Final Results
Baillie Gifford Japan Trust PLC
05 October 2006
THE BAILLIE GIFFORD JAPAN TRUST PLC
Results for the year to 31 August 2006
The Baillie Gifford Japan Trust PLC outperformed its benchmark index* over the
year to 31 August 2006 by 4.7 percentage points. Net asset value per share rose
by 19.9%, while the benchmark index gained 15.2%. In this period the Company's
share price rose 20.3%. In the second half of the year, net asset value
declined 13.6% compared to a 10.5% decline in the benchmark index.
• The good relative performance over the year was due to the use of gearing and positive stock selection
in the Real estate and construction sector.
• Over the financial year, net gearing declined from 20% of net assets to 15% of net assets as at 31
August 2006. Gross borrowing was increased from Y5.1bn to Y6.1bn through a new Y1bn five year facility
at an annual cost of 1.54%. Even though borrowing rates have started to rise in Japan, they still
appear attractive given the potential positive long-term returns from equities.
• The Japanese economy, driven by private domestic demand, continues to show good growth. In addition,
corporate earnings are still showing signs of strong expansion.
• The Board and Managers are confident that the Japanese economy is far more resilient and less globally
sensitive than it was in the 1990s owing to a sounder financial system and the steady emergence from
deflation.
• Companies are becoming increasingly dynamic and the Managers expect to be able to continue to find many
interesting investment opportunities.
* The Company's Benchmark index is the TOPIX Index in sterling terms.
Past performance is no guarantee of 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. 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 this loss. The more highly geared the Company, the
greater this effect will be. Investment in investment trusts should be regarded
as medium to long-term.
The Baillie Gifford Japan Trust PLC aims to pursue long-term capital growth
principally through investment in medium to smaller sized Japanese companies.
Baillie Gifford & Co, the Edinburgh based fund management group with around £45
billion under management and advice as at 4 October 2006, is appointed as
investment managers and secretaries to The Baillie Gifford Japan Trust PLC.
4 October 2006
- ends -
For further information please contact:
Sarah Whitley, Manager,
The Baillie Gifford Japan Trust PLC 0131 275 2000
Mike Lord, Director,
Broadgate Marketing 020 7726 6111
THE BAILLIE GIFFORD JAPAN TRUST PLC
The following is the unaudited preliminary statement for the year to 31 August
2006 which was approved by the Board on 4 October 2006. No dividend is payable.
INCOME STATEMENT
(unaudited)
For the year ended For the year ended
31 August 2006 31 August 2005
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Realised gains on investments - 19,822 19,822 - 2,195 2,195
Unrealised gains on investments - 2,741 2,741 - 17,034 17,034
Currency gains (note 2) - 2,611 2,611 - 402 402
Income 1,728 - 1,728 1,398 - 1,398
Investment management fee (1,573) - (1,573) (1,114) - (1,114)
Other administrative expenses (232) - (232) (236) - (236)
Net return before finance costs
and taxation (77) 25,174 25,097 48 19,631 19,679
Finance costs of borrowings (412) - (412) (315) - (315)
Return on ordinary activities
before taxation (489) 25,174 24,685 (267) 19,631 19,364
Tax on ordinary activities (104) - (104) (89) - (89)
Return on ordinary activities
after taxation (593) 25,174 24,581 (356) 19,631 19,275
Return per ordinary share (note
4) (0.96p) 40.65p 39.69p (0.58p) 31.70p 31.12p
The total column of this statement is the profit and loss account of the Company.
All revenue and capital items in this statement derive from continuing
operations.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement.
THE BAILLIE GIFFORD JAPAN TRUST PLC
SUMMARISED BALANCE SHEET
at 31 August 2006
(unaudited)
31 August 2006 31 August 2005
£'000 £'000
NET ASSETS
Listed overseas equities 169,160 145,442
Unlisted equities 1,491 2,339
Total fixed asset investments 170,651 147,781
Net liquid assets 4,371 832
Total assets (before deduction of bank loans) 175,022 148,613
Bank loans (note 7) (27,343) (25,515)
147,679 123,098
CAPITAL AND RESERVES
Called-up share capital 3,097 3,097
Capital reserves 152,975 127,801
Revenue reserve (8,393) (7,800)
EQUITY SHAREHOLDERS' FUNDS 147,679 123,098
NET ASSET VALUE PER ORDINARY SHARE 238.4p 198.8p
Ordinary shares in issue (note 7) 61,935,000 61,935,000
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 August 2006 (unaudited)
Share Share Capital Capital Capital Revenue Total
capital premium redemption reserve - reserve - reserve shareholders'
reserve realised unrealised funds
£'000 £'000 £'000 £'000
£'000 £'000 £'000
Shareholders' funds at 1
September 2005 3,097 22,110 203 68,317 37,171 (7,800) 123,098
Return on ordinary activities
after taxation - - - 19,255 5,919 (593) 24,581
Shareholders' funds at 31 August
2006 3,097 22,110 203 87,572 43,090 (8,393) 147,679
For the year ended 31 August 2005
Share Share Capital Capital Capital Revenue Total
capital premium redemption reserve - reserve - reserve shareholders'
reserve realised unrealised funds
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at 1
September 2004 3,097 22,110 203 65,979 19,878 (7,444) 103,823
Return on ordinary activities
after taxation - - - 2,338 17,293 (356) 19,275
Shareholders' funds at 31 August
2005 3,097 22,110 203 68,317 37,171 (7,800) 123,098
THE BAILLIE GIFFORD JAPAN TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
For the year ended For the year ended
31 August 2006 31 August 2005
£'000 £'000 £'000 £'000
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (65) 76
NET CASH OUTFLOW FROM SERVICING OF FINANCE (392) (311)
TOTAL TAX PAID (101) (89)
FINANCIAL INVESTMENT
Acquisitions of investments (48,792) (34,628)
Disposals of investments 48,485 19,947
Realised currency (losses)/gains (567) 143
NET CASH OUTFLOW FROM FINANCIAL INVESTMENT (874) (14,538)
NET CASH OUTFLOW BEFORE FINANCING (1,432) (14,862)
FINANCING
Bank loans drawn down 5,006 5,007
NET CASH INFLOW FROM FINANCING 5,006 5,007
INCREASE /(DECREASE) IN CASH 3,574 (9,855)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase /(decrease) in cash in the year 3,574 (9,855)
Net cash flow from bank loans (5,006) (5,007)
Exchange movement on bank loans 3,178 259
MOVEMENT IN NET DEBT IN THE YEAR 1,746 (14,603)
NET DEBT AT 1 SEPTEMBER (24,373) (9,770)
NET DEBT AT 31 AUGUST (22,627) (24,373)
THE BAILLIE GIFFORD JAPAN TRUST PLC
PORTFOLIO PERFORMANCE ATTRIBUTION
For the year to 31 August 2006
(unaudited)
Computed relative to the benchmark (TOPIX in sterling terms) with net income
reinvested.
Benchmark Baillie Gifford Japan Contribution
asset allocation asset allocation Performance * Contribution attributable to:
Portfolio breakdown to relative Stock Asset
return selection allocation
01.09.05 31.08.06 01.09.05 31.08.06 BG Japan Benchmark
% % % % % % % % %
Electricals and electronics 13.0 14.0 10.1 14.2 40.7 18.0 1.4 1.6 (0.2)
Manufacturing and machinery 18.6 17.1 20.6 15.9 1.2 21.7 (2.9) (2.9) -
Retail 3.7 3.8 10.1 7.7 9.8 10.0 - 0.3 (0.3)
Commerce and services 10.3 10.0 22.0 25.6 14.9 13.7 (0.2) 0.2 (0.4)
Pharmaceuticals and food 7.0 6.9 7.7 7.8 21.8 11.6 0.5 0.6 (0.1)
Real estate, construction
and housing 4.3 4.7 7.6 10.7 63.2 32.4 2.9 2.3 0.6
Financial 18.4 21.6 18.6 15.7 0.2 18.9 (2.8) (3.0) 0.2
Information, communication
and utilities 11.8 8.8 7.0 3.6 9.4 4.3 0.7 0.2 0.5
Chemicals and other
materials 12.9 13.1 16.1 14.1 14.0 19.9 (0.6) (0.7) 0.1
Cash and brokers' balances - - 0.9 3.2 - - (0.6) - (0.6)
Gearing - - (20.7) (18.5) (10.2) - 5.2 - 5.2
Total 100.0 100.0 100.0 100.0 20.0 16.4 3.1 (1.6) 4.7
Past performance is no guarantee of future performance.
Source: The WM Company/Baillie Gifford & Co
Contributions cannot be added together, as they are geometric; for example, to
calculate how a return of 20.0% against a benchmark return of 16.4% translates
into a relative return of 3.1%, divide the portfolio return of 120.0 by the
benchmark return of 116.4 and subtract one. In addition, the total contribution
figures include a residual element that relates to changes in weightings
mid-month and which cannot be attributed to individual sectors. Consequently,
the contributions for the individual sectors do not sum to the total
contribution figures.
* The above returns are total returns (net income reinvested), calculated on a
monthly linked method.
THE BAILLIE GIFFORD JAPAN TRUST PLC
TWENTY LARGEST EQUITY HOLDINGS
at 31 August 2006
(unaudited)
2006 Value 2006 2005 Value
£'000 % of total £'000
Name Business assets
Sumitomo Realty &
Development Property leasing and development 5,335 3.0 4,244
Japan Tobacco Tobacco manufacturer 5,049 2.9 4,619
Yamada Denki Consumer electronics retailer 4,744 2.7 5,749
Mitsubishi UFJ
Financial Group Major bank 4,611 2.6 -
Sumitomo Heavy Heavy electric machinery 4,527 2.6 4,808
USS Company Second-hand car auctioneer 4,353 2.5 2,505
Asahi Glass Specialist glass manufacturer 4,266 2.4 3,506
Canon Printers and copiers 4,233 2.4 3,004
Tokyu Railway based conglomerate 4,134 2.4 3,066
Toray Industries Materials company 3,957 2.3 -
Inpex Petroleum and natural gas producer 3,911 2.2 3,643
SMC Pneumatic control equipment 3,861 2.2 3,308
Itochu Trading conglomerate 3,665 2.1 4,233
AIOI Insurance General insurance 3,600 2.1 3,274
Diamond Lease Leasing services 3,502 2.0 3,282
Yaskawa Electric Factory automation 3,487 2.0 3,153
KDDI Mobile telecommunications 3,460 2.0 2,905
Goldcrest Condominium developer 3,399 1.9 2,822
Tsumura Herbal medicines 3,366 1.9 2,171
Panahome Housing and building materials 3,175 1.9 -
80,635 46.1 60,292
THE BAILLIE GIFFORD JAPAN TRUST PLC
NOTES
(unaudited)
1. The financial statements for the year to 31 August 2006 have been prepared on the basis of the same
accounting policies used for the year to 31 August 2005 except for the valuation of investments. FRS 26
'Financial Instruments: Measurement' has been adopted in full; listed investments are now valued at fair
value through profit or loss. Previously, listed investments were valued on a mid-market basis, as
represented by last traded prices (official mid-market prices are not available in Japanese markets). As
last traded prices are also the best measure of fair values of listed investments, there has been no
impact on the valuation of the Company's listed investments.
The implementation of the 2005 Statement of Recommended Practice 'Financial Statements of Investment
Trust Companies' (SORP) has resulted in changes in the presentation of total returns. Previously the
revenue column of the Statement of Total Return was deemed to be the profit and loss account of the
Company. We now present an Income Statement which still shows information on capital and revenue
returns, although it is the total return column which is regarded as the profit and loss account of the
Company.
FRS 22 'Earnings per Share' and FRS 23 'The Effects of Changes in Foreign Exchange Rates' have both been
adopted in full but have had no impact on the results for the year and no prior year adjustment has been
required. FRS 25 'Financial Instruments: Disclosure and Presentation' has been adopted and the Accounts
reflect the revised disclosures.
The Directors consider the Company's functional currency to be sterling as the Company's shareholders
are predominantly based in the UK and the Company is subject to the UK's regulatory environment.
31 August 2006 31 August 2005
£'000 £'000
2. Currency gains
Realised exchange differences (567) 143
Movement in unrealised exchange differences 3,178 259
2,611 402
3. No final dividend will be declared.
4. Return per ordinary share
Revenue return (593) (356)
Capital return 25,174 19,631
Return per ordinary share is based on the above returns of revenue and capital and on 61,935,000 (31
August 2005 - 61,935,000) ordinary shares, being the weighted average number of ordinary shares in issue
during the year. There are no dilutive or potentially dilutive shares in issue.
5. Bank loans of £27.3 million (Y6.1 billion) have been drawn down under yen loan facilities which are
repayable between August 2007 and May 2011 (31 August 2005 - £25.5 million (Y5.1 billion)).
6. Transaction costs incurred on the purchase and sale of investments are added to the purchase costs or
deducted from the sales proceeds, as appropriate. During the year, transaction costs on purchases
amounted to £78,000
(31 August 2005 - £65,000) and transaction costs on sales amounted to £64,000 (31 August 2005 -
£39,000).
THE BAILLIE GIFFORD JAPAN TRUST PLC
NOTES
(unaudited)
7. At 31 August 2006 the Company had authority to buy back 9,284,056 shares. No shares were bought back
during the year.
31 August 2006 31 August 2005
£'000 £'000
8. Reconciliation of Net Return before Finance Costs and
Taxation to Net Cash (Outflow)/Inflow from Operating
Activities
Net return on ordinary activities before finance costs
and taxation 25,097 19,679
Gains on investments (22,563) (19,229)
Currency Gains (2,611) (402)
Increase in accrued income (30) (30)
Increase in other debtors (20) (2)
Increase in creditors 62 60
Net cash (outflow)/inflow from operating activities (65) 76
9. The financial information set out above does not constitute the Company's statutory accounts for the
year ended 31 August 2006. The financial information for 2005 is derived from the statutory accounts
for 2005 which have been delivered to the Registrar of Companies. The Auditors have reported on the
2005 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 2006 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.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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