REG - Schroder Japan Trust - Half-year Report
17/04/2024 07:01
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RNS Number : 8654K Schroder Japan Trust PLC 17 April 2024
Half Year Report
Schroder Japan Trust plc hereby submits its Half Year Report for the period
ended 31 January 2024 as required by the Financial Conduct
Authority's Disclosure Guidance and Transparency Rule 4.2.
The Half Year Report is also being published in hard copy format and an
electronic copy of that document will shortly be available to download from
the Company's webpages www.schroders.com/japantrust. Please click on the
following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/8654K_1-2024-4-16.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8654K_1-2024-4-16.pdf)
The Company has submitted its Half Year Report to the National Storage
Mechanism and it will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Enquiries:
Schroder Investment Management Limited
Katherine
Fyfe
020 7658 6000
Augustine Chipungu
020 7658 6000
Half Year Report and Accounts
for the six months ended 31 January 2024
CHAIRMAN'S STATEMENT
Performance
I am pleased to report that during the six-month period to 31 January 2024,
the Company produced a NAV total return of 10.3%, outperforming the Benchmark
total return of 9.1%. The share price also produced a positive total return of
5.8% during the period. Our Investment Manager, Masaki Taketsume, continues to
manage a high conviction, balanced portfolio of large and smaller companies
with a strong emphasis on valuation.
Performance over the period was helped by strong stock selection across
machinery, glass and ceramics, and information and communication. From a style
perspective, holdings of value stocks outperformed the growth portion of the
portfolio. The use of financial leverage was also helpful to performance over
the period.
Further comment on performance and the investment policy can be found in the
Investment Manager's review.
Discount management
During the period under review, the Company's shares continued to trade at a
discount to NAV, and the Board utilised its buy-back authority to purchase
1,381,226 shares for cancellation at an average discount of 10.3%. Although
the discount widened during the reporting period from 7.2% to 11.1%, this was
broadly in line with the move in the average discount for the AIC Japan Sector
as a whole over the same timescale. The Board continues to monitor the
Company's discount actively and to authorise the Company to purchase shares
when appropriate. In addition, in February 2024, the Company appointed J.P.
Morgan Securities plc (which conducts its UK investment banking business
activities as "J.P. Morgan Cazenove") as the Company's sole corporate broker.
J.P. Morgan Cazenove is actively working with the Board to consider discount
mechanics and other strategic initiatives.
Gearing
The Investment Manager actively used gearing throughout the period. The
Company's term loan remained fully utilised, and the revolving credit facility
was drawn down. The average gearing during the six months to 31 January 2024
was 9.5% and, as at 15 April 2024, the gearing was 11.6%.
At the 2023 AGM, shareholders approved a change of the Company's investment
policy to allow it to use contracts for difference to provide exposure to
Japanese equities on a geared basis as an alternative to utilising bank
borrowings. The onboarding process for the implementation of this facility is
currently in progress.
The Company intends to continue to use leverage.
Conditional tender offer
As I stated in my last year-end Chairman's Statement, the Board continues to
monitor the Company's performance against its tender performance target each
year.
The Company has a target to deliver NAV total return performance of at least
2% per annum above the Benchmark over a four-year period starting from 1
August 2020. Should this target not be met, the Board will put to shareholders
a proposal for a tender offer of 25% of the issued share capital at a price
equal to the prevailing net asset value less costs. This would be contingent
on the next continuation vote of the Company at this year's AGM being
successful.
The Investment Manager has continued to deliver strong outperformance during
the fourth year of the performance target, delivering a NAV total return for
the period from 1 August 2020 to 31 January 2024 of 4.4% above the Benchmark
on an annualised basis. Over three and a half years, the Company has now
returned 12.8% on an annualised basis, which compares favourably to the
annualised 8.4% return from the Benchmark.
Outlook
The Japanese equity market has enjoyed a strong start to 2024 and,
symbolically, the Nikkei 225 Index has recently exceeded its previous high
achieved in 1989.
The Board remains very positive on the long-term equity market outlook because
corporate Japan is in the middle of a major transformation which is already
resulting in improved shareholder returns. This transformation has been a long
time in the making: it is now ten years since the introduction of the Japanese
government's Stewardship Code and nine years since the publication of its
Corporate Governance Code, so it is not surprising that it has slipped under
the radars of many international investors. But the speed of change is now
accelerating. In January, the Tokyo Stock Exchange announced that half the
companies listed on its Prime Market had developed plans (within a few months
of being requested to do so) to boost their capital efficiency and improve
returns on capital. Cross-shareholdings are being unwound. Dividend payouts
and share buybacks are at record highs. More takeovers, management buyouts,
and private equity deals are taking place. Greater capital efficiency and
improvements in shareholder value will result. In addition, as detailed in the
Investment Manager's Review, the recent launch of an enhanced Nippon
Individual Savings Account or "NISA" (originally modelled on the UK's ISA)
should encourage additional demand from domestic retail investors. At the
macro level, deflation has finally given way to moderate inflation, making it
easier for companies to raise prices, and early results of this year's
"Shunto" (the annual wage negotiations between labour unions and employers)
are suggesting a base pay rise of 3.7% - the highest since 1991. This
combination of real wage improvement and subdued inflation should lead to
increased demand from Japanese consumers. Finally, the recent end to the Bank
of Japan's 8-year-long negative interest rate policy represents a watershed
moment since the normalisation of Japan's monetary policy will, we believe, be
a net positive for the Japanese equity market.
All these developments should result in improved shareholder returns and
higher valuations and provide exciting opportunities for the high-conviction
stock-picking strategy of the Schroder Japan Trust.
As I mentioned in my last Chairman's statement, there have been many false
dawns when the performance of the Japanese equity market has failed to live up
to investor expectations. But your Board believes that, this time, there are
real positive structural shifts in motion. We remain very positive on the
long-term outlook for the Japanese market and are firmly of the view that the
Company is the best vehicle through which to capitalise on the opportunities
presented by corporate change and an improving fundamental backdrop. The
Company has delivered solid outperformance of its Benchmark over the three and
a half years since its conditional tender offer was implemented and yet still
trades at a discount to NAV, providing considerable upside.
Philip Kay
Chairman
16 April 2024
INVESTMENT MANAGER'S REVIEW
Over the first six months of the Company's financial year to 31 January 2024,
the Company's NAV produced a total return of 10.3%, while its Benchmark
produced a total return of 9.1%. Before we delve into the drivers of recent
performance, we would like to explain the investment philosophy and approach
that sits behind our decision-making. This should provide some important
context to help you understand why the portfolio is positioned the way it is,
and what you should expect in terms of future performance.
Our investment approach
We believe that the Japanese equity market ultimately acts efficiently in
reflecting the intrinsic value of companies. However, in the short to
medium-term considerable inefficiencies are frequently evident in individual
stocks. These inefficiencies provide repeatable opportunities to identify and
invest in undervalued stocks, with the aim of delivering a better return than
the market as a whole on a rolling three-to-five year view.
Our investment resource is entirely devoted to this aim, focusing on
individual company fundamentals to understand the true worth of a stock and
investing in a portfolio of 60-70 of the highest conviction ideas. These then
tend to be held for the long term, with value being realised as the market
gradually reflects their true value more efficiently.
Portfolio holdings tend to fall into three categories of inefficiency:
1. Market misperception - companies with self-improving credentials, with
management initiatives to sustainably enhance operational performance being
under-appreciated by other investors.
2. Market oversight - undervalued companies, especially among small and
mid-caps where research coverage is less widespread, with strong and
defendable business franchises in niche product areas.
3. Short-term overreaction - ideas arising from abrupt but transitory events
which push valuations of quality companies temporarily to unsustainably low
levels.
Outside these three categories, the balance of the portfolio represents "best
in class" stocks with reasonable valuations. The weighting given to each of
these segments evolves over time, but a reasonable exposure to each category
ensures a good level of diversification for the portfolio as a whole.
Meanwhile, the approach tends to result in a bias towards value stocks(1) and
smaller companies, as well as an overall focus on quality.
The portfolio tends to exhibit a high "active share", which means that its
constituents deviate significantly from the Benchmark. Gearing (financial
leverage) typically ranges between 10% and 17.5%, allowing shareholders to
potentially benefit even more as the inefficiencies we have identified become
more appropriately priced by the market.
1 The term 'value stocks' refers to shares of a company that appears to
trade at a lower price relative to its fundamentals, such as dividends,
earnings, or sales, making it appealing to value investors.
Portfolio strategy
So, what does this mean for current portfolio strategy and positioning?
Currently, the biggest category within the portfolio is market misperception
which accounts for almost 40% of assets. This includes companies such as
industrials conglomerate Hitachi and metals and mining business Nippon Steel.
In both cases, we see management teams pursuing strategies that should
deliver a transformative and sustainable improvement in returns, the effects
of which are not yet reflected in valuations.
Almost 30% of the portfolio is in market oversights, such as industrial
cooling business Fukushima Galilei and powder processing specialist Hosokawa
Micron, where we find highly competitive smaller businesses trading at a
significant discount to their large cap and global peers. Less than 10% of the
portfolio is invested in short-term overreactions, including out-of-favour
opportunities such as IT services business Nomura Research Institute and food
packaging specialist FP Corporation. These businesses are beneficiaries of
long-term structural tailwinds, but their shares have recently been sold down
aggressively - in our view, too aggressively, hence the opportunity to add
them to the portfolio.
The remaining 20% of the portfolio is invested in what we consider to be "best
in class" operators, such as the financial services company Sumitomo Mitsui
Financial and the insurance business Tokio Marine.
From a sector perspective, this means a bias towards machinery, glass and
ceramic products, and information and communication. As is typical, the
portfolio is also leaning towards small and mid-sized businesses, where
valuations look particularly attractive as the domestic Japanese economy
continues to recover.
Recent performance drivers
The Japanese stock market was strong throughout the period, buoyed by growing
global interest in the structural changes that are occurring in Japan as a
result of continuing corporate governance reforms. The recent return of
inflation has also helped to improve sentiment towards Japanese equities, as
has a period of robust earnings growth from Japanese companies.
Overall, the Company performed well over the six months to 31 January 2024,
as reflected in the positive NAV return and the modest outperformance of the
Benchmark. Value stocks continued to outperform growth stocks during the
period, which was generally helpful to the portfolio's performance, as was the
Company's gearing which helped to amplify returns. This was partly offset by
the under-performance of smaller companies, which lagged in a rally that was
driven mainly by large-cap stocks.
In terms of stock specifics, we saw positive corporate earnings developments
at several individual companies. Niterra, a mid-cap automotive component
manufacturer that specialises in spark plugs and other ceramic parts, was the
largest individual contributor to performance. The business is enjoying very
strong earnings growth, as the recovery in Japanese automotive production that
we had anticipated continues to play out positively.
Hitachi, the large-cap industrials conglomerate, also provided a solid
performance, supported by strong financial results and its continuing
transformation. Management has shifted the company's focus towards digital
solutions, IT services and sustainable energy, in an ongoing effort to
sustainably improve shareholder returns. It is encouraging to see the stock
market start to recognise the power of this transformation, but we believe
there is significant further upside potential as the company's financial
performance continues to improve and as the shares attain a more appropriate
market rating.
By contrast, some of the portfolio's technology companies saw share price
declines after strong performance in the previous period. In some cases,
including electronic component makers Ibiden and Rohm, financial results also
fell short of expectations, due to continued cyclical weakness in the
semiconductor industry.
Top 10 contributors and detractors
Six months to 31 January 2024
Top 10 contributors Portfolio weight Benchmark(1) weight Portfolio return Benchmark(1) return Total effect
Niterra Co., Ltd. 2.1 0.1 33.4 33.4 0.4
Hitachi, Ltd. 4.3 1.6 24.2 24.2 0.4
Disco Corporation 1.7 0.5 49.2 49.2 0.3
Hosokawa Micron Corporation 1.6 0.0 30.0 30.0 0.3
Daikin Industries, Ltd. - 0.8 - -17.9 0.3
Nidec Corporation - 0.3 - -35.3 0.3
NEC Networks & System Integration 1.6 0.0 26.7 26.7 0.2
SoftBank Group Corp. - 0.9 - -12.1 0.2
Tazmo Co., Ltd. 1.2 0.0 31.7 31.7 0.2
Panasonic Holdings Corporation - 0.5 - -20.7 0.2
Top 10 detractors Portfolio weight Benchmark(1) weight Portfolio return Benchmark(1) return Total effect
Rohm Co., Ltd. 1.7 0.1 -23.2 -23.2 -0.6
Ibiden Co., Ltd. 1.8 0.1 -13.9 -13.9 -0.5
Kohoku Kogyo Co. Ltd. 0.9 - -19.1 - -0.3
Miura Co., Ltd. 0.7 0.0 -25.0 -25.0 -0.3
Ricoh Company, Ltd. 1.6 0.1 -8.2 -8.2 -0.3
Tokyo Electron Ltd. - 1.6 - 29.6 -0.3
Asahi Group Holdings, Ltd. 2.6 0.3 -2.4 -2.4 -0.3
Mitsubishi UFJ Financial Group, Inc. - 2.3 - 21.1 -0.3
Nintendo Co., Ltd. - 1.5 - 27.9 -0.2
Lasertec Corp - 0.5 - 82.2 -0.2
Source: FactSet, GBP, 1TOPIX. Stocks mentioned are show for illustrative
purposes only and should not be viewed as a recommendation to buy/sell. Past
performance is not a guide to future performance and may not be repeated. The
value of investment can go down as well as up and is not guaranteed. The
return may increase or decrease as a result of currency fluctuations.
Portfolio activity
We initiated a position in a new market misperception idea: Nippon Steel,
Japan's largest and the world's leading steel maker. The starting valuation
looks highly attractive, and we foresee the potential for a much higher
multiple in the future, supported by management efforts to improve the
stability and growth profile of its earnings. The business has become
increasingly focused on profitability through price discipline, and the
strategy of expanding the business into new territories, such as India, holds
significant future potential. Ultimately, the strategy being pursued by Nippon
Steel's management team should allow the business to become much more
resilient, even in the event of a cyclical downturn in its core markets. This
development is under-appreciated by investors and comes at a time when the
Asian steel market appears poised for a cyclical upswing. Hence, we view this
as an opportune time to build an exposure, before improving fundamentals can
be fully reflected in market prices.
We also initiated a position in food packaging manufacturer, FP Corporation,
as a new short-term overreaction opportunity. The company saw increased
operational volatility during the COVID years, but we have subsequently seen a
stabilisation of growth rates, and the business has been steadily increasing
its market share. We are also impressed by management's ability to control
costs and raise prices in response to inflation, which should continue to
support improvements in returns, margins, and growth. Nevertheless, the share
price hit a six-year low in 2023, giving us the opportunity to build a
position at a very attractive valuation. We see significant potential for a
revaluation of the shares in 2024.
In terms of exits, we sold out of several positions including Yokowo, Astellas
Pharma, Aeon Financial Services and Toho, mainly due to weaker-than-expected
earnings progress. We used the proceeds to build positions in opportunities in
which we have increasing confidence, such as those outlined above.
Outlook
The Japanese equity market has shown encouraging strength this year, with the
Nikkei 225 Index finally exceeding the bubble-era high seen in December 1989.
The conditions are now in place for a bold new era of prosperity for the
Japanese stock market.
Importantly, the market's rise has been supported by strong and improving
corporate fundamentals. Profits from Japanese companies are generally heading
in the right direction, with the most recent quarterly earnings season seeing
plenty of upwards revisions of profit estimates. The performance of
domestically-oriented companies has been particularly impressive, with many
companies demonstrating strong demand and displaying signs of regained pricing
power. After years of entrenched deflation, the importance of this last point
should not be underestimated.
Meanwhile, thanks to the ongoing efforts of the Tokyo Stock Exchange,
corporate governance reforms have continued. After a long period of overseas
apathy towards Japanese equities, these reforms are now resulting in growing
interest from the global investment community. The unwinding of
cross-shareholdings is progressing and there has been an increasing number of
Japanese companies involved in corporate actions. According to the Nikkei
newspaper, the number of take-over bids in Japan was 65 in 2023, up by 35%
year on year and the highest figure since 2000. Notably, share buy-backs have
continued to increase, and by the end of February 2024, the share buy-back
plans announced by Japanese companies for the fiscal year to March 2024 had
already exceeded the level of the full preceding fiscal year to March 2023. We
would expect these trends in corporate activity to continue as more and more
companies are compelled to take steps to improve their returns and address
persistent under-valuations.
There has also been an increase in the level of Japanese retail participation
in the equity market as a result of the revised tax-exempt scheme for
individual investors, known as NISA. The revised NISA scheme now allows
individual investors to invest more assets with tax exemptions for an
unlimited period of time. The changes in the NISA scheme came at an ideal
time, just as retail investors started to recognise a shift towards a more
inflationary environment in Japan and thus the need for the retail investor to
move money out of their bank deposits and to rotate it towards investment in
the equity market.
To conclude, there are many reasons to believe that we are in a period of
sustained outperformance from the Japanese stock market. The overall valuation
of the market looks reasonable, but this masks a considerable divergence
between larger companies that have become relatively fully-priced, and smaller
companies to which the Company is currently biased, where valuations are, in
general, much more appealing. We believe that the Japanese market as a whole
can make good long-term progress from here, but this represents a particularly
exciting environment for active, high conviction stock pickers. By focusing
the portfolio towards undervalued businesses with strong growth prospects and
the potential to improve returns, we are confident in the opportunity that
lies ahead for investors in the Company.
Masaki Taketsume
Portfolio Manager
16 April 2024
INTERIM MANAGEMENT STATEMENT
Principal risks and uncertainties
The principal risks and uncertainties with the Company's business fall into
the following risk categories: strategic; investment management; financial and
currency; custody; gearing and leverage; accounting, legal and regulatory;
service provider; and cyber. A detailed explanation of the risks and
uncertainties in each of these categories can be found on pages 23 and 24 of
the Company's published annual report and accounts for the year ended 31 July
2023.
These risks and uncertainties have not materially changed during the six
months ended 31 January 2024. However, the Board undertook a review of
principal and emerging risks for the Company while reviewing these accounts.
The Directors noted that geopolitical risk and climate change risk in
particular continue to develop and will be reported on in the next annual
report as appropriate.
Going concern
Having assessed the principal risks and uncertainties, and the other matters
discussed in connection with the viability statement as set out on page 25 of
the published annual report and accounts for the year ended 31 July 2023, the
Directors consider it appropriate to adopt the going concern basis in
preparing the accounts.
Related party transactions
There have been no transactions with related parties that have materially
affected the financial position or the performance of the Company during the
six months ended 31 January 2024.
Directors' responsibility statement
In respect of the half year report for the six months ended 31 January 2024,
we confirm that, to the best of our knowledge:
- the condensed set of Financial Statements contained within have been
prepared in accordance with IAS 34 Interim Financial Reporting and give a true
and fair view of the assets, liabilities, financial position and profit and
loss of the Company as at 31 January 2024, as required by the Disclosure
Guidance and Transparency Rule 4.2.4R;
- the half year report includes a fair review as required by the
Disclosure Guidance and Transparency Rule 4.2.7R, of important events that
have occurred during the six months to 31 January 2024, and their impact on
the condensed set of Financial Statements, and a description of the principal
and emerging risks for the remaining six months of the financial year; and
- the half year report includes a fair review of the information
concerning related party transactions as required by the Disclosure Guidance
and Transparency Rule 4.2.8R.
The half year report has not been reviewed or audited by the Company's
auditors.
The half year report for the six months ended 31 January 2024 was approved by
the Board and the above Responsibilities Statement has been signed on its
behalf.
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 January 2024 (unaudited)
(Unaudited) (Unaudited) (Audited)
For the six months For the six months For the year
ended 31 January 2024 ended 31 January 2023 ended 31 July 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at
fair value through profit or loss - 27,118 27,118 - 12,757 12,757 - 22,484 22,484
Net foreign currency
gains/(losses) - 684 684 - (610) (610) - 3,920 3,920
Income from investments 4,209 - 4,209 4,198 - 4,198 8,766 - 8,766
Other interest receivable and
similar income 39 - 39 5 - 5 20 - 20
Gross return 4,248 27,802 32,050 4,203 12,147 16,350 8,786 26,404 35,190
Management fee (329) (768) (1,097) (300) (700) (1,000) (607) (1,416) (2,023)
Administrative expenses (354) - (354) (314) - (314) (653) - (653)
Net return before finance
costs and taxation 3,565 27,034 30,599 3,589 11,447 15,036 7,526 24,988 32,514
Finance costs (41) (96) (137) (45) (106) (151) (86) (200) (286)
Net return before taxation 3,524 26,938 30,462 3,544 11,341 14,885 7,440 24,788 32,228
Taxation (421) - (421) (420) - (420) (877) - (877)
Net return after taxation 3,103 26,938 30,041 3,124 11,341 14,465 6,563 24,788 31,351
Return per share (pence) 2.60 22.56 25.16 2.57 9.31 11.88 5.41 20.45 25.86
The "Total" column of this statement is the profit and loss account of the
Company. The "Revenue" and "Capital" columns represent supplementary
information prepared under guidance issued by The Association of Investment
Companies. The Company has no other items of other comprehensive income and
therefore the net return/(loss) after taxation is also the total comprehensive
income/(loss) for the period.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 January 2024 (unaudited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 July 2023 11,990 7 511 3 86,878 195,135 7,936 302,460
Repurchase of the Company's
own shares for cancellation (138) - 138 - (3,250) - - (3,250)
Net return after taxation - - - - - 26,938 3,103 30,041
Dividend paid in the period - - - - - - (6,439) (6,439)
At 31 January 2024 11,852 7 649 3 83,628 222,073 4,600 322,812
for the six months ended 31 January 2023 (unaudited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 July 2022 12,200 7 301 3 91,237 170,347 7,334 281,429
Repurchase of the Company's
own shares for cancellation (38) - 38 - (750) - - (750)
Net return after taxation - - - - - 11,341 3,124 14,465
Dividend paid in the period - - - - - - (5,961) (5,961)
At 31 January 2023 12,162 7 339 3 90,487 181,688 4,497 289,183
for the year ended 31 July 2023 (audited)
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 July 2022 12,200 7 301 3 91,237 170,347 7,334 281,429
Repurchase of the Company's
own shares for cancellation (210) - 210 - (4,359) - - (4,359)
Net return after taxation - - - - - 24,788 6,563 31,351
Dividend paid in the year - - - - - - (5,961) (5,961)
At 31 July 2023 11,990 7 511 3 86,878 195,135 7,936 302,460
STATEMENT OF FINANCIAL POSITION
as at 31 January 2024 (unaudited)
(Unaudited) (Unaudited) (Audited)
At 31 January At 31 January At 31 July
2024 2023 2023
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 365,629 324,533 331,756
Current assets
Debtors 1,968 471 1,113
Cash and cash equivalents 1,037 2,718 4,081
3,005 3,189 5,194
Current liabilities
Creditors: amounts falling due within one year (45,822) (1,062) (1,669)
Net current assets (42,817) 2,127 3,525
Total assets less current liabilities 322,812 326,660 335,281
Creditors: amounts falling due after more than one year - (37,477) (32,821)
Net assets 322,812 289,183 302,460
Capital and reserves
Called-up share capital 11,852 12,162 11,990
Share premium 7 7 7
Capital redemption reserve 649 339 511
Warrant exercise reserve 3 3 3
Share purchase reserve 83,628 90,487 86,878
Capital reserves 222,073 181,688 195,135
Revenue reserve 4,600 4,497 7,936
Total equity shareholders' funds 322,812 289,183 302,460
Net asset value per share (pence) 272.36 237.77 252.25
Schroder Japan Trust plc
Registered in England and Wales as a public company limited by shares
Company Registration Number: 02930057
NOTES TO THE FINANCIAL STATEMENTS
1. Financial Statements
The information contained within the accounts in this half year report has not
been audited or reviewed by the Company's independent auditor.
The figures and financial information for the year ended 31 July 2023 are
extracted from the latest published accounts of the Company and do not
constitute statutory accounts for that year. Those accounts have been
delivered to the Registrar of Companies and included the report of the
auditors which was unqualified and did not contain a statement under either
section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
Basis of accounting
The accounts have been prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, in particular with Financial Reporting Standard
104 "Interim Financial Reporting" and with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" issued by the Association of Investment Companies in July
2022.
All of the Company's operations are of a continuing nature.
The accounting policies applied to these accounts are consistent with those
applied in the accounts for the year ended 31 July 2023.
3. Taxation on ordinary activities
The Company's effective corporation tax rate is nil, as deductible expenses
exceed taxable income. The tax charge comprises irrecoverable overseas
withholding tax.
4. Return/(loss) per share
(Unaudited) (Unaudited)
For the six For the six (Audited)
months ended months ended Year ended
31 January 31 January 31 July
2024 2023 2023
£'000 £'000 £'000
Revenue return 3,103 3,124 6,563
Capital return 26,938 11,341 24,788
Total return 30,041 14,465 31,351
Weighted average number of shares in issue during the period 119,383,962 121,782,314 121,214,425
Revenue return per share (pence) 2.60 2.57 5.41
Capital return per share (pence) 22.56 9.31 20.45
Total return per share (pence) 25.16 11.88 25.86
5. Dividends paid
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 January 31 January 31 July
2024 2023 2023
£'000 £'000 £'000
2023 final dividend paid of 5.4p (2022: 4.9p) 6,439 5,961 5,961
No interim dividend has been declared in respect of the six months ended 31
January 2024 (2023: nil).
6. Creditors: amounts falling due within one year
(Unaudited) (Unaudited) (Audited)
31 January 31 January 31 July
2024 2023 2023
£'000 £'000 £'000
Securities purchased awaiting settlement 1,486 422 951
Other creditors and accruals 1,359 640 718
Bank loan 42,977 - -
45,822 1,062 1,669
The bank loan is a yen 6.0 billion three-year term loan from SMBC Bank
International plc, expiring on 17 January 2025 and carrying a floating
interest rate, calculated at the daily Compounded Risk Free Rate, plus a
margin. The bank loan also includes a yen 2.0 billion credit facility with
SMBC Bank International plc, repayment date in 10 May 2024 (2023: undrawn).
7. Creditors: amounts falling due after more than one year
(Unaudited) (Unaudited) (Audited)
31 January 31 January 31 July
2024 2023 2023
£'000 £'000 £'000
Bank loan - 37,477 32,821
8. Called-up share capital
(Unaudited) (Unaudited)
For the six For the six (Audited)
months ended months ended Year ended
31 January 31 January 31 July
2024 2023 2023
£'000 £'000 £'000
Opening balance of ordinary shares of 10p each 11,990 12,200 12,200
Repurchase and cancellation of shares (138) (38) (210)
Closing balance of ordinary shares of 10p each 11,852 12,162 11,990
Changes in the number of shares in issue during the period were as follows:
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 January 31 January 31 July
2024 2023 2023
£'000 £'000 £'000
Ordinary shares of 10p each, allotted, called-up and fully paid
Opening balance of shares in issue 119,903,965 122,000,562 122,000,562
Repurchase and cancellation of shares (1,381,226) (375,690) (2,096,597)
Closing balance of shares in issue 118,522,739 121,624,872 119,903,965
9. Net asset value per share
Net asset value per share is calculated by dividing shareholders' funds by the
number of shares in issue of 118,522,739 (31 January 2023: 121,624,872 and 31
July 2023: 119,903,965).
10. Financial instruments measured at fair value
The Company's financial instruments that are held at fair value comprise its
investment portfolio. At 31 January 2024, all investments in the Company's
portfolio were categorised as Level 1 in accordance with the criteria set out
in paragraph 34.22 (amended) of FRS 102. That is, they are all valued using
unadjusted quoted prices in active markets for identical assets (31 January
2023 and 31 July 2023: all valued using unadjusted quoted prices in active
markets for identical assets).
11. Events after the interim period that have not been reflected
in the financial statements for the interim period
The Directors have evaluated the period since the interim date and have not
noted any significant events which have not been reflected in the financial
statements.
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accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
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. END IR BLGDSUDBDGSLRecent news on Schroder Japan Trust
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