TIDMBGFD
RNS Number : 1166S
Baillie Gifford Japan Trust PLC
02 November 2023
RNS Announcement
The Baillie Gifford Japan Trust PLC
Legal Entity Identifier: 54930037AGTKN765Y741
Results for the year to 31 August 2023
Regulated Information Classification: Additional regulated
information required to be disclosed under the applicable laws and
regulations.
Over the year to 31 August 2023, The Baillie Gifford Japan Trust
PLC's net asset value total return per share was (5.4%) compared to
the 6.7% total return in the TOPIX index (in sterling terms). In
this period the Company's share price total return was (4.0%).
Over the five years to the end of August 2023, the compound NAV
total return was (1.2%) and over ten years 9.3% compared to the
TOPIX return of 3.5% and 8.1% respectively.
3/4 A final dividend of 10.0p per ordinary share will be put to
shareholders for approval at the Annual General Meeting. This
represents an 11% increase on the 9.0p paid in relation to the
prior year.
3/4 As was the case last year, the Managers' biases towards
higher growth and smaller companies have both been unhelpful as the
place to be has been in more cyclical areas and this is not a
natural hunting ground for growth investors.
3/4 During the period nine new investments were made. In a
number of these cases, the Manager took advantage of the derating
of share prices in smaller growth companies. These included Vector
(public relations company), SWCC Showa (high voltage cables), Nihon
M&A (mergers and acquisitions in Japan) and Lifenet Insurance
(online life insurance). Seven positions were sold during the
period while gearing remained at approximately 17%.
3/4 The most significant development of the year from an
investment perspective has been the leap forward in artificial
intelligence large language models which the Manager expects to
provide opportunities for many of the companies within the
portfolio including, but not limited to, Softbank, Rakuten,
CyberAgent and GMO Internet.
3/4 The Managers believe that the opportunities for growth
investing in Japan are the greatest since the Global Financial
Crisis.
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 2023, the Company had total
assets of GBP864.7m (before deduction of bank loans of
GBP131.7m).
The Company is managed by Baillie Gifford, an Edinburgh based
fund management group with around GBP202.3bn under management and
advice as at 30 October 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 .
See disclaimer at the end of this announcement.
Approved by the Board on 1 November 2023
For further information please contact:
Naomi Cherry - Client Director
Baillie Gifford & Co
Tel: 0131 474 5548
Jonathon Atkins, Four Communications
Tel: 020 3103 9553 or 07872495396
Chairman's Statement
Introduction
Last year, I reported that there was a great deal of uncertainty
facing investors including the global prospects for inflation,
interest rates and bond yields but also the impact of other factors
such as Covid-19 restrictions. These restrictions were lifted in
Japan in the Autumn of 2022 and the Board visited Japan with the
Managers in May 2023 - the first Board visit since 2019. I am
pleased to report a most insightful trip where the Board had the
opportunity to observe the Managers and their process in action and
to meet with some of the most exciting companies held within the
portfolio as well as several potential future investments.
Performance
In the year to 31 August 2023, the net asset value ('NAV') total
return was (5.4%). As market sentiment remained poor, the Company's
shares continued to trade at a discount to NAV, leading to a share
price total return of (4.0%). The benchmark total return was 6.7%
over the same period.
The Company's objective is to achieve long-term capital growth,
and the NAV returns remain ahead of the benchmark on a 10 year time
horizon.
Compound annual returns to 5 years 10 years
end August (%) (%)
---------------------------------- ------- --------
Net asset value total return
* (1.2) 9.3
---------------------------------- ------- --------
Share price total return * (3.0) 8.7
---------------------------------- ------- --------
TOPIX total return * (in sterling
terms) 3.5 8.1
---------------------------------- ------- --------
In June 2023, the Board conducted a thorough analysis with the
Managers of the Company's performance over the previous five years,
looking at both process and outcomes. The Company has an explicit
growth-focused investment strategy. The vast majority of the
Company's assets are invested in companies with higher than average
growth prospects. The Board is strongly supportive of this
investment strategy; the Japanese equity market is large and rich
in opportunity but the Japanese economy itself grows slowly due to
structural factors. As such, the Board believes companies able to
demonstrate idiosyncratic growth should command a premium valuation
and outperform over time. The Manager invests on a bottom-up basis,
focusing on identifying the most attractive growth companies and
largely ignoring macro factors. However, investors should note that
there are certain market environments which do not favour growth
investing and in which the Company may be more likely to
underperform both its benchmark and more value-focused peers. While
it is not possible to be prescriptive on this issue, an environment
of rising inflation and interest rates, such as we have seen over
the past two years, tends to be unfavourable for growth stocks'
relative performance.
Gearing and Borrowing
The Board believes that borrowing will enhance returns to
investors over the long-term. Net gearing fell very slightly from
17.5% to 17.0% over the year to 31 August 2023. The Board is
pleased to announce that in August 2023 the Company entered into a
new two year floating rate loan facility with The Bank of New York
Mellon for Yen15 billion, being an increase of Yen2.8 billion on
the SMBC loan that was repaid in August 2023. The new facility was
used to repay the SMBC facility and Mizuho Bank revolving credit
facility with the balance being available to the Managers to
deploy.
Dividend
The Board is recommending a dividend of 10p per share, an
increase of 11.1% on last year's 9p. This will be put to
shareholders for approval at the Annual General Meeting to be held
on 12 December 2023 and, if approved, will be paid on 20 December
to shareholders on the register at close of business on 17 November
2023. A dividend reinvestment plan ('DRIP') is available to
shareholders who would prefer to 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 29 November
2023.
Share Capital and Discount Management
Over the course of the year, the share price moved from a 8.1%
discount to NAV to a 6.7% discount to NAV. During this period, the
Company bought back 851,845 shares at a cost of approximately
GBP6.4 million. 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. Further details
of the buy-back facility can be found on page 53 of the Annual
Report and Financial Statements.
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
2024.
Regulatory Update
The FCA also introduced a new set of rules labelled as 'Consumer
Duty'. Investment Trusts, like the Company, are not directly
impacted by this but Baillie Gifford, as the Company's Manager is.
The Duty raises the standard of care that FCA regulated firms, like
Baillie Gifford, are expected to provide to retail consumers and
includes a number of obligations that need to be met. One of these
obligations is to undertake an Assessment of Value on the
'products' managed. The relevant report on the Company has
concluded that it does provide value, meaning that distributors
will be able to undertake their assessments and continue to make
shares in the Company available to current and potential
shareholders.
Annual General Meeting
The Company's Annual General Meeting has been scheduled to take
place on 12 December 2023 at Baillie Gifford's offices in
Edinburgh. The Board encourages all shareholders to attend in
person but also to exercise their votes by completing and
submitting a form of proxy. We encourage shareholders to monitor
the Company's website at japantrustplc.co.uk where any updates will
be posted and market announcements will 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 to submit these by
email to trustenquiries@bailliegifford.com or call 0800 917
2112.
Information on the resolutions can be found on pages 97 and 98
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
favourable outlook for the Japan Trust. To that end, my fellow
Directors and I intend, where possible, to vote our own
shareholdings in favour of the resolution and hope that all
shareholders will feel disposed to do likewise.
Board
During the year the Board undertook a recruitment process
seeking to appoint an additional independent non-executive
director. The Board was pleased to announce the appointment of
Patricia Lewis with effect from 1 August 2023. Patricia will stand
for election at the upcoming Annual General Meeting.
The Board is cognisant of good corporate governance practice and
as such I should also like to mention my intention to step down
from the Board at the Annual General Meeting to be held in 2025.
This would mean that I serve 10 years in total on the Board with
just over three of those years as Chairman, a role to which I was
appointed following the untimely death of Keith Falconer.
Outlook
The portfolio contains many attractive growth companies. Your
Board is confident in the long-term, and hopeful in the
shorter-term, regarding the prospects for the Company.
David Kidd
Chairman
1 November 2023
* Alternative Performance Measure - see Glossary of Terms and
Alternative Performance Measures on at the end of this
announcement.
The benchmark is the TOPIX total return (in sterling terms).
Source: Refinitiv/Baillie Gifford and relevant underlying index
providers. See disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Managers' Review
Whilst there remain various global challenges, including war and
other geopolitical tensions, high inflation levels and climate
challenges the most significant development of the year from an
investment perspective has been the leap forward in artificial
intelligence ('AI') large language models, as typified by ChatGPT.
The investment landscape remains complex and at times contradictory
but technological progress and the investment opportunities that
flow from it remain a constant.
The last 12 months have certainly not been a vintage year for
the Company with a NAV total return of (5.4%) compared with 6.7%
for the TOPIX index, in sterling terms. Over 5 years the cumulative
NAV total return was (5.8%) and over 10 years 143.5%. This compares
to increases in the TOPIX index of 18.5% over 5 years and 116.9%
over 10 years. To be behind the index to a material extent over a 5
year horizon is disappointing to us, and doubtless to
shareholders.
As was the case last year, our biases towards higher growth and
smaller companies have both been unhelpful to us. While not our
natural hunting ground as growth investors the place to be has been
in more cyclical areas. Since there was a positive return in Yen,
being geared made a small positive contribution to performance
(+0.9ppt). Despite the unsatisfactory overall result there is
little to say at the stock level. Two companies subtracted more
than 1.0ppt from performance, CyberAgent and Misumi, but the issue
was more that we missed out on many of the successful names.
The low returns over the past 5 years merit discussion. Has
something gone wrong with our process? Where do we get conviction
on a forward-looking basis? When will these businesses become
better appreciated?
The first point to make is that this 5 year period can be split
into two halves. In the period from August 2018 to August 2021 the
performance was positive in both absolute and relative terms.
However, this good 3 year period has been followed by 2 challenging
years. As a reminder, your Company's portfolio is very different to
the underlying market. The Trust holds no investments in around
half of the 33 industries included in the Company's benchmark
index, TOPIX. Some of the top performing sectors over the past
twelve months include iron and steel, banks, marine transportation
and construction - areas where we have little exposure. If these
stocks go up we will underperform. But our view remains that these
areas offer little fundamental opportunity for growth investors.
Another measure of how different your Company's portfolio is to the
TOPIX is the percentage of the portfolio with founder shareholders.
For The Baillie Gifford Japan Trust, 29% of the portfolio has a
founder-owner in charge compared with 8% for the TOPIX as a whole
(source: MSCI). In the long run we believe that having a founder at
the helm better aligns the interests of management and
shareholders.
Tentatively, it may be that the investment environment created
by the pandemic suited the types of businesses that we favour while
the
investment environment created by the exit from that environment
suited more cyclical businesses. The net result of this is that
performance over the 5 years is behind. However, inevitably, we are
trying to analyse a story containing large swings in opposing
directions that has not yet completed. The conclusions that we can
draw from this period will only be secure when more time has
passed, and we know what the ultimate results are.
The fundamentals of our process remain the same. Our team
remains intact with no changes to the senior investors over the
past 5 years and our approach to selecting stocks is substantially
unchanged. We continue our steady fundamental research-based
approach of trying to identify
companies with good growth prospects at a similar tempo to the
past.
We can look at the stocks in the portfolio with the worst
contributions to performance over the past 5 years. These are
CyberAgent, Rakuten, Outsourcing, Sato Holdings, and GA
Technologies. They had a negative attribution ranging from (2.1%)
to (1.1%) respectively. The first obvious question is, has
something gone wrong with these businesses? For the most recent 5
full years available these companies grew their sales by 14% p.a.,
15% p.a., 25% p.a., 5% p.a., and 64% p.a. respectively. If we
didn't know the share price return, I would certainly be more than
happy with the average underlying growth. And as a reminder, these
are the worst contributors to performance. A lot of the challenge
has come from profit growth not keeping up with sales. For example,
CyberAgent had a very successful hit in its gaming business that it
has yet to be able to better. Meanwhile, Rakuten has been rolling
out a new mobile network in Japan that has proven more costly than
we expected and has yet to reach profitability. Looking forwards we
expect CyberAgent to be able to achieve new peak profits and think
that Rakuten is past the worst of its investment phase and that
ultimately its mobile business will be successful.
Looking forward we expect continuing developments in AI to
provide opportunities for many of the companies in the portfolio.
AI can be thought of as comprising multiple layers - chips,
datacentres, models, and applications for example. Currently much
excitement has been about the opportunity in the first layer,
chips, but as time progresses we expect a broader view to be taken
about where the opportunities are.
Starting with the major portfolio holdings, SoftBank owns nearly
90% of recently re-listed ARM, which has a near-monopoly in mobile
phone chip design, as well as many early-stage AI companies listed
in the Vision Fund. Mr Son is looking towards a future not just of
artificial general intelligence (where AI roughly operates at a
human level across a wide variety of domains) but to a future of
artificial super-intelligence (where AI is multiples more capable
than humans). GMO Internet has a large exposure to internet
infrastructure and datacentres in Japan. Rakuten has proprietary
data across its ecosystem which provides the foundation for
creating successful applications for AI. CyberAgent has developed
the world's first large language model built with the Japanese
language as the base. Each of these are top 10 holdings in the
Company. Additionally, we expect opportunities in many of the
smaller holdings. For example, Z Holdings expect to be able to
achieve huge improvements in software engineer productivity as
humans work alongside AI as well as to be able to achieve big cost
reductions in dealing with customer queries. Bengo4.com has already
developed a prototype 'AI lawyer'.
It is always difficult for us to assess when businesses will
become better appreciated which is why we try to focus more on the
underlying progress of sales and profits in the expectation that,
over the long term, these will be reflected in share prices. Like
you, we would like to have seen significantly better share price
results over the past couple of years but, in general, we see solid
ongoing progress at individual businesses and take significant
comfort from that.
Meanwhile, we have continued to try to improve the portfolio.
During the period we bought 9 new holdings and sold 7 holdings.
Recently we have been taking advantage of the high level of pain
being felt in smaller growth companies share prices to initiate new
holdings in Vector (public relations agency), SWCC Showa (high
voltage cables), Nihon M&A (mergers and acquisitions in Japan)
and Lifenet Insurance (online life insurance). We also took a new
holding in M3 (medical website) after the shares fell by more than
60% from the price that we previously sold the shares at in late
2020 due to valuation concerns. Similar to the case of Pigeon last
year, the very large share price moves have exceeded the changes in
the fundamentals, which we believe has created opportunity for
long-term investors. The sales spanned a variety of reasons, from
considering the shares to be fully valued due to cyclical increase
in resource prices (Inpex, Toyota Tsusho), or becoming doubtful on
the long-term prospects being realised (Shimano, Makita, Tsubaki
Nakashima, Lifull). As is typical, turnover remained low at 8.8%
meaning that 91.2% of the portfolio was unchanged year-on-year. Net
gearing ended the year at 17%, reflecting our belief in the
significant opportunities available.
As Sir John Templeton put it many years ago "outperforming the
majority of investors requires doing what they are not doing". We
are sticking to an approach that has been effective over the
decades of trying to buy businesses with attractive long-term
growth prospects, not fiddling with the portfolio, and letting
those businesses generate the returns over time. This process has
never worked every year and the past 2 years have been a
particularly challenging time. However, we believe that the
opportunities for growth investing in Japan are the greatest since
the Global Financial Crisis and ask for shareholders continued
support.
Baillie Gifford
1 November 2023
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.
Relative Contribution
Top Ten Relative Stock Contributors Bottom Ten Relative Stock Contributors
Year to 31 August 2023 Year to 31 August 2023
============================================================ =====================================================
Portfolio Index Portfolio Index
(average (average (average (average
weight) weight) weight) weight)
% % Relative % % Relative
Contribution Contribution
Name % Name %
====================== ========= ========= ============== =============== ========= ========= ==============
DMG Mori 1.8 0.0 0.4 CyberAgent 2.4 0.1 (1.3)
Itochu 2.8 1.0 0.4 Misumi 2.5 0.2 (1.1)
Olympus 0.0 0.5 0.3 GMO Internet 3.1 0.0 (0.9)
Chugoku Marine Paints 0.8 0.0 0.2 Rakuten 2.4 0.1 (0.8)
Mercari 1.1 0.0 0.2 MonotaRO 1.4 0.1 (0.7)
Sumitomo Mitsui
Trust Bank 3.4 0.3 0.2 FANUC 3.3 0.7 (0.7)
MS&AD Insurance 2.8 0.3 0.2 Oisix 1.4 0.0 (0.5)
Nifco 1.4 0.0 0.2 Sysmex 2.1 0.3 (0.5)
M3 0.1 0.2 0.1 GA Technologies 1.2 0.0 (0.5)
DENSO 2.1 0.6 0.1 mixi 2.7 0.0 (0.4)
====================== ========= ========= ============== =============== ========= ========= ==============
Top Ten Relative Stock Contributors Bottom Ten Relative Stock Contributors
5 years to 31 August 2023 5 years to 31 August 2023
============================================================ =====================================================
Portfolio Index Portfolio Index
(average (average Relative (average (average Relative
weight) weight) Contribution weight) weight) Contribution
Name % % % Name % % %
====================== ========= ========= ============== =============== ========= ========= ==============
M3 0.8 0.3 1.4 CyberAgent 2.5 0.1 (2.1)
Itochu 2.4 0.8 1.3 Rakuten 3.3 0.2 (1.8)
SoftBank Group 5.7 1.7 1.2 Outsourcing 1.6 0.0 (1.4)
Pan Pacific
International 0.6 0.2 1.0 Sato Holdings 1.7 0.0 (1.3)
DENSO 1.8 0.5 0.7 GA Technologies 0.6 0.0 (1.1)
MS&AD Insurance 1.4 0.3 0.7 Toyota Motor 0.0 3.6 (1.1)
SMC 1.3 0.7 0.7 Sysmex 2.5 0.3 (1.0)
Inpex 1.7 0.2 0.6 Misumi 2.5 0.2 (1.0)
Advantest 0.2 0.2 0.6 Calbee 1.6 0.1 (0.9)
JAFCO 0.5 0.0 0.5 Healios K.K. 0.2 0.0 (0.8)
====================== ========= ========= ============== =============== ========= ========= ==============
Source: Revolution 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.
Investment Portfolio by Growth Category
As at 31 August 2023
% of % of % of % of
Secular total Growth total Special total Cyclical total
Growth(1) investments Stalwarts(2) investments Situations(3) investments Growth(4) investments
============== ============ ============== ============ ============== ============ ============= =============
Sumitomo
Mitsui Trust
SBI Holdings 3.5 Calbee 2.9 SoftBank Group 5.3 Bank 3.7
Rakuten 3.2 Shiseido 2.4 Sony 2.9 Bridgestone 2.2
FANUC 3.0 Unicharm 2.2 mixi 2.5 DMG Mori 2.2
MS&AD
GMO Internet 2.7 Nintendo 2.1 Insurance 2.2 Itochu 2.2
Sumitomo
Kubota 2.7 Pola Orbis 1.8 Tokyo Tatemono 1.3 Metal Mining 2.0
CyberAgent 2.1 Sugi 0.8 Colopl 1.3 Rohm 1.8
Recruit
Holdings 2.0 Kao 0.8 Olympus 0.7 Nifco 1.6
Misumi 2.0 Park24 0.6 DENSO 1.6
Sawai Murata
Sato 1.9 Pharmaceutical 0.3 Manufacturing 1.5
Chugoku
Sysmex 1.8 Marine Paints 1.0
Oisix 1.6 Outsourcing 0.9
GA Iida Group
Technologies 1.3 Holdings 0.7
Nidec 1.3 SWCC Showa 0.5
TKP 1.2 Shima Seiki 0.5
Topcon 1.2
MonotaRO 1.1
Mercari 1.1
Keyence 1.1
Raksul 1.1
SMC 0.9
Seria 0.9
Z Holdings 0.8
Broadleaf 0.7
Demae-can 0.7
M3 0.7
Pigeon 0.7
freee K.K. 0.6
Vector 0.6
Infomart 0.6
Digital Garage 0.5
Nihon M&A
Center 0.5
Noritsu Koki 0.5
PeptiDream 0.5
Bengo4.com 0.5
Lifenet
Insurance 0.4
BASE 0.4
Istyle 0.4
Rizap 0.4
Nippon Ceramic 0.3
-------------- ------------ -------------- ------------ -------------- ------------ ------------- -------------
47.5 13.9 16.2 22.4
-------------- ------------ -------------- ------------ -------------- ------------ ------------- -------------
(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
List of Investments at 31 August 2023
Absolute Relative
2023 2023 * *
Value % of total performance performance
Name Business GBP'000 investments % %
---------------------- ---------------------------- --------- ------------- ------------------ ------------------
Information, communication
SoftBank Group and utilities 45,420 5.3 3.7 (2.9)
Sumitomo Mitsui Trust
Bank Financials 31,818 3.7 14.4 7.2
SBI Holdings Financials 29,900 3.5 (0.6) (6.9)
Rakuten Commerce and services 27,787 3.2 (24.6) (29.4)
FANUC Electricals and electronics 25,540 3.0 (17.8) (23.0)
Calbee Pharmaceuticals and food 25,206 2.9 (6.6) (12.5)
Sony Electricals and electronics 24,747 2.9 (4.1) (10.1)
Information, communication
and
GMO Internet utilities 23,367 2.7 (20.1) (25.1)
Kubota Manufacturing and machinery 22,831 2.7 (4.1) (10.2)
mixi Commerce and services 21,141 2.5 (7.9) (13.7)
Shiseido Manufacturing and machinery 20,502 2.4 (1.2) (7.4)
MS&AD Insurance Financials 19,159 2.2 14.9 7.7
Bridgestone Manufacturing and machinery 19,096 2.2 (4.4) (10.4)
DMG Mori Manufacturing and machinery 18,802 2.2 32.0 23.7
Itochu Commerce and services 18,735 2.2 28.3 20.3
Chemicals and other
Unicharm materials 18,711 2.2 5.5 (1.2)
Nintendo Manufacturing and machinery 18,216 2.1 (1.1) (7.3)
CyberAgent Commerce and services 17,967 2.1 (40.2) (44.0)
Recruit Holdings Commerce and services 17,467 2.0 2.3 (4.1)
Chemicals and other
Sumitomo Metal Mining materials 17,416 2.0 (6.9) (12.8)
Misumi Commerce and services 16,789 2.0 (7.9) (13.7)
Sato Manufacturing and machinery 16,497 1.9 (1.1) (7.3)
Chemicals and other
Pola Orbis materials 15,795 1.8 8.8 2.0
Rohm Electricals and electronics 15,575 1.8 2.7 (3.7)
Sysmex Electricals and electronics 15,231 1.8 (20.6) (25.6)
Chemicals and other
Nifco materials 13,839 1.6 20.9 13.3
DENSO Manufacturing and machinery 13,631 1.6 16.4 9.1
Oisix Retail 13,497 1.6 (24.0) (28.8)
Murata Manufacturing Electricals and electronics 12,898 1.5 (3.6) (9.7)
Tokyo Tatemono Real estate and construction 11,466 1.3 (17.0) (22.2)
Information, communication
and
GA Technologies utilities 11,348 1.3 (29.9) (34.3)
Nidec Electricals and electronics 11,261 1.3 (27.9) (32.4)
Information, communication
and
Colopl utilities 10,694 1.3 (18.8) (23.9)
TKP Real estate and construction 10,200 1.2 (3.0) (9.1)
Topcon Manufacturing and machinery 9,878 1.2 (17.4) (22.6)
MonotaRO Retail 9,652 1.1 (39.9) (43.7)
Information, communication
and
Mercari utilities 9,525 1.1 27.6 19.6
Keyence Electricals and electronics 9,481 1.1 0.6 (5.7)
Information, communication
and
Raksul utilities 9,150 1.1 14.0 6.9
Chemicals and other
Chugoku Marine Paints materials 8,510 1.0 45.3 36.2
SMC Manufacturing and machinery 7,884 0.9 (6.2) (12.1)
Seria Retail 7,726 0.9 (24.6) (29.4)
Outsourcing Commerce and services 7,613 0.9 (16.3) (21.5)
Sugi Retail 7,174 0.8 (2.4) (8.5)
Z Holdings # Communication services 7,146 0.8 11.1 2.4
Chemicals and other
Kao # materials 6,752 0.8 1.1 (9.3)
Information, communication
and
Broadleaf utilities 6,278 0.7 (8.8) (14.6)
Information, communication
and
Demae-can # utilities 6,215 0.7 (20.2) (31.1)
Olympus # Pharmaceuticals and food 6,206 0.7 7.9 2.7
M3 # Commerce and services 6,124 0.7 (4.0) (5.7)
Iida Group Holdings Real estate and construction 6,123 0.7 2.0 (4.4)
Pigeon Manufacturing and machinery 5,901 0.7 (27.0) (31.6)
Park24 Real estate and construction 5,420 0.6 (9.9) (15.6)
Information, communication
and
freee K.K. utilities 5,113 0.6 (11.1) (16.6)
Information, communication
and
Vector # utilities 4,787 0.6 (3.2) (4.7)
Infomart Commerce and services 4,763 0.6 (3.4) (9.5)
SWCC Showa # Electricals and electronics 4,637 0.5 (2.4) (4.0)
Information, communication
and
Digital Garage utilities 4,228 0.5 (15.6) (20.9)
Nihon M&A Center # Commerce and services 4,128 0.5 (9.9) (15.6)
Noritsu Koki Manufacturing and machinery 4,111 0.5 5.2 (1.4)
PeptiDream Pharmaceuticals and food 4,072 0.5 (2.8) (8.9)
Shima Seiki Manufacturing and machinery 4,017 0.5 (21.4) (26.4)
Bengo4.com Commerce and services 3,884 0.5 14.5 7.3
Lifenet Insurance # Financials 3,728 0.4 (3.2) (1.4)
Information, communication
and
BASE utilities 3,686 0.4 0.7 (5.7)
Information, communication
and
Istyle utilities 3,359 0.4 (15.1) (20.5)
Rizap Commerce and services 3,124 0.4 10.1 3.1
Nippon Ceramic Electricals and electronics 2,805 0.3 (10.5) (16.1)
Sawai Pharmaceutical Pharmaceuticals and food 2,737 0.3 2.2 (4.2)
---------------------- ---------------------------- --------- ------------- ------------------ ------------------
Total investments 858,486 100.0
---------------------------------------------------- --------- ------------- ------------------ ------------------
Net liquid assets 6,200
---------------------------------------------------- --------- ------------- ------------------ ------------------
Total assets 864,686
---------------------------------------------------- --------- ------------- ------------------ ------------------
Bank loans (131,723)
---------------------------------------------------- --------- ------------- ------------------ ------------------
Equity shareholders'
funds 732,963
---------------------------------------------------- --------- ------------- ------------------ ------------------
* Absolute and relative performance have been calculated on a
total return basis over the period 1 September 2022 to 31 August
2023. 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.
# New purchase during the year. Complete sales in the year were
Inpex, Lifull, Makita, Secom, Shimano, Toyota Tsusho and Tsubaki
Nakashima.
Source: Revolution/Baillie Gifford 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
2023 2023 2023 2022 2022 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- -------- -------- --------- --------- ---------
Losses on investments - (70,082) (70,082) - (174,357) (174,357)
Currency gains - 17,005 17,005 - 8,222 8,222
Income (note 2) 18,707 - 18,707 20,075 - 20,075
Investment management
fee (note 3) (4,448) - (4,448) (4,802) - (4,802)
Other administrative
expenses (688) - (688) (742) - (742)
---------------------------- --------- -------- -------- --------- --------- ---------
Net return before finance
costs
and taxation 13,571 (53,077) (39,506) 14,531 (166,135) (151,604)
---------------------------- --------- -------- -------- --------- --------- ---------
Finance costs of borrowings (1,869) - (1,869) (1,866) - (1,866)
---------------------------- --------- -------- -------- --------- --------- ---------
Net return before taxation 11,702 (53,077) (41,375) 12,665 (166,135) (153,470)
---------------------------- --------- -------- -------- --------- --------- ---------
Tax (1,870) - (1,870) (2,004) - (2,004)
---------------------------- --------- -------- -------- --------- --------- ---------
Net return after taxation 9,832 (53,077) (43,245) 10,661 (166,135) (155,474)
---------------------------- --------- -------- -------- --------- --------- ---------
Net return per ordinary
share (note 4) 10.52p (56.79p) (46.27p) 11.31p (176.19p) (164.88p)
---------------------------- --------- -------- -------- --------- --------- ---------
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.
The accompanying notes below are an integral part of the
Financial Statements.
Balance Sheet
As at 31 August
2023 2023 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- --------- -------- --------
Fixed assets
Investments 858,486 930,354
-------------------------------------- -------- --------- -------- --------
Current assets
Debtors 1,811 2,185
Cash and cash equivalents 6,030 11,017
-------------------------------------- -------- --------- -------- --------
7,841 13,202
-------------------------------------- -------- --------- -------- --------
Creditors
Amounts falling due within one year (1,641) (94,895)
-------------------------------------- -------- --------- -------- --------
Net current assets/(liabilities) 6,200 (81,693)
-------------------------------------- -------- --------- -------- --------
Total assets less current liabilities 864,686 848,661
-------------------------------------- -------- --------- -------- --------
Creditors
Amounts falling due after more than
one year (note 6) (131,723) (57,655)
-------------------------------------- -------- --------- -------- --------
Net assets 732,963 791,006
-------------------------------------- -------- --------- -------- --------
Capital and reserves
Share capital 4,717 4,717
Share premium account 213,902 213,902
Capital redemption reserve 203 203
Capital reserve 496,965 556,414
Revenue reserve 17,176 15,770
-------------------------------------- -------- --------- -------- --------
Shareholders' funds 732,963 791,006
-------------------------------------- -------- --------- -------- --------
Net asset value per ordinary share 787.7p 842.4p
-------------------------------------- -------- --------- -------- --------
Statement of Changes in Equity
For the year ended 31 August 2023
Share Capital
Share premium redemption Capital Revenue Shareholders'
capital account 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 - - - (6,372) - (6,372)
Net return on ordinary
activities after taxation - - - (53,077) 9,832 (43,245)
Dividends paid in the
year - - - - (8,426) (8,426)
--------------------------- -------- -------- ----------- --------- -------- -------------
Shareholders' funds at
31 August 2023 4,717 213,902 203 496,965 17,176 732,963
--------------------------- -------- -------- ----------- --------- -------- -------------
For the year ended 31 August 2022
Share Capital
Share premium redemption Capital Revenue Shareholders'
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
--------------------------- -------- -------- ----------- --------- -------- -------------
* The capital reserve includes investment holding gains of
GBP44,038,000 (2022 - GBP137,669,000). The revenue reserve of
GBP17,176,000 and the capital reserve (to the extent it constitutes
realised profits) of GBP440,448,000 are distributable.
Cash Flow Statement
2023 2023 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ --------- -------- --------- --------
Cash flows from operating activities
Net return on ordinary activities
before taxation (41,375) (153,470)
Net losses on investments 70,082 174,357
Currency gains (17,005) (8,222)
Finance costs of borrowings 1,869 1,866
Overseas withholding tax (1,912) (1,996)
Changes in debtors and creditors 373 (284)
------------------------------------------ --------- -------- --------- --------
Cash from operations 12,032 12,251
Interest paid (1,961) (1,827)
------------------------------------------ --------- -------- --------- --------
Net cash inflow from operating activities 10,071 10,424
------------------------------------------ --------- -------- --------- --------
Cash flows from investing activities
Acquisitions of investments (99,512) (197,244)
Disposals of investments 101,483 145,489
------------------------------------------ --------- -------- --------- --------
Net cash inflow/(outflow) from investing
activities 1,971 (51,755)
------------------------------------------ --------- -------- --------- --------
Cash flows from financing activities
Shares bought back (7,926) (1,709)
Equity dividends paid (8,426) (5,660)
Bank loans drawn down 107,124 16,189
Bank loans repaid (106,131) -
------------------------------------------ --------- -------- --------- --------
Net cash (outflow)/inflow from financing
activities (15,359) 8,820
------------------------------------------ --------- -------- --------- --------
Decrease in cash and cash equivalents (3,317) (32,511)
Exchange movements (1,670) (761)
Cash and cash equivalents at start
of period 11,017 44,289
------------------------------------------ --------- -------- --------- --------
Cash and cash equivalents at end
of period * 6,030 11,017
------------------------------------------ --------- -------- --------- --------
* Cash and cash equivalents represent cash at bank and short
term money market deposits repayable on demand.
Cash from operations includes dividends received of
GBP19,122,000 (2022 - GBP19,993,000) and interest received of
GBP3,000 (2022 - nil).
Notes to the Financial Statements
1. The Financial Statements for the year to 31 August 2023 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.
The Financial Statements have also been prepared in accordance
with the Companies Act 2006, and with the AIC's Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued in November 2014 and
updated in July 2022 with consequential amendments.
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
and macroeconomic and geopolitical concerns, including rising
inflation and interest rates. 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.
In preparing these Financial Statements, the Directors have
considered the impact of climate change risk as a principal risk
set out on page 39 of the Annual Report and Financial Statements,
and have concluded that it does not have a material impact on the
Company's investments. The Directors consider the impact of climate
change on the value of the investments included in the Financial
Statements to already include the impact in their prices as the
investments are quoted on a stock exchange.
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 set out
in the Viability Statement on page 37 of the Annual Report and
Financial Statements which assesses the prospects of the Company
over a period of five years, that the Company will continue in
operational existence until 30 November 2024, which is for a period
of at least twelve months from the date of approval of these
Financial Statements.
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 85 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
and its Investment Manager, who are subject to the UK's regulatory
environment, are also UK based.
2. Income
2023 2022
GBP'000 GBP'000
------------------------ -------- --------
Income from investments
Overseas dividends 18,704 20,073
------------------------ -------- --------
Other income
------------------------ -------- --------
Deposit interest 3 2
------------------------ -------- --------
Total income 18,707 20,075
------------------------ -------- --------
Special dividends received during the year amounted to
GBP471,000 (2022 - GBP66,000) with GBP471,000 (2022 - GBP66,000)
classed as revenue and nil (2022 - nil) classed as capital.
3. Investment Management Fee - All Charged to Revenue
2023 2022
GBP'000 GBP'000
-------------------------- -------- --------
Investment management fee 4,448 4,802
-------------------------- -------- --------
Details of the Investment Management Agreement are disclosed on
page 50 of the Annual Report and Financial Statements.
4. Net Return per Ordinary Share
2023 2023 2023 2022 2022 2022
Revenue Capital Total Revenue Capital Total
------------------------------ -------- -------- -------- -------- --------- ---------
Net return per ordinary
share on ordinary activities
after taxation 10.52p (56.79p) (46.27p) 11.31p (176.19p) (164.88p)
------------------------------ -------- -------- -------- -------- --------- ---------
Revenue return per ordinary share is based on the net revenue
profit after taxation of GBP9,832,000 (2022 - net revenue profit
of
GBP10,661,000) and on 93,451,827 (2022 - 94,292,038) ordinary
shares, being the weighted average number of ordinary shares in
issue (excluding treasury shares) during the year.
Capital return per ordinary share is based on the net capital
loss for the financial year of GBP53,077,000 (2022 - net capital
loss of
GBP166,135,000) and on 93,451,827 (2022 - 94,292,038) ordinary
shares, being the weighted average number of ordinary shares in
issue (excluding treasury shares) during the year.
Total return per ordinary share is based on the total loss for
the financial year of GBP43,245,000 (2022 - total loss of
GBP155,474,000) and on 93,451,827 (2022 - 94,292,038) ordinary
shares, being the weighted average number of ordinary shares in
issue (excluding treasury shares) during the year.
There are no dilutive or potentially dilutive shares in
issue.
5. Ordinary Dividends
2023 2022
2023 2022 GBP'000 GBP'000
------------------------------------- ----- ----- -------- --------
Amounts recognised as distributions
in the year:
Previous year's final dividend (paid
21 December 2022) 9.00p 6.00p 8,426 5,660
------------------------------------- ----- ----- -------- --------
2023 2022
2023 2022 GBP'000 GBP'000
--------------------------------------- ------ ----- ----------------- --------
Dividends paid and payable in respect
of the year:
Current year's proposed final dividend
(payable 20 December 2023) 10.00p 9.00p 9,305 * 8,426
--------------------------------------- ------ ----- ----------------- --------
* Based on ordinary shares in issue at 31 August 2023.
If approved, the recommended final dividend will be paid on 20
December 2023 to shareholders on the register at close of business
on 17 November 2023. The ex-dividend date is 16 November 2023.
Further information can be found in the Dividend section of the
Chairman's Statement.
6. Total borrowings at 31 August 2023 were Yen24.3 billion (2022
- Yen24.1 billion) and a detailed in note 12 on page 89 of the
Annual Report and Financial Statements.
7. The transaction costs of purchases and sales were GBP34,000
(2022 - GBP70,000) and GBP29,000 (2022 - GBP66,000)
respectively.
8. In the year to 31 August 2023, 851,845 shares with a nominal
value of GBP42,600, representing 0.9% of the issued share capital
at 31 August 2022, were bought back at a cost of GBP6,372,000 and
held in treasury (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). At 31 August 2023, the Company had authority to buy
back 13,187,431 ordinary shares. Over the period from 1 September
to 30 October a further 1,205,000 shares have been bought back and
held in treasury at a cost of GBP8,209,000.
In the year to 31 August 2023, the Company sold no ordinary
shares from treasury (2022 - no ordinary shares). The Company
issued no further ordinary shares (2022 - no ordinary shares). As
at 31 August 2023 the Company had the authority to issue 9,365,761
ordinary shares. Over the period from 1 September 2034 to 30
October 2023 no further shares were issued by the Company.
9. The financial information set out above does not constitute
the Company's statutory accounts for the years ended 31 August 2023
or 2022 but is derived from those accounts. Statutory accounts for
2022 have been delivered to the registrar of companies, and those
for 2023 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.
10. The Annual Report and Financial Statements will be available
on the Company's page on the Managers' website japantrustplc.co.uk
++ on or around 9 November 2023.
++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.
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
2023 2022
-------------------------- ------------------- --------- ---------
Net asset value per share (a) 787.7p 842.4p
Share price (b) 735.0p 774.0p
-------------------------- ------------------- --------- ---------
((b) - (a)) ÷
Discount (a) (6.7%) (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.
2023 2022
2023 Share 2022 Share
NAV price NAV price
------------------------------------- ------------ ------ ------ -------- --------
Closing NAV per share/share
price (a) 787.7p 735.0p 842.4p 774.0p
Dividend adjustment factor* (b) 1.0113 1.0113 1.0058 1.0059
Adjusted closing NAV per share/share (c) = (a)
price x (b) 796.6p 743.3p 847.3p 778.6p
Opening NAV per share/share
price (d) 842.4p 774.0p 1,012.8p 1,022.0p
------------------------------------- ------------ ------ ------ -------- --------
((c) ÷
Total return (d)) -1 (5.4%) (4.0%) (16.3%) (23.8%)
------------------------------------- ------------ ------ ------ -------- --------
* The dividend adjustment factor is calculated on the assumption
that the dividend of 9.00p (2022 - 6.00p) 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.
Turnover
Annual turnover is calculated on a rolling 12 month basis. The
lower of purchases and sales for the 12 months is divided by the
average assets, with average assets being calculated on assets as
at each month's end.
Ongoing Charges (APM)
The total expenses (excluding borrowing costs) incurred by the
Company as a percentage of the average net asset value.
2023 2022
GBP'000 GBP'000
------------------------ ----------------------------------------- ---------- ----------
Investment management
fee 4,448 4,802
Other administrative
expenses 688 742
Total expenses (a) 5,136 5,544
Average net asset value (b) GBP764,686 GBP843,789
*
------------------------ ----------------------------------------- ---------- ----------
Ongoing charges (a) ÷ (b) expressed as a percentage 0.67% 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 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.
2023 2022
Gearing Potential Gearing Potential
* gearing * gearing
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---- ------------- ------------- ------------- -------------
Borrowings (a) 131,723 131,723 149,407 149,407
Cash and cash equivalents (b) 6,030 - 11,017 -
Shareholders' funds (c) 732,963 732,963 791,006 791,006
-------------------------- ---- ------------- ------------- ------------- -------------
Gearing 17.1% 18.0% 17.5% 18.9%
-------------------------------- ------------- ------------- ------------- -------------
* Gearing: ((a) - (b)) divided by (c), expressed as a
percentage.
Potential gearing: (a) divided by (c), expressed as a
percentage.
Leverage (APM)
For the purposes of the 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.
Active Share (AP M)
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 Baillie
Gifford Japan 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 ESG Principles
and Guidelines as its policy on integration of sustainability risks
in investment decisions.
Baillie Gifford & Co believes that a company cannot be
financially sustainable in the long run if its approach to business
is fundamentally out of line with changing societal expectations.
It defines 'sustainability' as a deliberately broad concept which
encapsulates a company's purpose, values, business model, culture,
and operating practices.
Baillie Gifford & Co's approach to investment is based on
identifying and holding high quality growth businesses that enjoy
sustainable competitive advantages in their marketplace. To do this
it looks beyond current financial performance, undertaking
proprietary research to build up an in-depth knowledge of an
individual company and a view on its long-term prospects. This
includes the consideration of sustainability factors
(environmental, social and/or governance matters) which it believes
will positively or negatively influence the financial returns of an
investment. The likely impact on the return of the portfolio from a
potential or actual material decline in the value of investment due
to the occurrence of an environmental, social or governance event
or condition will vary and will depend on several factors including
but not limited to the type, extent, complexity and duration of an
event or condition, prevailing market conditions and existence of
any mitigating factors.
Whilst consideration is given to sustainability matters, there
are no restrictions on the investment universe of the Company,
unless otherwise
stated within in its Investment Objective & Policy. Baillie
Gifford & Co can invest in any companies it believes could
create beneficial long-term returns for investors. However, this
might result in investments being made in companies that ultimately
cause a negative outcome for the environment or society.
More detail on the Investment Manager's approach to
sustainability can be found in the ESG Principles and Guidelines
document, available publicly on the Baillie Gifford website:
bailliegifford.com.
The underlying investments do not take into account the EU
criteria for environmentally sustainable economic activities
established under the EU Taxonomy Regulation.
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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
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contained herein.
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- ends -
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(END) Dow Jones Newswires
November 02, 2023 03:00 ET (07:00 GMT)
Grafico Azioni Baillie Gifford Japan (LSE:BGFD)
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