Final Results
Baillie Gifford Japan Trust PLC
29 September 2004
THE BAILLIE GIFFORD JAPAN TRUST PLC
Results for the year to 31 August 2004
The Baillie Gifford Japan Trust PLC outperformed its benchmark index* over the
year to 31 August 2004 by 14.5 percentage points. Net asset value per share rose
by 19.9%, while the benchmark index gained 5.4%.
• Over this period, the Company's share price rose by 22.4%+ and the discount
narrowed from 11.3% to 9.4%.
• Performance over the second half of the Company's year has been strong: net
asset value per share rose 12.6%, while the benchmark index rose 7.2%.
• The Company is ranked first in its AITC peer group in terms of net asset
value performance over one, three, five and ten years+.
• The strong relative performance emanated from good stock selection in the
Financials and Commerce & services sectors, combined with the benefits of
gearing.
• Over the year, gross borrowings increased from Y3.6bn to Y4.1bn, and a
seven year facility was taken out to increase the average term of the
borrowings as the Board and Managers believe that the likelihood of
reflation is increasing.
• Although recent GDP data has been volatile and disappointing, the more
reliable monthly indicators paint a more stable picture of economic growth.
Export growth remains strong, driven by China and other Asian countries.
Inventory levels remain low.
• The Board and Managers believe that, in the absence of exogenous shocks or
domestic policy errors, this economic cycle in Japan will be longer than
its recent predecessors.
• The Company is seeking the powers of treasury at this year's AGM. Any stock
bought for treasury will be held indefinitely, and re-issuance will only be
implemented at net asset value or above. These powers should prove
beneficial in smoothing demand and supply, as well as helping against any
possible future shrinkage of the Company
* The Company's Benchmark index for the year to 31/8/04 is the TOPIX Index in
sterling terms.
+ Past performance is no guarantee of future performance.
The Baillie Gifford Japan Trust PLC aims to pursue long-term capital growth
principally through investment in medium to smaller sized Japanese companies.
The Company is managed by Baillie Gifford & Co., an Edinburgh based fund
management group
29 September 2004
For further information please contact:
Sarah Whitley, Manager,
The Baillie Gifford Japan Trust PLC 0131 275 2000
Mike Lord, Director,
Broadgate 020 7726 6111
THE BAILLIE GIFFORD JAPAN TRUST PLC
Important Information and Risk Warnings
Past performance is no guarantee of future performance.
The value of your investment
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
stockmarkets in which the Company invests and by the supply and demand for the
Company's shares. Investment in investment trusts should be regarded as medium
to long-term.
Overseas investment
The Company invests in overseas securities and will be affected by currency
fluctuations. These can have a negative impact on the Company's share price.
Gearing
The Company has borrowed money to make further investments. This is commonly
referred to as gearing. The risk is that, when this money is repaid by the
Company, the value of these investments may not be enough to cover the borrowing
and interest costs, and the Company makes a loss. If the Company's investments
fall in value, gearing will increase the amount of the loss in value to
investors. The more highly geared the Company, the greater this effect will be.
Baillie Gifford staff interests
The staff of Baillie Gifford & Co, and/or the Company's directors, may hold
shares in the Company, or may buy, sell, or offer to make a purchase or sale of
such shares, from time to time.
The following is the unaudited preliminary statement for the year to 31 August
2004 which was approved by the Board on 28 September 2004. No dividend is
payable.
THE BAILLIE GIFFORD JAPAN TRUST PLC
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
for the year ended for the year ended
31 August 2004 31 August 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Realised gains/(losses) on
investments - 2,648 2,648 - (12,882) (12,882)
Unrealised gains on investments - 13,537 13,537 - 22,567 22,567
Currency gains/(losses) (note 1) - 1,635 1,635 - (64) (64)
Income 945 - 945 797 - 797
Investment management fee (975) - (975) (718) - (718)
Other administrative expenses (221) - (221) (184) - (184)
Net return before finance costs
and taxation (251) 17,820 17,569 (105) 9,621 9,516
Finance costs of borrowings (255) - (255) (159) - (159)
Return on ordinary activities
before taxation (506) 17,820 17,314 (264) 9,621 9,357
Tax on ordinary activities (73) - (73) (93) - (93)
Return on ordinary activities
after taxation (579) 17,820 17,241 (357) 9,621 9,264
Transfer (from)/to reserves (579) 17,820 17,241 (357) 9,621 9,264
Return per ordinary share (note 3) (0.93p) 28.77p 27.84p (0.57p) 15.40p 14.83p
* The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in this statement derive from continuing
operation
THE BAILLIE GIFFORD JAPAN TRUST PLC
SUMMARISED BALANCE SHEET
at 31 August 2004
(unaudited)
31 August 31 August
2004 2003
£'000 £'000
NET ASSETS
Listed overseas equities 108,849 96,084
Unlisted equities - traded on the OTC/Hercules Japan markets 3,263 8,746
- other unlisted 1,759 1,484
Total fixed asset investments 113,871 106,314
Net liquid assets/(liabilities) 10,719 (226)
Total assets (before deduction of bank loans) 124,590 106,088
Bank loans (note 4) (20,767) (19,506)
103,823 86,582
CAPITAL AND RESERVES
Called-up share capital 3,097 3,097
Capital reserves 108,170 90,350
Revenue reserve (7,444) (6,865)
EQUITY SHAREHOLDERS' FUNDS 103,823 86,582
NET ASSET VALUE PER ORDINARY SHARE 167.6p 139.8p
Ordinary shares in issue (note 5) 61,935,000 61,935,000
THE BAILLIE GIFFORD JAPAN TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Year to Year to
31 August 2004 31 August 2003
£'000 £'000 £'000 £'000
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (245) (27)
NET CASH OUTFLOW FROM SERVICING OF FINANCE (203) (157)
TOTAL TAX PAID (76) (98)
FINANCIAL INVESTMENT
Acquisitions of investments (31,553) (51,026)
Disposals of investments 39,685 44,309
Realised currency profit/(loss) 288 (147)
NET CASH INFLOW/(OUTFLOW) FROM FINANCIAL INVESTMENT 8,420 (6,864)
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 7,896 (7,146)
FINANCING
Shares purchased for cancellation - (1,183)
Bank loans drawn down 11,610 5,413
Bank loans repaid (9,002) -
NET CASH INFLOW FROM FINANCING 2,608 4,230
INCREASE/(DECREASE) IN CASH 10,504 (2,916)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash in the period 10,504 (2,916)
Net cashflow from bank loans (2,608) (5,413)
Exchange movement on bank loans 1,347 83
MOVEMENT IN NET DEBT IN THE PERIOD 9,243 (8,246)
NET DEBT AT 1 SEPTEMBER (19,013) (10,767)
NET DEBT AT 31 AUGUST (9,770) (19,013)
THE BAILLIE GIFFORD JAPAN TRUST PLC
TWENTY LARGEST EQUITY HOLDINGS
at 31 August 2004
Market
value % of total
Name Business £'000 assets
Aiful Consumer finance 3,661 2.9
Sumitomo Realty & Development Property development and leasing 3,638 2.9
Asahi Glass Specialist glass manufacturer 3,309 2.7
Yamada Denki Consumer electronics retailer 3,247 2.6
JFE Holdings Major steel company 3,218 2.6
Diamond Lease Leasing services 3,091 2.5
Sumitomo Heavy Heavy machinery 2,999 2.4
Itochu Trading conglomerate 2,937 2.4
Seiko Diversified precision manufacturer 2,813 2.3
Tokyu Railway based conglomerate 2,710 2.2
Tostem Inax Holdings Building materials 2,708 2.2
UFJ Holdings Major bank 2,623 2.1
Fuji Television Network Television broadcaster 2,567 2.1
Canon Printers and copiers 2,485 2.0
OMC Card Credit card company 2,461 2.0
KDDI Mobile telecommunications 2,398 1.9
Mitsui OSK Lines Marine transportation services 2,357 1.9
Alps Electric Electronic components 2,344 1.9
USS Company Second-hand car auctioneer 2,331 1.9
Kamigumi Port transportation 2,305 1.9
56,202 45.4
THE BAILLIE GIFFORD JAPAN TRUST PLC
NOTES
31 August 2004 31 August 2003
£'000 £'000
1. Currency gains/(losses)
Realised exchange differences 1,569 (147)
Movement in unrealised exchange differences 66 83
1,635 (64)
2. No final dividend will be declared.
3. Return per ordinary share
Revenue return (579) (357)
Capital return 17,820 9,621
Return per ordinary share is based on the above totals of revenue and capital and on 61,935,000 (31
August 2003 - 62,473,082) ordinary shares, being the weighted average number of ordinary shares in
issue during the year.
4. Bank loans of £20.8 million (Y4.1 billion) have been drawn down under yen loan facilities which are
repayable between August 2007 and May 2011 (31 August 2003 - £19.5 million (Y3.6 billion)).
5. At the AGM in November 2003, shareholders approved the renewal of the Company's authority to buy back
its own ordinary shares in respect of 9,284,056 ordinary shares of 5p each (equivalent to 14.99% of
its share capital at that date). No ordinary shares have been bought back during the year and at 31
August 2004 the Company's authority to buy back its own shares, therefore, remain unchanged at
9,284,056 ordinary shares.
6. The financial information set out above does not constitute the Company's statutory accounts for the
year ended 31 August 2004. The financial information for 2003 is derived from the statutory accounts
for 2003 which have been delivered to the Registrar of Companies. The Auditors have reported on the
2003 accounts, their report was unqualified and did not contain a statement under section 237(2) or
(3) of the Companies Act 1985. The statutory accounts for 2004 will be finalised on the basis of the
financial information presented in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.
None of the views expressed in this document should be construed as advice to buy or sell a particular
investment.
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