risks and how they are managed is set out on
pages 38 to 41 of the Company's Annual Report and Financial
Statements for the year to 31 August 2023 and is available on the
Company's website: japantrustplc.co.uk.
The principal risks and
uncertainties have not changed since the date of the Annual
Report.
Glossary of Terms and Alternative
Performance Measures ('APM')
Net
Asset Value
Also described as shareholders'
funds, net asset value ('NAV') is the value of total assets less
liabilities (including borrowings). The NAV per share is calculated
by dividing this amount by the number of ordinary shares in issue.
Borrowings are valued at their nominal par value. Par value
approximates to amortised cost. The Company's yen denominated loans
are valued at their sterling equivalent.
(Discount)/Premium (APM)
As stockmarkets and share prices
vary, an investment trust's share price is rarely the same as its
NAV. When the share price is lower than the NAV per share it is
said to be trading at a discount. The size of the discount is
calculated by subtracting the share price from the NAV per share
and is usually expressed as a percentage of the NAV per share. If
the share price is higher than the NAV per share, this situation is
called a premium.
|
|
29 February
2024
|
31 August
2023
|
Net asset value per ordinary
share
|
(a)
|
838.0p
|
787.7p
|
Share price
|
(b)
|
742.0p
|
735.0p
|
(Discount)/premium
|
(b - a) ÷ (a) expressed as a
percentage
|
(11.5%)
|
(6.7%)
|
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.
|
|
29 February 2024
NAV (par)
|
29 February 2024
Share price
|
28 February 2023
NAV (par)
|
28 February 2023
Share price
|
Closing NAV per share/share
price
|
(a)
|
838.0p
|
742.0p
|
822.6p
|
761.0p
|
Dividend adjustment
factor*
|
(b)
|
1.0135
|
1.0150
|
1.0113
|
1.0113
|
Adjusted closing NAV per share/share
price
|
(c) = (a) x (b)
|
849.3p
|
753.1p
|
831.9p
|
769.6p
|
Opening NAV per share/share
price
|
(d)
|
787.7p
|
735.0p
|
842.4p
|
774.0p
|
Total return
|
((c ÷ d) -1)
|
7.8%
|
2.5%
|
(1.2%)
|
(0.6%)
|
* The dividend adjustment factor is
calculated on the assumption that the dividend of 10.00p (2023 -
9.00p) paid by the Company in the period under review was invested
into shares of the Company at the cum income NAV per share/share
price, as appropriate, at the ex-dividend date.
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 the Company's borrowings
at par less cash and cash equivalents expressed as a percentage of
shareholders' funds.
Potential gearing is the Company's
borrowings expressed at par as a percentage of shareholders'
funds.
|
|
29
February 2024
|
31 August
2023
|
|
|
Gearing *
£'000
|
Potential
gearing †
£'000
|
Gearing *
£'000
|
Potential
gearing †
£'000
|
Borrowings
|
(a)
|
142,084
|
142,084
|
131,723
|
131,723
|
Cash and cash equivalents
|
(b)
|
8,501
|
-
|
6,030
|
-
|
Shareholders' funds
|
(c)
|
753,459
|
753,459
|
732,963
|
732,963
|
Gearing
|
|
17.7%
|
18.9%
|
17.1%
|
18.0%
|
* Gearing: ((a) - (b)) divided by
(c), expressed as a percentage.
† Potential gearing: (a) divided by
(c), expressed as a percentage.
Leverage (APM)
For the purposes of the Alternative
Investment Fund Managers (AIFM) 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.
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.
Further Shareholder
Information
The Baillie Gifford Japan Trust aims
to achieve long term capital growth principally through investment
in medium and smaller sized Japanese companies which are believed
to have above average prospects for growth, although it invests in
larger companies when considered appropriate.
At 29 February 2024, the Company had
total assets of £895.6m (before deduction of bank loans of
£142.1m).
The Company is managed by Baillie
Gifford, an Edinburgh based fund management group with around
£227bn under management and advice as at 20 March 2024.
Past performance is not a guide to
future performance. The value of an investment and any income from
it is not guaranteed and may go down as well as up and investors
may not get back the amount invested. This is because the share
price is determined by the changing conditions in the relevant
stock markets in which the Company invests and by the supply and
demand for the Company's shares. You should view your investment as
long term. You can find up to date performance information about
The Baillie Gifford Japan Trust PLC on the Company website
at japantrustplc.co.uk.†
The Interim Financial Report is
available at japantrustplc.co.uk† and will be posted to
shareholders on or around 5 April 2024.
21 March 2024
For further information please
contact:
Naomi Cherry, Baillie Gifford &
Co
Tel: 0131 474 5548
Jonathan Atkins, Director, Four
Communications
Tel: 0203 920 0555 or 07872
495396
None of the views expressed in this
document should be construed as advice to buy or sell a particular
investment.
† Neither the contents of the Managers' website nor the contents
of any website accessible from hyperlinks on the Managers' website
(or any other website) is incorporated into, or forms part of, this
announcement.
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.
- Ends
-