Baillie Gifford Shin - Baillie Gifford Shin Nippon Annual Results
03/04/2025 07:00
RNS Number : 4340D
Baillie Gifford Shin Nippon PLC
03 April 2025
RNS Announcement
Baillie Gifford Shin Nippon PLC (BGS)
Legal Entity Identifier: X5XCIPCJQCSUF8H1FU83
Results for the year to 31 January 2025
Regulated Information Classification: Additional regulated information required to be disclosed under the applicable laws and regulations.
The following is the results announcement for the year to 31 January 2025 which was approved by the Board on 2 April 2025.
Over the year to 31 January 2025, the Company's net asset value per share declined by 5.1% and its share price by 5.0%. The comparative index* appreciated by 8.9%. Over five years, the Company's comparative index* was up 23.4% while the net asset value was down by 18.8% and the share price was down 29.7%. All figures in total return, in sterling terms and net asset value with borrowings at fair value.
● Given the extent of the underperformance in recent years, and the negative impact that this has had on the share price discount, the Board has accelerated the rate of share buybacks, engaged with shareholders and undertook a thorough performance review at its strategy meeting in November.
● The Company's share price ended the period at a 14.6% discount to the NAV per share. 30.3 million shares were bought back in the reporting period, equivalent to 9.8% of the issued share capital as at 31 January 2024, and are currently held in treasury. The Company is seeking shareholder approval to cancel the share premium account to provide it with greater flexibility.
● The Company's investment policy has recently undergone a non-material change, removing the current restriction of less than JPY150bn market cap or sales at time of initial investment to one associated with the average market cap of the comparative index. Also, a number of measures have been introduced to make the investment process more robust.
● Brian Lum has been appointed deputy portfolio manager.
● High growth small caps in Japan remained out of favour during the first half of the year, with sentiment improving during the second half. Electric power cable and wire manufacturer SWCC Corp was the top contributor to portfolio performance. Japan's only pure-play online life insurer, Lifenet, was another strong performer as was leading global badminton brand Yonex. Litalico, Japan's leading provider of training and employment services for disabled adults and day care services for children with development disabilities, was the largest negative contributor to portfolio performance. Online payment company GMO Financing Gate was another weak performer and two of the portfolio's unlisted holdings, JEPLAN and Spiber, have been written down due to funding and capital concerns.
● Portfolio turnover for the financial year was 21.4%, with eleven positions exited and six new positions initiated.
● Revenue return per share was 0.67p (2024: 0.94p). The Board is recommending a final dividend of 0.60p per share (2024: 0.80p) to be put before shareholders as part of the Company's Annual General Meeting in May.
● The profitability and cash flow of the portfolio have improved over the year. Despite the much stronger potential earnings growth, the Company trades at a discount to the comparative index, whilst its shares trade at a significant discount to NAV. When the market returns to seeing value in the smaller Japanese sector, and we are the only investment trust offering pure exposure to this sector of the market, then we should be well placed to benefit.
† After deducting borrowings at fair value. For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.
* 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: LSEG/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 January 2025 the Company had total assets of £473.4 million (before deduction of bank loans of £83.6 million).
The Company is managed by Baillie Gifford, an Edinburgh based fund management group with approximately £205 billion under management and advice as at 31 March 2025.
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 is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority. 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.
2 April 2025
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Director, Four Communications
Tel: 0203 920 0555 or 07872 495396
Chair's statement
Performance
I am disappointed to report that performance for the Shin Nippon investment trust remains demonstratively poor despite the companies in which the trust is invested having grown their sales more than 6% per annum faster than the reference index over the last five years. Valuations rather than fundamental growth have had a far more significant impact on our overall returns.
Over the year to 31 January 2025, the Company's net asset value ('NAV') total return was negative 5.1% and its share price total return was negative 5.0%. The comparative index (MSCI Japan Small Cap Index, total return in sterling terms) was positive 8.9%.
As highlighted in previous reports, your Board has determined that performance should be measured principally over rolling five-year periods to reflect the Managers' time horizon for investment. Over the five years to 31 January 2025, the Company's NAV total return was negative 18.8% and its share price total return was negative 29.7%. The Company's comparative index total return over the same period was positive 23.4%. Much of the underperformance has occurred over the past three years when the Company's NAV total return was negative 20.2% against the comparative index total return of positive 22.3%.
The Managers' report below goes into significantly more detail on the main drivers of portfolio performance during the period.
Given the extent of the underperformance in recent years, and the negative impact that this has had on the share price discount, the Board has accelerated the rate of share buybacks, engaged with shareholders and undertook a thorough performance review at its strategy meeting in November. Each of these topics is covered in more detail below, together with actions the Board has taken as a result. I have also included a reminder of the performance based tender that was introduced last year.
Discount and Share Buybacks
As at 31 January 2025, the Company's share price stood at a 14.6% discount to NAV, the same level as at 31 January 2024. Over the year, the Company has bought back approximately 30.3 million shares, which have been held in treasury, equivalent to approximately 9.8% of the Company's issued share capital. Since then, a further 9.1 million shares have been purchased representing 2.9% of issued share capital, which represents nearly all of the authority shareholders granted at last year's AGM.
As part of this year's AGM business, approval is again being sought from shareholders to renew the Company's share buyback authority to enable the Company to continue buying back shares if the discount to NAV is substantial in absolute terms or in relation to its peers.
Strategy Review
The Managers believe that share prices follow fundamental business progress and earnings growth over the long term. However, in recent years, performance has been poor despite, as already mentioned, the companies in the portfolio having grown their sales faster than the index.
In the fourth quarter of 2024, my fellow director Claire Finn and I undertook a series of meetings with shareholders representing more than 30% of the shareholder register. Whilst frustrated at the performance, the vast majority of the shareholders we spoke to understand the Company's investment style and process and remain supportive.
That said, following a thorough review at the strategy meeting in November 2024, the Board and the Managers have decided to appoint a deputy portfolio manager, to make a change to the Investment Policy and to introduce a number of measures to make the investment process more robust.
Appointment of Deputy Portfolio Manager
I am pleased to report that Brian Lum has been appointed as deputy portfolio manager. Brian joined Baillie Gifford in 2006 and is now head of Baillie Gifford's Smaller Companies Team. Brian graduated with an MSci and BA (Hons) in Physics from the University of Cambridge in 2006.
Looking ahead, the Managers expect to leverage the resource base in the International Smaller Companies team, which comprises six investors, to look at more Japanese smaller company ideas.
Increasing resources that cover the portfolio is one of several measures the Managers have implemented over the last year to make their investment process more robust. These are set out in the Managers' Report below.
Change to the Investment Policy
Shin Nippon's objective is to pursue long term capital growth through investment principally in small Japanese companies which are believed to have above average prospects for growth. Under the existing investment policy, a small company is considered to be one that typically has either market capitalisation or turnover of less than ¥150 billion at the time of initial investment, with the Company having used this fixed definition for over a decade.
Ten years ago, the ¥150 billion limit would have permitted investment in the vast majority of the MSCI Japan Small Cap index by size. Performance has been particularly challenging for the smaller small-cap stocks over the past decade with the larger small-cap companies within the index delivering stronger returns. The fixed size restriction now limits new investments arbitrarily to just the bottom 20% of the index by size, so the Company can only make new investments in the smallest of Japanese small-cap companies.
The Board and the Manager believe that moving from a fixed limit on market capitalisation for new investments to one that is dynamically linked to the index provides the Company with a broader opportunity set from which to pursue its investment objective, while ensuring alignment of what the Company deems a small Japanese company.
The Board has therefore made the following change to the Company's investment policy, which is set out in full in the Annual Report and Financial Statements:
• to remove the current restriction of less than ¥150bn market cap or sales at time of initial purchase; and
• to replace this with a restriction that, while the Company will invest primarily in companies that, at the time of initial investment, are constituents of the index, it would typically expect to invest in 'small' companies that have market capitalisations at or below the average of the companies within the index.
The comparative index currently comprises over 800 stocks in total and of these, over 500 stocks are currently at or below the average market cap, and these stocks currently make up approximately 30% of the index by value.
This change is deemed to be "non-material" and not therefore subject to shareholder approval. Accordingly, the revised restriction was adopted by the Board on 2 April 2025.
Cancellation of Share Premium Account
The Company has built up a substantial share premium account owing to high levels of share issuance in the past. This reserve is non-distributable. A special resolution will be put to Shareholders at the AGM to cancel the amount standing to the credit of the Company's share premium account, following which an application will be made to the Scottish Court of Session to obtain its approval to the cancellation and the creation of an equivalent distributable reserve as explained in more detail in the Annual Report and Financial Statements. This will provide a significant pool of reserves which can be used in future to fund distributions including dividends, and any returns of capital, including any future tender offer and share buybacks.
Performance Triggered Tender Offer
Last year, the Board introduced a one-off performance triggered tender offer for up to 15% of the Company's issued share capital. This tender offer would be triggered if the Company's NAV total return per share, measuring debt at fair value, underperformed the total return of the MSCI Japan Small Cap Index (in sterling terms) over the three years to 31 January 2027. The tender would be at a price equal to a 2% discount to the cum income NAV per share (calculating debt at fair value) less costs. If the tender offer were to be triggered, it is expected to be implemented around the time of the Company's 2027 Annual General Meeting ('AGM') and subject to shareholder approval at that time.
Whilst there are still nearly two years remaining, the Company's performance is trailing the index over the performance period to date (being the 12 months to 31 January 2025 as reported above).
Borrowings
The Company's net gearing decreased over the course of the year from 18.1% to 16.1%.
During the year, the existing secured three year ¥5bn and seven year ¥2.1bn facilities with ING were refinanced on expiry with a three year ¥7.1bn secured revolving credit facility with Bank of America. Additionally, following the financial period end, the remaining ¥2bn and ¥7bn revolving credit facilities with ING were cancelled and incorporated into the cheaper secured revolving credit facility with Bank of America, which was extended to ¥16.1bn.
Dividend
Having been in deficit for a number of years, last year the Company's revenue reserve moved to a surplus, principally due to increased dividend payments from the portfolio's underlying holdings and a drop in the net asset value of the Company resulting in reduced investment management fees.
Revenue return per share was 0.67p compared to 0.94p the prior year. The Board is recommending a final dividend of 0.60p per share, being broadly the minimum required to maintain investment trust status. The proposed final dividend will be put before shareholders as part of the Company's Annual General Meeting ('AGM') business in May. I should add that, as the Company's focus is on capital growth, shareholders should not rely on their investment in the Company to provide any income.
Ongoing Charges Ratio
The Company's ongoing charges ratio was 0.80% compared to 0.72% last year, due largely to the assets decreasing and administrative expenses increasing.
Annual General Meeting
This year's AGM will take place on Tuesday 20 May 2025 at ICAEW, Chartered Accountants' Hall, 1 Moorgate Place, London EC2R 6EA commencing at 11.30 am. The AGM is an important tool for engagement and provides shareholders with the opportunity to meet and question in person those managing their assets as well as us the Directors, charged with acting in your best interests. I look forward to seeing as many of you there as possible.
Outlook
Looking ahead, a combination of investment decisions and operational changes by underlying companies have improved the profitability and cash flow of the portfolio. Furthermore, not only is the portfolio more mature from a cash flow perspective, but it also contains a large number of companies trading at a discount to their historic median valuation levels. The portfolio now has a lower weight than the benchmark in unprofitable companies and shows signs of stronger operational performance. The Board and the Manager believe that the portfolio is in a much stronger position for the next three years than it was at the end of 2021. Despite the much stronger potential earnings growth, the Company trades at a discount to the index whilst its shares, as mentioned, trade at a significant discount to NAV. This must surely leave the Company well placed when the market returns to seeing value in the smaller Japanese businesses that the Company invests in. Shin Nippon is now the only growth-focussed Japan small cap investment trust. I am grateful to shareholders for their continued patience during this difficult period and sincerely hope that this will be rewarded.
Jamie Skinner
2 April 2025
* After deducting borrowings at fair value. For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Managers' report
In a departure from our usual practice of starting the Manager's Report with an annual review, we would like to start by outlining our outlook for Japanese small caps and Shin Nippon. This is because we believe we might be at an inflexion point in terms of a turnaround in investor sentiment. As we noted in our Interim Report, there are definite signs of high growth small caps in Japan coming back in favour. Macro headwinds that have plagued this asset class over the past few years are now beginning to reverse. Portfolio holdings are making strong operational progress, and this is now gradually being acknowledged by the market. Global uncertainty wrought by the Trump administration in the US might perversely help sentiment improve towards the more domestic oriented small cap businesses in Japan that remain largely immune to geopolitics as far as their operations are concerned. We start from a position where the portfolio trades at a discount to its comparative benchmark, shares of Shin Nippon trade at a sizeable discount to their net asset value ('NAV'), and the underlying portfolio holdings are well placed to deliver strong earnings growth over the next few years. We know that it has been a painful and frustrating few years for patient and long‑standing shareholders. But we strongly believe that, as and when sentiment around high growth small caps in Japan turns favourable, Shin Nippon is in a strong position to deliver attractive long-term returns for shareholders.
Annual review
2024 was a year of two halves. High growth small caps in Japan remained out of favour during the first half of the year, with sentiment improving during the second half. This led to positive NAV performance of the portfolio in absolute terms in the latter period, but this was not enough to offset the weakness during the first half, leading to relative underperformance over the year. As noted in the Interim Report, we continue to see signs of macro headwinds turning into tailwinds. This process appears to be accelerating, and we are seeing a gradual rise in investor interest in high growth small caps in Japan.
Cyclical large cap and small cap value stocks remained the main driver of positive market performance. Interest rate-sensitive businesses like banks and insurers were among the strongest performers. Rising interest rates in Japan are improving profitability at these businesses. Artificial intelligence ('AI') remained a popular theme. In the absence of AI related software companies in Japan, large cap semiconductor equipment manufacturers were viewed by investors as the best alternative to play the AI theme. Consequently, share prices of such companies remained strong. Small cap value stocks also performed well. Pressure from the Tokyo Stock Exchange and private equity groups is forcing them to drastically improve shareholder returns. In many cases, they are being acquired by private equity groups at high premiums. Such businesses are attracting a lot of investor capital, much to the detriment of high-growth small caps that we typically invest in.
Geopolitics also emerged as a strong theme. The Trump administration has made it clear that traditional US allies can no longer count on unconditional US defence support. This has caused a great deal of worry for many allied countries, including Japan, which were historically dependent on the US. They are now allocating significant amounts of money to bolster their defence preparedness. Defence related stocks in Japan have rallied strongly and were among the top performers within our comparative index, the MSCI Japan Small Cap Index (MXJPSC Index). Most of these are large, traditional conglomerates with a patchy record of growth, and weak competitive edge. They are also structurally low return businesses with indebted balance sheets. Accordingly, Shin Nippon has no exposure to these stocks and has suffered in relative terms as they have outperformed significantly.
As noted earlier, we are seeing evidence of headwinds experienced in recent years turning into tailwinds. With interest rates rising in Japan, we are beginning to see the Japanese yen strengthen versus the US dollar on a sustained basis. Having suffered decades of deflation, Japan is finally experiencing inflation well above the Bank of Japan's 2% target. We believe there is a strong case for the central bank to continue raising interest rates in the near term, possibly resulting in continued yen strength. This should have positive implications for companies focussed on the domestic market as, historically, investors have tended to favour such stocks in a strong yen environment. Over 70% of Shin Nippon's holdings are domestically focussed businesses.
While inflationary pressures are broad based, they are being felt most acutely in the cost of utilities and wages. Capital and labour-intensive companies are struggling to cope, leading to a sharp rise in corporate bankruptcies. Most of Shin Nippon's holdings are capital and labour light businesses with a dominant market share in their respective areas. Holdings like online legal website Bengo4.com, online food ordering system provider Infomart, and power cable maker SWCC have raised prices multiple times over the past year, without any negative impact on end demand. In cases like SWCC, we are also seeing competitors exit the market, further strengthening its competitive position.
As noted in the interim report, Shin Nippon's fundamentals both in absolute terms and relative to the MXJPSC Index remain extremely attractive. If anything, over the course of the year, Shin Nippon's portfolio has become cheaper while the MXJPSC Index has been marginally re-rated to a higher multiple. Historic delivered growth and future expected growth are both far superior for Shin Nippon's portfolio compared to the MXJPSC Index. Over five years to 31 January 2025, the portfolio has delivered earnings growth of 7.5% p.a. compared to 1.1% p.a. for the MXJPSC Index. Based on market estimates, over the next three years it is expected to deliver earnings growth at 15.4% p.a. compared to 8.2% p.a. for the MXJPSC Index. On an EV/EBIT (Enterprise Value/ Earnings Before Interest and Tax) multiple basis, the portfolio currently has a rating of just 12 compared to 12.6 for the index. A year ago, the portfolio was trading on an EV/ EBIT multiple of 13.3 compared to 12.5 for the MXJPSC Index. In addition, over the past year, Shin Nippon's shares have traded at an average discount to their NAV of about 15%. In summary, relative to the MXJPSC Index, Shin Nippon has much higher historic and expected future earnings growth, trades at a discount to the MXJPSC Index, and its shares trade at a meaningfully high discount to NAV. We believe that this "double discount" represents an extremely compelling investment opportunity on a forward-looking basis and positions Shin Nippon favourably to deliver attractive returns to shareholders if sentiment towards high growth small caps in Japan continues to improve.
We have also made some changes to strengthen our research and portfolio construction process. As outlined in the Chairman's statement, Brian Lum, head of Baillie Gifford's Smaller Companies Team, has been appointed as deputy portfolio manager. We now have quarterly strategy meetings focussing on Japanese small caps involving not just the Japan team but also experienced members from our Smaller Companies and Global Discovery teams. We are engaging more closely with our Investment Risk team to identify portfolio specific risks and take appropriate actions. We are also broadening our stock idea generation process to include sectors like utilities, resources, and food services. We have historically struggled to identify attractive businesses in these areas but some of these sectors have undergone significant change. This may result in new growth opportunities for certain companies, and we want to ensure that these investment opportunities are duly considered. Finally, we have widened the coverage of Shin Nippon's holdings within the Baillie Gifford Japan Equity team. Each member of the team is now responsible for ongoing monitoring of a distinct set of small cap holdings, meaning that the entire portfolio now has a wider resource base covering it.
As explained in the Chairman's statement, we have also amended the Company's investment policy in order to better reflect the current nature of the MXJPSC Index, which has a significant skew towards large cap stocks. The fixed market cap limit of ¥150 billion for new investments has been replaced. Instead, Shin Nippon is now able to invest, at the point of initial investment, in companies that are typically at or below the average of the companies within the MXJPSC Index. We believe that this is a fairer representation of the investable universe. This gives us the opportunity of investing in exciting high growth small cap businesses which we have historically been unable to, due to the fixed market cap limit.
Performance
For the year ending 31 January 2025, Shin Nippon's NAV fell by 5.1% compared to an increase of 8.9% in the MXJPSC Index (all figures total return and in sterling terms, NAV with borrowings at fair value). Over three and five years, the NAV has fallen by 20.2% and 18.8% versus gains of 22.3% and 23.4% respectively for the MXJPSC Index. The Company repurchased 30.3m shares or 9.8% of issued share capital over the year.
Electric power cable and wire manufacturer SWCC Corp was the top positive contributor to portfolio performance. Under the leadership of its first ever female President, it is continuing to transform from a maker of commodity products to a high value-added component supplier. It has expanded its opportunity set by capturing demand in renewables and electric vehicles. Margins are continuing to improve, and valuations remain extremely low, so we believe there is considerable upside remaining in the shares. Japan's only pure-play online life insurer Lifenet was another strong performer. It is continuing to gain share from traditional incumbents who have large sales staff and are suffering from rising wage bills and falling sales efficiency. As a pure online operator, Lifenet does not face any of these issues. Its sales growth recently accelerated, thanks to partnerships with major enterprises like telecom services provider KDDI and credit card company Sumitomo Mitsui Card.
Leading global badminton brand Yonex also performed well. Despite worries about a slowing economy and cautious consumer sentiment in China, Yonex's sales in China are continuing to grow rapidly. The company is also making good progress with extending its brand into tennis where it continues to gain share from incumbents. Software maker Cybozu was another strong performer. It makes cloud-based software that require no programming by the end user, is easy to customise, and is primarily used for group-based tasks like project management. It has the largest market share in this category in Japan and recently raised prices significantly, leading to a sharp spike in its operating margins. Harmonic Drive, which makes precision reduction gears, a critical component used in robots, also had strong share price performance. This was due to market optimism about its strong global position in humanoid robots, a small but rapidly growing sub-segment of the robotics market.
Litalico was the largest negative contributor to portfolio performance. It is Japan's leading provider of training and employment services for disabled adults, and day care services for children with developmental disabilities. It has suffered in the short-term due to changes in regulation that have resulted in lower sales. But management remains confident of a strong rebound having repositioned the business to make up for lost revenue. Online payments company GMO Financial Gate was another weak performer. It has experienced minor delays in some large projects, resulting in poor near-term sales growth and the market took this very negatively. Construction software company SpiderPlus also performed poorly despite making good operational progress. Following recent regulatory changes that place significant restrictions on overtime in the construction industry, it is seeing strong demand for its software products that help automate a range of tasks for construction projects. It is continuing to grow sales at over 30% p.a., and after years of making losses due to aggressive growth investments, management finally expect the business to turn profitable for the next fiscal year and expect profitability to continue improving rapidly thereafter.
We also faced significant valuation downgrades to JEPLAN and Spiber, two of our unlisted holdings. JEPLAN has developed a low-cost, scalable, and environmentally friendly chemical process to recycle plastics and fabrics. Its clients include Suntory, Nestle Japan, Asahi Breweries and Coca Cola Japan. The company has been investing aggressively to expand capacity but has found it extremely tough to raise capital. Its current rate of monthly cash burn and net cash on the balance sheet mean that there is a real danger of the company running out of cash in a few months. Management is currently engaged in raising capital, but its weak financial position necessitated a downgrade in our valuation.
Spiber is a synthetic biology company that has developed a range of artificial fibres identical to natural fibres. Two of its largest shareholders are seeking to sell their entire holding in the company. As per the shareholder's agreement signed between Spiber and these two entities, the company is obliged to buy back these shares but currently has insufficient funds to do so. Although management is in the process of raising funds, this predicament has resulted in a large reduction to the valuation of the company.
In contrast, Gojo, one of our other unlisted holdings that has majority stakes in a range of affordable finance related businesses in emerging markets, is making good progress towards achieving an IPO this year. The company is continuing to grow sales at a fast pace and some of its investee companies like Satya Capital in India and Humo in Central Asia, have already achieved a dominant share of their respective local markets.
Portfolio
Given the poor performance over the past few years, we have undertaken an in-depth review of all our holdings and have subsequently made several changes to best position the portfolio for future success. For the year ending 31 January 2025, we purchased six new holdings and sold eleven. This means that turnover for this period was much higher than usual at 21.4%. Active share of the portfolio remains extremely high at 96.6%, implying just a 3.4% overlap with the MXJPSC Index.
Among the new buys was Inforich, a provider of portable batteries for charging mobile phones. It has managed to scale quickly across Japan and is now the leading provider of portable charging stations. It has secured exclusive contracts at prime locations like major convenience store chains, train stations, and even Tokyo Disneyland, and is growing its sales and profits rapidly. Global Security Experts, a cybersecurity company, was another new purchase. Japanese companies, in general, have historically under-invested in securing their IT infrastructure, a fact borne out by a series of recent high profile cyber-attacks on small and large companies. As a result, capital investment in cybersecurity solutions is rising and proving to be a strong tailwind for Global Security Experts.
We also took new holdings in Genda and Gift Holdings. Genda is an entertainment company that is using M&A to aggressively consolidate Japan's fragmented amusement sector. It targets cash generative and profitable businesses, run by ageing founders and where they can derive considerable synergies with other businesses within their group. Management has deep domain expertise and has shown excellent discipline in the price paid for acquisitions. Genda has grown rapidly and is now among the largest companies in its sector despite being founded only a few years ago. Gift holdings is one of Japan's largest ramen restaurants. It has a unique model whereby it operates its own stores but also supplies raw materials to a network of franchisees. It has a simple and transparent pricing structure that lowers the barrier for franchisees to join, allowing the company to expand rapidly while keeping cost low and generating high margins.
Two of our holdings, premium camping equipment maker Snow Peak and staffing company Outsourcing, were acquired by private equity. Snow Peak had been struggling with falling sales and inventory issues in China whereas Outsourcing has had a series of accounting scandals in recent years. Management of both companies felt ill-equipped to resolve these issues and hence sought help from private equity.
We sold our longstanding holding in M3, Japan's leading online drug marketing company. It has been owned in the portfolio for almost 20 years and has been a fantastic performer over this period, both in operational and share price terms. However, the business has also become very diversified, complex and growth has slowed markedly. We also sold online cosmetics retailer Kitanotatsujin. It has struggled to acquire new clients as the market has become more competitive. Management is having to significantly increase advertising spend, squeezing margins in the process.
We also sold plastic auto parts maker DaikyoNishikawa that has continued to struggle with falling sales and shrinking margins, mirroring the fortunes of its largest customer Mazda Motor. Gaming company Akatsuki has struggled to launch any new hit mobile games for many years despite significant investments in game development. In addition, management has expanded into new and unrelated areas like digital comics and venture capital. Given the increasingly competitive environment in mobile gaming and management's apparent lack of focus, we decided to sell. Staffing company WDB was also sold from the portfolio. It supplies labour to the R&D divisions at pharma and medical device companies. It already has a large share of its target market and has struggled to expand beyond this niche over the years. We think the future growth prospects for this company are now modest at best and hence decided to exit the position.
Concluding remarks
The past few years have been particularly challenging for Shin Nippon as our holdings have faced a perfect storm of macro headwinds and investor apathy. However, there are tentative signs of these headwinds turning into tailwinds. Shin Nippon's portfolio trades at a discount to its comparative index but should achieve faster growth. As the market and investors start acknowledging these fundamental attractions, we should see a turnaround in performance. For our part, we remain focussed on our fundamental task of identifying and investing in fast growing, dynamic, smaller companies in Japan that can deliver attractive long-term returns for shareholders.
Praveen Kumar
For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.
Baillie Gifford - valuing private companies
We hold our private company investments at an estimation of '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, as well as Baillie Gifford's Private Companies Specialist team, with all voting members being from different operational areas of the firm, and the investment managers only receive final valuation notifications once they have been applied.
We revalue the private 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. Regarding the Trust's private portfolio, 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 group 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 meaningful 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.
The valuation movements in the year have been summarised below, pricing in the continued challenging market backdrop, coupled with some underperformance within the private portfolio.
| Average movement in company valuation | Average movement in share price | |
| Shin Nippon* | -41.2% | -46.7% |
| Valuation | £14,465,000 |
| % of total assets* | 3.1% |
| Valuation at 31 January 2024 | £8,072,000 |
| % of total assets at 31 January 2024 | 1.5% |
| Net purchases/(sales) in year to 31 January 2025 | £4,622,000 |
| Held since | 2017 |
| Valuation | £14,347,000 |
| % of total assets* | 3.0% |
| Valuation at 31 January 2024 | £12,017,000 |
| % of total assets at 31 January 2024 | 2.2% |
| Net purchases/(sales) in year to 31 January 2025 | (£3,380,000) |
| Held since | 2012 |
| Valuation | £13,318,000 |
| % of total assets* | 2.8% |
| Valuation at 31 January 2024 | £13,289,000 |
| % of total assets at 31 January 2024 | 2.4% |
| Net purchases/(sales) in year to 31 January 2025 | (£1,314,000) |
| Held since | 2015 |
| Valuation | £12,886,000 |
| % of total assets* | 2.7% |
| Valuation at 31 January 2024 | £10,387,000 |
| % of total assets at 31 January 2024 | 1.9% |
| Net purchases/(sales) in year to 31 January 2025 | £3,173,000 |
| Held since | 2009 |
| Valuation | £12,625,000 |
| % of total assets* | 2.7% |
| Valuation at 31 January 2024 | £6,756,000 |
| % of total assets at 31 January 2024 | 1.2% |
| Net purchases/(sales) in year to 31 January 2025 | (£2,639,000) |
| Held since | 2023 |
| Valuation | £12,617,000 |
| % of total assets* | 2.7% |
| Valuation at 31 January 2024 | £10,589,000 |
| % of total assets at 31 January 2024 | 1.9% |
| Net purchases/(sales) in year to 31 January 2025 | £4,193,000 |
| Held since | 2013 |
| Valuation | £12,372,000 |
| % of total assets* | 2.6% |
| Valuation at 31 January 2024 | £11,586,000 |
| % of total assets at 31 January 2024 | 2.1% |
| Net purchases/(sales) in year to 31 January 2025 | £762,000 |
| Held since | 2020 |
| Valuation | £11,906,000 |
| % of total assets* | 2.5% |
| Valuation at 31 January 2024 | £6,913,000 |
| % of total assets at 31 January 2024 | 1.3% |
| Net purchases/(sales) in year to 31 January 2025 | £508,000 |
| Held since | 2015 |
| Valuation | £11,679,000 |
| % of total assets* | 2.5% |
| Valuation at 31 January 2024 | £8,128,000 |
| % of total assets at 31 January 2024 | 1.5% |
| Net purchases/(sales) in year to 31 January 2025 | £4,172,000 |
| Held since | 2023 |
| Valuation | £11,479,000 |
| % of total assets* | 2.4% |
| Valuation at 31 January 2024 | £8,843,000 |
| % of total assets at 31 January 2024 | 1.6% |
| Net purchases/(sales) in year to 31 January 2025 | £1,342,000 |
| Held since | 2018 |
| Valuation | £7,395,000 |
| % of total assets* | 1.6% |
| Valuation | £659,000 |
| % of total assets* | 0.1% |
| Valuation | £10,334,000 |
| % of total assets* | 2.2% |
| Valuation | £5,273,000 |
| % of total assets* | 1.1% |
| Valuation | £9,831,000 |
| % of total assets* | 2.1% |
| Valuation | £2,185,000 |
| % of total assets* | 0.5% |
| % of total assets* | 0.6% |
| % of total assets* | 2.7% |
| % of total assets* | 1.3% |
| % of total assets | 0.3% |
| % of total assets* | 0.3% |
| Meeting | 2024 Annual General Meeting |
| Vote | Against |
| % of total assets* | 1.0% |
| Meeting | 2024 Annual General Meeting |
| Vote | Abstain |
| % of total assets* | 1.4% |
| Meeting | 2024 Annual General Meeting |
| Vote | Against |
| Name | Business | 2025 Value £'000 | % of total assets # | Absolute† performance % | 2024 Value £'000 |
| Katitas | Real estate services | 14,465 | 3.1 | 17.1 | 8,072 |
| Lifenet Insurance | Online life insurance | 14,347 | 3.0 | 49.4 | 12,017 |
| Megachips | Electronic components | 13,318 | 2.8 | 21.1 | 13,289 |
| Nifco | Value-added plastic car parts | 12,886 | 2.7 | (5.3) | 10,387 |
| SWCC | Electric wire and cable manufacturer | 12,625 | 2.7 | 145.7 | 6,756 |
| JEOL | Manufacturer of scientific equipment | 12,617 | 2.7 | (16.9) | 10,589 |
| GA Technologies | Interactive media and services | 12,372 | 2.6 | 3.6 | 11,586 |
| Yonex | Sporting goods | 11,906 | 2.5 | 69.4 | 6,913 |
| Appier Group | Software as a service company providing AI platforms | 11,679 | 2.5 | (10.6) | 8,128 |
| Raksul | Internet based services | 11,479 | 2.4 | 13.9 | 8,843 |
| Anest Iwata | Manufactures compressors and painting machines | 11,060 | 2.3 | 3.3 | 10,924 |
| Harmonic Drive Systems | Robotic components | 11,033 | 2.3 | 22.5* | - |
| Infomart | Internet platform for restaurant supplies | 10,886 | 2.3 | (21.0)* | - |
| Avex Group | Entertainment management and distribution | 10,379 | 2.2 | 1.6 | 6,916 |
| Noritsu Koki | Holding company with interests in biotech and agricultural products | 10,360 | 2.2 | 51.4 | 8,183 |
| Gift | Food industry operator and distributor | 10,334 | 2.2 | 16.8 | - |
| Tsugami | Manufacturer of automated machine tools | 10,224 | 2.2 | 38.9 | 6,357 |
| Nakanishi | Dental equipment | 9,947 | 2.1 | 4.6 | 9,721 |
| Peptidream | Drug discovery and development platform | 9,907 | 2.1 | 59.7 | 5,069 |
| Inforich | Software Company | 9,831 | 2.1 | 4.7* | - |
| Top 20 | 231,655 | 49.0 | |||
| Cybozu | Develops and markets internet and intranet application software for businesses | 9,389 | 2.0 | 20.5 | 7,470 |
| Cosmos Pharmaceuticals | Drugstore chain | 8,755 | 1.8 | (10.8) | 12,231 |
| Vector | PR Company | 8,367 | 1.8 | (13.7) | 6,073 |
| Kohoku Kogyo | Manufacturer of undersea cable lead terminals | 7,917 | 1.7 | 55.3 | 5,429 |
| Sho-Bond | Infrastructure reconstruction | 7,560 | 1.6 | (24.2) | 12,017 |
| Shoei | Manufactures motor cycle helmets | 7,463 | 1.6 | 8.2 | 9,917 |
| Anicom | Pet insurance provider | 7,395 | 1.6 | 11.8* | - |
| Bengo4.com | Online legal consultation | 7,226 | 1.5 | (32.6) | 9,371 |
| GMO Financial Gate | Face-to-face payment terminals and processing services | 7,140 | 1.5 | (37.9) | 13,482 |
| Nittoku | Coil winding machine manufacturer | 7,119 | 1.5 | 11.1 | 6,364 |
| I-Ne | Hair care range | 6,991 | 1.5 | (16.3) | 7,290 |
| Horiba | Manufacturer of measuring instruments | 6,889 | 1.4 | (18.9) | 11,742 |
| Optex | Infrared detection devices | 6,622 | 1.4 | (11.7) | 9,190 |
| Istyle | Beauty product review website | 6,598 | 1.4 | 21.4 | 3,928 |
| Toyo Tanso | Electronics company | 6,165 | 1.3 | (20.6) | 12,219 |
| Seria | Discount retailer | 6,136 | 1.3 | (2.6) | 5,712 |
| Gojo & Company Inc Ord | Diversified financial services | 6,050 | 1.3 | (11.1) | 6,807 |
| Oisix | Organic food website | 5,987 | 1.3 | 2.5 | 4,375 |
| Technopro | IT staffing | 5,912 | 1.2 | (9.8) | 9,094 |
| Global Security Experts | Cyber Security Company | 5,273 | 1.1 | (1.1)* | - |
| Kitz | Industrial valve manufacturer | 5,044 | 1.1 | (2.8) | 7,127 |
| Kamakura Shinsho | Information processing company | 4,829 | 1.0 | (19.2) | 5,732 |
| Nikkiso | Industrial pumps and medical equipment | 4,716 | 1.0 | (6.9) | 6,958 |
| eGuarantee | Guarantees trade receivables | 4,683 | 1.0 | (11.3) | 8,053 |
| Asahi Intecc | Specialist medical equipment | 4,501 | 0.9 | (9.7) | 10,658 |
| SpiderPlus | Construction project management platform | 4,263 | 0.9 | (45.1) | 6,811 |
| Litalico | Provides employment support and learning support services for people with disabilities | 4,211 | 0.9 | (50.4) | 13,272 |
| OSG | Manufactures machine tool equipment | 4,148 | 0.9 | (15.1) | 9,168 |
| MatsukiyoCocokara | Retail company | 4,082 | 0.9 | (15.9) | 9,887 |
| oRo | Develops and provides enterprise planning software | 3,799 | 0.8 | (17.2) | 4,667 |
| Crowdworks | Crowd sourcing services | 3,597 | 0.8 | (4.9) | 4,054 |
| Kumiai Chemical | Specialised agrochemicals manufacturer | 3,385 | 0.7 | (10.1) | 7,638 |
| GMO Payment Gateway | Online payment processing | 3,351 | 0.7 | (10.5) | 4,674 |
| Weathernews | Weather information services | 3,057 | 0.6 | 30.7 | 4,155 |
| KH Neochem | Chemical manufacturer | 3,011 | 0.6 | (8.5) | 5,800 |
| Inter Action | Semiconductor equipment | 2,636 | 0.5 | (2.2) | 4,210 |
| Jade Group | Ecommerce services provider | 2,202 | 0.5 | (33.4) | 3,633 |
| Soracom | Networking software provider | 2,185 | 0.5 | 34.8* | - |
| Torex Semiconductor | Semiconductor company | 2,147 | 0.4 | (33.4) | 6,380 |
| MonotaRO | Online business supplies | 1,824 | 0.4 | 85.5 | 3,304 |
| Cellsource | Company engaged in regenerative medicine | 1,621 | 0.3 | (33.9) | 2,026 |
| Iriso Electronics | Specialist auto connectors | 1,555 | 0.3 | (24.6) | 5,962 |
| Moneytree K.K. Class B Preferred | AI based fintech platform | 1,272 | 0.3 | (9.2) | 1,401 |
| Nippon Ceramic | Electronic component manufacturer | 1,181 | 0.2 | (8.9) | 4,852 |
| Spiber | Textiles | 1,030 | 0.2 | (83.3) | 6,172 |
| JEPLAN | Chemical PET recycling | 834 | 0.2 | (84.5) | 5,372 |
| Genda | Operates as a holding company for entertainment businesses | 659 | 0.1 | 11.1* | - |
| Shima Seiki | Machine industry company | 342 | 0.1 | (33.4) | 3,498 |
| SIIX | Out-sources overseas production | 258 | 0.1 | (27.2) | 8,340 |
| Demae-Can | Online meal delivery service | 179 | <0.1 | (45.5) | 4,722 |
| Total investments | 453,211 | 95.7 | |||
| Net liquid assets# | 20,155 | 4.3 | |||
| Total assets# | 473,366 | 100 | |||
| Bank loans | (83,676) | (17.7) | |||
| Shareholders' funds | 389,690 | 82.3 |
| Listed equities % | Private company investments * % | Net liquid assets† % | Total assets† % | |
| 31 January 2025 | 93.8 | 1.9 | 4.3 | 100.0 |
| 31 January 2024 | 95.5 | 3.7 | 0.8 | 100.0 |
| Notes | 2025 Revenue £'000 | 2025 Capital £'000 | 2025 Total £'000 | 2024 Revenue £'000 | 2024 Capital £'000 | 2024 Total £'000 | |
| Losses on investments | - | (34,865) | (34,865) | - | (97,913) | (97,913) | |
| Currency gains | - | 2,415 | 2,415 | - | 13,058 | 13,058 | |
| Income | 2 | 7,389 | - | 7,389 | 8,870 | - | 8,870 |
| Investment management fee | 3 | (2,482) | - | (2,482) | (2,878) | - | (2,878) |
| Other administrative expenses | (714) | - | (714) | (628) | - | (628) | |
| Net return before finance costsand taxation | 4,193 | (32,450) | (28,257) | 5,364 | (84,855) | (79,491) | |
| Finance costs of borrowings | 4 | (1,465) | _ | (1,465) | (1,533) | - | (1,533) |
| Net return before taxation | 2,728 | (32,450) | (29,722) | 3,831 | (84,855) | (81,024) | |
| Tax on ordinary activities | (739) | _ | (739) | (887) | - | (887) | |
| Net return after taxation | 1,989 | (32,450) | (30,461) | 2,944 | (84,855) | (81,911) | |
| Net return per ordinary share | 6 | 0.67p | (10.97p) | (10.30p) | 0.94p | (27.13p) | (26.19p) |
| Note:Dividends per share payable and paid in respect of the year | 5 | 0.60p | 0.80p |
| Notes | 2025 £'000 | 2025 £'000 | 2024 £'000 | 2024 £'000 | |
| Fixed assets | |||||
| Investments held at fair value through profit or loss | 7 | 453,211 | 539,701 | ||
| Current assets | |||||
| Debtors | 1,989 | 3,521 | |||
| Cash at bank | 20,797 | 2,965 | |||
| 22,786 | 6,486 | ||||
| Creditors | |||||
| Amounts falling due within one year | 8 | (86,307) | (88,395) | ||
| Net current liabilities | (63,521) | (81,909) | |||
| Net assets | 389,690 | 457,792 | |||
| Capital and reserves | |||||
| Share capital | 9 | 6,285 | 6,285 | ||
| Share premium account | 260,270 | 260,270 | |||
| Capital redemption reserve | 21,521 | 21,521 | |||
| Capital reserve | 99,445 | 167,114 | |||
| Revenue reserve | 2,169 | 2,602 | |||
| Shareholders' funds | 389,690 | 457,792 | |||
| Net asset value per ordinary share* | 139.4p | 147.8p |
| Notes | Share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Shareholders' funds £'000 | |
| Shareholders' funds at 1 February 2024 | 6,285 | 260,270 | 21,521 | 167,114 | 2,602 | 457,792 | |
| Ordinary shares bought back into treasury | 9 | - | - | - | (35,219) | - | (35,219) |
| Net return on ordinary activities after taxation | 6 | - | - | - | (32,450) | 1,989 | (30,461) |
| Dividend paid in the period | 5 | - | - | - | - | (2,422) | (2,422) |
| Shareholders' funds at 31 January 2025 | 6,285 | 260,270 | 21,521 | 99,445 | 2,169 | 389,690 |
| Notes | Share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Shareholders' funds £'000 | |
| Shareholders' funds at 1 February 2023 | 6,285 | 260,270 | 21,521 | 257,719 | (342) | 545,453 | |
| Ordinary shares bought back into treasury | 9 | - | - | - | (5,750) | - | (5,750) |
| Net return on ordinary activities after taxation | 6 | - | - | - | (84,855) | 2,944 | (81,911) |
| Shareholders' funds at 31 January 2024 | 6,285 | 260,270 | 21,521 | 167,114 | 2,602 | 457,792 |
| Notes | 2025 £'000 | 2025 £'000 | 2024 £'000 | 2024 £'000 | |
| Cash flows from operating activities | |||||
| Net return on ordinary activities before taxation | (29,722) | (81,024) | |||
| Net losses on investments | 34,865 | 97,913 | |||
| Currency gains | (2,415) | (13,058) | |||
| Finance costs of borrowings | 1,465 | 1,533 | |||
| Overseas withholding tax | (805) | (922) | |||
| Decrease in debtors, accrued income and prepaid expenses | 638 | 351 | |||
| (Decrease)/increase in creditors | (402) | 150 | |||
| Cash inflow from operations | 3,624 | 4,943 | |||
| Interest paid | (1,460) | (1,462) | |||
| Net cash inflow from operating activities | 2,164 | 3,481 | |||
| Cash flows from investing activities | |||||
| Acquisitions of investments | (112,102) | (91,610) | |||
| Disposals of investments | 165,814 | 78,423 | |||
| Net cash inflow/(outflow) from investing activities | 53,712 | (13,187) | |||
| Ordinary shares bought back into treasury and stamp duty thereon | 9 | (35,219) | (5,750) | ||
| Bank loans repaid | (35,907) | 12,313 | |||
| Bank loans drawn down | 35,907 | - | |||
| Net cash (outflow)/inflow from financing activities | (35,219) | 6,563 | |||
| Dividends paid | 5 | (2,422) | - | ||
| Increase/(decrease) in cash and cash equivalents | 18,235 | (3,143) | |||
| Exchange movements | (403) | (838) | |||
| Cash and cash equivalents at 1 February | 2,965 | 6,946 | |||
| Cash and cash equivalents at 31 January* | 20,797 | 2,965 |
| 2025 £'000 | 2024 £'000 | ||
| Income from investments | |||
| Listed overseas dividends | 7,387 | 8,866 | |
| Other income | |||
| Deposit interest | 2 | 4 | |
| Total income | 7,389 | 8,870 | |
| Total income comprises | |||
| Dividends from financial assets designated at fair value through profit or loss | 7,387 | 8,866 | |
| Interest from financial assets not at fair value through profit or loss | 2 | 4 | |
| Total income | 7,389 | 8,870 |
| 2025 £'000 | 2024 £'000 | ||
| Investment management fee | 2,482 | 2,878 |
| 2025 p | 2024 p | 2025 £'000 | 2024 £'000 | |
| Amounts recognised as distributions in the year: | ||||
| Previous year's final dividend (paid 30 May 2024) | 0.80p | - | 2,422 | - |
| 2025 p | 2024 p | 2025 £'000 | 2024 £'000 | ||
| Amounts paid and payable in respect of the financial year: | |||||
| Proposed final dividend per ordinary share (payable 29 May 2025) | 0.60p | - | 1,677 | - |
| 2025 Revenue | 2025 Capital | 2025 Total | 2024 Revenue | 2024 Capital | 2024 Total | ||
| Net loss on ordinary activities after taxation | 0.67p | (10.97p) | (10.30p) | 0.94p | (27.13p) | (26.19p) |
| As at 31 January 2025 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | |
| Quoted equities | 444,025 | - | - | 444,025 | |
| Unlisted securities | - | - | 9,186 | 9,186 | |
| Total financial asset investments | 444,025 | - | 9,186 | 453,211 |
| As at 31 January 2024 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | |
| Quoted equities | 519,949 | - | - | 519,949 | |
| Unlisted securities | - | - | 19,752 | 19,752 | |
| Total financial asset investments | 519,949 | - | 19,752 | 539,701 |
| 31 January 2024 £'000 | Cash flows £'000 | Exchange movement £'000 | Other non-cash changes £'000 | 31 January 2025 £'000 | ||
| Cash and cash equivalents | 2,965 | 18,235 | (403) | - | 20,797 | |
| Loans due within one year* | (86,475) | - | 2,818 | (19) | (83,676) | |
| (83,510) | 18,235 | 2,415 | (19) | (62,879) |
| 31 January 2025 | 31 January 2024 | |
| NAV per ordinary share (borrowings at book value) | 139.4p | 147.8p |
| Shareholders' funds (borrowings at book value) | £389,690,000 | £457,792,000 |
| Add: book value of borrowings | £83,676,000 | £86,475,000 |
| Less: fair value of borrowings | (£83,676,000) | (£86,445,000) |
| NAV (borrowings at fair value) | £389,690,000 | £457,822,000 |
| Shares in issue at year end | 279,491,301 | 309,757,485 |
| NAV per ordinary share (borrowings at fair value) | 139.4p | 147.8p |
| 2025 NAV (book) | 2025 NAV (fair) | 2024 NAV (book) | 2024 NAV (fair) | |
| Closing NAV per share | 139.4p | 139.4p | 147.8p | 147.8p |
| Closing share price | 119.0p | 119.0p | 126.2p | 126.2p |
| Discount | (14.6%) | (14.6%) | (14.6%) | (14.6%) |
| 31 January 2025 £'000 | 31 January 2024 £'000 | ||
| Investment management fee | £2,482,000 | £2,878,000 | |
| Other administrative expenses | £714,000 | £628,000 | |
| Total expenses | (a) | £3,196,000 | £3,506,000 |
| Average daily cum-income NAV (with borrowings at fair value) | (b) | £401,677,000 | £485,043,000 |
| Ongoing charges | (a) as a percentage of (b) | 0.80% | 0.72% |
| 2025 NAV (book) | 2025 Share price | 2024 NAV (book) | 2024 Share price | ||
| Closing NAV per share/share price | (a) | 139.4 | 119.0 | 147.8 | 126.2 |
| Dividend adjustment factor* | (b) | 1.0059 | 1.0076 | 1.0000 | 1.0000 |
| Adjusted closing NAV per share/share price | (c = a x b) | 140.2 | 119.9 | 147.8 | 126.2 |
| Opening NAV per share/share price | (d) | 147.8 | 126.2 | 173.7 | 158.8 |
| Total return | (c ÷ d)-1 | (5.1%) | (5.0%) | (14.9%) | (20.5%) |
| 31 January 2025 | 31 January 2024 | ||||
| Gearing * £'000 | Gross gearing† £'000 | Gearing * £'000 | Gross gearing† £'000 | ||
| Borrowings | (a) | 83,676 | 83,676 | 86,475 | 86,475 |
| Cash and cash equivalents | (b) | 20,797 | - | 3,596 | - |
| Shareholders' funds | (c) | 389,690 | 389,690 | 457,792 | 457,792 |
| 16.1% | 21.5% | 18.1% | 18.9% | ||