Final Results

RNS Number : 9830T

Baillie Gifford Japan Trust PLC

07 October 2010

 



THE BAILLIE GIFFORD JAPAN TRUST PLC

Results for the year to 31 August 2010

Over the year to 31 August 2010, The Baillie Gifford Japan Trust's net asset value per share (after deducting borrowings at fair value) increased by 0.8% and the share price increased by 0.3%.  The Benchmark index* declined by 0.7% (in sterling terms) over this period.

·	Outperformance was due mainly to stock selection, notably the investments in Sysmex, Itochu and Rakuten.  Given the falls in the level of the market the gearing had a negative effect.
·	Turnover remained at low levels and fell to 16.7% during the year (24.5% year to 31 August 2009).  Seven new holdings have been bought in the period and ten holdings have been sold, including the bank bond.
·	The Japanese economy continues to recover after the global economic downturn and GDP growth for the current year is expected to be around +3.3%.  Japanese companies have rebuilt their profit margins, which in aggregate are back to previous peaks.  Profit growth of around 20% is estimated for the current fiscal year ending 31 March 2011.  Japan's largest export market is Asia and growth is expected to continue there.
·	Deflation remains, exacerbated by the strength of the yen.  There has been some intervention recently to weaken the currency, although the effects remain unclear.
·	Voters have expressed preferences for change in several elections that seem to have not yet been fulfilled by the politicians.  Politics in Japan are in a long term transition from the one party dominance of the LDP, but the short term developments are unpredictable.
·	Whilst the outlook for the Japanese economy is dull, particularly when compared to other nations in the region such as China, the potential for some Japanese companies to exploit particular niches is strong.  There is a growing list of exciting companies in the internet area, many manufacturing companies are supplying equipment to Asia and retailers with strong business models continue to thrive.

* The Company's Benchmark index is the TOPIX total return (in sterling terms).

The Baillie Gifford Japan Trust PLC aims to pursue long term capital growth principally through investment in medium to smaller sized Japanese companies which are believed to have above average prospects for growth. At 31 August 2010, the Company had total assets of £143.6m (before deduction of bank loans of £27.5m).

Baillie Gifford & Co, the Edinburgh based fund management group with around
£66 billion under management and advice as at 6 October 2010, is appointed as investment managers and secretaries to The Baillie Gifford Japan Trust PLC.

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 www.japantrustplc.co.uk

6 October 2010

- ends -

For further information please contact:

Sarah Whitley, Manager,

The Baillie Gifford Japan Trust PLC                                           0131 275 2000

Roland Cross, Director,

Broadgate Mainland Marketing                                                  020 7726 6111

 

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

Chairman's Statement

Japanese equities retreated in the second half of the year, after gains in the first. The fall was mitigated in sterling terms by the strength of the yen. Over the year your Company's net asset value (after deducting borrowings at fair value) rose by 0.8% compared with a fall of 0.7% in the benchmark TOPIX total return index (in sterling terms).

Stock selection over the year was good, but gains to performance were pared back because of the gearing. Further performance details can be found in the Manager's Report.

Investment income increased by 11% over the year reflecting higher dividends. Income was reduced by the sale of the bank bond which had a higher yield than equities. Expenses rose, mainly because of the effect of the increasing net assets on which the management fee is based. Overall revenue return per share was 0.72p. No dividend is payable as the revenue reserve remains in deficit.

Gearing

Net gearing amounted to 15% of net assets at the start of the year and ended the year at 18%. A tranche of the Company's loans was replaced during the year.  This was at a higher cost than the maturing loan, which is due to the higher margins being charged by banks but with the low cost of yen loans, we believe that borrowing to invest in Japanese equities is a sensible strategy.

Share Capital

The Company did not exercise its share buy back powers during the year.  Your Board believes however that it is important that the Company retains this power and is seeking to renew this facility at the Annual General Meeting. The Company is also seeking to renew the Directors' authority to issue new shares and to reissue any shares held in treasury up to 5% of the Company's issued share capital for cash on a non-pre-emptive basis.  Shares would only be issued/reissued at a premium to net asset value, thereby enhancing net asset value per share for existing shareholders.  The Directors will only seek to utilise this authority if they believe that it will be in the best interests of the Company to do so.

Continuance Vote and Investment Management Agreement

Our shareholders have the right to vote annually on whether the Company should continue in business, and will again have the opportunity to do so at the Annual General Meeting to be held on 30 November 2010.

Last year the Company received support for its continuance from 95.6% of those voting.  Your Directors are of the opinion that despite the continuing macro economic problems, there remains attractive opportunities in selected, well-run companies.

Given the favourable outlook, I and my fellow Directors intend where possible to vote our own shareholdings in favour of the resolution and hope that shareholders will feel disposed to do likewise.

Shareholders will note that in line with industry best practice, and at the suggestion of the Managers, the notice period for terminating the Management Agreement has been reduced from one year to six months with effect from 1 September 2010.

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

Chairman's Statement (continued)

Outlook

The setback in the equity market in the second half of the year has left Japanese equities looking good value against other world equity markets. The political environment and the strength of the yen are discouraging some international investors from increasing their Japanese exposure.  There are however companies in Japan which have more shareholder friendly policies and which are likely to show good growth in earnings. The Board is confident that the Managers can continue to seek out such companies.

Past performance is not a guide to future performance.

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

Managers' Report

Performance

During the year to 31 August 2010 the Japanese Stock Market was generally weak and the TOPIX ended at its lowest point.  In local currency terms the TOPIX total return index (including dividends) fell by 15.2%.  However the yen was strong, particularly against sterling, and consequently the currency adjusted benchmark declined by 0.7%.  In comparison, the Company's net asset value per share, after deducting borrowings at fair value, increased by 0.8%. 

The outperformance was due mainly to stock selection, with nearly all individual equity sectors showing positive returns relative to the market.  Major individual contributors were Sysmex (the haematology company), Itochu and Rakuten.  Given the falls in the level of the market the gearing had a negative effect.  Some of the holdings raised new equity finance, not always predictably, and those that did, such as Inpex and Tokyo Tatemono, hurt performance.  The table below shows the detail of the breakdowns between the sectors and between stock selection and gearing. 

Whilst the change in NAV over the year was small, there were sharp moves in Japanese markets during the year.  In autumn 2009 there was particular concern that Japan would undergo a 'double-dip' recession and this led to weakness in Japanese stocks.  But the continued recovery in the economy and a strong showing by corporate profits allowed a sharp recovery and the market reached its peak in April 24% above the year end level.  Then wider fears about economic prospects in Europe, the US and China concerned markets generally and coincided with yen strength, apparently as the yen was regarded as a less risky currency.    As a result the stock market fell sharply between April and the year end to levels comparable with those experienced in the financial crisis.

Portfolio

Turnover in the portfolio remained at low levels, reflecting our long term investment style, and fell to 16.7% during the year.  We have bought a total of seven new holdings and sold nine as well as the remaining holding in the bank bond, which had added marginally to performance.  The holdings sold were mainly those where we were less convinced about the longer term competitive advantage, particularly those in the financial sector, or where share prices rose to discount our positive view, such as Tokyo Electron.  We have also been concerned about share issuance by companies with weak balance sheets and sold Taiheiyo Cement and Juki as a result. 

The new holdings reflect various attractions.  Pigeon has a significant baby goods business in China, M3 offers drug companies an effective new sales channel which also appeals to doctors, Wacom has strong intellectual property in touch screens and Start Today is a leading on-line fashion retailer.  We also bought a holding in Mitsui, a large trading company with particular strengths in resources.  

Economy and Political Developments 

The Japanese economy has continued to recover after the global economic downturn and GDP growth for the current year is expected to be around +3.3%.  The rapid rebound seen in the second half of 2009 has moderated in the last quarter as conditions have normalised in some industrial sectors and some of the emergency stimulus measures made by various governments globally have finished.  Unemployment in Japan peaked in 2009 and has been relatively stable in 2010.  Deflation remains, exacerbated by the strength of the yen, although it has been acknowledged as a major issue by the government.  The Bank of Japan has not expanded its balance sheet as much as other major developed country banks and is under increasing pressure from a variety of politicians to do so.  There has recently been some intervention in the currency markets to weaken the yen, although the effects of this remain unclear. 

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

Managers' Report (continued)

In the short term the fortunes of the economy will be tied to export markets.  Although there has been some recovery domestically it is not robust enough to withstand a significant deterioration in global trade.  However, Japan's largest export market is in Asia and growth is expected to continue there.  In the short term, diplomatic relations with China have been troubled after an incident near disputed territory, but this is unlikely seriously to impact the burgeoning economic links.  China has been a buyer of Japanese Government Bonds and there have been a number of small scale purchases of companies in Japan.  Longer term growth will be driven by the amount of policy change, either in monetary policy or deregulation. 

After the historic election victory in 2009, the Democratic Party of Japan has had a disappointing first year in government and Prime Minister Hashimoto resigned in June.  His successor Naoto Kan then had to fight an Upper House election in July and withstand a leadership challenge by the powerful Ichiro Ozawa, who is a former leader of the DPJ.  The government failed to secure a majority in the Upper House election, but Mr Kan was confirmed as Prime Minister and party leader.  This means that decision making in government is clearer but that controversial policy, such as the inevitable raising of the consumption tax, will have to win the agreement of opposition parties.  The preferences for change expressed by voters in several elections seem not yet fulfilled by the politicians.   Politics in Japan is in a long term transition from the one party dominance of the LDP to what may be a more responsive and democratic system, but the short term developments are unpredictable.  Mr Kan may yet be a strong and decisive Premier, introducing the ambitious policy agenda which the DPJ developed in opposition, but it will be a challenge. 

Japanese Corporate Developments

After the recession and rebound Japanese companies have managed to rebuild their profit margins, which in aggregate are now back to previous peaks.  This was due mainly to aggressive cut backs on investment and personnel.  The first quarter results for the current fiscal year were exceptionally strong, although momentum is expected to fade as the year progresses.  Current estimates are for profit growth of around 20% for the fiscal year as a whole; forecasts have been reduced by the strength of the yen. 

Significant efforts have been made by companies to internationalise their business and one source estimates that one third of the assets of Japanese companies are abroad and two thirds of large companies have subsidiaries in China.  Company balance sheets are strong with significant amounts of cash.  Some companies have been taking advantage of the strength of the yen to make overseas acquisitions, notably Rakuten which has bought companies in France and the US, and most are increasing their investment overseas faster than within Japan.  Forthcoming changes as Japan moves towards international accounting standards should make M&A more appealing in reporting results.

Dividends are now increasing again and are expected to rise 18% in the first half of the current fiscal year.  Equity yields remain above bond yields and the maturity of many domestic businesses mean that payout ratios should rise with dividends increasing faster than profits over the next few years. 

Outlook

Whilst the outlook for the Japanese economy is dull, particularly when compared to other nations in the region such as China, the potential for some Japanese companies to exploit particular niches is strong.  There is a feeling of pessimism about domestic developments, not helped by the poor showing of the new government, but differentiation should be made between economic performance and the outlook for individual investments.  The stock market is now cheaper than it has been since the early 1980s and sells on its stated book value.  Company managements are in general less complacent.  The rising competitive threat from Asia and the maturation of the domestic economy mean that even traditionally domestic companies are refocusing their efforts.  There is a growing list of exciting companies in the internet area, many manufacturing companies are supplying equipment and components elsewhere in Asia and retailers with strong business models continue to thrive.  We continue to find attractive investments and continue to own only those stocks which will benefit from their own efforts.

Past performance is not a guide to future performance.

THE BAILLIE GIFFORD JAPAN TRUST PLC

Managers' Report (continued)

Portfolio Performance Attribution for the Year to 31 August 2010^† (unaudited)

Computed relative to the benchmark (TOPIX total return in sterling terms) with net income reinvested.

	Benchmark asset allocation		Baillie Gifford Japan asset allocation		Performance*                     TOPIX		Contribution to relative return	Contribution attributable to:
Portfolio breakdown	01.09.09	31.08.10	01.09.09	31.08.10	BG Japan	total return		Stock selection	Asset allocation	Gearing
	%	%	%	%	%	%	%	%	%	%
Financials	15.3	14.4	11.7	9.4	(9.9)	(18.5)	1.9	1.3	0.6	-
Commerce and Services	11.5	11.9	23.5	26.1	5.9	5.3	0.9	0.1	0.8	-
Electricals and electronics	13.7	14.3	16.4	16.0	8.4	3.6	0.9	0.7	0.2	-
Manufacturing and Machinery	19.3	19.2	15.2	14.9	6.7	(0.6)	1.1	1.1	-	-
Retail	3.6	3.6	8.4	10.2	5.5	2.9	0.4	0.2	0.2	-
Chemicals and other materials	13.7	13.0	8.4	8.0	(1.3)	(2.8)	0.2	0.1	0.1	-
Real estate and construction	4.6	4.2	2.3	3.4	(11.6)	(6.4)	0.1	-	0.1	-
Pharmaceuticals and food	7.4	7.8	6.3	5.7	10.8	7.2	0.1	0.2	(0.1)	-
Information, communication and utilities	10.9	11.6	5.3	6.3	10.2	12.9	(0.8)	(0.2)	(0.6)	-
Fixed Interest	-	-	2.5	-	-	-	0.1	-	0.1	-
Total (excluding gearing)	100.0	100.0	100.0	100.0	4.3	(0.7)	5.0	3.6	1.4	-
Impact of gearing					(2.5)	-	(2.5)	-	-	(2.5)
Total (including gearing)**					1.8	(0.7)	2.5	3.6	1.4	(2.5)

 

Past performance is not a guide to future performance.

Source: Statpro/Baillie Gifford & Co

Contributions cannot be added together, as they are geometric; for example, to calculate how a return of 4.3% against a benchmark return of (0.7%) translates into a relative return of 5.0%, divide the portfolio return of 104.3 by the benchmark return of 99.3 and subtract one.  In addition, the total contribution figures include a residual element that relates to changes in weightings mid-month, which cannot be attributed to individual sectors.  Consequently, the contributions for the individual sectors do not sum to the total contribution figures.

^†        The above performance attribution table is based on total assets.

*    The above returns are total returns (net income reinvested), calculated on a monthly linked method.

**   The above total return performance of 1.8% excludes expenses and, therefore, differs from the NAV return

       (after deducting borrowings at fair value) of 0.8% as a result.

 

 

 

 

 

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

 

The following is the unaudited preliminary statement for the year to 31 August 2010 which was approved by the Board on 6 October 2010.  No dividend is payable.

INCOME STATEMENT

(unaudited)

	For the year ended 31 August 2010				For the year ended 31 August 2009
	Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	3,640	3,640		-	7,476	7,476
Currency losses (note 2)	-	(3,248)	(3,248)		-	(4,110)	(4,110)
Income (note 3)	2,605	-	2,605		2,422	-	2,422
Investment management fee	(1,188)	-	(1,188)		(987)	-	(987)
Other administrative expenses	(267)	-	(267)		(247)	-	(247)
Net return before finance costs and taxation	1,150	392	1,542		1,188	3,366	4,554
Finance costs of borrowings	(530)	-	(530)		(503)	3	(500)
Net return on ordinary activities before taxation	620	392	1,012		685	3,369	4,054
Tax on ordinary activities	(173)	-	(173)		(153)	-	(153)
Net return on ordinary activities after taxation	447	392	839		532	3,369	3,901
Net return per ordinary share (note 5)	0.72p	0.63p	1.35p		0.86p	5.44p	6.30p

 All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued during the year.

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

BALANCE SHEET

(unaudited)

	At 31 August 2010		At 31 August 2009
	£'000	£'000	£'000	£'000
Fixed assets Investments		137,752		133,710
Current assets
Debtors	211		610
Cash and deposits	6,093		5,783
	6,304		6,393
Creditors: Amounts falling due within one year	(14,363)		(6,289)
Net current (liabilities)/assets		(8,059)		104
Total assets less current liabilities		129,693		133,814
Creditors:
Amounts falling due after more than one year		(13,560)		(18,520)
Total net assets		116,133		115,294
Capital and reserves
Called-up share capital		3,097		3,097
Share premium		22,110		22,110
Capital redemption reserve		203		203
Capital reserve		98,217		97,825
Revenue reserve		(7,494)		(7,941)
Shareholders' funds		116,133		115,294

Net asset value per ordinary share (after deducting borrowings at fair value)	186.7p	185.3p
Net asset value per ordinary share (after deducting borrowings at par value)	187.5p	186.2p
Ordinary shares in issue (note 8)	61,935,000	61,935,000

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

(unaudited)

For the year ended 31 August 2010

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 September 2009	3,097	22,110	203	97,825	(7,941)	115,294
Net return on ordinary activities after taxation	-	-	-	392	447	839
Shareholders' funds at 31 August 2010	3,097	22,110	203	98,217	(7,494)	116,113

For the year ended 31 August 2009

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 September 2008	3,097	22,110	203	94,456	(8,473)	111,393
Net return on ordinary activities after taxation	-	-	-	3,369	532	3,901
Shareholders' funds at 31 August 2009	3,097	22,110	203	97,825	(7,941)	115,294

*The capital reserve balance as at 31 August 2010 includes investment holding gains of £19,756,000 (2009 - gains of £16,952,000).

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

CASH FLOW STATEMENT (unaudited)
	For the year ended 31 August 2010						For the year ended 31 August 2009
	£'000		£'000				£'000		£'000
Net cash inflow from operating activities			1,095						1,069
Net cash outflow from servicing of finance			(511)						(522)
Financial investment
Acquisitions of investments	(24,026)						(29,563)
Disposals of investments	23,204						31,576
Realised profit on forward currency contract	-						471
Exchange differences on settlement of investment transactions	(87)						(289)
Net cash (outflow)/inflow from financial investment			(909)						2,195
Net cash (outflow)/inflow before financing			(325)						2,742
Financing
Bank loans drawn down	5,515						-
Bank loans repaid	(5,516)						(10,397)
Net cash outflow from financing			(1)						(10,397)
Decrease in cash			(326)						(7,655)
Reconciliation of net cash flow to movement in net debt
Decrease in cash in the year			(326)						(7,655)
Net cash flow from bank loans			1						10,397
Exchange differences on bank loans			(4,028)						(7,103)
Exchange differences on cash			636						2,927
Movement in net debt in the year			(3,717)						(1,434)
Net debt at 1 September			(17,698)						(16,264)
Net debt at 31 August			(21,415)						(17,698)
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation			1,542						4,554
Gains on investments			(3,640)						(7,476)
Other exchange differences			(549)						(1,656)
Exchange differences on bank loans			4,028						5,650
Amortisation of fixed interest book cost			(2)						8
(Increase)/decrease in accrued income			(95)						34
(Increase)/decrease in other debtors			(7)						97
(Decrease)/increase in creditors			(17)						13
Overseas tax suffered			(165)						(155)
Net cash inflow from operating activities			1,095						1,069

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

 

TWENTY LARGEST EQUITY HOLDINGS at 31 August 2010 (unaudited)
		2010		2009
Name	Business	Value £'000	% of total assets*	Value £'000
Itochu	Trading conglomerate	5,167	3.6	3,370
Don Quijote	Discount store operator	3,905	2.7	3,624
Japan Tobacco	Tobacco manufacturer	3,762	2.6	2,808
Canon	Printers and copiers	3,540	2.5	3,150
Otsuka	IT hardware and software	3,441	2.4	2,409
Asahi Glass	TV, car and construction glass	3,323	2.3	2,802
Accordia Golf	Golf course owner and operator	3,276	2.3	4,116
Osaka Securities Exchange	Stock and futures exchange	3,244	2.3	2,884
Keihin	Honda related parts supplier	3,243	2.3	3,268
Rakuten	Internet retailer	3,198	2.2	2,413
Mitsubishi Electric	Industrial electric conglomerate	3,188	2.2	2,810
Yamada Denki	Major consumer electronics retailer	3,136	2.2	3,245
KDDI	Mobile telecommunications	3,125	2.2	3,485
Misumi Group	Precision machinery parts distributor	3,115	2.2	3,423
Sysmex	Medical equipment	2,913	2.0	2,807
Shimadzu	Analytical and measuring instrument company	2,910	2.0	2,947
Nintendo	Games consoles and software	2,899	2.0	1,964
East Japan Railway	Tokyo based railway	2,850	2.0	2,719
Ushio	Specialist lamps and digital cinema equipment	2,827	2.0	2,212
Mitsubishi UFJ Lease & Finance	Leasing company	2,783	1.9	2,347
		65,845	45.9	58,803

*before deduction of bank loans.

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

NOTES

(unaudited)

1.	The financial information within this preliminary announcement has been extracted from the unaudited financial statements for the year to 31 August 2010 and has been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 31 August 2009. In accordance with The Financial Reporting Council's guidance on going concern and liquidity risk issued in 2009, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. 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 Directors have no reason to believe that the continuation resolution will not be passed at the Annual General Meeting. After making enquiries and notwithstanding the above, the financial statements have been prepared on the going concern basis as it is the Directors' opinion that the Company will continue in operational existence for the foreseeable future. If the continuation resolution is not passed, the Articles provide that the Directors shall convene a General Meeting within three months at which a special resolution will be proposed to wind up the Company voluntarily. If the Company is wound up, its investments may not be realised at their full market value. 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 2010 £'000		31 August 2009 £'000
2.	Currency Losses
	Exchange differences on bank loans				(4,028)		(7,103)
	Other exchange differences				780		2,993
					(3,248)		(4,110)
3.	Income
	Income from investments and interest receivable				2,605		2,351
	Other income				-		71
					2,605		2,422
4.	No final dividend will be declared.

 

THE BAILLIE GIFFORD JAPAN TRUST PLC

NOTES (Ctd)

(unaudited)

5.	Net Return per Ordinary Share
		2010				2009
		Revenue	Capital	Total		Revenue	Capital	Total
	Net return on ordinary activities after taxation	0.72p	0.63p	1.35p		0.86p	5.44p	6.30p
	Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £447,000 (2009 - net revenue return of £532,000), and on 61,935,000 ordinary shares, being the number of ordinary shares in issue throughout each year.  Capital return per ordinary share is based on the net capital return for the financial year of £392,000 (2009 - net capital return of £3,369,000), and on 61,935,000 ordinary shares, being the number of ordinary shares in issue throughout each year. There are no dilutive or potentially dilutive shares in issue.
6.	Bank loans of £27.5 million (¥3.55 billion) have been drawn down under yen loan facilities which are repayable between May 2011 and August 2014 (31 August 2009 - £23.5 million (¥3.55 billion)).  During the year, the Company drew down ¥750 million under a new ¥750 million loan facility with The Royal Bank of Scotland plc, which expires on 6 August 2013.  The ¥1,000 million loan facility with ING expired on 9 August 2010 and the amount drawn down of ¥750 million was repaid.
7.	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 £18,000 (31 August 2009 - £27,000) and transaction costs on sales amounted to £17,000 (31 August 2009 - £27,000).
8.	At 31 August 2010 the Company had authority to buy back 9,284,056 shares. No shares were bought back during the year. Under the provisions of the Company's Articles of Association share buy backs are funded from the capital reserve.
9.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 August 2010.  The financial information for 2009 is derived from the statutory accounts for 2009 which have been delivered to the Registrar of Companies.  The Auditors have reported on the 2009 accounts, their report was unqualified and did not contain a statement under sections 495 to 497 of the Companies Act 2006.  The statutory accounts for 2010 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.
10.	The Report and Accounts will be available on the Managers' website www.japantrustplc.com on or around 27 October 2010.
	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

 

END

 

 

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