REG - Baillie GiffordJapan - Baillie Gifford Japan Trust Half Year Fin. Report
02/04/2026 07:00
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RNS Number : 1463Z Baillie Gifford Japan Trust PLC 02 April 2026
RNS Announcement
The Baillie Gifford Japan Trust PLC
Legal Entity Identifier: 54930037AGTKN765Y741
Regulated Information Classification: Interim Financial Report
Results for the six months to 28 February 2026
The following is the unaudited Interim Financial Report for the six months to
28 February 2026 which was approved by the Board on 1 April 2026.
In the six months to 28 February 2026, The Baillie Gifford Japan Trust's net
asset value total return per share was 4.4% and the share price total return
was 6.1%. The TOPIX total return (in sterling terms) was 22.4%.
§ Performance lagged the benchmark, with several of the portfolio's largest
growth holdings detracting despite continued positive operational progress.
The largest detractors from relative performance were CyberAgent, GMO Internet
Group, Rakuten, SBI Holdings and GA Technologies. The Manager remains positive
on their long-term prospects, noting improving profitability, restructuring
initiatives and the opportunity presented by AI adoption.
§ Sumitomo Metal Mining was the largest contributor to performance over the
period.
§ The Manager made new additions to high-growth opportunities, including
Yaskawa Electric and Harmonic Drive, increasing exposure to the theme of
"physical AI".
§ During the period, the Company bought back 2,925,000 shares (3.8% of issued
share capital), which was NAV accretive for shareholders (0.4%).
§ The share price outperformed the NAV, reflecting a narrowing of the
discount over the period.
§ Given that the forecast sales and earnings growth are ahead of the market,
yet the portfolio trades at a meaningful discount to the market on a price to
earnings and EV to EBIT basis, the Manager believes that this represents
significant opportunity.
Chair's Statement
Having taken over as Chair of Baillie Gifford Japan Trust at the AGM in
December 2025, this is my first report to you as shareholders.
First, I would like to thank David Kidd for his dedicated service over many
years as, variously, Non-Executive Director, Senior Independent Director and
ultimately Chairman of the Company. We will greatly miss David's wisdom,
insightful questioning and humour and wish him well for the future.
Second, I am pleased to welcome Robert Talbut, who joined the Board as a
Non-Executive Director on 2 March 2026. Robert was appointed following a
rigorous market search carried out by an independent professional search firm,
with interviews conducted by the Board. He brings to the Board substantial
investment management experience from an executive career in the industry
encompassing hands-on investing through to team and investment process
management as well as significant experience of the investment trust industry
from the multiple boards on which he has served.
Performance
The net asset value (NAV) total return over the first half of the Company's
financial year was 4.4%, compared with 22.4% for the TOPIX total return (in
sterling terms), the Company's benchmark. The share price total return over
the period was 6.1% and so the discount to NAV of the Company's shares
narrowed from 11.4% to 10.1%.
Analysis of performance over the five years to the last financial year end
shows a period of relative under-performance against the benchmark following
the end of COVID when rising inflation and interest rates created a more
challenging environment for the Manager's growth investment style. The extent
of under-performance during that period impacted the Company's longer-term
record and led the Board to intensify its engagement with the Manager to
understand better the factors driving performance and to challenge various
aspects of the investment process.
However, shareholders will recall that in the year to 31 August 2025, the last
financial year of the Company, NAV increased by 20.5%, outperforming the
benchmark by 8.4% and suggesting a return to favour of growth investing in
Japan and the performance potential at such inflection points. It is therefore
disappointing to report that the Company has reverted to significant
under-performance in the first half of the current year, offsetting the
benefit of last year's relative returns. Needless to say, performance remains
the Board's foremost priority and we will continue to challenge the Manager on
the strategy and its implementation.
Further details on performance are provided in the Manager's Report below.
Share Buybacks
As noted, over the six-month period to 28 February 2026, the share price
discount to NAV narrowed from 11.4% to 10.1%. The Board continues to believe
that, if the Company's shares trade at anything beyond a high single-digit
discount, this presents an attractive opportunity to add value for
shareholders through buybacks. During the reporting period, 2,925,000 shares
were repurchased for a total consideration of £26.9 million, representing
3.8% of the Company's issued share capital. This increased the Company's net
asset value by 0.4%. The repurchased shares are held in Treasury and are
available to be reissued, at a premium, when market conditions allow.
Outlook
I would like to take this opportunity to remind readers of the attractions of
Japan as an investment market, which include:
• It is a wealthy, educated and democratic country with a
high degree of political and social stability, underpinned by strong
institutions, and which boasts the fourth-largest economy in the world;
• a deep and liquid equity market which, unusually among
developed markets, continues to see growth in new listings, thereby expanding
the opportunity set and offering diversification for investors concerned about
over-concentration elsewhere;
• global leadership across a range of advanced technologies,
alongside a range of internationally recognised branded goods companies and
content owners/creators;
• a market that remains relatively under-researched compared
to a number of its developed market peers, offering potential excess return
opportunities for active investors;
• ongoing improvements in corporate governance and increased
focus on capital efficiency, contributing to more shareholder-oriented
policies; and
• a currency which, on a number of measures, is presently
materially under-valued relative to economic fundamentals.
Japan also faces well-known demographic challenges which weigh on overall
economic growth, a situation which supports the thesis that the growth
companies in which your Company invests should command a premium valuation
over time. Your Manager remains confident that the growth the portfolio
holdings offer is highly attractive relative to their valuations. That said,
arguably this thesis has not been borne out by the Company's performance and
is potentially further challenged, at least in the near term, by the policy
direction of Japan's new Prime Minister. The Board is giving close
consideration to this central issue, alongside continued scrutiny of the
investment process and remains focused on building value for shareholders over
the long term.
Sam Davis
Chair
1 April 2026
Interim Management Report
During the period the NAV total return of your Company was 4.4% whilst the
share price total return was 6.1% and the TOPIX total return (in sterling
terms) was 22.4%. Whilst the absolute return was positive it was disappointing
to lag the wider Japanese market significantly.
5 stocks contributed -1ppt or more to the relative performance of the gross
portfolio. These were CyberAgent (-1.8ppt), GMO Internet Group (-1.8ppt),
Rakuten (-1.5ppt), SBI Holdings (-1.5ppt), and GA Technologies (-1.4ppt). For
context 4 of these names were among the top 5 performers to the Company's
August year-end and all are in the top 10 holdings of the Company.
We believe that it is important to distinguish between fluctuations in share
prices and material changes to business outlook. Despite recent share price
weakness, these names remain among the Company's highest-conviction holdings,
reflecting a combination of long-term opportunity, competitive edge and the
strength of underlying operational progress.
Looking in more detail at the recent progress in the operations of these 5
businesses, we see that CyberAgent's AbemaTV business has become profitable.
GMO Internet Group is evolving into a more coherent investment holding company
giving its subsidiaries more strategic and market visibility and we are
actively engaging to support the completion of that journey. Rakuten's
challenger mobile phone network business has also become profitable, removing
a key risk and enabling the company to continue to seek synergies with its
successful ecommerce and fintech offerings. SBI Holdings has simplified its
management structure with the successful initial public offering of SBI
Shinsei Bank (in which we chose to participate and which has delivered a
positive contribution over the holding period so far). Finally, GA
Technologies has continued to grow its sales and profits rapidly (to its
unusual October year-end sales grew 31% and operating profits grew 92%).
It may be that the market has become concerned that these businesses could be
negatively impacted by the rapid progress of Artificial Intelligence (AI).
However, deeper analysis suggests that AI represents more of an opportunity
than a threat as each of these businesses benefits from significant
proprietary customer data, multiple mutually supporting business lines, and
both the ambition and ability rapidly deploy AI internally.
The Japanese market has also continued to focus more on the cyclical parts of
the market over the past 6 months. However, given events in Iran, which began
the day after the end of the Company's reporting period, we are arguably now
operating in a different environment where durable, non-cyclical and low
carbon intensity businesses such as these will be more highly appreciated.
Sumitomo Metal Mining (1.3ppt) was the only stock to contribute 1ppt or more
to relative performance as the share price increased 3-fold over the six-month
period, mainly driven by enthusiasm for its gold mining businesses. Whilst we
admire the business and its technical skills in extracting nickel and making
complex materials we believe that the current valuation is now more
appropriate and have therefore reduced the holding somewhat.
Since the share prices of the companies held generally appreciated in Yen
terms over the period gearing made a positive contribution of 1.0ppt.
During the period we bought 5 new names and sold 4 names. Of note we bought
Yaskawa Electric, a robot manufacturer, and Harmonic Drive, a robot joint
manufacturer. Both increase the portfolio exposure to the theme of physical AI
- robots with advanced AI 'brains' making them much more flexible and capable
than traditional robots. We believe that advances in robotics will present
attractive long-term growth opportunities for those companies able to manage
the manufacturing complexities.
In line with our long-term time horizon the vast majority of the portfolio
remained unchanged. Net gearing ended the period at 12.5%.
As at the August 2025 results, and consistent with our focus on growth
businesses, the portfolio has exhibited sales growth significantly ahead of
the market over the past 5 years and is forecast to continue to grow faster.
While earnings growth has been good over the past 5 years, it has lagged the
market due to the lack of exposure to the very strong returns from some of
Japan's most cyclical companies. However, looking forward, the earnings growth
is forecast to be ahead of the market again. In addition the portfolio
currently trades at a meaningful discount to the index both on a price to
earnings basis and on an EV to EBIT basis (which adjusts for balance sheet
strength). This combination of better growth expectations at lower multiples
is rare, and we believe represents significant opportunity.
http://www.rns-pdf.londonstockexchange.com/rns/1463Z_1-2026-4-1.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/1463Z_1-2026-4-1.pdf)
http://www.rns-pdf.londonstockexchange.com/rns/1463Z_2-2026-4-1.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/1463Z_2-2026-4-1.pdf)
Source: Baillie Gifford & Co, in yen terms as at 28 February 2026.
As the world is rocked by geopolitical conflict, Japan remains politically
stable and focused on building prosperity. Your portfolio comprises high
quality businesses with attractive financial characteristics. While these
features were not rewarded to the same extent as the wider Japanese index in
the last six months we continue to believe that the businesses are making
strong operational progress and that over time that progress will be reflected
by share price appreciation that exceeds that of the market.
Baillie Gifford & Co
1 April 2026
See Glossary of Terms and Alternative Performance Measures at the end of this
document.
Total return information sourced from LSEG/Baillie Gifford. See disclaimer at
the end of this document.
Past performance is not a guide to future performance.
Responsibility Statement
We confirm that to the best of our knowledge:
a. the condensed set of Financial Statements has been prepared in
accordance with FRS 104 'Interim Financial Reporting';
b. the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.7R
(being an indication of important events that have occurred during the first
six months of the financial year, their impact on the condensed set of
Financial Statements and a description of the principal risks and
uncertainties for the remaining six months of the year); and
c. the Interim Financial Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.8R
(disclosure of related party transactions and changes therein).
On behalf of the Board
Sam Davis
Chair
1 April 2026
List of Investments
as at 28 February 2026 (unaudited)
Name Business Value % of total
£'000 investments
Secular Growth*
SBI Holdings Online financial services holding company 41,233 4.7
FANUC Industrial automation and robotics manufacturer 35,809 4.1
Rakuten E-commerce marketplace and fintech operator 34,462 3.9
CyberAgent Digital advertising and mobile gaming company 27,390 3.1
SMC Pneumatic equipment and automation manufacturer 25,978 2.9
GMO Internet Internet infrastructure and domain services provider 24,428 2.8
GA Technologies AI-enabled real estate investment platform 23,392 2.6
Kubota Agricultural machinery and tractor manufacturer 20,670 2.3
Misumi Online mechanical components supplier 19,531 2.2
Eisai Pharmaceutical drug developer and manufacturer 19,403 2.2
Keyence Industrial automation sensors and equipment 19,103 2.2
Sato Barcode printer and labelling solutions 19,102 2.2
Oisix Organic food delivery subscription service 17,697 2.0
Seria Discount retail chain 17,451 2.0
Recruit Human resources and job placement services 11,867 1.3
Shimano Bicycle and fishing equipment manufacturer 11,250 1.3
Daikin Industries Air conditioning systems manufacturer 10,266 1.2
TKP Meeting room rental operator 10,082 1.1
Yaskawa Electric Industrial robots, servo motors and factory automation systems manufacturer 9,750 1.1
Raksul Online printing services platform 8,763 1.0
M3 Healthcare platform and medical services provider 8,357 0.9
Nidec Electric motor manufacturer 8,016 0.9
Lifenet Insurance Online life insurance provider 7,363 0.8
Broadleaf Vertical SaaS and e-ordering platforms for the automotive aftermarket and 7,034 0.8
other industries
Vector PR, digital marketing and press release distribution services company 6,454 0.7
Harmonic Drive Precision reduction gears, actuators and motion-control components 5,909 0.7
manufacturer
Nakanishi Dental equipment manufacturer 5,886 0.7
Sysmex Medical diagnostics equipment manufacturer 5,532 0.6
Nihon M&A Center Merger and acquisition advisory services 3,999 0.5
Bengo4.com Legal services portal operator; provider of CloudSign e-signature/contract 3,867 0.4
management
Money Forward Financial technology and accounting software 3,699 0.4
Infomart B2B transaction platforms (ordering, e-invoicing, contracts), strong in 3,605 0.4
food-service
Rizap Personal fitness training company 3,523 0.4
freee K.K. Cloud accounting software provider 3,464 0.4
BASE E-commerce platform provider 3,442 0.4
MonotaRO Industrial supplies e-commerce platform 3,363 0.4
Noritsu Koki Diversified holding company with manufacturing and healthcare businesses 3,119 0.4
istyle Beauty e-commerce platform 2,869 0.3
PeptiDream Biotechnology and drug discovery company 2,729 0.3
Demae-can Food delivery platform 2,558 0.3
502,415 56.9
Growth Stalwarts(†)
Calbee Snack food and cereal manufacturer 21,584 2.4
Unicharm Personal care and hygiene products 18,299 2.1
Kansai Paint Automotive and industrial paint manufacturer 13,755 1.6
Nintendo Video game console and software developer 13,473 1.5
Pola Orbis Direct-sales cosmetics manufacturer 12,493 1.4
Nippon Paint Paint and coatings manufacturer 12,402 1.4
Sugi Drugstore chain operator 9,178 1.0
PARK24 Parking lot and car-sharing operator 9,056 1.0
Kose Cosmetics and skincare manufacturer 8,991 1.0
Square Enix Video game publisher and developer 7,773 0.9
Shiseido Global cosmetics and beauty products 7,578 0.9
Kao Personal care and cleaning products 6,804 0.8
Olympus Endoscopy-led medical device company 6,454 0.7
Pigeon Baby care products manufacturer 5,819 0.7
153,659 17.4
Special Situations(#)
SoftBank Group Technology investment and telecommunications conglomerate 46,181 5.2
Sony Electronics, gaming and entertainment conglomerate 28,734 3.3
MIXI Social networking and mobile gaming platform 11,619 1.3
COLOPL Mobile game developer 6,962 0.8
Casio Computer Timepieces, calculators and electronic musical instruments manufacturer 5,396 0.6
98,892 11.2
Cyclical Growth(‡)
Sumitomo Mitsui Trust Group Trust bank and asset management services 39,817 4.5
Murata Electronic components manufacturer 17,633 2.0
Bridgestone Tyre and rubber products manufacturer 14,195 1.6
Nifco Automotive plastic components manufacturer 13,822 1.5
Sumitomo Metal Mining Non-ferrous metals mining company 10,766 1.2
SBI Shinsei Bank Retail, institutional and consumer finance bank 10,555 1.2
DMG Mori CNC machine tools manufacturer 8,676 1.0
Sega Sammy Video games and entertainment developer 5,539 0.6
Tokyo Electron Semiconductor production equipment manufacturer 5,116 0.6
Shima Seiki Textile machinery manufacturer 2,388 0.3
128,507 14.5
Total investments 883,473 100.0
Growth category
* Secular Growth - opportunity to grow rapidly but where there are a
number of potential outcomes.
† Growth Stalwarts - growth is less rapid but more predictable.
# Special Situations - performance has not been good but there is a reason
to believe improvements are underway.
‡ Cyclical Growth - earnings do not rise every year but are expected to
be higher from one cycle to the next.
Stocks highlighted in bold are the 20 largest holdings.
Income Statement
(unaudited)
For the six months ended 28 February 2026 For the six months ended 28 February 2025
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 22,634 22,634 - 705 705
Currency gains/(losses) - 5,786 5,786 - (1,459) (1,459)
Income 6,795 - 6,795 7,192 - 7,192
Investment management fee (2,244) - (2,244) (2,042) - (2,042)
Other administrative expenses (389) - (389) (370) - (370)
Net return before finance costs and taxation 4,162 28,420 32,582 4,780 (754) 4,026
Finance costs of borrowings (1,165) - (1,165) (1,186) - (1,186)
Net return on ordinary activities before taxation 2,997 28,420 31,417 3,594 (754) 2,840
Tax on ordinary activities (686) - (686) (719) - (719)
Net return on ordinary activities after taxation 2,311 28,420 30,731 2,875 (754) 2,121
Net return per ordinary share (note 5) 3.03p 37.26p 40.29p 3.41p (0.89p) 2.52p
The total column of this statement is the profit and loss account of the
Company. The supplementary revenue and capital columns are prepared under
guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing
operations.
A Statement of Comprehensive Income is not required as all gains and losses of
the Company have been reflected in the above statement.
The accompanying notes are an integral part of the Financial Statements.
Balance Sheet
(unaudited)
Notes At 28 February 2026 At 31 August 2025
£'000 (audited) £'000
Fixed assets
Investments 6 883,473 889,768
Current assets
Debtors 6,796 2,473
Cash and cash equivalents 8,862 15,515
15,658 17,988
Creditors
Amounts falling due within one year 7 (57,611) (59,114)
Net current liabilities (41,953) (41,126)
Total assets less current liabilities 841,520 848,642
Creditors
Amounts falling due after more than one year 7 (57,169) (60,494)
Net assets 784,351 788,148
Capital and reserves
Share capital 4,717 4,717
Share premium 213,902 213,902
Capital redemption reserve 203 203
Capital reserve 557,951 556,398
Revenue reserve 7,578 12,928
Equity shareholders' funds 784,351 788,148
Net asset value per ordinary share* 1,051.9p 1,017.1p
Ordinary shares in issue 8 74,566,440 77,491,440
* See Glossary of Terms and Alternative Performance Measures at the end of
this document.
Statement of Changes in Equity
(unaudited)
For the six months ended 28 February 2026
Notes Share Share Capital Revenue Shareholders'
capital premium redemption Capital reserve funds
£'000 account reserve reserve * £'000 £'000
£'000 £'000 £'000
Shareholders' funds at 1 September 2025 4,717 213,902 203 556,398 12,928 788,148
Ordinary shares bought back 8 - - - (26,867) - (26,867)
Net return on ordinary activities after taxation - - - 28,420 2,311 30,731
Dividends paid during the period 4 - - - - (7,661) (7,661)
Shareholders' funds at 28 February 2026 4,717 213,902 203 557,951 7,578 784,351
For the six months ended 28 February 2025
Notes Share Share Capital Revenue Shareholders'
capital premium redemption Capital reserve funds
£'000 account reserve reserve * £'000 £'000
£'000 £'000 £'000
Shareholders' funds at 1 September 2024 4,717 213,902 203 514,122 15,435 748,379
Ordinary shares bought back 8 - - - (46,767) - (46,767)
Net return on ordinary activities after taxation - - - (754) 2,875 2,121
Dividends paid during the period 4 - - - - (8,481) (8,481)
Shareholders' funds at 28 February 2025 4,717 213,902 203 466,601 9,829 695,252
* The capital reserve balance at 28 February 2026 includes unrealised
investment holding gains of £67,966,000 (28 February 2025 - gains
of £14,780,000).
Condensed Cash Flow Statement
(unaudited)
Notes Six months to Six months to
28 February 2026 28 February 2025
£'000 £'000
Cash flows from operating activities
Net return on ordinary activities before taxation 31,417 2,840
Net gain on investments (22,634) (705)
Currency (gains)/losses (5,786) 1,459
Finance costs of borrowings 1,165 1,186
Overseas withholding tax (671) (702)
Changes in debtors and creditors (232) (317)
Cash from operations 3,259 3,761
Interest paid (1,184) (1,065)
Net cash inflow from operating activities 2,075 2,696
Cash flows from investing activities
Acquisitions of investments (94,443) (18,484)
Disposals of investments 122,961 72,801
Net cash inflow from investing activities 28,518 54,317
Cash flows from financing activities
Ordinary shares bought back 8 (26,601) (48,555)
Dividends paid 4 (7,661) (8,481)
Bank loans drawn down 59,452 140,747
Bank loans repaid (61,655) (140,036)
Net cash outflow from financing activities (36,465) (56,325)
(Decrease)/increase in cash and cash equivalents (5,872) 688
Exchange movements (781) (197)
Cash and cash equivalents at start of period* 15,515 5,305
Cash and cash equivalents at end of period* 8,862 5,796
* Cash and cash equivalents represent cash at bank and short term money
market deposits repayable on demand.
Notes to the condensed Financial Statements
(unaudited)
1. Basis of Accounting
The condensed Financial Statements for the six months to 28
February 2026 comprise the statements set out above with the related notes
below. They have been prepared in accordance with FRS 104 'Interim Financial
Reporting' and the AIC's Statement of Recommended Practice issued in November
2014 and updated in July 2022 with consequential amendments. They have not
been audited or reviewed by the Auditor pursuant to the Auditing Practices
Board Guidance on 'Review of Interim Financial Information'. The Financial
Statements for the six months to 28 February 2026 have been prepared on the
basis of the same accounting policies as set out in the Company's Annual
Report and Financial Statements at 31 August 2025.
Going concern
Having considered the Company's principal risks and
uncertainties, as set out on the inside front cover, together with its current
position, investment objective and policy, its assets and liabilities, and
projected income and expenditure, together with the Company's dividend policy,
it is the Directors' opinion that the Company has adequate resources to
continue in operational existence for the foreseeable future. The Board has
considered severe but plausible downside scenarios, including the impact of
heightened market volatility and macroeconomic and geopolitical concerns,
including inflation and interest rates, but it does not believe the Company's
going concern status is affected. The Company's assets, the majority of which
are investments in quoted securities which are readily realisable, exceed its
liabilities significantly. All borrowings require the prior approval of the
Board. Gearing levels and compliance with borrowing covenants are reviewed by
the Board on a regular basis. In accordance with the Company's Articles of
Association, shareholders have the right to vote annually at the Annual
General Meeting on whether to continue the Company. The next continuation vote
will be in December 2026. The Directors have no reason to believe that the
continuation resolution will not be passed at the Annual General Meeting. The
Company has continued to comply with the investment trust status requirements
of section 1158 of the Corporation Tax Act 2010 and the Investment Trust
(Approved Company) (Tax) Regulations 2011. Accordingly, the Directors consider
it appropriate to adopt the going concern basis of accounting in preparing
these Financial Statements and confirm that they are not aware of any material
uncertainties which may affect the Company's ability to continue to do so over
a period of at least twelve months from the date of approval of these
Financial Statements.
2. Financial Information
The financial information contained within this Interim
Financial Report does not constitute statutory accounts as defined in sections
434 to 436 of the Companies Act 2006. The financial information for the year
ended 31 August 2025 has been extracted from the statutory accounts which have
been filed with the Registrar of Companies. The Auditor's Report on those
accounts was not qualified, did not include a reference to any matters to
which the Auditor drew attention by way of emphasis without qualifying its
report and did not contain statements under sections 498(2) or (3) of the
Companies Act 2006.
3. Investment Manager
Baillie Gifford & Co Limited, a wholly owned subsidiary
of Baillie Gifford & Co, has been appointed by the Company as its
Alternative Investment Fund Manager and Company Secretary. The investment
management function has been delegated to Baillie Gifford & Co. The
management agreement can be terminated on not less than 6 months' notice, or
on shorter notice in certain circumstances. The Annual management fee is 0.65%
on the first £250 million of net assets and 0.55% on the remaining net
assets, calculated and payable quarterly.
4. Dividends
Six months to Six months to
28 February 28 February
2026 2025
£'000 £'000
Amounts recognised as a distribution in the period: 7,661 8,481
Previous year's final dividend of 10.00p paid 15 December 2025 (2025 - 10.00p
paid on 18 December 2024)
No interim dividend has been declared.
5. Net Return Per Ordinary Share
Six months to Six months to
28 February 28 February
2026 2025
£'000 £'000
Revenue return after taxation 2,311 2,875
Capital return after taxation 28,420 (754)
Total net return 30,731 2,121
Weighted average number of ordinary shares in issue 76,266,303 84,364,962
Net return per ordinary share is based on the above totals
of revenue and capital and the weighted average number of ordinary shares in
issue during each period. There are no dilutive or potentially dilutive shares
in issue.
6. Fair Value Hierarchy
The fair value hierarchy used to analyse the basis on which
the fair values of financial instruments held at fair value through the profit
or loss account are measured is described below. Fair value measurements are
categorised on the basis of the lowest level input that is significant to the
fair value measurement.
Level 1 - using unadjusted quoted prices for identical instruments in an
active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that
are directly or indirectly observable (based on market data); and
Level 3 - using inputs that are unobservable (for which market data is
unavailable).
The fair value of listed investments is the last traded
price which is equivalent to the bid price on Japanese markets.
The financial assets designated as valued at fair value
through profit or loss are all categorised as Level 1 in the above hierarchy.
None of the financial liabilities are designated at fair value through profit
or loss in the Financial Statements.
All of the Company's investments fall into Level 1 for the
periods reported.
7. Borrowings
At 28 February 2026 At 31 August 2025
Due within one year*:
1 year floating rate revolving credit facility with Bank of New York Mellon ¥10,500 million (£50.023 million) ¥11,000 million (£55.453 million)
for ¥15,000 million, expiring August 2026
at 2.49%
at 1.92%
£50.023 million £55.453million
Due after one year:
Fixed rate unsecured private notes with Canada Life:
-.. ¥4,000 million Series A Senior Notes due 20 November 2029 ¥4,000 million at 1.56% (£19.057 million) ¥4,000 million at 1.56% (£20.165 million)
-.. ¥4,000 million Series B Senior Notes due 20 November 2034 ¥4,000 million at 2.05% (£19.056 million) ¥4,000 million at 2.05% (£20.165 million)
-.. ¥4,000 million Series C Senior Notes due 20 November 2038 ¥4,000 million at 2.55% (£19.056 million) ¥4,000 million at 2.55% (£20.164 million)
£57.169 million £60.494 million
During the six month period to 28 February 2026, the
Company repaid ¥2,500 million and drew down ¥2,000 million under its
revolving credit facility with Bank of New York Mellon, resulting in a net
repayment of ¥500 million.
* Within the Balance Sheet, the bank loan is included in Creditors: Amounts
falling due within one year, along with other short-term creditors.
8. Share Capital
The Company has the authority to issue shares/sell Treasury
shares at a premium to net asset value as well as to buy back shares at a
discount to net asset value. During the period, no shares were issued and
2,925,000 shares were bought back into Treasury (28 February 2025 - nil
issued and 6,395,000 bought back). There were 19,761,769 shares held in
Treasury at 28 February 2026 (28 February 2025 - 13,190,595). Between 1 March
2026 and 31 March 2026, the Company bought back a further 2,780,000 shares
into Treasury. The Company has authority remaining to buy back 7,067,102
ordinary shares.
9. Related Party Transactions
There have been no transactions with related parties during
the first six months of the current financial year that have materially
affected the financial position or the performance of the Company during that
period and there have been no changes in the related party transactions
described in the last Annual Report and Financial Statements that could have
had such an effect on the Company during that period.
10. Principal Risks and Uncertainties
The principal risks facing the Company are financial risk,
discount risk, investment strategy and smaller company risk, climate and
governance risk, leverage risk, custody, depositary and reliance on third
party service provider risk, cyber security risk, regulatory risk, political
and associated economic risk and emerging risks. An explanation of these risks
and how they are managed is set out on pages 28 to 31 of the Company's Annual
Report and Financial Statements for the year to 31 August 2025 and is
available on the Company's website: japantrustplc.co.uk.
The principal risks and uncertainties have not changed
since the date of the Annual Report.
Glossary of Terms and Alternative Performance Measures ('APM')
Net Asset Value
Also described as shareholders' funds, net asset value ('NAV') is the value of
total assets less liabilities (including borrowings). The NAV per share is
calculated by dividing this amount by the number of ordinary shares in issue.
Borrowings are valued at their book value. The Company's yen denominated loans
are valued at their sterling equivalent. Net Asset Value can also be expressed
with borrowings valued at an estimate of their market worth or "fair value".
(Discount)/Premium (APM)
As stockmarkets and share prices vary, an investment trust's share price is
rarely the same as its NAV. When the share price is lower than the NAV per
share it is said to be trading at a discount. The size of the discount is
calculated by subtracting the NAV per share from the share price and is
usually expressed as a percentage of the NAV per share. If the share price is
higher than the NAV per share, this situation is called a premium.
28 February 2026 31 August 2025
NAV NAV NAV NAV
(book) (fair) (book) (fair)
NAV 1,051.9p 1,054.1p 1,017.1p 1,017.2p
Share price 946.0p 946.0p 901.0p 901.0p
Discount (10.1%) (10.3%) (11.4%) (11.4%)
Total Return (APM)
The total return is the return to shareholders after reinvesting the net
dividend on the date that the share price goes ex-dividend.
28 February 2026 28 February 2025
NAV NAV Share NAV NAV Share
(book) (fair) price (book) (fair) price
Closing NAV per ordinary share/share price (a) 1,051.9p 1,054.1p 946.0p 856.9p 855.9p 767.0p
Dividend adjustment factor* (b) 1.0097 1.0097 1.0107 1.0127 1.0127 1.0142
Adjusted closing NAV per ordinary share/share price (c) = (a) x (b) 1,062.1p 1,064.4p 956.2p 867.8p 866.8p 777.9p
Opening NAV per ordinary share/share price (d) 1,017.1p 1,017.2p 901.0p 855.0p 854.9p 756.0p
Total return ((c) ÷ (d)) -1 4.4% 4.6% 6.1% 1.5% 1.4% 2.9%
* The dividend adjustment factor is calculated on the assumption that the
dividend of 10.00p (2025 - 10.00p) paid by the Company in the period under
review was invested into shares of the Company at the cum income NAV per
ordinary share/share price, as appropriate, at the ex-dividend date.
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other public company, an
investment trust can borrow money to invest in additional investments for its
portfolio. The effect of the borrowing on the shareholders' assets is called
'gearing'. If the Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the value of
the Company's assets falls, the situation is reversed. Gearing can therefore
enhance performance in rising markets but can adversely impact performance in
falling markets. The level of gearing can be adjusted through the use of
derivatives which affect the sensitivity of the value of the portfolio to
changes in the level of markets.
Net gearing is the Company's borrowings less cash and cash equivalents
expressed as a percentage of shareholders' funds.
Gross gearing is the Company's borrowings expressed as a percentage of
shareholders' funds.
28 February 2026 31 August 2025
Net Gross Net Gross
gearing * gearing (†) gearing * gearing (†)
£'000 £'000 £'000 £'000
Borrowings (a) 107,192 107,192 115,947 115,947
Cash and cash equivalents (b) 8,862 - 15,515 -
Shareholders' funds (c) 784,351 784,351 788,148 788,148
Gearing 12.5% 13.7% 12.8% 14.7%
* Gearing: ((a) - (b)) divided by (c), expressed as a percentage.
† Potential gearing: (a) divided by (c), expressed as a percentage.
Leverage (APM)
For the purposes of the UK Alternative Investment Fund Managers (AIFM)
Regulations, leverage is any method which increases the Company's exposure,
including the borrowing of cash and the use of derivatives. It is expressed as
a ratio between the Company's exposure and its net asset value and can be
calculated on a gross and a commitment method. Under the gross method,
exposure represents the sum of the Company's positions after the deduction of
sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the
deduction of sterling cash balances and after certain hedging and netting
positions are offset against each other.
Active Share (APM)
Active share, a measure of how actively a portfolio is managed, is the
percentage of the portfolio that differs from its comparative index. It is
calculated by deducting from 100 the percentage of the portfolio that overlaps
with the comparative index. An active share of 100 indicates no overlap with
the index and an active share of zero indicates a portfolio that tracks the
index.
Further Shareholder Information
The Baillie Gifford Japan Trust aims to achieve long term capital growth
principally through investment in medium and smaller sized Japanese companies
which are believed to have above average prospects for growth, although it
invests in larger companies when considered appropriate.
At 28 February 2026, the Company had total assets of £891.5m (before
deduction of borrowings of £107.2m).
The Company is managed by Baillie Gifford, an Edinburgh based fund management
group with around £182bn under management and advice as at 1 April 2026.
Past performance is not a guide to future performance. The value of an
investment and any income from it is not guaranteed and may go down as well as
up and investors may not get back the amount invested. This is because the
share price is determined by the changing conditions in the relevant stock
markets in which the Company invests and by the supply and demand for the
Company's shares. You should view your investment as long term. You can find
up to date performance information about The Baillie Gifford Japan Trust PLC
on the Company website at japantrustplc.co.uk (http://www.japantrustplc.co.uk)
.†
The Interim Financial Report will be available at japantrustplc.co.uk† and
will be posted to shareholders on or around 14 April 2026.
For further information please contact:
Baillie Gifford & Co
Tel: +44 (0)800 917 2113
enquiries@bailliegifford.com
Jonathan Atkins, Director, Four Communications
Tel: 0203 920 0555 or 07872 495396
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
† Neither the contents of the Managers' website nor the contents of any
website accessible from hyperlinks on the Managers' website (or any other
website) is incorporated into, or forms part of, this announcement.
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