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RNS Number : 8620H Baillie Gifford Japan Trust PLC 22 March 2024
RNS Announcement
The Baillie Gifford Japan Trust PLC
Legal Entity Identifier: 54930037AGTKN765Y741
Regulated Information Classification: Interim Financial Report
Results for the six months to 29 February 2024
The following is the unaudited Interim Financial Report for the six months to
29 February 2024 which was approved by the Board on 21 March 2024.
In the six months to 29 February 2024, The Baillie Gifford Japan Trust's net
asset value total return per share was +7.8%. The share price total return was
+2.5%. The TOPIX total return (in sterling terms) was +13.1%.
- During the period the Company bought back 3,135,000 shares
representing 3.5% of the issued share capital as at 29 February 2024.
- The Company continues to deploy gearing, a key benefit of being a
closed ended vehicle, and the gearing level sits at approximately 17.7%.
Gearing contributed +1.5% to performance over the period.
- The five largest positive contributors to relative performance
were Rakuten (+1.0%), SoftBank Group (+1.0%) SBI Holdings (+0.7%), Rizap
(+0.6%) and MS&AD Insurance (+0.5%). Of note, Rakuten continued to make
progress towards profitability in its mobile business by gaining more
subscribers and SoftBank Group successfully listed 10% of its investment in
Arm Holdings which went on to have very strong share performance.
- During the period, Itochu (large general trading company) and
Outsourcing (staffing company) were sold and the proceeds were reinvested in
existing names where the Managers have higher conviction. Outsourcing received
a bid at a significant premium from a private equity firm.
- Sentiment towards Japanese stocks has improved, particularly in
the large-cap space. The Topix 100 delivered a total return of 17% whereas the
Topix 400 delivered a total return of 5%.
Summary of Unaudited Results
29 February 31 August 2023
2024
(audited) % change
Shareholders' funds £753.5m £733.0m
Net asset value per share* 838.0p 787.7p 6.4
Share price 742.0p 735.0p 1.0
Discount* (11.5%) (6.7%)
Active share* 84% 83%
Six months to Six months to
29 February
28 February
2024
2023
Revenue earnings per share 4.31p 5.28p
Total returns (%)*†
Net asset value per share 7.8 (1.2)
Share price 2.5 (0.6)
TOPIX total return (in sterling terms) 13.1 0.6
Six months to Year to
29 February 2024
31 August 2023
Period's high and low High Low High Low
Net asset value per share* 838.2p 715.5p 876.0p 749.0p
Share price 755.0p 641.0p 827.0p 703.0p
(Discount)/premium* (6.5%) (12.1%) 0.2% (11.9%)
* Alternative Performance Measure - see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
† Source: Baillie Gifford/LSEG and relevant underlying data providers. See
disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Interim Management Report
The six month period to the end of February 2024 was a positive one for the
Japanese stock market. During the period the NAV total return of your Company
was +7.8% whilst the share price return was +2.5% and the TOPIX total return
(in sterling terms) was +13.1%.
The Japanese macro-economic environment continues to provide a solid
background for investing. Companies have maintained a good focus on the
importance of shareholder returns. Inflation has persisted and workers are
increasingly benefiting from wage rises. Meanwhile the weak yen has continued
to buoy the profits of exporters. Consequently, the Bank of Japan has ended
the negative interest rate and yield curve control policies. After a long wait
this move clearly signals the final step in Japan's long journey back out of
deflation.
In general, sentiment towards Japanese stocks improved over the period and,
unusually, this improvement was disproportionately biased towards larger-cap
companies. For example, the Topix 100 (the largest 100 companies in Japan)
delivered a total return of 17% whereas the Topix 400 (the next largest 400
companies in Japan) delivered a total return of 5%. Generally, larger
Japanese companies tend to have more export exposure and so benefitted from
solid global demand and the weak yen. At the end of the period the Topix 100
comprised 66% of total Japanese market capitalisation whereas these larger
companies were 42% of your Company. We are looking for companies with the
ability to grow sales and profits significantly over the long-term which means
that we are naturally orientated towards a higher weighting in medium and
smaller companies. These companies are often using more innovative business
models and have a longer growth runway ahead of them.
Turning to individual stocks, the five largest positive contributors to
relative performance were Rakuten (+1.0%), SoftBank Group (+1.0%), SBI
Holdings (+0.7%), Rizap (+0.6%) and MS&AD Insurance (+0.5%). The five
largest negative contributors to relative performance were Shiseido (-1.1%),
TKP (-0.8%) and Pola Orbis (-0.7%) as well as not holding Toyota Motor (-1.1%)
and Tokyo Electron (-0.7%). Finally, gearing contributed +1.5% to relative
performance.
Each of the positive contributors experienced solid business performance over
the period. Rakuten continued to make progress towards achieving profitability
in its mobile business by gaining more subscribers. SoftBank Group
successfully listed 10% of its investment in Arm Holdings, which went on to
have very strong share price performance as it has been benefiting from
increased demand due to the requirements of AI. SBI Holdings benefited from
expansion in the NISA market (Nippon Individual Savings Account) and increased
interest in Japanese stocks. Rizap has been successfully rolling out its
ChocoZap community gym offering. Finally, MS&AD Insurance looks set to
realise some of the value of its substantial portfolio of cross-holdings.
On the negative side Shiseido and Pola Orbis are both waiting for a full
return of Chinese tourists to Japan, while TKP has been adjusting its business
model to focus on large room rental again. Toyota Motor and Tokyo Electron
(both not held) performed strongly as they benefited from good demand and a
weak Yen backdrop.
During the period we sold two holdings and reinvested the proceeds in existing
names where we have higher conviction. The two sold were Itochu and
Outsourcing. Itochu is a large general trading company that has been re-rated
significantly in recent years and where we no longer see sufficient
opportunity to continue holding the shares. Outsourcing is a staffing company
that received a bid at a significant premium by a private equity company.
We continue to be positive about the outlook for the portfolio of stocks held
by your Company. Whilst these types of businesses have not been the
short-term focus of the market, many continue to make solid operational
progress and benefit from longer-term secular trends such as the moves towards
digitalisation, automation and AI. Consequently, we have maintained net
gearing at the significant level of 17.7%.
The principal risks and uncertainties facing the Company are set out in Note
10 below.
Past performance is not a guide to future performance
Total return information sourced from LSEG/Baillie Gifford. See disclaimer at
end of this document.
See Glossary of Terms and Alternative Performance Measures at the end of this
announcement
Responsibility Statement
We confirm that to the best of our knowledge:
a. the condensed set of Financial Statements has been prepared in accordance
with FRS 104 'Interim Financial Reporting';
b. the Interim Management Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.7R (being an
indication of important events that have occurred during the first six months
of the financial year, their impact on the condensed set of Financial
Statements and a description of the principal risks and uncertainties for the
remaining six months of the year); and
c. the Interim Financial Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of
related party transactions and changes therein).
On behalf of the Board
David Kidd
Chairman
21 March 2024
List of Investments
As at 29 February 2024 (unaudited)
Name Business Value % of total
£'000
investments
Secular Growth*
Rakuten Commerce and services 39,927 4.5
SBI Holdings Financials 39,313 4.4
GMO Internet Information, communication and utilities 26,569 3.0
FANUC Electricals and electronics 24,744 2.8
CyberAgent Commerce and services 23,798 2.7
Kubota Manufacturing and machinery 20,490 2.3
Recruit Holdings Commerce and services 19,218 2.2
Keyence Electricals and electronics 17,757 2.0
Oisix Retail 17,276 1.9
Sato Manufacturing and machinery 17,241 1.9
Sysmex Electricals and electronics 16,411 1.9
GA Technologies Information, communication and utilities 15,196 1.7
Misumi Commerce and services 14,703 1.7
Seria Retail 11,367 1.3
SMC Manufacturing and machinery 9,809 1.1
Topcon Manufacturing and machinery 9,732 1.1
MonotaRO Retail 9,290 1.0
TKP Real estate and construction 8,622 1.0
Rizap Commerce and services 8,438 1.0
Nidec Electricals and electronics 8,024 0.9
Raksul Information, communication and utilities 7,149 0.8
M3 Commerce and services 6,882 0.8
LY Corporation Commerce and services 6,567 0.7
Demae-can Information, communication and utilities 6,546 0.7
Broadleaf Information, communication and utilities 6,322 0.7
Lifenet Insurance Financials 6,136 0.7
Nihon M&A Center Commerce and services 5,879 0.7
Mercari Information, communication and utilities 5,711 0.6
freee K.K. Information, communication and utilities 5,671 0.6
Vector Information, communication and utilities 4,820 0.5
Pigeon Manufacturing and machinery 4,490 0.5
Noritsu Koki Manufacturing and machinery 4,357 0.5
Infomart Commerce and services 4,214 0.5
Digital Garage Information, communication and utilities 3,818 0.4
Bengo4.com Commerce and services 3,586 0.4
BASE Information, communication and utilities 3,351 0.4
PeptiDream Pharmaceuticals and food 3,347 0.4
Istyle Information, communication and utilities 3,122 0.4
Nippon Ceramic Electricals and electronics 2,863 0.3
452,756 51.0
Growth Stalwarts†
Calbee Pharmaceuticals and food 26,925 3.0
Nintendo Manufacturing and machinery 20,307 2.3
Shiseido Manufacturing and machinery 15,831 1.8
Unicharm Chemicals and other materials 15,609 1.8
Pola Orbis Chemicals and other materials 13,169 1.5
Sugi Retail 7,535 0.9
Park24 Real estate and construction 7,121 0.8
Kao Chemicals and other materials 6,646 0.7
Sawai Pharmaceutical Pharmaceuticals and food 3,277 0.4
116,420 13.2
Special Situations#
SoftBank Group Information, communication and utilities 59,117 6.7
Sony Electricals and electronics 24,670 2.8
mixi Commerce and services 20,838 2.4
MS&AD Insurance Financials 20,348 2.3
Tokyo Tatemono Real estate and construction 11,587 1.3
Colopl Information, communication and utilities 9,684 1.1
Olympus Pharmaceuticals and food 7,981 0.9
154,225 17.5
Cyclical Growth‡
Sumitomo Mitsui Trust Bank Financials 33,805 3.8
DMG Mori Manufacturing and machinery 22,593 2.4
Bridgestone Manufacturing and machinery 16,346 1.8
Sumitomo Metal Mining Chemicals and other materials 13,803 1.6
Murata Manufacturing Electricals and electronics 13,753 1.6
Rohm Electricals and electronics 12,846 1.4
Chugoku Marine Paints Chemicals and other materials 12,429 1.4
DENSO Manufacturing and machinery 11,400 1.3
Nifco Chemicals and other materials 11,311 1.3
SWCC Showa Electricals and electronics 7,737 0.9
Iida Group Holdings Real estate and construction 4,171 0.5
Shima Seiki Manufacturing and machinery 2,700 0.3
162,894 18.3
Total investments 886,295 100.0
Growth category
* Secular Growth - opportunity to grow rapidly but where there are a number of
potential outcomes.
† Growth Stalwarts - growth is less rapid but more predictable.
# Special Situations - performance has not been good but there is a reason to
believe improvements are underway.
‡ Cyclical Growth - earnings do not rise every year but are expected to be
higher from one cycle to the next.
Stocks highlighted in bold are the 20 largest holdings.
Income Statement (unaudited)
For the six months ended 29 February 2024 For the six months ended 28 February 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments - 43,761 43,761 - (18,450) (18,450)
Currency gains - 3,470 3,470 - 3,102 3,102
Income from investments and interest receivable 8,066 - 8,066 9,352 - 9,352
Investment management fee (2,118) - (2,118) (2,260) - (2,260)
Other administrative expenses (345) - (345) (326) - (326)
Net return before finance costs and taxation 5,603 47,231 52,834 6,766 (15,348) (8,582)
Finance costs of borrowings (861) - (861) (885) - (885)
Net return before taxation 4,742 47,231 51,973 5,881 (15,348) (9,467)
Tax (806) - (806) (935) - (935)
Net return after taxation 3,936 47,231 51,167 4,946 (15,348) (10,402)
Net return per ordinary share (note 5) 4.31p 51.74p 56.05p 5.28p (16.39p) (11.11p)
The total column of this statement is the profit and loss account of the
Company. The supplementary revenue and capital columns are prepared under
guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing
operations.
A Statement of Comprehensive Income is not required as all gains and losses of
the Company have been reflected in the above statement.
The accompanying notes below are an integral part of the Financial Statements.
Balance Sheet (unaudited)
Notes At 29 February 2024 At 31 August 2023 (audited) £'000
£'000
Fixed assets
Investments 6 886,295 858,486
Current assets
Debtors 2,424 1,811
Cash and cash equivalents 9,401 6,030
11,825 7,841
Creditors
Amounts falling due within one year (65,432) (1,641)
Net current (liabilities)/assets (53,607) 6,200
Total assets less current liabilities 832,688 864,686
Creditors
Amounts falling due after more than one year: bank loans (79,229) (131,723)
Net assets 753,459 732,963
Capital and reserves
Share capital 4,717 4,717
Share premium account 213,902 213,902
Capital redemption reserve 203 203
Capital reserve 522,682 496,965
Revenue reserve 11,955 17,176
Shareholders' funds 753,459 732,963
Net asset value per ordinary share* 838.0p 787.7p
Ordinary shares in issue 8 89,912,614 93,047,614
* See Glossary of Terms and Alternative Performance Measures at the end of
this announcement.
The accompanying notes below are an integral part of the Financial Statements.
Statement of Changes in Equity (unaudited)
For the six months ended 29 February 2024
Notes Share Share Capital Revenue Shareholders'
Capital
capital premium redemption
reserve funds
reserve *
£'000 account reserve
£'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 September 2023 4,717 213,902 203 496,965 17,176 732,963
Shares bought back - - - (21,514) - (21,514)
Net return on ordinary activities after taxation - - - 47,231 3,936 51,167
Dividends paid during the period 4 - - - - (9,157) (9,157)
Shareholders' funds at 29 February 2024 4,717 213,902 203 522,682 11,955 753,459
For the six months ended 28 February 2023
Notes Share Share Capital Revenue Shareholders'
Capital
capital premium redemption
reserve funds
reserve *
£'000 account reserve
£'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 September 2022 4,717 213,902 203 556,414 15,770 791,006
Shares bought back - - - (2,058) - (2,058)
Net return on ordinary activities - - - (15,348) 4,946 (10,402)
after taxation
Dividends paid during the period 4 - - - - (8,426) (8,426)
Shareholders' funds at 28 February 2023 4,717 213,902 203 539,008 12,290 770,120
* The capital reserve balance at 29 February 2024 includes investment holding
gains on investments of £59,740,000 (28 February 2023 - gains of
£116,236,000).
The accompanying notes below are an integral part of the Financial Statements.
Condensed Cash Flow Statement (unaudited)
Notes Six months to Six months to
29 February 2024
28 February 2023
£'000 £'000
Cash flows from operating activities
Net return before taxation 51,973 (9,467)
Net (gains)/losses on investments (43,761) 18,450
Currency gains (3,470) (3,102)
Finance costs of borrowings 861 885
Overseas withholding tax (738) (870)
Changes in debtors and creditors (684) (2,249)
Cash from operations 4,181 3,647
Interest paid (866) (901)
Net cash inflow from operating activities 3,315 2,746
Cash flows from investing activities
Acquisitions of investments (39,296) (29,585)
Disposals of investments 55,966 34,763
Exchange differences on settlement of investment transactions - 446
Net cash inflow from investing activities 16,670 5,624
Shares bought back 8 (21,288) (2,058)
Equity dividends paid 4 (9,157) (8,426)
Bank loans drawn down 92,498 15,624
Bank loans repaid (78,620) (16,189)
Net cash outflow from financing activities (16,567) (11,049)
Increase/(decrease) in cash and cash equivalents 3,418 (2,679)
Exchange movements (47) (45)
Cash and cash equivalents at start of period* 6,030 11,017
Cash and cash equivalents at end of period* 9,401 8,293
* Cash and cash equivalents represent cash at bank and short term money
market deposits repayable on demand.
Notes to the Financial Statements
1. Basis of Accounting
The condensed Financial Statements for the six months to 29 February 2024
comprise the statements set out above together with the related notes below.
They have been prepared in accordance with FRS 104 'Interim Financial
Reporting' and the AIC's Statement of Recommended Practice issued in November
2014 and updated in July 2022 with consequential amendments.
They have not been audited or reviewed by the Auditor pursuant to the Auditing
Practices Board Guidance on 'Review of Interim Financial Information'. The
Financial Statements for the six months to 29 February 2024 have been prepared
on the basis of the same accounting policies as set out in the Company's
Annual Report and Financial Statements at 31 August 2023.
Going Concern
Having considered the Company's principal risks and uncertainties, as set out
in Note 10, together with its current position, investment objective and
policy, its assets and liabilities, and projected income and expenditure,
together with the Company's dividend policy, it is the Directors' opinion that
the Company has adequate resources to continue in operational existence for
the foreseeable future. The Board has considered severe but plausible downside
scenarios, including the impact of heightened market volatility and
macroeconomic and geopolitical concerns, including rising inflation and
interest rates, but it does not believe the Company's going concern status is
affected. The Company's assets, the majority of which are investments in
quoted securities which are readily realisable, exceed its liabilities
significantly. All borrowings require the prior approval of the Board. Gearing
levels and compliance with borrowing covenants are reviewed by the Board on a
regular basis. In accordance with the Company's Articles
of Association, shareholders have the right to vote annually at the Annual
General Meeting on whether to continue the Company. The next continuation vote
will be in December 2024. The Directors have no reason to believe that the
continuation resolution will not be passed at the Annual General Meeting. The
Company has continued to comply with the investment trust status requirements
of section 1158 of the Corporation Tax Act 2010 and the Investment Trust
(Approved Company) (Tax) Regulations 2011. Accordingly, the Directors consider
it appropriate to adopt the going concern basis of accounting in preparing
these Financial Statements and confirm that they are not aware of any material
uncertainties which may affect the Company's ability to continue to do so over
a period of at least twelve months from the date of approval of these
Financial Statements.
2. Financial Information
The financial information contained within this Interim Financial Report does
not constitute statutory accounts as defined in sections 434 to 436 of the
Companies Act 2006. The financial information for the year ended 31 August
2023 has been extracted from the statutory accounts which have been filed with
the Registrar of Companies. The Auditor's Report on those accounts was not
qualified, did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying its report and did not
contain statements under sections 498(2) or (3) of the Companies Act 2006.
3. Investment Manager
Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford
& Co, has been appointed by the Company as its Alternative Investment Fund
Manager and Company Secretary. The investment management function has been
delegated to Baillie Gifford & Co. The management agreement can be
terminated on not less than 6 months' notice, or on shorter notice in certain
circumstances. The annual management fee is 0.75% on the first £50 million of
net assets, 0.65% on the next £200 million of net assets and 0.55% on the
remaining net assets, calculated and payable quarterly.
4. Dividends
Six months to Six months to
29 February 28 February
2024 2023
£'000 £'000
Amounts recognised as a distribution in the period: 9,157 8,426
Previous year's final dividend of 10.00p paid 20 December 2023
(2023 - 9.00p paid on 21 December 2022)
No interim dividend has been declared.
5. Net Return per Ordinary Share
Six months to Six months to
29 February 28 February
2024 2023
£'000 £'000
Revenue return after taxation 3,936 4,946
Capital return after taxation 47,231 (15,348)
Total net return 51,167 (10,402)
Weighted average number of ordinary shares in issue 91,294,290 93,667,547
Net return per ordinary share is based on the above totals of revenue and
capital and the weighted average number of ordinary shares in issue during
each period. There are no dilutive or potentially dilutive shares in issue.
6. Fair Value Hierarchy
The fair value hierarchy used to analyse the basis on which the fair values of
financial instruments held at fair value through the profit or loss account
are measured is described below. Fair value measurements are categorised on
the basis of the lowest level input that is significant to the fair value
measurement.
Level 1 - using unadjusted quoted prices for identical instruments in an
active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that
are directly or indirectly observable (based on market data); and
Level 3 - using inputs that are unobservable (for which market data is
unavailable).
The fair value of listed investments is the last traded price which is
equivalent to the bid price on Japanese markets.
The financial assets designated as valued at fair value through profit or loss
are all categorised as Level 1 in the above hierarchy. None of the financial
liabilities are designated at fair value through profit or loss in the
Financial Statements.
All of the Company's investments fall into Level 1 for the periods reported.
7. Bank Loans
Bank loans of £142.1m million (¥26.9 billion) have been drawn down under yen
loan facilities which are repayable between May 2024 and August 2025 (31
August 2023 - £131.7 million (¥24.3 billion)).
8. Share Capital
The Company has the authority to issue shares/sell treasury shares at a
premium to net asset value as well as to buy back shares at a discount to net
asset value. During the period, no shares were issued and 3,135,000 shares
were bought back into Treasury (28 February 2023 - nil issued and 276,845
bought back). There were 4,415,595 shares held in Treasury at 29 February 2024
(28 February 2023 - 705,595). Between 1 March 2024 and 20 March 2024, the
Company bought back a further 90,000 shares into Treasury. The Company has
authority remaining to buy back 12,605,808 ordinary shares.
9. Related Party Transactions
There have been no transactions with related parties during the first six
months of the current financial year that have materially affected the
financial position or the performance of the Company during that period and
there have been no changes in the related party transactions described in the
last Annual Report and Financial Statements that could have had such an effect
on the Company during that period.
10. Principal Risks and Uncertainties
The principal risks facing the Company are financial risk, investment strategy
risk, discount risk, smaller company risk, climate and governance risk,
leverage risk, regulatory risk, political and associated economic risk,
custody and depositary risk, reliance on third party service provider risk,
cyber security risk and emerging risks. An explanation of these risks and how
they are managed is set out on pages 38 to 41 of the Company's Annual Report
and Financial Statements for the year to 31 August 2023 and is available on
the Company's website: japantrustplc.co.uk.
The principal risks and uncertainties have not changed since the date of the
Annual Report.
Glossary of Terms and Alternative Performance Measures ('APM')
Net Asset Value
Also described as shareholders' funds, net asset value ('NAV') is the value of
total assets less liabilities (including borrowings). The NAV per share is
calculated by dividing this amount by the number of ordinary shares in issue.
Borrowings are valued at their nominal par value. Par value approximates to
amortised cost. The Company's yen denominated loans are valued at their
sterling equivalent.
(Discount)/Premium (APM)
As stockmarkets and share prices vary, an investment trust's share price is
rarely the same as its NAV. When the share price is lower than the NAV per
share it is said to be trading at a discount. The size of the discount is
calculated by subtracting the share price from the NAV per share and is
usually expressed as a percentage of the NAV per share. If the share price is
higher than the NAV per share, this situation is called a premium.
29 February 31 August
2023
2024
Net asset value per ordinary share (a) 838.0p 787.7p
Share price (b) 742.0p 735.0p
(Discount)/premium (b - a) ÷ (a) expressed as a percentage (11.5%) (6.7%)
Total Return (APM)
The total return is the return to shareholders after reinvesting the net
dividend on the date that the share price goes ex-dividend.
29 February 2024 29 February 2024 28 February 2023 28 February 2023
NAV (par) Share price NAV (par) Share price
Closing NAV per share/share price (a) 838.0p 742.0p 822.6p 761.0p
Dividend adjustment factor* (b) 1.0135 1.0150 1.0113 1.0113
Adjusted closing NAV per share/share price (c) = (a) x (b) 849.3p 753.1p 831.9p 769.6p
Opening NAV per share/share price (d) 787.7p 735.0p 842.4p 774.0p
Total return ((c ÷ d) -1) 7.8% 2.5% (1.2%) (0.6%)
* The dividend adjustment factor is calculated on the assumption that the
dividend of 10.00p (2023 - 9.00p) paid by the Company in the period under
review was invested into shares of the Company at the cum income NAV per
share/share price, as appropriate, at the ex-dividend date.
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other public company, an
investment trust can borrow money to invest in additional investments for its
portfolio. The effect of the borrowing on the shareholders' assets is called
'gearing'. If the Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the value of
the Company's assets falls, the situation is reversed. Gearing can therefore
enhance performance in rising markets but can adversely impact performance in
falling markets.
Gearing is the Company's borrowings at par less cash and cash equivalents
expressed as a percentage of shareholders' funds.
Potential gearing is the Company's borrowings expressed at par as a percentage
of shareholders' funds.
29 February 2024 31 August 2023
Gearing * Potential Gearing * Potential
£'000
gearing †
£'000
gearing †
£'000
£'000
Borrowings (a) 142,084 142,084 131,723 131,723
Cash and cash equivalents (b) 8,501 - 6,030 -
Shareholders' funds (c) 753,459 753,459 732,963 732,963
Gearing 17.7% 18.9% 17.1% 18.0%
* Gearing: ((a) - (b)) divided by (c), expressed as a percentage.
† Potential gearing: (a) divided by (c), expressed as a percentage.
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers (AIFM)
Regulations, leverage is any method which increases the Company's exposure,
including the borrowing of cash and the use of derivatives. It is expressed as
a ratio between the Company's exposure and its net asset value and can be
calculated on a gross and a commitment method. Under the gross method,
exposure represents the sum of the Company's positions after the deduction of
sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the
deduction of sterling cash balances and after certain hedging and netting
positions are offset against each other.
Active Share (APM)
Active share, a measure of how actively a portfolio is managed, is the
percentage of the portfolio that differs from its comparative index. It is
calculated by deducting from 100 the percentage of the portfolio that overlaps
with the comparative index. An active share of 100 indicates no overlap with
the index and an active share of zero indicates a portfolio that tracks the
index.
Further Shareholder Information
The Baillie Gifford Japan Trust aims to achieve long term capital growth
principally through investment in medium and smaller sized Japanese companies
which are believed to have above average prospects for growth, although it
invests in larger companies when considered appropriate.
At 29 February 2024, the Company had total assets of £895.6m (before
deduction of bank loans of £142.1m).
The Company is managed by Baillie Gifford, an Edinburgh based fund management
group with around £227bn under management and advice as at 20 March 2024.
Past performance is not a guide to future performance. The value of an
investment and any income from it is not guaranteed and may go down as well as
up and investors may not get back the amount invested. This is because the
share price is determined by the changing conditions in the relevant stock
markets in which the Company invests and by the supply and demand for the
Company's shares. You should view your investment as long term. You can find
up to date performance information about The Baillie Gifford Japan Trust PLC
on the Company website at japantrustplc.co.uk (http://www.japantrustplc.co.uk)
.†
The Interim Financial Report is available at japantrustplc.co.uk† and will
be posted to shareholders on or around 5 April 2024.
21 March 2024
For further information please contact:
Naomi Cherry, Baillie Gifford & Co
Tel: 0131 474 5548
Jonathan Atkins, Director, Four Communications
Tel: 0203 920 0555 or 07872 495396
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
† Neither the contents of the Managers' website nor the contents of any
website accessible from hyperlinks on the Managers' website (or any other
website) is incorporated into, or forms part of, this announcement.
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