TIDMBGFD
RNS Number : 3315D
Baillie Gifford Japan Trust PLC
19 October 2022
RNS Announcement: Preliminary Results
The Baillie Gifford Japan Trust PLC
Results for the year to 31 August 2022
Over the year to 31 August 2022, The Baillie Gifford Japan Trust
PLC's net asset value total return was -16.3% compared to the -3.9%
total return for the benchmark TOPIX index (in sterling terms). In
this period the Company's share price fell by 23.8%.
3/4 A final dividend of 9p per ordinary share will be put to
shareholders for approval at the AGM. This represents a 50%
increase on the 6.0p paid in relation to the prior year
3/4 Biases towards smaller companies, higher growth companies
and gearing have been unhelpful over the last year
3/4 The largest positive contributor to performance was Inpex, which has been sold
3/4 Gearing has increased from 9.8% to 17.5%, as a result of
both share price moves and additional investment in high quality
growth companies
3/4 The Managers believe that investing in quality growth
companies will continue to be an effective way of preserving and
growing wealth over time
3/4 The Company's objective is to achieve long term capital
growth, and the NAV total return of 22.8% over the five year period
remains ahead of the benchmark return of 20.0%
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Source: Refinitiv/Baillie Gifford. See disclaimer at the end of
this announcement.
The Baillie Gifford Japan Trust PLC aims to achieve long term
capital growth principally through investment in medium to smaller
sized Japanese companies which are believed to have above average
prospects for growth. At 31 August 2022, the Company had total
assets of GBP940.4m (before deduction of bank loans of
GBP149.4m).
The Company is managed by Baillie Gifford, an Edinburgh based
fund management group with around GBP 216 bn under management and
advice as at 17 October 2022.
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. The Trust has borrowed money to make further investments
(sometimes known as 'gearing' or 'leverage'). The risk is that when
this money is repaid by the Trust, the value of the investments may
not be enough to cover the borrowing and interest costs, and the
Company will make a loss. If the Trust's investments fall in value,
any invested borrowings will increase the amount of this loss. 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 .
Legal Entity Identifier: 54930037AGTKN765Y741
18 October 2022
For further information please contact:
Alex Blake - Client Director
Baillie Gifford & Co
Tel: 0131 275 2859
Jonathon Atkins, Four Communications
Tel: 020 3103 9553 or 07872495396
The following is the audited preliminary statement for the year
to 31 August 2022 which was approved by the Board on 18 October
2022.
Chairman's Statement
Introduction
With great sadness, the Board notified shareholders in May of
the sudden death of Keith Falconer. Keith joined the Board in 2014
and was appointed Chairman in 2019. He was an effective and widely
admired Chairman who will be much missed by the Board and the
Managers.
I was appointed interim Chairman in May and then Chairman of the
Company in June.
Performance
In the year to 31 August 2022 the net asset value total return
was -16.3%. As market sentiment deteriorated, the Company's shares
moved to a discount to NAV, leading to a share price total return
of -23.8%. The benchmark total return was -3.9% over the same
period.
The Company's objective is to achieve long term capital growth,
and the NAV returns over longer time periods remain ahead of the
benchmark.
Compound annual returns to 5 years 10 years
end August % %
================================== ======== =========
Net asset value total return 4.2 14.5
Share price total return 1.7 14.7
TOPIX total return (in sterling) 3.7 9.9
================================== ======== =========
Source: Refinitiv, debt at par value.
Gearing and Borrowing
The Board believes that borrowing will enhance returns to
investors over the long-term. Net gearing rose from 9.8% to 17.5%
over the year to 31 August 2022. This reflected several factors.
Firstly, as share prices fell, the Managers used gearing to invest
in companies where they saw significant upside. Details of the
portfolio changes are contained in the Managers' Report. The
Company entered into a new revolving credit facility with Mizuho
Bank for Yen2,600 million to provide additional flexibility for the
Managers to take advantage of investment opportunities.
Additionally, the net asset value fell over the year, which
contributed to an increase in the gearing level in percentage
terms.
Dividend
The Board is recommending a dividend of 9p per share, an
increase of 50% on last year's 6p. This will be put to shareholders
for approval at the Annual General Meeting to be held on 15
December 2022 and, if approved, will be paid on 21 December to
shareholders on the register at close of business on 11 November
2022. A dividend reinvestment plan (DRIP) is available to
shareholders who would prefer to re-invest their dividends in the
shares of the Company. For those shareholders electing to receive
the DRIP, the last date for receipt of election is 30 November
2022.
Share Capital and Discount Management
Over the course of the year, the share price moved from a 0.9%
premium to NAV to an 8.1% discount to NAV. During this period, the
Company bought back 428,750 shares at a total cost of approximately
GBP3.3m. These shares are held in Treasury and are available to be
reissued, at a premium, when market conditions allow.
Your Board believes it is important that the Company retains the
power to buy back equity during the year and so, at the Annual
General Meeting, is seeking to renew this facility.
The Company also has authority to issue new shares and to
reissue any shares held in treasury for cash on a non pre-emptive
basis. Shares are issued/reissued only at a premium to net asset
value, thereby enhancing net asset value per share for existing
shareholders. The Directors are, once again, seeking 10% share
issuance authority at the Annual General Meeting. This authority
would expire at the conclusion of the Annual General Meeting in
2023.
Annual General Meeting
The Company's AGM is scheduled to take place on 15 December 2022
at Baillie Gifford's offices in Edinburgh. Last year, the Board
announced and fully intended to hold a physical meeting but, given
uncertainty caused by Covid-19, reverted to a purely administrative
meeting held at the Managers' offices, limiting attendance to those
required for a quorum.
We very much hope that this year circumstances will permit us to
meet the Company's shareholders in person. Nevertheless, given that
Covid-19 remains in circulation and new variants may present new
challenges, the Board encourages all shareholders to exercise their
votes on the AGM resolutions by completing and submitting a form of
proxy. We recommend that shareholders monitor the Company's website
at japantrustplc.co.uk where any updates will be posted. Market
announcements will also be made, as appropriate. Should
shareholders have questions for the Board or the Managers or any
queries as to how to vote, they are welcome, as always, to submit
them by email to trustenquiries@bailliegifford.com or call 0800 917
2112.
Information on the resolutions can be found on pages 59 and 60
of the Annual Report and Financial Statements. The Directors
consider that all resolutions to be put to shareholders are in
their and the Company's best interests as a whole and recommend
that shareholders vote in their favour.
In particular, shareholders have the right to vote annually on
whether the Company should continue in business and will have the
opportunity to do so again this year. Last year, the Company again
received support for its continuation with 99.99% of votes cast in
favour. Your Directors believe there are attractive opportunities
in selected, well-run Japanese companies benefiting the long-term
outlook for the Japan Trust. To that end, my fellow Directors and I
intend to vote our own shareholdings in favour of the resolution
and hope that shareholders will feel disposed to do likewise.
Board
The Board undertook an external evaluation during the year and
has considered its balance of skills. Further information is
contained in the Governance Report on page 30 of the Annual Report
and Financial Statements.
Joanna Pitman was appointed as the Company's Senior Independent
Director in June, and in 2023 the Company intends to recruit an
additional independent non-executive Director using the services of
an independent recruitment consultant. Shareholders will be updated
when a candidate has been appointed.
Outlook
There is a great deal of uncertainty facing investors at
present. This concerns not only the global prospects for inflation,
interest rates and bond yields but also the impact of these and
other factors on the short-term prospects for your trust's
investments.
After the disappointing absolute and relative performance over
the past 12 months, the Board is optimistic that the long-term
stock-picking skills of the Managers will return to the fore.
David Kidd
Chairman
18 October 2022
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Managers' Report
The past 12 months have been a difficult time for investors.
Despite Covid beginning to fade from a pandemic into an endemic
virus, new challenges have emerged. Russia's war on Ukraine has
brought significant suffering and destruction to Ukraine and the
range of possible outcomes from here is wide. Who would have
thought that we would pivot from a pandemic to conversations around
the differences between strategic and tactical nuclear weapons?
Alongside this there has been significant disruption to energy
markets and high inflation numbers in many developed markets. Asset
prices have been impacted as the spectre of stagflation has preyed
on investor minds. Meanwhile Japan has experienced the shock of the
assassination of highly influential former Prime Minister Shinzo
Abe.
Against this backdrop, the share prices of the companies that
the Japan Trust invests in have had, in aggregate, a setback. The
NAV total return of your Company was -16.3% compared with the -3.9%
fall in the TOPIX index in Sterling terms. We continue to believe
that it is more appropriate to look at longer-term numbers. Over 5
years the NAV total return has increased by 22.8%, and by 387.7%
over 10 years. This compares to increases in the TOPIX index of
19.8% over 5 years and 257.8% over 10 years. Our bias towards
smaller companies and higher growth companies have been unhelpful
over the last year. Additionally, given the widespread share price
falls, being geared was also unhelpful.
Four companies subtracted at least 1ppt from the return. These
were Rakuten (-1.5%), Raksul (-1.4%), CyberAgent (-1.0%) and
Mercari (-1.0%). Each of these companies operates in the internet
area and they share the common feature of investing heavily to try
and seize future opportunities. Rakuten has been building a new
mobile phone network in Japan, funded by its profitable e-commerce
and online financial service operations. Raksul is a young company
involved in online printing, logistics on demand and online
advertising . CyberAgent has been investing heavily in AbemaTV,
perhaps best described as a cross between YouTube and Netflix,
funded by its profitable advertising and gaming businesses.
Finally, Mercari provides a platform for consumer-to-consumer
second-hand good sales and is investing heavily in its US
operations, funded by its more established and profitable Japanese
operations.
On the positive side Inpex contributed 1.8% to the return. As a
liquified natural gas (LNG) extraction company, its profits have
increased sharply as gas prices have soared due to the Russian war
on Ukraine.
We try to operate in a semi-stoic fashion; acknowledging that we
would prefer to see more share prices going up but continuing our
day-to-day activities with the usual attitude and tempo. Our
business practices are no longer meaningfully impacted by Covid and
we are visiting Japan again and our Japanese-based researchers are
visiting Edinburgh. We see our job as trying to stay invested in
good companies that are progressing well, trying to find new
opportunities, and removing companies from the portfolio where the
prospects are fading. In this we are driven by long-term
opportunity and potential upside in shares rather than moves in
currencies or yield curves.
In total we bought 8 new holdings and sold 10. As is typical the
new holdings spanned a range of growth opportunities, from quality
long-term franchises such as Nintendo (games consoles), Shiseido
(skincare) and Pigeon (baby bottles) to newer high growth companies
such as Oisix (meal kit delivery), Freee (cloud-based accounting)
and finally eclectic growth companies such as Chugoku Marine Paint
(anti-fouling ship paint), Shima Seiki (knitting machines) and
Seria (bargain retail). These were funded by sales of existing
holdings where conviction has waned. Overall turnover was 14.5%,
meaning that 85.5% of the portfolio was not changed from the
previous year.
The difficulties caused by Covid have temporarily negatively
impacted the earnings of many usually high-quality businesses.
While attitudes in Asia towards Covid remain generally more
cautious than in Europe and the United States, we believe that the
fundamental trends are in the same direction. Japan has very high
vaccine coverage now and is re-opening for unrestricted tourism.
Although the exact timing of earnings' recovery is uncertain, we
have very high conviction that it will happen. The new holding in
Shiseido, the addition to Pola Orbis (high end skincare) and the
purchase of Pigeon were all partly driven by this long-term
conviction in recovery. Each of these was a highly profitable
business prior to the pandemic and we assess them to have many
years of growth ahead of them as consumers in many parts of Asia
continue to grow in affluence. Sometimes share prices move far more
than the long-term prospects of the underlying business. Pigeon was
completely sold in 2018, largely on valuation grounds. Following
some short-term issues, and with the shares trading 65% lower than
our average selling price, we decided that the prospective returns
were attractive enough to take a holding again.
We have also been making additions across various high-growth
businesses where the share prices have become much lower but where
we retain conviction. Indeed, the trend towards digital
transformation in Japan seems to have been strengthened by the
pandemic. Digital payments, e-commerce, and online financial
services are all more relevant. Therefore, we have increased
holdings in 3 of the 4 most significant contributors to
under-performance, which are all internet businesses, because our
conviction in future returns has increased over the year.
On the selling side two outcomes are worthy of comment. First,
your Company is without a single car assembler for the first time
in many years. This is because we have become increasingly of the
view that consumer demand is now at a tipping point where we will
see a rapid shift towards battery electric vehicles given that they
have emission, running cost, and performance benefits while current
challenges of range and initial price are improving. In general,
the Japanese car companies are very good at making the cars of the
near past but poorly positioned for this change in consumer
preference. Previously combustion engine technology (including
hybrids) and mechanical engineering skills have been critical and
play to Japanese strengths. However, in the future battery
technology and software are likely to be key, opening the car
market to a range of new players. Rather than assemblers we favour
companies that supply critical parts and components such as DENSO
(air-conditioning and various electronic parts), Nidec (motors for
battery electric vehicles) and Bridgestone (tyres).
Second, we have sold Inpex (liquified natural gas)*, and reduced
other resource-related names. While these have provided useful
returns recently the situation is largely the opposite of companies
negatively impacted by Covid. Regarding Inpex, the current
situation has been very supportive of short-term earnings but
technology development and environmental concern make natural gas
an increasingly poor choice for energy generation.
Overall, there is no premium paid for the portfolio of shares in
your Company relative to the Japanese market (EV/EBIT multiple of
13x in each case), despite our belief that the underlying portfolio
has significantly higher forward-looking growth potential. Gearing
has been actively increased as we have made a conscious decision to
invest more in what we believe to be high quality growth companies
at a time when their shares seem to us to be on sale. Net gearing
at the end of the year was 17.5%.
Given the difficulties globally and sharp share price falls it
reflects very well on your underlying investments that in aggregate
they have continued to grow their dividends. Consequently, your
company will pay an increased dividend of 9p compared with 6p in
the previous year, entirely covered by increased dividend income
from the portfolio.
Whilst it has been a difficult twelve months for the share price
of the Company, it is perhaps worth re-iterating three sources of
comfort. First, 85% of your Company is the same as the year before
which means that our processes have been operating in a steady
fashion. Second, in aggregate those companies have been paying out
increased dividends (and doing significant share buybacks)
suggesting both that cash is available and that directors have
confidence in the future. Finally, given the growth profile of your
Company's portfolio it is striking that it does not trade at a
meaningful premium to the Japanese market. The future is always
uncertain, and volatility is inevitable, but in the past your
Company has always managed to recover from setbacks and we believe
that investing in quality growth companies will continue to be an
effective way of preserving and growing wealth over the long
term.
*Comprising a significant reduction as of the company's year-end
and the completion of the sale as at time of writing.
Baillie Gifford
18 October 2022
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Investment Portfolio by Growth Category
As at 31 August 2021
% of % of % of % of
Secular total Growth total Special total Cyclical total
Growth(1) investments Stalwarts(2) investments Situations(3) investments Growth(4) investments
========================= ============= ============== =========== ============== =========== ============= ===========
FANUC 3.4 Calbee 2.9 SoftBank 5.0 Bridgestone 3.1
MS&AD Sumitomo
SBI Holdings 3.4 Nintendo 2.1 Insurance 2.9 Mitsui Trust 3.1
GMO Internet 3.1 Shiseido 2.0 Sony 2.7 DENSO 2.6
CyberAgent 2.8 Unicharm 1.9 mixi 2.6 Itochu 2.6
Sumitomo
Misumi 2.8 Pola Orbis 1.5 Tokyo Tatemono 1.7 Metal Mining 2.1
Kubota 2.6 Seria 0.8 Colopl 1.5 DMG Mori 1.6
Murata
Rakuten 2.2 Sugi 0.8 Inpex 0.8 Manufacturing 1.5
Sysmex 2.1 Makita 0.6 Rohm 1.5
MonotaRO 1.7 Park24 0.6 Nifco 1.3
Tsubaki
Recruit Holdings 1.7 Pigeon 0.4 Nakashima 1.0
Nidec 1.7 Secom 0.4 Outsourcing 0.9
Sawai
Sato 1.6 Pharmaceutical 0.3 Iida 0.7
Chugoku
GA Technologies 1.5 Marine Paints 0.6
Istyle 1.5 Shima Seiki 0.5
TKP 1.3
Topcon 1.3
Mercari 1.1
Keyence 1.0
Raksul 0.9
SMC 0.9
Oisix 0.8
Shimano 0.8
Toyota Tsusho 0.8
Broadleaf 0.7
Digital Garage 0.5
Infomart 0.5
BASE 0.4
freee K.K. 0.4
Noritsu Koki 0.4
PeptiDream 0.4
Nippon Ceramic 0.4
Bengo4.com 0.3
Rizap 0.3
Lifull 0.1
============== ===========
45.4 14.3 17.2 23.1
========================= ============= ============== =========== ============== =========== ============= ===========
(1) Secular Growth: Opportunity to grow rapidly but where there
are a number of potential outcomes.
(2) Growth Stalwarts: Growth is less rapid but more
predictable.
(3) Special Situations: Performance has not been good but there
is a reason to believe improvements are underway.
(4) Cyclical Growth: Earnings do not rise every year but are
expected to be higher from one cycle to the next
Relative Contribution
Top Ten Relative Stock Contributors Bottom Ten Relative Stock Contributors
Year to 31 August 2022 Year to 31 August 2022
==================================================== ======================================================
Portfolio Index Portfolio Index
(average (average Relative (average (average Relative
weight) weight) Contribution weight) weight) Contribution
Name % % % Name % % %
============== ========= ========= ============== ================ ========= ========= ==============
Inpex 2.1 0.2 1.8 Rakuten 3.1 0.2 (1.5)
Istyle 0.6 0.0 0.6 Raksul 1.5 0.0 (1.4)
Sumitomo
Mitsui
Trust 2.8 0.3 0.5 CyberAgent 2.8 0.1 (1.0)
MS&AD
Insurance 2.8 0.3 0.4 Mercari 1.2 0.0 (1.0)
Gree 0.2 0.0 0.4 Sysmex 2.6 0.3 (0.8)
TKP 0.8 0.0 0.4 Healios K.K. 0.4 0.0 (0.8)
Tokyo Tatemono 1.4 0.1 0.3 Outsourcing 1.2 0.0 (0.6)
Keyence 0.8 2.1 0.3 Pola Orbis 1.5 0.0 (0.6)
Hoya 0.0 1.1 0.3 Infomart 0.8 0.0 (0.6)
Itochu 2.6 0.9 0.3 Misumi 2.7 0.2 (0.5)
============== ========= ========= ============== ================ ========= ========= ==================
Top Ten Relative Stock Contributors Bottom Ten Relative Stock Contributors
5 years to 31 August 2022 5 years to 31 August 2022
============================================================ ====================================================
Portfolio Index Portfolio Index
(average (average Relative (average (average Relative
weight) weight) Contribution weight) weight) Contribution
Name % % % Name % % %
====================== ========= ========= ============== ============== ========= ========= ==============
M3 1.2 0.3 2.2 Rakuten 3.2 0.2 (1.7)
SoftBank 5.5 1.8 1.8 Toyota Motor 0.0 3.5 (1.3)
Katitas 0.4 0.0 1.5 Sato 1.4 0.0 (1.0)
Pan Pacific
International 1.0 0.2 1.3 Lifull 0.6 0.0 (0.9)
SBI Holdings 3.2 0.1 1.3 Daiichi Sankyo 0.0 0.8 (0.9)
MonotaRO 1.4 0.1 1.1 Raksul 0.8 0.0 (0.8)
GMO Internet 2.9 0.0 1.1 Mazda Motor 1.2 0.1 (0.8)
Advantest 0.4 0.2 1.1 Healios K.K. 0.3 0.0 (0.8)
Itochu 2.3 0.7 0.9 Pola Orbis 0.6 0.0 (0.6)
SanBio 0.3 0.0 0.8 H.I.S. 0.8 0.0 (0.6)
====================== ========= ========= ============== ============== ========= ========= ==============
Source: StatPro and relevant underlying index providers. Baillie
Gifford Japan Trust relative to TOPIX total return, in sterling
terms. See disclaimer at the end of this announcement.
Holding Period
As at 31 August 2022
>10 % of 5-10 years % of 2-5 years % of <2 years % of
years total total total total
investments investments investments investments
========== ============ =============== ============ =========== ============ ============= ============
SBI
Holdings 3.4 SoftBank 5.0 Calbee 2.9 Bridgestone 3.1
GMO MS&AD
Internet 3.1 FANUC 3.4 DENSO 2.6 Insurance 2.9
Sumitomo
Mitsui
Misumi 2.8 Trust 3.1 mixi 2.6 Nintendo * 2.1
Kubota 2.6 CyberAgent 2.8 Sato 1.6 Shiseido * 2.0
Itochu 2.6 Sony 2.7 DMG Mori 1.6 Unicharm 1.9
GA
Rakuten 2.2 Sumitomo Metal Pola Orbis 1.5 Technologies 1.5
Sysmex 2.1 Mining 2.1 Mercari 1.1 TKP 1.3
Tokyo Recruit Tsubaki
Tatemono 1.7 Holdings 1.7 Raksul 0.9 Nakashima 1.0
Rohm 1.5 MonotaRO 1.7 Shimano 0.8 Oisix * 0.8
Nifco 1.3 Nidec 1.7 Sugi 0.8 Seria * 0.8
Chugoku
Marine
SMC 0.9 Istyle 1.5 Makita 0.6 Paints 0.6
Murata Noritsu Shima Seiki
Inpex 0.8 Manufacturing 1.5 Koki 0.4 * 0.5
Digital
Garage 0.5 Colopl 1.5 Bengo4.com 0.3 BASE 0.4
Lifull 0.1 Topcon 1.3 Rizap 0.3 Pigeon* 0.4
========== ============ =========== ============
Total 25.6 Keyence 1.0 Total 18.0 Freee K.K.* 0.4
========== ============ =========== ============ ============= ============
Outsourcing 0.9 Total 19.7
============= ============
Toyota Tsusho 0.8
Broadleaf 0.7
Iida 0.7
Park24 0.6
Infomart 0.5
PeptiDream 0.4 * Stocks
bought
within
the past
year.
Secom 0.4
Nippon Ceramic 0.4
Sawai
Pharmaceutical 0.3
=============== ============
Total 36.7
=============== ============
List of Investments at 31 August 2022
Value
31 August Absolute Relative
2022 % of total performance performance
Name Sector GBP'000 investments % %
===================== ============================== ============ =================== ============= =============
Information, communication
SoftBank and utilities 46,440 5.0 (15.1) (11.6)
Electricals and
FANUC electronics 31,699 3.4 (10.4) (6.7)
SBI Holdings Financials 31,558 3.4 0.6 4.7
Information, communication
GMO Internet and utilities 29,197 3.1 (13.1) (9.6)
Manufacturing and
Bridgestone machinery 29,184 3.1 2.2 6.3
Sumitomo Mitsui
Trust Financials 28,945 3.1 17.3 22.0
Calbee Pharmaceuticals and food 27,394 2.9 (3.2) 0.7
MS&AD Insurance Financials 27,235 2.9 14.2 18.8
Misumi Commerce and services 26,335 2.8 (25.4) (22.4)
CyberAgent Commerce and services 25,834 2.8 (36.1) (33.5)
Electricals and
Sony electronics 25,431 2.7 (7.7) (4.0)
Manufacturing and
Kubota machinery 24,429 2.6 (8.8) (5.1)
Manufacturing and
DENSO machinery 24,243 2.6 (5.2) (1.3)
Itochu Commerce and services 24,180 2.6 11.7 16.2
mixi Commerce and services 23,922 2.6 (7.5) (3.7)
Rakuten Commerce and services 20,924 2.2 (44.8) (42.6)
Electricals and
Sysmex electronics 19,510 2.1 (35.2) (32.6)
Sumitomo Metal Chemicals and other
Mining materials 19,411 2.1 2.8 7.0
Manufacturing and
Nintendo machinery 19,043 2.1 11.9 * 18.7 *
Manufacturing and (28.2)
Shiseido machinery 18,347 2.0 (34.2) * *
Chemicals and other
Unicharm materials 17,942 1.9 (6.7) (2.9)
Recruit Holdings Commerce and services 16,256 1.7 (35.3) (32.6)
MonotaRO Retail 16,179 1.7 (2.2) 1.7
Electricals and
Nidec electronics 15,861 1.7 (30.4) (27.6)
Real estate and
Tokyo Tatemono construction 15,389 1.7 19.8 24.7
Manufacturing and
Sato machinery 15,047 1.6 (31.2) (28.4)
Manufacturing and
DMG Mori machinery 14,888 1.6 (10.5) (6.9)
Chemicals and other
Pola Orbis materials 14,188 1.5 (38.1) (35.6)
Electricals and
Rohm electronics 13,787 1.5 (5.8) (2.0)
Information, communication
Istyle and utilities 13,696 1.5 15.3 19.9
Electricals and
Murata Manufacturing electronics 13,614 1.5 (21.3) (18.2)
Information, communication
Colopl and utilities 13,514 1.5 (18.9) (15.7)
Information, communication
GA Technologies and utilities 13,417 1.5 (19.6) (16.4)
Manufacturing and
Topcon machinery 12,204 1.3 (3.0) 0.9
Chemicals and other
Nifco materials 11,942 1.3 (13.3) (9.8)
Real estate and
TKP construction 11,841 1.3 29.2 34.5
Information, communication
Mercari and utilities 9,958 1.1 (60.6) (59.0)
Electricals and
Keyence electronics 9,467 1.0 (25.1) (22.0)
Manufacturing and
Tsubaki Nakashima machinery 8,940 1.0 (27.5) (24.6)
Outsourcing Commerce and services 8,730 0.9 (38.1) (35.6)
Manufacturing and
SMC machinery 8,505 0.9 (10.6) (7.0)
Information, communication
Raksul and utilities 8,023 0.9 (65.2) (63.8)
(31.3)
Oisix Retail 7,885 0.8 (31.5) * *
Toyota Tsusho Commerce and services 7,447 0.8 (2.9) 1.1
Manufacturing and
Shimano machinery 7,294 0.8 (27.6) (24.7)
Sugi Retail 7,227 0.8 (33.9) (31.3)
Seria Retail 7,157 0.8 6.0 * 1.2 *
Chemicals and other
Inpex materials 7,009 0.8 107.6 116.0
Information, communication
Broadleaf and utilities 6,899 0.7 (7.0) (3.2)
Real estate and
Iida construction 6,731 0.7 (26.6) (23.7)
Manufacturing and
Makita machinery 5,863 0.6 (50.4) (48.4)
Real estate and
Park24 construction 5,700 0.6 (11.9) (8.3)
Chugoku Marine Chemicals and other
Paints materials 5,106 0.6 (1.7) * 6.1 *
Information, communication
Digital Garage and utilities 5,042 0.5 (26.6) (23.7)
Manufacturing and
Shima Seiki machinery 4,887 0.5 16.5 * 12.4 *
Infomart Commerce and services 4,183 0.5 (59.4) (57.8)
Manufacturing and
Noritsu Koki machinery 4,139 0.4 10.5 15.0
Manufacturing and
Pigeon machinery 4,110 0.4 28.2 * 16.8 *
PeptiDream Pharmaceuticals and food 4,007 0.4 (59.5) (57.8)
Information, communication
BASE and utilities 3,662 0.4 (74.4) (73.4)
Secom Commerce and services 3,573 0.4 2.1 6.2
Information, communication
freee K.K. and utilities 3,323 0.4 6.0 * 1.9 *
Electricals and
Nippon Ceramic electronics 3,275 0.4 (15.1) (11.7)
Bengo4.com Commerce and services 2,984 0.3 (47.9) (45.8)
Rizap Commerce and services 2,838 0.3 (27.0) (24.0)
Sawai Pharmaceutical Pharmaceuticals and food 2,755 0.3 (20.5) (17.3)
Lifull Commerce and services 609 0.1 (53.3) (51.4)
===================== ============================== ============ =================== ============= =============
Total investments 930,354 100.0
===================================================== ============ =================== ============= =============
Net liquid assets 10,059
===================================================== ============ =================== ============= =============
Total assets # 940,413
===================================================== ============ =================== ============= =============
Bank loans (149,407)
===================================================== ============ =================== ============= =============
Equity shareholders' funds 791,006
===================================================== ============ =================== ============= =============
Absolute and relative performance has been calculated on a total
return basis over the period 1 September 2021 to 31 August 2022.
For investments held for part of the year, the return is for the
period they were held. Absolute performance is in sterling terms;
relative performance is against TOPIX total return (in sterling
terms).
* Figures relate to part period returns.
# Total assets comprise all assets held less all liabilities
other than liabilities in the form of borrowings. See Glossary of
Terms and Alternative Performance Measures at the end of this
announcement.
Source: Baillie Gifford/Statpro and relevant underlying index
providers. See disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Income Statement
For the year ended 31 August
2022 2022 2022 2021 2021 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================== ======== ========= ================ ======== ======== ================
(Losses)/gains on investments - (174,357) (174,357) - 147,763 147,763
Currency gains - 8,222 8,222 - 5,560 5,560
Income (note 2) 20,075 - 20,075 17,224 - 17,224
Investment management fee
(note 3) (4,802) - (4,802) (5,450) - (5,450)
Other administrative expenses (742) - (742) (668) - (668)
=============================== ======== ========= ================ ======== ======== ================
Net return before finance
costs and taxation 14,531 (166,135) (151,604) 11,106 153,323 164,429
=============================== ======== ========= ================ ======== ======== ================
Finance costs of borrowings (1,866) - (1,866) (2,047) - (2,047)
=============================== ======== ========= ================ ======== ======== ================
Net return before taxation 12,665 (166,135) (153,470) 9,059 153,323 162,382
=============================== ======== ========= ================ ======== ======== ================
Tax on ordinary activities (2,004) - (2,004) (1,723) - (1,723)
=============================== ======== ========= ================ ======== ======== ================
Net return after taxation 10,661 (166,135) (155,474) 7,336 153,323 160,659
=============================== ======== ========= ================ ======== ======== ================
Net return per ordinary
share (note 4) 11.31p (176.19p) (164.88p) 7.89p 164.97p 172.86p
=============================== ======== ========= ================ ======== ======== ================
The total column of this statement is the profit and loss
account of the Company. The supplementary revenue and capital
return 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 total comprehensive
income for the year.
Balance Sheet
At 31 August 2022 At 31 August 2021
GBP'000 GBP'000 GBP'000 GBP'000
======================================== ================ =================== =============== ====================
Fixed assets
Investments held at fair value through
profit or loss 930,354 1,053,673
======================================== ================ =================== =============== ====================
Current assets
Debtors 2,185 2,111
Cash and cash equivalents 11,017 44,289
======================================== ================ =================== =============== ====================
13,202 46,400
======================================== ================ =================== =============== ====================
Creditors
Amounts falling due within one year (94,895) (2,471)
Net current (liabilities)/assets (81,693) 43,929
======================================== ================ =================== =============== ====================
Total assets less current liabilities 848,661 1,097,602
======================================== ================ =================== =============== ====================
Creditors
Amounts falling due after more than one
year (note 6) (57,655) (142,200)
======================================== ================ =================== =============== ====================
Net assets 791,006 955,402
======================================== ================ =================== =============== ====================
Capital and reserves
Share capital 4,717 4,717
Share premium account 213,902 213,902
Capital redemption reserve 203 203
Capital reserve 556,414 725,811
Revenue reserve 15,770 10,769
======================================== ================ =================== =============== ====================
Equity shareholders' funds 791,006 955,402
======================================== ================ =================== =============== ====================
Net asset value per ordinary share* 842.4p 1,012.8p
======================================== ================ =================== =============== ====================
Ordinary shares in issue (note 8) 93,899,459 94,328,209
======================================== ================ =================== =============== ====================
* See Glossary of Terms and Alternative Performance Measures at the end of this announcement.
Statement of Changes in Equity
For the year ended 31 August 2022
Share Capital
premium redemption Capital Revenue Shareholders'
Share capital account reserve * reserve reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== =============== ======== =========== =========== ========= ===============
Shareholders' funds at 1 September
2021 4,717 213,902 203 725,811 10,769 955,402
Shares bought back - - - (3,262) - (3,262)
Net return on ordinary activities
after taxation - - - (166,135) 10,661 (155,474)
Dividends paid in the year - - - - (5,660) (5,660)
=================================== =============== ======== =========== =========== ========= ===============
Shareholders' funds at 31
August 2022 4,717 213,902 203 556,414 15,770 791,006
=================================== =============== ======== =========== =========== ========= ===============
For the year ended 31 August 2021
Share Share Capital Capital Revenue Shareholders'
Capital premium reserve * reserve reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======== ======== ======== ========== ======== =============
Shareholders' funds at 1 September
2020 4,621 190,939 203 569,059 7,567 772,389
Shares issued 96 22,963 - 3,429 - 26,488
Net return on ordinary activities
after taxation - - - 153,323 7,336 160,659
Dividends paid in the year - - - - (4,134) (4,134)
=================================== ======== ======== ======== ========== ======== =============
Shareholders' funds at 31
August 2021 4,717 213,902 203 725,811 10,769 955,402
=================================== ======== ======== ======== ========== ======== =============
* The capital reserve includes investment holding gains of
GBP137,669,000 (2021 - GBP330,848,000). The revenue reserve and the
capital reserve (to the extent it constitutes realised profits) are
distributable.
Cash Flow Statement
At 31 August 2022 At 31 August 2021
GBP'000 GBP'000 GBP'000 GBP'000
============================================================== ========= ======== ========= ========
Cash flows from operating activities
Net return on ordinary activities before taxation (153,470) 162,382
Net losses/(gains) on investments 174,357 (147,763)
Currency gains (8,222) (5,560)
Finance cost of borrowings 1,866 2,047
Overseas withholding tax (1,996) (1,626)
Changes in debtors and creditors (284) (726)
Cash from operations 12,251 8,754
Interest paid (1,827) (2,066)
============================================================== ========= ======== ========= ========
Net cash inflow from operating activities 10,424 6,688
============================================================== ========= ======== ========= ========
Cash flows from investing activities
Acquisitions of investments (197,244) (199,460)
Disposals of investments 145,489 99,611
Exchange differences on settlement of investment transactions 1,102 343
Net cash outflow from investing activities (50,653) (99,506)
============================================================== ========= ======== ========= ========
Cash flows from financing activities
Shares (bought back)/issued (1,709) 26,502
Equity dividends paid (5,660) (4,134)
Bank loans drawn down 16,189 -
Net cash inflow from financing activities 8,820 22,368
============================================================== ========= ======== ========= ========
Decrease in cash and cash equivalents (31,409) (70,450)
Exchange movements (1,863) (4,003)
Cash and cash equivalents at start of period 44,289 118,742
============================================================== ========= ======== ========= ========
Cash and cash equivalents at end of period* 11,017 44,289
============================================================== ========= ======== ========= ========
* Cash and cash equivalents represent cash at bank and short
term money market deposits repayable on demand.
Notes to the Financial Statements
1. The Financial Statements for the year to 31 August 2022 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.
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 and derivative financial
instruments 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 Board has, in
particular, considered the impact of heightened market volatility
during the Covid-19 pandemic and over recent months due to
macroeconomic and geopolitical concerns, including rising inflation
and interest rates and the Russia-Ukraine war. It has reviewed the
results of specific leverage and liquidity stress testing and does
not believe the Company's going concern status is affected. In
addition, the Company is subject to an annual continuation vote
which in previous years has been passed with a significant
majority. The Directors have no reason to believe that the vote
will not continue to be in favour based on their assessment of the
Company's performance and the views collated from shareholders. The
Company's assets, the majority of which are investments in quoted
securities which are readily realisable, exceed its liabilities
significantly. All borrowings require the prior approval of the
Board. Gearing levels and compliance with borrowing covenants are
reviewed by the Board on a regular basis.
The Company has 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, Depositary and Custodian, Registrar, Auditor and
Broker, are not experiencing significant operational difficulties
affecting their respective services to the Company.
Accordingly, the Financial Statements have been prepared on a
going concern basis as it is the Directors' opinion, having
assessed the principal and emerging risks and other matters
including the impact of the Covid-19 pandemic set out in the
Viability Statement on page 11 of the Annual Report and Financial
Statements which assesses the prospects of the Company over a
period of five years, notwithstanding the Company has a net current
liability of GBP81,693,000, that the Company will meet its
liabilities as they fall due 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 AIC's Statement of Recommended Practice 'Financial Statements
of Investment Trust Companies' issued in October 2019.
In order to better reflect the activities of the Company and in
accordance with guidance issued by the AIC, supplementary
information which analyses the Income Statement between items of a
revenue and capital nature has been presented.
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.
The Directors consider the Company's functional and presentation
currency to be sterling, see consideration in accounting policy (j)
on page 48 of the Annual Report and Financial Statements , as the
Company's shareholders are predominantly based in the UK, the
Company pays its dividends and expenses in sterling and the Company
is subject to the UK's regulatory environment and is UK based.
2. Income
2022 2021
GBP'000 GBP'000
======================== ================= =================
Income from investments
Overseas dividends 20,073 17,224
Other income
Miscellaneous income 2 -
======================== ================= =================
Total income 20,075 17,224
======================== ================= =================
3. Investment Management Fee - all charged to revenue
2022 2021
GBP'000 GBP'000
========================== ================= =================
Investment management fee 4,802 5,450
========================== ================= =================
Details of the Investment Management Agreement are disclosed on
page 26 of the Annual Report and Financial Statements. The annual
management fee is 0.75% on the first GBP50 million of net assets,
0.65% on the next GBP200 million of net assets and 0.55% on the
remaining net assets, calculated and payable quarterly.
4. Net Return per Ordinary Share
2022 2022 2022 2021 2021 2021
Revenue Capital Total Revenue Capital Total
=========================== ============= ============ =============== ============= =========== ==============
Net return on ordinary
activities after taxation 11.31p (176.19p) (164.88p) 7.89p 164.97p 172.86p
=========================== ============= ============ =============== ============= =========== ==============
Revenue return per ordinary share is based on the net revenue
return after taxation of GBP10,661,000 (2021 - GBP7,336,000), and
on 94,292,038 (2021 - 92,939,322) ordinary shares, being the
weighted average number of ordinary shares in issue (excluding
treasury shares) during each year.
Capital return per ordinary share is based on the net capital
loss for the financial year of GBP166,135,000 (2021 - net capital
return GBP153,323,000), and on 94,292,038 (2021 - 92,939,322)
ordinary shares, being the weighted average number of ordinary
shares in issue (excluding treasury shares) during each year.
There are no dilutive or potentially dilutive shares in
issue.
5. Ordinary Dividends
2022 2021 2022 2021
GBP'000
========================================= ===== ======= ================= =======
Amounts recognised as distributions in
the year:
Previous year's final dividend (paid 21
December 2021) 6.00p 4.50p 5,660 4,134
========================================= ===== ======= ================= =======
2022 2021 2022 2021
GBP'000 GBP'000
======================================== ======= ======= ================= =================
Dividends paid and payable in respect
of the year:
Current year's proposed final dividend
(payable 21 December 2022) 9.00p 6.00p 8,451 5,660
======================================== ======= ======= ================= =================
If approved, the recommended final dividend will be paid on 21
December 2022 to shareholders on the register at close of business
on 11 November 2022. The ex-dividend date is 10 November 2022.
Further information can be found in the Dividend section of the
Chairman's Statement.
6. Total borrowings at 31 August 2022 were Yen24.1 billion (2021
- Yen21.5 billion) and are detailed in notes 11 and 12 on page 51
of the Annual Report and Financial Statements
7. Transaction costs incurred on the purchase and sale of
investments are added to the purchase costs or deducted from the
sales proceeds, as appropriate. During the year, transaction costs
on purchases and sales amounted to GBP70,000 (2021 - GBP62,000) and
GBP66,000 (2021 - GBP50,000) respectively.
8. In the year to 31 August 2022, 428,750 shares with a nominal
value of GBP22,000, representing 0.5% of the issued share capital
at 31 August 2021, were bought back at a cost of GBP3,262,000 and
held in treasury (2021 - nil). At 31 August 2022 the Company had
authority to buy back 13,711,048 ordinary shares. Over the period
from 1 September to 17 October a further 241,845 shares have been
bought back and held in treasury at a cost of GBP1,807,000.
In the year to 31 August 2022, the Company sold from treasury no
ordinary shares (2021 - 566,716 shares, at a premium to net asset
value, with a nominal value of GBP28,335.80 raising net proceeds of
GBP6,183,000). The Company issued no further ordinary shares (2021
- 1,903,284 shares, at a premium to net asset value raising
proceeds of GBP20,319,000). As at 31 August 2022 the Company had
the authority to issue 9,432,821 ordinary shares. Over the period
from 1 September 2022 to 17 October 2022 the Company has issued no
further shares.
9. The financial information set out above does not constitute
the company's statutory accounts for the years ended 31 August 2022
or 2021 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the registrar of companies, and those
for 2022 will be delivered in due course. The auditor has reported
on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Glossary of Terms and Alternative Performance Measures (APM)
Total Assets
The total value of all assets held less all liabilities (other
than liabilities in the form of borrowings).
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 (excluding treasury shares).
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.
31 August 31 August
2022 2021
=========================================================== ========= =========
Net asset value per share (borrowings
at par value) (a) 842.4p 1,012.8p
Share price (b) 774.0p 1,022.0p
====================================== =================== ========= =========
((b) - (a)) ÷
(Discount)/premium (a) (8.1%) 0.9%
====================================== =================== ========= =========
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.
2022 2021
2022 Share 2021 Share
NAV Price NAV Price
================================== =================== =================== =================== ===================
Closing NAV per
share/share
price (a) 842.4p 774.0p 1,012.8p 1,022.0p
Dividend adjustment
factor
* (b) 1.0058 1.0059 1.0046 1.0046
Adjusted closing NAV
per (c) = (a) x
share/share price (b) 847.3p 778.6p 1,017.5p 1,026.7p
Opening NAV per
share/share
price (d) 1,012.8p 1,022.0p 840.8p 817.0p
==================== ============ =================== =================== =================== ===================
((c) ÷
Total return (d)) -1 (16.3%) (23.8%) 21.0% 25.7%
==================== ============ =================== =================== =================== ===================
* The dividend adjustment factor is calculated on the assumption
that the dividend of 6.00p (2021 - 4.50p) paid by the Company
during the year was invested into shares of the Company at the cum
income NAV per share/share price, as appropriate, at the
ex-dividend date.
Ongoing Charges (APM)
The total expenses (excluding borrowing costs) incurred by the
Company as a percentage of the average net asset value.
2022 2021
GBP'000 GBP'000
========================================================= ===================== =====================
Investment management fee 4,802 5,450
Other administrative expenses 742 668
========================================================= ===================== =====================
Total expenses (a) 5,544 6,118
========================================================= ===================== =====================
Average net asset value * (b) GBP843,789 GBP931,054
========================================================= ===================== =====================
Ongoing charges (a) ÷ (b) expressed as a percentage 0.66% 0.66%
========================================================= ===================== =====================
* Average of daily net asset values calculated during the
year.
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. The level of
gearing can be adjusted through the use of derivatives which affect
the sensitivity of the value of the portfolio to changes in the
level of 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 as a
percentage of shareholders' funds.
2022 2021
========================================== ============================== =================
Potential Potential
Gearing* Gearing ** Gearing* Gearing *
GBP'000 GBP'000 GBP'000 *
GBP'000
============================== ========== ================== ========== =================
Borrowings (a) 149,407 149,407 142,200 142,200
Cash and cash equivalents (b) 11,017 - 44,289 -
Shareholders' funds (c) 791,006 791,006 955,402 955,402
============================== ========== ================== ========== =================
17.5% 18.9% 10.2% 14.9%
============================== ========== ================== ========== =================
* Gearing: ((a) - (b)) divided by (c), expressed as a
percentage.
** Potential gearing: (a) divided by (c), expressed as a
percentage.
2021 comparative figures have been updated for consistency.
Leverage (APM)
For the purposes of the UK 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.
2022 2021
======================================= ================================== ===============================
Commitment Commitment
Gross method method Gross method method
GBP'000 GBP'000 GBP'000 GBP'000
======================================= ====================== ========== =================== ==========
Borrowings 149,407 149,407 142,200 142,200
Sterling cash 60 - 34 -
======================================= ====================== ========== =================== ==========
(a) 149,347 149,407 142,166 142,200
======================================= ====================== ========== =================== ==========
Shareholders'
funds (b) 791,006 791,006 955,402 955,402
============== ======================= ====================== ========== =================== ==========
((a) + (b)) ÷ (b)
Leverage expressed as a ratio 1.19:1 1.19:1 1.15:1 1.15:1
============== ======================= ====================== ========== =================== ==========
2021 comparative figures have been updated for consistency.
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.
Sustainable Finance Disclosure Regulation ('SFDR')
The EU Sustainable Finance Disclosure Regulation ('SFDR') does
not have a direct impact in the UK due to Brexit, however, it
applies to third-country products marketed in the EU. As The
Baillie Gifford Japan Trust PLC is marketed in the EU by the
AIFM, Baillie Gifford & Co Limited, via the National Private
Placement Regime ('NPPR') the following disclosures have been
provided
to comply with the high-level requirements of SFDR.
The AIFM has adopted Baillie Gifford & Co's Governance and
Sustainable Principles and Guidelines as its policy on integration
of sustainability risks in investment decisions.
Baillie Gifford & Co's approach to investment is based on
identifying and holding high quality growth businesses that enjoy
sustainable competitive advantages in their marketplace.
To do this it looks beyond current financial performance,
undertaking proprietary research to build an in-depth knowledge of
an individual company and a view on its long-term prospects. This
includes
the consideration of sustainability factors (environmental,
social and/or governance matters) which it believes will positively
or negatively influence the financial returns of an investment.
More details on the Managers' approach to sustainability can be
found in the Governance and Sustainability Principles and
Guidelines document, available publicly on the Baillie Gifford
website (bailliegifford.com/en/uk/about-us/literature-library/
corporate-governance/our-stewardshipapproach-esg-
principles-and-guidelines-2022/).
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework of
criteria for environmentally sustainable economic activities in
respect of six environmental objectives. It builds on the
disclosure requirements under SFDR by introducing additional
disclosure obligations in respect of alternative investment funds
that invest in an economic activity that contributes to an
environmental objective.
The Company does not commit to make sustainable investments as
defined under SFDR. As such, the underlying investments do not take
into account the EU criteria for environmentally sustainable
economic activities.
++ 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.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
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- ends -
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FR DBBDGDGBDGDI
(END) Dow Jones Newswires
October 19, 2022 02:00 ET (06:00 GMT)
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