Half-year Financial Report

AVI Japan Opportunity Trust PLC

17 September 2026

 

AVI JAPAN OPPORTUNITY TRUST PLC

INTERIM REPORT 2026

LEI: 894500IJ5QQD7FPT3J73

Interim Report for the six months ended 30 June 2026

The Directors present the unaudited Interim Report for the six months ended 30 June 2026.

Copies of the Interim Report can be obtained from AVI Japan Opportunity Trust plc's website 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.

Dividend

An interim ordinary dividend of 1.6p has been declared for the Period ended 30 June 2026 and will be paid on 6 November 2026 to Ordinary Shareholders on the register at the close of business on 9 October 2026 (ex-dividend date is 8 October 2026).

PERFORMANCE SUMMARY

	30 June 2026	30 June 2025
Net Asset Value* (£'000)	378,631	234,098
Net Asset Value per share (total return) for the Period	(2.2)%	11.7%
Net Asset Value per share (p)	170.3	172.3
Comparator Benchmark
MSCI Japan Small-Cap Index (£ adjusted total return for the Period)	18.0%	6.5%
Portfolio Valuation*
Net Cash as % of Market Cap	13.7%	21.2%
Net Financial Value as % of Market Cap	40.4%	51.2%
EV/EBIT	8.3x	7.2x
FCF Yield	6.6%	5.4%
	Six months to 30 June 2026	Six months to 30 June 2025
Earnings and Dividends
Profit before tax	£(8.8)m	£25.0m
Investment income	£6.7m	£4.1m
Revenue earnings per share	2.2p	2.2p
Capital earnings per share	(6.2)p	15.9p
Total earnings per share	(3.9)p	18.1p
Ordinary dividends per share	1.6p	1.6p
Ongoing Charge
Management, marketing and other expenses
(as a percentage of average Shareholders' funds)	1.4%	1.4%
2026 Year's Highs/Lows	High	Low
Net Asset Value per share	191.6p	160.1p

Net Asset Value per share at 30 June 2026	170.3p
Share price at 30 June 2026	166.5p
Discount as at 30 June 2026	2.2%
(difference between share price and Net Asset Value)	(3.8)p

NAV TR (GBP)	Since inception	H1 2026	2025	2024	2023	2022	2021	2020	2019
AJOT	90.5%	(2.2)%	14.7%	20.9%	15.8%	(4.3%)	12.3%	(1.4%)	19.0%
MSCI Japan Small Cap	74.5%	18.0%	19.8%	6.2%	6.9%	(1.0%)	(1.4%)	3.2%	14.7%
Relative Performance	15.9%	(20.2)%	(5.2)%	14.7%	8.8%	(3.4%)	13.7%	(4.6%)	4.3%

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

CHAIR'S STATEMENT

"The Board expects several of the initiatives being progressed by the Investment Manager will yield positive results over the coming months."

Norman Crighton, Chair

Performance and Introduction

Welcome to the seventh interim report for AVI Japan Opportunity Trust plc ("the Company" or "AJOT"), covering the period from 1 January 2026 to 30 June 2026 ("the Period"). The first half of 2026 proved challenging for the Company, with the portfolio delivering a return of -2.2% compared with +18.0% for the Comparator Benchmark Index in GBP. Accounting for currency moves, performance was flat over the period on an absolute basis. While this outcome is disappointing, particularly following the strong relative performance achieved in recent years, the Board remains confident that short-term market movements do not diminish the long-term investment opportunity available to the Company. More information on the reason behind the performance can be found in the following Investment Manager's Statement.

The Period also marked the first full six months since the enlarged AJOT incorporated the additional assets arising from the combination with Fidelity Japan Trust plc ("FJV"). The transaction has increased the scale of the Company and, importantly, increased the size of AVI's ownership positions across a significant proportion of the underlying portfolio.

The Board believes that the increased scale of the Company provides a stronger platform from which AVI can pursue its differentiated investment strategy. The greater scale of the underlying holdings also enables AVI to exercise more influence with portfolio companies, while providing AJOT shareholders with exposure to a concentrated portfolio of high-conviction investments.

The Board continues to view the structural changes taking place across corporate Japan as an important long-term support for the Company's investment strategy.

Corporate governance reform is now firmly embedded in the Japanese market, with increasing attention being paid to capital efficiency, shareholder returns, board effectiveness and communication with investors. Shareholder engagement has also become a more established feature of the market, while increasing M&A and private equity activity is providing further evidence of the changing expectations around corporate ownership and the value of listed companies.

The forthcoming revision of the Japan Corporate Governance Code, the first major revision in five years, will be an important development during 2026. In parallel, the Tokyo Stock Exchange's two-year revision of TOPIX, beginning in October, is expected to introduce tighter listing and continuation requirements. The Board believes these developments should continue to encourage companies to improve their governance, capital efficiency and relevance to investors.

During the Period, AVI continued to engage actively with portfolio companies, seeking to improve corporate governance, capital allocation and shareholder returns. While engagement outcomes inevitably take time to be reflected in share prices, the Board has been encouraged by the progress made across a number of portfolio holdings, including improved shareholder return policies, enhanced investor communications and greater willingness by management teams to engage constructively with shareholders. The Board remains supportive of AVI's patient, high-conviction investment philosophy and, following the FJV combination late last year, believes the growing scale of ownership positions across the portfolio provides an important competitive advantage.

We are pleased to share that shortly after period end, but prior to publication of this interim report, the portfolio ended the longest corporate activity drought in its history when a private equity firm announced a tender offer for Sharingtechnology. As at 9 September 2026, Sharingtechnology was AJOT's largest portfolio holding, representing 11.11% of AJOT's NAV. The offer price represents a premium of 55% to the undisturbed share price in June, when expectations of a strategic event started building in the media. The last transaction of this kind in the portfolio was in February 2025. That is an unusually long gap for AJOT, where corporate transactions have historically been an important source of returns. We recognise that the absence of such events has been frustrating, and we hope that Sharingtechnology's performance and contribution to the portfolio serves to highlight how quickly and dramatically transactions like this can affect the overall direction of the strategy. While we cannot predict the timing or outcome of individual situations, this transaction demonstrates the type of value realisation that AJOT's concentrated, engagement-led strategy is designed to deliver. Be assured that the investment team has been working hard behind the scenes across a number of core portfolio companies, to realise their full and under-appreciated value.

Board and Investment Management Changes

There have been some important corporate developments to update our shareholders on. As previously announced, Claire Binyon joined the Board as a Non-Executive Director with effect from 27 May 2026. Claire is a chartered accountant and experienced Non-Executive Director with a distinguished career including senior roles in corporate finance, strategic planning, and M&A, across blue-chip multinationals and listed companies in a wide range of sectors. In June, Andrew Rose was appointed Senior Independent Director and will continue his responsibilities as Non-Executive Director concurrently. In 2027, Margaret Stephens and I will each reach nine years of tenure on the Board and intend to step down during that year.

Sale of AVI to Pacific Asset Management

As was announced after the period end, AVI is to be acquired by Pacific Asset Management ("Pacific"), the London-based multi-boutique asset manager and part of the Pinnacle Investment Management Group, subject to applicable conditions. AVI has confirmed to the Board that following the transaction, the investment team led by Joe Bauernfreund will remain in place, and the investment philosophy and process applied to the Company's portfolio will be unchanged. There is no change as a result of the transaction to the Company's investment objective and policy, or to its fee arrangements. AVI will retain its brand and continue to operate as an independent boutique within Pacific, with access to a broader distribution network and to Pacific's operational and technology platform. The Board will monitor developments in relation to the above.

Completion of the transaction is subject to certain conditions, including regulatory approval, and is expected to complete in Q4 2026.

Since AJOT's launch in 2018, AVI's decades-long expertise in Japanese markets, disciplined investment approach and constructive style of engagement have produced outstanding long-term performance for shareholders. AVI believes that Pacific's additional distribution, technology and operational capabilities will support AJOT's continued growth and enable AVI's proven investment team, to take even greater advantage of the evolving opportunity set in Japan's overlooked, undervalued small-cap companies and deliver strong returns to shareholders.

Dividends

The Board has declared an interim ordinary dividend of 1.6 pence per share. This is in line with the interim dividend declared in 2025 but does not fully reflect expected income to be generated in 2026. As stated in the Prospectus at the Initial Public Offering ("IPO") the Company intends to distribute all net revenue arising from the portfolio. So far income generated in 2026 has been greater than that generated on a per share basis in 2025. The Board therefore expects, given no negative unforeseen events, to be in a position to pay a higher final dividend than last year.

Debt Structure and Gearing

Over the period the Company negotiated an increased borrowing facility following the combination with FJV. This was finalised at the start of April 2026 with the Yen debt facility increased from ¥6.6bn to ¥12.7bn. Debt increased from ¥6.6bn to ¥9.2bn (c.£42.7m) at the end of the Period with net gearing equal to 5.6% of NAV.

Discount, Issuance and Buybacks

The Board continues to monitor closely the Company's share price discount to net asset value. During the Period, the Company's shares traded at an average discount of approximately -1.3%, compared with -1.3% at the beginning of the year and -2.2% at the period end. Despite the challenging performance, the Board is pleased to report the successful sale of 6.2 million shares from treasury during the period at a premium, and for a total value of £11,591,000. During the same period, 27,224,713 shares were bought back at an aggregate cost of £48,012,000. Meanwhile, the Board remains committed to its discount management policy and will continue to utilise share buybacks where appropriate.

Closing Remarks

The Board recognises that AJOT's investment performance over the first six months of 2026 was disappointing. However, our assessment remains positive over the medium to long term, reflecting the time required for corporate engagement to translate into fundamental change and Shareholder returns. The Board expects several of the initiatives being progressed by the Investment Manager will yield positive results over the coming months.

The Board remains confident in the Company's long-term prospects and AVI's ability to create value through disciplined investment and constructive engagement. In October 2024 the Company announced its intention to offer our Shareholders the opportunity to exit at close to NAV on an annual basis (rather than biennially). This opportunity will again be offered in 2026. We would hope that Shareholders will understand that the returns generated by the Investment Manager will not result in smooth outperformance of an index but take time to yield results. I look forward to discussing the results of these initiatives in the 2026 Annual Report, my last as your Chair, to be published in March 2027.

On behalf of the Board, I thank Shareholders for their continued support.

Norman Crighton

Chair

16 September 2026

INVESTMENT MANAGER'S REPORT

"Disciplined engagement and patient capital allocation ultimately create meaningful shareholder value."

Joe Bauernfreund, Portfolio Manager

The first half of 2026 proved to be a challenging period for AJOT, with NAV declining by -2.2% versus a very strong market. Although Japanese equities continued to perform well in aggregate, market returns became increasingly concentrated in a narrow group of AI and semiconductor-related companies, creating a difficult environment for our disciplined value and engagement strategy. As a portfolio focused on undervalued businesses with company-specific catalysts rather than high-growth technology stocks, AJOT lagged the broader market over much of the period. While this resulted in disappointing performance over the six months, we remain confident that the underlying investment case across the portfolio has strengthened rather than weakened. Encouragingly, the latter part of the period saw signs that market leadership was beginning to broaden beyond the technology sector, allowing stock-specific fundamentals and corporate developments to reassert themselves as drivers of returns.

This remains an attractive backdrop for our investment approach. The structural reforms underway across corporate Japan continue to gather momentum, with improving governance standards, greater attention to balance sheet efficiency and increasing shareholder engagement providing fertile ground for value creation. In addition, there has been a continuing trend of corporate activity with private equity funds actively involved in takeovers/privatisations of listed companies.

Against this backdrop, engagement activity accelerated during the period. Japan's 2026 AGM season saw a record number of shareholder proposals submitted by both activist and institutional investors, highlighting the continued evolution of corporate governance standards across the market. AVI itself submitted shareholder proposals at Kurabo Industries, Wacom and Rohto Pharmaceutical. While none of the resolutions were ultimately approved, each received encouraging levels of shareholder support, demonstrating growing investor willingness to challenge entrenched management teams.

Our engagement extends well beyond formal shareholder proposals. Across the portfolio, we have continued to work with companies on capital allocation, governance, investor relations and strategic direction. Several holdings announced enhanced shareholder return policies, including more disciplined capital allocation frameworks and clearer commitments to distributing excess capital. Elsewhere, improved investor relations, greater strategic transparency and a greater willingness by management teams to engage with shareholders have helped narrow the gap between market valuations and our assessment of intrinsic value.

These developments are important because our objective is not simply to identify undervalued companies, but to help create the conditions under which that undervaluation can be addressed. Engagement is therefore an integral part of the investment process rather than a separate activity undertaken after an investment has been made.

Announced after period-end but prior to publication, Sharingtechnology provides a timely example of what our investment process can achieve. On 9 September, it was announced that a private equity firm had launched a tender offer for Sharingtechnology at a significant premium to the undisturbed share price. While the potential transaction had been speculated upon in the media since June 26, the resulting share price appreciation contributed an impressive 4.6% of AJOT's 11.7% return (in GBP) over the period through to the announcement. Although dependent on the takeover bid duration, since the initial investment in July 2024, we estimate an ROI of over 40% at the offer price. Corporate activity has historically been an important component of returns from our strategy, making the 17-month gap since the portfolio's last corporate event highly unusual. This extended period without a transaction has inevitably weighed on sentiment towards the portfolio and contributed to relative underperformance versus the benchmark.

Our strategy is deliberately concentrated: we build substantial, often double-digit, ownership positions in companies where we believe there is significant unrealised value and use our influence through intensive engagement and activism to encourage change. The tender offer is a welcome example of this approach translating into a tangible outcome for shareholders and reinforces our conviction in the opportunity set created by this model.

Our investment strategy remains differentiated by building meaningful ownership positions in high-quality businesses where we believe active engagement can materially influence outcomes. With contribution from FJV's additional assets we crossed the key 5% ownership threshold in 14 AJOT portfolio companies - in some cases owning as much as 20 or 30% of outstanding shares across AVI funds*. The 5% threshold triggers public notification of our holding, and these 14 companies represent approximately two-thirds of the Trust's NAV. These significant ownership stakes provide us with a level of access and influence that few minority shareholders can achieve. We believe this concentrated ownership model is a key competitive advantage and significantly enhances our ability to unlock long-term value.

While the first half of the year was disappointing from performance perspective, we believe the portfolio exits the period in a considerably stronger position than headline returns might suggest. Valuations across many holdings remain attractive despite continued operational progress, engagement momentum has continued to build, and an increasing number of portfolio companies are demonstrating a greater willingness to embrace governance reforms and shareholder-friendly capital allocation policies. Share prices of less liquid companies can be very inefficient, and particularly so when a small number of shareholders own a large proportion of the shares. We have deliberately sought to own large stakes in companies so that we can be more effective in our engagement with those companies. Whilst share prices in the short term may not reflect the true value, we are confident that catalysts will emerge and make the true value more transparent.

The improvement in market breadth towards the end of the period, together with a growing pipeline of company-specific catalysts, provides grounds for optimism that performance will increasingly reflect the underlying progress being made within the portfolio.

CONTRIBUTORS AND DETRACTORS

Mitsubishi Logistics:

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

The company completed a share buyback programme, announced on 30 April 2025, to repurchase a maximum of ¥20bn worth of shares by March 2026. In June 2026, the company replaced an external board member with ties to the Mitsubishi Group, with an independent director with a real estate background. We believe this is critical to our main engagement focus which centres on the company's large and inefficient real estate portfolio.

Added to the portfolio in January 2025, Mitsubishi Logistics is now the second largest holding in AJOT at 10.24% of NAV (as of 30 June 2026), and across AVI funds. AVI is the third largest shareholder of the company with 4.7%. The investment has so far generated a +24% ROI for an IRR of +30% to period-end (in GBP).

Sharingtechnology:

Based in Nagoya, Aichi Prefecture, Sharingtechnology operates online platforms that match individual customers with local service providers across everyday life-related services, including repair, maintenance and other household problem-solving categories.

The share price rose 24% from 26-30th June 2026, which may have reflected growing investor expectations regarding the potential implementation of strategic options. While the company has not disclosed any specific plan at this stage, the magnitude of the share price move suggests that the market is increasingly focused on the company's undervaluation and the possibility of actions to unlock value. Given the company's strong balance sheet, platform economics and improving market recognition, we believe there remains scope for further value creation if management pursues measures that enhance shareholder value. As a long-term shareholder, AVI will continue to engage constructively with the company to support the realisation of its intrinsic value.

Added to the portfolio in July 2024, Sharingtechnology's recent share price moves have brought it to the top of the holding list, at 10.6% of NAV. As of period-end, the investment has so far generated an IRR of +37% and an ROI of +36% (in GBP).

Synchro Food:

Synchro Food has been the largest detractor over the period, falling 58% in absolute terms and reducing performance by 3.3%. 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.

Our engagement with the company continues steadfast, controlling a combined c.28% of the shares across all AVI client funds. Two other foreign shareholders control a combined c.24% of the shares. Additionally, AVI's Head of Japan Research, Kaz Sakai, was successfully appointed to the board as an independent director in December 2025.

After reporting weak quarterly results in February 2026, full year results published in May 2026 saw operating profit fall by 39% year on year. AVI continues to take action to advance much-needed reform. At the company's AGM, Kaz Sakai was retained as a board member, and two additional AVI nominated candidates have taken board seats. Although the operational performance during the period was disappointing, the increased representation on the board provides us with significantly greater scope to influence the company's future direction. We believe the opportunity to improve the company's operating performance, strategic focus and capital allocation remains substantial.

Added to the portfolio in March 2025, the company accounted for 2.5% of AJOT's NAV at period-end. We see significant upside through our constructive engagement. To period-end, the investment has generated an ROI of -47% for an IRR of -51% (in GBP).

OUTLOOK

Looking ahead, we remain positive on the outlook. In addition to Prime Minister Takaichi's focus on corporate reform, we look forward to two meaningful developments: the first revision to the Japan Corporate Governance Code in five years, as well as a two-year revamp of the TOPIX (which will include tightening listing and continuation requirements) by the Tokyo Stock Exchange starting in October. While periods of narrow market leadership can temporarily obscure the benefits of our approach, history has shown that disciplined engagement and patient capital allocation ultimately create meaningful shareholder value. We therefore remain focused on executing our long-term strategy and believe the portfolio is well positioned to benefit as company-specific catalysts continue to emerge and governance reforms across corporate Japan gather further momentum.

Joe Bauernfreund

Asset Value Investors

16 September 2026

INVESTMENT PORTFOLIO As at 30 June 2026
Company	Stock Exchange Identifier	% of net assets	Cost £'000	Equity Exposure £'000	% of investee company	NFV / Market capitalisation1	EV/EBIT1
Sharingtechnology	TSE: 3989	10.6%	30,924	40,077	25.3%	13.8%	13.82
Mitsubishi Logistics	TSE: 9301	10.2%	31,909	38,842	1.5%	75.8%	6.36
Kurabo Industries	TSE: 3106	8.5%	20,497	32,247	4.1%	76.7%	3.64
Eiken Chemical	TSE: 4549	7.0%	22,554	26,435	6.5%	10.2%	25.20
Wacom	TSE: 6727	6.3%	24,533	23,724	4.9%	17.0%	6.36
Foster Electric	TSE: 6794	6.2%	22,035	23,478	6.6%	6.4%	8.35
Sanyo Shokai	TSE: 8011	6.1%	21,775	23,062	11.9%	54.2%	7.44
Maruzen Showa Unyu	TSE: 9068	6.0%	24,699	22,679	3.2%	34.0%	5.96
Broadmedia	TSE: 4347	5.6%	22,802	21,209	34.2%	53.4%	5.47
Atsugi	TSE: 3529	5.4%	20,764	20,405	24.4%	125.0%	0.00
Top ten investments		71.9%	242,492	272,158
Asiro	TSE: 7378	4.2%	17,657	15,969	31.4%	14.9%	6.53
Rohto Pharmaceutical	TSE: 4527	4.1%	17,329	15,503	0.6%	13.6%	11.18
Ines	TSE: 9742	3.9%	14,452	14,822	7.3%	34.2%	8.29
Saxa	TSE: 6675	2.6%	11,278	9,786	6.0%	22.5%	8.02
Synchro Food	TSE: 3963	2.5%	19,210	9,375	23.8%	0.7%	7.62
Aoyama Zaisan Networks	TSE: 8929	2.4%	12,542	8,906	6.1%	30.9%	4.95
Raito Kogyo	TSE: 1926	2.3%	6,469	8,796	1.1%	26.4%	7.35
Taki Chemical	TSE: 4025	2.3%	8,958	8,560	4.2%	81.4%	2.16
Senshu Electric	TSE: 9824	2.0%	5,955	7,578	1.3%	37.9%	7.63
DTS	TSE: 9682	1.9%	7,165	7,306	1.0%	24.9%	7.32
Total 20 investments		100.1%	363,507	378,759
Quick	TSE: 4318	1.6%	7,853	6,186	3.3%	39.9%	5.36
Asoview Inc†		1.5%	5,842	5,569
Wakamoto Pharmaceutical	TSE: 4512	1.0%	4,777	3,783	8.7%	96.8%	0.00
SK Kaken	TSE: 4628	0.5%	3,041	1,981	0.3%	96.2%	0.38
Studyplus Inc†		0.5%	1,862	1,825
The Iyell Co†		0.3%	1,669	1,192
Yoriso†		0.1%	546	488
Total Investments		105.6%	389,097	399,783
Other net current assets less current liabilities		5.7%		21,504
Non-current liabilities		(11.3%)		(42,656)
Net assets		100.0%		378,631

¹ Estimates provided by AVI. Please refer to the Glossary in the full Half Year Report.

† Level 3 investment (see note 8 in full Half Year Report.

LEI: 894500IJ5QQD7FPT3J73

FURTHER INFORMATION

AVI Japan Opportunity Trust Plc's Half Year Report for the period ended 30 June 2026 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.

ENDS

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