The Baillie Gifford Japan Trust PLC Annual Results

RNS Number : 5925B

Baillie Gifford Japan Trust PLC

08 October 2015

 

RNS Announcement: Preliminary Results

The Baillie Gifford Japan Trust PLC

Results for the year to 31 August 2015

The Baillie Gifford Japan Trust PLC outperformed its benchmark index* over the year to 31 August 2015 by 7 percentage points.  Net asset value per share, after deducting borrowings at fair value, rose 20.4%, while the benchmark index gained 13.4%.  In this period the Company's share price increased by 26.3%.

¾ The positive absolute and relative outperformance came from investment in a variety of sectors and stocks as a broad spectrum of stocks performed well.  There were thirteen individual stock contributors of more than 0.5% to outperformance and five which detracted at the same level.

¾ Gearing was also beneficial to returns, with gearing standing at 14% of shareholders' funds as at year end (31 August 2014 - 15%).  Additional borrowings of ¥3bn were drawn during the course of the year to reflect growth in the asset base.

¾ Portfolio turnover over the period was 7.5% (11% for the year to 31 August 2014) reflecting conviction in the current portfolio.  Eight new holdings were purchased and six holdings sold in entirety.

¾  During the year the Company issued 5.79m shares, 8.35% of its pre-existing issued share capital, at a premium to net asset value, raising £26.47m.

¾  There are three new forces driving economic change in Japan: the development of corporate governance, the tight labour market and the surge in inbound tourism.

*    The benchmark index is the TOPIX total return (in sterling terms)

The Baillie Gifford Japan Trust PLC aims to achieve 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 2015, the Company had total assets of £377.9m (before deduction of bank loans of £54.7m).

The Company is managed by Baillie Gifford, an Edinburgh based fund management group with around £115bn under management and advice as at 7 October 2015.

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. The Trust has borrowed money to make further investments (sometimes known as 'gearing or leverage'). The risk is that when this money is repaid by the Trust, the value of the investments may not be enough to cover the borrowing and interest costs, and the Company will make a loss. If the Trust's investments fall in value, any invested borrowings will increase the amount of this loss. 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.

7 October 2015

 

For further information please contact:

Alex Blake - Client Liaison

The Baillie Gifford Japan Trust PLC

Tel: [phone]

Roland Cross, Director

Four Broadgate

Tel: [phone]

 

Chairman's Statement

It has been a good year for Japanese investments and another good year for your Company with the net asset value (after deducting borrowings at fair value) rising by 20.4%, compared to a 13.4% rise in the benchmark TOPIX index total return (in sterling terms). The share price increased by 26.3% and the Company's shares are sitting at a premium to NAV (after deducting borrowings at fair value) of 4.6%, having traded at a premium for most of the year unlike the rest of our sector. This builds on an excellent five and ten year record for the Japan Trust.

  As with last year, both stock selection and gearing contributed positively to the returns; further performance details are to be found in the Managers' Report.

  Investment income increased 15% over the year, reflecting higher dividends, while expenses also increased due mainly to higher management fees in line with the substantial increase in net asset value.

  Overall revenue gain per share was 0.28p (down from 0.47p last year) and, as in prior years, no dividend will be paid as the revenue reserve remains in deficit. Ongoing charges for the year were 0.9%, the same as in 2014.

Gearing

Gearing amounted to 15% of shareholders' funds at the start of the year and ended the year at 14%. The Company entered into two new revolving loan facilities with Scotiabank Europe plc, details of which can be found in note 7. Gross borrowings increased to Y10.2bn from Y7.2bn and with the low cost of yen loans we continue to 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; however, your Board believes that it is important that the Company retains this power and so, at the Annual General Meeting, it is seeking to renew this facility. The Company also has authority to issue new shares and to reissue any shares held in treasury for cash on a non-pre-emptive basis. Shares are only issued/reissued at a premium to net asset value, thereby enhancing net asset value per share for existing shareholders.

  During the year to 31 August 2015 5,790,000 shares were issued at a premium to net asset value raising proceeds of £26,469,000, continuing the trend of recent years. The Directors are, once again, seeking 10% share issuance authority at the Annual General Meeting and we will continue to issue shares only when at a premium to net asset value. This authority will expire at the conclusion of the Annual General Meeting in November 2016.

Continuance Vote

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 2015.

  Last year the Company received support for its continuance from 99.9% of those voting. Your Directors are of the opinion that there remain attractive opportunities in selected, well-run Japanese companies.

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

 

Board

Your Board is committed to high standards of corporate governance. In particular it recognises the need to have a balance of skills, experience and length of service. It also believes that membership of the Board should be refreshed over time and to that end, after 14 years of excellent service, Martin Barrow is standing down at the AGM. The process to identify a new Director with the requisite skills has commenced using an external agency and we expect to make an appointment before the end of 2015.

Outlook

The year to 2015 saw renewed strength in Japanese equities and our Managers are continuing to find extremely interesting companies in which to invest, with their bottom up approach of stock selection adding significant value to the portfolio. The Board visited Japan in May this year, meeting with a variety of companies of interest to the Managers and we returned with a more positive outlook on the investment opportunities within Japan as a whole.

  Prime Minister Abe strengthened his mandate for political and economic reforms by calling and winning a snap election last December.

  We also saw much evidence of the encouraging improvements in corporate governance across Japan which the Manager continues to press for with all our holdings.

  There has been significant volatility across world markets since our August year end with Japan no exception; however, we continue to believe there are significant opportunities for investment growth amongst the companies in our portfolio and that the Managers' approach of investing for medium to long term growth can capitalise on these opportunities going forward.

Nick Bannerman

Chairman

7 October 2015

Past performance is not a guide to future performance.

 

Managers' Report

Performance 

Over the past year the NAV per share with borrowings deducted at fair value has increased by 20.4% compared to a rise of 13.4% in the Company's benchmark.  The share price also moved from a discount at the end of last year to a premium and this helped the share price increase by 26.3% over the period.  This is the first time in the past 10 years that there has been a premium at the year end.  On average over the year the shares traded at a premium of just over 1%. 

  The Japanese stock market rose in the first half of the Company's year but has seen some volatility since the summer as various global concerns have hit markets.  The Company has continued to use its gearing and over the year this has contributed to roughly half the outperformance, with the rest coming from stock selection.   The yen weakened against sterling over the year by 7.5%, but trends are really driven by the yen/dollar rate translated into sterling.  Overall Japan remains a competitive place for high quality manufacture and services and an attractive country for tourists. 

  The strongest returns within the portfolio came from the Commerce and Services sector which includes several of the internet related holdings, as well as companies involved in employment services.  In total there were 13 stocks which contributed more than 0.5% to outperformance and five which subtracted at the same level.  Notable amongst the winners were Cookpad, the recipe website which has continued to gather paying members, new recipes and is moving into advertising to its substantial subscriber base, Sysmex and Shimadzu, both manufacturers of medical equipment, and Don Quijote, the discount retailer benefiting from inbound tourism.  Toyo Tire and Rubber continues to do well selling truck tyres in the USA whilst Temp Holding and Outsourcing both were helped by the labour shortage in Japan and the increase in women in the workforce.  Those that detracted from performance included Iriso electronics, which did very well last year and has had some pricing issues, along with energy related holdings Modec and Inpex. 

Portfolio

There have been relatively few changes within the portfolio in the past year as our growth orientated companies have continued to look appealing.  Turnover fell to 7.5% over the year even after buying eight new holdings and selling six. 

  Three of the new purchases were new listings and the IPO market in Japan has been quite active, although the advent of sizeable companies is still rare.  The largest new listing we invested in was Recruit, a large service sector company involved in recruitment as well as property marketing and advertising.  We have admired their corporate culture for some time, as many key individuals in the internet sector in Japan have spent some of their careers at Recruit.  The other two are much smaller companies and both illustrate interesting points about current developments in Japan.  Nippon Ski Resort, a subsidiary of a parking company, was set up to buy underperforming ski operations and improve their facilities.  This has been successful and there are many further opportunities to expand, particularly as foreign tourists ski more in Japan. SanBio, a research oriented bio tech company founded by Japanese scientists, moved its headquarters from California to Japan after legislation was passed in November 2014 as part of the Prime Minister's third Arrow to speed up the approval processes for regenerative medicine.  Although at an early stage its technology could represent a significant breakthrough in stroke treatment. 

  We sold six companies including Kyocera, Nomura, Sanrio and Industrial & Infrastructure Fund.  In the main these were sold because the prospects no longer looked appealing owing to a variety of reasons: intensified competition from the Frozen franchise in the case of Sanrio, to the unsuccessful move from feature phone to smart phones for Gree.  None of these were a significant portion of the portfolio and funds were used to invest in the more promising opportunities.

Economy and Corporate Developments

Usually Japan is regarded as a pro-cyclical market with corporate profits driven by the health of the economy and the speed of growth.  What has been interesting in the past year or so is the lack of correlation.  The economy in Japan has not recorded strong growth since the rise in the consumption tax in April 2014.  For the current fiscal year ending in March 2016 the consensus view is that the expansion is only going to be around 1.6% whilst profit growth is likely to be over 10% despite recent weakness.  Corporate profitability in aggregate and margins are also at record levels.  This is partly due to the ongoing internationalisation of corporate Japan, with more than half of profits now coming from overseas, and partly to the drivers of change within the economy, along with a greater focus on shareholder returns.  There is also a thesis that as the importance of the digital economy is mis-described by economic statistics first compiled more than a century ago. 

  The Managers believe that there are three key forces driving changes in Japan at the moment.  The first is the fundamental sea-change in corporate governance, encouraged by the advent of Abenomics but also by the demographic changes and the increase in international competition.  Last year Japan introduced a new stewardship code encouraging institutional investors to constructively engage with the companies they invest in and this year a new Corporate Governance code was introduced in June.  This encourages companies to change their boards and already the number of independent Directors has risen further and now 94% of companies have outsiders on the board.  Companies also have to issue a statement about their attitude to issues like cross-shareholdings by the end of this year.  This push is also coming at a time when the importance of some other stakeholder groups is lessening. We believe that there will be fundamental change over a five year period and that this will lead to lower cash holdings on balance sheets and increasing dividends along with investment for growth. 

 The retirement of the baby-boomer generation, with their corporate pensions and the increasing labour shortage, means that managements no longer have to run companies to maintain employment in Japan.    The second development driving change is therefore the tightening labour shortage.  Again related to the aims of the Abe government more women have been working in Japan but the unemployment rate is now extremely low and surveys show employment conditions extremely tight.  There are suggestions that most new jobs in Japan in the past few years have been created by companies younger than five years, whilst the older companies are reducing employment.  This is a very welcome rebalancing and one that has very positive implications for productivity.  It goes alongside the change in corporate governance and the rise in entrepreneurship in Japan.  In 1992, after the bubble burst, the major cause of bankruptcy in Japan was a labour shortage for small companies artificially created by large corporations continuing to recruit whilst the economy turned down.  Now the situation is different and the very strong confidence being reported by the non-manufacturing sector, which is the majority of employment in the economy.  In terms of significant formal immigration that remains some years away, although the number of foreign residents of Japan continues to rise and there are many anecdotal reports of informal employment. 

  Thirdly, increased inbound tourism is arguably one of the most successful outcomes of the original aims of Abenomics.  The easing of visa restrictions alongside the improvement in access provided by more low cost airlines flying into Japan, mainly from Asia have contributed to inbound tourism.  For example, there is now a new terminal at Narita, Tokyo's main international airport, dedicated to such airlines offering cheaper landing fees as historically the punitive rates for the main airport have been a deterrent to travel.  Last year the total number of foreign tourists reached 13.4m and the likely outcome for 2015 is now very likely to exceed 18m.  Originally the target had been 20m in 2020, when Japan is hosting the summer Olympics in Tokyo, but this is likely to be comfortably exceeded.  This new source of demand is helping certain retailers and manufacturers as well as increasing the occupancy rates of hotels, but it is also beginning to have social impacts.  As travellers come on return trips they are travelling outside the main cities and many traditional Japanese attractions, from temples to ryokan, are adapting and becoming more welcoming. Made in Japan is viewed increasingly as a badge of quality, particularly by Chinese tourists.

Outlook

Whilst global stock markets have been experiencing turbulence in recent weeks we think that the long term positive changes for Japanese companies outlined already will be more important over the next year.  This is not to deny that weakness in the Chinese economy will see demand fall for some products but rather that the longer term shifts in behaviour driven by the changes mentioned above will outweigh shorter term difficulties.  This is also not to claim that all the many aims of Abenomics will be a success, but that there is enough forward progress to be encouraged.  Prime Minister Abe was re-elected with a strong majority in December 2014, and having achieved his aims of changing the security laws in Japan is now refocused on improving the economy.  There is much negative commentary on Japan's outstanding levels of debt and very little on the overall level of assets, which makes Japan the world's largest ever net creditor nation.   In November Japan Post Holdings, Bank and Insurance will all be privatised which will move very significant businesses from the public to the private sector.  Against this background and with the belief that valuations are not too high the trust has increased its levels of gearing after the year end.  There is a further tranche of borrowing to be invested as appropriate. 

Past performance is not a guide to future performance.

 

Portfolio Performance Attribution for the Year to 31 August 2015* (unaudited)

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

Portfolio breakdown	Benchmark asset allocation		Baillie Gifford Japan asset allocation		Performance†			Contribution attributable to:
					BG Japan %	TOPIX total return %	Contribution to relative return %	Stock selection %	Asset allocation %	Gearing %
	01.09.14 %	31.08.15 %	01.09.14 %	31.08.15 %
Commerce and services	12.5	12.6	24.9	27.9	26.8	12.6	3.1	3.1	-	-
Manufacturing and   machinery	21.0	19.8	20.6	19.6	20.4	8.8	2.2	2.2	-	-
Retail	4.1	4.8	5.5	5.3	52.3	34.0	0.9	0.7	0.2	-
Electricals and electronics	12.8	11.7	14.2	12.9	5.7	4.9	-	0.1	(0.1)	-
Real estate and   construction	6.1	5.8	5.7	5.4	2.1	5.7	(0.1)	(0.2)	0.1	-
Information,   communication and   utilities	9.2	9.7	9.1	9.8	12.4	18.3	(0.5)	(0.5)	-	-
Chemicals and other   materials	11.6	10.9	7.3	5.6	(5.0)	7.1	(0.5)	(0.8)	0.3	-
Financials	13.9	14.9	10.0	10.3	15.6	20.0	(0.7)	(0.4)	(0.3)	-
Pharmaceuticals and food	8.8	9.8	2.7	3.2	6.2	26.0	(1.1)	(0.5)	(0.6)	-
Total assets	100.0	100.0	100.0	100.0	17.2	13.4	3.3	3.7	(0.4)	-
Impact of gearing					3.0	-	3.0	-	-	3.0
Total (including gearing)#					20.6	13.4	6.3	3.7	(0.4)	3.0

Past performance is not a guide to future performance.

Source: StatPro/Baillie Gifford

Contributions cannot be added together, as they are geometric; for example, to calculate how a return of 20.6% against a benchmark return of 13.4% translates into a relative return of 6.3%, divide the portfolio return of 120.6 by the benchmark return of 113.4, subtract one and multiply by 100. 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 performance attribution table is based on total assets.

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

#      The total return performance of 20.6% excludes expenses and, therefore, differs from the NAV return (after deducting borrowings at par value) of 19.9% as a result.

 

Income Statement (unaudited)

The following is the unaudited preliminary statement for the year to 31 August 2015 which was approved by the Board on 7 October 2015. No dividend is payable.

	For the year ended 31 August 2015			For the year ended 31 August 2014
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	45,071	45,071	-	18,801	18,801
Currency gains (note 2)	-	2,700	2,700	-	3,927	3,927
Income (note 3)	4,316	-	4,316	3,746	-	3,746
Investment management fee (note 4)	(2,141)	-	(2,141)	(1,693)	-	(1,693)
Other administrative expenses	(502)	-	(502)	(386)	-	(386)
Net return before finance costs and taxation	1,673	47,771	49,444	1,667	22,728	24,395
Finance costs of borrowings	(1,042)	-	(1,042)	(1,004)	-	(1,004)
Net return on ordinary activities before taxation	631	47,771	48,402	663	22,728	23,391
Tax on ordinary activities	(432)	-	(432)	(341)	-	(341)
Net return on ordinary activities after taxation	199	47,771	47,970	322	22,728	23,050
Net return per ordinary share (note 6)	0.28p	67.17p	67.45p	0.47p	33.45p	33.92p

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.

 

Balance Sheet (unaudited)

	At 31 August 2015		At 31 August 2014
	£'000	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		369,568		286,275
Current assets
Debtors	345		369
Cash and cash equivalents	8,742		5,231
	9,087		5,600
Creditors
Amounts falling due within one year (note 7)	(16,872)		(1,428)
Net current (liabilities)/assets		(7,785)		4,172
Total assets less current liabilities		361,783		290,447
Creditors
Amounts falling due after more than one year (note 7)		(38,630)		(41,733)
Net assets		323,153		248,714
Capital and reserves
Called up share capital		3,756		3,467
Share premium		73,272		47,092
Capital redemption reserve		203		203
Capital reserve		251,739		203,968
Revenue reserve		(5,817)		(6,016)
Shareholders' funds		323,153		248,714
Net asset value per ordinary share (after deducting borrowings at fair value)		425.4p		353.3p
Net asset value per ordinary share (after deducting borrowings at par value)		430.2p		358.7p
Ordinary shares in issue (note 9)		75,121,750		69,331,750

 

Reconciliation of Movements in Shareholders' Funds (unaudited)

For the year ended 31 August 2015

	Called up Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital* reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 September 2014	3,467	47,092	203	203,968	(6,016)	248,714
Shares issued	289	26,180	-	-	-	26,469
Net return on ordinary activities after taxation	-	-	-	47,771	199	47,970
Shareholders' funds at 31 August 2015	3,756	73,272	203	251,739	(5,817)	323,153

For the year ended 31 August 2014

	Called up Share capital £'000		Share premium £'000		Capital redemption reserve £'000		Capital* reserve £'000		Revenue reserve £'000		Shareholders' funds £'000
Shareholders' funds at 1 September 2013		3,251		32,019		203		181,240		(6,338)		210,375
Shares issued		216		15,073		-		-		-		15,289
Net return on ordinary activities after taxation		-		-		-		22,728		322		23,050
Shareholders' funds at 31 August 2014		3,467		47,092		203		203,968		(6,016)		248,714

*      The capital reserve balance as at 31 August 2015 includes investment holding gains of £140,216,000 (2014 - £103,632,000)

 

Cash Flow Statement (unaudited)

	At 31 August 2015		At 31 August 2014
	£'000	£'000	£'000	£'000
Net cash inflow from operating activities		1,327		1,322
Servicing of finance
Interest paid	(1,030)		(884)
Net cash outflow from servicing of finance		(1,030)		(884)
Financial investment
Acquisitions of investments	(62,854)		(52,638)
Disposals of investments	23,906		30,201
Exchange differences on settlement of investment transactions	(117)		(54)
Net cash outflow from financial investment		(39,065)		(22,491)
Net cash outflow before financing		(38,768)		(22,053)
Financing
Shares issued	26,469		15,289
Bank loans drawn down	24,075		27,410
Bank loans repaid	(7,921)		(16,387)
Net cash inflow from financing		42,623		26,312
Increase in cash		3,855		4,259

Reconciliation of net cash flow to movement in net debt		2015 £'000		2014 £'000
Increase in cash in the year		3,855		4,259
Net cash inflow from bank loans		(16,154)		(11,023)
Exchange differences on bank loans		3,161		4,869
Exchange differences on cash		(344)		(888)
Movement in net debt in the year		(9,482)		(2,783)
Opening net debt		(36,502)		(33,719)
Closing net debt		(45,984)		(36,502)

 

Twenty Largest Holdings at 31 August 2015 (unaudited)

Name	Business	2015		2014
		Value £'000	% of total assets	Value £'000
SoftBank	Telecom operator and internet investor	12,058	3.2	6,966
Sysmex	Medical equipment	11,183	3.0	6,607
Toyo Tire & Rubber	Tyre manufacturer	10,833	2.9	7,327
Temp Holdings	Employment and outsourcing services	10,568	2.8	6,236
Rakuten	Internet retail and financial services	9,676	2.6	6,664
Japan Exchange Group	Stock Exchange operator	9,329	2.5	6,580
Fuji Heavy Industries	Subaru cars	8,858	2.3	8,747
Itochu	Trading conglomerate	8,785	2.3	8,028
Cookpad	Recipe website	8,731	2.3	4,309
M3	Online medical database	8,690	2.3	6,073
GMO internet	Internet services	8,460	2.2	4,438
Otsuka Corp	IT solutions for SMEs	8,272	2.2	6,158
H.I.S.	Travel agency and theme parks	8,257	2.2	6,666
Sumitomo Mitsui Trust	Trust bank and investment manager	8,242	2.2	4,808
Misumi Group	Precision machinery parts distributor	8,050	2.1	6,418
Kubota	Agricultural machinery	7,986	2.1	6,753
Sony	Consumer electronics, films and finance	7,770	2.1	4,418
Asics	Sports shoes and clothing	7,238	1.9	4,694
SMC	Pneumatic control equipment	7,209	1.9	5,375
Nitori	Furniture retail chain	7,005	1.8	4,894
		177,200	46.9	122,159

 

Notes to the Condensed Financial Statements (unaudited)

1.	The financial information within this preliminary announcement has been extracted from the unaudited financial statements for the year to 31 August 2015 and has been prepared on the basis of the accounting policies set out in the Company's Annual Report and Financial Statements at 31 August 2014. In accordance with The Financial Reporting Council's guidance on going concern and liquidity risk, 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. Accordingly, 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.
2.	Currency Gains/(Losses)	31 August 2015 £'000	31 August 2014 £'000
	Exchange differences on bank loans	3,161	4,869
	Other exchange differences on cash	(344)	(888)
		2,817	3,981
3.	Income	31 August 2015 £'000	31 August 2014 £'000
	Income from investments	4,316	3,746
4.	Investment Management Fee - all charged to revenue	2015 £'000	2014 £'000
	Investment Management Fee	2,141	1,693
	The annual management fee is 0.95% on the first £50m of net assets and 0.65% on the remaining net assets, calculated and payable quarterly.
5.	No final dividend will be declared.

 

Notes to the Condensed Financial Statements (unaudited) (ctd)

6.	Net Return per Ordinary Share	2015 Revenue	2015 Capital	2015 Total	2014 Revenue	2014 Capital	2014 Total
	Net return on ordinary activities after taxation	0.28p	67.17p	67.45p	0.47p	33.45p	33.92p
	Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £199,000 (2014 - £322,000), and on 71,115,407 (2014 - 67,942,092) ordinary shares, being the weighted average number of ordinary shares in issue during each year. Capital return per ordinary share is based on the net capital return for the financial year of £47,771,000 (2014 - £22,728,000), and on 71,115,407 (2014 - 67,942,092) ordinary shares, being the weighted average number of ordinary shares in issue during each year. There are no dilutive or potentially dilutive shares in issue.
7.	Total borrowings at 31 August 2015 were ¥10.2 billion. During the year the Company entered into two revolving loan facilities with Scotiabank Europe plc. At 31 August 2015, the 3 year ¥1.5 billion facility was fully drawn down and under the 5 year ¥3 billion facility, ¥1.5 billion was drawn down. The 3 year facility expires in November 2017 and the 5 year facility in August 2020.
8.	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 £30,000 (31 August 2014 - £32,000) and transaction costs on sales amounted to £12,000 (31 August 2014 - £19,000).
9.	At 31 August 2015 the Company had authority to buy back 10,415,314 shares. No shares were bought back during the year. Under the provisions of the Company's Articles share buy-backs are funded from the capital reserve. During the year, 5,790,000 (2014 - 4,300,000) shares were issued at a premium to net asset value raising proceeds of £26,469,000 (2014 - £15,289,000).
10.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 August 2015. The financial information for 2015 is derived from the statutory accounts for 2014 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2014 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 2015 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.
11.	The Report and Accounts will be available on the Company's page of the Managers' website www.japantrustplc.co.uk‡ on or around 27 October 2015.

‡      Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

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