REG - Baillie Gifford Shin - Half-year Report
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RNS Number : 1082Y Baillie Gifford Shin Nippon PLC 05 September 2025
RNS Announcement
Baillie Gifford Shin Nippon PLC (BGS)
Legal Entity Identifier: X5XCIPCJQCSUF8H1FU83
Regulated Information Classification: Half Yearly Financial Report
Over the six months to 31 July 2025, the Company's net asset value per
share† rose by 3.4% compared to a 7.9% increase in the MSCI Japan Small Cap
index*. The share price rose by 8.2%. All figures in total return terms.
¾ During the period, Brian Lum was promoted from deputy to the Company's
lead portfolio manager, taking over from Praveen Kumar. Jared Anderson was
appointed as deputy portfolio manager. The changes were implemented by Baillie
Gifford following an internal review.
¾ The top three positive stock contributors to performance were GA
Technologies, Yonex and Cybozu following strong operational progress. The key
detractors to performance included Harmonic Drive Systems, following a cooling
of investor excitement to humanoid robots, and Inforich and JEOL following
poor results.
¾ During the period, two new positions have been initiated in companies
with market capitalisations or turnover of more than ¥150 billion, DMG Mori
and Money Forward, consistent with the revised investment policy. In total,
five new positions were initiated, and seven holdings were sold outright.
¾ Over the six months, the Company has bought back approximately 23.1
million shares into treasury, equivalent to approximately 8.3% of the
Company's issued share capital as at 31 January 2025. The Company has obtained
the necessary approvals to cancel the amount standing to the credit of the
Company's share premium account and the creation of an equivalent
distributable reserve.
¾ With US-Japan trade negotiations now seemingly concluded and agreed,
inflation re-establishing itself and expectations of further monetary policy
normalising, macro-economic conditions in Japan appear to be improving. This
should provide a tailwind for Japanese growth equities. In addition, reduced
uncertainty and a return of risk tolerance should prove beneficial to
well-managed Japanese smaller companies
† 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: LSEG/Baillie Gifford and relevant underlying index providers. See
disclaimer at 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 2025 the Company had total assets of
£442.3 million (before deduction of bank loans of £74.5 million).
The Company is managed by Baillie Gifford, an Edinburgh based fund management
group with approximately £206.8 billion under management and advice as at
4 September 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 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
(http://www.shinnippon.co.uk) .
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 2025 which was approved by the Board on 4 September 2025.
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.
Comparative index
The index against which performance is compared is the MSCI Japan Small Cap
Index (total return and in sterling terms).
Principal risks and uncertainties
The principal risks facing the Company are financial risk, private company
(unlisted) investment risk, performance and investment strategy risk, climate
and governance risk, discount risk, regulatory risk, custody and depositary
risk, small company risk, operational risk, cyber security risk, leverage
risk, political and associated financial risk and emerging risks. An
explanation of these risks and how they are managed is set out on pages 49 to
55 of the Company's Annual Report and Financial Statements for the year to 31
January 2025 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.
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
4 September 2025
Summary of unaudited results*
31 January 2025
31 July 2025 (audited) % change
Shareholders' funds £367.8m £389.7m
Net asset value per ordinary share(‡) 143.4p 139.4p 2.9
Share price 128.0p 119.0p 7.6
Comparative index(†) 7.9
Discount* 10.8% 14.6%
Active share* 96% 97%
Six months to 31 July 2025 Year to 31 January 2025
Period's high and low High Low High Low
Net asset value per ordinary share (after deducting borrowings at fair value)* 143.5p 108.3p 150.4p 112.7p
Share price 128.0p 95.5p 126.8p 105.0p
Discount (borrowings at fair value)* 7.4% 16.9% 6.5% 18.6%
Total returns (%)* Six months to Year to
31 July 2025 31 January 2025
Net asset value per ordinary share (borrowings at fair value) 3.4 (5.1)
Share price 8.2 (5.0)
Comparative index (in sterling terms)(†) 7.9 8.9
Longer term total return performance at 31 July 2025*
3 years 5 years 10 years
Net asset value per ordinary share(‡) (13.4%) (22.7%) 80.2%
Share price (17.5%) (29.4%) 55.6%
Comparative index(†) 30.8% 46.0% 121.8%
Source: LSEG/Baillie Gifford and relevant underlying index providers. See
disclaimer below.
Notes
* Alternative Performance Measure - see Glossary of terms and alternative
performance measures below.
† The comparative index is the MSCI Japan Small Cap Index (total return
and in sterling terms). See disclaimer below.
‡ Net asset value per share ('NAV') with borrowings at fair value. At 31
July 2025 the NAV with borrowings at fair value was the same as the NAV with
borrowings at book value. For a definition of terms see Glossary of terms and
alternative performance measures below.
Past performance is not a guide to future performance.
Chairman's Interim Statement
Performance
Over the six months to 31 July 2025, the Company's net asset value per share*
rose by 3.4% and the share price rose by 8.2%, with a commensurate narrowing
in the discount to 10.8%, although the Company underperformed its comparative
index, the MSCI Japan Small Cap Index (total return in sterling terms), which
increased by 7.9%. While it is pleasing to see an absolute return in this
period, this is nevertheless a continuation of the significant
underperformance against the index that shareholders have experienced since
2021.
The Board has worked over recent years with Baillie Gifford to understand the
market dynamics impacting on the returns being generated from Japanese small
cap growth equities. Whilst appreciating the market backdrop and the reality
that small cap companies are often particularly vulnerable to investor risk
appetite and sentiment, it is frustrating that Baillie Gifford's investment
approach has not resulted in better outcomes. As highlighted in my statement
in the annual report, a number of measures have been implemented to strengthen
the investment process, such as small cap specific discussions with a wider
set of colleagues and closer engagement with the investment risk team at
Baillie Gifford. The investable opportunity set at the point of initial
investment has also been broadened recently so as to permit initial investment
in any company in the comparative index. The previous restriction on having to
invest in companies with either a market capitalisation or turnover of not
more than ¥150 billion at time of initial purchase, which would have captured
most smaller companies ten years ago but now limits investment in only the
bottom 20% of the comparative index, was removed. It is hoped that, together,
these measures will support improved returns once they have had a chance to
take effect. In that vein, during the period, two new positions have been
initiated in companies with market capitalisations or turnover of more than
¥150 billion. In total, five new positions were initiated and seven holdings
were sold outright. Further details on the transactions and prospects for the
portfolio are contained within the managers' interim report.
Prompted by market volatility in April, drawn borrowings from the revolving
credit facility were reduced by ¥1.3 billion. Net gearing stood at 15.8% as
at period end, having been 16.1% as at 31 January 2025.
Tender and Buybacks
As announced previously, the Company has in place a performance-triggered
conditional tender offer for up to 15% of issued share capital. The tender
offer will be triggered if the Company's NAV total return per share*
underperforms the total return of the comparative index over the three years
to 31 January 2027. The tender offer would be at a price equal to a 2%
discount to the cum income NAV per share* less costs.
As at 31 July 2025, the Company's performance is trailing the comparative
index by 19.4%. Whilst only halfway through the measurement period, clearly
the level of underperformance needing to be recouped is notable. I have been
in regular communication with a number of 'professional' shareholders and have
had correspondence with a number of 'retail' shareholders and, although there
remains a loyal supportive base both of Baillie Gifford and Japanese small cap
growth equities, I am in no doubt that patience in some quarters is being
tested. If poor performance continues into the medium term, then I do not
believe that a 15% tender offer will be sufficient and the Board will not
hesitate to assess all available options.
In the meantime, the Company remains active in undertaking buybacks. As at 31
July 2025, the Company's share price stood at a 10.8% discount to NAV, having
narrowed from 14.6% as at 31 January 2025. Over the six months, the Company
has bought back approximately 23.1 million shares into treasury, equivalent to
approximately 8.3% of the Company's issued share capital as at 31 January
2025. This has resulted in an increase in NAV of 1%. The Company has also
obtained the necessary approval from shareholders to cancel the amount
standing to the credit of the Company's share premium account. An application
was made to the Scottish Court of Session to obtain its approval to the
cancellation and the creation of an equivalent distributable reserve. This was
granted in August and, once the Company's interim accounts are lodged with
Companies House, 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.
Portfolio managers
During the period, Brian Lum was promoted from deputy to the Company's lead
portfolio manager, taking over from Praveen Kumar. Jared Anderson was
appointed as deputy portfolio manager. The changes were implemented by Baillie
Gifford following an internal review. Baillie Gifford as a house is a 'growth'
manager and therefore the investment style underpinning the portfolio will not
be changing. A number of larger shareholders have flagged in my discussions
with them that the last thing they wish to happen is style drift.
Outlook
As noted in my most recent annual statement, I am grateful to shareholders for
their continued patience. With US-Japan trade negotiations now seemingly
concluded and agreed, inflation re-establishing itself and expectations of
further monetary policy normalising, macro-economic conditions in Japan appear
to be improving. This should provide a tailwind for Japanese growth equities.
In addition, reduced uncertainty and a return of risk tolerance should prove
beneficial to well-managed Japanese smaller companies. As the only
growth-focused Japan small cap investment trust, Baillie Gifford Shin Nippon
should be increasingly well-placed to capture the opportunities presenting
themselves. It is incumbent on the new team at the helm to do so without
delay.
J Skinner
Chair
4 September 2025
* With borrowings at fair value. For a definition of terms see Glossary of
terms and alternative performance measures below.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See
disclaimer below.
Interim management report
Performance
Portfolio performance over the past few years has been challenging and this
trend continued in the six months to 31 July 2025. This period was
characterised by a difficult start to the year in relative terms as capital
flowed into larger companies and more defensive sectors, and, since May, a
stabilisation of performance as some of the stylistic headwinds began to
abate. The volatility triggered by 'Liberation Day' led to renewed interest in
the more domestically orientated Japanese small cap segment of the market and
the strengthening yen has been helpful. Over the period, the Company's net
asset value rose by 3.4%* in sterling terms compared to the MSCI Japan Small
Cap Index's total return (in sterling terms) of 7.9%. Encouragingly, the
Company's share price rose 8.2% over the same period.
The top three positive stock contributors to performance included GA
Technologies, Yonex and Cybozu. All reported strong operational progress. GA
Technologies' tech-focused real estate platform is rapidly gaining share,
Yonex's badminton and tennis rackets are in demand in China/India, and SaaS
company Cybozu's growth has accelerated (aided by a price increase) and
operating leverage coming through. Outside of the top three, Technopro - the
IT staffing company - was also a significant contributor as an M&A target
(at the time of writing, it looks set to be acquired by Blackstone).
On the other hand, the key detractors include Harmonic Drive Systems, Inforich
and JEOL. Harmonic Drive, a maker of robotic components, suffered as
short-term excitement around humanoid robots cooled. Inforich - which operates
the leading smartphone battery rental service in Japan - delivered poor
results as it experiments with its pricing model. JEOL - a semiconductor
equipment company - reported a poor set of results as it navigates a weaker
part of the cycle. We believe the fundamental attractions of these businesses
remain valid and they continue to warrant a place in the portfolio.
Why we are excited
Jared Anderson (deputy portfolio manager) and I are under no illusions that
the Company's performance needs to improve without delay. We are both
energised by the challenge and committed to strengthening processes and work
alongside the Board to turn the performance of the Company around. What will
not change is our core investment philosophy - we are long term orientated
investors with a strong commitment to growth investing.
Several factors underpin our optimism and excitement. Firstly, Japan is a
special market for small cap investing. Outside of the US and, arguably, China
(to those with access), Japan is the deepest small cap market with thousands
of potentially investible companies; more companies means more opportunities
to find winners.
Secondly, Japanese small cap is deeply underappreciated. The MSCI Japan Small
Cap index offers the lowest valuation in terms of Price-to-Earnings and
Price-to-Book, often by a very significant margin, when compared to other
major small cap markets such as the US, Europe, the Rest of Asia and the
Emerging Markets. In addition, small caps as an asset class is itself deeply
out of favour relative to large caps internationally. While we are
fundamentally stock pickers, we do not believe that the perfect storm of
headwinds will persist forever. Indeed, the strengthening yen represents a
small reversal of a headwind that has hurt the asset class over the past five
years. Also, structurally, we have noted that the governance reforms pushed by
regulators in Japan are beginning to filter through to smaller companies -
another catalyst for the asset class. For us, Japan small cap growth's laggard
status is a real opportunity.
Changes in market conditions aside, we have worked hard to implement various
improvements to our investment processes to better capture the opportunities
that come our way. We will detail these in the next Annual Report.
Fundamentally, we believe that we have strengthened our approach to position
sizing and improved our discipline in risk management; and our capabilities to
carry out investment research has deepened meaningfully as we incorporate new
tools (AI) to our workflow.
Observations from Japan
During July, we visited 49 companies over a period of three weeks, including
28 holdings (c.40% of the portfolio by number and weighting). This trip
completed our initial evaluation of the portfolio, strengthened our
relationship with company management teams, and importantly expanded our
pipeline of ideas.
There are two key observations to highlight here. The first is the sheer
ambition and strategic nimbleness of the companies that we met, particularly
those led by founder CEOs. Examples include Gift - a leading ramen chain in
Japan; Litalico - a provider of vocational training to those with
disabilities; and Soracom - an Internet of Things connectivity platform. All
of them are actively planning for expansion in terms of multiples rather than
percentages. Several non-holdings also fall into this category and are being
actively considered as new holdings.
The other is AI. This is of course a topic that we have all been grappling
with in recent years, but the real-world impact is becoming increasingly
apparent for companies across all sectors. The implications are profound.
Business models across industries will need to adapt, and there are clear
opportunities and threats for us all to contemplate. For example, various
companies have highlighted how AI is dramatically compressing their product
development timelines, and the scope to deliver their existing services using
a fraction of the headcount; on the other hand, some businesses will need to
adapt to serve AI agents and face new sources of competition. For Japan, this
takes on additional significance given the country's chronic labour shortages
and productivity challenges.
Portfolio Changes
Over the six-month period, we have made five new investments: Shinnihon (a
regional family-owned construction and real estate company), Cover (a
fast-growing agency for 'vTubers'), Mani (leading maker of medical tools such
as surgical needles), DMG Mori (CNC machine company) and Money Forward
(back-office SaaS company). The theme is the diversity of growth drivers
behind each of these companies, from emergence of a new form of entertainment,
to Japan's strength in precision tools, to industrial automation. Three of the
five were enabled by the upward revision to our market cap limit for new
purchases.
There were seven complete sales. Several are investment cases that have not
worked out: Shima Seiki, Torex Semiconductor, InterAction, SIIX and Iriso fall
under this category. Matsukiyo Cocokara and MonotaRO are highly successful
investments that we are exiting on valuation grounds.
Looking ahead
The turnover of the portfolio will likely be elevated relative to our historic
norms in the short term, as we continue to reshape the portfolio in the next
few months. In the meantime, there are two points that we would like to
emphasise.
Firstly, we are committed to long term growth investing. There will be no
style drift. Secondly, while we acknowledge the pain that shareholders have
suffered in recent years, we are optimistic on the prospects from here. Our
portfolio companies continue to deliver significantly higher growth than that
of the benchmark, while the valuation premium to the benchmark (using forward
price-to-earnings) is at near the lowest level in a decade. We are excited by
many of our holdings and our investment universe, and we believe our
strengthened processes can help us deliver the returns that our
shareholders expect.
Lastly, we would like to thank shareholders for their ongoing support and
patience, and we look forward to sharing more about our progress with you
all soon.
Brian Lum
* With borrowings at fair value. For a definition of terms see Glossary of
terms and alternative performance measures below.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See
disclaimer below.
Past performance is not a guide to future performance.
The principal risks and uncertainties facing the Company are set out above.
Valuing private companies
We aim to hold our private company 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 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. 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 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 benchmarks 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.
List of investments as at 31 July 2025
Name Business Value % of total Absolute
£'000 assets performance *
%
GA Technologies Interactive media and services 16,829 3.8 27.9
Tsugami Manufacturer of automated machine tools 13,214 3.0 22.8
Yonex Sporting goods 13,045 2.9 38.2
Infomart Internet platform for restaurant supplies 12,245 2.8 24.8
Cosmos Pharmaceuticals Drugstore chain 11,989 2.7 25.6
Lifenet Insurance Online life insurance 11,987 2.7 14.1
Katitas Real estate services 11,424 2.6 14.1
Nifco Value-added plastic car parts 11,017 2.5 (3.1)
Gift Food industry operator and distributor 10,592 2.4 2.9
Appier Group Software as a service company providing AI platforms 10,391 2.3 (7.5)
Anicom Pet insurance provider 9,898 2.2 18.0
KH Neochem Chemical manufacturer 9,300 2.1 34.4
Raksul Internet based services 9,127 2.1 (10.5)
SWCC Electric wire and cable manufacturer 9,017 2.0 18.3
Name Business Value % of total Absolute
£'000 assets performance *
%
JEOL Manufacturer of scientific equipment 8,958 2.0 (25.8)
Kohoku Kogyo Manufacturer of lead terminals for aluminium electrolytic capacitors and 8,586 1.9 (6.1)
optical isolators for undersea cables
Cybozu Develops and markets internet and intranet application software for businesses 8,110 1.8 41.6
Harmonic Drive Systems Robotic components 7,806 1.8 (37.3)
Technopro IT staffing 7,554 1.7 49.7
Bengo4.com Online legal consultation 7,350 1.7 5.0
Top 20 208,439 47.0
Avex Group Entertainment management and distribution 7,319 1.7 (13.2)
Vector PR company 7,162 1.6 5.7
Seria Discount retailer 6,975 1.6 2.9
Global Security Experts Cyber security company 6,893 1.6 31.2
Megachips Electronic components 6,695 1.5 (6.6)
Horiba Manufacturer of measuring instruments 6,564 1.5 12.0
Optex Infrared detection devices 6,555 1.5 1.3
Sho-Bond Infrastructure reconstruction 6,550 1.5 (5.9)
Nakanishi Dental equipment 6,526 1.5 (25.5)
Peptidream Drug discovery and development platform 6,345 1.4 (23.5)
Toyo Tanso Electronics company 6,323 1.4 18.5
Nittoku Coil winding machine manufacturer 6,119 1.4 (5.8)
Anest Iwata Manufactures compressors and painting machines 6,033 1.4 13.9
Litalico Provides employment support and learning support services for people with 5,842 1.3 25.5
disabilities
I-Ne Hair care range 5,810 1.3 (22.6)
Oisix Organic food website 5,745 1.3 12.1
Istyle Beauty product review website 5,608 1.3 6.5
Noritsu Koki Holding company with interests in biotech and agricultural products 5,388 1.2 (6.5)
SpiderPlus Construction project management platform 5,384 1.2 20.5
Shinnihon(†) Construction and real estate development company 5,307 1.2 9.9
Nikkiso Industrial pumps and medical equipment 5,202 1.2 30.3
oRo Develops and provides enterprise planning software 5,140 1.2 23.8
Money Forward(†) Accounting and tax software company 5,097 1.2 35.9
Inforich Software company 4,746 1.1 (43.3)
GMO Financial Gate Face-to-face payment terminals and processing services 4,685 1.1 (28.2)
Kamakura Shinso Information processing company 4,635 1.1 6.1
DMG Mori(†) Machine tool manufacturer 4,571 1.0 4.8
Kitz Industrial valve manufacturer 4,461 1.0 6.5
Shoei Manufactures motor cycle helmets 4,095 0.9 (19.0)
OSG Manufactures machine tool equipment 4,081 0.9 11.3
Genda Operates entertainment business 4,011 0.9 (38.1)
Mani(†) Manufactures medical goods and equipment 3,491 0.8 6.1
Gojo & Company Inc Ord (U) Diversified financial services 3,435 0.8 (43.2)
Asahi Intecc Specialist medical equipment 3,360 0.8 (11.8)
eGuarantee Guarantees trade receivables 3,297 0.7 (15.5)
Cover(†) Leading vTuber ('virtual youtuber') agency 3,278 0.7 (18.9)
GMO Payment Gateway Online payment processing 3,218 0.7 1.0
Kumiai Chemical Specialised agrochemicals manufacturer 2,610 0.6 4.7
Crowdworks Crowd sourcing services 2,430 0.5 (13.8)
Weathernews Weather information services 2,305 0.5 22.2
Moneytree K.K. Class B Preferred (U) AI based fintech platform 2,270 0.5 78.5
Nippon Ceramic Electronic component manufacturer 2,097 0.5 19.4
JEPLAN (U) Chemical PET recycling 2,034 0.5 143.9
Soracom Networking software provider 1,990 0.4 (27.8)
Jade Group E-commerce services provider 1,754 0.4 (0.3)
Demae-Can Online meal delivery service 1,495 0.3 (26.7)
Cellsource Company engaged in regenerative medicine 902 0.2 (21.2)
Spiber (U) Textiles 823 0.2 (20.1)
Total investments 425,095 96.1
Net liquid assets(#) 17,226 3.9
Total assets(‡) 442,321 100.0
Bank loans (74,514) (16.8)
Shareholders' funds 367,807 83.2
* Absolute performance is in sterling terms and has been calculated on a
total return basis over the period 1 February 2025 to 31 July 2025.
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 31 July 2025 For the six months ended 31 July 2024 For the year ended 31 January 2025 (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Net gains/(losses) on investments 3 - 4,155 4,155 - (34,665) (34,665) - (34,865) (34,865)
Currency gains - 1,896 1,896 - 2,891 2,891 - 2,415 2,415
Income from investments 3,495 - 3,495 3,557 - 3,557 7,389 - 7,389
Investment management fee 4 (1,142) - (1,142) (1,269) - (1,269) (2,482) - (2,482)
Other administrative expenses (347) - (347) (308) - (308) (714) - (714)
Net return before finance costs and taxation 2,006 6,051 8,057 1,980 (31,774) (29,794) 4,193 (32,450) (28,257)
Finance cost of borrowings (662) - (662) (709) - (709) (1,465) - (1,465)
Net return on ordinary activities before taxation 1,344 6,051 7,395 1,271 (31,774) (30,503) 2,728 (32,450) (29,722)
Tax on ordinary activities 5 (349) - (349) (356) - (356) (739) - (739)
Net return on ordinary activities after taxation 995 6,051 7,046 915 (31,774) (30,859) 1,989 (32,450) (30,461)
Net return per ordinary share 6 0.37p 2.26p 2.63p 0.30p (10.51p) (10.21p) 0.67p (10.97p) (10.30p)
Note: 7 - - 0.60p
Dividends paid and payable per share
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
2025 2025
£'000 (audited)
£'000
Fixed assets
Investments held at fair value through profit or loss 8 425,095 453,211
Current assets
Debtors 2,006 1,989
Cash and cash equivalents 16,580 20,797
18,586 22,786
Creditors
Amounts falling due within one year 9 (75,874) (86,307)
Net current liabilities (57,288) (63,521)
Net assets 367,807 389,690
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 78,182 99,445
Revenue reserve 1,549 2,169
Shareholders' funds 367,807 389,690
Net asset value per ordinary share (after deducting borrowings at book value) 143.4p 139.4p
Ordinary shares in issue 11 256,437,278 279,491,301
Statement of changes in equity (unaudited)
For the six months ended 31 July 2025
Notes Share Share Capital Capital Revenue Shareholders'
capital premium redemption reserve * reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 February 2025 6,285 260,270 21,521 99,445 2,169 389,690
Ordinary shares bought back into treasury - - - (27,314) - (27,314)
Net return on ordinary activities after taxation 6 - - - 6,051 995 7,046
Equity dividends paid in the year 7 - - - - (1,615) (1,615)
Shareholders' funds at 31 July 2025 6,285 260,270 21,521 78,182 1,549 367,807
For the six months ended 31 July 2024
Share Share Capital Capital Revenue Shareholders'
capital premium redemption reserve * reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'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 - - - (14,385) - (14,385)
Net return on ordinary activities after taxation - - - (31,774) 915 (30,859)
Equity dividends paid in the year - - - - (2,422) (2,422)
Shareholders' funds at 31 July 2024 6,285 260,270 21,521 120,955 1,095 410,126
* The capital reserve includes investment holding losses of £12,240,000
(31 July - losses of £30,383,000).
Condensed cash flow statement (unaudited)
Six months to Six months to
31 July 31 July
2025 2024
£'000 £'000
Cash flows from operating activities
Net return on ordinary activities before taxation 7,395 (30,503)
Net (gains)/losses on investments (4,155) 34,665
Currency gains (1,896) (2,891)
Finance costs of borrowings 662 709
Overseas withholding tax (424) (472)
Changes in debtors and creditors 1,265 830
Cash from operations* 2,847 2,338
Interest paid (763) (711)
Net cash inflow from operating activities 2,084 1,627
Acquisitions of investments (51,171) (55,729)
Disposals of investments 81,066 73,721
Net cash inflow from investing activities 29,895 17,992
Ordinary shares bought back into treasury and stamp duty thereon (27,314) (14,385)
Bank loans repaid (241,267) (92,146)
Bank loans drawn down 234,564 92,146
Net cash (outflow) from financing activities (34,017) (14,385)
Dividends paid (1,615) (2,422)
(Decrease)/increase in cash and cash equivalents (3,653) 2,362
Exchange movements (564) (293)
Cash and cash equivalents at start of period 20,797 2,965
Cash and cash equivalents at end of period* 16,580 5,484
* Cash and cash equivalents represent cash at bank and deposits repayable
on demand.
Notes to the financial statements (unaudited)
1. Basis of accounting
The condensed Financial Statements for the six months to 31 July 2025 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 2025 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 2025.
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 owing to macroeconomic and geopolitical
concerns 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. As at 31 July 2025 the Company
had a net liability of £57.3 million primarily as a result of a revolving
credit facility which is repayable on a three monthly basis until 2027. 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.
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 January
2025 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.
3. Net gains/(losses) on investments
Six months Six months Year to
to 31 July to 31 July 31 January
2025 2024 2025
£'000 £'000 £'000
Gains/(losses) on sales of investments 108 (28,129) (42,425)
Changes in investment holding gains/(losses) 4,047 (6,536) 7,560
4,155 (34,665) (34,865)
4. 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 £50m of net assets, 0.65% on
the next £200m of net assets and 0.55% on the remainder, calculated and
payable quarterly.
5. Tax
The Company suffers overseas withholding tax on its equity income, currently
at the rate of 10%.
6. Net return per ordinary share
Six months to Six months to Year to 31 January
31 July 2025 31 July 2024 2025 (audited)
£'000 £'000 £'000
Revenue return 995 915 1,989
Capital return 6,051 (31,774) (32,450)
Total return 7,046 (30,859) (30,461)
Weighted average number of ordinary shares in issue 268,010,782 302,470,410 295,693,208
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 the
period. There are no dilutive or potentially dilutive shares in issue.
7. Dividends
Six months to Six months to Year to 31 January
31 July 2025 31 July 2024 2025 (audited)
£'000 £'000 £'000
Amounts recognised as distributions in the period:
Previous year's final dividend of 0.60p (31 January 2024 - 0.80p), paid 29 May 1,615 2,422 2,422
2025
Amounts paid and payable in respect of the period:
Final dividend (31 January 2025 - 0.60p) - - 1,615
No interim dividend has been declared in respect of the current period.
8. 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 2025 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed equities 416,533 - - 416,533
Private company (unlisted) securities - - 8,562 8,562
Total financial asset investments 416,533 - 8,562 425,095
As at 31 January 2025 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed equities 444,025 - - 444,025
Private company (unlisted) securities - - 9,186 9,186
Total financial asset investments 444,025 - 9,186 453,211
There have been no transfers between levels of the fair value hierarchy during
the period. The fair value of listed security investments is bid value, or in
the case of certain recognised overseas exchanges, last traded prices. 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 2022 ('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.
9. Financial liabilities
The amounts falling due within one year include bank loans of £74,514,000
(¥14.84 billion) outstanding under yen loan facilities repayable on 7
November 2027.
10. Fair value financial liabilities
The fair value of the bank loans at 31 July 2025 was £74,514,000 (31 January
2025 - £83,676,000).
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
2024 - nil) and 23,054,023 shares were bought back and held in treasury at a
cost of £27,314,000 (31 July 2024 - 12,166,184 shares bought back at a cost
of £14,385,000).
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 £24,000
(six months to 31 July 2024 - £26,000; year to 31 January 2025 - £48,000)
and transaction costs on sales amounted to £30,000 (six months to 31 July
2024 - £24,000; year to 31 January 2025 - £49,000).
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.
Further shareholder information
How to invest
Baillie Gifford Shin Nippon's shares are traded on the London Stock Exchange.
They can be bought through a stockbroker or by asking a professional adviser
to do so. If you are interested in investing directly in Shin Nippon you can
do so online. There are a number of companies offering real time online
dealing services - find out more by visiting shinnippon.co.uk.
Client relations team contact details
You can contact the Baillie Gifford Client Relations Team by telephone (your
call may be recorded for training or monitoring purposes), email or post.
Share register enquiries
Computershare Investor Services PLC maintains the share register on behalf of
the Company. In the event of queries regarding shares registered in your own
name, please contact the Registrars on 0370 889 3223.
Automatic Exchange of Information
In order to fulfil its obligations under UK tax legislation relating to the
automatic exchange of information, Baillie Gifford Shin Nippon PLC is required
to collect and report certain information about certain shareholders.
The legislation requires investment trust companies to provide personal
information to HMRC on certain investors who purchase shares in investment
trusts. Accordingly, Baillie Gifford Shin Nippon PLC will have to provide
information annually to the local tax authority on the tax residencies of a
number of non-UK based certificated shareholders and corporate entities.
New shareholders, excluding those whose shares are held in CREST, who come on
to the share register will be sent a certification form for the purposes of
collecting this information.
For further information, please see HMRC's Quick Guide: Automatic Exchange of
Information - information for account holders
gov.uk/guidance/automatic-exchange-of-information-account-holders.
Glossary of terms and alternative performance measures ('APM')
An alternative performance measure is a financial measure of historical or
future financial performance, financial position, or cash flows, other than a
financial measure defined or specified in the applicable financial reporting
framework. The APMs noted below are commonly used measures within the
investment trust industry and serve to improve comparability between
investment trusts.
Total assets
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 book 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 fair 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 2025 31 January 2025
Net Asset Value per ordinary share (borrowings at book value) 143.4p 139.4p
Shareholders' funds (borrowings at book value) £367,807,000 £389,690,000
Add: book value of borrowings £74,514,000 £83,676,000
Less: fair value of borrowings (£74,514,000) (£83,676,000)
NAV (borrowings at fair value) £367,807,000 £389,690,000
Shares in issue at period end 256,437,278 279,491,301
NAV per ordinary share (borrowings at fair value) 143.4p 139.4p
Net liquid assets
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 2025 31 July 2025 31 January 2025 31 January 2025
NAV (book) NAV (fair) NAV (book) NAV (fair)
Closing NAV per share 143.4p 143.4p 139.4p 139.4p
Closing share price 128.0p 128.0p 119.0p 119.0p
Discount (10.8%) (10.8%) (14.6%) (14.6%)
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. In periods where
no dividend is paid the total return equates to the capital return.
As at As at As at As at
31 July 31 July 31 January 31 January
2025 2025 2025 2025
NAV (fair) Share price NAV (fair) Share price
Closing NAV per share/share price (a) 143.4p 128.0p 139.4p 119.0p
Dividend adjustment factor* (b) 1.0048 1.0056 1.0059 1.0076
Adjusted closing NAV per share/share price (c) = (a) x (b) 144.1p 128.7p 140.2p 119.9p
Opening NAV per share/share price (d) 139.4p 119.0p 147.8p 126.2p
Total return for the six months/year (c) ÷ (d) -1 3.4% 8.2% (5.1%) (5.0%)
* The dividend adjustment factor is calculated on the assumption that the
final dividend of 0.60p paid by the Company during the period in respect of
the year to 31 January 2025 was reinvested into shares of the Company at the
cum income NAV per share/share price, as appropriate, at the
ex-dividend date.
Ongoing charges (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 2025 31 January 2025
Gearing * Gross Gearing (†) Gearing * Gross Gearing †
£'000 £'000 £'000 £'000
Borrowings (a) 74,514 74,514 83,676 83,676
Cash and cash equivalents (b) 16,580 - 20,797 -
Shareholders' funds (c) 367,807 367,807 389,690 389,690
15.8% 20.3% 16.1% 21.5%
* 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 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.
Private (unlisted) company
A private (unlisted) company means a company whose shares are not available
to the general public for trading and not listed on a stock exchange.
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