Final Results

CC Japan Income & Growth Trust PLC

25 January 2024

 

CC JAPAN INCOME & GROWTH TRUST PLC
LEI:  549300FZANMYIORK1K98

ANNUAL FINANCIAL REPORT ANNOUNCEMENT

INVESTMENT OBJECTIVE, FINANCIAL INFORMATION AND PERFORMANCE SUMMARY

INVESTMENT OBJECTIVE
The investment objective of the CC Japan Income & Growth Trust Plc (the "Company" or "CCJI") 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  31 October  2023	As at  31 October  2022
Net assets (millions)	£235.1m	£203.6m
Net asset value ("NAV") per Ordinary Share ("Share")1	174.5p	151.1p
Share price	162.5p	138.8p
Share price discount to NAV2	6.9%	8.1%
Transferable Subscription Share price	n/a	0.53p
Ongoing charges2	1.06%	1.06%
Gearing (net)2	21.2%	20.9%
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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 for the year ended 31 October 2023 ("Annual Report"), which will be made available on the Company's website at www.ccjapanincomeandgrowthtrust.com.

PERFORMANCE SUMMARY

	For the year to  31 October  2023  % change1	For the year to  31 October  2022  % change1
NAV ex-income total return per Share2	+19.3%	-6.3%
NAV cum-income total return per Share2	+18.9%	-5.9%
Share price total return2	+20.9%	-7.1%
Tokyo Stock Exchange Price Index ("TOPIX") total return	+12.0%	-9.5%
Revenue return per Share	5.37p	5.14p
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Dividends per share:
First interim dividend	1.55p	1.40p
Second interim dividend	3.75p	3.50p
	--------------	--------------
Total dividends per Share for the year	5.30p	4.90p
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1     Total returns are stated in sterling, including dividends reinvested.

2     These are APMs.

Source: Chikara Investments LLP - The Company's Factsheet October 2023.

CCJI ANNUAL PERFORMANCE SUMMARY

Year to October unless otherwise stated	Launch to  Oct 2016*	2017	2018	2019	2020	2021	2022	2023
Share price (p)	122.40	152.00	153.00	150.00	119.50	154.00	138.75	162.50
Share price total return (%)	+23.5	+27.2	+2.8	+0.7	-17.3	+32.7	-7.1	+20.9
NAV per Share (p)	123.90	146.00	148.60	158.90	136.80	165.40	151.09	174.50
NAV (cum-income) total return per Share (%)	+24.9	+20.7	+4.1	+9.9	-11.1	+24.3	-5.9	+18.9
TOPIX Index total return in sterling (%)	+32.7	+10.1	-0.4	+7.2	+0.3	+11.9	-9.5	+12.0
Revenue return per Share (Undiluted) (p)	3.60	4.06	4.55	5.26	5.04	4.75	5.14	5.37
Dividends per Share (p)	3.00	3.45	3.75	4.50	4.60	4.75	4.90	5.30**
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*     Period from the Company's launch on 15 December 2015 to 31 October 2016.

**    Includes second interim dividend of 3.75p for the year ended 31 October 2023.

CHAIRMAN'S STATEMENT

Performance Review
I am delighted to report a year of strong performance to 31 October 2023. The Net Asset Value ("NAV") total return of the Company which includes income, increased by 18.9% in sterling terms. The Share price, again measured by total return, rose 20.9%. This represents significant outperformance against the TOPIX Total Return Index, which rose 12.0% in sterling terms during the year.

Since launch in December 2015 until the recent financial year end, the Company's NAV total return, including dividend distributions, recorded a 117.4% increase, continuing to outperform the sterling adjusted TOPIX total return index, which rose 77.0%. Over the same period, the Share price total return in sterling has doubled. An aggregate of 30.5 pence of dividends per Share has been paid to Ordinary Shareholders since inception. Our long-term track record and relative performance against the AIC Japan investment trust peer group remains robust. This underscores the validity of our investment mandate which seeks dividend income combined with capital growth.

Our investment manager, Richard Aston, has had to navigate another challenging year with an uncertain geopolitical situation, not least the fallout from wars on two fronts. Nevertheless, the Japanese stock market has rebounded after a lacklustre calendar year in 2022 with the Topix rising 21.9% in local currency terms in the first 10 months of 2023. This has been offset by the weakness of the yen which has fallen by 13.6% against the US dollar over the same period and 14.0% against sterling. This reflects the continuing disparity between the ongoing accommodative monetary policy by the Bank of Japan ("BOJ") as distinct from rising interest rates and tighter policy agendas pursued by most other Central Banks, including the Federal Reserve in the United States.

Richard Aston and his team have handled the market volatility with great discipline by retaining focus within the scope of the investment mandate which seeks total return. They have identified and captured opportunities arising from the post Covid reopening of the Japanese domestic economy with adroit portfolio positioning notably by being overweight in financials as the sector recovered. The team had a notable success with Socionext participating in a Japanese IPO for the first time. Our manager's aim is to find companies with solid growth prospects, improving cash flow and dividends. They deservedly picked up the Citywire award in November 2023 for best performing Japanese equity investment trust.

Change of investment manager name
On 1 August 2023, Coupland Cardiff Asset Management LLP, the Company's Alternative Investment Fund Manager ("AIFM") announced that they were changing their name to Chikara Investments LLP ("Chikara"). There are no plans at present to change the name of this Company. Chikara is broadening their product range with the arrival of the well-regarded Emerging Markets team from Stewart Investors. It is hoped that this will raise both Chikara and your Company's profile.

Growing the Company
Although the Ordinary Share price discount to NAV has narrowed slightly to 6.9% at the year end (31 October 2022: 8.1%), we are not able to issue any more shares until we regain our premium rating. The Board continues to monitor the share price rating and the level of discount and has the flexibility to buy back shares through the authority renewed by Shareholder Resolution at the Annual General Meeting ("AGM").  

As I reported in the interim statement, it was unfortunate that The Transferable Subscription Shares ("TSS") expired worthless on the last business day of February 2023. Indeed, we might have raised up to £40 million with a little more time. It is ironic that within a fairly short period the TSS would have been "in the money" with the Ordinary shares comfortably cresting the Subscription price of £1.61. The scheme is unlikely to be repeated in the near future.

Other options to grow the company include merger and acquisition given a marked pickup in activity reflecting an increased trend of consolidation within the investment trust industry not least the Japanese sectors. The Board remains alert to any opportunities that could arise which could be incremental to our market capitalisation.

The investment trust industry continues to face regulatory pressures. The PRIIPS and Key Information Document ("KID") cost disclosure requirements give a misleading reading by including transactional and finance expenses, integral to operations, rather than just ongoing costs (i.e., investment management fees) and compare unfavourably with the disclosure required by open ended funds. There is ongoing scrutiny of this problem by the FCA but so far little traction to resolve the issue despite pressure from the industry and Association of Investment Companies ("AIC"). Although investment trusts are not directly in the scope of the new Consumer Duty regulations, there may be unintended consequences potentially deterring investor appetite not only on the basis of fallacious cost comparisons but also mitigating against those trusts trading at significant discounts.

The Board continues to invest in various marketing initiatives to raise the profile of the Company by way of webinars hosted by third parties and continue to update our website, which you can visit at: https://ccjapanincomeandgrowthtrust.com.

Our Broker and Investment Manager organise regular schedules of meetings with wealth managers, institutions and platforms, besides major Shareholders, which continue to raise the profile and awareness of our differentiated total return mandate.

Income and Dividends
For the year to 31 October 2023, the revenue return increased by 4.5% to 5.37p per Ordinary Share. The underlying trend of Japanese dividend growth remains intact despite the weakness of the yen. We translate dividend income into sterling on receipt. In accordance with our investment policy we do not hedge currency.

We are maintaining our policy of paying a second interim dividend in substitution for a final dividend. Therefore, on the 19 January 2024, the Board  declared a second interim dividend of 3.75p per Ordinary Share, making a full year distribution of 5.30p per Ordinary Share and representing an 8.2% increase over last year. This will be paid on 1 March 2024 to those Shareholders on the register as at 2 February 2024 with an ex-date of 1 February 2024.

While the Board is committed to growing the dividend, it considers it prudent to continue to build the revenue reserve which now represents 40% of this year's distribution after the payment of the second interim dividend. As we have previously reminded Shareholders, the Company has a Special Reserve of £64.7 million available for distribution in circumstances where there is an unforeseen revenue shortfall.

This is the eighth year of dividend increase for the Company with the annual dividend increasing by 76.7% since launch in December 2015. We currently pay a dividend yield of around 3% out of covered income. Investors looking for equity income can continue to look to Japan.

Annual General Meeting ("AGM")
In line with the requirements of the Companies Act 2006, the Company will hold an 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 5 March 2024 at 12 noon at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH. Our Investment Manager, Richard Aston, will provide an update on the portfolio and take questions after the formal business of the meeting. The Board will also be available to meet Shareholders and 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. 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.

Outlook
Despite decent returns over the last decade, the Japanese equity market remains undervalued. The earnings yield dwarfs the negative return from cash. The Government and The Tokyo Stock Exchange are committed to cleaning up capital inefficiencies and boosting returns on equity. Companies are being forced to change their behaviour. TOPIX listed companies are still sitting on considerable amounts of cash estimated at the yen equivalent of over US $1 trillion. This should steadily be reduced through increasing shareholder distributions, share buy backs, management buyouts ("MBOs") and private equity deals. The recent rationalisation of cross holdings and subsidiaries by the influential Toyota group and the gathering pace of MBOs executed at significant premiums to existing share prices are examples. The drive for efficiency is complemented by PM Kishida's efforts to mobilise a shift in the mountain of household savings and domestic institutional funds into income generating assets including equities. The recent doubling of NISA allowances, Japan's equivalent of the UK ISA, is one such initiative to encourage savings into the stock market. It remains to be seen whether the inevitable but gradual steps towards normalisation of monetary policy as a corollary of inflation serve to stimulate equity investment flows. For now, BOJ monetary policy remains uniquely accommodating compared to other major Central Banks.

Deflation in Japan has at last given way to some inflation. Wage growth should help the consumer. Tourism is picking up. Reshoring manufacturing capacity has seen a recovery in capital expenditure. The weakness of the yen is an export opportunity. Forecasts for corporate earnings growth are healthy with an estimated growth of at least 7.5% for both 2024 and 2025. These virtuous developments will benefit further from any recovery of the world economy and improvement in global political tensions. The risks of widening conflict in the Middle East quite apart from tensions over Taiwan and Korea are apparent. The recent earthquake also reminds us that Japan is susceptible to natural disasters. That aside, most commentators believe that the USA is heading for a soft landing rather than a deep recession. World equity markets tend to take a lead from the policy actions of the US Federal Reserve, but Japanese equities now stand out on their own merits. Our mandate is well placed to continue to provide solid total returns and the Board has every confidence in Richard Aston and the team at Chikara to keep producing them.

Board Composition
Following a search carried out by Cornforth Consulting, we are pleased to welcome John Charlton-Jones to the Board. John was appointed as a Director on 1 October 2023. John has had a 36-year career as a Japanese equities' stockbroker recently retiring from CLSA where he headed up the institutional sales desk in London. John possesses a formidable knowledge of many facets of Japan and will stand for election at this year's AGM.

Peter Wolton retired from the Board on 10 October 2023 after serving as Senior Independent Director since launch. On behalf of the Board and Shareholders, I would like to thank Peter for his valuable service, support and contributions over the first 8 years of the Company's life.

As the remaining founder Director, I am retiring at this year's AGM and June Aitken will succeed me as Chair. I am sure that the Company will be in sound hands under her stewardship, supported by an experienced and professional Board. Craig Cleland will take over from June as the Senior Independent Director. The Board will initially revert to its original complement of four directors.

One summer's day back in 2015, conversations with Richard Cardiff in a Wiltshire pub, led to the creation of the Company. Coupland Cardiff, as Chikara were then, had astutely identified a very different investment approach to Japan targeting the potential of total return-growth with income - which still presents a compelling proposition. We were the first Japanese investment trust to launch for 25 years. It is gratifying to have been part of the project. Our original Shareholders are now enjoying more than a 5% yield on their book cost. I would like to thank all those involved, particularly the Board members past and present, for all their efforts and support. Hopefully, this is just the beginning of a new dawn for a Japanese market renaissance.

Harry Wells
Chairman
24 January 2024

INVESTMENT MANAGER'S REPORT

Performance Review
The Net Asset Value cum-income of the CC Japan Income & Growth Trust rose by 18.9% in sterling terms in the twelve-month period to 31 October 2023. The Topix Total Return Index recorded a rise of 19.8% in yen terms, but the sterling returns were negatively affected by the 8.1% depreciation of the yen against the British Pound with the exchange rate falling from Y170.5/GBP to Y184.4/GBP. This performance continues the strong record of total return since inception.

It is not unusual for global developments to have a significant impact on the Japanese economy and its stock market, and this has been particularly evident during the last twelve months. Over this period, the Japanese economy has been less synchronised with its overseas counterparts than in recent years, due to the later removal of the domestic Covid advisory procedures at the end of January 2023 and the lifting of restrictions on international visitors in May 2023. However, the investment landscape for all assets has been dominated by the post pandemic re-emergence of inflation and associated response from Central Banks around the world. Rising political tensions globally as well as environmental concerns and the development of new technologies have also featured as prominent investment considerations, affecting the performance of individual companies and the dynamics of whole industries, and we anticipate that each of these will continue to be relevant going forward.

The Japanese equity market performed strongly in the twelve months to the end of October 2023. The portfolio was able to improve on the market's overall performance. The standout performer has been the holding in Socionext in which a holding was established during the company's Initial Public Offering in October 2022. For a number of years, we have been unable to identify attractive investment opportunities suitable for this mandate in an increasingly buoyant new listings market in Japan. However, Socionext, which was formed through the merger of system LSI (large-scale integration) businesses of leading Japanese semiconductor manufacturers, Fujitsu and Panasonic, listed on the Tokyo Stock Exchange Prime Market with the growth potential and the financial attributes required by the investment process. The newly listed shares performed well as the company exceeded initial operational performance expectations and its system on a chip (SoC) technology platform became increasingly appreciated for its potential in the area of Artificial Intelligence (AI).

April 2023 saw the retirement as Governor of the Bank of Japan of Haruhiko Kuroda, the architect of the experimental easy monetary policy that has made an important contribution to taming deflation in Japan. Before his departure, in December 2022 he announced the first signs of a reversal of the progressively easier policies introduced over the last 10 years. By expanding the range of yields tolerated under the policy known as Yield Curve Control (YCC), he paved the way for his successor, Kazuo Ueda, to steadily adjust monetary policy towards more normal conditions. This has had a favourable impact on the share price performance of companies in the financial industry. Leading banks Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group, which have been long standing holdings in the portfolio on the basis of the steadily improving business performance and returns to shareholders, received a significant boost to their share prices. Other financial company stocks such as SBI Holdings (broad range of financial services) and JACCS (consumer credit) also performed strongly.

Despite the uncertain economic outlook, some of the top performing sectors over the past twelve months have included cyclical beneficiaries such as iron and steel, marine transportation, construction and automobiles. These are industries where this portfolio has little exposure as the key attributes of the investment strategy - long-term growth and consistent returns to shareholders - are not evident in their past performance, or likely in the future under current operating conditions. While it can be frustrating at times to observe share price rallies in the sectors in which the exposure in the Company is low or non-existent, it is an integral discipline of the process that we believe is important in generating the long-term track record of dividend progression and total return.

At an individual stock level, it is disappointing to have experienced the underperformance of Dip (internet job recruitment services) and Carta Holdings (internet advertising). While both companies have reiterated their commitment to shareholders through consistent dividends and share buybacks, it is apparent that corporate spending on business services has temporarily weakened as consumer facing companies contemplate strategies to pass on higher costs. These two companies remain leaders in their sector and can be expected to recover as corporate Japan adapts to the end of deflation.

Portfolio Positioning
We believe there is a growing recognition of the importance of compound returns in Japan and, with this, increasing opportunities for investment as corporate management identify strategies to enhance corporate value. We continue to focus on those that offer the prospect of long-term business growth, accompanied by rising returns to shareholders, as opposed to those where the benefit from one-off capital events such as asset disposal or large share buyback will reap only short-term reward.

Changing corporate attitudes and equity market volatility continue to create many new and interesting investment candidates for us. For example, over the past twelve months new holdings have been established in JACCS, En-Japan and Mani, three quite diverse companies.

JACCS is an affiliate of Japan's largest bank Mitsubishi UFJ Financial Group. It is well established as one of the leading consumer credit companies in Japan offering revolving credit, rent guarantees and payment settlements amongst a range of services which have been successfully expanding in selective countries around Asia. Their most recent Mid-term Plan highlights the management's intent to optimize these growth opportunities, financial soundness and returns to shareholders through stable and continuous dividend payments.

En-Japan, which provides online recruitment and staffing services, has announced an interesting investment plan for areas of the labour market that will benefit from Prime Minister Kishida's initiative to improve job mobility. This will limit the potential for short-term earnings growth, but investors will be compensated for their patience by a stable dividend until the rapid growth anticipated by these new business opportunities is reflected in a commensurate rise in the distribution to shareholders.

Mani is a global high precision manufacturer of niche medical equipment used in surgical and dental procedures. The company has been extremely successful in establishing its products as the premium devices in parts of Asia and is seeking to replicate this further with India and North America offering strong potential markets. Complementing the anticipated growth and healthy balance sheet is an attractive dividend distribution policy.

The prospect of rising interest rates has lowered the appeal of real estate investment trusts ("REITS") and the weighting in these specialist investment products has been reduced to zero for the first time since the Trust was established with the disposal of Industrial and Infrastructure REIT and Star Asia REIT. The holding in Intage was sold following a partial takeover offer from NTT DoCoMo, Japan's leading mobile phone operator. Other disposals have included Fujitec and TRE Holdings where progress towards each company's business objectives has been disappointing.

Outlook
We believe the prospects for Japanese equities remain favourable following a year of strong performance. The emergence of inflation in Japan is a new dynamic for companies and investors to address. The consequences are likely to lead to many potentially positive responses over the medium term. Central to this will be the efforts that Prime Minister Kishida will make with his key policy initiatives to increase job mobility and wage levels, and also to double the income generated from the vast pool of personal savings. Of particular note is the revamped Nippon Individual Saving Account (NISA) programme which will be relaunched at the beginning of 2024, offering more flexibility in investment approach, the potential for larger annual savings amounts and a perpetual tax exemption period. Given the emergence of inflation and rising lifespans, this new system corresponds to the growing need for individuals to take more financial responsibility through better long-term management of retirement savings.

Bearing that in mind, it seems more than just a coincidence that in early 2023, the Tokyo Stock Exchange announced major initiatives to support the considerable progress in corporate governance seen in Japan since the Stewardship Code and Corporate Governance Code were first introduced in 2014 and 2015 respectively. The need for identification of the relevant cost of capital for each business and requiring management efforts consistent with an improvement in corporate value is becoming widely acknowledged. Indeed, this is already being cited by companies seeking to improve capital efficiencies, for example, by reducing cross-shareholdings or raising shareholder returns. We believe that the ongoing progress in corporate governance reform has been instrumental for the strong performance of the Japanese equity market not only over the last twelve months, but really over the last decade. We believe that these improvements in corporate focus will continue in the coming years and will be reflected in favourable total returns for both domestic and international investors.

RICHARD ASTON
Chikara Investments LLP
24 January 2024

TOP TEN HOLDINGS

Mitsubishi UFJ Financial Group Inc         7.0%
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, most prominently in Asia and North America. This includes an alliance and 20% stake in Morgan Stanley entered into in 2008. The company continues to promote a balanced capital management policy maintaining a strong capital base, appropriate allocations to strategic growth opportunities and enhancing shareholder returns.

Sumitomo Mitsui Financial Group inc    6.7%
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 disciplined investment and alliances, sound finances and progressive shareholder returns.

Nippon Telegraph & Telephone corp    4.3%
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 consolidation of mobile telephone subsidiary NTT DoCoMo and cost cutting initiatives that enhance the earnings growth and potential for further returns to shareholders.

Itochu Corp              4.1%
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 increasing returns to shareholders in the form of dividend and share buybacks.

Shin-Etsu Chemical co ltd            3.8%
Shin Etsu Chemical is a manufacturer with top global market share in PVC, semiconductor silicon wafers and a number of other semiconductor related and functional materials. The company established a global production base and developed a list of top tier international customers, which has allowed it to generate a strong track record of growth despite underlying volatility in individual markets. The company has, in recent years, given greater attention to shareholder returns within their capital policy, giving emphasis on stability and progression.

SBI Holdings inc      3.5%
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.

Sompo Holdings inc           3.5%
Sompo Holdings is a financial holding company which operates a leading domestic property and casualty insurance business as well as life insurance and healthcare operations in Japan. It has also established an international presence to increase scale and diversification alongside initiatives to improve corporate and capital efficiency, and improve shareholder returns.

Hitachi Ltd                3.4%
Hitachi Ltd is a globally recognised manufacturer of industrial equipment and developer of software covering a broad range of industries including Information Technology, Energy, Automotive, Transportation and Consumer Electronics. After restructuring the business operations, management has emphasised capital efficiency and improving shareholder returns.

Softbank Corp        3.4%
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 e-commerce leader Yahoo Japan, online fashion retailer Zozo, social network Line and electronic payment service PayPay.

Noevir holding corp          3.1%
Noevir is a leading domestic manufacturer of cosmetics, specialising in skincare and makeup products, as well as OTC pharmaceuticals and health foods. The company focuses on specific categories in the Japanese market where it continues to gain market share and seeks incremental growth from markets overseas and duty-free sales. It aims to deliver a stable and continuous dividend as the primary source of return to their shareholders and has increased the annual distribution for the last 12 consecutive years.

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 £7,241,000 (2022: £6,930,000). In August 2023, the Company paid an interim dividend of 1.55p (2022: 1.40p) per Ordinary Share. On 19 January 2024, the Directors declared a second interim dividend for the year ended 31 October 2023 of 3.75p (2022: 3.50p) per Ordinary Share, which will be paid on 1 March 2024 to Shareholders on the register at 2 February 2024. Therefore, the total dividend in respect of the financial year to 31 October 2023 will be 5.30p (2022: 4.90p) per Ordinary Share.

The Company made a capital gain after tax of £31,099,000 (2022: loss of £19,818,000). The total return, including income, after tax for the year was a gain of £38,340,000 (2022: loss of £12,888,000).

The Company's Purpose, Values and Culture
The primary focus of the Company is to provide Shareholders with dividend income combined with capital growth, mainly through investment in equities listed or quoted 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 Chikara Investments 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 the provision of services.

To ensure that the Company's purpose, values, strategy and culture are aligned, the Board comprises independent Non-Executive Directors, 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 on the Board's engagement with Stakeholders, please refer to the Company's section 172 statement in the Annual Report.

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 2023 increased by 18.9% (2022: -5.9%) in sterling terms, and the NAV total return from the Company's inception in December 2015 to 31 October 2023 increased by 117.4%.

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 5.37p (2022: 5.14p). The Company's proposed total dividend payable in respect of the year ended 31 October 2023, including an interim dividend of 1.55p per Ordinary Share paid on 4 August 2023 and a second interim dividend of 3.75p payable on 1 March 2024 is 5.30p (2022: 4.90p) 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 2023 (2022: 8.1% discount).

(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 2023, the Company's ongoing charges figure calculated in accordance with the AIC methodology was 1.06% (2022: 1.06%).

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 good corporate 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, 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 2023, the Company had five Directors, comprising three males (60%) and two females (40%). On 1 October 2023, John Charlton-Jones joined the Board, bringing with him additional experience and skills. Peter Wolton, having served on the Board since launch in December 2015, stepped down as a Non-Executive Director on 10 October 2023. Biographical details can be found in the Annual Report. As part of the recruitment process, the Board was, and continues to be, mindful of the Company's policy on diversity which is contained in the Corporate Governance statement.

Anti-bribery, Corruption and Tax Evasion
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, corruption or tax evasion; and has adopted the same standard of zero tolerance.

Viability Statement
The Directors have assessed the viability of the Company for the period until 31 October 2028 (the "Period'') taking into account the long-term nature of the Company's investment strategy and the principal risks and emerging risks. 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.

In their assessment of the prospects of the Company, the Directors have considered each of the principal and emerging risks and uncertainties 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 securities which can be readily realised and 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 that can be realised 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. 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.

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.

The continuation of the Company is subject to approval by Shareholders every three years with the next continuation vote due to be held at the AGM in 2025.

This assessment takes into account the impact that higher levels of global inflation are having on portfolio companies and the investment environment 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.

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 three categories: strategic and business risk, financial and 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.

During the year under review the Committee was particularly concerned with geopolitical risk following the outbreak of war in Gaza and Israel, in addition to the ongoing conflict in the Ukraine, and the political tension between the US and China.

High levels of inflation globally, continued uncertainty concerning the level of interest rates and the threat of recession have led to investors being more risk averse and generally shunning equities. In this scenario, Japan with its exceptionally low interest rates has outperformed most global markets, but the weakness of the Japanese yen against the British pound has impacted the Company's revenue receipts.

The Committee continues to review the processes in place to mitigate risk; and to ensure that these are appropriate and proportionate in the current market environment. 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.

The Company's ability to operate as a going concern and the Company's longer-term viability can be found in the Annual Report.

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 Company's Share price may not always reflect underlying net asset value.	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, and receives reports on the composition of the portfolio, any recent sales and purchases, and expectations of dividend income. The Management Engagement Committee Reviews the appointment of the investment manager on an annual basis. The Board monitors the share price discount to NAV and has authority to buy back shares.				↔
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, foreign exchange rates and employment, unpredictable factors such as natural disasters, earthquakes and diplomatic events may impact market risk.	The Directors acknowledge that market risk is inherent in the investment process. The Company maintains a diversified portfolio of quoted investments. The Board reviews the impact of economic indicators on the portfolio with the Investment Manager at every Board meeting. 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 in normal circumstances. 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. The Company's policy is not to hedge against any foreign currency movements. Income received from investee companies is translated into sterling on receipt.				↔
Geopolitical Risk War and conflict can impact investor confidence and threaten global economic growth. Geopolitical instability in the region may increase volatility, reduce economic growth, and affect the prospects of the companies in the portfolio.	The Board discusses the impact of geopolitics on the portfolio with the Investment Manager at every Board meeting. The increased geopolitical tension between the US and China is both an opportunity and a threat for Japan. The portfolio is comprised of listed, liquid, realisable securities, which could be sold in the event of a significant deterioration in global political stability. 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. The Manager's emphasis on companies which can pay sustainable dividends has helped alleviate the impact.				↑
Excess leverage The Company uses 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. The gearing is achieved using derivatives in the form of Contracts for Difference (CFDs). Further information on financial instruments and risk can be found in note 16 to the Financial Statements.				↔
Cyber Risk/Fraud Cybercrime or fraud could impact any of the Company's service providers; the Investment Manager, the Depositary or the Administrator. Business interruption could mean service providers are unable to meet their contractual obligations or that information is late, misleading or inaccurate. Increasing geopolitical turbulence and the use of artificial intelligence has increased the risk from cyber crime.	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. The Board monitors cyber security and certification of service providers.				↑
ESG and Climate Change Shareholders expectations are increasingly focused on sustainability and ESG factors. Potential reputational damage from non-compliance with regulations or incorrect disclosures could arise. Climate change leads to additional costs and risks for portfolio companies. These risks include operating conditions and reporting obligations. 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 Investment Manager's approach is to include ESG factors for consideration in the investment process, such as climate change, where they are relevant and may have a material impact on stock performance. Examples of responsible engagement are detailed in the Annual Report. Chikara Investments 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 is also a signatory to 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.				↔
			========	========	========

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 Directors are also responsible for preparing a Strategic Report, Director's Report, Directors' Remuneration Report and Corporate Governance Statement that comply with applicable laws and regulations.

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
24 January 2024

FINANCIAL STATEMENTS

INCOME STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2023

		Year ended  31 October 2023			Year ended  31 October 2022
	Note	Revenue  £'000	Capital  £'000	Total  £'000	Revenue  £'000	Capital  £'000	Total  £'000
Gains/(losses) on investments	3	-	32,435	32,435	-	(18,118)	(18,118)
Currency gains/(losses)		-	209	209	-	(209)	(209)
Income	4	9,283	-	9,283	8,878	-	8,878
Investment management fee	5	(343)	(1,372)	(1,715)	(327)	(1,306)	(1,633)
Other expenses	6	(715)	-	(715)	(664)	-	(664)
		---------------	---------------	---------------	---------------	---------------	---------------
Return on ordinary activities before finance costs and taxation		8,225	31,272	39,497	7,887	(19,633)	(11,746)
		========	========	========	========	========	========
Finance costs	7	(63)	(173)	(236)	(69)	(185)	(254)
		---------------	---------------	---------------	---------------	---------------	---------------
Return on ordinary activities before taxation		8,162	31,099	39,261	7,818	(19,818)	(12,000)
		========	========	========	========	========	========
Taxation	8	(921)	-	(921)	(888)	-	(888)
		---------------	---------------	---------------	---------------	---------------	---------------
Return on ordinary activities after taxation		7,241	31,099	38,340	6,930	(19,818)	(12,888)
		========	========	========	========	========	========
Return per Ordinary Share - undiluted	13	5.37p	23.08p	28.45p	5.14p	(14.71)p	(9.57)p
Return per Ordinary Share - diluted	13	5.37p	23.08p	28.45p	4.29p	(12.26)p	(7.97)p
		========	========	========	========	========	========

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 both 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. There was no dilution for the "Return per Ordinary Share - diluted" for the year ended 31 October 2023 (31 October 2022: dilution was due to the issuance of 26,946,122 Subscription Shares issued on 18 February 2021 and expired in February 2023).

The notes form part of these financial statements.

STATEMENT OF FINANCIAL POSITION AS AT 31 OCTOBER 2023

	Note	31 October  2023  £'000	31 October  2022  £'000
Fixed assets
Investments at fair value through profit or loss	3	231,987	199,642
		---------------	---------------
Current assets
Cash and cash equivalents		340	1,413
Cash collateral in respect of Contracts for Difference ("CFDs")		806	433
Amounts due in respect of CFDs		773	2,680
Other debtors	10	3,750	4,434
		---------------	---------------
		5,669	8,960
		========	========
Creditors: amounts falling due within one year
Cash collateral in respect of CFDs		(1,266)	-
Amounts payable in respect of CFDs		(738)	(2,780)
Other creditors	11	(534)	(2,240)
		---------------	---------------
		(2,538)	(5,020)
		========	========
Net current assets		3,131	3,940
		---------------	---------------
Total assets less current liabilities		235,118	203,582
		---------------	---------------
Net assets		235,118	203,582
		========	========
Capital and reserves
Share capital	12	1,348	1,348
Share premium		98,067	98,067
Special reserve		64,671	64,671
Capital reserve
- Revaluation gains on equity investments held at year end	3	24,636	5,841
- Other capital reserves		38,486	26,182
Revenue reserve		7,910	7,473
		---------------	---------------
Total Shareholders' funds		235,118	203,582
		========	========
NAV per share - Ordinary Shares - undiluted (pence)	14	174.51p	151.10p
NAV per share - Ordinary Shares - diluted (pence)	14	174.51p	152.75p
		========	========

Approved by the Board of Directors and authorised for issue on 24 January 2024 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.

The notes form part of these financial statements.

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 OCTOBER 2023

For the year ended 31 October 2023

	Note	Share  capital  £'000	Share  premium  £'000	Special  reserve  £'000	Capital  reserve  £'000	Revenue  reserve  £'000	Total  £'000
Balance at 1 November 2022		1,348	98,067	64,671	32,023	7,473	203,582
Return on ordinary activities after taxation		-	-	-	31,099	7,241	38,340
Dividends paid	9	-	-	-	-	(6,804)	(6,804)
		---------------	---------------	---------------	---------------	---------------	---------------
Balance at 31 October 2023		1,348	98,067	64,671	63,122	7,910	235,118
		========	========	========	========	========	========

For the year ended 31 October 2022

	Note	Share  capital  £'000	Share  premium  £'000	Special  reserve  £'000	Capital  reserve  £'000	Revenue  reserve  £'000	Total  £'000
Balance at 1 November 2021		1,348	98,067	64,671	51,841	6,943	222,870
Return on ordinary activities after taxation		-	-	-	(19,818)	6,930	(12,888)
Dividends paid	9	-	-	-	-	(6,400)	(6,400)
		---------------	---------------	---------------	---------------	---------------	---------------
Balance at 31 October 2022		1,348	98,067	64,671	32,023	7,473	203,582
		========	========	========	========	========	========

The Company's distributable reserves consist of the Special reserve, Revenue reserve and Capital reserve attributable to realised profits.

The notes form part of these financial statements.

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 OCTOBER 2023

	Year ended  31 October  2023  £'000	Year ended  31 October  2022  £'000
Operating activities cash flows
Return on ordinary activities before finance costs and taxation*	39,497	(11,746)
	---------------	---------------
Adjustment for:
(Gains)/losses on equity investments	(24,684)	18,106
Realised (gains)/losses on CFDs	(7,656)	184
Movement in CFD balances	758	(646)
Increase in other debtors	(500)	(6)
Increase in other creditors	19	3
Tax withheld on overseas income	(921)	(888)
	---------------	---------------
Net cash flow from operating activities	6,513	5,007
	========	========
Investing activities cash flows
Purchases of equity investments	(57,623)	(43,572)
Proceeds from sales of equity investments	49,413	46,864
Realised gains/(losses) on CFDs	7,656	(184)
	---------------	---------------
Net cash flow (used in)/from investing activities	(554)	3,108
	========	========
Financing activities cash flows
Equity dividends paid	(6,804)	(6,400)
Finance costs paid	(228)	(254)
	---------------	---------------
Net cash used in financing activities	(7,032)	(6,654)
	========	========
(Decrease)/increase in cash and cash equivalents	(1,073)	1,461
Cash and cash equivalents at the beginning of the year	1,413	(48)
	---------------	---------------
Cash and cash equivalents at the end of the year	340	1,413
	========	========

* *Inflow from dividends was £7,888,000 (2022: £8,038,000).

The notes form part of these financial statements.

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.

In 2021, the Company's 26,946,122 TSS were admitted to the London Stock Exchange with the ticker CCJS. The TSS expired at the end of February 2023.

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 July 2022 and the Companies Act 2006. The financial statements have been prepared on a 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's continuation vote was passed at the AGM in 2022 and will next put forward a vote for its continuation at the AGM in 2025.

The financial statements have been prepared on a going concern basis. In forming this opinion, the Directors have considered any potential impact of war in Ukraine and the Middle East; and the increase in geopolitical tension between the US and China, 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, continue to have in place to maintain operational resilience.

In reaching this conclusion, the Directors have also considered the liquidity of the Company's portfolio of investments as well as its cash position, income, and expense flows. The Company's net assets as at 31 October 2023 were £235.1 million (2022: £203.6 million). As at 31 October 2023, the Company held £232.0 million in quoted investments (2022: £199.6 million) and had cash of £0.3 million (2022: £1.4 million overdraft). The total expenses (excluding finance costs and taxation) for the year ended 31 October 2023 were £2.4 million (2022: £2.3 million), which represented approximately 1.06% (2022: 1.06%) of average net assets during the year. At the date of approval of this report, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover.

The Company's ability to continue as a going concern for the period assessed by the Directors, being the period to 31 January 2025 which is at least 12 months from the date the financial statements were authorised for issue.

The financial statements have been presented in 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.

In preparing these financial statements the Directors have considered the impact of ESG and climate change risk as an emerging risk as set out in the Annual Report and have concluded that while climate change impacts operating conditions of portfolio companies and increases obligations, it does not have a material impact on the value of the Company's investments. In line with FRS 102, investments are valued at fair value, which for the Company are quoted bid prices for investments in active markets at 31 October 2023 and therefore reflect market participants' view of climate change risk.

(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 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 classified by the Company as "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 transaction price, 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 are 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. The CFD balance is made up of transactions in relation to the underlying equity held by the Company, with the risks embedded in the CFDs disclosed in Note 16.

(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 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, 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.

(m) Reserves
Capital reserves
Profits/(losses) from selling investments and changes in fair value arising upon the revaluation of investments that remain in the portfolio are shown in the capital column of the Statement of Comprehensive Income and allocated to the capital reserve. Capital reserves attributable to realised profits are distributable.

Special distributable 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. This reserve is distributable.

Revenue reserves
The revenue reserve reflects all income and expenditure recognised in the revenue column of the income statement and is distributable by way of dividends.

Share premium
The Company's share premium is the excess of the issue price of the share over its nominal value on shares issued subsequent to the First Issue. The share premium is not available for distribution.

3. INVESTMENTS
(a) Summary of valuation

	As at  31 October 2023  £'000	As at  31 October 2022  £'000
Investments listed on a recognised overseas investment exchange	231,987	199,642
	---------------	---------------
	231,987	199,642
	========	========

(b) Movements
During the year ended 31 October 2023

	2023  £'000	2022  £'000
Book cost at the beginning of the year	193,801	193,643
Revaluation gains on non-derivative investments held at beginning of the year	5,841	26,628
	---------------	---------------
Valuation at beginning of the year	199,642	220,271
	========	========
Purchases at cost	55,890	45,505
Sales:
- proceeds	(48,229)	(48,028)
- gains on investment holdings sold during the year	5,889	2,681
Movements in revaluation gains/(losses) on investment held at year end	18,795	(20,787)
	---------------	---------------
Valuation at end of the year	231,987	199,642
	========	========
Book cost at end of the year	207,351	193,801
Revaluation gains on non-derivative investment held at year end	24,636	5,841
	---------------	---------------
Valuation at end of the year	231,987	199,642
	========	========

Transaction costs on investment purchases for the year ended 31 October 2023 amounted to £26,000 (2022: £17,000) and on investment sales for the year amounted to £22,000 (2022: £19,000).

The Company received £48,229,000 (2022: £48,028,000) from investments sold during the year. The book cost of these investments when they were purchased was £42,340,000 (2022: £45,347,000). 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 2023  £'000	Year ended  31 October 2022  £'000
Gains on non-derivative investment holdings sold during the year	5,889	2,681
Movements in revaluation gains/(losses) on investment held at year end	18,795	(20,787)
Other capital losses	(40)	(23)
	---------------	---------------
Total gains/(losses) on non-derivative investments held at fair value	24,644	(18,129)
	========	========
Realised gains/(losses) on CFD assets and liabilities	7,656	(184)
Unrealised gains on CFD assets and liabilities	135	195
	---------------	---------------
Total gains/(losses) on investments held at fair value	32,435	(18,118)
	========	========

4. INCOME

	Year ended  31 October 2023  £'000	Year ended  31 October 2022  £'000
Income from investments:
Overseas dividends	9,215	8,878
Deposit interest	68	-
	---------------	---------------
Total	9,283	8,878
	========	========

Overseas dividend income is translated into sterling on receipt.

5. INVESTMENT MANAGEMENT FEE

	Year ended  31 October 2023  £'000	Year ended  31 October 2022  £'000
Fee:
20% charged to revenue	343	327
80% charged to capital	1,372	1,306
	---------------	---------------
Total	1,715	1,633
	========	========

The Company's Investment Manager is Chikara Investments 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 2023  £'000	Year ended  31 October 2022  £'000
Secretarial services	48	48
Administration and other expenses	474	420
Auditor's remuneration - statutory audit services	37*	50
Directors' fees	156	146
	---------------	---------------
Other expenses - Revenue	715	664
	========	========

*     This excludes an additional £4,500 (excluding VAT) payable by Apex, the Company's Administrator for extra statutory audit work performed by the auditor.

7. FINANCE COSTS

	Year ended  31 October 2023  £'000	Year ended  31 October 2022  £'000
Interest paid - 100% charged to revenue	20	23
CFD finance cost and structuring fee - 20% charged to revenue	42	45
Structuring fees - 20% charged to revenue	1	1
	---------------	---------------
	63	69
	========	========
CFD finance cost and structuring fee - 80% charged to capital	169	181
Structuring fees - 80% charged to capital	4	4
	---------------	---------------
	173	185
	========	========
Total finance costs	236	254
	========	========

8. TAXATION

	Year ended 31 October 2023			Year ended 31 October 2022
	Revenue  £'000	Capital  £'000	Total  £'000	Revenue  £'000	Capital  £'000	Total  £'000
(a) Analysis of tax charge in the year:
Overseas withholding tax	921	-	921	888	-	888
	---------------	---------------	---------------	---------------	---------------	---------------
Total tax charge for the year (see note 8 (b))	921	-	921	888	-	888
	========	========	========	========	========	========

(b) Factors affecting the tax charge for the year:
The effective UK corporation tax rate for the year is 23.00% (2022: 19.00%). The tax charge for the Company differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The differences are explained below:

	Year ended 31 October 2023			Year ended 31 October 2022
	Revenue  £'000	Capital  £'000	Total  £'000	Revenue  £'000	Capital  £'000	Total  £'000
Total return before taxation	8,162	31,099	39,261	7,818	(19,818)	(12,000)
Effective UK corporation tax at 23.00% (2022: 19.00%)	1,877	7,153	9,030	1,485	(3,765)	(2,280)
Effects of:
Overseas withholding tax suffered	921	-	921	888	-	888
Non-taxable overseas dividends	(2,119)	-	(2,119)	(1,687)	-	(1,687)
Capital (gains)/losses not subject to tax	-	(7,509)	(7,509)	-	3,482	3,482
Finance costs not tax deductible	14	40	54	13	35	48
Movement in unutilised management expenses	228	316	544	189	248	437
	---------------	---------------	---------------	---------------	---------------	---------------
Total tax charge for the year	921	-	921	888	-	888
	========	========	========	========	========	========

The Company has an unrecognised deferred tax asset of £1,441,000 (2022: £1,218,000) based on the long-term prospective corporation tax rate of 25% (2022: 25%). This asset has accumulated because deductible expenses exceeded taxable income for the year ended 31 October 2023. No asset has been recognised in the accounts because, given the composition of the Company's portfolio, it is unlikely that this asset 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 2023  £'000	Year ended  31 October 2022  £'000
Second Interim - year ended 31 October 2022 3.50p (2021: 3.35p)	4,716	4,514
Interim dividend - year ended 31 October 2023 1.55p (2022: 1.40p)	2,088	1,886
	---------------	---------------
Total	6,804	6,400
	========	========

(ii) The dividend relating to the year ended 31 October 2023, 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 2023		Year ended 31 October 2022
	Pence per  Ordinary  Share	£'000	Pence per  Ordinary  Share	£'000
Interim dividend	1.55p	2,088	1.40p	1,886
Second interim dividend*	3.75p	5,052	3.50p	4,716
	---------------	---------------	---------------	---------------
	5.30p	7,140	4.90p	6,602
	========	========	========	========

*     Not included as a liability in the year ended 31 October 2023 accounts.

The Directors have declared a second interim dividend for the financial year ended 31 October 2023 of 3.75p per Ordinary Share. The dividend will be paid on 1 March 2024 to Shareholders on the register at the close of business on 2 February 2024.

10. OTHER DEBTORS

	As at  31 October 2023  £'000	As at  31 October 2022  £'000
Accrued income	3,552	3,146
Sales for settlement	-	1,184
VAT receivable	128	62
Prepayments and other receivables	70	42
	---------------	---------------
Total	3,750	4,434
	========	========

11. OTHER CREDITORS

	As at  31 October 2023  £'000	As at  31 October 2022  £'000
Amounts falling due within one year:
Purchases for future settlement	200	1,933
Accrued finance costs	15	7
Accrued expenses	319	300
	---------------	---------------
Total	534	2,240
	========	========

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 2023		As at 31 October 2022
	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, the Company has issued no Ordinary Shares, with 134,730,610 Ordinary Shares in issue as at 24 January 2024.

13. RETURN PER ORDINARY SHARE
Total return per Ordinary Share is based on the return on ordinary activities, including income, a profit for the year after taxation of £38,340,000 (2022: loss of £12,888,000) and the weighted average number of Ordinary Shares-undiluted in issue for the year to 31 October 2023 of 134,730,610 (2022: 134,730,610); Ordinary Shares-diluted in issue for the year to 31 October 2023 of 134,730,610 (2022: 161,676,732). The Company's Ordinary Shares-diluted in prior year is due to the 26,946,122 Subscription Shares in issue for the year to 31 October 2022.

The returns per Ordinary Share were as follows:

	As at 31 October 2023			As at 31 October 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Return per Ordinary
Share - undiluted	5.37p	23.08p	28.45p	5.14p	(14.71)p	(9.57)p
Return per Ordinary
Share - diluted*	5.37p	23.08p	28.45p	4.29p	(12.26)p	(7.97)p
	========	========	========	========	========	========

*     Diluted figures apply for the year to 31 Oct 2022 and assumed that all the TSS in issue were fully subscribed at the price of £1.61p per TSS. The TSS expired on the last business day of February 2023 so there is no subsequent dilution.

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 2023	As at  31 October 2022
Net Asset Value (£'000)	235,118	203,582
Ordinary Shares in issue	134,730,610	134,730,610
NAV per Ordinary Share - undiluted	174.51p	151.10p
	========	========

NAV per Ordinary Share - diluted

	As at  31 October 2023	As at  31 October 2022
Subscription shares issue	-	26,946,122
Proceeds from exercise of TSS (£'000)	-	43,383
Adjusted Net Asset Value for exercise of TSS (£'000)	235,118	246,954
Ordinary Shares - post exercise of TSS	134,730,610	161,676,732
NAV per Ordinary Share - diluted	174.51p	152.75p
	========	========

As at the year end, there was no dilution effect on the NAV per share.

15. RELATED PARTY TRANSACTIONS
Transactions with the Investment Manager and the Alternative Investment Fund Manager ("AIFM")
The Company provides additional information concerning its relationship with the Investment Manager and AIFM, Chikara Investments LLP. The fees for the period are disclosed in note 5 and amounts outstanding at the year ended 31 October 2023 were £151,000 (2022: £134,000).

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 2023 to 31 December 2023, as agreed between the Investment Manager and the Company, was US $34,000 (31 December 2022: US $34,000). The research charge for the year 1 January 2024 to 31 December 2024, as budgeted by the Investment Manager, is US $31,000.

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. 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, and credit risk, and the Directors' approach to the management of them are set out follows.

The objectives, policies and processes for managing the risks, and the methods used to measure the risks, are set out below.

(a) Market Risk
Economic conditions
Changes in economic conditions in Japan (for example, interest rates and rates of inflation, industry conditions, competition, 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 in the Annual Report.

(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 2023  £'000	As at  31 October 2022  £'000
Equity Investments: yen	231,987	199,642
Receivables (due from brokers, dividends, and other income receivable)	3,552	4,330
CFD: yen (absolute exposure)	35	(100)
Cash and cash equivalent: yen	(3,640)	(1,927)
	---------------	---------------
Total	231,934	201,945
	========	========

Foreign currency sensitivity
If the Japanese Yen had appreciated or depreciated by 10% as at 31 October 2023 (2022: 10%) then the value of the portfolio as at that date would have increased or decreased as shown below.

	Increase in  Fair Value  As at  31 October  2023  £'000	Decrease in  Fair Value  As at  31 October  2023  £'000	Increase in  Fair Value  As at  31 October  2022  £'000	Decrease in  Fair Value  As at  31 October  2022  £'000
Impact on capital return - increase/(decrease)	23,193	(23,193)	20,195	(20,195)
Return after taxation - increase/(decrease)	23,193	(23,193)	20,195	(20,195)
	========	========	========	========

(c) Leverage risk
Derivative instruments
The Company may utilise 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.

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. The Company had no borrowings at the year end.

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 may 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 2023 is disclosed in the Alternative Performance Measures section of 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 bank overdraft is an integral part of cash management and the Company has a legal right of offset and has the intention to settle this at net.

Interest rate exposure
The exposure at 31 October 2023 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 in Japan, no sensitivity analysis is shown as the total impact will not be material.

	As at  31 October 2023  due within  one year  £'000	As at  31 October 2022  due within  one year  £'000
Exposure to floating interest rates: CFD derivative contract - (absolute exposure)	46,397	39,926
Collateral paid in respect of CFDs	806	433
	========	========

(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. The Company has appointed Northern Trust Investor Services Limited as its 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 AA-.

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 2023 was as follows:

	As at  31 October 2023  3 months or less  £'000	As at  31 October 2022  3 months or less  £'000
Cash at bank	340	1,413
Amounts due in respect of CFDs	773	2,680
Collateral paid in respect of CFDs	806	433
Debtors	3,750	4,434
	---------------	---------------
Total	5,669	8,960
	========	========

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 market 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 2023 on its equity investments was £231,987,000 (2022: £199,631,000).

In addition, the Company's gross market exposure to these price changes through its CFD portfolio was £46,397,000 through long positions (2022: £39,926,000).

The Company uses CFDs, as part of its investment policy. These instruments can be highly 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. In addition, daily limits on price fluctuations and speculative position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses.

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 2023 were:

	As at 31 October 2023		As at 31 October 2022
	£'000	% of net  assets	£'000	% of net  assets
CFDs - (absolute exposure)	46,397	19.73%	39,926	19.61%
CFDs - (net exposure)	46,397	19.73%	39,926	19.61%
	========	========	========	========

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 objective.

Concentration of exposure to other price risk
A sector breakdown of the portfolio is contained in the Portfolio in the Annual Report.

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 reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the notional exposure of the Company's equities investments and long CFDs.

	As at 31 October 2023		As at 31 October 2022
	Increase in  Fair Value  £'000	Decrease in  Fair Value  £'000	Increase in  Fair Value  £'000	Decrease in  Fair Value  £'000
Impact on capital return - increase/(decrease)	27,835	(27,835)	23,967	(23,967)
Return after taxation - increase/(decrease)	27,835	(27,835)	23,967	(23,967)
	========	========	========	========

(g) Liquidity Risk
The securities of small-to-medium-sized (by market capitalisation) companies may have a more limited secondary market than the securities of larger companies. Accordingly, it may be more difficult to effect sales of such securities at an advantageous time or without a substantial drop in price than securities of a company with a large market capitalisation and broad trading market. In addition, securities of small-to-medium-sized companies may have greater price volatility as they can be more vulnerable to adverse market factors such as unfavourable economic reports.

Management of liquidity risk
The Company's Investment Manager monitors the liquidity of the Company's portfolio on a regular basis.

Liquidity risk exposure
The undiscounted gross cash outflows of the financial liabilities as at 31 October 2023, based on the earliest date on which payment can be required, were as follows:

	As at  31 October 2023  less than 3 months  £'000	As at  31 October 2022  less than 3 months  £'000
Amounts payable in respect of CFDs	2,004	2,780
Other payables	534	2,240
	---------------	---------------
Total	2,538	5,020
	========	========

The Company is exposed to liquidity risks from the leverage employed through exposure to long only CFD positions. 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.

(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.

31 December 2023	Level 1  £'000	Level 2  £'000	Level 3  £'000	Total  £'000
Assets:
Equity investments	231,987	-	-	231,987
CFDs - Unrealised Fair Value gains	-	773	-	773
	---------------	---------------	---------------	---------------
Liabilities:
CFDs - Unrealised Fair Value losses	-	(738)	-	(738)
	---------------	---------------	---------------	---------------
Total	231,987	35	-	232,022
	========	========	========	========

31 December 2022	Level 1  £'000	Level 2  £'000	Level 3  £'000	Total  £'000
Assets:
Equity investments	199,642	-	-	199,642
CFDs - Unrealised Fair Value gains	-	2,680	-	2,680
	---------------	---------------	---------------	---------------
Liabilities:
CFDs - Unrealised Fair Value losses	-	(2,780)	-	(2,780)
	---------------	---------------	---------------	---------------
Total	199,642	(100)	-	199,542
	========	========	========	========

There were no transfers between levels during the year (2022: 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 2023 (2022: 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 at 31 October 2023 comprises called up share capital and reserves totalling £235,118,000 (2022: £203,582,000).

The Board regularly monitors, and has complied with, the externally imposed capital requirements.

17. DISTRIBUTABLE RESERVES
The Company's distributable reserves consist of the Special reserve, Revenue reserve and Capital reserve attributable to realised profits. As at 31 October 2023 the total Capital reserve distributable is 38,486,000 (2022: £26,182,000), total Capital reserve not distributable is £24,636,000 (2022: £5,841,000).

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 is distributable.

18. POST BALANCE SHEET EVENTS
There were no post balance sheet events other than those already disclosed in this report.

GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES ("APMS")

Administrator	The Company's administrator, the current such administrator being Apex Listed Companies Services (UK) Limited (which acquired Sanne Group).
AIC	Association of Investment Companies
Alternative Investment Fund or "AIF"	An investment vehicle under AIFMD. Under AIFMD (see below) the Company is classified as an AIF.
Alternative Investment Fund Managers Directive or "AIFMD"	The UK version of an European Union Directive which came into force on 22 July 2013 and which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended by The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019.
Alternative Performance Measure or "APM"	A financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.
Annual General Meeting or "AGM"	A meeting held once a year, which Shareholders are entitled to attend, and where they can vote on resolutions to be put forward at the meeting and ask Directors questions about the Company.
Absolute exposure	The absolute difference between the Company's long positions and short positions.
Bonus Issue	The distribution of subscription shares to qualifying Shareholders. In this report pertinent to the issue to qualifying Shareholders of new Transferable Subscription Shares on the basis of one new Transferable Subscription Share for every five existing Ordinary Shares.
Cum-dividend	A dividend that has been declared but not yet paid out.
CFD or Contract for Difference	A financial instrument, which provides exposure to an underlying equity with the provider financing the cost to the buyer with the buyer receiving the difference of any gain or paying for any loss.
Custodian	An entity that is appointed to hold and safeguard a company's assets.
Depositary	Certain AIFs must appoint depositaries under the requirements of AIFMD. A depositary's duties include, inter alia, safekeeping of the Company's assets and cash monitoring. Under AIFMD the depositary is appointed under a strict liability regime. The Company's Depositary is Northern Trust Investor Services Limited.
Diluted NAV per Ordinary Share	Diluted NAV per Ordinary Share calculates a Company's NAV if all subscriptions shares were converted.
Dividend	Income receivable from an investment in shares.
Discount (APM)	The amount, expressed as a percentage, by which the share price is less than the NAV per Ordinary Share.

As at 31 October 2023
NAV per Ordinary Share		a		174.5
Share price		b		162.5
Discount		(b÷a)-1		6.9%
As at 31 October 2022
NAV per Ordinary Share (pence)		a		151.1
Share price (pence)		b		138.8
Discount		(b÷a)-1		8.1%

Ex-dividend date	The date from which you are not entitled to receive a dividend which has been declared and is due to be paid to shareholders.
Financial Conduct Authority or "FCA"	The independent body that regulates the financial services industry in the UK.
Gearing (APM)	A way to magnify income and capital returns, but which can also magnify losses. The Company may be geared through the CFDs and if utilised, the overdraft facility, with The Northern Trust Company.

As at 31 October 2023				£'000
CFD notional market value*		a		46,397
Non-base cash borrowings**		b		3,380
NAV		c		235,118
Gearing (net)		((a+b)/c)		21.2%
As at 31 October 2022				£'000
CFD notional market value*		a		39,926
Non-base cash borrowings**		b		2,652
NAV		c		203,582
Gearing (net)		((a+b)/c)		20.9%
* CFD positions in underlying asset value. ** Non-base cash borrowings represents borrowings in Yen

Gross assets (APM)	The Company's total assets including any leverage amount.
Index	A basket of stocks which is considered to replicate a particular stock market or sector.
Gross market exposure	The Company's total exposure investment value in the financial market prices.
Gross underlying notional exposure	The company's total exposure value on the underlying asset of its derivatives.
Investment company	A company formed to invest in a diversified portfolio of assets.
Investment trust	A closed end investment company which is based in the United Kingdom ("UK") and which meets certain tax conditions which enables it to be exempt from UK corporation tax on its capital gains. This Company is an investment trust.
Leverage (APM)	Under the Alternative Investment Fund Managers Directive ("AIFMD"), leverage is any method by which the exposure of an Alternative Investment Fund ("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. Under both methods the AIFM has set current maximum limits of leverage for the Company of 200%.

As at 31 October 2023			Gross £'000	Commitment £'000
Security Market value		a	231,987	231,987
CFD Notional market value		b	46,397	46,397
Cash and cash equivalents		c	3,841	321
NAV		d	235,118	235,118
Leverage		(a+b+c)/d	120%	119%
As at 31 October 2022			Gross £'000	Commitment £'000
Security Market value		a	199,642	199,642
CFD Notional market value		b	39,926	39,926
Cash and cash equivalents		c	2,676	1,098
NAV		d	203,582	203,582
Leverage		(a+b+c)/d	119%	118%

* Cash and cash equivalents represent gross overdraft and net overdraft with Northern Trust

Market liquidity	The extent to which investments can be bought or sold at short notice.
Net assets	An investment company's assets less its liabilities.
Net Asset Value (NAV) per Ordinary Share	Net assets divided by the number of Ordinary Shares in issue (excluding any shares held in Treasury).
Net exposure	The difference between the Company's long positions and short positions.
Ordinary Shares	The Company's Ordinary Shares in issue.
Ongoing charges (APM)	A measure, expressed as a percentage of average NAV, of the regular, recurring annual costs of running an investment company.

Year end 31 October 2023
Average NAV		a		228,765,739
Annualised expenses		b		2,430,000
Ongoing charges		(b÷a)		1.06%
Year end 31 October 2022
Average NAV		a		217,165,791
Annualised expenses		b		2,297,000
Ongoing charges		(b÷a)		1.06%

Portfolio	A composition of different investment holdings constructed and held in order to deliver returns to Shareholders and to spread risk.
Share Premium to Net Asset Value (APM)	The amount, expressed as a percentage, by which the share price is more than the Net Asset Value per share.
Share buyback	A purchase by a company of its own shares. Shares can either be bought back for cancellation or held in Treasury.
Share price	The price of a share as determined by buyers and sellers on the relevant stock exchange.
Subscription Share Price	The price at which the Transferable Subscription Share Rights are exercised in accordance with the terms and conditions of the Transferable Subscription shares.
Transferable Subscription Share Rights	The right conferred by each Transferable Subscription Share to subscribe for one Ordinary Share as detailed in the prospectus.
Transferable Subscription Shares (TSS)	The transferable subscription shares in the capital of the Company as a Bonus Issue.
Treasury shares	A company's own shares held in Treasury account by the company but which are available to be resold in the market.
Total return (APM)	A measure of performance that takes into account both income and capital returns.

Year end 31 October 2023						Share price		NAV
Opening at 1 November 2022 (in pence)		a				138.8		151.1
Closing at 31 October 2023 (in pence)		b				162.5		174.5
Price movement (b÷a)-1		c				17.1%		15.5%
Dividend reinvestment		d				3.8%		3.4%
Total return		(c+d)				20.9%		18.9%
	Year end 31 October 2022						Share price		Cum-income NAV
	Opening at 1 November 2021 (in pence)		a				154.0		136.8
	Closing at 31 October 2022 (in pence)		b				138.8		151.1
	Price movement (b÷a)-1		c				-9.9%		10.4%
	Dividend reinvestment*		d				2.8%		-16.3%
	Total return		(c+d)				-7.1%		-5.9%

* 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.

Volatility

A measure of how much a market share price, currency or other instrument moves up and down in price over a period of time.

FINANCIAL INFORMATION
This announcement does not constitute the Company's statutory accounts.  The financial information for the year to 31 October 2023 is derived from the statutory accounts for 2023, which will be delivered to the Registrar of Companies. The auditor has reported on the 2023 accounts; their report was unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

The Annual Report for the year ended 31 October 2023 was approved on 24 January 2024. It will be made available on the Company's website at www.ccjapanincomeandgrowthtrust.com.

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held on 5 March 2024 at 12 noon 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.

25 January 2024

For further information contact:
Company Secretary and registered office:
Apex Listed Companies Services (UK) Limited
6th Floor, 125 London Wall,
London.
EC2Y 5AS 
Tel: [phone]

END

 

END