Annual Financial Report

AVI Japan Opportunity Trust PLC

13 March 2026

 

AVI JAPAN OPPORTUNITY TRUST PLC

ANNUAL REPORT 2025

LEI: 894500IJ5QQD7FPT3J73

Annual Financial Report for the year ended 31 December 2025

The Directors present the audited Annual Report for the year ended 31 December 2025

Copies of the Annual Report can be obtained from the Company's website ("AJOT" or the "Company") www.ajot.co.uk or by contacting the Company Secretary by telephone on [phone].

AVI Japan Opportunity Trust plc ("AJOT" or "the Company") invests in a focused portfolio of quality small and mid-cap listed companies in Japan that have a large portion of their market capitalisation in cash or realisable assets.

Notice of Annual General Meeting

The Company's Annual General Meeting ("AGM") will be held at 11.30 a.m. on Tuesday, 5 May 2026 at the offices of the Association of Investment Companies, 9th Floor, 24 Chiswell Street, London, EC1Y 4YY. Shareholders will be able to submit questions to the Board and AVI ahead of the AGM and answers to these, as well as AVI's presentation, will be made available on the Company's website. Please refer to the Notice of AGM for further information and the resolutions which will be proposed at this meeting.

Dividend

The Directors are proposing a final dividend of 0.60p per share for the year to 31 December 2025. Subject to the approval of Shareholders at the forthcoming AGM, the proposed final ordinary dividend will be payable on 22 May 2026 to Shareholders on the register at the close of business on 24 April 2026. The ex-dividend date will be 23 April 2026.

Performance Summary

	31 December  2025	31 December  2024
Net Asset Value	£425,291,000	£211,981,000
Net Asset Value per Share (total return) for the year*	14.7%	20.9%
Share price total return for the year*	15.3%	19.9%
Comparator Benchmark
MSCI Japan Small-Cap Index (£ adjusted total return)	19.8%	6.2%
Portfolio Valuation*
Net Cash as % of Market Cap	12.3%	21.2%
Net Financial Value as % of Market Cap2	37.8%	48.4%
EV/EBIT2	9.5x	8.7x
FCF Yield	5.9%	6.7%
	Year to 31 December 2025	Year to 31 December 2024
Earnings and Dividends
Profit/(loss)before tax	£41.9m	£38.6m
Investment income	£6.3m	£4.8m
Revenue earnings per share	2.94p	2.21p
Capital earnings per share	25.20p	25.00p
Total earnings per share	28.14p	27.21p
Ordinary dividends per share	2.20p	2.20p
Special dividends per share	0.60p	-
Ongoing Charge*
Management, marketing and other expenses (as a percentage of average Shareholders' funds)	1.4%	1.5%
	31 December 2025	31 December 2024
Net asset value per share	174.7p	155.4p
Share price	172.0p	152.3p
Discount (difference between share price and net asset value)*	1.6%	2.1%
2025 Year's Highs/Lows	High	Low
Net asset value per share	186.6p	149.2p

NAV TR (GBP)	Since inception	2025	2024	2023	2022	2021	2020	2019	20181
AJOT	94.8%	14.7%	20.9%	15.8%	-4.3%	12.3%	-1.4%	19.0%	-4.0%
MSCI Japan Small Cap	48.0%	19.8%	6.2%	6.9%	-1.0%	-1.4%	3.2%	14.7%	-6.0%
Relative	46.8%	-5.2%	14.7%	8.8%	-3.4%	13.7%	-4.6%	4.3%	-2.0%

¹ Since inception on 23 October 2018.

² The portfolio NFV and EV/EBIT estimates differ to the reported figures in the December 2025 Factsheet due to a post period-end  change in the NFV calculation for Mitsubishi Logistics.

* For all Alternative Performance Measures, please refer to the definitions in the Glossary in the Annual Report.

COMPANY OVERVIEW

Company Purpose

Discovering overlooked and under-researched investment opportunities, utilising shareholder engagement to unlock long-term value.

Company Objectives and Strategy

AJOT aims to provide Shareholders with total returns in excess of the MSCI Japan Small Cap Index in GBP ("MSCI Japan Small Cap"), through the active management of a focused portfolio of equity investments listed or quoted in Japan, which have been identified by Asset Value Investors Limited as undervalued and typically have a significant proportion of their market capitalisation held in cash, listed securities and/or other realisable assets.

AVI seeks to unlock this value through proactive engagement with management and capitalising on the increased focus on corporate governance, balance sheet efficiency and returns to Shareholders in Japan.

The companies in the portfolio are selected for their high quality, whether having strong prospects for profit growth or economically resilient earnings.

By investing in companies whose corporate value should grow over time, AVI can be patient in its engagement to unlock value.

Benchmark

The MSCI Japan Small Cap Index.

Capital Structure

As at 31 December 2025, the Company's issued share capital comprised 247,873,823 Ordinary Shares of 1p each, of which 4,450,716 were held in treasury and therefore total voting rights attached to Ordinary Shares in issue were 243,423,107. As at 11 March 2026 it comprised 247,873,823 Ordinary Shares, 26,800,429 of which were held in treasury, and therefore total voting rights attached to Ordinary Shares in issue were 221,073,394.

Investment Manager

The Company has appointed Asset Value Investors Limited ("AVI" or the "Investment Manager") as its Alternative Investment Fund Manager.

The Association of Investment Companies ("The AIC")

The Company is a member of The AIC.

Website

The Company's website, which can be found at www.ajot.co.uk, includes useful information on the Company, such as price performance, news, monthly and quarterly reports as well as previous annual and half-year reports.

CHAIRMAN'S STATEMENT

"AVI takes a unique approach to engagement by focusing on driving operational improvements in addition to the typical engagement areas of capital efficiency, corporate governance and investor relations."

Overview of the Year

On behalf of the Board of Directors ("the Board") I am pleased to present the Annual Report for 2025 for AVI Japan Opportunity Trust Plc ("AJOT" or "Company").

AJOT's positive performance continued in 2025 with a NAV return of +14.7% in GBP and +22.8% in JPY. This compares to total return figures for our comparator index, the MSCI Japan Small Cap Index, of 19.8% in Sterling and 28.4% in JPY.

2025 was a transformative year with the transaction between AJOT and Fidelity Japan Trust PLC (FJV) which completed in the fourth quarter of the year. The result of the long combination process was that many FJV investors chose to join AJOT shareholders in the journey we are currently on. Now the Company's NAV exceeds £400m (growing from c. £80m at IPO), the Investment Manager has the ability to scale positions, which strengthens the capacity for engagement with portfolio companies.

For the third consecutive year, AJOT has delivered double-digit sterling-based returns. The benchmark, the MSCI Japan Small Cap Index, enjoyed strong performance in 2025, propped up by the performance of larger names that do not fall within AJOT's investment universe. The strategy continued to deliver numerous positive engagement outcomes, with two companies taken private and several meaningful share buyback announcements during the year.

AJOT continues to adhere to the highest standards of corporate governance, and the same rigorous approach was taken to the combination of the two companies. Since launch, AJOT has been grateful for a supportive shareholder register, which has helped keep the discount to NAV in low single figures. It was important to the Board and the investment manager that any new investors shared the desire to participate in the future success of AJOT.

To achieve that, the Boards of AJOT and FJV designed a structure that would meet those aims by allowing those who wished to no longer be invested in Japan the opportunity to exit at close to NAV. It was pleasing to both boards that 68% of FJV shareholders chose to join AJOT.

I would like to thank the Board of FJV, especially Chair David Graham and Sarah Macauley, for their help and support throughout the entire process, as well as City of London Investment Group plc for their help in prompting the initial discussions between the two companies. It is also important to recognise the work that AVI has done in this entire process, including investing the new money, while at the same time conducting our annual tender and ensuring that the portfolio continues to perform.

For the second time since inception, in September the AJOT Board visited Japan to meet with AJOT portfolio companies alongside AVI's Head of Japan Research, Kaz Sakai, and Managing Director, Nicola Takada Wood. In a highly productive week, the Board met with 6 portfolio companies, consolidating relationships with management as AVI continue its constructive approach to engagement. It was clear to us that management teams continue to be highly receptive to AVI's differentiated approach to engagement, which includes a unique focus on operational improvements in addition to traditional engagement areas.

AJOT and FJV Combination

The AJOT and FJV combination is expected to benefit all Shareholders in several ways. The combination has resulted in a more liquid and larger fund. The enlarged fund will have increased capability to take influential positions in companies where AVI has identified a significant opportunity to unlock value through AVI's active engagement. AVI has agreed to a reduced management fee of a tiered structure on assets above £300m and will continue to reinvest 25% of the management fee into AJOT shares. The new reduced management fee structure and the economies of scale will result in a reduced annual ongoing charge.

Much has been made in recent years of the fact that many investment trusts are of insufficient scale to attract wealth managers. The argument has been that smaller investment trusts have insufficient liquidity to deal with the ability to buy and sell in sufficient size required by these entities. With the combination, and our ability to issue shares at a small premium to NAV as well as our twin features of robust buy backs and an annual tender for up to 100% of shares in issue, we have addressed those concerns. I would encourage any potential investors to contact AVI and our joint brokers, Singer Capital Markets and Canaccord Genuity, to discuss how we can help you participate in the next phase of AJOT's growth.

Dividend

As provided for in the Prospectus at the IPO, the Company intends to distribute substantially all the net revenue arising from the portfolio. The Company paid an interim dividend of 1.60p per share in December 2025, as well as a special interim dividend of 0.60p per share, and the Board has elected to propose a final dividend of 0.60p per share, bringing total dividends for the year ended 31 December 2025 to 2.80p per share (2024: 2.20p per share). Former FJV shareholders on AJOT's register at the dividend record date will also receive the final dividend.

Investment Strategy

AJOT listed in October 2018 to take advantage of the highly attractive opportunity to invest in under- valued, over-capitalised Japanese small-cap equities with strong underlying business fundamentals. Active engagement and corporate action are the keys to unlocking valuation anomalies and AJOT's track -record has demonstrated the potential absolute and relative returns this approach can deliver.

Over seven years since launch, your Company has performed well in the face of multiple headwinds: underperformance of small-cap stocks (MSCI Small Cap Japan has returned +48% compared to the MSCI Japan's +69% return, in GBP); a -31% depreciation of the Japanese Yen which has detracted from GBP returns; and a turbulent global environment encompassing a pandemic, rapidly rising interest rates and multiple geopolitical events. The Board remains confident that AVI is well placed to continue executing the strategy and that there are still plenty of mis-priced investment opportunities to discover.

Share Discount and Issuances

As of 31 December 2025, your Company's shares were trading at a discount of -1.6% to NAV per share. The Board monitors the premium/discount and carefully manages it by periodically issuing or buying back shares. During 2025, 110,674,880 new shares were issued to shareholders of FJV as part of the combination of the two trusts, while 3,625,000 shares were bought back during the period. As of 31 December 2025, 247,873,823 shares were in circulation, a pleasing increase from the 80,000,000 shares at AJOT's launch.

The Directors believe that the performance of the Company since IPO should be attractive to a larger pool of investors and are exploring avenues to grow AJOT.

Realisation Opportunities

At the launch of the Company in October 2018, the Prospectus published at that time stated that the Directors may, at their discretion, offer a full or a partial exit opportunity to Shareholders in October 2022 and every two years thereafter. The rationale behind including the Exit Opportunity in the Prospectus was to ensure that if the original investment thesis did not generate the expected returns, or if circumstances had changed to make Japan unattractive, then Shareholders would be offered the opportunity to exit at close to NAV if they wished.

Considering the Board's keen focus on corporate governance, the Board decided from October 2024 to consider an Exit Opportunity on an annual basis (rather than biennially), giving Shareholders a potential Exit Opportunity in October 2026, and every 12 months thereafter.

The redemption opportunity in 2025, allowing investors to sell 100% of their share capital at a 2% discount to net asset value (NAV), resulted in 11.05% of Shareholders choosing to exercise the opportunity to exit. The Board is aware that a number of shareholders had positions in both FJV and AJOT. Following the strong uptake of the combination of FJV holdings into AJOT, the Board recognises some Shareholders' requirements to rebalance their portfolio holdings in the enlarged Company. At the time of the redemption opportunity, AJOT shares traded at a -1.6% discount (EGM date 9 January 2026).

Debt Structure and Gearing

As described in the Prospectus, the Board supports the use of gearing to enhance portfolio performance. The Company has a ¥6.6 billion debt facility, which was fully drawn as at 31 December 2025 and net gearing stood at +1.8%. Following the combination of FJV into AJOT, the Company has successfully negotiated a new ¥12.7 billion, two-year facility. This has been approved, and is being reviewed by the Company's legal counsel.

Outlook

The Tokyo Stock Exchange continues to pressure companies to embrace corporate reform to unlock the full potential of the Japanese market. The election of Sanae Takaichi as leader of the Liberal Democratic Party (and Prime Minister) in October 2025 and subsequent resounding victory in the February 2026 general election, reinforces the effort seeking to see companies enhance capital efficiency by either reinvesting excess cash into their core business operations or returning excess cash to shareholders. Takaichi has also spoken of corporations reducing latent cash balances by investing in their employees through wage hikes, something that we believe would be supportive of long-term corporate value. Whilst acknowledging the current geopolitical situation unfolding globally, it is at least encouraging that Japan looks likely to have political clarity for the next four years. Finally, the Financial Services Agency in Japan is currently conducting a review of the Corporate Governance Code, last reviewed in 2021, with the aim of prompting a timelier enhancement of capital efficiency.

Key tailwinds for the strategy include unwinding of cross-shareholdings, increasing shareholder activism, private equity firms targeting the Japanese market, and the Japanese government encouraging unsolicited acquisition offers.

The mounting pressure for corporate reform will continue to grow in 2026. AJOT's speciality in finding undervalued companies with robust earnings and using constructive engagement to unlock value positions it well to benefit from the ever-improving market environment. The portfolio is well placed with a concentrated yet diverse collection of high-quality, lowly valued companies, with multiple levers for re-ratings. As a board, we are confident that AJOT can build on its successful track record of engagement and will continue to deliver attractive returns for investors. AJOT's portfolio companies currently have 38% of their market cap covered by net cash and investment securities and trade at a weighted average 9.5x EV/EBIT multiple.

In the coming weeks I shall be meeting any institutional investors who would like to sit down with me, and I hope to see as many Shareholders as possible at our AGM in May.

The Board and I remain available to all our Shareholders - institutional and retail - who may wish to discuss an issue or ask a question. As always, please feel free to reach out to me directly ([e-mail]) or contact our joint brokers, Singer Capital Markets and Canaccord Genuity, to arrange a meeting.

Norman Crighton

Chairman

12 March 2026

OUR TOP 10 HOLDINGS

1. Mitsubishi Logistics (7.5% of net assets, 2.9x EV/EBIT)

Mitsubishi Logistics is a third-party logistics provider covering the entire supply chain. The company is the largest warehouse operator in Japan, enjoys strong presence at all seven of Japan's major ports, and operates an overseas air logistics business. Mitsubishi Logistics remains substantially overcapitalised, with investment securities and real estate accounting for over 100% of the market cap.

2. Kurabo Industries (7.3% of net assets, 4.2x EV/EBIT)

Kurabo Industries ("Kurabo") is a diversified conglomerate with significant real estate and investment securities, which accounted for over 100% of its market cap at the time of investment in early 2024, which has subsequently fallen to 69% following +189% share price appreciation. Engaged in the textile, chemical, advanced technology, food & service, and real estate businesses, Kurabo has achieved stable revenues, while its operating margin has doubled in recent years. In 2025, Kurabo pleasingly shut down its largest textiles plant, which had held back Kurabo's valuation.

3. Eiken Chemical (6.0% of net assets, 21.5x EV/EBIT)

Eiken Chemical is a manufacturer of medical diagnostics equipment, operating a high-quality business with a proven track record of growing sales. Eiken Chemical holds a dominant market position in colon cancer screening, with an overwhelming global market share in excess of 70%. Eiken Chemical is set to experience structural growth from the ageing population, and with an open shareholder register, the company is a potential takeover target.

4. Raito Kogyo (5.9% of net assets, 7.6x EV/EBIT)

Raito Kogyo is a leading company in the specialist construction sector, with core operations in slope construction and ground improvement together comprising over 70% of total sales. The company holds the largest market shares in these areas, with approximately 30% in slope construction and 20% in ground improvement. At the time of our investment, Raito Kogyo had achieved revenue growth at 2.4% CAGR from FY13 to FY22, with the operating profit margin consistently exceeding 10% over recent years. Raito Kogyo anticipates public project demand providing a growth runway.

5. Sharingtechnology (5.9% of net assets, 11.4x EV/EBIT)

Sharingtechnology operates one of the largest life service matching platforms in Japan, connecting a variety of user needs with high-quality services. With nearly 200 specialised websites and over 6,000 external service providers, the most frequent services catered for include lost keys, lawn mowing, and termite control. There are several tailwinds to support continued growth, including the declining Japanese population and the projected increase in the number of single-person households.

6. Atsugi (5.9% of net assets, N/A EV/EBIT)

Atsugi is an apparel manufacturer primarily known for producing stockings, innerwear, and legwear for women. The company manufactures and retails under its own brands. Atsugi is substantially overcapitalised with Net Financial Value accounting for over 100% of the market cap.

7. Wacom (5.8% of net assets, 9.1x EV/EBIT)

Wacom is the global leader of digital pen solutions, and our investment was premised on the increased adoption of digital drawing and writing. Wacom manufactures its own branded tablets and sells its technology to other electronic device manufacturers. Although the Branded Business segment continues to face challenges, we are confident that through shortening the product development cycle for entrylevel products and strengthening e-commerce channels, Wacom can further reinforce its position as the global leader.

8. Synchro Food (5.4% of net assets, 23.0x EV/EBIT)

Synchro Food operates a service matching platform for restaurants in Japan, with much of its sales coming from job listings. The company operates "Inshokuten.com" which provides an end-to-end business platform for restaurants, including supplier search, accountant search, interior design, food truck support and bulk ordering services. Synchro Food is a high-quality business, with an operating margin of c.25% and 5-year revenue annual growth of c.14%. However, capital allocation issues are holding the company back from its true valuation potential.

9. Rohto Pharmaceutical (5.4% of net assets, 13.4x EV/EBIT)

Rohto is the largest skincare and eye-drop manufacturing company in Japan, yet trades at a significant discount to peers. AVI believes that Rohto's undervaluation can be explained by the lack of focus on its core businesses, misleading IR communication, and lower allocation to shareholder returns than its peers. Specifically, management needs to reallocate its R&D spending from low-profit business areas such as the prescription drug business and regenerative medicine business, towards its high-value, high market share product lines, such as skin care products.

10. Broadmedia (4.2% of net assets, 12.1x EV/EBIT)

Broadmedia mainly engages in online education and IT service businesses. It is a leading player in Japan running online-learning secondary schools with the brand name "Renaissance High School Group," allowing students to learn at their own pace remotely and to focus on their individual learning interests. Broadmedia's unique education curriculum allows students to study e-sports, KPOP and programming, on top of the standard arts/science curriculum. In addition to operating online-schools, Broadmedia operates an IT service business, specifically for distributing Akamai Technologies' software and solutions to domestic clients.

INVESTMENT MANAGER'S REPORT

"2025 was another eventful year for AVI Japan Opportunity Trust Plc ("AJOT" or "Company"), both in terms of active engagement and latterly, welcoming new shareholders into the Trust following the combination with Fidelity Japan Trust PLC (FJV)."

After a strong start to the year, AJOT's performance weakened in the second half of 2025, resulting in overall underperformance for the year. Japanese equity markets were again robust, and while AJOT delivered a positive absolute return of +14.7%, relative performance lagged the benchmark by -5.2% (in GBP).

In a tale of two halves, the Company was buoyed by meaningful engagement success early in the year. TSI Holdings, AJOT's largest holding at the time, sold real estate assets equivalent to 30% of its market cap. This was followed by a 15.3% buyback, into which AJOT sold its entire holding in July, successfully and neatly closing the position after three years for an ROI of +92%. Other positive results of our engagement were Kurabo Industries announcing the restructuring of its aged and unprofitable textile business, and Tecnos Japan receiving a tender offer at a +39% premium to the undisturbed share price.

AJOT also enjoyed a successful AGM season in June, submitting shareholder resolutions to three companies. Of particular note was a shareholder proposal which was passed with a supermajority at Eiken Chemical, allowing the dividend to be determined by resolution of a general meeting of shareholders, in addition to a resolution of the Board of Directors.

AJOT also submitted shareholder proposals at Wacom, a company in which we launched a public campaign, "Draw Wacom's Future", in May 2025. In September, we were encouraged by the appearance of a constructive investor on the shareholder register, and continue to believe Wacom can reinforce its position as the global leader in digital pen solutions.

Our second ongoing public campaign is with Rohto Pharmaceutical ("Rohto"), launched in April 2025. Despite its name, Rohto is frequently mischaracterised as a pharmaceutical company; in reality, it is Japan's largest manufacturer of skincare products and eye drops, yet it trades at a significant discount to relevant peers. Consistent with our recommendations, the company announced its first medium-term management plan in May 2025 and has since outlined long-overdue pricing increases across one of its core brands.

The latter half of 2025 combined a quieter period of engagement results with an increasingly volatile macro backdrop in Japan.

The election of Sanae Takaichi as leader of the Liberal Democratic Party (and Prime Minister) in October 2025 and subsequent victory in the February 2026 general election has triggered a sustained rally across the broader market alongside renewed weakness in the Yen. Takaichi's policy agenda is perceived as supportive of defence, energy, semiconductors and advanced technology, resulting in a rally concentrated in Takaichi-aligned sectors and large-cap exporters. The latter has been further underpinned by yen depreciation, reflecting expectations of fiscal stimulus and continued accommodative monetary policy under a Takaichi administration. This dynamic raises important questions around the future evolution of the relationship between the Bank of Japan and the new political leadership.

While she has formally respected the BoJ's institutional independence, Takaichi has been clear that monetary policy should remain aligned with the government's growth and fiscal strategy. Despite the BoJ's gradual move toward policy normalisation, the Yen has weakened to its lowest level since July 2024, shrugging off two rate hikes during that period. Given AJOTs focus on domestic smaller companies, the relative performance to the index has suffered as a result.

We would reassure investors, however, that rather than individual stock weakness over the last few weeks, we are seeing a slow period of corporate activity as we wait for several catalysts to develop. After a very strong start to the year, followed by an active few weeks over AGM season, we have taken advantage of a quiet period to build up some positions and have been busy behind the scenes, making several large ownership declarations in recent months and significantly improving our engagement position across the portfolio. How the next few weeks or months of geopolitical events will play out is anyone's guess, and how that will affect global currency markets and the Yen remains to be seen.

An example of this improved engagement position is the EGM AVI called at Synchro Food. The EGM was held by Synchro Food on 26 December 2025, having initially received our request in October, a week after LIM Japan Event Master Fund had made a separate EGM request. The results of the EGM were highly positive, with AVI's Head of Japan Research, Kaz Sakai, successfully appointed to the board as an independent director. Additionally, two internal directors were dismissed, with both a new CEO and Chairman stepping up consequently.

On 9 December 2025, AVI announced its intention to increase its combined stake across client funds from c.29% to c.40% via tender offer, at a price of 2,200 Yen per share, a 29% premium to the undisturbed share price of Broadmedia. Although not covered by the timeframe of this report, it is worth noting that the tender offer was successfully completed in January, raising AJOT's holding of Broadmedia to 43% of outstanding shares.

The examples of Synchro Food and Broadmedia illustrate the broader range of tools now available to the AVI investment team amid a more constructive environment for engagement and activism in Japan. In select situations, a more involved - and at times public - approach can be an effective means of exerting greater influence on company management, with the objective of accelerating value-enhancing change.

November marked a significant milestone for AJOT with the successful completion of the combination with FJV. Approximately 68% of FJV shareholders elected to roll into AJOT, providing a meaningful uplift in capital. The team deployed this additional capital selectively, adding to high-conviction existing holdings while initiating positions in new investment ideas. The combination also enhances the team's ability to deploy capital at scale and strengthens our capacity for constructive engagement with portfolio companies.

The environment over the past few months has allowed us to build positions while intensifying engagement with portfolio companies. At year-end, AJOT held more than 5% of voting rights in nine names, accounting for 37% of NAV. Combined with AVI's holdings across other funds which are invested in the same names, AVI holds more than 5% of voting rights in 13 AJOT names, accounting for 54% of NAV. We are particularly encouraged by the appearance of other activists and like-minded investors on the share registers of some of our portfolio companies and look forward to seeing the results of the engagement groundwork we have laid as we head into 2026.

Contributors

Kurabo Industries

Contribution (GBP)	3.66%
% of net assets	7.3%
EV/EBIT	4.2x
NFV/Market Cap	69%

Kurabo Industries ("Kurabo") was the largest contributor, adding +366bps to performance as its share price increased by +47% over the year.

Kurabo, established in 1888 as a textile manufacturer, has diversified its operations over the years to include chemicals, advanced technology, food and services, and real estate. Kurabo has a history of stable revenues and has doubled its operating margin in recent years.

Much of our engagement with the company has focused on encouraging management to direct resources towards the high-quality chemicals and advanced technology segments, and away from the unprofitable textiles business.

In March this year, the company announced plans in line with our recommendations to close its largest and most unprofitable textile factory. In May, Kurabo announced a new medium-term plan with increased commitment to shareholder returns, which include a 4.0% DOE target and ¥20.0billion buyback plans. In a continuation of positive announcements, in September, Kurabo announced it had completed the ¥6billion buyback program (7.3% of total shares) started in November 2024, and in November it disclosed another ¥7billion buyback program (6.0% of total shares).

Across all AVI client funds, as of year-end, AVI controls 5.1% of the shares, with the company accounting for 7.3% of AJOT's NAV. Our engagement with Kurabo continues steadfast in 2026 to unlock the company's full potential and maximise corporate value.

To year-end, the investment has returned an ROI of +53% for an IRR of +66% since being added to the portfolio in January 2024 (in JPY).

Raito Kogyo

Contribution (GBP)	2.73%
% of net assets	5.9%
EV/EBIT	7.6x
NFV/Market Cap	25%

Raito Kogyo was the second largest contributor, adding +273bps to performance as its share price rose by +52% in 2025.

Raito Kogyo is a leading company in the specialist construction sector, with core operations in slope construction and ground improvement-together comprising over 70% of total sales. The company holds the largest market shares in these areas, with approximately 30% in slope construction and 20% in ground improvement.

AVI's engagement with the company to date has focused on enhancing capital efficiency, corporate governance and shareholder communication. During the year, AVI continued to build its stake in Raito Kogyo across AVI funds, as we sought to step up our influence with the company and use engagement to drive the necessary change to unlock value.

Raito Kogyo's share price rise in 2025 was mainly driven by the positive disclosure regarding shareholder returns in February, when the company announced a 6.0% DOE / 50% payout target and a ¥15.0 billion buyback plan. This was followed by positive earnings announcements, with the full-year results announcement in May showing +4% annual revenue growth and +14% growth in operating income. As of the latest earnings announcement in November 2025, operating income is forecast to grow by a further +7% in the year ending March 2026, while the top line is set to grow by +5%.

Held in the portfolio since March 2024, Raito Kogyo accounted for 5.9% of AJOT's NAV at year-end. We see significant upside to the current share price, and to year-end, the investment has returned an ROI of +24% for an IRR of +40% (in JPY).

TSI Holdings

Contribution (GBP)	2.05%
% of net assets	Exited
EV/EBIT	Exited
NFV/Market Cap	Exited

 TSI Holdings, was the third largest contributor, adding +205bps as its share price rose by +0% from the start of 2025 to our exit in late July, when we sold the remainder of our stake into the 15.3% share buyback completed by the company. Earlier in the year, we also sold much our stake at a price c.15% higher than the final exit price.

Our investment thesis was predicated on valuation of TSI Holdings' real estate assets, investment securities and net cash exceeding the market cap at the time of investment, as well as their diversified brand portfolio and diminishing founding family influence. Pleasingly, in line with our suggestions, in April 2024 the company announced a mid-term plan focusing on improving EBIT margin as well as optimising non-operating assets to improve capital efficiency.

The apparel holding company enjoyed a period of very strong share price performance to start 2025, having announced the sale of its former HQ building for a value equal to c.30% of the market cap in mid-January.

Across all AVI client funds combined, we were the largest shareholder, owning more than 10% of the shares at one stage. AVI engaged extensively with management on ways to enhance operations, capital efficiency, governance and shareholder communications.

Over the holding period from July 2022 to July 2025, the investment generated an ROI of +92% for an IRR of +46% (in JPY).

Tecnos Japan

Contribution (GBP)	1.75%
% of net assets	Exited
EV/EBIT	Exited
NFV/Market Cap	N/A

Tecnos Japan was another notable contributor, adding +175bps as its share price rose by +39% from the beginning of 2025 to the company's privatisation in March 2025.

An IT services company, Tecnos Japan is engaged in the business of providing information technology services, especially the installation of Enterprise Resource Planning (ERP) systems. Our investment thesis was built on the track-record of high-quality earnings under the digitalisation trend in Japan, with revenue growing at a +13% CAGR and operating margins consistently in the low double digits, in addition to the overcapitalised balance sheet that had net financial value equal to c.35% of the market cap.

As per the regulatory news service announcement on 4 February, AVI signed a tender agreement with Ant Capital Partners Co., Ltd. (the "Offeror") for AVI's 10% stake in Tecnos Japan. The tender offer price of ¥1,155 per share represented a +39% premium to the undisturbed closing price on 4 February 2025.

As the largest shareholder of Tecnos Japan, AVI has engaged extensively with the company's Board on ways to enhance corporate value and returns to shareholders. Tecnos Japan serves as another example of how AJOT's concentrated portfolio of asset-backed Japanese small-caps can benefit from AVI's active engagement strategy against a backdrop of rapidly increasing corporate activity in Japan.

Tecnos Japan was held in AJOT from April 2024 to March 2025, with the investment generating a +62% ROI for a +109% IRR (in JPY).

Wacom

Contribution (GBP)	1.63%
% of net assets	5.8%
EV/EBIT	9.1x
NFV/Market Cap	12%

Wacom was the fifth largest contributor to performance, adding +163bps as its share price rose +12% over the year.

Across all funds, AVI controls over 13% of the vote in Wacom, which is the global leader of digital pen solutions. Our investment is premised on the increased adoption of digital drawing and writing, relative undervaluation, and scope for improvement through engagement. Wacom manufactures its own branded tablets and sells its technology to other electronic device manufacturers.

In May 2025, AVI launched a public campaign titled 'Draw Wacom's Future', in which we highlighted several constructive suggestions, since then the share price has risen by +47%. We are concerned by the poor performing Branded Business Segment, which has consistently posted losses since 2022.

Alongside the public campaign, we formally submitted shareholder proposals to the AGM. These proposals called for appointment of an independent director, establishment of a Transformation Plan Supervisory Committee, better handling of acquisition proposals, allowing shareholders to determine the dividend at the AGM, a share buyback, and defining total shareholder return as a metric to determine stock-based compensation for internal directors.

During September, constructive yet active investor Kaname Capital declared 5% ownership in Wacom, with the shares rising a further +5% to month-end. Although the Branded Business segment continues to face challenges, we are confident that through shortening the product development cycle and strengthening e-commerce channels, Wacom can further reinforce its position as the global leader.

Added to the portfolio in August 2021, the company accounted for 5.8% of AJOT's NAV at year-end as a top ten holding. We see significant upside through our constructive engagement and to year-end, the investment has returned an ROI of +23% for an IRR of +11% (in JPY).

Detractors

Aoyama Zaisan Networks

Contribution (GBP)	-1.32%
% of net assets	3.1%
EV/EBIT	5.2x
NFV/Market Cap	35%

Aoyama Zaisan Networks (AZN) was the largest detractor, reducing performance by -132bps as its share price fell by -17% in 2025.

AZN specialises in providing wealth management consulting services across areas such as property, succession planning, corporate finance and strategic management of individual assets. AZN is set to benefit from the aging Japanese population as the need for inheritance and business succession consulting is on the rise.

In December 2025, AZN revised its revenue guidance downwards by -11% for FY2025 due to revenue from transactions at Advantage Club, AZN's real estate co-ownership platform, being pushed into later periods due to the announcement of upcoming tax reform. While operating profit remained unchanged at ¥3.85bn, the market perceived this as a negative signal for future earnings potential, with the share price drifting -7% lower in the following five trading days.

At the time we initiated our investment in March 2024, AZN's stock price had been flat for the previous five years, despite operating income that had continued to grow steadily and non-operating assets that had expanded to c.47% of its market cap as of the end of December 2023 (now c.35%). AZN was added to the portfolio in March 2024, and at year-end accounted for 3.1% of AJOT's NAV. To date, the investment has returned an ROI of +7% for an IRR of +7% (in JPY).

Aichi Corp

Contribution (GBP)	-0.35%
% of net assets	Exited
EV/EBIT	Exited
NFV/Market Cap	Exited

Aichi was the second largest detractor over the year, reducing performance by -35bps as its share price declined by -11% from 2024 year-end to our exit in late March 2025.

Aichi is a leading manufacturer of special purpose vehicles used in construction in Japan, such as aerial work platforms. The company is a listed subsidiary of Toyota Industries (TICO), and a possible candidate for a takeover. We engaged with management in a friendly manner on various corporate governance issues relating to its parent/ subsidiary relationship.

AVI launched a public campaign titled 'Taking Aichi Higher' in May 2024, urging Aichi and TICO to dissolve the listed subsidiary structure to address the persistent undervaluation and unlock Aichi's full potential. Addressing our campaign, Aichi announced a new capital policy in March, in which TICO would sell some of its Aichi stake to ITOCHU Corporation, and Aichi would also buy back shares from TICO via tender offer, with a view to dissolving the listed subsidiary structure. Following this announcement, we made the decision to allocate capital to more promising ideas, as the parent/subsidiary issue was at least resolved, although not in the manner that investors had hoped.

Over our holding period from November 2019 to March 2025, the investment period generated an ROI of +52% for an IRR of +18% (in JPY).

Mitsubishi Logistics Corp. 

Contribution (GBP)	-0.31%
% of net assets	7.5%
EV/EBIT	2.9x
NFV/Market Cap	87%

Mitsubishi Logistics was the third largest detractor, reducing performance by -31bps as its share price was roughly flat, returning +3%, as we added to our stake during the year.

Mitsubishi Logistics is a third-party logistics provider covering the entire supply chain. The company is the largest warehouse operator in Japan, enjoys strong presence at all seven of Japan's major ports, and operates an overseas air logistics business.

The company has an ongoing share buyback programme, announced in May 2025, to repurchase 9.2% of the shares (33m) by March 2026. In early October, Mitsubishi Logistics announced the programme was only 27% complete, and we hope management are taking advantage of the recent share price weakness. The company announced its Q2 earnings on 31 October 2025, with full-year operating profit guidance revised downward from ¥20billion to ¥16billion.

Mitsubishi Logistics remains substantially overcapitalised, with investment securities and real estate accounting for more than 100% of the market cap. We will continue to constructively engage with management to encourage the timely liquidation of investment securities and rotation of real estate to limit the accumulation of unrealised capital gains.

Mitsubishi Logistics was added to the portfolio in January 2025, and at yearend accounted for 7.5% of AJOT's NAV as the largest holding. To date, the investment has returned an ROI of +3% for an IRR of +9% (in JPY).

Konishi

Contribution (GBP)	-0.30%
% of net assets	Exited
EV/EBIT	Exited
NFV/Market Cap	Exited

Konishi was another, albeit relatively minor detractor, reducing performance by -30bps as its share price fell by -6% from year-end to the date we exited our stake in July 2025.

Konishi is the manufacturer of the no.1 adhesive brand in Japan, 'Bond', used in construction and civil engineering projects, as well as household tasks. Moreover, the company manufactures industrial chemicals and synthetic resins, as well as operating in the business of infrastructure construction and repairs.

At the peak of our investment period, we were the largest shareholder in the company, and we engaged closely with management, putting forward a variety of suggestions to address the undervaluation. Over our near seven-year holding period, despite revenue only growing at a modest +1% annually, the operating margin increased from 5.6% in 2018 to 7.8% in 2025, as operating income grew at +6% annually.

Having held a position in AJOT since inception in October 2018, the investment generated an ROI of +74% for an IRR of +13% (in JPY).

Wakamoto Pharmaceutical

Contribution (GBP)	-0.26%
% of net assets	1.0%
EV/EBIT	N/A
NFV/Market Cap	93%

Wakamoto Pharmaceutical ("Wakamoto"), was the fifth largest detractor, reducing performance by -26bps as its share price rose modestly by +4% from the date we started adding to the position to 2025 year-end.

Wakamoto operates three pharmaceutical segments, including prescription eyecare products, as well as sales of over-the-counter (OTC) medicines, both in Japan and overseas. The prescription eyecare business is loss-making and has been a consistent drag on Wakamoto's operational performance. In contrast, the OTC segments each enjoy positive operating margins, with domestic sales particularly profitable.

Rohto Pharmaceutical, which accounts for 5.4% of AJOT's NAV, is the largest shareholder in Wakamoto, owning over 11% of the company's shares.

Following the Q1 earnings announcement for the financial year ending March 2026 on 5th August, which showed the domestic OTC business had generated an operating loss, the shares traded down -11% to 2025 year-end. Pleasingly, the November Q2 earnings announcement showed the domestic OTC segment had returned to profitability, achieving a 10.9% operating margin in H1.

Having held a position in AJOT since inception in February 2025, the investment has so far generated an ROI of -5% for an IRR of -6% (in JPY) to year-end.

Portfolio Trading Activity

AJOT saw a total of 14 new listed companies enter the portfolio (in addition to five private companies received as part of the combination with FJV). Meanwhile, 11 names exited the portfolio, 2 of which followed tender offer bids (Beenos and Tecnos Japan). This resulted in higher apparent turnover for the portfolio in 2025, at 69% compared to the annualised turnover of 38% since inception. The sale of ETFs received in relation to the combination with FJV in late November further elevated turnover.

Adjusted for the aforementioned factors, turnover in 2025 was somewhat more in line with AJOT's historical average, at 48%. The targeted holding period for our strategy is typically three to five years, however, this may be shortened by catalysts such as tender offers or share buybacks, often a result of our active engagement approach.

The largest purchases over the period were predominantly in new positions entering the portfolio in 2025, namely Mitsubishi Logistics, Synchro Food, Sanyo Shokai and Maruzen Showa Unyu. We also added notably to existing stakes such as Raito Kogyo, Rohto Pharmaceutical, Kurabo Industries and Wacom.

The largest sales during 2025 were the ETFs received as part of the combination with FJV. Outside of these, TSI Holdings, discussed previously, was the largest sale as we exited our position. We also exited Beenos early in 2025 following receipt of advanced notice of a tender offer bid in November 2024.

Outlook

The combination of rising pressure from regulators and activists in 2025 presents a compelling opportunity to unlock substantial value in small to mid-cap Japanese companies in 2026 and beyond. With several key tailwinds and a deeply under researched market, our conviction in the strategy remains as high as ever. We look forward to continuing our active engagement with companies to drive the catalysts needed to grow long-term corporate value and generate significant alpha.

Joe Bauernfreund

Asset Value Investors Limited

12 March 2026

PORTFOLIO CONSTRUCTION

The objective of AVI's portfolio construction is to create a concentrated position in 15-25 holdings, facilitating a clear monitoring process of the entire portfolio.

AVI picks stocks that meet our investment criteria and once we decide to invest, a minimum position size of approximately 2% of the portfolio is initiated. In determining position sizes, AVI is mindful of liquidity and the likely timing of any catalysts to unlock value. A key consideration is the make-up of the shareholder register, a proxy for how receptive management might be to our suggestions. The portfolio is diverse in the industries within it, however, we are sector agnostic and select investments based on quality and value.

Portfolio value by sector*

	2025	2024
Consumer Durables and Apparel	22%	22%
Media and Entertainment	13%	4%
Transportation	12%	0%
Capital Goods	9%	15%
Technology Hardware and Equipment	8%	3%
Health Care Equipment and Services	7%	11%
Household and Personal Products	6%	2%
Software and Services	5%	7%
Telecommunication Services	5%	3%
Commercial and Professional Services	5%	0%
Real Estate Management and Development	4%	6%
Materials	2%	15%
Pharmaceuticals, Biotechnology and Life Sciences	1%	0%
Consumer Discretionary, Distribution and Retail	0%	12%

* % of net assets. Data may not sum to 100% due to rounding.

Equity portfolio value by market capitalisation

	2025	2024
<£250mn	42%	29%
£250mn - £500mn	12%	32%
£500mn - £750mn	23%	30%
£750mn - £1bn	7%	3%
£1bn - £2.5bn	10%	4%
>£2.5bn	6%	2%

Investment Portfolio as at 31 December 2025

Company	Stock Exchange Identifier	% of  investee company	Cost  £'000*	Market  value  £'000	% of AJOT net assets	NFV/Market  capitalisation1	EV/EBIT1
Mitsubishi Logistics2	TSE: 9301	1.5%	33,130	32,035	7.5%	87%	2.9
Kurabo Industries	TSE: 3106	4.6%	21,838	31,089	7.3%	69%	4.2
Amova Listed IDX Fund Topix3,4	TSE: 1308	0.0%	30,059	30,461	7.2%
Nomura NF Topix3,4	TSE: 1306	0.0%	29,983	30,371	7.10%
Eiken Chemical	TSE: 4549	6.5%	22,579	25,694	6.0%	15%	21.5
Raito Kogyo	TSE: 1926	3.5%	21,785	25,283	5.9%	25%	7.6
Sharingtechnology4.5	TSE: 3989	18.3%	21,296	25,169	5.9%	18%	11.4
Atsugi	TSE: 3529	24.2%	20,573	24,929	5.9%	102%
Wacom	TSE: 6727	4.8%	23,743	24,688	5.8%	12%	9.1
Synchro Food	TSE: 3963	23.8%	19,210	23,187	5.4%	-1%	23.0
Top 10 investments			244,196	272,906	64.0%
Rohto Pharmaceutical	TSE: 4527	0.8%	22,696	22,868	5.4%	10%	13.4
Broadmedia	TSE: 4347	23.9%	14,762	17,960	5.2%	35%	12.1
Aoyama Zaisin Networks	TSE: 8929	7.0%	14,276	13,138	3.1%	45%	5.2
Sanyo Shokia	TSE: 8011	7.0%	12,170	13,132	3.1%	20%	12.7
Maruzen Showa Unyu	TSE: 9068	1.5%	10,466	12,228	2.9%	36%	8.4
Ines	TSE: 9742	4.9%	9,594	9,445	2.2%	19%	14.8
Asiro	TSE: 7378	18.0%	9,091	9,294	2.2%	10%	6.1
Foster Electric	TSE: 6794	2.8%	8,953	8,871	2.1%	40%	7.3
DTS	TSE: 9682	0.9%	6,679	8,572	2.0%	19%	9.9
Senshu Electric	TSE: 9824	1.6%	7,286	7,548	1.8%	40%	6.3
Top 20 investments			360,166	395,692	93.0%
Quick	TSE: 4318	2.3%	5,372	5,622	1.3%	31%	7.7
Asoview Inc3,†			5,842	5,589	1.3%
Saxa	TSE: 6675	3.0%	4,766	5,341	1.3%	26%	8.2
Shin Etsu Polymer	TSE: 7970	0.6%	3,272	4,389	1.0%	29%	8.4
Wakamoto Pharmaceutical	TSE: 4512	8.6%	4,711	4,044	1.0%	93%
Go Vrn3,†			3,035	3,212	0.8%
SK Kaken	TSE: 4628	0.3%	3,041	2,405	0.6%	79%	2.6
Kokuyo	TSE: 7964	0.1%	2,079	2,350	0.5%	58%	6.2
Studyplus Inc3,†			1,862	1,988	0.5%
The Iyell Co3,†			1,669	1,736	0.4%
Top 30 investments			395,815	432,368	101.8%
Yoriso 3,†			543	0.1%
Total investments			396,361	432,911	101.8%
Other net assets and liabilities				(7,620)	(1.8%)
Net assets				425,291	100.0%
*Please refer to Glossary in the Annual Report.
1 Estimates provided by AVI. For all Alternative Performance Measures, please refer to the definitions in the Glossary in the Annual Report.
2 The NFV and EV/EBIT estimates differ to the reported figures in the December 2025 Factsheet due to a post period-end change in the NFV calculation for Mitsubishi Logistics.
3 Investments acquired as part of the combination with FJV.
4 These Exchange Traded Fund ("ETF") holdings provided passive exposure to the Japanese equity market following the combination with FJV.
5 219,700 Sharingtechnology shares were acquired as part of the combination with FJV at a cost of £1,093,000.
† Level 3 investment (see note 15).

 LEI: 894500IJ5QQD7FPT3J73

FURTHER INFORMATION

AVI Japan Opportunity Trust Plc's annual report and accounts for the year ended 31 December 2024 and the notice of meeting for the Company's AGM will be available today on www.ajot.co.uk.

It will also be submitted shortly in full unedited text to the Financial Conduct Authority's National

Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

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

 

END