TIDMBGFD
RNS Number : 9333U
Baillie Gifford Japan Trust PLC
31 March 2023
RNS Announcement
The Baillie Gifford Japan Trust PLC
Legal Entity Identifier: 54930037AGTKN765Y741
Regulated Information Classification: Interim Financial
Report
Results for the six months to 28 February 2023
The following is the unaudited Interim Financial Report for the
six months to 28 February 2023 which was approved by the Board on
30 March 2023.
In the six months to 28 February 2023, The Baillie Gifford Japan
Trust's net asset value total return per share was -1.2%. The share
price total return was -0.6%. The TOPIX total return (in sterling
terms) was +0.6%.
- There have been three positive macroeconomic developments over
the past six months. First, Japan has reopened its borders
following Covid both to business travellers and to tourists.
Second, Japan has experienced inflation and in particular the wage
rises in the last few months exceed anything we have seen in Japan
for the last 30 years. Finally, there are signs that Japan is
moving away from zero interest rates.
- During the period three new holdings were added to the
portfolio. These were Kao (Japan's leading manufacturer of
household products), Demae-can (a leading Japanese online food
ordering and delivery company) and Z Holdings (an online
advertising and e-commerce business).
- There remain many exciting growth businesses in Japan and
expectations embedded in share prices seem low, creating firm
foundations for long-term investment.
- The Company's objective is to achieve long-term capital
growth. The net asset value total return per share of +4.9% over
the five year period compares with the TOPIX total return of
+13.2%.
Summary of Unaudited Results*
28 February 31 August %
2023 2022 Change
Shareholders' funds GBP770.1m GBP791.0m
Net asset value per share* 822.6p 842.4p (2.4)
Share price 761.0p 774.0p (1.7)
(Discount)/premium* (7.5%) (8.1%)
Active share* 83% 82%
--------------------------- ----------- --------- -------
Six months Six months
to to
28 February 28 February
2023 2022
-------------------------------- ------------ ------------
Total return (%)*
Net asset value per share (1.2) (14.8)
Share price (0.6) (18.3)
TOPIX total return (in sterling
terms) 0.6 (4.9)
-------------------------------- ------------ ------------
Six months Six months
to to
28 February 28 February
2023 2022
--------------------------- ------------ ------------
Revenue earnings per share 5.28p 5.17p
--------------------------- ------------ ------------
Six months to 28 Year to 31 August
February 2023 2022
-------------------- ------------------ -------------------
Period's high and
low High Low High Low
Net asset value
per share 875.8p 758.9p 1,105.7p 707.6p
Share price 827.0p 703.0p 1,106.0p 662.0p
(Discount)/premium* 0.2% (11.4%) 2.3% (9.6%)
-------------------- -------- -------- ---------- -------
* Alternative performance measures, see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
Source: Baillie Gifford/Refinitiv and relevant underlying data
providers. See disclaimer at end of this announcement.
Interim Management Report
The six month period to the end of February 2023 was a
remarkably uneventful one for returns. During the period the NAV
total return of your Company was -1.2% whilst the share price
return was -0.6%. The TOPIX total return (in sterling terms) was
+0.6% during the same period.
There is also little to comment on in the performance of
individual holdings. The three largest positive contributors to
performance were Sumitomo Mitsui Trust (+0.5%), not holding Toyota
Motor (+0.5%) and Shiseido (+0.4%). The three largest negative
contributors to performance were GA Technologies (-0.6%), MonotaRO
(-0.5%) and not holding Mitsubishi UFJ Financial Group (-0.5%).
Finally gearing contributed +0.1% to performance. These
contributions are small and unremarkable relative to those that
have been experienced in the past.
More interesting are several macro-economic developments over
the past six months.
First, Japan has re-opened its borders, initially to business
travel and then to tourists. This reopening improves the business
prospects of many domestic holdings which have been starved of
foreign visitors. It is also likely to have positive effects on
societal openness and ideas flow. Although it has taken longer in
Asia than the West, we are now firmly past the pandemic phase of
Covid.
Second, Japan has clearly experienced inflation. This is a
continuation of its long post-bubble journey from deflation,
through a period in recent years with neither significant inflation
nor deflation, finally to positive inflation. Inflation can be
currently seen in headline numbers, in raw material and producer
prices, in consumer products, and perhaps most significantly in
wages. The wage rises that we have seen being announced in the past
few months alone exceed anything that we have seen in Japan for the
past 30 years.
Third, there are signs that Japan may be moving away from zero
interest rates, which is the logical expectation as inflation
becomes embedded. The Bank of Japan made a small adjustment to its
yield curve control policy in December, announcing that it would
target 10-year Japanese Government Bonds to yield up to 0.5%
compared to the previous limit of 0.25%. Subsequently Mr Kuroda
stepped down as Governor of the Bank of Japan and Mr Ueda has taken
over.
Meantime we have continued with the steady process of trying to
improve the long-term prospects of the portfolio. During the period
we bought three new holdings and sold three holdings.
The new holdings are Kao, Demae-can and Z Holdings. Kao is
Japan's leading manufacturer of household products. The segments in
which it operates have attractive characteristics of steady growth
combined with strong entry barriers due to scale, brands and
control of distribution. In the shorter term the company has
experienced challenges from the lingering impacts of Covid
restrictions and having to deal with rising input costs. However,
we believe the company has the potential to grow its earnings
substantially over the next decade by expanding into surrounding
Asian markets and by improving the profitability of its domestic
businesses. Demae-can is a leading Japanese online food ordering
and delivery company. Following a review of the company we
concluded that there remains a significant profit opportunity at
scale. Meanwhile, Demae-can has continued to grow its sales rapidly
and has put in place measures to strengthen its accounting systems
which had been a previous concern. Given our updated view of the
potential for the company, and lower expectations discounted in the
share price, we decided to take a small holding again. Z Holdings
was formed from the combination of Yahoo Japan and Line and has
decent positions in online advertising and e-commerce. It also has
exciting prospects in cashless payments through its large holding
in PayPay. We expect cashless payments to show significant growth
and PayPay to remain a dominant player. In the long-run the
combination of businesses creates the prospects for Z Holdings to
develop into a super-app comprising mutually reinforcing
opportunities.
The sold holdings were Lifull, Shimano and Inpex. Lifull is a
property aggregation website. In recent years it has suffered as a
result of competition with Suumo, the property aggregation website
of Recruit (a current holding of Japan Trust). Having come to the
view that Suumo is the stronger business, we decided to sell the
holding in Lifull. Shimano makes gears for bikes. While the company
has a strong market position we do not believe that the market will
grow rapidly enough to support high sales growth and with margins
already high we think it unlikely that they can show significant
expansion. We commented in the Annual Report on the sale of Inpex
following strong share price performance post the Russian invasion
of Ukraine.
We maintained our optimistic stance about the potential for
investment in Japan to generate good returns. Backing this
conviction net gearing ended the period at 18.0%, little-changed
from the position six months prior. There remain many exciting
growth businesses in Japan and expectations embedded in share
prices seem low, creating firm foundations for long-term
investment.
The principal risks and uncertainties facing the Company are set
out are set out in Note 11 below.
Past performance is not a guide to future performance
Total return information sourced from Refinitiv/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
30 March 2023
Equity Portfolio by Growth Category as at 28 February 2023
Secular Growth Special
Growth(1) Stalwarts(2) Situations(3) Cyclical Growth(4)
================== ===== ===================== ===== ================ ===== ===================== =====
% of % of % of % of
total investments total investments total investments total investments
========================= ============================ ======================= ============================
Sumitomo Mitsui
SBI 3.6 Calbee 2.9 SoftBank 4.7 Trust 3.6
MS&AD Insurance
Fanuc 3.5 Shiseido 2.7 Group 2.9 Bridgestone 3.0
GMO Internet 3.1 Uni Charm 2.0 Sony 2.9 Itochu 2.7
Sumitomo Metal
Misumi Group 2.7 Nintendo 1.8 Mixi 2.9 Mining 2.4
Kubota 2.5 Pola Orbis 1.8 Tokyo Tatemono 1.3 Denso 2.3
CyberAgent 2.5 Sugi 0.8 Colopl 1.2 DMG Mori 1.9
Rakuten 2.3 Kao 0.7 Rohm 1.5
Sysmex 2.0 Makita Corporation 0.7 Nifco 1.5
Sato 1.9 Park24 0.6 Murata Manufacturing 1.4
TKP 1.6 Secom 0.3 Outsourcing 1.1
Chugoku Marine
Oisix 1.5 Sawai Pharmaceutical 0.3 Paints 0.8
Recruit Holdings 1.5 Iida Group Holdings 0.8
MonotaRO 1.3 Shima Seiki 0.4
Tsubaki Nakashima
Nidec 1.3 Co 0.3
Topcon 1.2
Keyence 1.1
Raksul 1.1
SMC 1.0
GA Technologies 1.0
Mercari 0.9
Toyota Tsusho 0.9
Seria Co Ltd 0.8
Demae-can 0.7
Broadleaf 0.6
Digital Garage 0.6
Istyle 0.6
Pigeon 0.5
Peptidream 0.5
Z Holdings 0.5
freee K.K. 0.4
Noritsu Koki 0.4
Rizap 0.4
Base 0.4
Nippon Ceramic 0.4
Infomart Corp 0.3
Bengo4.com 0.2
45.8 14.6 15.9 23.7
================== ===== ===================== ===== ================ ===== ===================== =====
(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.
Twenty Largest Holdings at 28 February 2023
% of total
Name Business Value GBP'000 investments
------------------ ----------------------------------- ------------- ------------
Telecom operator and technology
SoftBank investor 42,923 4.7
SBI Online financial services 33,016 3.6
Sumitomo Mitsui Japanese trust bank and investment
Trust manager 32,942 3.6
Fanuc Robotics manufacturer 31,880 3.5
GMO Internet Internet conglomerate 27,833 3.1
Bridgestone Tyre manufacturing 27,163 3.0
MS&AD Insurance
group Insurance 26,692 2.9
Consumer electronics, films
Sony and finance 26,373 2.9
Calbee Branded snack foods 26,213 2.9
Mixi Mobile gaming 26,113 2.9
Itochu General trading firm 24,664 2.7
Shiseido Japanese cosmetics manufacturer 24,311 2.7
Online distributor of precision
Misumi Group machinery parts 24,192 2.7
Kubota Agricultural machinery 22,577 2.5
Japanese internet advertising
CyberAgent and content 22,441 2.5
Sumitomo Metal Smelting and copper, nickel
Mining and gold mining 21,810 2.4
Internet retail and financial
Rakuten services 21,231 2.3
Denso Auto parts 20,645 2.3
Sanitary napkins and baby
Uni Charm products 18,244 2.0
Sysmex Medical testing equipment 18,103 2.0
----------------- ----------------------------------- ------------- ------------
Total 519,366 57.2
------------------------------------------------------ ------------- ------------
Income Statement (Unaudited)
For the six months
ended For the six months ended
28 February 2023 28 February 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ======== ======== ======== ======== ========= =========
Gains on sales of investments - 2,984 2,984 - 18,469 18,469
Movement in investment holding
gains - (21,434) (21,434) - (165,919) (165,919)
Currency gains - 3,102 3,102 - 2,426 2,426
Income from investments and interest
receivable 9,352 - 9,352 9,612 - 9,612
Investment management fee (2,260) - (2,260) (2,540) - (2,540)
Other administrative expenses (326) - (326) (350) - (350)
===================================== ======== ======== ======== ======== ========= =========
Net return before finance costs
and taxation 6,766 (15,348) (8,582) 6,722 (145,024) (138,302)
===================================== ======== ======== ======== ======== ========= =========
Finance costs of borrowings (885) - (885) (886) - (886)
===================================== ======== ======== ======== ======== ========= =========
Net return before taxation 5,881 (15,348) (9,467) 5,836 (145,024) (139,188)
===================================== ======== ======== ======== ======== ========= =========
Tax (935) - (935) (961) - (961)
===================================== ======== ======== ======== ======== ========= =========
Net return after taxation 4,946 (15,348) (10,402) 4,875 (145,024) (140,149)
===================================== ======== ======== ======== ======== ========= =========
Net return per ordinary share
(note 5) 5.28p (16.39p) (11.11p) 5.17p (153.74p) (148.57p)
===================================== ======== ======== ======== ======== ========= =========
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.
Balance Sheet (Unaudited)
At 28 February At 31 August
2023 2022
GBP'000 GBP'000
--------------------------------------- -------------- ------------
Fixed assets
Investments held at fair value through
profit or loss (note 6) 907,040 930,354
Current assets
Debtors 3,121 2,185
Cash and cash equivalents 8,293 11,017
--------------------------------------- -------------- ------------
11,414 13,202
--------------------------------------- -------------- ------------
Creditors
Amounts falling due within one year (91,939) (94,895)
--------------------------------------- -------------- ------------
Net current liabilities (80,525) (81,693)
--------------------------------------- -------------- ------------
Total assets less current liabilities 826,515 848,661
Creditors
Amounts falling due after more than
one year:
Bank loans (note 7) (56,395) (57,655)
--------------------------------------- -------------- ------------
Net assets 770,120 791,006
--------------------------------------- -------------- ------------
Capital and reserves
Share capital 4,717 4,717
Share premium 213,902 213,902
Capital redemption reserve 203 203
Capital reserve 539,008 556,414
Revenue reserve 12,290 15,770
--------------------------------------- -------------- ------------
Shareholders' funds 770,120 791,006
--------------------------------------- -------------- ------------
Net asset value per ordinary share* 822.6p 842.4p
--------------------------------------- -------------- ------------
Ordinary shares in issue (note 8) 93,622,614 93,899,459
--------------------------------------- -------------- ------------
* See Glossary of Terms and Alternative Performance Measures at
the end of this announcement.
Statement of Changes in Equity (unaudited)
For the six months ended 28 February 2023
Capital
Share Share redemption 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 2022 4,717 213,902 203 556,414 15,770 791,006
Shares bought back - - - (2,058) - (2,058)
Net return after taxation - - - (15,348) 4,946 (10,402)
Dividends paid during the
period (note 4) - - - - (8,426) (8,426)
-------------------------- -------- -------- ----------- --------- -------- -------------
Shareholders' funds at
28 February 2023 4,717 213,902 203 539,008 12,290 770,120
-------------------------- -------- -------- ----------- --------- -------- -------------
For the six months ended 28 February 2022
Capital
Share Share redemption 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 2021 4,717 213,902 203 725,811 10,769 966,402
Net return after taxation - - - (145,024) 4,875 (140,149)
Dividends paid during the
period (note 4) - - - - (5,660) (5,660)
-------------------------- -------- -------- ----------- --------- -------- -------------
Shareholders' funds at
28 February 2022 4,717 213,902 203 580,787 9,984 809,593
-------------------------- -------- -------- ----------- --------- -------- -------------
* The capital reserve balance at 28 February 2023 includes
investment holding gains on investments of GBP116,236,000 (28
February 2022 - gains of GBP164,930,000).
Condensed Cash Flow Statement (Unaudited)
Six months Six months
to to
28 February 28 February
2023 2022
GBP'000 GBP'000
------------------------------------------- ------------ ------------
Cash flows from operating activities
Net return before taxation (9,467) (139,188)
Net losses on investments 18,450 147,450
Currency gains (3,102) (2,426)
Finance costs of borrowings 885 886
Overseas withholding tax (870) (839)
Changes in debtors and creditors (2,249) (1,439)
------------------------------------------- ------------ ------------
Cash from operations 3,647 4,444
Interest paid (901) (913)
------------------------------------------- ------------ ------------
Net cash inflow from operating activities 2,746 3,531
------------------------------------------- ------------ ------------
Cash flows from investing activities
Acquisitions of investments (29,585) (129,815)
Disposals of investments 34,763 90,781
Exchange differences on settlement
of investment transactions 446 (7)
------------------------------------------- ------------ ------------
Net cash inflow/(outflow) from investing
activities 5,624 (39,041)
------------------------------------------- ------------ ------------
Shares (bought back)/issued (note 8) (2,058) -
Equity dividends paid (note 4) (8,426) (5,660)
Bank loans drawn down 15,624 -
Bank loans repaid (16,189) -
------------------------------------------- ------------ ------------
Net cash outflow from financing activities (11,049) (5,660)
------------------------------------------- ------------ ------------
Decrease in cash and cash equivalents (2,679) (41,170)
Exchange movements (45) (641)
Cash and cash equivalents at start
of period* 11,017 44,289
------------------------------------------- ------------ ------------
Cash and cash equivalents at end of
period * 8,293 2,478
------------------------------------------- ------------ ------------
* 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 28
February 2023 comprise the statements set out on the previous pages
together with the related notes. 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 28
February 2023 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 2022.
Going Concern
Having considered the Company's principal risks and
uncertainties, as set out in Note 11, 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 over recent months due to
macroeconomic and geopolitical concerns, including inflation,
interest rates and the ongoing conflict in Ukraine, but 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 2023.
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 2022 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
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. Dividends
Six months Six months
to to
28 February 28 February
2023 2022
GBP'000 GBP'000
--------------------------------------------- ---------------- ----------------
Amounts recognised as a distribution in
the period:
Previous year's final dividend of 9.00p
paid 21 December 2022
(2022 - 6.00p paid on 21 December 2021) 8,426 5,660
--------------------------------------------- ---------------- ----------------
No interim dividend has been declared.
5. Net Return per Ordinary Share
Six months Six months
to to
28 February 28 February
2023 2022
GBP'000 GBP'000
---------------------------------------- ---------------- ----------------
Revenue return after taxation 4,946 4,875
Capital return after taxation (15,348) (145,024)
---------------------------------------- ---------------- ----------------
Total net return (10,402) (140,149)
---------------------------------------- ---------------- ----------------
Weighted average number of ordinary
shares in issue 93,667,547 94,328,209
---------------------------------------- ---------------- ----------------
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 GBP146.1 million (Yen24.1 billion) have been drawn
down under yen loan facilities which are repayable between August
2023 and November 2024 (31 August 2022 - GBP149.4 million (Yen24.1
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 276,845 shares were
bought back into Treasury (28 February 2022 - nil issued and nil
bought back). There were 705,595 shares held in Treasury at 28
February 2023 (28 February 2022 - nil). Between 1 March 2023 and 30
March 2023 the Company bought back a further 50,000 shares into
Treasury. The Company has authority remaining to buy back
13,954,276 ordinary shares.
9. Transaction Costs
Transaction costs incurred on the purchase and sale of the
investments are added to the purchase cost or deducted from the
sales proceeds, as appropriate. During the period, transaction
costs on purchases amounted to GBP12,000 (28 February 2022 -
GBP48,000) and transaction costs on sales amounted to GBP11,000 (28
February 2022 - GBP50,000).
10. Related Party Transactions
There have been no transactions with related parties during the
first six months of the current financial year that have materially
affected the financial position or the performance of the Company
during that period and there have been no changes in the related
party transactions described in the last Annual Report and
Financial Statements that could have had such an effect on the
Company during that period.
11. Principal risks and uncertainties
The principal risks facing the Company are financial risk,
investment strategy risk, discount risk, smaller company risk,
environmental, social and governance ('ESG') 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 8 to 10 of the
Company's Annual Report and Financial Statements for the year to 31
August 2022 and is available on the Company's website:
japantrustplc.co.uk.
Glossary of Terms and Alternative Performance Measures
('APM')
An alternative performance measure is a financial measure of
historical or future financial performance, financial position, or
cash flows, other than a financial measure defined or specified in
the applicable financial reporting framework. The APMs noted below
are commonly used measures within the investment trust industry and
serve to improve comparability between investment trusts.
Total Assets
Total assets less current liabilities, before deduction of all
borrowings at par value.
Net Asset Value ('NAV')
Also described as shareholders' funds, 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.
Net Current Assets
Net current assets comprise current assets less current
liabilities, excluding long-term borrowings at par value.
(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.
28 February 31 August
2023 2022
----------------------------- --------------------------- ----------- ---------
Net asset value per ordinary
share (a) 822.6p 842.4p
Share price (b) 761.0p 774.0p
----------------------------- --------------------------- ----------- ---------
(b - a) ÷ a expressed
(Discount)/premium as a percentage (7.5%) (8.1%)
----------------------------- --------------------------- ----------- ---------
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.
Feb 2023 Feb 2023 Feb 2022 Feb 2022
NAV (par) Share Price NAV (par) Share Price
------------------------------------------- ------------------- ---------- ------------ ---------- ------------
Closing NAV per share/share price (a) 822.6p 761.0p 858.3p 830.0p
Dividend adjustment factor* (b) 1.0113 1.0113 1.0058 1.0059
Adjusted closing NAV per share/share price (c) = (a) x (b) 831.9p 769.6p 863.3p 834.9p
Opening NAV per share/share price (d) 842.4p 774.0p 1,012.8p 1,022.0p
------------------------------------------- ------------------- ---------- ------------ ---------- ------------
Total return ((c ÷ d) - 1) (1.2%) (0.6%) (14.8%) (18.3%)
------------------------------------------- ------------------- ---------- ------------ ---------- ------------
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.
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 28 February 2023, the Company had total
assets of GBP916.2m (before deduction of bank loans of
GBP146.1m).
The Company is managed by Baillie Gifford, an Edinburgh based
fund management group with around GBP225.2bn under management and
advice as at 30 March 2023.
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 14 April 2023.
30 March 2023
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.
Sustainable Finance Disclosures 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
detail on the Managers' approach to sustainability can be found in
the Governance and Sustainability Principles and Guidelines
document, available publicly on the Baillie Gifford website
bailliegifford.com.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework of
criteria for environmentally sustainable economic activities in
respect of six environmental objectives. It builds on the
disclosure requirements under SFDR by introducing additional
disclosure obligations in respect of alternative investment funds
that invest in an economic activity that contributes to an
environmental objective. The Company does not commit to make
sustainable investments as defined under SFDR. As such, the
underlying investments do not take into account the EU criteria for
environmentally sustainable economic activities.
- Ends -
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END
IR EAPDFDALDEEA
(END) Dow Jones Newswires
March 31, 2023 04:26 ET (08:26 GMT)
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