Half-year Report

RNS Number : 2460T
Baillie Gifford Japan Trust PLC
24 March 2021
 

RNS Announcement

 

The Baillie Gifford Japan Trust PLC

 

Results for the six months to 28 February 2021

 

Legal Entity Identifier: 54930037AGTKN765Y741

Regulated Information Classification: Interim Financial Report.

 

The following is the unaudited Interim Financial Report for the six months to 28 February 2021.

 

· In the six months to 28 February 2021, The Baillie Gifford Japan Trust's net asset value total return per share (after deducting borrowings at fair value) increased by 20.4% compared to a 11.0% increase in the TOPIX total return (in sterling terms). The Company's share price total return rose by 30.3% as the shares moved from a discount to a premium to NAV.

· The largest positive contributors to performance were SoftBank, Outsourcing, Sumitomo Metal Mining and MonotaRO.

· The two largest detractors to performance were Calbee and Colopl. We remain confident in the long-term prospects of both and continue to hold the shares.

· Over the period we sold three holdings and bought four new holdings which we believe to have attractive long-term growth prospects.

 

Summary of Unaudited Results

 


 

28 February

2021

 

31 August

2020

 

 

% change

Shareholders' funds

£933.7m

£772.4m


Net asset value per share

(after deducting borrowings at fair value)*

 

1,006.3p

 

839.8p

 

19.8

Share price

1,060.0p

817.0p

29.7

Premium/(discount) (borrowings at fair value)*

5.3%

(2.7%)


Active share*

81%

82% 


 


Six months to

28 February 2021

Six months to

29 February 2020

Total returns (%)



Net asset value per share (after deducting borrowings at fair value)*

 

20.4

 

(7.4)

Share price

30.3

(14.3)

TOPIX total return (in sterling terms) #

11.0

(5.1)

 

 

 

 


Six months to 28 February 2021

Six months to 29 February 2020

Revenue earnings per share

3.40p

3.34p

 

 

Six months to 28 February 2021

Year to 31 August 2020

Period's high and low

High

Low

High

Low

Net asset value per share

(after deducting borrowings at fair value)*†

 

1,081.3p

 

841.8p

 

860.7p

 

579.8p

Share price

1,132.0p

823.0p

848.0p

532.0p

Premium/(discount) (borrowings at fair value) *†

 

10.3%

 

(5.5%)

 

1.8%

 

(12.4%)

 

* See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

Alternative performance measure.

# Source: Baillie Gifford/Refinitiv and relevant underlying data providers. See disclaimer at end of this announcement.

 

Interim Management Report

 

During the six months to the end of February 2021 the NAV total return of your Company, after deducting borrowings at fair value, increased by 20.4% whilst the share price total return rose by 30.3% as the shares moved from a discount to a premium to NAV.  The TOPIX increased by 11.0% on a total return basis during the period.  While it has been a successful period, we would caution that six months is a very short time frame.  In our view it is more helpful to consider investment over a longer time horizon. 

 

Over the period four stocks contributed more than +0.5% to performance.  In descending order of contribution they were SoftBank (+1.0%), Outsourcing (+0.9%), Sumitomo Metal Mining (+0.7%) and MonotaRO (+0.5%).  We have commented in detail on the positive case for SoftBank in previous reports.  In summary we think that it combines very good quality investments with a significant discount (to net worth) and an exceptional founder.  It appears that these merits are becoming more widely recognised.  Outsourcing is a staffing business that has delivered very rapid sales growth over recent years and is aiming to become one of the largest globally.  Sumitomo Metal Mining benefits from combining resource assets and advanced smelting and materials technologies.  Finally, MonotaRO acts as an online distributor, mainly of useful parts for companies.  It is worth noting that each of these companies is quite different from the others, reflecting Japan Trust's style of finding growth investments across a variety of sectors.  The use of gearing also made a positive (+0.9%) contribution. 

 

On the negative side, the two largest negative contributors were Calbee (-0.5%) and Colopl (-0.5%).  Calbee is Japan's leading maker of snacks and has been expanding internationally.  Colopl is an entrepreneurial smartphone gaming business with interesting investments in virtual reality (VR) technologies.  We remain confident in the long-term prospects of both and continue to hold the shares. 

 

 

 

Over the period we bought four new holdings and sold three holdings.  Turnover remained low in line with our long-term horizon.  The new holdings have significant variety both in business line and size, but we hope share the common feature of attractive long-term growth prospects.  Bridgestone, which we believe to be the world's leading tyre manufacturer, has experienced difficulties from lack of demand during the pandemic.  However, in the long-term we believe tyres are "shoes for cars" which means that demand will continue to grow regardless of whether the vehicle is powered electrically or by combustion engine and regardless of whether the car is being driven or is autonomous.  GA Technologies provides online real-estate solutions and has succeeded in growing sales rapidly in recent years as well as benefitting from having the founder entrepreneur in charge.  MS&AD Insurance is one of Japan's largest insurers.  The Japanese market is unusual in that general insurers regularly make underwriting profits and the company has very significant balance sheet strength.  With a large dividend yield we see significant upside in the shares.  Finally, Tsubaki Nakashima is the world-leader in steel and ceramic ball bearings.  Demand has been lower than usual in the current environment, but we expect it to recover and we believe that the company has significant long-term competitive strengths derived from scale and technology.

 

The sold holdings included M3, a medical website.  It has been a holding for over a decade and will be missed.  However, this is a rare case where the share price had appreciated to such an extent that we no longer had a sufficiently positive case to continue holding.  Pan Pacific International, formerly known as Don Quijote, is a quirky retailer but it has become very large and looking forward we see more prospects for growth in some of our online holdings.  Finally, MUFJ Lease and Finance is a solid business but we believe that we can do better elsewhere. 

 

We also had a very unusual case of buying and selling a holding within the period.  This was SoftBank Corporation, the separately listed domestic mobile business of SoftBank.  We were encouraged by the progress the company was making, through investing in internet assets, to move beyond being a traditional telecom company.  However, after taking a holding, it was announced that NTT, the former state telecom monopoly, was to fully acquire its mobile subsidiary NTT Docomo, creating a formidable competitor.  To give an idea of the scale of the change in environment bear in mind that NTT Docomo was originally demerged from NTT to prevent it from exploiting its monopoly power.  Given that the long-term outlook for SoftBank Corporation had become significantly less favourable we sold the shares.  This illustrates an important point.  When we invest it is not for a fixed time period.  Rather it is contingent on our investment case remaining intact.  In general, where a company is making good progress, we are happy to hold the shares for many years.  However, exceptionally, where it becomes clear that there is a significant problem, we sell.  In all cases we look forward to the future prospects of the business. 

 

We continue to believe that there is significant opportunity to pursue a growth orientated stock-picking strategy in Japan.  Going forward short-term returns will inevitably be volatile but given the number of exciting growing businesses to invest in we remain optimistic about securing a good outcome for shareholders over the long term. 

 

Past performance is not a guide to future performance

 

Total return information sourced from Refinitiv/Baillie Gifford. See disclaimer at end of this document.

 

See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

 



 

Responsibility statement

We confirm that to the best of our knowledge:

a)  the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';

b)  the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year, their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the year); and

c)  the Interim Financial Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

 

On behalf of the Board

J Keith R Falconer

Chairman

23 March 2021

 


 



 

Equity Portfolio by Growth Category as at 28 February 2021

 

Secular

Growth1

 


Growth

Stalwarts2


Special

Situations3


 

Cyclical Growth4

 

 

 




total investments

 

Rakuten

3.7


Calbee

2.1


SoftBank

6.2


Sumitomo Metal Mining

2.7

GMO Internet

3.3


Pola Orbis

1.6


Sony

2.7


Denso

2.4

SBI

3.1


Zenkoku Hosho

1.2


Mixi

2.6


Sumitomo Mitsui Trust

2.4

Kubota

2.9


Makita

0.9


MS&AD Insurance

1.9


Itochu

2.4

Sysmex

2.7


Park24

0.7


Colopl

1.7


Outsourcing

2.2

Nidec

2.4


Sugi

0.6


Inpex

1.6


Bridgestone

2.1

Fanuc

2.4


Asics

0.6


Tokyo Tatemono

1.2


Mazda Motor

1.9

CyberAgent

2.4


Fukuoka Financial

0.5


JAFCO

1.0


Murata

1.7

Misumi

2.2


Secom

0.4


Gree

0.7


Nifco

1.5

MonotaRO

2.1


Sawai Pharmaceutical

0.3





Mitsubishi Electric

1.4

GA Technologies

1.8








DMG Mori

1.3

Sato

1.6








Iida

1.0

Raksul

1.5








Rohm

0.9

Recruit Holdings

1.2








Tsubaki Nakashima

0.6

Demae-Can

1.1










Toyota Tsusho

1.1










Infomart

1.0










Topcon

0.9










SMC

0.9










Digital Garage

0.8










Istyle

0.8










Bengo4.com

0.8










ZOZO

0.8










Mercari

0.7










Broadleaf

0.7










Keyence

0.7










Peptidream

0.6










Subaru

0.5










Shimano

0.5










Noritsu Koki

0.4










Lifull

0.4










Nippon Ceramic

0.3










Rizap

0.3










Cyberdyne

0.2










Healios K.K.

0.2










 






















 











47.0

8.9


19.6


24.5

 

1 Secular Growth: Opportunity to grow rapidly but where there are a number of potential outcomes.

2 Growth Stalwarts: Growth is less rapid but more predictble.

3 Special Situations: Performance has not been good but there is a reason to believe improvements are underway.

4 Cyclical Growth: Earnings do not rise every year but are expected to be higher from one cycle to the next.

 

 

Twenty Largest Holdings at 28 February 2021 (unaudited)

 

Name

Business

Value

£'000

% of total
 investments

SoftBank

Telecom operator and technology investor

 63,281

6.2

Rakuten

Internet retail and financial services

 37,942

3.7

GMO Internet

Internet conglomerate

 34,054

3.3

SBI

Online financial services

 32,024

3.1

Kubota

Agricultural machinery

 29,065

2.9

Sony

Consumer electronics, films and finance

 27,503

2.7

Sysmex

Medical testing equipment

 27,223

2.7

Sumitomo Metal Mining

Smelting and copper, nickel and gold mining

 27,092

2.7

Mixi

Mobile gaming

 26,299

2.6

Nidec

Specialist motors

 24,906

2.4

Denso

Auto parts

 24,891

2.4

Fanuc

Robotics manufacturer

 24,810

2.4

Sumitomo Mitsui Trust

Japanese trust bank and investment manager

 24,056

2.4

CyberAgent

Japanese internet advertising and content

 23,947

2.4

Itochu

General trading firm

 23,927

2.4

Outsourcing

Employment placement services

 22,819

2.2

Misumi

Online distributor of precision machinery parts

 22,079

2.2

Calbee

Branded snack foods

 21,736

2.1

Bridgestone

Tyre manufacturing

 21,711

2.1

MonotaRO

Online business supplies

 21,242

2.1

Total


560,607

55.0



 

Income Statement (unaudited)

 


For the six months ended

28 February 2021

For the six months ended

29 February 2020


Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Gains on sales of investments

-

27,969

27,969 

60,723 

60,723 

Movement in investment holding gains

-

120,497

120,497 

(124,801)

(124,801)

Currency gains

-

4,945

4,945 

6,637 

6,637 

Income from investments and interest receivable

8,025 

-

8,025 

7,511 

7,511 

Investment management fee

(2,696)

-

(2,696)

(2,128)

(2,128)

Other administrative expenses

(319)

-

(319)

(296)

(296)

Net return before finance costs and taxation

5,010 

153,411

158,421 

5,087

(57,441)

(52,354)

Finance costs of borrowings

(1,083)

-

(1,083)

(1,252)

(1,252)

Net return before taxation

3,927 

153,411

157,338 

3,835

(57,441)

(53,606)

Tax

(802)

-

(802)

(750)

(750)

Net return after taxation

3,125 

153,411

156,536 

3,085

(57,441)

(54,356)

Net return per ordinary share (note 5)

3.40p

166.88p

170.28p

3.34p

(62.15p)

(58.81p)

 

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)

 


At 28 February 2021

£'000

At 31 August 2020

£'000

Fixed assets



Investments held at fair value through profit or loss (note 6)

1,017,855 

805,347 

Current assets



Debtors

1,934 

1,322 

Cash and cash equivalents

60,745 

118,742 


62,679 

120,064 

Creditors



Amounts falling due within one year

(3,661)

(1,602)

Net current assets

59,018 

118,462 

Total assets less current liabilities

1,076,873 

923,809 

Creditors



Amounts falling due after more than one year:



Bank loans (note 7)

(143,163)

(151,420)

Net assets

933,710 

772,389 

Capital and reserves



Share capital

4,633 

4,621 

Share premium

196,417 

190,939 

Capital redemption reserve

203 

203 

Capital reserve

725,897 

569,059 

Revenue reserve

6,560 

7,567 

Shareholders' funds

933,710 

772,389 

Net asset value per ordinary share*

1,007.5p

840.8p

Ordinary shares in issue (note 8)

92,673,209 

91,858,209

*See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

Excluding shares held in treasury at 31 August 2020. No Shares were held in treasury at 28 February 2021.

Statement of Changes in Equity (unaudited)

 

For the six months ended 28 February 2021


Share
capital

£'000

Share premium

£'000

Capital redemption reserve

£'000

Capital

reserve*

£'000

Revenue reserve

£'000

Shareholders'
funds

£'000

Shareholders' funds at 1 September 2020

4,621

190,939

203

569,059

7,567 

772,389 

Shares issued

12

5,478

-

3,429

-

8,919 

Net return after taxation

-

-

-

153,411

3,125 

156,536 

Dividends paid during the period (note 4)

-

-

-

-

(4,134)

(4,134)

Shareholders' funds at 28 February 2021

4,633

196,417

203

6,558 

933,710 

 

For the six months ended 29 February 2020


Share
capital

£'000

Share premium

£'000

Capital redemption reserve

£'000

Capital

reserve*

£'000

Revenue reserve

£'000

Shareholders'
funds

£'000

Shareholders' funds at 1 September 2019

4,621

190,939

203

531,587 

4,755 

732,105 

Shares bought back into treasury

-

-

-

(1,236)

(1,236)

Net return after taxation

-

-

-

(57,441)

3,085 

(54,356)

Dividends paid during the period (note 4)

-

-

-

(3,235)

(3,235)

Shareholders' funds at 29 February 2020

4,621

190,939

203

472,910 

4,605 

673,278 

The Capital Reserve balance as at 28 February 2021 includes investment holding gains on investments of £344,842,000 (29 February 2020 - gains of £179,435,000).



 

Condensed Cash Flow Statement (unaudited)

 


Six months to

28 February 2021

£'000

Six months to

29 February 2020

£'000

Cash flows from operating activities



Net return on ordinary activities before taxation

157,338 

(53,606)

Net (gains)/losses on investments

(148,466)

64,078 

Currency gains

(4,945)

(6,637)

Finance costs of borrowings

1,083 

1,252 

Overseas withholding tax

(729)

(684)

Changes in debtors and creditors

(562)

(838)

Cash from operations

3,719 

3,565 

Interest paid

(1,096)

(1,282)

Net cash inflow from operating activities

2,623 

2,283 

Cash flows from investing activities



Acquisitions of investments

(139,300)

(71,241)

Disposals of investments

77,207 

93,338 

Exchange differences

636 

(534)

Net cash inflow/(outflow) from investing activities

(61,457)

21,563 

Shares issued (note 8)

8,919 

Equity dividends paid (note 4)

(4,134)

(3,235)

Net cash (outflow)/inflow from financing activities

4,785 

(3,235)

Increase in cash and cash equivalents

(54,049)

20,611 

Exchange movements

(3,948)

(710)

Cash and cash equivalents at start of period*

118,742 

40,303 

Cash and cash equivalents at end of period*

60,745 

60,204 

* Cash and cash equivalents represent cash at bank and short term money market deposits repayable on demand.

 

 

 

 

 

 

 

 

 

 

 

Notes to the Condensed Financial Statements (unaudited)

 

1.  Basis of Accounting

The condensed Financial Statements for the six months to 28 February 2021 comprise the statements set out on the previous pages together with the related notes below. They have been prepared in accordance with FRS 104 'Interim Financial Reporting' and the AIC's Statement of Recommended Practice issued in October 2019. They have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The Financial Statements for the six months to 28 February 2021 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 August 2020.

Going Concern

Having considered the Company's principal risks and uncertainties, as set out below, together with its current position, investment objective and policy, its assets and liabilities, and projected income and expenditure, together with the Company's dividend policy, it is the Directors' opinion that the Company has adequate resources to continue in operational existence for the foreseeable future. The Board has, in particular, considered the heightened market volatility since the coronavirus (Covid-19) outbreak but does not believe the Company's going concern status is affected. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. In accordance with the Company's Articles of Association, shareholders have the right to vote annually at the Annual General Meeting on whether to continue the Company. The next continuation vote will be in December 2021. The Directors have no reason to believe that the continuation resolution will not be passed at the Annual General Meeting. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements and confirm that they are not aware of any material uncertainties which may affect the Company's ability to continue to do so over a period of at least twelve months from the date of approval of these Financial Statements.

2.  Financial Information

The financial information contained within this Interim Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 31 August 2020 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditor's Report on those accounts was not qualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying its report and did not contain statements under sections 498(2) or (3) of the Companies Act 2006.

3.  Investment Manager

Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed by the Company as its Alternative Investment Fund Manager and Company Secretary. The investment management function has been delegated to Baillie Gifford & Co. The management agreement can be terminated on not less than 6 months' notice, or on shorter notice in certain circumstances. The annual management fee is 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly.

4.  Dividends


Six months to 28 February 2021

£'000

Six months to 29 February 2020

£'000

Amounts recognised as distribution in the period:



Previous year's final dividend of 4.50p paid 11 December 2020 (2020: 3.50p paid 13 December 2019)

4,134

3,235

No interim dividend has been declared.

 

 

5.  Net return per ordinary share


Six months to

28 February 2021

£'000

Six months to

29 February 2020

 '000

Revenue return after taxation

3,125

3,085 

Capital return after taxation

153,411

(57,441)

Total net return

156,536

(54,356)

Weighted average number of ordinary shares in issue

91,929,766

92,423,903 

Net return per ordinary share is based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue.

6.  Fair Value

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - using unadjusted quoted prices for identical instruments in an active market;

Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and

Level 3 - using inputs that are unobservable (for which market data is unavailable).

The fair value of listed investments is the last traded price which is equivalent to the bid price on Japanese markets.

The financial assets designated as valued at fair value through profit or loss are all categorised as Level 1 in the above hierarchy. None of the financial liabilities are designated at fair value through profit or loss in the Financial Statements.

All of the Company's investments fall into Level 1 for the periods reported.

7.  Bank Loans

Bank loans of £143.2 million (¥16.5 billion) have been drawn down under yen loan facilities which are repayable between August 2023 and November 2024 (31 August 2020 - £151.4 million (¥16.5 billion)).

8.  Share Capital

The Company has the authority to issue shares/sell treasury shares at a premium to net asset value as well as to buy back shares at a discount to net asset value.

During the period, 815,000 shares (of which 566,716 came from treasury) were issued at a premium to net asset value raising net proceeds of £8,919,000 (29 February 2020 - no shares were issued). There were no shares held in treasury at 28 February 2021.

During the period to 28 February 2021, no ordinary shares were bought back into treasury (2020 - 185,000 ordinary shares were bought back into treasury at a cost of £1,236,000). As at 28 February 2021 the Company has authority remaining to buy back 13,769,545 ordinary shares.

9.  Transaction Costs

Transaction costs incurred on the purchase and sale of the investments are added to the purchase cost or deducted from the sales proceeds, as appropriate. During the period, transaction costs on purchases amounted to £40,000 (29 February 2020 - £33,000) and transaction costs on sales amounted to £40,000 (29 February 2020 - £39,000).

10.  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.

11.  Principal Risks and Uncertainties

The principal risks facing the Company are financial risk, investment strategy risk, discount risk, regulatory risk, custody and depositary risk, smaller company risk, operational risk, leverage risk and political risk. An explanation of these risks and how they are managed is set out on pages 8 and 9 of the Company's Annual Report and Financial Statements for the year to 31 August 2020 and is available on the Company's website: japantrustplc.co.uk .

 

The principal risks and uncertainties have not changed since the date of the Annual Report with the exception of the ongoing situation regarding Covid-19. The Board and Managers continue to review the portfolio for the potential impact of the pandemic. The business continuity arrangements of the Managers and other third party service providers have proven to be robust with operations continuing largely as normal.

 

Further detail on the Company's risks can be found on pages 16 and 17 of the Annual Report and Financial Statements.

 

The Interim Financial Report is available at japantrustplc.co.uk and will be posted to shareholders on or around 9 April 2021.

 

12.  Glossary of Terms and Alternative Performance Measures (APM)

Total Assets

Total assets less current liabilities, before deduction of all borrowings.

 

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 Par Value) (APM)

Borrowings are valued at their nominal par value. Par value approximates to amortised cost. The Company's

yen denominated loans are valued at their sterling equivalent.

 

Net Asset Value (Borrowings at Fair Value) (APM)

Borrowings are valued at an estimate of their market worth. The Company's yen denominated loans are fair

valued with reference to Japanese government bonds of comparable yield and maturity. The value of the

borrowings on this basis is set out in note 7. A reconciliation from Net Asset Value (with borrowings

at par value) to Net Asset Value per ordinary share (with borrowings at fair value) is provided below.

 


28 February 2021

31 August 2020

Net Asset Value per ordinary share (borrowings at par value)

1,007.5p

840.8p

Shareholders' funds (borrowings at par value)

£933,710,000

£772,389,000

Add: par value of borrowings

£143,163,000

£151,420,000

Less: fair value of borrowings

(£144,341,000)

(£152,387,000)

Shareholders' funds (borrowings at fair value)

£932,532,000

£771,422,000

Shares in issue at year end

92,673,209

91,858,209

Net Asset Value per ordinary share (borrowings at fair value)

1,006.3p

839.8p

 

Net Current Assets

Net current assets comprise current assets less current liabilities, excluding long-term borrowings.

 

Premium/(Discount) (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.

 



28 February 2021

31 August 2020

Net Asset Value per ordinary share (borrowings at fair value)

(a)

1,006.3p

839.8p

Share price

(b)

1,060.0p

817.0p

Premium/(discount)

(b -a) ÷a

5.3%

(2.7%)

 

Total Return (APM)

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

 



Feb

2021

NAV

(fair)

Feb

2021

NAV

(par)

Feb

2021

Share

price

Feb 2020

NAV

(fair)

Feb

2020

NAV

(par)

Feb 2020

Share

price

Closing NAV per share/share price

(a)

 

1,006.3p

 

1,007.5p

 

1,060.0p

 

728.1p

 

729.9p

 

675.0p

Dividend adjustment factor *

(b)

 

1.0046

 

1.0046

 

1.0046

 

1.0043

 

1.0042

 

1.0044

Adjusted closing NAV per share/share price

(c) = (a) x (b)

 

1,010.9p

 

1,012.1p

 

1,064.9p

 

731.2p

 

733.0p

 

677.9p

Opening NAV per share/share price

(d)

 

839.8p

 

840.8p

 

817.0p

 

789.3p

 

792.1p

 

791.0p

Total Return

((c ÷ d) - 1) x 100

 

20.4%

 

20.4%

 

30.3%

 

(7.4%)

 

(7.5%)

 

(14.3%)

* The dividend adjustment factor is calculated on the assumption that the dividend of 4.50 p (2020 - 3.50p) paid by the Company in the period under review was invested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.

 

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Gearing is the Company's borrowings at par less cash and cash equivalents expressed as a percentage of shareholders' funds.

Potential gearing is the Company's borrowings at par expressed as a percentage of shareholders' funds.

 

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.

 

 

The Baillie Gifford Japan Trust aims to achieve long term capital growth principally through investment in medium and smaller sized Japanese companies which are believed to have above average prospects for growth, although it invests in larger companies when considered appropriate. At 28 February 2021, the Company had total assets of £1,077m (before deduction of bank loans of £143m).

The Company is managed by Baillie Gifford, an Edinburgh based fund management group with around £323bn under management and advice as at 23 March 2021.

Past performance is not a guide to future performance. The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stock markets in which the Company invests and by the supply and demand for the Company's shares. You should view your investment as long term. You can find up to date performance information about The Baillie Gifford Japan Trust PLC on the Company website at www.japantrustplc.co.uk .†

 

23 March 2021

 

For further information please contact:

Alex Blake, Baillie Gifford & Co

Tel: 0131 275 2859

 

Mark Knight, Four Communications

Tel: 0203 697 4200 or 07803 758810

 

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

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