Final Results
Baillie Gifford Japan Trust PLC
04 October 2007
THE BAILLIE GIFFORD JAPAN TRUST PLC
Results for the year to 31 August 2007
Over the year to 31 August 2007, The Baillie Gifford Japan Trust's net asset
value per share declined by 7.8%. The TOPIX (in sterling terms) declined by
6.1% over the same period. All of the underperformance occurred in the first
half of the Company's year, with marginal outperformance since 28 February 2007.
• In comparison with its AIC peer group, the Company's net asset value total
return to the end of August 2007 ranks first over three, five and ten years.
• Stock selection in the Commerce and services and the Chemicals and other
materials sectors impacted performance during the financial year.
• Over the Company's year, gearing increased from 15% of net assets to 18% of
net assets as at 31 August 2007. Given current interest rates and the
increasing prospects for corporate earnings growth, the Board and Managers
are comfortable with the current level of gearing.
• It is not clear whether the recent resignation of the Prime Minister, Mr
Abe, and election of Mr Fukuda will have a meaningful impact. The Board and
Managers are monitoring the situation.
• The Japanese economy is now into its sixth year of expansion, driven by
companies increasing investment in capital equipment, with consumption
remaining supportive.
• Profits of Japanese companies continue to rise and profit margins are at
record levels. The Board and Managers are of the view that the underlying
balance sheet strength of many Japanese companies should make them an
attractive area for investment.
* The Company's Benchmark index is the TOPIX Index in sterling terms.
The Baillie Gifford Japan Trust PLC aims to pursue long-term capital growth
principally through investment in medium to smaller sized Japanese companies.
Baillie Gifford & Co, the Edinburgh based fund management group with around £55
billion under management and advice as at 3 October 2007, is appointed as
investment managers and secretaries to The Baillie Gifford Japan Trust PLC.
4 October 2007
- ends -
For further information please contact:
Sarah Whitley, Manager,
The Baillie Gifford Japan Trust PLC 0131 275 2000
Mike Lord, Director,
Broadgate Marketing 020 7726 6111
THE BAILLIE GIFFORD JAPAN TRUST PLC
The following is the unaudited preliminary statement for the year to 31 August
2007 which was approved by the Board on 3 October 2007. No dividend is payable.
INCOME STATEMENT
(unaudited)
For the year ended For the year ended
31 August 2007 31 August 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments - (12,386) (12,386) - 22,563 22,563
Currency gains (note 2) - 1,203 1,203 - 2,611 2,611
Income 1,844 - 1,844 1,728 - 1,728
Investment management fee (1,432) - (1,432) (1,573) - (1,573)
Other administrative expenses (239) - (239) (232) - (232)
Net return before finance costs 173 (11,183) (11,010) (77) 25,174 25,097
and taxation
Finance costs of borrowings (385) - (385) (412) - (412)
Net return on ordinary activities (212) (11,183) (11,395) (489) 25,174 24,685
before taxation
Tax on ordinary activities (114) - (114) (104) - (104)
Net return on ordinary activities (326) (11,183) (11,509) (593) 25,174 24,581
after taxation
Net return per ordinary share (0.52p) (18.06p) (18.58p) (0.96p) 40.65p 39.69p
(note 4)
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in this statement derive from continuing
operations.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement.
THE BAILLIE GIFFORD JAPAN TRUST PLC
SUMMARISED BALANCE SHEET
at 31 August 2007
(unaudited)
At 31 August 2007 At 31 August 2006
£'000 £'000 £'000 £'000
FIXED ASSETS
Investments 160,997 170,651
CURRENT ASSETS
Debtors 164 168
Cash and deposits 2,439 4,716
2,603 4,884
CREDITORS:
Amounts falling due within one year (4,762) (4,099)
NET CURRENT (LIABILITIES)/ASSETS (2,159) 785
TOTAL ASSETS LESS CURRENT LIABILITIES 158,838 171,436
CREDITORS:
Amounts falling due after more than one year (22,668) (23,757)
TOTAL NET ASSETS 136,170 147,679
CAPITAL AND RESERVES
Called-up share capital 3,097 3,097
Share premium 22,110 22,110
Capital redemption reserve 203 203
Capital reserve - realised 93,068 87,572
Capital reserve - unrealised 26,411 43,090
Revenue reserve (8,719) (8,393)
EQUITY SHAREHOLDERS' FUNDS 136,170 147,679
NET ASSET VALUE PER ORDINARY SHARE 219.9p 238.4p
Ordinary shares in issue (note 7) 61,935,000 61,935,000
THE BAILLIE GIFFORD JAPAN TRUST PLC
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited)
For the year ended 31 August 2007
Share Share Capital Capital Capital Revenue Total
capital premium redemption reserve - reserve - reserve shareholders'
reserve realised unrealised funds
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at 1
September 2006 3,097 22,110 203 87,572 43,090 (8,393) 147,679
Net return on ordinary activities
after taxation - - - 5,496 (16,679) (326) (11,509)
Shareholders' funds at 31 August
2007 3,097 22,110 203 93,068 26,411 (8,719) 136,170
For the year ended 31 August 2006
Share Share Capital Capital Capital Revenue Total
capital premium redemption reserve - reserve - reserve shareholders'
reserve realised unrealised funds
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at 1
September 2005 3,097 22,110 203 68,317 37,171 (7,800) 123,098
Net return on ordinary activities
after taxation - - - 19,255 5,919 (593) 24,581
Shareholders' funds at 31 August
2006 3,097 22,110 203 87,572 43,090 (8,393) 147,679
THE BAILLIE GIFFORD JAPAN TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
For the year ended For the year ended
31 August 2007 31 August 2006
£'000 £'000 £'000 £'000
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 35 (166)
NET CASH OUTFLOW FROM SERVICING OF FINANCE (385) (392)
FINANCIAL INVESTMENT
Acquisitions of investments (33,004) (48,792)
Disposals of investments 30,272 48,485
Realised currency losses (15) (567)
NET CASH OUTFLOW FROM FINANCIAL INVESTMENT (2,747)
(874)
NET CASH OUTFLOW BEFORE FINANCING (3,097) (1,432)
FINANCING
Bank loans drawn down 4,100 5,006
Bank loans repaid (3,280) -
NET CASH INFLOW FROM FINANCING 820 5,006
(DECREASE)/INCREASE IN CASH (2,277) 3,574
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
(Decrease)/increase in cash in the year (2,277) 3,574
Net cash flow from bank loans (820) (5,006)
Exchange movement on bank loans 1,218 3,178
MOVEMENT IN NET DEBT IN THE YEAR (1,879) 1,746
NET DEBT AT 1 SEPTEMBER (22,627) (24,373)
NET DEBT AT 31 AUGUST (24,506) (22,627)
THE BAILLIE GIFFORD JAPAN TRUST PLC
TWENTY LARGEST EQUITY HOLDINGS
at 31 August 2007
(unaudited)
2007 Value 2007 2006 Value
£'000 % of total £'000
Name Business assets
Japan Tobacco Tobacco manufacturer 5,082 3.1 5,049
Canon Printers and copiers 4,578 2.8 4,233
Itochu Trading conglomerate 4,459 2.7 3,665
Sumitomo Heavy Specialist machinery 4,449 2.7 4,527
Juki Sewing machines and electrical equipment 4,252 2.6 2,715
Mitsubishi Electric Industrial electrical 4,180 2.6 2,638
Yamada Denki Major consumer electronics retailer 4,175 2.6 4,744
USS Company Second-hand car auctioneer 4,065 2.5 4,353
Asahi Glass LCD, auto and construction glass 3,835 2.3 4,266
KDDI Mobile telecommunications 3,813 2.3 3,460
Inpex Oil and gas producer 3,804 2.3 3,911
Modec Designs and leases offshore oil platforms 3,697 2.3 2,211
Misumi Group Precision machinery parts distributor 3,648 2.2 2,550
SMC Pneumatic control equipment 3,607 2.2 3,861
Toray Industries Carbon fibre, plastics and textiles 3,569 2.2 3,957
East Japan Railway Tokyo based railway 3,521 2.2 2,934
Yaskawa Electric Factory automation 3,480 2.1 3,487
Accordia Golf Golf courses 3,453 2.1 -
Shimadzu Environmental testing equipment 3,379 2.1 -
Kamigumi Port operator 3,149 1.9 3,118
78,195 47.8 65,679
THE BAILLIE GIFFORD JAPAN TRUST PLC
NOTES
(unaudited)
1. The financial statements for the year to 31 August 2007 have been prepared
on the basis of the same accounting policies set out in the Company's
Annual Financial Statements at 31 August 2006.
31 August 2007 31 August 2006
£'000 £'000
2. Currency gains
Exchange differences on bank loans 1,218 3,178
Other exchange differences (15) (567)
1,203 2,611
3. No final dividend will be declared.
4. Net return per ordinary share
2007 2006
Revenue Capital Total Revenue Capital Total
Net return on ordinary activities after (0.52p) (18.06p) (18.58p) (0.96p) 40.65p 39.69p
taxation
Revenue return per ordinary share is based on the net revenue loss on
ordinary activities after taxation of £326,000 (2006 - £593,000), and on
61,935,000 ordinary shares, being the number of ordinary shares in issue
throughout each year.
Capital return per ordinary share is based in the net capital loss for the
financial year of £11,183,000 (2006 - net capital gain of £25,174,000),
and on 61,935,000 ordinary shares, being the number of ordinary
shares in issue throughout each year.
There are no dilutive or potentially dilutive shares in issue.
5. Bank loans of £26.9 million (Y6.3 billion) have been drawn down under yen
loan facilities which are repayable between August 2008 and August 2014
(31 August 2006 - £27.3 million (Y6.1 billion)).
6. Transaction costs incurred on the purchase and sale of investments are
added to the purchase costs or deducted from the sales proceeds, as
appropriate. During the year, transaction costs on purchases amounted
to £52,000 (31 August 2006 - £78,000) and transaction costs on sales
amounted to £38,000 (31 August 2006 - £64,000).
7. At 31 August 2007 the Company had authority to buy back 9,284,056 shares
at a discount to net asset value as well as the authority to issue/sell
from treasury 6,193,500 shares at a premium to net asset value. No shares
were bought back or issued/sold during the year.
THE BAILLIE GIFFORD JAPAN TRUST PLC
NOTES (Ctd)
(unaudited)
31 August 2007 31 August 2006
£'000 £'000
8. Reconciliation of Net Return before Finance Costs and
Taxation to Net Cash Inflow/(Outflow) from Operating
Activities
Net return before finance costs and taxation (11,010) 25,097
(Losses)/gains on investments 12,386 (22,563)
Currency gains (1,203) (2,611)
Increase in accrued income (7) (30)
Decrease/(increase) in other debtors 11 (20)
Decrease/(increase) in creditors (29) 62
Overseas tax suffered (113) (101)
Net cash inflow/(outflow) from operating activities 35 (166)
9. The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 August 2007. The financial
information for 2006 is derived from the statutory accounts for 2006 which
have been delivered to the Registrar of Companies. The Auditors have
reported on the 2006 accounts, their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
The statutory accounts for 2007 will be finalised on the basis of the
financial information presented in this preliminary announcement and will
be delivered to the Registrar of Companies following the Company's Annual
General Meeting.
10. The Report and Accounts will be available on the Managers' website
www.bailliegifford.comon or around 31 October 2007.
None of the views expressed in this document should be construed as advice
to buy or sell a particular investment.
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