REG - Schroder Japan Trust - Half-year Financial Report
16/04/2026 07:00
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RNS Number : 6424A Schroder Japan Trust PLC 16 April 2026
SCHRODER JAPAN TRUST PLC
(the "Company")
Half Year Report
Schroder Japan Trust plc hereby submits its Half Year Report for the six
months ended 31 January 2026 as required by the Financial Conduct Authority's
Disclosure Guidance and Transparency Rule 4.2.
Key highlights
· The Company achieved a net asset value (''NAV'') increase of
18.9%, surpassing the Benchmark return of 15.3%. On a NAV basis, the Company
has outperformed the Benchmark by 4.0% and 4.1% per annum over five and ten
years, respectively.
· The portfolio remains biased towards value opportunities and
benefited from exposure to generative AI stocks and improving domestic
inflation dynamics, with positions such as Infroneer and Sanki Engineering
delivering strong performance.
· Strong performance has been reflected in the Company being
awarded an AAA rating by Citywire, and the AIC including the Company on its
2026 ISA Millionaire list.
· From 1 August 2026, the Company's investment management fee will
reduce from 0.75% to 0.70% on the first £200 million and 0.65% thereafter,
and will be charged on the lower of market capitalisation or NAV. The Board
expects the more competitive fee structure and total expense ratio to enhance
returns per share.
Philip Kay, Chairman of Schroder Japan Trust plc, commented:
"Masaki Taketsume's disciplined approach to stock selection proved effective
once again, with strong contributions from holdings exposed to the generative
artificial intelligence ("AI") value chain and continuing corporate governance
reforms."
The Company's Half Year Report and Financial Statements for the six months
ended 31 January 2026 are also being published in hard copy format and an
electronic copy will shortly be available to download from the Company's
website: www.schroders.com/japantrust (http://www.schroders.com/japantrust)
The Company has submitted a copy of its Half Year Report to the National
Storage Mechanism and it will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Enquiries:
Schroder Investment Management Limited
Charlotte Banks/Kirsty Preston (Press) 020 7658 6000
Katherine Fyfe (Company Secretarial) 020 7658 6000
Half Year Report for the six months ended 31 January 2026
Chairman's Statement
"Masaki Taketsume's disciplined approach to stock selection proved effective
once again, with strong contributions from holdings exposed to the generative
artificial intelligence ("AI") value chain and continuing corporate governance
reforms"
Performance
I am pleased to report that our Investment Manager's strategy has continued to
deliver a solid performance over the six-month period ended 31 January 2026.
The Company achieved a net asset value ("NAV") increase of 18.9%, surpassing
the Benchmark return of 15.3%. The share price delivered a total return of
27.4%. The Investment Manager continues to demonstrate a consistent and
methodical approach, reflected in the Company's long-term performance. On a
NAV basis, the Company has outperformed the benchmark by 4.0% and 4.1% per
annum over five and ten years, respectively. From a share price perspective,
the Company outperformed the benchmark by 5.4% and 1.7% per annum over five
and ten years, respectively.
During the period under review, the Japanese stock market experienced
a strong rally, with headline indices repeatedly reaching record highs. The
policy environment remained supportive, with the Bank of Japan's accommodative
monetary stance and modest policy rate increases helping to underpin investor
confidence. Masaki Taketsume's disciplined approach to stock selection proved
effective once again, with strong contributions from holdings exposed to the
generative artificial intelligence ("AI") value chain and continuing corporate
governance reforms. More details on the Company's investment strategy and
recent portfolio activity can be found in the Investment Manager's Review
starting on page 6.
Investment management fee
The Board is pleased to announce that, with effect from 1(st) August 2026, the
basis on which the Company's investment management fees are charged will be
adjusted from a charge on NAV to the lower of market capitalisation or NAV.
Therefore, if the shares trade at a discount to NAV, this is a benefit to
shareholders. As a result, the Company's investment management fee will be
reduced from 0.75% on the first £200 million of NAV to 0.70% on the first
£200 million of the lesser of market capitalisation and NAV. A fee of 0.65%
will be charged on the lesser of market capitalisation and NAV above £200
million. These changes introduce a fee structure and a total expense ratio
that are highly competitive within the industry. These adjustments are
expected to enhance returns per share. To support enhanced marketing activity
aimed at increasing the Company's profile and investor engagement, it has been
agreed that the marketing fee will increase by £50,000.
Awards
I am pleased to confirm that the strong performance over the period has been
reflected in the Company being awarded an AAA rating by Citywire, as well as
the AIC (Association of Investment Companies) including the Company on its
2026 ISA Millionaire List. The list comprises those trusts that would have
generated over £1 million had an investor contributed their full annual ISA
allowance since the inception of ISAs in 1999.
Discount management
During the period, the Company's shares continued to trade at a discount to
NAV. The Board exercised its buy-back authority to acquire 991,813 shares to
be held in treasury, at an average discount of 9.7%. The discount started at
12.9% and narrowed to 6.7% by period-end. We remain committed to monitoring
the discount and addressing it through share repurchases as appropriate.
Enhanced dividend policy
The Board has adopted an enhanced dividend policy under which it intends to
pay out 4% of the average NAV in each financial year. Dividends are declared
on a quarterly basis and, for the purposes of calculating the NAV in relation
to quarterly dividends, the average NAV of the 12 months trailing the
relevant quarter is used. The enhanced dividend policy does not result in any
change to the Company's investment approach and strategy. As at 31 January
2026, the shares of the Company had a dividend yield of 3.55%, which was
significantly higher than any other Japanese investment trust.
Gearing
Throughout the period, the Investment Manager actively geared the portfolio by
using contracts for difference ("CFDs"). The gearing level was 13.4% at 31
July 2025 and ended the half year period at 12.4%. The Investment Manager
typically targets a gearing range of between 10% and 17.5%. Gearing had a
positive effect on performance during the period. The Company's gearing
continues to operate within its pre-agreed limit of 25% of net asset value.
Schroders combination with Nuveen
On 12 February 2026 the Board of Schroders plc announced that they had agreed
terms of a recommended cash acquisition by Nuveen, to combine the
two businesses. The transaction is not expected to complete until Q4 2026.
The Board of Schroder Japan Trust have been informed that Nuveen's intention
is to maintain continuity across Schroders' existing investment and
client-facing functions, and the Board will monitor progress in this regard.
Further details are available on the Schroders website:
https://www.schroders.com/en/global/individual/nuveenoffer/
(https://www.schroders.com/en/global/individual/nuveenoffer/)
Outlook
At the time of writing, escalating geopolitical tensions and ongoing conflict
are contributing to an elevated level of uncertainty across global markets. In
the near term, investor sentiment is therefore likely to remain sensitive, not
only to political and security developments, but also to continued debate
around the durability of the AI investment cycle, including whether today's
high levels of spending on AI infrastructure can be sustained and how quickly
that investment translates into meaningful productivity gains and earnings
growth.
Even so, the Board continues to view the outlook for Japanese equities
positively. Continued progress of corporate governance reforms, improving
capital discipline, and the gradual shift away from deflation should provide
supportive conditions for long-term investors.
Philip Kay
Chairman
15 April 2026
Investment Manager's Review
"The Company remains well positioned to capture attractive opportunities
across the Japanese equity market"
Our investment approach
We believe the Japanese equity market ultimately acts efficiently in
reflecting the intrinsic value of companies. In the short to medium-term,
however, considerable inefficiencies are frequently evident in individual
stocks. These inefficiencies provide repeatable opportunities to identify and
invest in undervalued stocks, with the aim of delivering a better return than
the market as a whole on a rolling three-to-five year view.
Our investment resource is entirely devoted to this aim, focusing on
individual company fundamentals to understand the true worth of a stock and
investing in a portfolio of 60-70 of the highest conviction ideas. These then
tend to be held for the long term, with value being realised as the market
gradually reflects their true value more efficiently.
Portfolio holdings tend to fall into three categories of inefficiency:
1. Market misperception - companies with self-improving credentials, with
management initiatives to sustainably enhance operational performance being
under-appreciated by other investors.
2. Market oversight - undervalued companies, especially among small and
mid-caps where research coverage is less widespread, with strong and
defendable business franchises in niche product areas.
3. Short-term overreaction - ideas arising from abrupt but transitory
events which push valuations of quality companies temporarily to unsustainably
low levels.
Outside these three categories, the balance of the portfolio represents best
in class stocks with reasonable valuations. The weighting given to each of
these segments evolves over time, but a reasonable exposure to each category
ensures a good level of diversification for the portfolio as a whole.
Meanwhile, the approach tends to result in a bias towards value stocks and
smaller companies, as well as an overall focus on quality.
The portfolio tends to exhibit a high 'active share', which means that its
constituents deviate significantly from the benchmark index. Gearing
(financial leverage) typically ranges between 10% and 17.5%, allowing
shareholders to potentially benefit even more as the inefficiencies we have
identified become more appropriately priced by the market.
Manager's review
Over the first six months of the Company's financial year to 31 January 2026,
the Company's net asset value increased by 18.9%, while its Benchmark rose by
15.3%.
The Japanese stock market maintained its recent strength during the period
under review, supported by fading concerns over potential changes to US tariff
policy and growing optimism about interest rate cuts from the US Federal
Reserve (Fed). Following the inauguration of Sanae Takaichi as Prime Minister
in early October 2025, the market gained further momentum amid expectations of
greater political stability and a more proactive fiscal policy stance.
Recent performance drivers
During the period, Japanese equities advanced but remained sensitive to
shifting global rate expectations and artificial intelligence ("AI") related
sentiment. Softer US economic data reinforced expectations for Fed cuts, while
improving macro data in Japan, including a return to GDP growth and ongoing
moderate inflation, supported risk appetite.
Market leadership was mixed. Generative AI optimism supported sectors such as
semiconductor equipment and optical components, but concerns about valuations,
the returns on heavy AI infrastructure spending and potential disruption to
software businesses - including gaming and companies with 'software as a
service' (SaaS) business models - drove sharp rotations and periodic weakness
in growth and quality stocks.
Domestic policy developments also influenced sentiment. Following Prime
Minister Ishiba's resignation in September, Takaichi's election and the
formation of a coalition between the Liberal Democratic Party (LDP) and the
Japan Innovation Party (JIP) were generally viewed as positive for political
stability, while elevated Japan-China tensions weighed on some sectors that
are reliant on inbound tourism. Rising yields, alongside expectations of a
strong result for the ruling LDP in the February snap election, supported
financials and other domestically focused sectors.
On monetary policy, the Bank of Japan (BoJ) raised interest rates twice in
2025, continued to signal the potential for further increases, and set out an
extremely gradual plan to unwind its exchange-traded fund (ETF) holdings.
These ETF purchases were originally introduced as part of the BOJ's
extraordinary monetary easing measures - intended to support market
functioning, encourage risk-taking and help combat persistent deflationary
pressures - so the pace of any unwind has been designed to limit the immediate
impact on markets.
Whilst the market remains concerned about Japan's dependency on the
Middle East for its energy supply. It is worth highlighting that Japan holds
some eight months worth of oil reserves in storage, suggesting that short term
risk of energy supply shock is limited. The government has also taken a number
of other initiatives such as instigating a cap on oil prices at the petrol
pump and an increase in alternative energy sources. Japan's energy mix is also
very well diversified with oil accounting for 36-37% of the total supply,
followed by coal at 26%, natural gas at 21% with nuclear at 6-7% and renewable
energy (hydro, solar and wind) at 10-11%.
Within the market, value stocks continued to outperform growth stocks, which
assisted the Company's performance given the value bias inherent in our
investment approach. Smaller companies generally outperformed their larger
counterparts, which also represented a modest tailwind. There was a beneficial
impact from gearing and helpful contributions from a range of individual
stocks, as explained below.
Two key developments contributed positively to performance during the period.
Firstly, continued investor enthusiasm for generative AI drove outperformance
among related stocks, while concerns about its potential disruptive impact led
to underperformance in gaming and SaaS stocks. In aggregate, the portfolio's
exposure to the AI theme added value during the period. We tend to view these
companies as market misperception stocks, as the market has not yet fully
reflected either their ability to participate in the AI growth opportunity or
the earnings leverage that stems from their dominant positions within their
respective markets.
For example, JX Advanced Metals, an advanced non-ferrous materials
manufacturer, performed strongly as the market began to recognise its dominant
position in high-end materials that are essential for the semiconductors and
electronic components used in generative AI. Meanwhile, the portfolio's
limited exposure to software-related gaming stocks such as Sony and Nintendo
also contributed positively.
Secondly, improving domestic inflation dynamics have enabled companies
operating in supply-constrained environments to regain pricing power and
improve profitability. The portfolio benefited from this trend, with positions
such as Infroneer and Sanki Engineering delivering strong performance in this
way.
By contrast, some holdings faced valuation pressure due to rising concerns
about potential business model disruption from generative AI. For example, our
best in class IT services holding Nomura Research Institute, as well as our
market misperception holding LY, both underperformed due to valuation
compression despite relatively stable earnings. Asahi, which faced operational
disruption caused by cyberattacks, also detracted from performance.
Portfolio strategy
Currently, the largest category within the portfolio is market misperception,
which accounts for approximately 40% of assets. This includes companies such
as Nippon Steel, Japan Post and Rohm, where management initiatives are paving
the way for sustainable improvements in returns that are not yet reflected in
valuations.
For example, we expect to see profitability improvements from Japan Post as it
implements price increases in its postal services division. A cyclical
recovery should also benefit its financial subsidiaries, Yucho Bank and Kampo
Life. We also expect management to enhance shareholder returns, although
regulatory constraints and complex stakeholder relationships could hinder
progress.
Almost 30% of the portfolio is in market oversights, such as Galilei, Hosokawa
Micron and Kohoku Kogyo, where we find highly competitive smaller businesses
trading at a significant discount to their large cap and global peers. For
example, Kohoku Kogyo's two main businesses - lead terminals and optical
components - are experiencing rapid growth. Demand for its lead terminals,
used in high-end capacitors, is rising as the expansion of electric and
electrified vehicles drives the need for more advanced electronic components.
Meanwhile, its optical components business is benefiting from surging global
data traffic, which is prompting increased investment in subsea optical
networks. Despite these strong and sustainable tailwinds, its shares continue
to trade at an unwarranted discount to comparable companies worldwide.
Around 10% of the portfolio is invested in short-term overreactions, including
out-of-favour technology opportunities such as Recruit and Nichirei. These
businesses are beneficiaries of long-term structural tailwinds, but their
shares were sold down aggressively - in our view, too aggressively - over the
last couple of years. Nichirei, a leading frozen food and cold chain logistics
provider in Japan, is well positioned to capture structural demand growth
driven by labour shortages in business-to-business (B2B) categories and
lifestyle changes in business-to-consumer (B2C) categories. The company's
profitability was temporarily pressured by yen depreciation, which led to
higher raw material costs. However, these costs have been passed on to
customers through price increases, with little impact on underlying volume
growth. Despite this, the company's valuation has contracted significantly,
leading to what we consider to be an attractive entry point.
The remaining portfolio is invested in what we consider to be best in class
operators, such as Sumitomo Mitsui Financial, Asahi and Orix.
From a sector perspective, this results in a bias towards construction,
services, chemicals and non-ferrous metal. As is typical, the portfolio
remains biased towards value opportunities and overweight to small and mid-cap
stocks, where valuations look particularly attractive given the improving
domestic economic backdrop.
Top 10 contributors and detractors
Six months to 31 January 2026
Top 10 contributors Portfolio weight Benchmark weight Portfolio return Benchmark return Total effect
Fujikura Ltd 3.2% 0.4% 87% 89% 1.6%
JX Advanced Metals Corp 1.4% 0.1% 167% 168% 1.3%
Ibiden Ltd 1.4% 0.1% 142% 143% 1.2%
Infroneer Holdings Inc 1.8% 0.0% 72% 73% 0.8%
Nintendo Ltd 0.0% 1.7% 0% -26% 0.8%
Sony Group Corp 0.0% 3.1% 0% -8% 0.7%
Sumitomo Mitsui Financial Group In 4.0% 2.0% 40% 35% 0.5%
Sanki Engineering Ltd 1.8% 0.0% 43% 43% 0.5%
Mizuho Financial Group Inc 2.6% 1.5% 52% 47% 0.4%
Mitsui Ltd 2.0% 1.3% 64% 56% 0.4%
Top 10 detractors Portfolio weight Benchmark weight Portfolio return Benchmark return Total effect
Advantest Corp 0.0% 1.2% 0.0% 132.8% -0.9%
LY Corp 1.4% 0.2% -32.4% -32.4% -0.8%
Asahi Group Holdings Ltd 2.0% 0.3% -20.1% -20.0% -0.7%
Kyoritsu Maintenance Ltd 1.0% 0.0% -26.8% -26.7% -0.5%
Nomura Research Institute Ltd 1.3% 0.3% -26.1% -25.9% -0.5%
Aica Kogyo Ltd 1.6% 0.0% -9.7% -9.5% -0.5%
Internet Initiative Japan Inc 1.2% 0.0% -15.7% -15.6% -0.4%
Tokyo Electron Ltd 0.0% 1.4% 0.0% 43.0% -0.4%
Mitsubishi Ufj Financial Group Inc 0.0% 3.2% 0.0% 27.4% -0.4%
Wingarc1st Inc 1.1% 0.0% -14.5% -14.4% -0.4%
Source: FactSet, GBP, TOPIX. Stocks mentioned are shown for illustrative
purposes only and should not be viewed as a recommendation to buy/sell. Past
performance is not a guide to future performance and may not be repeated. The
value of investments can go down as well as up and is not guaranteed. Returns
may increase or decrease as a result of currency fluctuations.
Portfolio activity
We initiated two new market misperception positions in THK and Yokogawa
Electric. For THK, we are constructive on its earnings growth, supported by
accelerating sales growth and improving operating leverage as demand recovers
in end markets such as semiconductor equipment and machine tools. We also see
potential for margin improvement as production normalises following a period
of inventory adjustments. Additionally, we believe the company is well
positioned to make meaningful progress on corporate governance, as we expect
the new president to pursue fundamental reforms to the business portfolio.
For Yokogawa Electric, we expect revenue growth to accelerate, supported in
the near term by increased global investment in gas infrastructure, and over
the longer term by the expansion of higher-margin services. Improving product
mix and near-term investments should enhance overall profitability, and there
is considerable scope for revaluation as these benefits come through.
We also initiated a position in Capcom as a new short-term overreaction idea.
The company is a well-known Japanese gaming developer with globally recognised
franchises such as Monster Hunter and Resident Evil. We believe its business
model, which is focused on repeat sales and the expansion of its PC user base
in emerging markets, should deliver steady growth. Nevertheless, Capcom's
latest Monster Hunter release was poorly received, leading to some share price
pressure and a decline in its valuation premium relative to sector peers. We
believe this historic premium is still justified and expect the shares to
recover as sales rebound following remedial measures to Monster Hunter and the
release of a new Resident Evil title next fiscal year.
In terms of exits, we sold out of TPR, as industry-wide uncertainty linked to
US tariff policy overshadowed company-specific drivers, such as improving
asset efficiency and higher shareholder returns. We also sold the position in
Tazmo, as we saw little evidence of acceleration in activity related to
advanced integrated circuit packaging technologies such as
chip-on-wafer-on-substrate (CoWoS), which we had viewed as a key growth driver
for the company.
Outlook
After a strong 2025, Japanese equity valuations have risen towards the upper
end of their historical range, suggesting more limited scope for near-term
multiple expansion. At the same time, geopolitical tensions - primarily the
recent escalation of conflict in the Middle East - and ongoing concerns around
a potential 'AI bubble' could keep volatility elevated, particularly among
highly valued AI-linked growth stocks. Markets are also likely to remain
sensitive to the path of monetary policy normalisation in Japan and the pace
of Fed easing in the US, as these factors influence yields, currencies and
sector leadership.
Even so, we believe the investment case for the Schroder Japan Trust remains
very attractive.
Japan-specific tailwinds - including ongoing progress on corporate governance
and capital discipline, improving political stability and the continued shift
from deflation to inflation - should support durable earnings growth and
rising shareholder returns.
With headline valuations now fuller, further market progress is likely to
depend more on earnings growth than continued multiple expansion. There are
still pockets of genuine value, and the earnings backdrop has remained
encouragingly firm, supported by better-than-expected results and further
upgrades to forecasts.
In this environment, outcomes are likely to be driven increasingly by stock
selection, and the Company is well positioned to respond. Our investment
decisions are underpinned by a dedicated, on-the-ground research capability in
Japan, with nine analysts based in Tokyo providing regular company access,
local market insight and detailed fundamental analysis.
We continue to favour businesses with robust balance sheets, resilient cash
generation and clear capital allocation discipline - particularly those
demonstrating tangible progress on return on equity (ROE), governance
standards and shareholder returns through dividends and buybacks. Supported by
our local research presence, the Company remains well positioned to identify
and capture attractive opportunities across the breadth of the Japanese equity
market.
Masaki Taketsume
Portfolio Manager
15 April 2026
Interim Management Statement
Principal risks and uncertainties
The principal risks and uncertainties with the Company's business fall into
the following risk categories: strategic; investment management; financial and
currency; custody; gearing and leverage; accounting, legal and regulatory;
service provider; and cyber. A detailed explanation of the risks and
uncertainties in each of these categories can be found on pages 30 to 32 of
the Company's published annual report and financial statements for the year
ended 31 July 2025.
These risks and uncertainties have not materially changed during the six
months ended 31 January 2026. While assessing the financial statements, the
Board undertook a review of the principal and emerging risks and noted that
geopolitical risks had increased considerably in recent months. Most notably
it is due to the global trade wars arising from the evolving US tariff regime
as well as escalating geopolitical tensions and ongoing conflict which are
contributing to an elevated level of uncertainty across global markets. These
matters will be closely monitored and reported on in the next Annual Report,
as appropriate.
Going concern
Having assessed the principal risks and uncertainties, and the other matters
discussed in connection with the viability statement as set out on page 33 of
the published annual report and financial statements for the year ended 31
July 2025, the Directors consider it appropriate to adopt the going concern
basis in preparing the financial statements.
Related party transactions
There have been no transactions with related parties that have materially
affected the financial position or the performance of the Company during the
six months ended 31 January 2026.
Directors' responsibility statement
In respect of the half year report for the six months ended 31 January 2026,
we confirm that, to the best of our knowledge:
- the condensed set of Financial Statements contained within have been
prepared in accordance with IAS 34 Interim Financial Reporting and give a true
and fair view of the assets, liabilities, financial position and profit and
loss of the Company as at 31 January 2026, as required by the Disclosure
Guidance and Transparency Rule 4.2.4R;
- the half year report includes a fair review as required by the
Disclosure Guidance and Transparency Rule 4.2.7R, of important events that
have occurred during the six months to 31 January 2026, and their impact on
the condensed set of Financial Statements, and a description of the principal
and emerging risks for the remaining six months of the financial year; and
- the half year report includes a fair review of the information
concerning related party transactions as required by the Disclosure Guidance
and Transparency Rule 4.2.8R.
The half year report has not been reviewed or audited by the Company's
auditors.
The half year report for the six months ended 31 January 2026 was approved by
the Board and the above Responsibilities Statement has been signed on its
behalf.
Statement of Comprehensive Income
For the six months ended 31 January 2026 (unaudited)
(Unaudited) (Unaudited) (Audited)
For the six months For the six months For the year
ended 31 January ended 31 January ended 31 July
2026 2026 2026 2025 2025 2025 2025 2025 2025
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at
fair value through profit or loss - 48,552 48,552 - 6,878 6,878 - 12,834 12,834
Net gains on derivative contracts - 13,911 13,911 - 2,404 2,404 - 2,080 2,080
Net foreign currency (losses)/gains - (971) (971) - 127 127 - (89) (89)
Income from investments 4,659 - 4,659 4,961 - 4,961 10,383 - 10,383
Other interest receivable and
similar income 23 - 23 42 - 42 66 - 66
Gross return 4,682 61,492 66,174 5,003 9,409 14,412 10,449 14,825 25,274
Investment management fee (398) (929) (1,327) (341) (795) (1,136) (688) (1,605) (2,293)
Administrative expenses (349) - (349) (394) - (394) (724) - (724)
Net return before finance
costs and taxation 3,935 60,563 64,498 4,268 8,614 12,882 9,037 13,220 22,257
Finance costs (73) (171) (244) (47) (111) (158) (116) (272) (388)
Net return before taxation 3,862 60,392 64,254 4,221 8,503 12,724 8,921 12,948 21,869
Taxation 3 (392) - (392) (438) - (438) (901) - (901)
Net return after taxation 3,470 60,392 63,862 3,783 8,503 12,286 8,020 12,948 20,968
Return per share (pence) 4 3.02 52.63 55.65 3.25 7.30 10.55 6.91 11.16 18.07
The "Total" column of this statement is the profit and loss account of the
Company. The "Revenue" and "Capital" columns represent supplementary
information prepared under guidance issued by The Association of Investment
Companies. The Company has no other items of other comprehensive income and
therefore the net return after taxation is also the total comprehensive income
for the period.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period.
Statement of Changes in Equity
For the six months ended 31 January 2026 (unaudited)
Called-up Capital Warrant Share
share Share redemption purchase purchase Capital Revenue
capital premium reserve reserve reserve reserves reserves Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 July 2025 11,845 7 656 3 75,929 255,022 1,115 344,577
Repurchase of the Company's own shares into treasury - - - - (2,801) - - (2,801)
Net return after taxation - - - - - 60,392 3,470 63,862
Dividend paid in the period 5 - - - - - (2,160) (4,470) (6,630)
At 31 January 2026 11,845 7 656 3 73,128 313,254 115 399,008
For the six months ended 31 January 2025 (unaudited)
Called-up Capital Warrant Share
share Share redemption purchase purchase Capital Revenue
capital premium reserve reserve reserve reserves reserves Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 July 2024 11,845 7 656 3 80,718 249,597 8,062 350,888
Repurchase of the Company's own shares into treasury - - - - (4,094) - - (4,094)
Net return after taxation 5 - - - - - 8,503 3,783 12,286
Dividend paid in the period - - - - - (4,499) (11,329) (15,828)
At 31 January 2025 11,845 7 656 3 76,624 253,601 516 343,252
For the year ended 31 July 2025 (audited)
Called-up Capital Warrant Share
share Share redemption purchase purchase Capital Revenue
capital premium reserve reserve reserve reserves reserves Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 July 2024 11,845 7 656 3 80,718 249,597 8,062 350,888
Repurchase of the Company's own
shares into treasury - - - - (4,789) - - (4,789)
Net return after taxation 5 - - - - - 12,948 8,020 20,968
Dividend paid in the period - - - - - (7,523) (14,967) (22,490)
At 31 July 2025 11,845 7 656 3 75,929 255,022 1,115 344,577
Statement of Financial Position
as at 31 January 2026 (unaudited)
(Unaudited) (Unaudited) (Audited)
31 January 31 January 31 July
2026 2025 2025
Note £'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 375,287 328,885 327,209
Current assets
Debtors 1,289 2,041 2,213
Cash at bank 26,888 14,201 17,028
Derivative financial instruments held at fair value through profit or loss 411 1,819 3,855
28,588 18,061 23,096
Current liabilities
Creditors: amounts falling due within one year 6 (2,455) (2,798) (2,460)
Amounts held at derivative clearing houses and brokers - (739) (3,145)
Derivative financial instruments held at fair value through profit or loss (2,412) (157) (123)
(4,867) (3,694) (5,728)
Net current assets 23,721 14,367 17,368
Total assets less current liabilities 399,008 343,252 344,577
Net assets 399,008 343,252 344,577
Capital and reserves
Called-up share capital 7 11,845 11,845 11,845
Share premium 7 7 7
Capital redemption reserve 656 656 656
Warrant exercise reserve 3 3 3
Share purchase reserve 73,128 76,624 75,929
Capital reserve 313,254 253,601 255,022
Revenue reserve 115 516 1,115
Total equity shareholders' funds 399,008 343,252 344,577
Net asset value per share (pence) 8 348.47 296.46 298.35
Registered in England and Wales as a public company limited by shares
Company registration number: 02930057
Notes to the Financial Statements
for the six months ended 31 January 2026 (unaudited)
1. Accounts
The information contained within the financial statements in this half year
report has not been audited or reviewed by the Company's independent auditor.
The figures and financial information for the year ended 31 July 2025 are
extracted from the latest published financial statements of the Company and do
not constitute statutory financial statements for that year. Those financial
statements have been delivered to the Registrar of Companies and included the
report of the auditors which was unqualified and did not contain a statement
under either section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
Basis of accounting
The financial statements have been prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, in particular with Financial Reporting
Standard 104 "Interim Financial Reporting" and 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.
All of the Company's operations are of a continuing nature.
The accounting policies applied to these financial statements are consistent
with those applied in the financial statements for the year ended 31 July
2025.
3. Taxation on ordinary activities
The Company's effective corporation tax rate is nil, as deductible expenses
exceed taxable income. The tax charge comprises irrecoverable overseas
withholding tax.
4. Return per share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 January 31 January 31 July
2026 2025 2025
£'000 £'000 £'000
Revenue return 3,470 3,783 8,020
Capital return 60,392 8,503 12,948
Total return 63,862 12,286 20,968
Weighted average number of shares in issue during the period 114,756,668 116,412,443 116,025,982
Revenue return per share (pence) 3.02 3.25 6.91
Capital return per share (pence) 52.63 7.30 11.16
Total return per share (pence) 55.65 10.55 18.07
5. Dividends paid
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 January 31 January 31 July
2026 2025 2025
£'000 £'000 £'000
2025 final dividend paid of 2.85p (2024: 10.81p) 3,275 12,561 12,561
First interim dividend of 2.93p (2025: 2.82p) 3,355 3,267 3,267
Second interim dividend (2025: 2.89p) - - 3,345
Third interim dividend (2025: 2.87p) - - 3,317
Total dividends paid in the period 6,630 15,828 22,490
The 2025 final dividend amounted to £3,292,000. However the amount actually
paid was £3,275,000 as shares were repurchased and held in treasury, after
the accounting date, but prior to the dividend Record Date.
A second interim dividend of 3.05p (2025: 2.89p) per share, amounting to
£3,492,000 (2025: £3,345,000) has been declared in respect for the year
ending 31 July 2026.
6. Creditors: amounts falling due within one year
(Unaudited) (Unaudited) (Audited)
31 January 31 January 31 July
2026 2025 2025
£'000 £'000 £'000
Securities purchased awaiting settlement 832 1,865 1,546
Repurchase of ordinary shares into treasury awaiting settlement - 160 114
Other creditors and accruals 1,623 773 800
2,455 2,798 2,460
The company has a yen 1.0 billion credit facility available from Sumitomo
Mitsui Banking Corporation, London Branch, which was undrawn at the period end
(2025: yen 1.0 billion).
7. Called-up share capital
Changes in called-up share capital during the period were as follows:
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 January 31 January 31 July
2026 2025 2025
Ordinary shares of 10p each, allotted, called up and fully paid:
Ordinary shares in issue:
Opening balance of 115,495,504 (year ended 31 July 2025: 117,400,528 and 11,549 11,740 11,740
period ended 31 January 2025: 117,400,528) ordinary shares of 10p each
Repurchase of 991,813 (year ended 31 July 2025: 1,905,024 and period ended
31 January 2025: 1,617,260) shares held in treasury (99) (162) (191)
Closing balance of 114,503,691 (year ended 31 July 2025: 115,495,504 and
period ended 31 January 2025: 115,783,268) shares in issue, excluding shares 11,450 11,578 11,549
held in treasury
Shares held in treasury 3,949,595 (year ended 31 July 2025: 2,957,782 and 395 267 296
period ended 31 January 2025: 2,670,018)
Closing balance of 118,453,286 (year ended 31 July 2025: 118,453,286 and 11,845 11,845 11,845
period ended 31 January 2025: 118,453,286) shares in issue
8. Net asset value per share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
31 January 31 January 31 July
2026 2025 2025
£'000 £'000 £'000
Net assets attributable to shareholders (£'000) 399,008 343,252 344,577
Shares in issue at the period end 114,503,691 115,783,268 115,495,504
Net asset value per share (pence) 348.47 296.46 298.35
9. Financial instruments measured at fair value
The Company's financial instruments within the scope of FRS 102 that are held
at fair value comprise its investment portfolio and derivative financial
instruments.
FRS 102 requires financial instruments to be categorised into a hierarchy
consisting of the three levels below.
Level 1 - valued using unadjusted quoted prices in active markets for
identical assets.
Level 2 - valued using observable inputs other than quoted prices included
within Level 1.
Level 3 - valued using inputs that are unobservable.
The following table sets out the fair value measurements using the FRS 102
hierarchy above:
31 January 2026 (unaudited)
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial instruments held at fair value through profit or loss
Equity investments 375,287 - - 375,287
Derivative financial instruments - contracts for difference - CFD assets - 411 - 411
Derivative financial instruments - contracts for difference - CFD liabilities - (2,412) - (2,412)
Total 375,287 (2,001) - 373,286
31 January 2025 (unaudited)
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial instruments held at fair value through profit or loss
Equity investments 328,885 - - 328,885
Derivative financial instruments - contracts for difference - CFD assets - 1,819 - 1,819
Derivative financial instruments - contracts for difference - CFD liabilities - (157) - (157)
Total 328,885 1,662 - 330,547
31 July 2025 (audited)
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial instruments held at fair value through profit or loss
Equity investments 327,209 - - 327,209
Derivative financial instruments - contracts for difference - CFD assets - 3,855 - 3,855
Derivative financial instruments - contracts for difference - CFD liabilities - (123) - (123)
Total 327,209 3,732 - 330,941
10. Events after the interim period that have not been reflected in the
financial statements for the interim period
The Directors have evaluated the period since the interim date and have not
noted any significant events which have not been reflected in the financial
statements.
ENDS
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