TIDMBGS
RNS Number : 2863N
Baillie Gifford Shin Nippon PLC
22 September 2023
RNS Announcement
Baillie Gifford Shin Nippon PLC (BGS)
Legal Entity Identifier: X5XCIPCJQCSUF8H1FU83
Regulated Information Classification: Half Yearly Financial
Report
The following is the unaudited Interim Financial Report for the
six months to 31 July 2023 which was approved by the Board on 21
September 2023.
Over the six months to 31 July 2023, the Company's net asset
value per share declined by 9.7% compared to a 1.1% increase in the
MSCI Japan Small Cap Index*. The share price decreased by
12.5%.
3/4 There was a bifurcation in performance within the Japanese
market in the first half of this year. Mature large cap stocks in
capital intensive and cyclical sectors did very well in share price
terms while high growth small cap stocks continued to languish.
3/4 A number of the manufacturing holdings supplying
semiconductor and industrial equipment sectors reported weak
operating results due to excess inventory and a weak Chinese
economy. Contrary to their weak share prices, most of the internet
related holdings continued to perform well in operational
terms.
3/4 Annualised portfolio turnover to 31 July 2023 was 10.9%.
Three stocks were sold: Brainpad; Broadleaf and Calbee. New
positions were initiated in SWCC Corp, a manufacturer of electric
cables and wires, Appier, a developer of artificial intelligence
products, and Vector, Japan's largest public relations company.
3/4 The Company's share price ended the period at an 11.4%
discount to the NAV. 1,100,000 shares were bought back in the
reporting period and are currently held in treasury.
3/4 Despite the challenging backdrop for high-growth small caps
in Japan, the majority of the portfolio's holdings continue to grow
strongly whilst their overall valuation multiples are well below
their own long-term average.
3/4 The Board and Managers remain firmly of the view that
exceptional long-term returns are likely to be generated by young,
disruptive, fast-growing and entrepreneurial smaller businesses in
Japan.
After deducting borrowings at fair value.
* The Company's comparative index is the MSCI Japan Small Cap
Index (total return and in sterling terms). See disclaimer at the
end of this announcement.
Source: Refinitiv/Baillie Gifford and relevant underlying index
providers. See disclaimer at the end of this announcement.
Shin Nippon aims to achieve long term capital growth through
investment principally in small Japanese companies which are
believed to have above average prospects for growth. At 31 July
2023 the Company had total assets of GBP579.1 million (before
deduction of bank loans of GBP88.0 million).
The Company is managed by Baillie Gifford, an Edinburgh based
fund management group with approximately GBP219.4 billion under
management and advice as at 21 September 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. The Company has borrowed money to make further
investments. This is commonly referred to as gearing. The risk is
that, when this money is repaid by the Company, the value of these
investments may not be enough to cover the borrowing and interest
costs, and the Company makes a loss. If the Company's investments
fall in value, gearing will increase the amount of this loss. The
more highly geared the Company, the greater this effect will
be.
Investment in investment trusts should be regarded as long term.
You can find up to date performance information about Shin Nippon
at shinnippon.co.uk .
22 September 2023
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
The following is the unaudited Interim Financial Report for the
six months to 31 July 2023.
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 and Transparency Rule 4.2.7R
(indication of important events during the first six months, their
impact on the 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 and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes therein).
On behalf of the Board
J Skinner
Chair
21 September 2023
Interim management report
The first half of this year saw a bifurcation in performance
within the Japanese market. Mature large cap stocks in capital
intensive and cyclical sectors did very well in share price terms,
helping lift the broader Japanese indices to record highs. Their
strong performance was largely due to improvements in corporate
governance and shareholder return policies. A key driving factor
for this has been the pressure applied on management teams by both
domestic and overseas activist investors who have taken large
stakes in many of these businesses. In addition, Yen weakness has
helped inflate profits as most of these companies are exporters. In
this environment and amid a complete lack of investor interest,
high growth small cap stocks continued to languish.
In the six months to 31 July 2023, Shin Nippon's net asset value
per share (in sterling, after deducting borrowings at fair value)
fell by 9.7% compared to a 1.1% rise in the MSCI Japan Small Cap
index. The share price declined by 12.5% and finished the period at
an 11.4% discount to the net asset value per share. During the
period, 1,100,000 shares were bought back and are currently held in
treasury. Over three and five years, the Company's net asset value
per share is down 13.9% and 17.1% compared to the index which is up
18.2% and 6.5% respectively.
We are disappointed by the weak performance over these varying
periods, but this has come in an environment where investor
preference has switched from high growth small cap stocks to
cyclical companies and companies enhancing corporate value. These
companies offer little by way of growth, they make uneconomic
returns on capital at the best of times due to their capital
intensity and are ripe for disruption given their outdated business
models. Dividends and share buybacks tend to be their main
attractions. Over the long-term, we remain firmly of the view that
exceptional returns are likely to be generated by young,
disruptive, fast-growing and entrepreneurial smaller businesses in
Japan and we are continuing to invest accordingly.
At a macro level, rising interest rates, inflation, and US-China
tensions continue to sour investor sentiment on growth stocks. A
slowing Chinese economy and signs of excess inventory in critical
sectors like semiconductors and industrial equipment are further
dampening market confidence. In this context, it is perhaps
unsurprising to see weak operating results being reported by many
of our manufacturing holdings exposed to these end markets. More
encouragingly and contrary to their weak share price, most of our
internet holdings continue to perform admirably well in operational
terms.
Among the top positive contributors to performance was
Megachips, the sole supplier of custom-made memory chips used in
Nintendo's game cartridges. Demand for Nintendo's 'Switch' gaming
console has seen a resurgence following the runaway success of the
recently released Super Mario Brothers movie. This has translated
into rapid sales growth for Megachips. Nintendo has historically
been Megachips' largest customer and the latter has made a series
of investments over the years to diversify its business beyond
Nintendo. These are now bearing fruit, with the company reporting
new customer wins in areas like 5G and factory automation.
Online legal website Bengo4.com also performed strongly. The
company is continuing to see strong growth in its digital contracts
business. In addition, management has recently added a series of
new features to the legal website that makes its value proposition
more compelling for lawyers. For example, lawyers are now able to
prepare for a case using Bengo4.com's AI-enabled tool that trawls
through voluminous legal literature and provides lawyers with
specific insights. Another example is the online legal library
which is a subscription based service that Bengo4.com launched
recently. This provides lawyers with a vast and easily searchable
library of past cases and rulings.
Cosmos Pharmaceutical was another strong performer. This is one
of Japan's leading discount stores that sells mainly food,
cosmetics, daily necessities and over-the-counter medicines. It
operates a low-cost, 'Everyday Low Price' strategy that is unique
and disruptive within the Japanese retail sector. The company
deliberately makes slim margins whilst investing excess profits
into lower prices for consumers. This strategy has allowed Cosmos
to relentlessly take market share from weaker and traditional
players who struggle to match Cosmos's price points.
Litalico was among the largest negative contributors to
performance. This is an online employment agency that trains and
secures jobs for adults with disabilities. It also provides
training, development courses and support for disabled children and
their families. There are nearly ten million disabled adults and
children in Japan. The Japanese government has mandated all
corporates to hire a certain percentage of disabled adults each
year and this mandated ratio has been rising each year. As the
largest provider of such services in Japan, this is a long-term
structural tailwind f or Litalico. Management is investing
aggressively in opening new training centres for disabled adults
and children and this has temporarily depressed profitability,
although annual sales growth remains well over 20%. The market,
however, has taken a dim view of this and has subsequently punished
the shares.
Online funeral services provider Kamakura Shinsho also performed
poorly in share price terms. It operates an online platform that
connects people looking for funeral services with providers of such
services. It charges the service provider a fee for introducing
customers. Funerals in Japan are an extensive affair involving
large gatherings in a sizeable and often costly venue and typically
last a number of days. Local funeral houses have a monopoly and
often charge egregious prices. Through its online model, Kamakura
Shinsho offers customers a choice of providers across Japan
complete price transparency and the option for customers to
customize the product based on their budgets. During Covid-19
traditional in-person ceremonies were replaced by an improvised,
low-cost online version which did not involve the sale of funeral
packages. This resulted in a collapse in Kamakura Shinsho's sales
and profits. With life returning to normal in Japan, traditional
funeral ceremonies have resumed in earnest and the company's sales
and profits are bouncing back strongly. Despite this, the market
continues to harbour doubts about the company's ability to sustain
its growth.
Japan's only, pure-play online life insurer Lifenet was also
among the poor performers. It is continuing to take share from
large, sleepy incumbents as its brand recognition has improved. The
company is also diversifying into other related, profitable and
potentially large areas like group credit insurance where it
insures individuals' mortgages in the event of death. Japanese
accounting standards have meant that Lifenet has had to recognise
the entire cost of selling a policy upfront rather than amortising
it over the life of the policy which is allowed under IFRS. This
results in rising accounting losses as the company write more new
business, giving the impression that this is a perennially
loss-making enterprise. We believe this is the view taken by the
market, resulting in share price weakness. As of this year, the
company has adopted IFRS which should more accurately reflect the
underlying profitability of the business and change the market's
perception of the stock .
Whilst we monitor the investment case for each of our holdings
on a regular basis, given our long- term orientation, portfolio
activity remained low with annualised turnover of 10.9%. We sold
three stocks and bought an equal number of new holdings. Artificial
intelligence ('AI') consultancy Brainpad was sold as we lost faith
in management's ability to scale the business despite being in an
area that is witnessing significant growth. We also sold Broadleaf
which develops packaged software for the auto aftermarket industry.
The company is changing its entire business model from on-premise
to the cloud and this poses significant execution risks for a
management team that has a patchy record of executing large-scale
internal projects. We also sold Japan's leading snack company
Calbee as we were concerned that growth rates might remain
pedestrian for many years following a lean period of new product
development.
Among the new holdings was SWCC Corp, a leading domestic
manufacturer of electric cables and wires. The company appointed
its first ever female President a few years ago and she has
instituted wide-ranging reforms across the company in a bid to
drastically improve profitability. In addition, SWCC is also
emerging as a key component supplier that facilitates the last-mile
delivery of renewable energy in Japan. Fast growing AI software
company Appier was another new addition to the portfolio. This is a
Taiwanese company, run by a husband and wife duo, which happens to
be listed in Japan. The company has developed a suite of AI
products that enable retailers, both offline and online, to target
and reach potential customers, increase the lifetime value of
existing customers, and more accurately monitor their marketing
spend to improve return on investment. We also purchased shares in
Vector, Japan's largest PR company. It is run by a young and
dynamic founder who retains a large stake in the business. Using
its dominant position in PR, Vector is expanding into marketing and
advertising where it seeks to offer a complete package, ranging
from the initial PR related activities all the way to the post
sales promotion for clients. This breadth of offering gives the
company a strong edge in our view.
Despite the challenging environment for high growth small caps
in Japan, the majority of Shin Nippon's holdings are continuing to
grow strongly whilst their overall valuation multiples have
collapsed to levels that remain well below their own long-term
average. Many of the holdings are also demonstrating sustained
levels of profitability despite investing heavily for future
growth. These are all very positive developments in our view and
increases our conviction in Shin Nippon's current holdings. We have
therefore continued to deploy gearing which stood at 17% as at
period end. We believe the key to generating significant long-term
returns from here is to remain patient and optimistic.
The principal risks and uncertainties facing the Company are set
out following note 13 of this report.
Valuing private companies
We aim to hold our private company (unlisted) investments at
'fair value' i.e. the price that would be paid in an open-market
transaction. Valuations are adjusted both during regular valuation
cycles and on an ad-hoc basis in response to 'trigger events'. Our
valuation process ensures that private companies are valued in both
a fair and timely manner.
The valuation process is overseen by a valuations group at
Baillie Gifford which takes advice from an independent third party
(S&P Global). The valuations group is independent from the
investment team, with all voting members being from different
operational areas of the firm, and the portfolio managers only
receive final valuation notifications once they have been applied
.
We revalue the private (unlisted) holdings on a three-month
rolling cycle, with one-third of the holdings reassessed each
month. During stable market conditions, and assuming all else is
equal, each investment would be valued four times in a twelve month
period. For investment trusts, the prices are also reviewed twice
per year by the respective boards and are subject to the scrutiny
of external auditors in the annual audit process.
Beyond the regular cycle, the valuations team also monitors the
portfolio for certain 'trigger events'. These may include: changes
in fundamentals; a takeover approach; an intention to carry out an
initial public offering ('IPO'); company news which is identified
by the valuation team or by the portfolio managers or changes to
the valuation of comparable public companies. Any ad-hoc change to
the fair valuation of any holding is implemented swiftly and
reflected in the next published net asset value ('NAV'). There is
no delay.
The valuations team also monitors relevant market indices on a
weekly basis and updates valuations in a manner consistent with our
external valuer's (S&P Global) most recent valuation report
where appropriate. When market volatility is particularly
pronounced the team undertakes these checks daily.
Baillie Gifford statement on stewardship
Baillie Gifford's over-arching ethos is that we are 'actual'
investors. We have a responsibility to behave as supportive and
constructively engaged long-term investors. We invest in companies
at different stages in their evolution, across vastly different
industries and geographies and we celebrate their uniqueness.
Consequently, we are wary of prescriptive policies and rules,
believing that these often run counter to thoughtful and beneficial
corporate stewardship. Our approach favours a small number of
simple principles which help shape our interactions with companies
and give appropriate latitude to diverse processes of our different
investment teams. These principles do not all have to be positively
reflected in each holding our teams acquire.
Prioritisation of long-term value creation
We encourage our holdings to be ambitious and focus their
investments on long-term value creation. We understand that it is
easy to be influenced by short-sighted demands for profit
maximisation but believe these often lead to sub-optimal long-term
outcomes. We regard it as our responsibility to steer holdings away
from destructive financial engineering towards activities that
create genuine economic and stakeholder value over the long run. We
are happy that our value will often be in supporting management
when others do not.
A constructive and purposeful board
We believe that boards play a key role in supporting corporate
success and representing the interests of all capital providers.
There is no fixed formula, but it is our expectation that boards
have the resources, information, cognitive and experiential
diversity they need to fulfil these responsibilities. We believe
that good governance works best when there are diverse skillsets
and perspectives, paired with an inclusive culture and strong
independent representation able to assist, advise and
constructively challenge the thinking of management.
Long-term focused remuneration with stretching targets
We look for remuneration policies that are simple, transparent
and reward superior strategic and operational endeavour. We believe
incentive schemes can be important in driving behaviour, and we
encourage policies which create genuine long-term alignment with
external capital providers. We are accepting of significant payouts
to executives if these are commensurate with outstanding long-run
value creation, but plans should not reward mediocre outcomes. We
think that performance hurdles should be skewed towards long-term
results and that remuneration plans should be subject to
shareholder approval.
Fair treatment of stakeholders
We believe it is in the long-term interests of all enterprises
to maintain strong relationships with all stakeholders - employees,
customers, suppliers, regulators and the communities they exist
within. We do not believe in one-size-fits-all policies and
recognise that operating policies, governance and ownership
structures may need to vary according to circumstance. Nonetheless,
we believe the principles of fairness, transparency and respect
should be prioritised at all times.
Sustainable business practices
We believe an entity's long-term success is dependent on
maintaining its social licence to operate and look for holdings to
work within the spirit and not just the letter of the laws and
regulations that govern them. We expect all holdings to consider
how their actions impact society, both directly and indirectly and
encourage the development of thoughtful environmental practices.
Climate change, environmental impact, social inclusion, tax and
fair treatment of employees should be addressed at board level,
with appropriately stretching policies and targets focused on the
relevant material dimensions. Boards and senior management should
understand, regularly review and disclose information relevant to
such targets publicly, alongside plans for ongoing improvement.
List of investments as at 31 July 2023
Name Business Value % of total Absolute
GBP'000 assets performance*
%
---------------------- -------------------------------------- -------- ---------- ---------------------
Toyo Tanso Electronics company 16,727 2.9 20.8
---------------------- -------------------------------------- -------- ---------- ---------------------
GMO Financial Face-to-face payment terminals
Gate and processing services 15,755 2.7 25.6
---------------------- -------------------------------------- -------- ---------- ---------------------
MatsukiyoCocokara Retail company 14,146 2.4 13.2
---------------------- -------------------------------------- -------- ---------- ---------------------
Provides employment support and
learning support services for
Litalico people with disabilities 13,952 2.4 (25.4)
---------------------- -------------------------------------- -------- ---------- ---------------------
Descente Manufactures athletic clothing 13,944 2.4 2.0
---------------------- -------------------------------------- -------- ---------- ---------------------
Nakanishi Dental equipment 13,676 2.4 5.1
---------------------- -------------------------------------- -------- ---------- ---------------------
Shoei Manufactures motor cycle helmets 13,260 2.3 (9.2)
---------------------- -------------------------------------- -------- ---------- ---------------------
Cosmos Pharmaceuticals Drugstore chain 13,194 2.3 13.9
---------------------- -------------------------------------- -------- ---------- ---------------------
Megachips Electronic components 12,080 2.1 41.8
---------------------- -------------------------------------- -------- ---------- ---------------------
Nifco Value-added plastic car parts 11,681 2.0 11.3
---------------------- -------------------------------------- -------- ---------- ---------------------
Asahi Intecc Specialist medical equipment 11,300 2.0 13.5
---------------------- -------------------------------------- -------- ---------- ---------------------
Sho-Bond Infrastructure reconstruction 11,091 1.9 (7.5)
---------------------- -------------------------------------- -------- ---------- ---------------------
GA Technologies Interactive media and services 10,758 1.9 (2.5)
---------------------- -------------------------------------- -------- ---------- ---------------------
Optex Infrared detection devices 10,512 1.8 (22.3)
---------------------- -------------------------------------- -------- ---------- ---------------------
Raksul Internet based services 10,470 1.8 (11.4)
---------------------- -------------------------------------- -------- ---------- ---------------------
Katitas Real estate services 10,448 1.8 (26.6)
---------------------- -------------------------------------- -------- ---------- ---------------------
Technopro IT staffing 10,145 1.8 (18.9)
---------------------- -------------------------------------- -------- ---------- ---------------------
Torex Semiconductor Semiconductor company 10,130 1.8 (20.5)
---------------------- -------------------------------------- -------- ---------- ---------------------
Bengo4.com Online legal consultation 10,099 1.7 39.2
---------------------- -------------------------------------- -------- ---------- ---------------------
Lifenet Insurance Online life insurance 10,091 1.7 (29.0)
---------------------- -------------------------------------- -------- ---------- ---------------------
Top 20 243,459 42.1
---------------------- -------------------------------------- -------- ---------- ---------------------
Manufactures compressors and
Anest Iwata painting machines 9,952 1.7 20.0
---------------------- -------------------------------------- -------- ---------- ---------------------
Enechange IT service management company 9,943 1.7 15.3
---------------------- -------------------------------------- -------- ---------- ---------------------
Designs & manufactures outdoor
Snow Peak lifestyle goods 9,692 1.7 (27.8)
---------------------- -------------------------------------- -------- ---------- ---------------------
Horiba Manufacturer of measuring instruments 9,591 1.7 25.2
---------------------- -------------------------------------- -------- ---------- ---------------------
OSG Manufactures machine tool equipment 9,354 1.6 (17.1)
---------------------- -------------------------------------- -------- ---------- ---------------------
eGuarantee Guarantees trade receivables 9,033 1.6 (22.7)
---------------------- -------------------------------------- -------- ---------- ---------------------
Outsourcing Employment placement services 8,980 1.6 27.3
---------------------- -------------------------------------- -------- ---------- ---------------------
Kumiai Chemical Specialised agrochemicals manufacturer 8,719 1.5 7.2
---------------------- -------------------------------------- -------- ---------- ---------------------
Yonex Sporting goods 8,298 1.4 (3.4)
---------------------- -------------------------------------- -------- ---------- ---------------------
Manufacturer of automated machine
Tsugami tools 8,039 1.4 (22.4)
---------------------- -------------------------------------- -------- ---------- ---------------------
Jeol Manufacturer of scientific equipment 7,768 1.3 13.7
---------------------- -------------------------------------- -------- ---------- ---------------------
Entertainment management and
Avex distribution 7,445 1.3 (23.9)
---------------------- -------------------------------------- -------- ---------- ---------------------
Harmonic Drive Robotic components 7,371 1.3 (20.8)
---------------------- -------------------------------------- -------- ---------- ---------------------
Develops and markets internet
and intranet application software
Cybozu for businesses 7,012 1.2 (25.4)
----------------------- -------------------------------------- -------- ---------- ---------------------
Construction project management
SpiderPlus platform 6,807 1.2 5.8
----------------------- -------------------------------------- -------- ---------- ---------------------
Iriso Electronics Specialist auto connectors 6,774 1.2 (19.3)
----------------------- -------------------------------------- -------- ---------- ---------------------
Internet platform for restaurant
Infomart supplies 6,715 1.2 (10.5)
----------------------- -------------------------------------- -------- ---------- ---------------------
Holding company with interests
Noritsu Koki in biotech and agricultural products 6,653 1.2 (7.1)
----------------------- -------------------------------------- -------- ---------- ---------------------
Manufacturer of lead terminals
for aluminium electrolytic capacitors
and optical isolators for undersea
Kohoku Kogyo cables 6,468 1.1 (14.5)
----------------------- -------------------------------------- -------- ---------- ---------------------
KH Neochem Chemical manufacturer 6,368 1.1 (24.8)
----------------------- -------------------------------------- -------- ---------- ---------------------
SIIX Out-sources overseas production 6,344 1.1 (2.7)
----------------------- -------------------------------------- -------- ---------- ---------------------
Kitz Industrial valve manufacturer 6,319 1.1 15.0
----------------------- -------------------------------------- -------- ---------- ---------------------
Drug discovery and development
Peptidream platform 6,172 1.1 (21.2)
----------------------- -------------------------------------- -------- ---------- ---------------------
Wealthnavi Digital robo wealth-management 6,075 1.0 (14.1)
----------------------- -------------------------------------- -------- ---------- ---------------------
GMO Payment Gateway Online payment processing 5,862 1.0 (20.3)
----------------------- -------------------------------------- -------- ---------- ---------------------
Demae-Can Online meal delivery service 5,825 1.0 0.5
----------------------- -------------------------------------- -------- ---------- ---------------------
Kamakura Shinso Information Processing Company 5,723 1.0 (41.8)
----------------------- -------------------------------------- -------- ---------- ---------------------
Weathernews Weather information services 5,486 0.9 (20.2)
----------------------- -------------------------------------- -------- ---------- ---------------------
Jeplan u Chemical PET recycling 5,471 0.9 (3.2)
----------------------- -------------------------------------- -------- ---------- ---------------------
Nittoku Coil winding machine manufacturer 5,450 0.9 (14.5)
----------------------- -------------------------------------- -------- ---------- ---------------------
Gojo & Company
Inc Class D Preferred
u Diversified financial services 5,324 0.9 (5.8)
----------------------- -------------------------------------- -------- ---------- ---------------------
Seria Discount retailer 5,218 0.9 (25.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
I-Ne Hair care range 5,161 0.9 (26.0)
----------------------- -------------------------------------- -------- ---------- ---------------------
MonotaRO Online business supplies 5,097 0.9 (21.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
Industrial pumps and medical
Nikkiso equipment 5,063 0.9 (21.0)
----------------------- -------------------------------------- -------- ---------- ---------------------
Nippon Ceramic Electronic component manufacturer 4,814 0.8 (6.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
Kitanotatsujin Online retailer 4,797 0.8 (35.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
Istyle Beauty product review website 4,784 0.8 (13.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
Shima Seiki Machine industry company 4,707 0.8 (12.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
Tsubaki Nakashima Industrial machinery 4,584 0.8 (35.2)
----------------------- -------------------------------------- -------- ---------- ---------------------
Inter Action Semiconductor equipment 4,560 0.8 (32.1)
----------------------- -------------------------------------- -------- ---------- ---------------------
Nabtesco Robotic components 4,503 0.8 (29.4)
----------------------- -------------------------------------- -------- ---------- ---------------------
Crowdworks Crowd sourcing services 4,294 0.7 (29.2)
----------------------- -------------------------------------- -------- ---------- ---------------------
Software as a service company
Appier providing AI platforms 4,107 0.7 20.2
----------------------- -------------------------------------- -------- ---------- ---------------------
Daikyonishikawa Automobile part manufacturer 4,091 0.7 15.7
----------------------- -------------------------------------- -------- ---------- ---------------------
Vector PR Company 3,981 0.7 (15.7)
----------------------- -------------------------------------- -------- ---------- ---------------------
WDB Holdings Human resource services 3,834 0.7 (13.1)
----------------------- -------------------------------------- -------- ---------- ---------------------
SWCC Electric wire and cable manufacturer 3,755 0.6 (1.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
Nihon M&A Center M&A advisory services 3,682 0.6 (45.3)
----------------------- -------------------------------------- -------- ---------- ---------------------
Pigeon Baby care products 3,408 0.6 (16.9)
----------------------- -------------------------------------- -------- ---------- ---------------------
Locondo E-commerce services provider 3,232 0.6 47.0
----------------------- -------------------------------------- -------- ---------- ---------------------
Freakout Holdings Digital marketing technology 3,178 0.5 (22.4)
----------------------- -------------------------------------- -------- ---------- ---------------------
Spiber u Textiles 3,008 0.5 (41.4)
----------------------- -------------------------------------- -------- ---------- ---------------------
M3 Online medical services 2,815 0.5 (18.1)
----------------------- -------------------------------------- -------- ---------- ---------------------
Poletowin Pitcrew Game testing and internet monitoring 2,770 0.5 (32.4)
----------------------- -------------------------------------- -------- ---------- ---------------------
Develops and provides enterprise
oRo planning software 2,580 0.4 (13.6)
----------------------- -------------------------------------- -------- ---------- ---------------------
Moneytree K.K.
Class B Preferred
u AI based fintech platform 2,416 0.4 4.5
----------------------- -------------------------------------- -------- ---------- ---------------------
Akatsuki Mobile games developer 2,263 0.4 (18.5)
----------------------- -------------------------------------- -------- ---------- ---------------------
Total investments 575,194 99.3
----------------------- -------------------------------------- -------- ---------- ---------------------
Net liquid assets
# 3,864 0.7
----------------------- -------------------------------------- -------- ---------- ---------------------
Total assets
++ 579,058 100.0
----------------------- -------------------------------------- -------- ---------- ---------------------
Bank loans (88,039) (15.2)
----------------------- -------------------------------------- -------- ---------- ---------------------
Shareholders'
funds 491,019 84.8
----------------------- -------------------------------------- -------- ---------- ---------------------
* Absolute performance is in sterling terms and has been
calculated on a total return basis over the period
1 February 2023 to 31 July 2023.
u Private company (unlisted) investment.
Figures relate to part period returns where the investment has
been purchased in the period.
# See Glossary of Terms and Alternative Performance Measures below.
++ Total assets less current liabilities, before deduction of
borrowings. See Glossary of Terms and Alternative
Performance Measures below.
Source: Baillie Gifford/Revolution and relevant underlying data
providers. See disclaimer below.
Income statement (unaudited)
For the six months to For the six months ended
31 July 2023 31 July 2022
--------------------------- ----- ---------------------------- ----------------------------
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ----- -------- -------- -------- -------- -------- --------
Net losses on investments 3 - (65,599) (65,599) - (32,239) (32,239)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Currency gains - 11,510 11,510 - 3,740 3,740
--------------------------- ----- -------- -------- -------- -------- -------- --------
Income from investments 4,225 - 4,225 4,753 - 4,753
--------------------------- ----- -------- -------- -------- -------- -------- --------
Investment management
fee 4 (1,521) - (1,521) (1,546) - (1,546)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Other administrative
expenses (310) - (310) (330) - (330)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Net return before
finance costs and
taxation 2,394 (54,089) (51,695) 2,877 (28,499) (25,622)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Finance cost of borrowings (713) - (713) (671) - (671)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Net return on ordinary
activities before
taxation 1,681 (54,089) (52,408) 2,206 (28,499) (26,293)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Tax on ordinary activities 5 (422) - (422) (475) - (475)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Net return on ordinary
activities after
taxation 1,259 (54,089) (52,830) 1,731 (28,499) (26,768)
--------------------------- ----- -------- -------- -------- -------- -------- --------
Net return per ordinary
share 7 0.40p (17.24p) (16.84p) 0.55p (9.07p) (8.52p)
--------------------------- ----- -------- -------- -------- -------- -------- --------
The accompanying notes below are an integral part of the
Financial Statements.
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)
Notes At 31 July At 31 January
2023
2023 (audited)
GBP'000 GBP'000
---------------------------------------------- ------ ----------- --------------
Fixed assets
---------------------------------------------- ------ ----------- --------------
Investments held at fair value through profit
or loss 8 575,194 625,922
---------------------------------------------- ------ ----------- --------------
Current assets
---------------------------------------------- ------ ----------- --------------
Debtors 2,763 3,047
---------------------------------------------- ------ ----------- --------------
Cash and cash equivalents 3,655 6,946
---------------------------------------------- ------ ----------- --------------
6,418 9,993
---------------------------------------------- ------ ----------- --------------
Creditors
---------------------------------------------- ------ ----------- --------------
Amounts falling due within one year 9 (51,780) (46,154)
---------------------------------------------- ------ ----------- --------------
Net current liabilities (45,362) (36,161)
---------------------------------------------- ------ ----------- --------------
Total assets less current liabilities 529,832 589,761
---------------------------------------------- ------ ----------- --------------
Creditors
---------------------------------------------- ------ ----------- --------------
Amounts falling due after more one year 9 (38,813) (44,308)
---------------------------------------------- ------ ----------- --------------
Total net assets 491,019 545,453
---------------------------------------------- ------ ----------- --------------
Capital and reserves
---------------------------------------------- ------ ----------- --------------
Share capital 6,285 6,285
---------------------------------------------- ------ ----------- --------------
Share premium account 260,270 260,270
---------------------------------------------- ------ ----------- --------------
Capital redemption reserve 21,521 21,521
---------------------------------------------- ------ ----------- --------------
Capital reserve 202,026 257,719
---------------------------------------------- ------ ----------- --------------
Revenue reserve 917 (342)
---------------------------------------------- ------ ----------- --------------
Shareholders' funds 491,019 545,453
---------------------------------------------- ------ ----------- --------------
Net asset value per ordinary share
(after deducting borrowings at book value) 156.9p 173.6p
---------------------------------------------- ------ ----------- --------------
Ordinary shares in issue 11 313,052,485 314,152,485
---------------------------------------------- ------ ----------- --------------
Statement of changes in equity (unaudited)
For the six months ended 31 July 2023
Share Share Capital Capital Revenue Shareholders'
capital premium redemption reserve* reserve funds
GBP'000 account reserve GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
---------------------------------- -------- -------- ----------- --------- -------- ---------------
Shareholder's funds at 1 February
2023 6,285 260,270 21,521 257,719 (342) 545,453
---------------------------------- -------- -------- ----------- --------- -------- -------------
Ordinary shares bought back into
treasury - - - (1,604) - (1,604)
---------------------------------- -------- -------- ----------- --------- -------- -------------
Net return on ordinary activities
after taxation - - - (54,089) 1,259 (52,830)
---------------------------------- -------- -------- ----------- --------- -------- -------------
Shareholders' funds at 31 July
2023 6,285 260,270 21,521 202,026 917 491,019
---------------------------------- -------- -------- ----------- --------- -------- -------------
For the six months ended 31 July 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
February 2022 6,285 260,270 21,521 268,408 (3,832) 552,652
---------------------------------- -------- -------- ----------- --------- -------- -------------
Net return on ordinary activities
after taxation - - - (28,499) 1,731 (26,768)
---------------------------------- -------- -------- ----------- --------- -------- -------------
Shareholders' funds at 31
July 2022 6,285 260,270 21,521 239,909 (2,101) 525,884
---------------------------------- -------- -------- ----------- --------- -------- -------------
*The Capital reserve includes investment holding gains of
GBP6,551,000 (31 July 2022 - gains of GBP36,090,000).
Condensed cash flow statement (unaudited)
Six months Six months
to to
31 July 31 July
2023 2022
GBP'000 GBP'000
-------------------------------------------------- ---------- ----------
Cash flows from operating activities
-------------------------------------------------- ---------- ----------
Net return on ordinary activities before taxation (52,408) (26,293)
-------------------------------------------------- ---------- ----------
Net losses on investments 65,599 32,239
-------------------------------------------------- ---------- ----------
Currency gains (11,510) (3,740)
-------------------------------------------------- ---------- ----------
Finance costs of borrowings 713 671
-------------------------------------------------- ---------- ----------
Overseas withholding tax (557) (521)
-------------------------------------------------- ---------- ----------
Changes in debtors and creditors 1,182 397
-------------------------------------------------- ---------- ----------
Cash from operations 3,019 2,753
-------------------------------------------------- ---------- ----------
Interest paid (687) (664)
-------------------------------------------------- ---------- ----------
Net cash inflow from operating activities 2,332 2,089
-------------------------------------------------- ---------- ----------
Net cash outflow from investing activities (15,530) (31,524)
-------------------------------------------------- ---------- ----------
Ordinary shares bought back into treasury and
stamp duty thereon (1,604) -
-------------------------------------------------- ---------- ----------
Bank loans repaid (11,486) -
-------------------------------------------------- ---------- ----------
Bank loans drawn down 23,799 -
-------------------------------------------------- ---------- ----------
Net cash inflow from financing activities 10,709 -
-------------------------------------------------- ---------- ----------
Decrease in cash and cash equivalents (2,489) (29,435)
-------------------------------------------------- ---------- ----------
Exchange movements (802) (770)
-------------------------------------------------- ---------- ----------
Cash and cash equivalents at start of period 6,946 33,505
-------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of period
* 3,655 3,300
-------------------------------------------------- ---------- ----------
* Cash and cash equivalents represent cash at bank and deposits
repayable on demand.
Notes to the financial statements (unaudited)
01. Basis of accounting
The condensed Financial Statements for the six months to 31 July
2023 comprise the statements set out above together with the
related notes below. They have been prepared in accordance with FRS
104 'Interim Financial Reporting' and the principles of the AIC's
Statement of Recommended Practice issued in November 2014 and
updated in July 2022 with consequential amendments and 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 31
July 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 January 2023.
Going concern
The Directors have considered the nature of the Company's
principal risks and uncertainties, as set out on the inside front
cover, together with its current position, investment objective and
policy, its assets and liabilities and projected income and
expenditure. The Board has, in particular, considered the impact of
heightened market volatility and reviewed the results of specific
leverage and liquidity stress testing, but does not believe the
Company's going concern status is affected. The Company's assets,
which are primarily investments in quoted securities which are
readily realisable (Level 1), exceed its liabilities significantly
and could be sold to repay borrowings if required. All borrowings
require the prior approval of the Board. Gearing levels and
compliance with loan 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) Regulations 2011. Accordingly, the Directors considered 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 in operational existence for a period of at
least twelve months from the date of approval of these Financial
Statements.
02. 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 January 2023 has been extracted
from the statutory accounts which have been filed with the
Registrar of Companies. The Auditor's Report on these accounts was
not qualified, did not include a reference to any matters to which
the Auditor drew attention by way of emphasis without qualifying
their report, and did not contain a statement under sections 498
(2) or (3) of the Companies Act 2006.
03. Net losses on investments
Six months Six months
to 31 July to 31 July
2023 2022
GBP'000 GBP'000
------------------------------- ----------- -----------
Gains/(losses) on sales of
investments 1,648 (13,268)
------------------------------- ----------- -----------
Movement in investment holding
gains (67,247) (18,971)
------------------------------- ----------- -----------
(65,599) (32,239)
------------------------------- ----------- -----------
04. 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 (AIFM) and Company Secretary.
The investment management function has been delegated to Baillie
Gifford & Co. The management agreement can be terminated on six
months' notice. The annual management fee is 0.75% on the first
GBP50m of net assets, 0.65% on the next GBP200m of net assets and
0.55% on the remainder, calculated and payable quarterly.
05. Tax
The Company suffers overseas withholding tax on its equity
income, currently at the rate of 10%.
06. Dividends
No interim dividend will be declared.
07. Net return per ordinary share
Six months to 31 Six months to 31 July
July 2023 2022
GBP'000 GBP'000
--------------- ---------------- ---------------------
Revenue return 1,259 1,731
--------------- ---------------- ---------------------
Capital return (54,089) (28,499)
--------------- ---------------- ---------------------
Total return (52,830) (26,768)
--------------- ---------------- ---------------------
Net return per ordinary share is based on the above totals of
revenue and capital and on 313,792,816 (31 July 2022 - 314,252,485)
ordinary shares, being the weighted average number of ordinary
shares in issue during the period. There are no dilutive or
potentially dilutive shares in issue.
08. Fair value financial assets
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 Company's investments are financial assets held at fair
value through profit or loss. In accordance with FRS 102, an
analysis of the Company's financial asset investments based on the
fair value hierarchy described above is shown below.
As at 31 July 2023 Level Level Level Total
1 2 3 GBP'000
GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- --------
Listed equities 558,975 - - 558,975
-------------------------------------- -------- -------- -------- --------
Private company (unlisted) securities - - 16,219 16,219
-------------------------------------- -------- -------- -------- --------
Total financial asset investments 558,975 - 16,219 575,194
-------------------------------------- -------- -------- -------- --------
As at 31 January 2023 Level Level Level Total
1 2 3 GBP'000
GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- --------
Listed equities 607,176 - - 607,176
-------------------------------------- -------- -------- -------- --------
Private company (unlisted) securities - - 18,746 18,746
-------------------------------------- -------- -------- -------- --------
Total financial asset investments 607,176 - 18,746 625,922
-------------------------------------- -------- -------- -------- --------
There have been no transfers between levels of the fair value
hierarchy during the period. The fair value of listed investments
is last traded price which is equivalent to the bid price on
Japanese markets. Listed investments are categorised as Level 1 if
they are valued using unadjusted quoted prices for identical
instruments in an active market and as Level 2 if they do not meet
all these criteria but are, nonetheless, valued using market data.
Private company (unlisted) investments are valued at fair value by
the Directors following a detailed review and appropriate challenge
of the valuations proposed by the Managers. The Managers' private
company valuation policy applies methodologies consistent with the
International Private Equity and Venture Capital Valuation
guidelines 2018 ('IPEV'). The techniques applied are predominantly
market- based approaches. The market-based approaches available
under IPEV are set out below:
-- Multiples;
-- Industry Valuation Benchmarks; and
-- Available Market Prices.
Further information on the private company (unlisted) valuation
process is provided above.
The Company's holdings in private company (unlisted) investments
are categorised as Level 3 as unobservable data is a significant
input to their fair value measurements.
09. Financial liabilities
The amounts falling due within one year include bank loans of
GBP49,226,000 (Yen9.00 billion) outstanding under yen loan
facilities repayable on 27 November 2023 and the revolving credit
facility repayable on a three monthly basis (31 January 2023 - bank
loans of GBP43,705,000 (Yen7.00 billion)). The amounts falling due
after more than one year include bank loans of GBP38,813,000
(Yen7.10 billion) outstanding under yen loan facilities repayable
between 8 November 2024 and 18 December 2024 (31 January 2023 -
GBP44,308,000 (Yen7.10 billion)).
10. Fair value financial liabilities
The fair value of the bank loans at 31 July 2023 was
GBP87,979,000 (31 January 2023 - GBP87,725,000).
11. 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 under
review, no shares were issued (31 July 2022 - nil). 1,100,000
shares were bought back during the period under review at a cost of
GBP1,604,000 (31 July 2022 - nil).
12. Transaction costs
Transaction costs incurred on the purchase and sale of the
investments are added to the purchase cost or deducted from the
sale proceeds, as appropriate. During the period, transaction costs
on purchases amounted to GBP23,000 (31 July 2022 - GBP36,000) and
transaction costs on sales amounted to GBP14,000 (31 July 2022 -
GBP25,000).
13. 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.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment .
Principal risks and uncertainties
The principal risks facing the Company are financial risk,
private company (unlisted) investment risk, investment strategy
risk, environmental, social and governance risk, discount risk,
regulatory risk, custody and depositary risk, small company risk,
operational risk, cyber security risk, leverage risk, political
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 January 2023
which is available on the Company's website: shinnippon.co.uk ++ .
The principal risks and uncertainties have not changed since the
date of that report.
The Interim Financial Report will be available on
shinnippon.co.uk++ and will be posted to shareholders on or around
4 October 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.
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 a ssets
This is the Company's definition of Adjusted Total Assets, being
the total value of all assets held less all liabilities (other than
liabilities in the form of borrowings).
Shareholders' funds and Net Asset Value
Also described as shareholders' funds, Net Asset Value ('NAV')
is the value of total assets less liabilities (including
borrowings). The NAV per share is calculated by dividing this
amount by the number of ordinary shares in issue.
Net Asset Value (borrowings at b ook value)
Borrowings are valued at adjusted net issue proceeds. The
Company's yen denominated loans are valued at their sterling
equivalent and adjusted for their arrangement fees. The value of
the borrowings on this basis is set out in note 9 above.
Net Asset Value (borrowings at f air value) (APM)
This is a widely reported measure across the investment trust
industry. Borrowings are valued at an estimate of their market
worth. The Company's yen denominated loans are fair valued using
methodologies consistent with International Private Equity and
Venture Capital Valuation ('IPEV') guidelines. The value of the
borrowings on this basis is set out in note 10 above.
31 July 2023 31 January
2023
----------------------------------------------- --------------- ---------------
Net Asset Value per ordinary share (borrowings
at book value) 156.9p 173.6p
----------------------------------------------- --------------- ---------------
Shareholders' funds (borrowings at book value) GBP491,019,000 GBP545,453,000
----------------------------------------------- --------------- ---------------
Add: book value of borrowings GBP88,039,000 GBP88,013,000
----------------------------------------------- --------------- ---------------
Less: fair value of borrowings (GBP87,979,000) (GBP87,725,000)
----------------------------------------------- --------------- ---------------
Shareholders' funds (borrowings at fair value) GBP491,079,000 GBP545,741,000
----------------------------------------------- --------------- ---------------
Shares in issue at period end 313,052,485 314,152,485
----------------------------------------------- --------------- ---------------
Net Asset Value per ordinary share (borrowings
at fair value) 156.9p 173.7p
----------------------------------------------- --------------- ---------------
Net liquid a ssets
Net liquid assets comprise current assets less current
liabilities, excluding borrowings.
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 July 2023 31 July 2023 31 January 31 January
NAV (book) NAV (fair) 2023 2023
NAV (book) NAV (fair)
---------------------- ------------ ------------ ----------- -----------
Closing NAV per share 156.9p 156.9p 173.6p 173.7p
---------------------- ------------ ------------ ----------- -----------
Closing share price 139.0p 139.0p 158.8p 158.8p
---------------------- ------------ ------------ ----------- -----------
Discount 11.4% 11.4% 8.5% 8.6%
---------------------- ------------ ------------ ----------- -----------
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.
The Company does not pay a dividend, therefore, the one year total
returns for the share price and NAV per share at book and fair
value are the same as the percentage movements in the share price
and NAV per share at book and fair value as detailed above.
Ongoing c harges (APM)
The total expenses (excluding borrowing costs) incurred by the
Company as a percentage of the average net asset value (with debt
at fair value).
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 represents
borrowings at book less cash and cash equivalents expressed as a
percentage of shareholders' funds. Gross gearing is the Company's
borrowings expressed as a percentage of shareholders' funds.
31 July 2023 31 January 2023
-------------------------- ----------------------- -----------------------
Gearing* Gross Gearing Gearing* Gross Gearing
GBP'000 GBP'000 GBP'000
GBP'000
-------------------------- -------- ------------- -------- -------------
Borrowings (a) 88,039 88,039 88,013 88,013
-------------------------- -------- ------------- -------- -------------
Cash and cash equivalents
(b) 3,450 - 6,082 -
-------------------------- -------- ------------- -------- -------------
Shareholders' funds (c) 491,019 491,019 545,453 545,453
-------------------------- -------- ------------- -------- -------------
17.2% 17.9% 15.0% 16.1%
-------------------------- -------- ------------- -------- -------------
* Gearing: ((a) - (b)) ÷ (c), expressed as a percentage.
Gross gearing (a) ÷ (c), expressed as a percentage.
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers
('AIFM') Directive, 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 s hare (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.
Private (unlisted) company
A private (unlisted) company company means a company whose
shares are not available to the general public for trading and not
listed on a stock exchange.
Third party data providers disclaimer
No third party data provider ('Provider') makes any warranty,
express or implied, as to the accuracy, completeness or timeliness
of the data contained herewith nor as to the results to be obtained
by recipients of the data. No Provider shall in any way be liable
to any recipient of the data for any inaccuracies, errors or
omissions in the index data included in this document, regardless
of cause, or for any damages (whether direct or indirect) resulting
therefrom.
No Provider has any obligation to update, modify or amend the
data or to otherwise notify a recipient thereof in the event that
any matter stated herein changes or subsequently becomes
inaccurate.
Without limiting the foregoing, no Provider shall have any
liability whatsoever to you, whether in contract (including under
an indemnity), in tort (including negligence), under a warranty,
under statute or otherwise, in respect of any loss or damage
suffered by you as a result of or in connection with any opinions,
recommendations, forecasts, judgements, or any other conclusions,
or any course of action determined, by you or any third party,
whether or not based on the content, information or materials
contained herein.
MSCI index data
Source: MSCI. The MSCI information may only be used for your
internal use, may not be reproduced or redisseminated in any form
and may not be used as a basis for or a component of any financial
instruments or products or indices. None of the MSCI information is
intended to constitute investment advice or a recommendation to
make (or refrain from making) any kind of investment decision and
may not be relied on as such. Historical data and analysis should
not be taken as an indication or guarantee of any future
performance analysis, forecast or prediction.
The MSCI information is provided on an 'as is' basis and the
user of this information assumes the entire risk of any use made of
this information. MSCI, each of its affiliates and each other
person involved in or related to compiling, computing or creating
any MSCI information collectively, the 'MSCI Parties' expressly
disclaims all warranties (including, without limitation, any
warranties of originality, accuracy, completeness, timeliness,
non-infringement, merchantability and fitness for a particular
purpose) with respect to this information. Without limiting any of
the foregoing, in no event shall any MSCI Party have any liability
or any direct, indirect, special, incidental, punitive,
consequential (including, without limitation, lost profits) or any
other damages (msci.com).
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 Shin
Nippon is marketed in the EU by the AIFM, BG & Co Limited, via
the National Private Placement Regime ('NPPR') the following
disclosures have been provided to comply with the high-level
requirements of SFDR.
The AIFM has adopted Baillie Gifford & Co's ESG Principles
and Guidelines as its policy on integration of sustainability risks
in investment decisions.
Baillie Gifford & Co believes that a company cannot be
financially sustainable in the long run if its approach to business
is fundamentally out of line with changing societal expectations.
It defines 'sustainability' as a deliberately broad concept which
encapsulates a company's purpose, values, business model, culture,
and operating practices.
Baillie Gifford & Co's approach to investment is based on
identifying and holding high quality growth businesses that enjoy
sustainable competitive advantages in their marketplace. To do this
it looks beyond current financial performance, undertaking
proprietary research to build up an in-depth knowledge of an
individual company and a view on its long-term prospects. This
includes the consideration of sustainability factors
(environmental, social and/or governance matters) which it believes
will positively or negatively influence the financial returns of an
investment. The likely impact on the return of the portfolio from a
potential or actual material decline in the value of investment due
to the occurrence of an environmental, social or governance event
or condition will vary and will depend on several factors including
but not limited to the type, extent, complexity and duration of an
event or condition, prevailing market conditions and existence of
any mitigating factors.
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.
- ends -
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END
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September 22, 2023 02:00 ET (06:00 GMT)
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