Preliminary Results for the year to 31 August 2021
|
RNS Announcement: Preliminary Results |
|
The Baillie Gifford Japan Trust PLC |
|
Results for the year to 31 August 2021 |
Over the year to 31 August 2021, The Baillie Gifford Japan Trust PLC's net asset value total return† (after deducting borrowings at fair value) was 20.9% compared to the benchmark TOPIX index total return (in sterling terms) which was 16.3%. In this period the Company's share price total return was 25.7%.
· The largest positive contributors to performance over the year came from physical-world businesses whilst negative contributions mainly came from the internet area
· The Board is recommending a dividend of 6.00p per share, an increase of 33.3% on last year's 4.50p
· This year marks the 40th anniversary of the trust. Since inception to 31 August 2021, the Company's NAV total return is 10.6% per annum compared to the TOPIX total return of 4.7% per annum
· The Managers continue to believe in the power of a diversified mix of quality growth companies to deliver a good return to shareholders over the long-term
† For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.
Source: Refinitiv/Baillie Gifford. See disclaimer at the end of this announcement.
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 2021, the Company had total assets of £1,097.6m (before deduction of bank loans of £142.2m).
The Company is managed by Baillie Gifford, an Edinburgh based fund management group with around £330bn under management and advice as at 12 October 2021.
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 japantrustplc.co.uk .
Legal Entity Identifier: 54930037AGTKN765Y741
13 October 2021
For further information please contact:
Alex Blake - Client Director
Baillie Gifford & Co
Tel: 0131 275 2859
Mark Knight, Four Communications
Tel: 0203 697 4200 or 07803 758810
The following is the audited preliminary statement for the year to 31 August 2021 which was approved by the Board on 13 October 2021.
Chairman's Statement |
Last year, I reported on an extraordinary year. The news flow was dramatic, speculation about the effects of Covid on the economy was causing enormous volatility but at least the equity market, which had plunged, continued its powerful resurgence which had begun in the spring.
This year has been characterised by a continuing strong recovery in share prices with normal concerns such as earnings trends being swept aside. By the end of the last financial year our benchmark (the TOPIX total return in sterling terms) had recovered most of its lost ground. The rally continued into the beginning of this calendar year before peaking in early 2021. Since then, the market has traded within a band as investors wait for greater clarity.
Performance
In the year to 31 August, after deducting borrowings at fair value, the net asset value total return was 20.9%. The discount, which started the year at 2.7%, moved to a premium of 1.1% leading to a share price total return of 25.7% (please see Total Return calculations at the end of this announcement). The Benchmark total return was 16.3% over the same period.
I am not sure that there is much merit in relaying more than the bare facts about a market that fell and rebounded just as sharply. Instead, I thought I should write about other outcomes, which, I am glad to say, were favourable for shareholders.
First, I want to show you the returns over longer periods shown in the following table.
Compound annual returns to end of August 5 years 10 years
Net asset value total return (borrowings at fair value) 13.7% 16.8%
Share price total return 14.7% 18.2%
TOPIX total return 10.3% 11.2%
After a static six months, it's instructive to reflect on longer term performance which has beaten the index and inflation handsomely.
The Trust is enjoying its 40th Birthday this year and I thought it would be appropriate to show the performance over the period it's been in existence.
Since inception of the Trust 15 December 1981 to 31 August 2021
|
Share price % | Share Price Total return % | NAV (fair) % |
NAV Total Return (fair) % |
TOPIX |
TOPIX Total Return % |
Performance | 5,110.0 | 5,161.6 | 5,136.3 | 5,025.7 | 347.6 | 592.6 |
Annualised | 10.6 | 10.6 | 10.6 | 10.6 | 3.2 | 4.7 |
I'd like to offer my sincere thanks to all the people who have helped build this tremendous record.
Gearing and borrowing
The Board believes that borrowing will enhance returns to investors over medium and long term periods. Borrowing normally sits at a reasonable level and will fluctuate modestly, driven by portfolio transactions. But last year was very unusual. We had no idea what to expect and decided that the normal level of gearing was not appropriate. A year ago, gearing was reduced to just over 4%. By the end of August, our confidence had grown enough to allow us to raise gearing to 10%, a more normal, but not high level, reflecting a continuing high degree of uncertainty.
Portfolio Revenue and Dividend
When I started investing in Japan over 40 years ago, it was all about capital growth. There was very little dividend income and certainly not enough to encourage investment in the stock market. It is therefore pleasing to be able to report that gross revenues rose from £15,337,000 last year to £17,224,000 in the twelve months to 30 August 2021. That's an increase of 12.3%. Given that this was the outcome in a year of a battered economy, this is encouraging.
Expenses rose by 23.1% during the year from £4,970,000 to £6,118,000. This appears high, but most of the increase was in the fee paid to your managers reflecting the sharp recovery in the portfolio's value.
The Trust's aim is to achieve long term capital growth. However, in order to qualify as an investment trust, the Company is not permitted to retain more than 15% of eligible investment income arising during any accounting period. Accordingly, the board's policy is to pay a single yearly dividend to satisfy this statutory requirement.
With buoyant revenues in this period, I am pleased to tell you that the board is recommending a dividend of 6.00p per share, an increase of 33.3% on last year's 4.50p. This will be put to shareholders for approval at the Annual General Meeting to be held on 16 December 2021 and, if approved, will be paid on 21 December to shareholders on the register at close of business on 12 November 2021. A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the company. For those shareholders electing to receive the DRIP, the last date for receipt of election is 30 November 2021
With more companies actively wanting to raise their dividends, I hope we will have more good news to report next year.
Share Capital and Discount Management
Last year I wrote about the advantages Investment Trusts enjoy over open ended funds. I also wrote that the Board had actively bought back shares when the opportunity arose in March 2020. I know from speaking to shareholders that they expect us to exercise our right to buy shares back and I was pleased to have an opportunity to do just that. This year, we issued 2,470,000 shares raising £26,500,000 to invest. At year end, your Trust was at a 1.1% premium to its NAV, remaining well ahead of the sector average which was at a discount of 4.4%.
Your Board believes it is important that the Company retains the power to buy back equity during the year and so, at the Annual General Meeting, 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 issued/reissued only at a premium to net asset value, thereby enhancing net asset value per share for existing shareholders. The Directors are, once again, seeking 10% share issuance authority at the Annual General Meeting and we would continue to issue shares only when at a premium to net asset value. This authority would expire at the conclusion of the Annual General Meeting in 2022.
Annual General Meeting
The Annual General Meeting of the Company is scheduled to be held at Baillie Gifford's offices in Edinburgh at 12.30pm on 16 December 2021. I do sincerely hope this will be possible, but Covid-19 may not oblige. The Board will monitor developments and may be unable to allow shareholders to attend in person. Accordingly, the Board encourages all shareholders to exercise their votes at the AGM by completing and submitting a form of proxy. We would encourage shareholders to monitor the Company's website at japantrustplc.co.uk where any updates will be posted and market announcements will also be made, as appropriate. Should shareholders have questions for the Board or the Managers or any queries as to how to vote, they are welcome as always to submit them by email to trustenquiries@bailliegifford.com or to call 0800 917 2112.
Information on the resolutions can be found on pages 58 and 59 of the Annual Report and Financial Statements. The Directors consider that all resolutions proposed are in the best interests of shareholders and the Company as a whole and recommend that shareholders vote in their favour.
In particular, shareholders have the right to vote annually on whether the Company should continue in business and will have the opportunity to do so again this year. Last year, the Company again received support for its continuation with 99.99% of votes cast in favour. Your Directors believe there are attractive opportunities in selected, well-run Japanese companies benefiting the long-term favourable outlook for the Japan Trust. To that end, 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
Martin Paling will retire after the AGM in December. With his great investment experience, strong sense of humour and love of challenge, we shall miss him very much. David Kidd will replace Martin as the Company's Senior Independent Director. After a thorough search, we identified an excellent replacement in the form of Simon (Sam) Davis. Sam has a degree in Japanese Studies from Trinity College, Oxford and after 12 years with Deutsche Group in London and Tokyo, worked for Putnam Investments in Boston and London.
Outlook
It's a relief to have ended the year with the share price fully recovered and growing revenues, suggesting dividends will continue to grow. However, the future cannot be predicted and we gaze out onto a sea of uncertainties. At the same time as the US seems to withdraw from its global commitments and China becomes more assertive, we also face growing alarm about the need to manage the environment a lot more carefully. Japan was not as well prepared to work from home as many parts of the rest of the world and so must invest accordingly. Her huge car industry needs to embrace the switch to electric cars and labour shortages will mean a global rush to invest in productivity. Japan has lost its dominance in semiconductor technology and manufacturing which needs to be addressed. The pandemic will encourage supply chains to be made a great deal more robust. On the political front, former foreign minister Fumio Kishida replaced Yoshihide Suga in October as President of the ruling Liberal Democratic Party and Prime Minister. Representing stability and continuity, Kishida is expected to follow a path of predictable, consensus driven and incremental change in economic and financial policy.
Other people would surely have identified many other changes in matters that we have become accustomed to. Change is good as it provides lots of investment opportunities and the Board is confident that Baillie Gifford will continue to exploit these to your advantage.
Let me close by congratulating Baillie Gifford on a very successful forty year period of investment.
Keith Falconer
Chairman
13 October 2021
For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Managers' Report |
Inevitably this has been another year where the news has been dominated by the novel coronavirus. At a very big picture level it may be that there are three things that we have learned so far. First, there is a pandemic. Second, effective vaccines have been created. Third, the endgame will likely be a new endemic virus. In many ways what we are seeing currently in the global economy are the consequences of different countries being at different states in their immunity levels and, even where immunity is high, echoes from the pandemic and the methods used to control it continuing to ripple through the economy.
We are pleased to report that Baillie Gifford, and therefore the Japanese team, are once again able to use the office on a regular basis. While we have learned a great deal about how to work remotely we also believe that one of our key long-term competitive edges is the quality of discussion and debate in the team and therefore it is good to be able to strengthen the long-term bonds between team members with real-world interaction. Equally, while it is convenient and easy to talk with company management on Zoom and similar tools, we are looking forward to being able to meet with management in person again both in Japan and Edinburgh. Meanwhile, we are ably supported by our Japanese researchers in Tokyo.
Performance
Japan is now making reasonable progress with its vaccination programme, following a slow start, and overall case numbers remain low by global standards. It seems likely that Japan will enter the endemic phase of the coronavirus around the same time as many other developed economies. However, the coronavirus pandemic has been a global issue. For example, many of the suppliers to Japanese companies are based in South-East Asia where there continue, for now, to be significant virus-related problems. Many supply chains are complex and the temporary lack of availability of some parts can have significant knock-on impacts. Also, on the demand side, different parts of the globe have been emerging at varying speeds creating surges in demand for certain products at different times whilst supply is sometimes intermittent. Unsurprisingly this combination is leading to short-term difficulties that may still take some time to resolve. Our meetings with individual companies suggest that many are having to respond by adjusting product schedules, making design modifications, and increasing prices. Capitalism is an effective system for meeting demand but, inevitably, it will take time for all the various problems to be worked through.
Throughout this period corporate Japan has shown admirable resilience, as demonstrated by the continuing increases in dividends being paid by the holdings of your Company. This determination by Japanese management to continue paying dividends is a significant improvement from their actions during the global financial crisis. Coupled with the significant cash positions of many Japanese companies it cements our view that it is quite realistic to expect growth in dividends to exceed growth in earnings, perhaps for another decade. While our focus remains on securing capital growth it is expected that growth businesses can provide a secure and growing income stream, and as mentioned in the Chairman's statement, this will lead to a further increase in the dividend paid to shareholders this year.
During the year, the NAV total return per share (with the borrowings deducted at fair value) was 20.9%, exceeding the total return of the Company's benchmark which was 16.3%. Over 5 years the NAV total return has outpaced the benchmark by 3.4% p.a. and over ten years by 5.6% p.a., demonstrating the benefit to shareholders of an active, long-term, growth-orientated approach to investing.
The largest positive contributors to performance mainly came from physical-world companies where business conditions had improved from the very difficult times that many experienced late last year. Outsourcing (a staffing company) was the leading contributor to performance. Run by the energetic entrepreneur Mr Doi, it has grown and internationalised its business over time to reduce its vulnerability to economic shocks and it seems that the market now has a greater understanding of how the resilience has improved. We also had significant contributions from Raksul (logistics and printing), DENSO (Toyota group electronics company), Misumi (dies and small parts) and Topcon (positioning systems) all of which are clearly companies with substantial physical-world operations.
Significant negative contributions mainly came from the internet area. The share prices of these businesses had been generally good performers in the previous year as they were resilient to the challenges of the novel coronavirus and, in some cases, benefitted from increased demand. Notable names included long-standing holdings GMO Internet (internet conglomerate), Bengo4.com (lawyers website), last year's star Softbank (internet conglomerate) and newer holding GA Technologies (online real-estate). Calbee (potato snacks) and Colopl (mobile phone gaming) were also significant negative contributors. For each of these companies we retain conviction in the investment case.
Portfolio Positioning
The observant will note that the position in Softbank Group is significantly smaller than last year. This is due to a combination of underperformance of the shares over the 12 months and a net reduction to the position size. We continue to regard it as an attractive long-term investment prospect but its weighting is now back under 5% of the portfolio, as is our general practice.
Over the year we bought a total of seven new holdings and sold five, maintaining the low turnover that characterises our long-term approach to investing. Since the Interim report, we took new holdings in Unicharm (nappies and sanitary products), BASE (e-commerce software) and TKP (serviced offices and conference rooms). Although these companies have many differences, they each share the feature of significant inside ownership. Unicharm's Takahara family own approximately 30% of the shares and are involved in the management of the business, while BASE's founder Mr Tsuroaka owns approximately 15% and TKP's founder Mr Kawano owns over 50%. We have long believed that significant ownership by management helps to align their interests with outside shareholders and is one of the most effective means of ensuring that shareholder interests are high up the priority list. Meanwhile, we sold the holdings in JAFCO (venture capital) and Zozo (e-commerce). Consistent with the above comment on inside ownership, one of the long-term concerns with Zozo was the stepping down of Mr Maezawa, the founder, from the management of the company and his subsequent share sales which we believe are likely to reduce the entrepreneurialism of the company in the long-run.
Net gearing levels rose during the year and your Company ended the year with 10% net gearing, reflecting two factors. First, the development of effective vaccines brought forward the likely date at which the novel coronavirus ultimately becomes one of many endemic viruses and gave a level of certainty that the worst of the problems would end. Second, we found ourselves with more buying than selling ideas which always encourages us to invest the cash that we keep on hand.
Outlook
It is sometimes easier to make long-term predictions than shorter ones. It seems highly likely to us that the novel coronavirus pandemic will fade into being another of the many endemic virus outbreaks that affect humanity. Similarly, it seems highly likely that the current waves of economic disruption that have flowed from it will ebb away over time. However, we do not feel that we can say anything insightful on the detail of the journey to these outcomes.
Similarly, in terms of the Trust itself: we continue to believe in the power of a diversified mix of quality growth companies to deliver a good return to shareholders over the long-term. However, we can give no assurances on how the journey will go in the short-term. What we can continue to do is to strive for ongoing improvement in the portfolio of your Company with a view to benefitting from the good business prospects of selected Japanese companies.
Baillie Gifford
13 October 2021
For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.
Past performance is not a guide to future performance.
Investment Portfolio by Growth Category
|
Secular Growth1 |
% of total investments |
|
Growth Stalwarts2 |
% of total investments |
|
Special Situations3 |
% of total investments |
|
Cyclical Growth4 |
% of total investments |
|
Rakuten |
3.5 |
Calbee |
2.6 |
SoftBank |
4.1 |
DENSO |
2.8 |
|||
|
GMO Internet |
3.2 |
Pola Orbis |
1.5 |
Sony |
2.6 |
Bridgestone |
2.5 |
|||
|
SBI |
3.0 |
Unicharm |
1.3 |
MS&AD Insurance |
2.4 |
Outsourcing |
2.5 |
|||
|
Sysmex |
2.9 |
Zenkoku |
1.2 |
mixi |
2.3 |
Itochu |
2.3 |
|||
|
CyberAgent |
2.8 |
Makita |
1.1 |
Colopl |
1.6 |
Sumitomo Mitsui Trust |
2.3 |
|||
|
Misumi |
2.8 |
Asics |
0.7 |
Inpex |
1.5 |
Mazda Motor |
2.1 |
|||
|
Kubota |
2.6 |
Sugi |
0.7 |
Tokyo Tatemono |
1.3 |
Sumitomo Metal Mining |
2.0 |
|||
|
FANUC |
2.5 |
Park24 |
0.6 |
Gree |
0.8 |
Murata |
1.7 |
|||
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Raksul |
2.2 |
Fukuoka Financial |
0.5 |
|
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DMG Mori |
1.6 |
|||
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Nidec |
2.2 |
Secom |
0.3 |
|
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Nifco |
1.3 |
|||
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Sato |
1.6 |
Sawai Pharmaceutical |
0.3 |
|
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Mitsubishi Electric |
1.3 |
|||
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MonatoRO |
1.6 |
|
|
|
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Rohm |
1.1 |
|||
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Recruit Holdings |
1.4 |
|
|
|
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Iida |
1.1 |
|||
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GA Technologies |
1.3 |
|
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Tsubaki Nakashima |
0.7 |
|||||
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Topcon |
1.2 |
|
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|
|
|
|
|||
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Toyota Tsusho |
1.1 |
|
|
|
|
|
|
|||
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Digital Garage |
1.0 |
|
|
|
|
|
|
|||
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Infomart |
1.0 |
|
|
|
|
|
|
|||
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Mercari |
1.0 |
|
|
|
|
|
|
|||
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SMC |
0.9 |
|
|
|
|
|
|
|||
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Keyence |
0.8 |
|
|
|
|
|
|
|||
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Broadleaf |
0.7 |
|
|
|
|
|
|
|||
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Demae-Can |
0.7 |
|
|
|
|
|
|
|||
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Shimano |
0.7 |
|
|
|
|
|
|
|||
|
TKP |
0.6 |
|
|
|
|
|
|
|||
|
Istyle |
0.6 |
|
|
|
|
|
|
|||
|
Bengo4.com |
0.5 |
|
|
|
|
|
|
|||
|
Subaru |
0.5 |
|
|
|
|
|
|
|||
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Peptidream |
0.4 |
|
|
|
|
|
|
|||
|
BASE |
0.4 |
|
|
|
|
|
|
|||
|
Noritsu Koki |
0.4 |
|
|
|
|
|
|
|||
|
Nippon Ceramic |
0.4 |
|
|
|
|
|
|
|||
|
Lifull |
0.3 |
|
|
|
|
|
|
|||
|
Healios K.K. |
0.2 |
|
|
|
|
|
|
|||
|
Rizap |
0.2 |
|
|
|
|
|
|
|||
|
Cyberdyne |
0.1 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
47.3 |
|
10.8 |
|
16.6 |
|
25.3 |
As at 31 August 2021
1
Secular Growth: Opportunity to grow rapidly but where there are a number of potential outcomes.
2 Growth Stalwarts: Growth is less rapid but more predictable.
3 Special Situations: Performance has not been good but there is a reason to believe improvements are underway.
4 Cyclical Growth: Earnings do not rise every year but are expected to be higher from one cycle to the next.
Relative Contribution
|
Top Ten Relative Stock Contributors Year to 31 August 2021 |
|
Bottom Ten Relative Stock Contributors Year to 31 August 2021 |
|
||||||
|
Name |
Portfolio (average weight) % |
Index (average weight) % |
Relative Contribution % |
|
Name
|
Portfolio (average weight) % |
Index (average weight) % |
Relative Contribution % |
|
|
Outsourcing |
2.4 |
0.0 |
1.1 |
|
Colopl |
1.9 |
0.0 |
(0.7) |
|
|
Raksul |
1.7 |
0.0 |
0.8 |
|
Calbee |
2.1 |
0.1 |
(0.7) |
|
|
Denso |
2.7 |
0.6 |
0.7 |
|
GMO Internet |
3.6 |
0.0 |
(0.7) |
|
|
Misumi |
2.5 |
0.2 |
0.6 |
|
SoftBank |
6.4 |
2.5 |
(0.6) |
|
|
Topcon |
1.0 |
0.0 |
0.6 |
|
GA Technologies |
1.0 |
0.0 |
(0.6) |
|
|
Bridgestone |
1.8 |
0.4 |
0.5 |
|
Bengo4.com |
0.9 |
0.0 |
(0.5) |
|
|
JAFCO |
0.7 |
0.0 |
0.4 |
|
Demae-Can |
1.1 |
0.0 |
(0.5) |
|
|
CyberAgent |
3.0 |
0.2 |
0.4 |
|
Keyence |
0.8 |
2.0 |
(0.3) |
|
|
Mazda Motor |
2.0 |
0.1 |
0.3 |
|
mixi |
2.9 |
0.0 |
(0.2) |
|
|
Sysmex |
3.1 |
0.3 |
0.3 |
|
SBI |
3.3 |
0.1 |
(0.2) |
|
|
Top Ten Relative Stock Contributors 5 years to 31 August 2021 |
|
Bottom Ten Relative Stock Contributors 5 years to 31 August 2021 |
||||||
|
Name |
Portfolio (average weight) % |
Index (average weight) % |
Relative Contribution % |
|
Name
|
Portfolio (average weight) % |
Index (average weight) % |
Relative Contribution % |
|
Yaskawa Electric |
2.1 |
0.2 |
2.4 |
|
Inpex |
2.2 |
0.2 |
(1.3) |
|
SoftBank Group |
5.8 |
1.8 |
2.2 |
|
Mazda Motor |
1.4 |
0.2 |
(1.1) |
|
Katitas |
0.4 |
0.0 |
1.7 |
|
Park24 |
1.2 |
0.1 |
(1.0) |
|
M3 |
1.9 |
0.3 |
1.6 |
|
Subaru |
1.3 |
0.4 |
(1.0) |
|
CyberAgent |
2.6 |
0.1 |
1.5 |
|
Takara Leben |
0.4 |
0.0 |
(0.9) |
|
Pan Pacific International |
1.6 |
0.2 |
1.4 |
|
Suruga Bank |
0.4 |
0.0 |
(0.9) |
|
SBI |
3.1 |
0.1 |
1.3 |
|
Rakuten |
3.4 |
0.2 |
(0.8) |
|
Misumi |
2.7 |
0.1 |
1.3 |
|
Lifull |
0.9 |
0.0 |
(0.8) |
|
Outsourcing |
2.3 |
0.0 |
1.3 |
|
Istyle |
0.9 |
0.0 |
(0.8) |
|
IRISO Electronics |
1.0 |
0.0 |
1.2 |
|
Cyberdyne |
0.4 |
0.0 |
(0.7) |
Source: StatPro and relevant underlying index providers. Baillie Gifford Japan Trust relative to TOPIX total return, in sterling terms. See disclaimer at the end of this announcement.
Holding Period
As at 31 August 2021
|
>10 years |
% of total investments |
|
|
5-10 years |
% of total investments |
|
|
2-5 years |
% of total investments |
|
|
<2 years |
% of total investments |
|
Rakuten |
3.5 |
|
|
SoftBank |
4.1 |
|
|
mixi |
2.3 |
|
|
DENSO |
2.8 |
|
GMO Internet |
3.2 |
|
|
CyberAgent |
2.8 |
|
|
Sato |
1.6 |
|
|
Calbee |
2.6 |
|
SBI |
3.0 |
|
|
Sony |
2.6 |
|
|
DMG Mori |
1.6 |
|
|
Bridgestone |
2.5 |
|
Sysmex |
2.9 |
|
|
FANUC |
2.5 |
|
|
Colopl |
1.6 |
|
|
MS&AD Insurance |
2.4 |
|
Misumi |
2.8 |
|
|
Outsourcing |
2.5 |
|
|
MonatoRO |
1.6 |
|
|
Raksul |
2.2 |
|
Kubota |
2.6 |
|
|
Sumitomo Mitsui Trust |
2.3 |
|
|
Zenkoku Hosho |
1.2 |
|
|
Pola Orbis |
1.5 |
|
Itochu |
2.3 |
|
|
Nidec |
2.2 |
|
|
Makita |
1.1 |
|
|
GA Technologies |
1.3 |
|
Inpex |
1.5 |
|
|
Mazda Motor |
2.1 |
|
|
Mercari |
1.0 |
|
|
Unicharm |
1.3 |
|
Nifco |
1.3 |
|
|
Sumitomo Metal Mining |
2.0 |
|
|
Keyence |
0.8 |
|
|
Tsubaki Nakishima |
0.7 |
|
Mitsubushi Electric |
1.3 |
|
|
Murata |
1.7 |
|
|
Demae-Can |
0.7 |
|
|
Sugi |
0.7 |
|
Tokyo Tatemono |
1.3 |
|
|
Recruit |
1.4 |
|
|
Shimano |
0.7 |
|
|
TKP |
0.6 |
|
Rohm |
1.1 |
|
|
Topcon |
1.2 |
|
|
Peptidream |
0.4 |
|
|
Bengo4.com |
0.5 |
|
Digital Garage |
1.0 |
|
|
Toyota Tsusho |
1.1 |
|
|
Noritsu Koki |
0.4 |
|
|
BASE |
0.4 |
|
SMC |
0.9 |
|
|
Iida |
1.1 |
|
|
Secom |
0.3 |
|
|
Total |
19.5 |
|
Gree |
0.8 |
|
|
Infomart |
1.0 |
|
|
Healios K.K. |
0.2 |
|
|
|
|
|
Asics |
0.7 |
|
|
Broadleaf |
0.7 |
|
|
Rizap |
0.2 |
|
|
|
|
|
Fukuoka Financial |
0.5 |
|
|
Park24 |
0.6 |
|
|
Cyberdyne |
0.1 |
|
|
|
|
|
Lifull |
0.3 |
|
|
Istyle |
0.6 |
|
|
Total |
15.8 |
|
|
|
|
|
Total |
31.0 |
|
|
Subaru |
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nippon Ceramic |
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sawai |
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
33.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stocks bought within the past year. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
List of Investments as at 31 August 2021
|
Name |
Sector |
Value 31 August 2021 £'000 |
% of total investments |
Absolute † performance % |
Relative† performance % |
|
SoftBank |
Information, communication and utilities |
43,240 |
4.1 |
(11.5) |
(23.9) |
|
Rakuten |
Commerce and services |
36,951 |
3.5 |
16.4 |
0.1 |
|
GMO Internet |
Information, communication and utilities |
33,983 |
3.2 |
(4.4) |
(17.8) |
|
SBI |
Financials |
31,624 |
3.0 |
7.6 |
(7.5) |
|
Sysmex |
Electricals and electronics |
30,291 |
2.9 |
27.8 |
9.9 |
|
CyberAgent |
Commerce and services |
29,707 |
2.8 |
35.0 |
16.1 |
|
DENSO |
Manufacturing and machinery |
29,597 |
2.8 |
66.0 |
42.8 |
|
Misumi |
Commerce and services |
29,214 |
2.8 |
48.0 |
27.3 |
|
Sony |
Electricals and electronics |
27,680 |
2.6 |
29.0 |
11.0 |
|
Kubota |
Manufacturing and machinery |
27,248 |
2.6 |
13.1 |
(2.7) |
|
Calbee |
Pharmaceuticals and food |
27,218 |
2.6 |
(22.1) |
(33.0) |
|
FANUC |
Electricals and electronics |
26,672 |
2.5 |
22.3 |
5.2 |
|
Bridgestone |
Manufacturing and machinery |
26,031 |
2.5 |
25.7 * |
19.8 |
|
Outsourcing |
Commerce and services |
25,929 |
2.5 |
102.1 |
73.8 |
|
MS&AD Insurance |
Financials |
25,401 |
2.4 |
6.0 * |
2.6 |
|
Itochu |
Commerce and services |
24,636 |
2.3 |
17.0 |
0.7 |
|
Sumitomo Mitsui Trust |
Financials |
24,549 |
2.3 |
14.5 |
(1.5) |
|
mixi |
Commerce and services |
24,431 |
2.3 |
4.7 |
(10.0) |
|
Raksul |
Information, communication and utilities |
23,033 |
2.2 |
85.8 |
59.9 |
|
Nidec |
Electricals and electronics |
22,904 |
2.2 |
33.6 |
14.9 |
|
Mazda Motor |
Manufacturing and machinery |
22,120 |
2.1 |
32.1 |
13.6 |
|
Sumitomo Metal Mining |
Chemicals and other materials |
21,062 |
2.0 |
25.2 |
7.7 |
|
Murata |
Electricals and electronics |
17,533 |
1.7 |
38.2 |
18.8 |
|
Sato |
Manufacturing and machinery |
17,353 |
1.6 |
28.0 |
10.1 |
|
DMG Mori |
Manufacturing and machinery |
17,000 |
1.6 |
38.3 |
18.9 |
|
Colopl |
Information, communication and utilities |
16,904 |
1.6 |
(17.7) |
(29.2) |
|
MonotaRA |
Retail |
16,639 |
1.6 |
9.4 |
(5.9) |
|
Pola Orbis |
Chemicals and other materials |
15,805 |
1.5 |
18.2 |
1.7 |
|
Inpex |
Chemicals and other materials |
15,514 |
1.5 |
9.8 |
(5.6) |
|
Recruit Holdings |
Commerce and services |
14,939 |
1.4 |
52.2 |
30.9 |
|
Nifco |
Chemicals and other materials |
14,011 |
1.3 |
21.7 |
4.7 |
|
GA Technologies |
Information, communication and utilities |
13,596 |
1.3 |
(28.7) * |
(28.4) |
|
Unicharm |
Chemicals and other materials |
13,548 |
1.3 |
11.5 * |
6.5 |
|
Mitsubishi Electric |
Electricals and electronics |
13,353 |
1.3 |
(1.5) |
(15.3) |
|
Tokyo Tatemono |
Real estate and construction |
13,205 |
1.3 |
25.9 |
8.3 |
|
Zenkoku |
Financials |
13,166 |
1.2 |
33.7 |
15.0 |
|
Topcon |
Manufacturing and machinery |
12,280 |
1.2 |
106.7 |
77.8 |
|
Makita |
Manufacturing and machinery |
11,763 |
1.1 |
22.7 |
5.5 |
|
Toyota Tsusho |
Commerce and services |
11,535 |
1.1 |
51.7 |
30.5 |
|
Rohm |
Electricals and electronics |
11,154 |
1.1 |
48.3 |
27.6 |
|
Iida |
Real estate and construction |
11,138 |
1.1 |
30.2 |
12.0 |
|
Digital Garage |
Information, communication and utilities |
10,393 |
1.0 |
47.4 |
26.8 |
|
Infomart |
Commerce and services |
10,325 |
1.0 |
26.3 |
8.6 |
|
Name |
Sector |
Value 31 August 2021 £'000 |
% of total investments |
Absolute † performance % |
Relative† performance % |
|
Mercari |
Information, communication and utilities |
10,092 |
1.0 |
6.5 |
(8.4) |
|
SMC |
Manufacturing and machinery |
9,607 |
0.9 |
14.5 |
(1.5) |
|
Keyence |
Electricals and electronics |
8,704 |
0.8 |
42.7 |
22.8 |
|
Gree |
Information, communication and utilities |
8,560 |
0.8 |
37.9 |
18.7 |
|
Broadleaf |
Information, communication and utilities |
7,489 |
0.7 |
(1.1) |
(14.9) |
|
Asics |
Manufacturing and machinery |
7,402 |
0.7 |
51.8 |
30.6 |
|
Demae-Can |
Information, communication and utilities |
7,174 |
0.7 |
(36.7) |
(45.5) |
|
Tsubaki Nakashima |
Manufacturing and machinery |
7,071 |
0.7 |
71.8 * |
58.7 |
|
Shimano |
Manufacturing and machinery |
7,028 |
0.7 |
36.9 |
17.8 |
|
Sugi |
Retail |
6,999 |
0.7 |
5.3 |
(9.4) |
|
TKP |
Real estate and construction |
6,818 |
0.6 |
(20.8) * |
(22.5) |
|
Park24 |
Real estate and construction |
6,467 |
0.6 |
4.1 |
(10.5) |
|
Istyle |
Information, communication and utilities |
5,968 |
0.6 |
28.9 |
10.9 |
|
Bengo4.com |
Commerce and services |
5,732 |
0.5 |
(39.8) |
(48.3) |
|
Subaru |
Manufacturing and machinery |
5,482 |
0.5 |
(11.2) |
(23.6) |
|
Fukuoka Financial |
Financials |
5,110 |
0.5 |
12.9 |
(2.9) |
|
Peptidream |
Pharmaceuticals and food |
4,637 |
0.4 |
(15.4) |
(27.2) |
|
BASE |
Information, communication and utilities |
4,307 |
0.4 |
12.4 * |
10.2 |
|
Noritsu Koki |
Manufacturing and machinery |
4,052 |
0.4 |
42.6 |
22.7 |
|
Nippon Ceramic |
Electricals and electronics |
3,995 |
0.4 |
15.3 |
(0.8) |
|
Secom |
Commerce and services |
3,565 |
0.3 |
(20.6) |
(31.7) |
|
Sawai Pharmaceutical |
Pharmaceuticals and food |
3,554 |
0.3 |
(12.0) |
(24.3) |
|
Lifull |
Commerce and services |
3,120 |
0.3 |
(28.7) |
(38.7) |
|
Healios K.K. |
Pharmaceuticals and food |
2,509 |
0.2 |
16.5 |
0.2 |
|
Rizap |
Commerce and services |
1,958 |
0.2 |
22.6 |
5.4 |
|
Cyberdyne |
Manufacturing and machinery |
1,598 |
0.1 |
(11.8) |
(24.1) |
|
Total Investments |
|
1,053,673 |
100.0 |
|
|
|
Net liquid assets |
|
43,929 |
|
|
|
|
Total assets |
|
1,097,602 |
|
|
|
|
Bank Loans |
|
(142,200) |
|
|
|
|
Equity Shareholders Funds |
955,402 |
|
|
|
|
† Absolute and relative performance has been calculated on a total return basis over the period 1 September 2020 to 31 August 2021. For investments held for part of the year, the return is for the period they were held. Absolute performance is in sterling terms; relative performance is against TOPIX total return (in sterling terms).
* Figures relate to part period returns.
Source: Baillie Gifford/Statpro and relevant underlying index providers. See disclaimer at the end of this announcement.
Past performance is not a guide to future performance.
Income Statement
| For the year ended 31 August 2021 | For the year ended 31 August 2020 | ||||
| Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 |
Gains on investments | - | 147,763 | 147,763 | - | 34,676 | 34,676 |
Currency gains | - | 5,560 | 5,560 | - | 6,225 | 6,225 |
Income (note 2) | 17,224 | - | 17,224 | 15,337 | - | 15,337 |
Investment management fee (note 3) | (5,450) | - | (5,450) | (4,380) | - | (4,380) |
Other administrative expenses | (668) | - | (668) | (590) | - | (590) |
Net return before finance costs and taxation | 11,106 | 153,323 | 164,429 | 10,367 | 40,901 | 51,268 |
Finance costs of borrowings | (2,047) | - | (2,047) | (2,788) | - | (2,788) |
Net return before taxation | 9,059 | 153,323 | 162,382 | 7,579 | 40,901 | 48,480 |
Tax on ordinary activities | (1,723) | - | (1,723) | (1,532) | - | (1,532) |
Net return after taxation | 7,336 | 153,323 | 160,659 | 6,047 | 40,901 | 46,948 |
Net return per ordinary share (note 4) | 7.89p | 164.97p | 172.86p | 6.56p | 44.38p | 50.94p |
The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing operations.
A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is both the profit and total comprehensive income for the year.
Balance Sheet |
| At 31 August 2021 | At 31 August 2020 | ||
| £'000 | £'000 | £'000 | £'000 |
Fixed assets |
|
|
|
|
Investments held at fair value through profit or loss |
| 1,053,673 |
| 805,347 |
Current assets |
|
|
|
|
Debtors | 2,111 |
| 1,322 |
|
Cash and cash equivalents | 44,289 |
| 118,742 |
|
| 46,400 |
| 120,064 |
|
Creditors |
|
|
|
|
Amounts falling due within one year | (2,471) |
| (1,602) |
|
Net current assets |
| 43,929 |
| 118,462 |
Total assets less current liabilities |
| 1,097,602 |
| 923,809 |
Creditors |
|
|
|
|
Amounts falling due after more than one year (note 6) |
| (142,200) |
| (151,420) |
Net assets |
| 955,402 |
| 772,389 |
Capital and reserves |
|
|
|
|
Share capital |
| 4,717 |
| 4,621 |
Share premium account |
| 213,902 |
| 190,939 |
Capital redemption reserve |
| 203 |
| 203 |
Capital reserve |
| 725,811 |
| 569,059 |
Revenue reserve |
| 10,769 |
| 7,567 |
Equity shareholders' funds |
| 955,402 |
| 772,389 |
Net asset value per ordinary share* |
| 1,012.8p |
| 840.8p |
Ordinary shares in issue (note 8) |
| 94,328,209 |
| 91,858,209 |
* See Glossary of Terms and Alternative Performance Measures at the end of this announcement.
Statement of Changes in Equity |
For the year ended 31 August 2021
| Share £'000 | Share £'000 | Capital redemption reserve £'000 | Capital* reserve £'000 | Revenue reserve £'000 | Shareholders' £'000 |
Shareholders' funds at 1 September 2020 | 4,621 | 190,939 | 203 | 569,059 | 7,567 | 772,389 |
Shares issued | 96 | 22,963 | - | 3,429 | - | 26,488 |
Net return on ordinary activities after taxation | - | - | - | 153,323 | 7,336 | 160,659 |
Dividends paid in the year | - | - | - | - | (4,134) | (4,134) |
Shareholders' funds at 31 August 2021 | 4,717 | 213,902 | 203 | 725,811 | 10,769 | 955,402 |
For the year ended 31 August 2020
| Share £'000 | Share £'000 | Capital redemption reserve £'000 | Capital* reserve £'000 | Revenue reserve £'000 | Shareholders' £'000 |
Shareholders' funds at 1 September 2019 | 4,621 | 190,939 | 203 | 531,587 | 4,755 | 732,105 |
Shares bought back | - | - | - | (3,429) | - | (3,429) |
Net return on ordinary activities after taxation | - | - | - | 40,901 | 6,047 | 46,948 |
Dividends paid in the year | - | - | - | - | (3,235) | (3,235) |
Shareholders' funds at 31 August 2020 | 4,621 | 190,939 | 203 | 569,059 | 7,567 | 772,389 |
* The capital reserve includes investment holding gains of £330,848,000 (2020 - £224,345,000). The revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable.
Cash Flow Statement |
| At 31 August 2021 | At 31 August 2020 | ||
| £'000 | £'000 | £'000 | £'000 |
Cash flows from operating activities |
|
|
|
|
Net return on ordinary activities before taxation | 162,382 |
| 48,480 |
|
Net gains on investments | (147,763) |
| (34,676) |
|
Currency gains | (5,560) |
| (6,225) |
|
Finance cost of borrowings | 2,047 |
| 2,788 |
|
Overseas withholding tax | (1,626) |
| (1,565) |
|
Changes in debtors and creditors | (726) |
| 326 |
|
Cash from operations |
| 8,754 |
| 9,128 |
Interest paid |
| (2,066) |
| (3,004) |
Net cash inflow from operating activities |
| 6,688 |
| 6,124 |
Cash flows from investing activities |
|
|
|
|
Acquisitions of investments | (199,460) |
| (122,053) |
|
Disposals of investments | 99,611 |
| 171,028 |
|
Exchange differences on settlement of investment transactions | 343 |
| (564) |
|
Net cash (outflow)/inflow from investing activities |
| (99,506) |
| 48,411 |
Cash flows from financing activities |
|
|
|
|
Shares issued/(bought back) | 26,502 |
| (3,429) |
|
Equity dividends paid | (4,134) |
| (3,235) |
|
Bank loans drawn down | - |
| 87,288 |
|
Bank loans repaid | - |
| (51,724) |
|
Net cash inflow from financing activities |
| 22,368 |
| 28,900 |
(Decrease)/increase in cash and cash equivalents |
| (70,450) |
| 83,435 |
Exchange movements |
| (4,003) |
| (4,996) |
Cash and cash equivalents at start of period |
| 118,742 |
| 40,303 |
Cash and cash equivalents at end of period* |
| 44,289 |
| 118,742 |
|
|
|
|
|
* Cash and cash equivalents represent cash at bank and short term money market deposits repayable on demand.
Notes to the Condensed Financial Statements |
1. | The Financial Statements for the year to 31 August 2021 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' on the basis of the accounting policies set out in the Annual Report and Financial Statements which are unchanged from the prior year and have been applied consistently. All of the Company's operations are of a continuing nature and the Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include the revaluation of fixed asset investments and derivative financial instruments at fair value through profit or loss, and on the assumption that approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 will be retained. The Board has, considered severe but plausible downside scenarios, including the impact of market volatility during the Covid-19 pandemic but does not believe the Company's going concern status is affected. In addition, the Company is subject to an annual continuation vote which in previous years has been passed with a majority. The Directors have no reason to believe that the vote will not continue to be in favour based on their assessment of the Company's performance and the views collated from shareholders.The Company's assets, the majority of which are investments inquoted securities which are readily realisable, exceed its liabilitiessignificantly. All borrowings require the prior approval of the Board.Gearing levels and compliance with borrowing covenants arereviewed by the Board on a regular basis. The Company hascontinued to comply with the investment trust status requirementsof section 1158 of the Corporation Tax Act 2010 and theInvestment Trust (Approved Company) (Tax) Regulations 2011.The Company's primary third party suppliers, including its Managersand Secretaries, Depositary and Custodian, Registrar, Auditor andBroker, are not experiencing significant operational difficulties affecting their respective services to the Company. Accordingly, the Financial Statements have been prepared on a going concern basis as it is the Directors' opinion, having assessed the principal and emerging risks and other matters including the impact of the Covid-19 pandemic set out in the Viability Statement on page 10 of the Annual Report and Financial Statements, which assesses the prospects of the Company over a period of five years, that the Company will meet its liabilities as they fall due for a period of at least twelve from the date of approval of these statements. The Financial Statements have been prepared in accordance with the Companies Act 2006, applicable UK Accounting Standards and with the AIC's Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' issued in April October 2019.
In order to better reflect the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented.
Financial assets and financial liabilities are recognised in the Company's Balance Sheet when it becomes a party to the contractual provisions of the instrument. The Directors consider the Company's functional currency to be sterling, see consideration in accounting policy (j) on page 49 of the Annual Report and Financial Statements, as the Company's shareholders are predominantly based in the UK, the Company pays its dividends and expenses in sterling and the Company and its investment manager, who are subject to the UK's regulatory environment are also UK based. | ||
2. | Income | 31 August 2021 £'000 | 31 August 2020 £'000 |
| Income from investments |
|
|
| Overseas dividends | 17,224 | 15,337 |
| Total income | 17,224 | 15,337 |
| Total Income comprises |
|
|
| Dividends from financial assets designated at fair value through profit or loss | 17,224 | 15,337 |
| Total income | 17,224 | 15,337 |
| Notes to the Condensed Financial Statements (ctd) | |||||||||||||||||||||||||||||
3. | Investment Management Fee - all charged to revenue | 2021 £'000 | 2020 £'000 | |||||||||||||||||||||||||||
| Investment Management Fee | 5,450 | 4,380 | |||||||||||||||||||||||||||
| Details of the Investment Management Agreement are disclosed on page 27 of the Annual Report and Financial Statements. The annual management fee is 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly.
| |||||||||||||||||||||||||||||
4. | Net Return per Ordinary Share | 2021 Revenue | 2021 Capital | 2021 Total | 2020 Revenue | 2020 Capital | 2020 Total | |||||||||||||||||||||||
| Net return on ordinary activities after taxation | 7.89p | 164.97p | 172.86p | 6.56p | 44.38p | 50.94p | ||||||||||||||||||||||||
|
Revenue return per ordinary share is based on the net revenue return after taxation of £7,336,000 (2020 - £6,047,000), and on 92,939,322 (2020 - 92,154,367) 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 £153,323,000(2020 - (£40,901,000), and on 92,939,322 (2020 - 92,154,367) 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 | |||||||||||||||||||||||||||||
5. | Ordinary Dividends
If approved, the recommended final dividend will be paid on 21 December 2021 to shareholders on the register at close of business on 12 November 2021. The ex-dividend date is 11 November 2021. Further information can be found in the Dividend section of the Chairman's Statement. | |||||||||||||||||||||||||||||
6. | Total borrowings at 31 August 2021 were £142,200,000 (¥21.5 billion), (31 August 2020 - £151,420,000 (¥21.5 billion)). | |||||||||||||||||||||||||||||
7. | Transaction costs incurred on the purchase and sale of investments are added to the purchase costs or deducted from the sales proceeds, as appropriate. During the year, transaction costs on purchases and sales amounted to £62,000 (31 August 2020 - £61,000) and £50,000 (31 August 2020 - £74,000) respectively. | |||||||||||||||||||||||||||||
Notes to the Condensed Financial Statements (ctd) |
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8. | In the year to 31 August 2021, no shares were bought back and held in treasury (2020 - 566,716 shares with a nominal value of £28,000 were bought back at a total cost of £3,429,000 and held in treasury). At 31 August 2021 the Company had authority to buy back 35,444,433 ordinary shares. In the year to 31 August 2021, the Company sold from treasury 566,716 ordinary shares, at a premium to net asset value, with a nominal value of £28,336 raising net proceeds of £6,183,000. The Company issued a further 1,903,284 ordinary shares at a premium to net asset value raising proceeds of £20,319,000. Block listing fees of £14,000 have been allocated during the year. As at 31 August 2021 the Company had the authority to issue 7,282,536 ordinary shares. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9. | The financial information set out above does not constitute the company's statutory accounts for the years ended 31 August 2021 or 2020 but is derived from those accounts. Statutory accounts for 2020 have been delivered to the registrar of companies, and those for 2021 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Glossary of Terms and Alternative Performance Measures (APM)
Total Assets The total value of all assets held less all liabilities (other than liabilities in the form of borrowings). Net Asset Value Also described as shareholders' funds, Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue. Net Asset Value (Borrowings at Par Value) Borrowings are valued at their nominal par value. Par value approximates to amortised cost. The Company's yen denominated loans are valued at their sterling equivalent. Net Asset Value (Borrowings at Fair Value) (APM) Borrowings are valued at an estimate of their market worth. The Company's yen denominated loans are fair valued with reference to Japanese government bonds of comparable yield and maturity. The value of the borrowings on this basis is set out in note 15 on page 53 in the Annual Report and Financial Statements. A reconciliation from Net Asset Value (with borrowings at par value) to Net Asset Value per ordinary share (with borrowings at fair value) is provided below.
Premium/(discount) (APM) As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.
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| Glossary of Terms and Alternative Performance Measures (APM) (ctd)
Total Return (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.
* The dividend adjustment factor is calculated on the assumption that the dividend of 4.50p (2020 - 3.50p) paid by the Company during the year was invested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.
Ongoing Charges (APM) The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value (with debt at fair value).
Gearing (APM) At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. The level of gearing can be adjusted through the use of derivatives which affect the sensitivity of the value of the portfolio to changes in the level of markets. Gearing is the Company's borrowings at par less cash and cash equivalents expressed as a percentage of shareholders' funds. Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.
*Gearing: ((a)-(b)) divided by (c), expressed as a percentage. **Potential gearing: (a) divided by (c), expressed as a percentage.
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| Glossary of Terms and Alternative Performance Measures (APM) (Ctd)
Leverage (APM) For the purposes of the UK Alternative Investment Fund Managers (AIFM) Regulations, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.
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| Active Share (APM) Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.
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