Final Results

RNS Number : 3609B

CC Japan Income & Growth Trust PLC

11 February 2022

 

CC JAPAN INCOME & GROWTH TRUST PLC

LEI:  549300FZANMYIORK1K98

ANNUAL FINANCIAL REPORT ANNOUNCEMENT

INVESTMENT OBJECTIVE

The investment objective of the CC Japan Income & Growth Trust Plc (the "Company") is to provide Shareholders with dividend income combined with capital growth, mainly through investment in equities listed or quoted in Japan.

FINANCIAL INFORMATION
	As at	As at
	31 October	31 October
	2021	2020
Net assets (millions)	£222.9	£184.4
Net asset value ("NAV") per Ordinary Share ("Share")1	165.4p	136.8p
Share price	154.0p	119.5p
Share price discount to NAV2	6.9%	12.6%
Transferable Subscription Share price	3.50p	N/A
Ongoing charges2	1.05%	1.04%
Gearing (net)2	21.1%	20.7%
1 Measured on a cum income basis.
2 This is an Alternative Performance Measure ('APM').  Definitions of APMs used in this report, together with how these measures have been calculated are disclosed in the Annual Report.
PERFORMANCE SUMMARY
	For the year to	For the year to
	31 October	31 October
	2021	2020
	% change1	% change1
NAV ex-income total return per Share2	+25.1%	-11.2%
NAV cum-income total return per Share2	+24.3%	-11.1%
Share price total return2	+32.7%	-17.3%
Tokyo Stock Exchange Price Index ("TOPIX") total return	+11.9%	+0.3%
Revenue return per Share (Undiluted)	4.75p	5.04p
Dividends per Share:
First Interim dividend	1.40p	1.40p
Second interim dividend	3.35p	3.20p
Total dividends per Share for the year	4.75p	4.60p
1 Total returns are stated in GBP sterling, including dividend reinvested. 2 These are APMs.
Source: Coupland Cardiff Asset Management LLP - The Company's Factsheet October 2021

 

PERFORMANCE SUMMARY

	Launch to	Year to	Year to	Year to	Year to	Year to
	Oct 2016*	Oct 2017	Oct 2018	Oct 2019	Oct 2020	Oct 2021
Share price	122.40p	152.00p	153.00p	150.00p	119.50p	154.00p
Share price total return	+23.5%	+27.2%	+2.8%	+0.7%	-17.3%	+32.7%
NAV per Share	123.90p	146.00p	148.60p	158.90p	136.80p	165.40p
NAV (cum-income) total return per Share	+24.9%	+20.7%	+4.1%	+9.9%	-11.1%	+24.3%
TOPIX Index total return in GBP sterling	+32.7%	+10.1%	-0.4%	+7.2%	+0.3%	+11.9%
Revenue return per Share (Undiluted)	3.60p	4.06p	4.55p	5.26p	5.04p	4.75p
Dividends per Share	3.00p	3.45p	3.75p	4.50p	4.60p	4.75p**

* Period from the Company's launch on 15 December 2015 to 31 October 2016.

** Includes second interim dividend of 3.35p for the year ended 31 October 2021

CHAIRMAN'S STATEMENT

Performance

I am pleased to report to Shareholders that your Company experienced a strong recovery during our financial year to 31 October 2021 as Japan and the rest of the world grappled with and emerged from the first onslaught of the COVID-19 pandemic.  The Company's cum-income Net Asset Value ("NAV"), measured by total return, rose 24.3% in sterling terms, comfortably outperforming the Tokyo Stock Exchange Price Index ("TOPIX") total return of 11.9% over the same period. The share price, measured by total return to include dividends, increased by 32.7% over the period.

Between launch in December 2015 and the recent financial year end, the Company's cum-income NAV return amounted to 89.4% in terms of sterling total return, comparing favourably with the TOPIX total return of 74.6%, while the share price has risen 74.7%, again measured by total return in sterling. This includes the aggregate distribution of 20.7p per Ordinary Share of dividends paid to Shareholders but excludes the potential contribution from the Transferable Subscription Shares issued as a 1 for 5 free bonus in February 2021 which closed at a price of 3.5p (equivalent to a further 0.7p return per Ordinary Share).

The year under review has presented unprecedented challenges for our Investment Manager, who has weathered the COVID-19 storm with considerable aplomb by retaining focus and discipline within the scope of the investment mandate. Richard Aston has continually looked through market volatility, retaining confidence in portfolio holdings with solid prospects while adroitly repositioning the portfolio into companies which have growth trajectories, and improving cash flows and dividends. Many of these companies should benefit from a reopening of the domestic Japanese economy.

Over a 12-month view, our investment performance is a leader in the AIC Japanese investment trust peer group as our Investment Manager's confidence in the intrinsic value of portfolio holdings has been rewarded. However, the steep fall at the beginning of the pandemic continues to depress our 3-year performance numbers.  Our premium share price rating has not recovered from the initial fall, although the discount to NAV narrowed to close the year at 6.9% compared to a 12.6% discount at the previous year end.

Growing the Company

While it is pleasing to see the NAV of the Company growing by £38.5 million over the year, reflecting a partial recovery following the initial pandemic related sell-off, a persistent share price discount to NAV during the year has prevented any further share issuance. However, the Board is hopeful that further recovery in the NAV will see the share price exceed the Subscription Price for the Transferable Subscription Shares ("TSS") which were issued with a Subscription price of £1.61 per Ordinary Share as a free 1 for 5 bonus to Shareholders in February 2021. The TSS are listed on the London Stock Exchange (ticker: CCJS) and may be exercised on a quarterly basis, with the next exercise date being the last business day of February 2022. The TSS have a 2-year life with a final expiry on the last business day of February 2023. Full exercise of the TSS entitlements would increase the size of the Company by an additional £40 million. In passing, I should mention that a small number of TSS Shareholders have lodged applications to exercise when it has clearly been financially unfavourable to do so and have had their funds returned.

The Board continues to invest in marketing initiatives to raise the profile of the Company. In particular, we are improving content and web and media distribution to raise awareness of our differentiated mandate which represents a good opportunity for investors to capture both capital growth and income from Japan.

The Board is once again seeking approval from Shareholders to renew the authority to buy back shares at the Annual General Meeting, although it has not hitherto exercised this power. The Board believes that the Company's share price rating is ultimately determined by the investment performance together with the level and growth in the dividend but keeps the level of discount under review.

Income and Dividends

While the revenue return per Ordinary Share declined by 5.77% from the previous financial year, Japanese dividends held up relatively well in the context of the global downturn. This resilience reflects strong balance sheets and corporate governance reforms which have led to a more enlightened approach by Japanese management towards shareholder distributions. The Board and Investment Manager continually review the prospects for the Company's revenue account and currently see a much rosier outlook than six months ago. As I wrote last year, investors looking for equity income can continue to look to Japan. The main risk to the income account is the Yen/GBP cross rate and Shareholders should be aware that we do not have a currency hedging policy. Revenue is potentially at risk from a strengthening of sterling although, conversely, a weaker Yen tends to stimulate Japanese corporate earnings. 

The Board has declared a second interim dividend of 3.35p per Ordinary Share, which is covered by earnings received this year. This amounts to an increase of 4.68% over last year's second interim dividend (also paid in lieu of a final dividend). The full year distribution of 4.75p per Ordinary Share represents a 3.26% improvement over last year. The second interim dividend will be paid on 18 March 2022 to those Shareholders on the register as at 18 February 2022 with an ex-dividend date of 17 February 2022. The revenue reserves currently stand at £6.94 million representing 5.15p per Ordinary Share, before taking into account the second interim dividend. In addition, the £64.67 million Special Reserve is available to call upon for distribution to Shareholders in the event of an unforeseen revenue shortfall.

This is the sixth consecutive year of dividend growth since the Company's launch in December 2015 which has seen the dividend grow by 58.33% over the period.

Board Constitution

As announced on 16 December 2021, I am pleased to welcome Mrs June Aitken and Mr Craig Cleland, who have been appointed to the Board with effect from 1 February 2022.

Both June and Craig bring a wealth of oversight and board experience besides familiarity with Japan and investment markets. We are confident that they will make a valuable contribution to the Company with a balance of skills complementary to the Board. You will find details of their biographies in the annual report.

Mr John Scott, who has served as a Non-Executive Director since the launch of the Company in December 2015, will retire from the Board at the Annual General Meeting in March 2022.  On behalf of Shareholders and the Board, I would like to thank John for his considerable contribution and unerringly wise counsel to our deliberations. While these new appointments reflect an ongoing succession plan to refresh the Board, it should be noted that they also meet diversity and gender guidelines which continue to be in the spotlight.

Annual General Meeting arrangements

In line with the requirements of the Companies Act 2006, the Company will hold an Annual General Meeting ("AGM") of Shareholders to consider the resolutions laid out in the Notice of Meeting. The Board encourages Shareholders to attend and participate in the Company's forthcoming AGM on 22 March 2022 at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH. Our Investment Manager, Richard Aston, will provide an update on the investments and take questions after the formal business of the meeting. Members of the Board, including myself, will also be available to discuss the Company. I do hope that you will join us.

We recognise it is not possible for everyone to attend the AGM and I would remind Shareholders that any questions relating to the business of the AGM, can be sent by email to [e-mail]. To the extent that it is appropriate to do so, the Company will respond to any questions received in a Q&A which will be posted on the Company's website www.ccjapanincomeandgrowthtrust.com in advance of the AGM.

If Shareholders are unable to attend the meeting in person, they are strongly encouraged to vote by proxy and to appoint the "Chairman of the AGM" as their proxy. Details of how to vote, either electronically, by proxy form or through CREST, can be found in the Notes to the Notice of AGM. The lodging of a form of proxy (or an appointment of a proxy through CREST) will not however prevent a shareholder from attending the AGM and voting in person if they so wish (subject to any restrictions which may be imposed by the UK Government in response to the COVID-19 pandemic).

In addition, there will be a webinar presentation from the Investment Manager with an update immediately after the AGM.

Outlook

In response to the arrival of the COVID-19 Omicron variant, Japan has re-imposed domestic restrictions and closed its borders to travellers again after briefly reopening them. The incidence of infections there remains at a very low level and well over 80% of Japan's population has been double vaccinated. While Omicron may be less virulent than the previous outbreaks, it is still having a profound economic effect as risk averse governments continue to impose lock down restrictions in many countries. These restrictions dislocate labour and supply chains which, in turn, exacerbate shortages, creating yet further global inflationary pressure and imbalances in the energy market. In addition, the Federal Reserve, which initially maintained a dovish course, has now embraced a more hawkish monetary stance to tackle structural inflationary challenges by signalling that more aggressive tapering of bond purchases and interest rate increases lie ahead. Global inflation should be beneficial to the Japanese economy, but weak domestic demand has seen little evidence of price rises in Japan. Inflation is nowhere near the Bank of Japan's ("BOJ") 2% target and there is less likelihood of monetary tightening or a change of policy even after BOJ Governor Kuroda retires in April 2023. That said, the BOJ's Regional Economic Report published in January 2022 raises growth assumptions for all nine of the country's economic regions and sees breakeven inflation expectations rising modestly.

Despite a strong earnings reporting season, the Japanese stock market has made little progress this year; indeed, the market has effectively de-rated on improving earnings. Foreigners have been on the side lines as net sellers of Japanese equities for three successive years, while the BOJ has significantly reduced their equity market buying programme. The market rallied during the LDP leadership campaign, after the resignation of Prime Minster Suga in autumn 2021 and the new Prime Minister Kishida ushered in yet another fiscal stimulus package.

However, there seems little immediate prospect of the staggering Yen 40 trillion (US$345 billion) household savings returning to the Japanese equity market. These huge sums sit largely on deposit, earning little to no interest. If Japanese inflation gathers momentum, perhaps this could at long last provide some catalyst for some of this money returning to the stock market, which looks unloved and cheap.

Despite the uncertain market environment, Richard Aston and his team continue to find stocks with solid prospects. Their focus is on companies with business models capable of generating rising earnings and cash flow and with improving distribution policies. The emphasis is to invest for total return, with income as an important part of the equation rather than providing a high absolute portfolio yield and falling into value traps with no growth.

The portfolio appears well positioned to capture the benefits of a reopening of the Japanese economy. Recent market action supports our investment strategy with pronounced style rotation away from growth stocks and towards value and cyclicals. We must hope that the world can learn to live with COVID-19 and that rising global geopolitical tensions particularly with the precarious situation over the Ukraine do not derail the potential for Japanese and global economic recovery.

On behalf of the Board, I recommend that it is in the best interests of Shareholders to vote in favour of the resolution for the continuation of the Company, which is tabled every third year, and is due to be proposed at this year's AGM on 22 March 2022.

Harry Wells

Chairman

10 February 2022

INVESTMENT MANAGER'S REPORT

Performance Review

The start of the Company's reporting year in November 2020 coincided very closely with the announcement of the first effective vaccination against COVID-19 and this proved the foundation for the strong rally in equity markets that has followed. The TOPIX rose 29.4% in Yen and sterling terms over the subsequent 12-month period, with the Company's NAV cum dividends outperforming the benchmark. 

Although equity markets have performed well, on reflection, it has been another turbulent 12 months.  Global progress to contain the COVID-19 pandemic has been inhibited by the emergence of new variants and differing regional infection patterns, which has resulted in patchy economic activity.  Abnormal levels of recovery demand combined with supply constraints have resulted in levels of inflation not seen in Western economies for decades. The geopolitical environment has evolved with President Biden embarking on an expansionary fiscal policy, while Chinese authorities have imposed increasingly tough regulations on private sector business activities, slowing economic growth.  In Japan, the incoming Prime Minister Kishida has announced a large fiscal stimulus package and suggested some subtle changes of policy which will influence the recovery of the economy in 2022.

Portfolio attribution has been strongly positive over the last twelve months with the structural gearing embedded in the investment policy making an important contribution. At the stock level, new positions that were established during the equity market volatility of 2020, feature prominently in the leading performers. Companies such as DIP Corporation, (recruitment) Open House (real estate), Denso (manufacturing technology) and Technopro (technology staffing) have been beneficiaries of the domestic economic recovery to date and their share prices have performed well. 

Also, it has been especially pleasing to see the improved share price performance of long-standing holdings in the banking (Sumitomo Mitsui Financial Group & Mitsubishi UFJ Financial Group) and telecommunications (Softbank Corp & NTT Group) sectors. Despite facing considerable business challenges over the past 18 months, these companies have been able to improve their returns to shareholders with increases in annual dividends and share buyback initiatives, which have been favourably received. 

The Company returns also benefited from tender offers for two long term holdings whose share prices suffered greatly during 2020.  In the case of both GCA (Japan based M&A advisory business) and Invesco Office REIT (office property Real Estate Investment Trust), the position within the portfolio has been increased despite the companies experiencing operational difficulties in the early stages of the pandemic. In each case their strong balance sheet, shrewd management and shareholder awareness had allowed them to deliver a stable dividend over the period and these attributes were recognised by a third party willing to offer a significant premium to the prevailing share price and above a price that the shares had traded at pre-pandemic.  We believe that these deals recognised the intrinsic value of these companies and justify our disciplined approach to valuation within the investment strategy. 

The weakest performers include Hikari Tsushin (corporate services) and Nippon Gas. Both have suffered due to higher energy prices for their wholesale businesses. Each company has indicated that these are temporary timing issues and have confirmed their confidence in the long-term outlook by increasing the dividends year on year and announcing share buyback programmes.  It is disappointing that the share prices of consumer products and services companies such as Kao (consumer products), Noevir (cosmetics) and Nippon Parking development have remained lacklustre despite the end of the restrictive state of emergency in Japan.  However, these companies have all increased their dividends consistently over the last two years reflecting their healthy underlying financial position and prospects for better times ahead as the economy normalises. 

Portfolio Positioning

Trading activity in the portfolio continues to reflect the bottom-up analysis approach of the strategy, whilst giving consideration to the short-term risks and uncertainties that still prevail. We retain the twin objectives of generating an attractive income stream of distributions to Shareholders whilst investing in companies that have solid financial attributes and the ability to grow in the long-term. 

The recent re-introduction of the ban on foreigners travelling to Japan highlights that operating conditions still have some way to go before returning to pre-pandemic levels in many industries, whilst others are experiencing or have identified new opportunities for expansion. The Company has exited holdings in Gakkyusha, Yamada Holdings, Pigeon, Nihon Unisys, Nomura and Japan Metropolitan Fund due to concerns over the sustainability of their pre-COVID-19 business success and hence their long-term shareholder return prospects. Positions in holdings such as Shoei (motorcycle helmets), Itochu (general trading), Tokyo Electron (electricity utility) and West Holdings (solar power) were reduced into strong performance of the shares although they each remain important holdings within the portfolio.  However, holdings in Mitsubishi UFJ Group and Sumitomo Mitsui Financial Group along with Sompo Insurance and Orix (diversified financial services) were increased as it became clear that their business prospects were not as disappointing as many had initially feared. 

Whereas the portfolio changes in 2020 were an immediate reaction to the COVID-19 outbreak and the rapid government and central bank response, activity in 2021 has better reflected the underlying attributes of the individual companies. This is particularly evident in the new holdings established during the year and highlights the influence of the ongoing corporate governance reforms in Japan.  Hitachi, an electrical conglomerate, often historically associated with many of the perceived failings of corporate management in Japan, has made steady progress in de-leveraging its balance sheet, focusing its business portfolio and simplifying its management structure.  Having achieved many of its interim goals, it has now indicated a desire to focus on improving its returns to shareholders which management recognises have fallen behind improving national standards in Japan. Carta Holdings (internet advertising platform) has cited the upcoming restructuring of the Tokyo Stock Exchange Indices and its desire to be included in the Primary Section as the important consideration in its recent announcement of a more generous shareholder return policy, which clearly emphasises the importance of stability going forward. New holdings were also established in TRE Holdings (waste material recycling and biomass power generation) and Asahi Holdings (precious metal refining and recycling), reflecting the potentially exciting opportunities for their operations as Japan seeks to enhance its environmental standards increasing the appeal of their attractive approach to shareholder returns.

Outlook

We believe that the steady progress of corporate governance reform and the associated benefits in terms of capital efficiency and shareholder returns provide the real catalyst for Japanese equities rather than short term macro or political considerations. The Corporate Governance Code, first introduced in 2014, is continuing to play a significant role in promoting the necessary improvements as its principles and guidelines are revised and enforced. Certain favourable trends can be measured directly such as the increasing presence of external independent directors, the reduction in cross-shareholdings, the elimination of parent subsidiary listings and general restructuring of non-core assets, although it is in the commentary and actions of corporate management where the change is most evident. The resilient dividend and share buyback profile of the last two years is in stark contrast to the UK and Europe and highlights the significant benefit this offers to Shareholders through greater and more stable returns.  The run rate for the current fiscal year suggests that both dividend and share buybacks are on track to exceed their previous peaks in FY19. 

We believe that this strategy has demonstrated a strong recovery from the unexpected consequences of the COVID-19 pandemic and the detrimental impact this had on some of the portfolio holdings. Our portfolio construction has resolutely continued to focus on high quality companies with attractive long-term growth prospects and we are encouraged by the response from companies in the portfolio and excited by the increasing number of investment opportunities that the improving outlook is creating. 

Richard Aston

Coupland Cardiff Asset Management LLP

10 February 2022

TOP TEN HOLDINGS

Mitsubishi UFJ Financial Group  5.1%

Mitsubishi UFJ Financial Group was established in 2005 through the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings.  It is now one of Japan's leading financial services groups with established operations around the world and most prominently in Asia and North America.  This includes an alliance and 20% stake in Morgan Stanley which was established in 2008.  The company continues to promote a balanced capital management policy maintaining a strong capital base, appropriate allocations to growth, strategic growth opportunities and enhancing shareholder returns. 

Sumitomo Mitsui Financial  5.1%

Sumitomo Mitsui Financial Group was established through the merger of Sumitomo Bank and Sakura Bank in 2001.  It is one of Japan's leading financial groups offering services such as commercial banking, leasing, securities, consumer finance and asset management.  The company targets continued growth in shareholder value by promoting discipline investment and alliances, sound finances and progressive shareholder returns.

Nippon Telegraph & Telephone  4.9%

NTT provides a broad range of telecommunication and business services in Japan and increasingly overseas.  As well as benefiting from the focus on data services and IT infrastructure, the company is also seeking synergies from the recent consolidation of mobile telephone subsidiary NTT DoCoMo and cost cutting initiatives that enhance the earnings growth and potential for further returns to shareholders. 

Softbank Corp  4.5%

Softbank Corp provides telecommunication and associated network services in Japan and is a subsidiary of the Softbank Group.  The company continues to demonstrate strong growth in its business services segment and from its "beyond carrier" strategy which includes ecommerce leader Yahoo Japan, online fashion retailer Zozo, social network Line and electronic payment service PayPal

Itochu Corp  4.5%

ITOCHU Corp is one of Japan's leading trading companies involved in a broad range of business domains from upstream raw materials to downstream retail.  In recent years Itochu has successfully introduced a business investment strategy based on high levels of capital efficiency and appropriate cash allocation including rising returns to shareholders in the form of dividend and share buybacks. 

SBI Holdings  4.4%

SBI Holdings is a holding company that offers innovative financial services in areas such as securities broking, banking, insurance and asset management.  As a group it focuses specifically on organic growth in each of its businesses whilst maintaining a high return on equity ("ROE") to generate value for shareholders. 

DIP Corporation  4.2%

DIP operates a number of domestic job listing websites, establishing a strong reputation amongst part-time workers which has experienced the majority of growth in the Japanese labour market in recent years.  DIP has been successfully rolling out digital business tools aimed at enhancing labour efficiencies at its clients and seeks to become a 'labour force solution company'.

Tokyo Electron  4.2%

Tokyo Electron is an industry leading manufacturer of semiconductor and flat panel display product equipment that has benefited from the increasing demand for logic and memory devices.  The company has grown organically by investing in R&D and a global infrastructure and enhanced the stability of cashflow by increasing recurring field service revenues.  It has a shareholder return policy comprised of a dividend pay-out ratio of 50% and a flexible approach to share buybacks based on operating consideration and market conditions. 

Shin-Etsu Chemical  4.2%

Shin-Etsu is the largest chemical company in Japan and has top global market share for a range of products including silicon wafer, polyvinyl chloride and photomask substrates.  The company has a strong record of promoting research and development and necessary investment in facilities and human resource to capture growth opportunities.  This is now being complemented by a focus on long-term distribution of stable returns to shareholders. 

Asahi Holdings  4.0%

Asahi Holdings operates three core businesses:  the recycling of precious metals in Japan from electronics scrap, jewellery, dentistry and catalytic converters; the refining of precious metals from raw materials in the US; and Environmental Preservation which provides a range of services to support the processing and recycling of a variety of waste materials. 

INVESTMENT POLICY, RESULTS AND OTHER INFORMATION

Investment policy

The Company intends to invest in equities listed or quoted in Japan. The Company may also invest in exchange traded funds in order to gain exposure to such equities. Investment in exchange traded funds shall be limited to not more than 20 per cent. of Gross Assets at the time of investment. The Company may also invest in listed Japanese real estate investment trusts ("J-REITs").

The Company may enter into long only contracts for difference or equity swaps for gearing and efficient portfolio management purposes.

No single holding (including any derivative instrument) will represent more than 10 per cent. of Gross Assets at the time of investment and, when fully invested, the portfolio is expected to have between 30 to 40 holdings, although there is no guarantee that this will be the case and it may contain a lesser or greater number of holdings at any time.

The Company will have the flexibility to invest up to 10 per cent. of its Gross Assets at the time of investment in unquoted or untraded companies.

The Company will not be constrained by any index benchmark in its asset allocation.

Borrowing policy

The Company may use borrowings for settlement of transactions, to meet on-going expenses and may be geared through borrowings and/or by entering into long only contracts for difference or equity swaps that have the effect of gearing the Company's portfolio to seek to enhance performance. The aggregate of borrowings and long only contracts for difference and equity swap exposure will not exceed 25 per cent. of Net Asset Value at the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate, although the Company's normal policy will be to utilise and maintain gearing to a lower limit of 20 per cent. of Net Asset Value at the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate. It is expected that any borrowings entered into will principally be denominated in Yen.

Hedging policy

The Company does not currently intend to enter into any arrangements to hedge its underlying currency exposure to investment denominated in Yen, although the Investment Manager and the Board may review this from time to time.

Results and dividend

The Company's revenue return after tax for the financial year amounted to £6,404,000 (2020: £6,796,000). In July 2021, the Company paid an interim dividend of 1.40p (2020: 1.40p) per Ordinary Share. On 8 February 2022, the Directors declared a second interim dividend for the year ended 31 October 2021 of 3.35p (2020: 3.20p) per Ordinary Share, which will be paid on 18 March 2022 to Shareholders on the register at 18 February 2022. Therefore, the total dividend in respect of the financial year to 31 October 2021 will be 4.75p (2020: 4.60p) per Ordinary Share.

The Company made a capital gain after tax of £38,673,000 (2020: capital loss of £30,499,000). The total return, including income, after tax for the year was £45,077,000 (2020: loss of £23,703,000).

The Company's Purpose, Values and Culture

The primary focus of the Company is to generate total returns for Shareholders by investing in equities quoted on the recognised exchanges in Japan. The Investment Manager identifies companies which are undervalued, have strong balance sheets, strong business franchises, and favourable attitudes to shareholder returns in the form of sustainable and growing dividends and share buyback policies.

The Company aims to meet the needs of investors through the Investment Manager's dual mandate of generating income and capital growth. The Company has been investing in Japanese equities since launch in 2015. Whilst the Company does not have a benchmark, the Board measures performance against the TOPIX Total Return Index and High Yield Indices.

To achieve this, the Board of Directors has engaged Coupland Cardiff Asset Management LLP, who have the appropriate capability, resources and controls in place to actively manage the Company's assets in order to meet its investment objective. The Investment Manager has a well-defined investment strategy and process which is regularly and rigorously monitored and reviewed by the Board. As the Company has no employees and acts through its service providers, its culture is represented by the values and behaviour of the Board and third parties to which it delegates

To ensure that the Company's purpose, values, strategy and culture are aligned, the Board comprises independent non-executive Directors from a diverse background, who together bring a wide range of knowledge, skills and experience. The Board members contribute to a transparent culture ensuring effective oversight, critical support and challenge to the Investment Manager, and all other third party suppliers. For more information, please refer to the Company's section 172 statement.

Key performance indicators ("KPIs")

The Board measures the Company's success in attaining its investment objective by reference to the following KPIs:

(i)  Long term capital growth

The Board considers the Company's Net Asset Value ("NAV") total return figures to be the best indicator of performance over time and this therefore is the main indicator of performance used by the Board. The NAV cum-income total return for the year to 31 October 2021 was +24.3% (2020: -11.1%) and the NAV total return from the Company's inception in December 2015 to 31 October 2021 was +89.4%.

The Chairman's Statement incorporates a review of the highlights during the year. The Investment Manager's Report gives details on investments made during the year and how performance has been achieved.

(ii)  Revenue return per Share and dividends

The Company's revenue return per Ordinary Share, based on the weighted average number of shares in issue during the year, was 4.75p (2020: 5.04p). The Company's proposed total dividend payable in respect of the year ended 31 October 2021, including an interim dividend of 1.40p per Ordinary Share paid on 8 July 2021 and a second interim dividend of 3.35p payable on 18 March 2022, is 4.75p (2020: 4.60p) per Ordinary Share.

(iii)  Discount/premium to NAV

The discount/premium relative to the NAV per share represented by the share price is closely monitored by the Board. The share price closed at a 6.9% discount to the NAV as at 31 October 2021 (2020: 12.6% discount). This is addressed in the Chairman's Statement.

(iv)  Control of the level of ongoing charges

The Board monitors the Company's operating costs carefully. Growing the size of the Company offers many benefits, as not all of the Company's operating costs increase in line with the Company's assets under management. Based on the Company's average net assets for the year ended 31 October 2021, the Company's ongoing charges figure calculated in accordance with the AIC methodology was 1.05% (2020: 1.04%).

Other information

Modern slavery disclosure

The Company aims to act to the highest standards and is committed to integrating responsible business practices throughout its operations. The prevention of modern slavery is an important part of corporate good governance.

As an investment trust the Company does not offer goods or services to consumers and deals predominantly with professional advisers and service providers in the financial services industry. As such the Board considers that the Company is out of scope of the Modern Slavery Act 2015.

Greenhouse Gas Emissions and Streamlined Energy and Carbon Reporting ("SECR")

The Company has no employees, physical assets, property or operations of its own, does not provide goods or services and does not have its own customers. It follows that the Company has little to no direct environmental impact. In consequence, the Company has limited greenhouse gas emissions to report from its operations aside from Directors' travel to board meetings, nor does it have responsibility for any other sources of emissions under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013. As the Company has no material operations and therefore has little energy use, it falls below the threshold to produce an energy and carbon report. The Company's ESG policy is contained in the annual report.

Employees

The Company has no employees. As at 31 October 2021, the Company had four Directors, comprising three males (75%) and one female (25%). On 1 February 2022, June Aitken and Craig Cleland joined the Board, bringing with them a wealth of experience and skills. Biographical details can be found in the annual report. As part of the recruitment process, the Board was mindful of the Company's policy on diversity which is contained in the Corporate Governance statement.

Anti-bribery and corruption

It is the Company's policy to conduct all of its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery, corruption and tax evasion and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships wherever it operates. Taking account of the nature of the Company's business and operations, the Board has adopted policies and procedures that allow it to have reasonable assurance that persons associated with the Company are prevented from engaging in bribery or corruption for and on behalf of the Company.

Prevention of the facilitation of Tax Evasion

The Board has a zero-tolerance approach to the criminal facilitation of tax evasion.

Viability statement

The Directors have assessed the viability of the Company for the period to 31 October 2026 (the "'Period'') taking into account the long-term nature of the Company's investment strategy and the principal risks and emerging risks outlined below. The Board has chosen a five-year period to assess the Company's viability because of the expected long-term nature of equity investment, the Investment Manager's holding period and the fact that the investment objective is unlikely to change significantly over this period. Based on this assessment, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the Period.

Notwithstanding the foregoing, the continuation of the Company is subject to approval by Shareholders at the Annual General Meeting due to be held on 22 March 2022 and, if passed, every three years thereafter.

In their assessment of the prospects of the Company, the Directors have considered each of the principal and emerging risks and uncertainties set out below and the liquidity and solvency of the Company.

The Directors have considered the Company's income and expenditure projections and the fact that the Company's investments comprise readily realisable securities which could, if necessary, be sold to meet the Company's funding requirements. Portfolio activity and market developments are discussed at quarterly Board meetings. The internal control framework of the Company is subject to a formal review on at least an annual basis.

The Directors do not expect there to be any material increase in the annual ongoing charges of the Company over the Period. The Company's income from investments and cash realisable from the sale of its investments provide substantial cover to the Company's operating expenses, and any other costs likely to be faced by the Company over the period of their assessment.

The Chairman's Statement and Investment Manager's Report present a positive long term investment case for Japanese equities, which also underpins the Company's viability for the Period.

This assessment has included a detailed review of the issues arising from the COVID-19 pandemic as discussed in the Chairman's Statement, the Investment Manager's Report and in the Principal and Emerging Risks section.

Outlook

The outlook for the Company is discussed in the Chairman's Statement.

Strategic Report

The Strategic Report set out in the Annual Report was approved by the Board of Directors on 10 February 2022.

RISK AND RISK MANAGEMENT

 Principal and emerging risks and uncertainties

The Board is responsible for the management of risks faced by the Company and delegates this role to the Audit and Risk Committee (the "Committee"). The Committee carries out, at least annually, a robust assessment of principal and emerging risks and uncertainties and monitors the risks on an ongoing basis. The Committee has a dynamic risk management register in place to help identify key risks in the business and oversee the effectiveness of internal controls and processes.

The risk management register and associated risk heat map provide a visual reflection of the Company's identified principal and emerging risks. These fall into four categories: strategic and business risk, financial risk, operational risk, and regulatory and compliance risk. The Committee considers both the impact and the probability of each risk occurring and ensures appropriate controls are in place to reduce risk to an acceptable level. The Committee continues to be concerned with the risks posed by the COVID-19 pandemic which has a significant impact on all risk categories. In addition to implementing more regular reviews of investment performance with the Investment Manager, the Committee has worked closely with the Company's key service providers to ensure high standards of service were maintained whilst hybrid working models were implemented.

Further information on how the Committee has considered COVID-19 when assessing its effect on the Company's ability to operate as a going concern and the Company's longer-term viability can be found in the annual report.

The principal and emerging risks, together with a summary of the processes and internal controls used to manage and mitigate risks where possible are outlined below.

Principal Risks	Mitigation	Movement During the Year
Poor investment performance The Company's investment performance depends on the Investment Manager's ability to identify successful investments in accordance with the Company's investment policy.	The Investment Manager has a well-defined investment strategy and process which is regularly and rigorously reviewed by the Board. The Board monitors the Company's investment performance against its peer group over a range of periods. Whilst the Company does not have a benchmark, the Board measures performance for reference purposes against the TOPIX and High Yield Indices. At each meeting, the Board discusses the Japanese investment environment. The Investment Manager reports on the composition of the portfolio, any recent sales and purchases, and expectations of dividend income. The Company's investment policy states that no single holding will represent more than 10 per cent. of the Company's Gross Assets at the time of investment and the portfolio is expected to have between 30 to 40 holdings although there is no guarantee that this will be the case and it may contain a lesser or greater number of holdings at any time. An investment management contract is in place which defines the duties and responsibilities of the Investment Manager. Safeguards include the provision to terminate the Management Agreement with 6 months' notice and in line with AIC guidance, the Investment Manager's appointment is considered on an annual basis.	Following a significant downturn at the beginning of the global pandemic in the first quarter of 2020, investment performance has improved substantially in the year under review
Currency Risk The Company's investments are denominated in Japanese Yen. Changes in the Yen / Sterling exchange rate may impact returns and lead to a devaluation of the Company's assets when translated into sterling.  Income is received from investee companies in Yen. Exchange rate fluctuations could impact distributable income available for dividends.	The currency risk is explained to shareholders in the prospectus and the annual and interim reports. The Board regularly reviews the level of foreign currency exposure and monitors forecast revenues. The revenue forecast presented to the board includes a Yen sensitivity analysis. The Company's policy is not to hedge against any foreign currency movements. Income received from investee companies is translated into sterling on receipt. The Company has built up a revenue reserve and the Board regularly reviews the net income available for distribution using the Investment Manager's sensitivity analysis of revenue estimates. The Company also has a Special Reserve available for distribution in the event of unforeseen revenue shortfall.
Share price does not reflect underlying net asset value ("NAV") The market value of the Company's shares can fluctuate and may not always reflect their underlying value. Returns achieved are reliant primarily upon the performance of the Company's portfolio and the Company may experience fluctuations in its operating results due to a number of factors. Such variability may lead to volatility in the trading price of the Company's shares, in excess of levels acceptable to the Board or shareholders.	The Board closely monitors the Company's share price relative to NAV and the Company's discount / premium relative to their peer group, and recognises the importance that investors attach to the ordinary shares not trading at a significant discount or premium to the prevailing NAV. Should the shares trade at a significant discount to the prevailing NAV, the Board will consider whether the Company should purchase its own ordinary shares, pursuant to the general authority renewed at each AGM. Conversely, the Board will issue new Ordinary Shares should the shares trade at a premium to their prevailing NAV, pursuant to the general authority renewed at each AGM. Extensive marketing is carried out by the Company's Investment Manager, Broker and a specialist PR company. An investment research consultant is engaged to provide independent research for retail shareholders. During the year, a Special Resolution was approved to issue 26,946,122 TSS as a 1 for 5 Bonus Issue. The Board was also granted the authority to repurchase up to 14.99% of the issued Subscription Share capital.
Market Risk Changes in the investment, economic or political conditions in Japan, and/or in the countries in which the Company's investee companies operate could substantially and adversely affect the Company's prospects. In addition to changing economic factors such as interest rates, employment, industry conditions and competition, unpredictable factors such as natural disasters, earthquakes and diplomatic events may impact market risk. Geopolitical instability in the region may threaten global economic growth and, consequently, companies in the portfolio.	The Directors acknowledge that market risk is inherent in the investment process. The Company maintains a diversified portfolio of quoted investments. The Board has imposed guidelines within its investment policy to limit exposure to individual holdings and limits the level of gearing. Further information on financial instruments and risk can be found in note 16 to the Financial Statements. In addition to regular market updates from the Investment Manager and reports at Board meetings, the Board convenes more often during periods of extreme volatility, for example during the COVID-19 pandemic. The impact on the portfolio from Brexit and other geopolitical changes including the trade war between the US and China are monitored and discussed regularly at Board meetings. Market risk also arises from uncertainty about the future prices of the Company's Japanese equity investments, geopolitical and natural disasters. While it is difficult to quantify the impact of such changes, it is not anticipated that they will fundamentally affect the business of the Company or make the investment case for Japanese equities any less desirable. The longer-term effects of the COVID-19 pandemic, including the unprecedented levels of fiscal stimulus and global travel restrictions are unknown. However, the Board is encouraged by the scope for recovery as Japan emerges from the pandemic.	In addition to continued uncertainty surrounding the global recovery from the COVID-19 pandemic, geo-political risk has risen in the region.
Key Person Risk The Company depends on the diligence, skill and judgment of the Investment Manager's investment professionals and the information and ideas they generate during the normal course of their activities. The Company's future success depends on the continued service of key personnel. The departure of any of these individuals without adequate replacement may have a material adverse effect on the Company's business prospects and results of operations.	The Board meets regularly with other members of the wider team employed by the Investment Manager. The strength and depth of the investment management team provides comfort that there is no over-reliance on one person with alternative portfolio managers available to act if needed.
Excess leverage The Company may use borrowings to seek to enhance investment returns. While this has the potential to enhance investment returns in rising markets, in falling markets the impact could be detrimental to performance.	An ability to gear is a unique advantage of closed-end companies and structural gearing is a clearly stipulated component of the Company's investment policy. This is highlighted in shareholder communications. Gearing is monitored and strict restrictions on borrowings are imposed: gearing continues to operate within a limit of 25% of NAV at the time of investment.
Underperforming key service providers The Company's service providers including the Depositary, the Custodian and the Administrator could fail to provide accurate timely information to the Board. External events, such as cyber-crime, natural disasters or pandemics may mean service providers are unable to meet their contractual obligations.	The Board has appointed an experienced independent professional Depositary, Custodian and Administrator. All key service providers produce annual internal control reports for review by the Audit and Risk Committee. These reviews include consideration of their business continuity plans and the associated cyber security risks. Service providers report on cyber risk mitigation and management at least annually, which includes confirmation of business continuity capability in the event of a cyber-attack. Penetration testing is carried out by the Investment Manager and key service providers at least annually.
Emerging risk
Business Interruption due to COVID-19 Failure in services provided by key service providers, meaning information is not processed correctly or in a timely manner, resulting in regulatory investigation or financial loss, failure of trade settlement, or potential loss of investment trust status.	Each service provider has business continuity policies and procedures in place to ensure that they are able to meet the Company's needs and all significant breaches are brought to the attention of the Board. Due to the COVID-19 pandemic and the restrictions on gatherings and travel introduced by the UK Government, the Audit and Risk Committee requested assurances from the Company's key service providers that business continuity plans had been enacted where necessary, with service providers enabling remote and hybrid working arrangements. This provided a satisfactory level of assurance that there had not been, and there was no expectation of any disruption to service quality. Details of the Directors' assessment of the going concern status of the Company, which considered the adequacy of the Company's resources and the impacts of the COVID-19 pandemic.
ESG and Climate Change Potential reputational damage from non-compliance with regulations or incorrect disclosures. Climate change leads to additional costs and risks for portfolio companies. The Company could suffer as a result of increased investor demand for products which promote ESG investments.	The Company's ESG Policy, which is updated annually is published on the Company's website and the AIC website. The Company's approach to ESG, including the ESG factors that are considered in the investment process, such as climate change, where they are relevant and have a material impact on stock performance, is included in the Annual Report. It also includes examples of responsible engagement. Coupland Cardiff Asset Management LLP (the Investment Manager) is a signatory to the Principles of Responsible Investment Initiative("PRI") and reports annually according to the PRI reporting framework.  The Investment Manager also complies with the obligations of both the UK Stewardship Code and the Japan Stewardship Code. Investment trusts are currently exempt from the Task Force on Climate-Related Financial Disclosures ("TCFD ") disclosure, but the Board will continue to monitor the situation.	Shareholders expectations are increasingly focused on sustainability and ESG  factors Climate change is impacting operating conditions of portfolio companies and their reporting obligations

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102, which is The Financial Reporting Standard applicable to the UK and Republic of Ireland and applicable law. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the Company's affairs as at the end of the year and of the net return for the year. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates, which are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Company Reports and Accounts are published on its website at www.ccjapanincomeandgrowthtrust.com which is maintained by the Company's Investment Manager. The work carried out by the auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the financial statements since being initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmation statement

The Directors each confirm to the best of their knowledge that:

(a) the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

(b) this Annual Report includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal risks and uncertainties that it faces.

Having taken advice from the Audit and Risk Committee, the Directors consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.

For and on behalf of the Board

Harry Wells

Chairman

10 February 2022

FINANCIAL STATEMENTS

INCOME STATEMENT

FOR THE YEAR ENDED 31 OCTOBER 2021

		Year ended 31 October 2021			Year ended 31 October 2020
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments	3	-	39,373	39,373	-	(29,495)	(29,495)
Currency gains		-	734	734	-	302	302
Income	4	8,241	-	8,241	8,553	-	8,553
Investment management fee	5	(318)	(1,273)	(1,591)	(285)	(1,140)	(1,425)
Other expenses	6	(634)	-	(634)	(556)	-	(556)
Return on ordinary activities before finance costs and taxation		7,289	38,834	46,123	7,712	(30,333)	(22,621)
Finance costs	7	(61)	(161)	(222)	(63)	(166)	(229)
Return on ordinary activities before taxation		7,228	38,673	45,901	7,649	(30,499)	(22,850)
Taxation	8	(824)	-	(824)	(853)	-	(853)
Return on ordinary activities after taxation		6,404	38,673	45,077	6,796	(30,499)	(23,703)
Return per Ordinary Share-undiluted	13	4.75p	28.70p	33.45p	5.04p	(22.64)p	(17.60)p
Return per Ordinary Share-diluted	13	3.96p	23.92p	27.88p	-	-	-
The total column of the Income Statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations.
Both the supplementary revenue and capital columns are prepared under guidance from the Association of Investment Companies. There is no other comprehensive income and therefore the return for the year is also the total comprehensive income for the year. The Company's "Ordinary Shares - diluted" is due to the issuance of 26,946,122 Subscription Shares issued on 18 February 2021.

STATEMENT OF FINANCIAL POSITION

AT 31 OCTOBER 2021

		31 October 2021	31 October 2020
	Note	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	3	220,271	180,927
Current assets
Cash and cash equivalents		-	2,463
Cash collateral in respect of Contracts for Difference ("CFDs")		-	41
Amounts due in respect of CFDs		443	3,014
Other debtors	10	3,264	3,100
		3,707	8,618
Creditors: amounts falling due within one year
Cash and cash equivalents-Bank overdraft		(48)	-
Cash collateral in respect of CFDs		(18)	-
Amounts payable in respect of CFDs		(738)	(4,969)
Other creditors	11	(304)	(216)
		(1,108)	(5,185)
Net current assets		2,599	3,433
Total assets less current liabilities		222,870	184,360
Net assets		222,870	184,360
Capital and reserves
Share capital	12	1,348	1,348
Share premium		98,067	98,437
Special reserve		64,671	64,671
Capital reserve
-Revaluation gains on investments held at year end	3	26,628	14,746
-Other capital reserves		25,213	(1,578)
Revenue reserve		6,943	6,736
Total Shareholders' funds		222,870	184,360
NAV per share - Ordinary Shares - undiluted (pence)	14	165.42p	136.84p
NAV per share - Ordinary Shares - diluted (pence)	14	164.68p	-

 Approved by the Board of Directors and authorised for issue on 10 February 2022 and signed on their behalf by:

Harry Wells
Director
CC Japan Income & Growth Trust plc is incorporated in England and Wales with registration number 9845783.

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 OCTOBER 2021

		Share capital	Share premium	Special reserve	Capital reserve	Revenue reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 November 2020		1,348	98,437	64,671	13,168	6,736	184,360
Return on ordinary activities after taxation		-	-	-	38,673	6,404	45,077
Dividends paid	9	-	-	-	-	(6,197)	(6,197)
Subscription Shares issue costs		-	(370)	-	-	-	(370)
Balance at 31 October 2021		1,348	98,067	64,671	51,841	6,943	222,870
For the year ended 31 October 2020
		Share capital	Share premium	Special reserve	Capital reserve	Revenue reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 November 2019		1,348	98,437	64,671	43,667	6,003	214,126
Return on ordinary activities after taxation		-	-	-	(30,499)	6,796	(23,703)
Dividends paid	9	-	-	-	-	(6,063)	(6,063)
Balance at 31 October 2020		1,348	98,437	64,671	13,168	6,736	184,360
The Company's distributable reserves consist of the Special reserve, Revenue reserve and Capital reserve attributable to realised profits.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 OCTOBER 2021

	Year ended 31 October 2021	Year ended 31 October 2020
	£'000	£'000
Operating activities cash flows
Return on ordinary activities before finance costs and taxation*	46,123	(22,621)
Adjustment for:
(Gains)/losses on investments	(28,306)	23,290
Movements in CFD transactions	(1,601)	48
Increase in other debtors	(293)	(380)
Increase/(decrease) in other creditors	89	(75)
Tax withheld on overseas income	(824)	(853)
Net cash flow from/(used in) operating activities	15,188	(591)
Investing activities cash flows
Purchases of investments	(100,687)	(92,584)
Proceeds from sales of investments	89,778	99,458
Net cash flow (used in)/from investing activities	(10,909)	6,874
Financing activities cash flows
Subscription Share issue costs paid	(370)	-
Equity dividends paid	(6,197)	(6,063)
Finance costs paid	(223)	(229)
Net cash used in financing activities	(6,790)	(6,292)
Decrease in cash and cash equivalents	(2,511)	(9)
Cash and cash equivalents at the beginning of the year	2,463	2,472
Cash and cash equivalents at the end of the year	(48)	2,463
* Cash inflow from dividends was £7,083,000 (2020: £7,396,000).

  NOTES TO THE ACCOUNTS

	1. GENERAL INFORMATION
	CC Japan Income & Growth Trust plc (the "Company") was incorporated in England and Wales on 28 October 2015 with registered number 9845783, as a closed-ended investment company. The Company commenced its operations on 15 December 2015. The Company carries on business as an investment trust within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act 2010.
	The Company's investment objective is to provide Shareholders with dividend income combined with capital growth, mainly through investment in equities listed or quoted in Japan.
	The Company's shares were admitted to the Official List of the Financial Conduct Authority with a premium listing on 15 December 2015. On the same day, trading of the Ordinary Shares commenced on the London Stock Exchange. During the year, the Company's 26,946,122 TSS were admitted to the London Stock Exchange with the ticker CCJS.
	The Company's registered office is 6th Floor, 125 London Wall, London EC2Y 5AS.
	2. ACCOUNTING POLICIES
	The principal accounting policies followed by the Company are set out below:
	(a) Basis of accounting
	The financial statements have been prepared in accordance with FRS 102 ("the Financial Reporting Standard applicable in the UK and Republic of Ireland" issued by the Financial Reporting Council), with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the Association of Investment Companies in October 2019 and the Companies Act 2006. The financial statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial instruments as specified in the accounting policies below.
	They have also been prepared on the assumption that approval as an investment trust will continue to be granted. As required by its Articles of Association, the Company will put forward a vote for its continuation at the Annual General Meeting held on 22 March 2022. As outlined in the Chairman's statement, between launch in December 2015 and the recent financial year end, the Company's cum-income NAV return amounts to 89.4% in terms of sterling total return, comparing favourably with the TOPIX total return of 74.6%. Over a 12-month view, the Company's investment performance is a leader in the AIC Japanese investment trust peer group and the Investment Manager's confidence in the intrinsic value of portfolio holdings has been rewarded. The Company has also met its objectives set out in the prospectus in relation to the annual dividend, which is reflected in the premium/low discount at which the Company's Ordinary Shares are trading. The Directors recommend that shareholders vote in favour of the continuation of the Company and have no reason to believe that the continuation vote will not be passed. In the event that the continuation vote is not passed, the Directors would be required to put forward proposals that the Company be wound up, liquated, reconstructed or unitised.
	The financial statements have been prepared on a going concern basis. In forming this opinion, the directors have considered any potential impact of the COVID-19 pandemic on the going concern and viability of the Company. In making their assessment, the Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and considered the mitigation measures which key service providers, including the Investment Manager, have in place to maintain operational resilience particularly in light of COVID-19. The Company's ability to continue as a going concern for the period assessed by the Directors, being the period to 31 October 2023 which is at least 18 months from the date the financial statements were authorised for issue.
	The financial statements have been presented in GBP sterling (£), which is also the functional currency as this is the currency of the primary economic environment in which the Company operates. The Board, having regard to the currency of the Company's share capital and the predominant currency in which it pays distributions, expenses and its shareholders operate, has determined that sterling is the functional currency.  Sterling is also the currency in which the financial statements are presented.
	(b) Investments
	As the Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value, financial assets are designated as held at fair value through profit or loss in accordance with FRS 102 Section 11: 'Basic Financial Instruments', and Section 12: 'Other Financial Instruments'. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of Directors.
	Upon initial recognition, investments are designated by the Company "at fair value through profit or loss". They are recognised on the date they are traded and are measured initially at fair value, which is taken to be their cost, excluding expenses incidental to purchases which are expensed to capital on acquisition. Subsequently investments are revalued at fair value which is the bid market price for listed investments over the time until they were sold, any unrealised gains/losses are included in the fair value of the investments.
	Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are included in the capital column of the income statement within "gains on investments held at fair value".
	(c) Derivatives
	Derivatives comprise Contracts for Difference ("CFD"), which are measured at fair value and valued by reference to the underlying market value of the corresponding security. CFDs are held for investment purposes. Where the fair value is positive the CFD is presented as a current asset, and where the fair value is negative the CFD is presented as a current liability. Gains or losses on these derivative transactions are recognised in the Income Statement. They are recognised as capital and are shown in the capital column of the Income Statement if they are of a capital nature and are recognised as revenue and shown in the revenue column of the Income Statement if they are of a revenue nature. To the extent that any gains or losses are of a mixed revenue and capital nature, they are apportioned between revenue and capital accordingly.
	(d) Foreign currency
	Transactions denominated in foreign currencies including dividends are translated into sterling at actual exchange rates as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing at the year end. Foreign exchange movements on investments and derivatives are included in the Income Statement within gains on investments. Any other gain or loss is included as an exchange gain or loss to capital or revenue in the Income Statement as appropriate.
	(e) Income
	Investment income has been accounted for on an ex-dividend basis or when the Company's right to the income is established. Special dividends are credited to capital or revenue in the Income Statement, according to the circumstances surrounding the payment of the dividend. Overseas dividends are included gross of withholding tax recoverable.
	Interest receivable on deposits is accounted for on an accrual basis.
	(f) Dividend payable
	Interim dividends are recognised when the Company pays the dividend. Final dividends are recognised in the period in which they are approved by the shareholders. This year, as was also the case last year, a second interim dividend is being paid in substitution for the final dividend.
	(g) Expenses
	All expenses are accounted for on an accruals basis and are charged as follows: • the basic investment management fee is charged 20% to revenue and 80% to capital; • CFD finance costs are charged 20% to revenue and 80% to capital; • investment transactions costs are allocated to capital; and • other expenses are charged wholly to revenue.
	(h) Taxation
	The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that were applicable at the financial reporting date.
	Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated between capital and revenue returns on the marginal basis using the Company's effective rate of corporation taxation for the relevant accounting period.
	Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the timing differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.
	(i) Other receivables and other payables
	Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value.
	(j) Segmental reporting
	The Directors are of the opinion that the Company is engaged in a single segment of business being that of an investment trust, as disclosed in note 1.
	(k) Accounting estimates, judgements and assumptions
	The preparation of financial statements requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Although these estimates are based on management's best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates, possibly significantly.
	There have not been any instances requiring any significant estimates or judgements in the year.
	(l) Cash and cash equivalents
	Cash comprises cash and demand deposits. Cash equivalents, include bank overdrafts, and short-term, highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
3. INVESTMENTS
(a) Summary of valuation
				As at 31 October 2021		As at 31 October 2020
				£'000		£'000
Investments listed on a recognised overseas investment exchange				220,271		180,927
				220,271		180,927
(b) Movements
In the year ended 31 October 2021
				2021		2020
				£'000		£'000
Book cost at the beginning of the year				166,181		185,084
Revaluation gains on investments held at beginning of the year				14,746		26,156
Valuation at beginning of the year				180,927		211,240
Purchases at cost				100,687		92,584
Sales:
- proceeds				(89,649)		(99,607)
- gains/(losses) on investment holdings sold during the year				16,424		(11,880)
Movements in revaluation gains/(losses) on investments held at year end				11,882		(11,410)
Valuation at end of the year				220,271		180,927
Book cost at end of the year				193,643		166,181
Revaluation gains on investments held at year end				26,628		14,746
Valuation at end of the year				220,271		180,927
Transaction costs on investment purchases for the year ended 31 October 2021 amounted to £46,000 (2020: £45,000) and on investment sales for the year amounted to £39,000 (2020: £48,000). The Company received £89,649,000 (2020: £99,607,000) from investments sold in the year. The book cost of these investments when they were purchased was £73,225,000 (2020: £111,487,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
(c) Gains/(losses) on investments
				Year ended 31 October 2021		Year ended 31 October 2020
				£'000		£'000
Gains/(losses) on non-derivative investment holdings sold during the year				16,424		(11,880)
Movements in revaluation gains/(losses) on investments held at year end				11,882		(11,410)
Other capital losses				(27)		(31)
Total gains/(losses) on non-derivative investments held at fair value				28,279		(23,321)
Realised gains/(losses) on CFD assets and liabilities				9,434		(6,101)
Unrealised gains/(losses) on CFD assets and liabilities				1,660		(73)
Total gains/(losses) on investments held at fair value				39,373		(29,495)
4. INCOME
			Year ended 31 October 2021		Year ended 31 October 2020
			£'000		£'000
Income from investments:
Overseas dividends			8,241		8,553
Total			8,241		8,553
Overseas dividend income is translated into sterling on receipt.

5. INVESTMENT MANAGEMENT FEE
	Year ended 31 October 2021	Year ended 31 October 2020
	£'000	£'000
Basic fee:
20% charged to revenue	318	285
80% charged to capital	1,273	1,140
Total	1,591	1,425
The Company's Investment Manager is Coupland Cardiff Asset Management LLP. The Investment Manager is entitled to receive a management fee payable monthly in arrears and is at the rate of one-twelfth of 0.75% of Net Asset Value per calendar month. There is no performance fee payable to the Investment Manager.

6. OTHER EXPENSES
	Year ended 31 October 2021	Year ended 31 October 2020
	£'000	£'000
Secretarial services	48	48
Administration and other expenses	416	326
Auditor's remuneration- statutory audit	45	38
Directors' fees	125	144
Other expenses - Revenue	634	556

7. FINANCE COSTS
	Year ended 31 October 2021	Year ended 31 October 2020
	£'000	£'000
Interest paid - 100% charged to revenue	21	21
CFD finance cost and structuring fee - 20% charged to revenue	39	41
Structuring fees - 20% charged to revenue	1	1
	61	63
CFD finance cost and structuring fee - 80% charged to capital	157	164
Structuring fees - 80% charged to capital	4	2
	161	166
Total finance costs	222	229

8. TAXATION

		Year ended 31 October 2021					Year ended 31 October 2020
		Revenue	Capital		Total		Revenue	Capital		Total
		£'000	£'000		£'000		£'000	£'000		£'000
(a) Analysis of tax charge in the year:
Overseas withholding tax		824	-		824		853	-		853
Total tax charge for the year (see note 8 (b))		824	-		824		853	-		853
(b) Factors affecting the tax charge for the year:
The Company's effective tax rate for the year is 19.00% (2020: 19.00%), which is same as the standard rate of corporation tax in the UK for a large company, currently at 19.00% (2020: 19.00%).
The differences are explained below.
		Year ended 31 October 2021					Year ended 31 October 2020
		Revenue	Capital		Total		Revenue	Capital		Total
		£'000	£'000		£'000		£'000	£'000		£'000
Total return before taxation		7,228	38,673		45,901		7,649	(30,499)		(22,850)
UK corporation tax at 19.00% (2020: 19.00%)		1,373	7,348		8,721		1,453	(5,795)		(4,342)
Effects of:
Overseas withholding tax suffered		824	-		824		853	-		853
Non-taxable overseas dividends		(1,566)	-		(1,566)		(1,625)	-		(1,625)
Capital (gains)/losses not subject to tax		-	(7,620)		(7,620)		-	5,547		5,547
Finance costs not tax deductible		12	31		43		12	32		44
Movement in unutilised management expenses		181	241		422		160	216		376
Total tax charge		824	-		824		853	-		853
The Company has an unrecognised deferred tax asset of £904,000 (2020: £562,000) based on a prospective corporation tax rate of 25% (2020: 19%). The March 2021 Budget announced an increase to the main rate of corporation tax to 25% from 1st April 2023. This increase in the standard rate of corporation tax was substantively enacted on 24th May 2021 and became effective from 2nd June 2021. This asset has accumulated because deductible expenses exceeded taxable income for the year ended 31 October 2021. No asset has been recognised in the accounts; given that with the composition of the Company's portfolio, it is unlikely that this will be utilised in the foreseeable future. The Company has not provided for deferred tax on any tax losses.
9. DIVIDEND
(i) Dividends paid during the financial year
	Year ended 31 October 2021					Year ended 31 October 2020
Final dividend - year ended 31 October 2019 of 3.10p				-					4,177
Second Interim - year ended 31 October 2020 3.20p				4,311					-
Interim dividend - year ended 31 October 2021 1.40p  (2020: 1.40p)				1,886					1,886
Total				6,197					6,063
(ii) The dividend relating to the year ended 31 October 2021, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered is detailed below:
	Year ended 31 October 2021					Year ended 31 October 2020
	Pence per Ordinary share			£'000		Pence per Ordinary share			£'000
Interim dividend	1.40p			1,886		1.40p			1,886
Second interim dividend*	3.35p			4,513		3.20p			4,311
	4.75p			6,399		4.60p			6,197
*Not included as a liability in the year ended 30 October 2021 accounts.
The Directors have declared a second interim dividend for the financial year ended 30 October 2021 of 3.35p per Ordinary Share. The dividend will be paid on 18 March 2022 to Shareholders on the register at the close of business on 18 February 2022.

10. OTHER DEBTORS
	As at 31 October 2021	As at 31 October 2020
	£'000	£'000
Accrued income	3,194	2,860
Sales for settlement	20	149
VAT receivable	19	48
Prepayments and other receivables	31	43
	3,264	3,100

11. OTHER CREDITORS
	As at 31 October 2021	As at 31 October 2020
	£'000	£'000
Amounts falling due within one year:
Accrued finance costs	7	8
Accrued expenses	297	208
	304	216

12. SHARE CAPITAL
Share capital represents the nominal value of shares that have been issued. The share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.
	As at 31 October 2021		As at 31 October 2020
	No. of shares	£'000	No. of shares	£'000
Allotted, issued & fully paid:
Ordinary Shares of 1p
Opening balance	134,730,610	1,348	134,730,610	1,348
Closing balance	134,730,610	1,348	134,730,610	1,348
Since the year end, no Ordinary Shares were issued by the Company.

Transferable Subscription Shares

On 18 February 2021, the Company's 26,946,122 TSS were admitted to the London Stock Exchange with the ticker CCJS. The prospectus was published on 22^nd January 2021 and a General Meeting was held on 15 February 2021, where 99.95% of the Shareholders voting on the resolution, approved the requisite special resolution including changes to the Articles of Association. Thus, the Company has now issued 26,946,122 TSS to qualifying shareholders on the register as at 6.00 pm on 15 February 2021. The Subscription Price of £1.61, payable on the exercise of the rights attached to the TSS, was determined at the close of business on 15 February 2021.

TSS were issued as a free bonus to Shareholders on the basis of 1 Subscription Share for every 5 Ordinary Shares owned. The TSS have a limited life but can be exercised by paying the Subscription Price of £1.61 for new Ordinary Shares on a quarterly basis on the last business day of May, August, November and February up until the last business day of February 2023, whereupon they expire. As of 31 October 2021, none of the TSS have been exercised.

13. RETURN PER ORDINARY SHARE
Total return per Ordinary Share is based on the profit on ordinary activities, including income, for the year after taxation of £45,077,000 (2020: loss of £23,703,000) and weighted average number of Ordinary Shares-undiluted of 134,730,610 (2020: 134,730,610); Ordinary Shares-diluted 161,676,732 (2020: 134,730,610) in issue for the year to 31 October 2021. The Company's Ordinary Shares-diluted is due to the issuance of 26,946,122 Subscription Shares.
The returns per Ordinary Share were as follows:
	As at 31 October 2021			As at 31 October 2020
	Revenue	Capital	Total	Revenue	Capital	Total
Return per Ordinary Share-undiluted	4.75p	28.70p	33.45p	5.04p	(22.64)p	(17.60)p
Return per Ordinary Share-diluted	3.96p	23.92p	27.88p	-	-	-

	14. NET ASSET VALUE PER SHARE
Total Shareholders' funds and the net asset value ("NAV") per share attributable to the Ordinary Shareholders at the year end calculated in accordance with the Articles of Association were as follows:
NAV per Ordinary Share - undiluted
		As at 31 October 2021		As at 31 October 2020
Net Asset Value (£'000)		222,870		184,360
Ordinary Shares in issue		134,730,610		134,730,610
NAV per Ordinary Share-undiluted		165.42p		136.84p
NAV per Ordinary Share - diluted On 16 February 2021, the Company announced an issue of 26,946,122 TSS at a price of 161p. The first exercise date for the Subscription shares was 31 May 2021 and quarterly thereafter until the final exercise date of 28 February 2023. On the assumption that the Subscription shares had been fully exercised and paid for as the year end, the dilutive effect on the Company's NAV will be as follows:
		As at 31 October 2021		As at 31 October 2020
Subscription shares in issue		26,946,122		-
Proceeds from exercise of subscription shares (£'000)		43,400		-
Adjusted Net Asset Value for exercise of subscription shares (£'000)		266,270		-
Ordinary Shares - post exercise subscription shares		161,676,732		-
NAV per Ordinary Share - diluted		164.68p		-

15. RELATED PARTY TRANSACTIONS
Transactions with the Investment Manager and the Alternative Investment Fund Investment Manager ("AIFM")
The Company's relationship with the Investment Manager and AIFM, Coupland Cardiff Asset Management LLP is set out in the annual report. The fees for the year are disclosed in note 5 and amounts outstanding at the year ended 31 October 2021 were £141,000 (2020: £116,000).
Research purchasing agreement
MiFID II treats investment research provided by brokers and independent research providers as a form of "inducement" to investment managers and requires research to be paid separately from execution costs. In the past, the costs of broker research were primarily borne by the Company as part of execution costs through dealing commissions paid to brokers. With effect from 3 January 2018, this practice has changed, as brokers subject to MiFID II are now required to price, and charge for, research separately from execution costs. Equally, the rules require the Investment Manager, as an investment manager, to ensure that the research costs borne by the Company are paid for through a designated Research Payment Account ("RPA") funded by direct research charges to the Investment Manager's clients; including the Company.
The research charge for the year 1 January 2021 to 31 December 2021, as agreed between the Investment Manager and the Company, was £28,000 (31 December 2020: £30,000). The research charge for the year 1 January 2022 to 31 December 2022, as budgeted by the Investment Manager, is £26,000.
Directors' fees and shareholdings
The Directors' fees and shareholdings are disclosed in the Directors' Remuneration Implementation Report in the Annual Report.
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES
Risk Management Policies and Procedures
As an investment trust the Company invests in equities and equity related derivatives for the long-term so as to secure its investment objective stated. In pursuing its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company's net assets or a reduction of the profits available for dividends.
These risks, include market risk (comprising currency risk, interest rate risk, and other price risk), liquidity risk, leverage risk and credit risk.
The objectives, policies and processes for managing the risks, and the methods used to measure the risks, are set out as below.
(a) Market Risk Overview
Economic conditions
Changes in economic conditions in Japan (for example, interest rates and rates of inflation, industry conditions, competition, political and geo-political events and other factors) and in the countries in which the Company's investee companies operate could substantially and adversely affect the Company's prospects. The Company is subject to concentration risk as it only invests in Japanese companies but has diversified investments across the different sectors in the Japanese market.
Sectoral diversification
The Company has no limits on the amount it may invest in any sector. This may lead to the Company having significant concentrated exposure to portfolio companies in certain business sectors from time to time.
Concentration of investments in any one sector may result in greater volatility in the value of the Company's investments and consequently its NAV and may materially and adversely affect the performance of the Company and returns to Shareholders.
Unquoted companies
The Company may invest in unquoted companies from time to time. Such investments, by their nature, involve a higher degree of valuation and performance uncertainties and liquidity risks than investments in listed and quoted securities and they may be more difficult to realise. However, the Company does not currently hold and has never held any unquoted securities.
Management of market risk
The Company is invested in a diversified portfolio of investments. The Company's investment policy states that no single holding (including any derivative instrument) will represent more than 10% of the Company's Gross Assets at the time of investment and, when fully invested, the portfolio is expected to have between 30 to 40 holdings although there is no guarantee that this will be the case and it may contain a lesser or greater number of holdings at any time. A maximum of 10% of the Company's Gross Assets at the time of investment may be invested in unquoted or untraded companies at time of investment.
The Investment Manager's approach will in most cases achieve diversification across a number of sectors as shown in the Holdings in Portfolio.
(b) Currency risk
The majority of the Company's assets will be denominated in a currency other than sterling (predominantly in Yen) and changes in the exchange rate between sterling and Yen may lead to a depreciation of the value of the Company's assets as expressed in sterling and may reduce the returns to the Company from its investments and, therefore, negatively impact the level of dividends paid to shareholders.
Management of currency risk
The Investment Manager monitors the currency risk of the Company's portfolio on a regular basis. Foreign currency exposure is regularly reported to the Board by the Investment Manager. The Company does not currently intend to enter into any arrangements to hedge its underlying currency exposure to investment denominated in Yen, although the Investment Manager and the Board will keep this approach under regular review.
Foreign currency exposures
An analysis of the Company's assets priced in Yen are as follows:
				As at 31 October 2021			As at 31 October 2020
				£'000			£'000
Equity Investments				220,271			180,927
Receivables (dividend income receivable and sales settlement due)				3,214			3,100
CFD (absolute exposure)				44,055			36,183
Cash and cash equivalents				(3,360)			(1,535)
Total				264,180			218,675
Foreign currency sensitivity
If the Japanese Yen had appreciated or depreciated relative to sterling by 10% as at 31 October 2021 then the value of the portfolio as at that date would have increased or decreased as shown below.
		Increase in Fair Value	Decrease in Fair Value	Increase in Fair Value			Decrease in Fair Value
		As at 31 October 2021	As at 31 October 2021	As at 31 October 2020			As at 31 October 2020
		£'000	£'000	£'000			£'000
Impact on capital return - increase/(decrease)		26,418	(26,418)	21,868			(21,868)
Return after taxation - increase/(decrease)		26,418	(26,418)	21,868			(21,868)
(c) Leverage risk
Derivative instruments
The Company utilises long only CFDs or equity swaps for gearing and efficient portfolio management purposes. Leverage may be generated through the use of CFDs or equity swaps. Such financial instruments inherently contain much greater leverage than a non-margined purchase of the underlying security or instrument. This is due to the fact that, generally, only a very small portion (and in some cases none) of the value of the underlying security or instrument is required to be paid in order to make such leveraged investments. As a result of any leverage employed by the Company, small changes in the value of the underlying assets may cause a relatively large change in the Net Asset Value of the Company. Many such financial instruments are subject to variation or other interim margin requirements, which may force premature liquidation of investment positions. The Company settled the CFDs on a net basis.
Borrowing risks
The Company may use borrowings to seek to enhance investment returns. While the use of borrowings can enhance the total return on the Ordinary Shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the return on the Company's underlying assets is rising at a lower rate than the cost of borrowing or falling, further reducing the total return on the Ordinary Shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value per Ordinary Share.
Any reduction in the value of the Company's investments may lead to a correspondingly greater percentage reduction in its Net Asset Value (which is likely to adversely affect the price of an Ordinary Share). Any reduction in the number of Ordinary Shares in issue (for example, as a result of buy backs) will, in the absence of a corresponding reduction in borrowings, result in an increase in the Company's level of gearing.
To the extent that a fall in the value of the Company's investments causes gearing to rise to a level that is not consistent with the Company's gearing policy or borrowing limits, the Company may have to sell investments in order to reduce borrowings, which could give rise to a significant loss of value compared to the book value of the investments, as well as a reduction in income from investments.
Management of leverage risk
The aggregate of borrowings and long only CFD and equity swap exposure will not exceed 25% of Net Asset Value at the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate, although the Company's normal policy will be to utilise and maintain gearing to a lower limit of 20% of Net Asset Value at the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate. It is expected that any borrowings entered into will principally be denominated in Yen.
The Company's level of gearing as at 31 October 2021 is disclosed in the Alternative Performance Measures section in the Annual Report.
(d) Interest rate risk
The Company is exposed to interest rate risk specifically through its cash holdings and on positions within the CFD portfolio. Interest rate movements may affect the level of income receivable from any cash at bank and on deposits. The effect of interest rate changes on the earnings of the companies held within the portfolio may have a significant impact on the valuation of the Company's investments. Movements in interest rates will also have an impact on the valuation of the CFD derivative contracts. Interest receivable on cash balances or paid on overdrafts is at fixed rate.
Management of interest rate risk
The possible effects on Fair Value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions. Derivative contracts are not used to hedge against the exposure to interest rate risk.
Interest income earned on deposits and paid on overdraft by the Company is primarily derived from fixed interest rates, as such do not have a material exposure to interest rate risk.
The overdraft is an integral part of the Company's cash management practices and the Company has a legal right to offset with other accounts and intention to settle net.
Interest rate exposure
The exposure at 31 October 2021 of financial assets and liabilities to interest rate risk is shown by reference to floating interest rates - when the interest rate is due to be reset. Due to the current low interest rate environment, no sensitivity analysis is shown because the direct impact of a significant increase in interest rates would be immaterial due to the relatively small proportion of the Company's investment exposure achieved using CFDs.
					As at 31 October 2021 due within one year		As at 31 October 2020 due within one year
					£'000		£'000
Exposure to floating interest rates: CFD derivative contract					44,055		36,183
Collateral paid in respect of CFDs					-		41
(e) Credit risk
Credit risk is the possibility of a loss to the Company due to the failure of the counterparty to a transaction discharging its obligations under that transaction.
Cash and other assets held by the Depositary
The cash and other assets held by the Depositary or its sub-custodians are subject to counterparty credit risk as the Company's access to its cash could be delayed should the counterparties become insolvent or bankrupt.
Derivative instruments
The Company's holdings in CFD contracts present counterparty credit risks, with the risk of the counter party (Morgan Stanley & Co International plc) defaulting.
Management of credit risk
Cash and other assets held by the Depositary
Cash and other assets that are required to be held in custody will be held by the depositary or its sub-custodians. Cash and other assets may not be treated as segregated assets and will therefore not be segregated from any custodian's own assets in the event of the insolvency of a custodian. Cash held with any custodian will not be treated as client money subject to the rules of the Financial Conduct Authority ('FCA') and may be used by a custodian in the course of its own business. The Company will therefore be subject to the creditworthiness of its custodians. In the event of the insolvency of a custodian, the Company will rank as a general creditor in relation thereto and may not be able to recover such cash in full, or at all. Northern Trust Investor Services Limited is appointed as the Company's depositary. The credit rating of Northern Trust was reviewed at time of appointment and will be reviewed on a regular basis by the Investment Manager and/or the Board. The Fitch's credit rating of Northern Trust is BBB.
Derivative instruments
Where the Company utilises CFDs or equity swaps, it is likely to take a credit risk with regard to the parties with whom it trades and may also bear the risk of settlement default. These risks may differ materially from those entailed in exchange-traded transactions that generally are backed by clearing organisation guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered into directly between counterparties generally do not benefit from such protections and expose the parties to the risk of counterparty default. CFD contracts generally require variation margins and the counterparty credit risk is monitored by the Investment Manager.
The Investment Manager monitors the Company's exposure to its counterparties on a regular basis and the position is reviewed by the Directors at Board meetings. Investment transactions are carried out with a number of brokers, whose credit-standing is reviewed periodically by the Investment Manager, and limits are set on the amount that may be due from any one broker.
In summary, the exposure to credit risk as at 31 October 2021 was as follows:
					As at 31 October 2021 3 months or less		As at 31 October 2020 3 months or less
					£'000		£'000
Cash at bank					-		2,463
Amounts due in respect of CFDs					443		3,014
Collateral paid in respect of CFDs					-		41
Debtors					3,264		3,100
Total					3,707		8,618
None of the above assets or liabilities were impaired or past due but not impaired.
(f) Other Price Risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market.
The Company is exposed to other price risk arising from its equity investments and its exposure to the positions within the CFD portfolio. The movements in the prices of these investments result in movements in the performance of the Company.
The Company's exposure to other changes in market prices at 31 October 2021 on its equity investments was £220,271,000 (2020: £180,927,000).
In addition, the Company's gross market exposure (nominal value) to these price changes through its CFD portfolio was £44,055,000 through long positions (2020: £36,183,000).
The Company uses CFDs, as part of its investment policy. These instruments can be volatile and potentially expose investors to a higher risk of loss. The low initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result, a relatively small movement in the price of a contract may result in a profit or loss which is high in proportion to the value of the net exposures in the underlying CFD positions.
The Company limits the gross market exposure, and therefore the leverage, of this strategy to approximately 200% of the Company's net assets. The CFDs utilised have a linear performance to referenced stocks quoted on exchanges and therefore have the same volatility profile to the underlying stocks.
Market exposures to derivative contracts are disclosed below.
The Company's exposure to CFDs is the aggregate of long CFD Positions. The gross and net market exposure is the same as the Company does not hold short CFD Positions.
Exposures are monitored daily by the Investment Manager. The Company's Board also reviews exposures regularly.
The gross underlying notional exposures within the CFD portfolio as at 31 October 2021 were:
	As at 31 October 2021				As at 31 October 2020
	£'000		% of net assets		£'000		% of net assets
CFDs - (absolute exposure)	44,055		19.77%		36,183		19.63%
CFDs - (net exposure)	44,055		19.77%		36,183		19.63%
The Board of Directors manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the Investment Manager's compliance with the Company's investment objective.
Other price risk sensitivity
The following table illustrates the sensitivity of the profit after taxation for the period to an increase or decrease of 10% in the fair values of the Company's equities and CFDs. This level of change is considered to be reasonable based on observation of current market conditions. The sensitivity analysis is based on the fair value of the Company's equities investments and the notional exposure of its long CFDs.
	As at 31 October 2021				As at 31 October 2020
	Increase in Fair Value		Decrease in Fair Value		Increase in Fair Value		Decrease in Fair Value
	£'000		£'000		£'000		£'000
Impact on capital return - increase/(decrease)	26,462		(26,462)		21,906		(21,906)
Return after taxation - increase/(decrease)	26,462		(26,462)		21,906		(21,906)
(g) Liquidity Risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Management of liquidity risk
Liquidity risk is not significant as the Company's assets comprise readily realisable securities, which can be sold to meet funding requirements if necessary.However, timely sale of trading positions can be impaired by many factors including decreased trading volume and increased price volatility. As a result, the Company could experience difficulties in disposing of assets to satisfy liquidity demands. Liquidity risk is minimised by holding sufficient liquid investments which can be readily realised to meet liquidity demands. The Company's liquidity risk is managed on a daily basis by the Investment Manager in accordance with established policies and procedures in place.
Liquidity risk exposure
The undiscounted gross cash outflows of the financial liabilities as at 31 October 2021, based on the earliest date on which payment can be required, were as follows:
					As at 31 October 2021 less than 3 months		As at 31 October 2020 less than 3 months
Bank overdraft					48		-
Amounts payable in respect of CFDs					756		4,969
Other payables					304		216
Total					1,108		5,185

(h) Fair Value Measurements of Financial Assets and Financial Liabilities
The financial assets and liabilities are either carried in the balance sheet at their Fair Value, or the balance sheet amount is a reasonable approximation of Fair Value (due from brokers, dividends receivable, accrued income, due to brokers, accruals and cash and cash equivalents).
The valuation techniques for investments and derivatives used by the Company are explained in the accounting policies notes 2 (b and c).
The table below sets out Fair Value measurements using Fair Value Hierarchy.
	Level 1	Level 2	Level 3	Total
As at 31 October 2021	£'000	£'000	£'000	£'000
Assets:
Equity investments	220,271	-	-	220,271
CFDs - Fair Value gains	-	443	-	443
Liabilities:
CFDs - Fair Value losses	-	(738)	-	(738)
Total	220,271	(295)	-	219,976
	Level 1	Level 2	Level 3	Total
As at 31 October 2020	£'000	£'000	£'000	£'000
Assets:
Equity investments	180,927	-	-	180,927
CFDs- Fair Value gains	-	3,014	-	3,014
Liabilities:
CFDs - Fair Value losses	-	(4,969)	-	(4,969)
Total	180,927	(1,955)	-	178,972
There were no transfers between levels during the year (2020: same).
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the Fair Value measurement of the relevant asset as follows:
Level 1 - valued using quoted prices in active markets for identical assets.
Level 2 - valued by reference to valuation techniques using observable inputs including quoted prices.
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data. There were no Level 3 investments as at 31 October 2021 (2020: nil).
(i) Capital Management Policies and Procedures
The Company's capital management objectives are:
- to ensure that the Company will be able to continue as a going concern; and
- to provide dividend income combined with capital growth, mainly through investment in equities listed or quoted in Japan and by utilising the leverage effect of CFD.
The key performance indicators are contained in the strategic report.
The Company is subject to several externally imposed capital requirements:
- As a public company, the Company has to have a minimum share capital of £50,000.
- In order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law.
The Company's capital as at 31 October 2021 comprises called up share capital and reserves totalling £222,870,000 (2020: £184,360,000).
The Board regularly monitors and has complied with the capital requirements.

17. DISTRIBUTABLE RESERVES

Distributable reserves comprise: the Revenue reserve; and Capital reserve attributable to realised profits including the

Special reserve.

Special reserve: As stated in the Company's prospectus dated 13 November 2015, in order to increase the distributable reserves available to facilitate the flexibility and source of future dividends, the Company resolved that, conditional upon First Admission to listing on the London Stock Exchange and the approval of the Court, the net amount standing to the credit of the share premium account of the Company immediately following completion of the First Issue be cancelled and transferred to a special distributable reserve. Following approval by the Court, the cancellation became effective on 23 March 2016 and an amount of £64,671,250 was transferred to the above Special reserve at that time.

The Special reserve may be used to fund dividend payments.

18. SUBSEQUENT EVENTS

The Company appointed Ms June Aitken and Mr Craig Cleland to the Board with effect from 1 February 2022.

Following the Company's year-end, Sanne Group plc acquired the PraxisIFM Funds Business and subsequently the name of the Company's Administrator and Company Secretary changed from PraxisIFM Fund Services (UK) Limited to Sanne Fund Services (UK) Limited.

ALTERNATIVE PERFORMANCE MEASURES ("APM")

Discount (APM)

The amount, expressed as a percentage, by which the share price is less than the Net Asset Value per share.

As at 31 October 2021

NAV per Ordinary Share (pence)

a

165.4

Share price (pence)

b

154.0

Discount

(b÷a)-1

6.9%

As at 31 October 2020

NAV per Ordinary Share (pence)

a

136.8

Share price (pence)

b

119.5

Discount

(b÷a)-1

12.6%

Gearing (APM)

A way to magnify income and capital returns, but which can also magnify losses. A bank loan is a common method of gearing.

As at 31 October 2021

£'000

CFD notional market value*

a

44,055

Non-base cash borrowings**

b

2,914

NAV

c

222,870

Gearing (net)

((a+b)/c)

21.1%

As at 31 October 2020

£'000

CFD notional market value*

36,183

Non-base cash borrowings**

1,893

NAV

184,360

Gearing (net)

20.7%

* CFD positions in underlying asset value **Non-base cash borrowings represents borrowings in Yen.

Leverage (APM)

An alternative word for "Gearing". Under AIFMD, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions. Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company's positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other.

As at 31 October 2021			Gross £'000	Commitment £'000
Security market value		a	220,271	220,271
CFD notional market value		b	44,055	44,055
Cash and cash equivalents*		c	3,338	45
NAV		d	222,870	222,870
Leverage		(a+b+c)/d	120%	119%

As at 31 October 2020									Gross £'000		Commitment £'000
Security market value							a		180,927		180,927
CFD notional market value							b		36,183		36,183
Cash and cash equivalents*							c		1,385		2,653
NAV							d		184,360		184,360
Leverage							(a+b+c)/d		119%		119%
*Cash and cash equivalents represent gross overdraft and net overdraft with Northern Trust
Ongoing charges (APM)			A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company.
Year end 31 October 2021
Average NAV						a		211,514,855
Annual expenses						b		2,225,000
Ongoing charges						(b÷a)		1.05%
Year end 31 October 2020
Average NAV							a		190,442,282
Annual expenses							b		1,981,000
Ongoing charges							(b÷a)		1.04%
Total return (APM)			A measure of performance that takes into account both income and capital returns.
Year end 31 October 2021						Share price		Cum-income NAV
Opening at 1 November 2020 (in pence)				a		119.5		136.8
Closing at 31 October 2021 (in pence)				b		154.0		165.4
Price movement (b÷a)-1				c		28.9%		20.9%
Dividend reinvestment*				d		3.8%		3.4%
Total return				(c+d)		32.7%		24.3%
Year end 31 October 2020					Share price		Cum-income NAV
Opening at 1 November 2019 (in pence)					150.0		158.9
Closing at 31 October 2020 (in pence)					119.5		136.8
Price movement (b÷a)-1					-20.3%		-13.9%
Dividend reinvestment*					3.0%		2.8%
Total return					-17.3%		-11.1%
* The dividend reinvestment is calculated on the assumption that dividends paid out by the Company are reinvested into the shares of the Company at NAV at the ex-dividend date.

THE SECURITIES FINANCING TRANSACTIONS REGULATION (UNAUDITED)

The Securities Financing Transactions Regulation ("SFTR") came into effect on 12 January 2016. Article 13 requires information to be provided as to the use of securities financing transactions (SFTs) and total return swaps (TRS).

A Securities Financing Transaction ("SFT") is defined as per Article 3 (11) of the SFTR as:

· a repurchase transaction;

· securities or commodities lending and securities or commodities borrowing;

· a buy-sell back transaction or sell-buy back transaction; or

· a margin lending transaction.

As at 31 October 2021 the Company held the following types of SFTs:

None (2020: None)

As at 31 October 2021 the Company held the following types of Total Return Swaps:

Contracts for Difference (2020: Same)

The amount of securities and commodities on loan as a proportion of total lendable assets (excluding cash and cash equivalents) was 0% as at 31 October 2021 (2020: 0%).

GLOBAL DATA:

Type of Asset	Absolute Amount (£'000)	Proportion of AUM (%)
Security lending	0	0
Repo	0	0
Total return swap	44,055	16.7%

CONCENTRATION DATA:

The largest collateral issuer across all SFTs and Total Return Swaps is as follows:

	Collateral Issuers	Volume of the collateral securities and commodities (£'000)
1	JPY Cash Collateral	424

The top counterparties across all SFTs and Total Return Swaps is as follows:

	Counterparty	Gross volume of outstanding trades (£'000)
1	Morgan Stanley & Co Intl Plc	44,350

AGGREGATE TRANSACTION DATA:

	Type of collateral	Quality	Currency	Maturity tenor  (collateral)	Maturity tenor (SFTs/Total Return Swaps)	Country of counterparty establishment (not collateral)	Settlement and clearing
Total Return Swap
Morgan Stanley & Co Intl Plc	Cash	High	JPY	<1 Day	>1yr	UK	Bilateral
Macquarie Bank Limited	Cash	High	JPY	<1 Day	>1yr	Australia	Bilateral

REUSE OF COLLATERAL:

The share of collateral that is reused is 0%, this is in comparison to the maximum of 0% as expressed in the prospectus.

The cash collateral reinvestment returns to the company were 0.

SAFEKEEPING - Collateral Received:

Custodian	Collateral assets safe-kept (£'000)
Northern Trust Investor Services Limited (prior to 27 November 2021, Northern Trust Global Services SE)	424

SAFEKEEPING - Collateral Granted:

The proportion of collateral held in segregated accounts, in pooled accounts or any other accounts is 100%.

RETURN/COSTS:

	Cost (£'000)	Absolute Returns (£'000)	% overall returns of Transaction Type
Alternative Investment Fund:
Total Return Swaps	(197)	9,132	100
Manager of the Alternative Investment Fund:	0	0	0
Third parties:	0	0	0

COMPANY INFORMATION

DIRECTORS, INVESTMENT MANAGER AND ADVISERS

DIRECTORS Harry Wells (Chairman) Kate Cornish-Bowden (Audit Chair) John Scott Peter Wolton June Aitken** Craig Cleland**	INVESTMENT MANAGER Coupland Cardiff Asset Management LLP 31-32 St James's Street London SW1A 1HD Website - www.couplandcardiff.com
BROKER Peel Hunt LLP 100 Liverpool Street London EC2M 2AT	REGISTERED OFFICE* 6th Floor, 125 London Wall London EC2Y 5AS
DEPOSITARY AND CUSTODIAN Northern Trust Investor Services Limited 50 Bank Street London E14 5NT	COMPANY SECRETARY AND ADMINISTRATOR Sanne Fund Services (UK) Limited 6th Floor, 125 London Wall London EC2Y 5AS Website - www.sannegroup.com
REGISTRAR Link Group 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL	AUDITOR Ernst & Young LLP 144 Morrison Street Edinburgh EH38EX
LEGAL ADVISER Stephenson Harwood LLP 1 Finsbury Circus, London EC2M 7SH

COMPANY SECURITY INFORMATION AND IDENTIFICATION CODES

WEBSITE	www.ccjapanincomeandgrowthtrust.com
ISIN	GB00BYSRMH16 (Ordinary Shares) / GB00BM90B010 (Subscription Shares)
SEDOL	BYSRMH1 (Ordinary Shares) / BM90B01 (Subscription Shares)
BLOOMBERG TICKER	CCJI LDN (Ordinary Shares) / CCJS LDN (Subscription Shares)
LEGAL ENTITY IDENTIFIER (LEI)	549 300 FZANMYIORK 1K98
GLOBAL INTERMEDIARY IDENTIFICATION NUMBER (GIIN)	6 HEK HT - 99 999 -SL - 826

* Registered in England no. 9845783

**Appointed to the Board on 1 February 2022

ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 22 March 2022 at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH. Investment Manager, Richard Aston, will provide an update on the investments and take questions after the formal business of the meeting. Members of the Board, will also be available to discuss the Company.

11 February 2022

Secretary and registered office:

Sanne Fund Services (UK) Limited

6th Floor, 125 London Wall

London

EC2Y 5AS

For further information contact:

Sanne Fund Services (UK) Limited

Tel: [phone]

END

 

END

 

 

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