Baillie Gifford Shin Nippon Interim Results

Baillie Gifford Shin Nippon PLC

17 September 2026

 

RNS Announcement

Baillie Gifford Shin Nippon PLC (BGS)

Legal Entity Identifier: X5XCIPCJQCSUF8H1FU83

Regulated Information Classification: Half Yearly Financial Report

Results for the six months to 31 July 2026

Over the six months to 31 July 2026, the Company's net asset value per share† rose by 22.9% and the share price by 19.8%, compared to a 13.3% increase in the MSCI Japan Small Cap Index*. All figures are in total return terms.

¾    Notable contributors to performance included Tsugami, Harmonic Drive Systems, Kohoku Kogyo and JEOL, all beneficiaries of growing investment in artificial intelligence infrastructure, robotics and advanced semiconductor technology. Nikkiso also contributed strongly, benefiting from increased investment in energy infrastructure. The largest detractors included Yonex and Peptidream.

¾    Three new holdings were initiated during the period: Baudroie, an IT infrastructure and network engineering specialist; Sega Sammy, the video games and entertainment company; and Metaplanet, a bitcoin treasury company. Three positions were exited, including Raksul and Inforich, both of which were acquired. The portfolio ended the period with 62 holdings and an active share of 96%.

¾    Following increased geopolitical uncertainty in April, the Company reduced drawn borrowings by ¥3.7 billion. Net gearing stood at 12.9% at 31 July 2026, compared with 14.9% at 31 January 2026.

¾    The Company's share price ended the period at a 9.9% discount to NAV per share, compared with 7.5% at 31 January 2026. In addition to the 15% tender offer completed in March, approximately 13.52 million shares were bought back into treasury during the six months, equivalent to approximately 5.5% of the Company's issued share capital.

¾    The Board and Managers remain confident in the long-term opportunity presented by Japanese smaller growth companies. Structural changes including labour shortages, digitalisation, automation and artificial intelligence, alongside continued corporate governance reform and greater capital discipline, are creating opportunities for innovative businesses to improve productivity, gain market share and deliver long-term growth.

†           After deducting borrowings at fair value.

*        The Company's comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). See disclaimer at the end of this announcement.

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer at end of this announcement.

Shin Nippon aims to achieve long term capital growth through investment principally in small Japanese companies which are believed to have above average prospects for growth. At 31 July 2026 the Company had total assets of £401.1 million (before deduction of bank loans of £51.8 million).

The Company is managed by Baillie Gifford, an Edinburgh based fund management group with approximately £197.4 billion under management and advice as at 30 June 2026.

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. The Company has borrowed money to make further investments. This is commonly referred to as gearing. The risk is that, when this money is repaid by the Company, the value of these investments may not be enough to cover the borrowing and interest costs, and the Company makes a loss. If the Company's investments fall in value, gearing will increase the amount of this loss. The more highly geared the Company, the greater this effect will be.

Investment in investment trusts should be regarded as long term. You can find up to date performance information about Shin Nippon at shinnippon.co.uk.

16 September 2026

For further information please contact:

Anzelm Cydzik, Baillie Gifford & Co

Tel: [phone]

Jonathan Atkins, Four Communications

Tel: [phone] or 07872 495396

The following is the unaudited Interim Financial Report for the six months to 31 July 2026 which was approved by the Board on 16 September 2026.

Shin Nippon's objective is to pursue long term capital growth through investment principally in small Japanese companies which are believed to have above average prospects for growth.

Comparative index

The index against which performance is compared is the MSCI Japan Small Cap Index (total return and in sterling terms).

Principal risks and uncertainties

The principal risks facing the Company are financial risk, discount risk, regulatory risk, third party service provider risk, cyber security risk and leverage risk. The Board also considers emerging risks. An explanation of these risks and how they are managed is set out on pages 49 to 53 of the Company's Annual Report and Financial Statements for the year to 31 January 2026 which is available on the Company's website: shinnippon.co.uk.

The principal risks and uncertainties have not changed since the date of that report.

Responsibility statement

We confirm that to the best of our knowledge:

a.       the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';

b.       the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (indication of important events during the first six months, their impact on the Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the year); and

c.       the Interim Financial Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

On behalf of the Board

J Skinner

Chair

16 September 2026

Summary of unaudited results*

	31 July 2026	31 January 2026 (audited)	% change
Shareholders' funds	£349.3m	£358.8m
Net asset value per ordinary share‡	179.1p	146.3p	22.4%
Share price	161.4p	135.4p	19.2%
Comparative index†			13.3%
Discount*	9.9%	7.5%
Active share*	96%	97%

	Six months to 31 July 2026		Year to 31 January 2026
Period's high and low	High	Low	High	Low
Net asset value per ordinary share (after deducting borrowings at fair value)*	185.1p	143.9p	152.8p	108.3p
Share price	168.0p	133.4p	138.4p	95.5p
Discount (borrowings at fair value)*	5.1%	11.6%	6.7%	16.9%

Total returns (%)*	Six months to 31 July 2026	Year to 31 January 2026
Net asset value per ordinary share (borrowings at fair value)	22.9%	5.4%
Share price	19.8%	14.4%
Comparative index (in sterling terms)†	13.3%	21.5%

Longer term total return performance at 31 July 2026*

	3 years	5 years	10 years
Net asset value per ordinary share‡	15.9%	(20.4%)	62.8%
Share price	18.1%	(29.8%)	39.3%
Comparative index†	57.6%	58.6%	119.9%

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer below.

Notes

Alternative Performance Measure - see Glossary of terms and alternative performance measures below.

†The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). See disclaimer below.

‡Net asset value per share ('NAV') with borrowings at fair value. At 31 July 2026 the NAV with borrowings at fair value was the same as the NAV with borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures below.

Past performance is not a guide to future performance.

Chairman's Interim Statement

Performance

It is pleasing to start by saying that, for the first time in a number of years, I can report that over the course of its latest reporting period, the Company has achieved both a positive absolute return and also outperformed its comparative index, the MSCI Japan Small Cap Index (total return in sterling terms).

Over the six months to 31 July 2026, the Company's net asset value (NAV) total return was 22.9% and the share price total return was 19.8%. The index total return was 13.3% in sterling terms.

Performance was driven by good returns across the portfolio, with particularly strong contributions from Tsugami (precision machine-tools manufacturer), Harmonic Drive Systems (robotic components manufacturer) and Nikkiso (industrial pumps and medical equipment manufacturer). Each delivered substantial share price gains during the period and, together with positive contributions from a broad range of other holdings, helped the Company generate both a strong absolute return and meaningful outperformance of the comparative index.

Since period end to 15 September 2026, the positive returns have continued with the Company's NAV per share and share price both up 4.6% compared to 2.8% for the comparative index.

The Managers' report below provides further detail on the principal contributors to performance and the portfolio changes made during the period.

While it is still relatively early to draw firm conclusions, the changes Brian and Jared made to the portfolio during 2025 are beginning to deliver encouraging results. Nevertheless, both the Managers and the Board remain focused on the long-term objective of generating attractive returns for shareholders.

Gearing

Following an escalation of conflict in the Middle East and the resulting market uncertainty, drawn borrowings from the revolving credit facility were reduced by ¥3.7 billion in early April. Net gearing stood at 12.9% at the period end, compared with 14.9% at 31 January 2026.

Tender and Buybacks

As announced previously, the Company has in place a performance-triggered tender offer for up to 100% of its issued share capital. This will be undertaken if the Company's net asset value total return does not equal or exceed the total return on the MSCI Japan Small Cap Index (in sterling terms) over the five‑year period to 31 December 2030. As at 31 July 2026, the Company's performance was ahead of the comparative index by eight percentage points (25.4% versus 17.4%) since 31 December 2025.

This 100% performance-triggered tender was put in place following shareholder approval not only to replace the previous 2027 15% performance-triggered tender offer but also to implement a more immediate unconditional tender offer for up to 15% of the Company's issued share capital. That 15% tender was completed, with payments made to shareholders on 20 March 2026.

In response to shareholder feedback, in addition to the 15% tender taking place, the Board has continued to authorise the use of buy backs when the Company's share price discount to its NAV is substantial in absolute terms or relative to its peers. Over the six months to 31 July 2026, this discount widened from 7.5% at the start of the period to 9.9% by its end, averaging 8.7%. During this period, outwith of the tendered shares bought back, the Company bought back approximately 13.52 million shares into treasury, equivalent to approximately 5.5% of the Company's issued share capital.

Outlook

The Board believes that the long-term investment case for smaller Japanese growth companies remains compelling. Japan is entering a period of significant economic and corporate change, creating attractive opportunities for innovative businesses that can improve productivity, gain market share and deliver sustainable growth.

Demographic change, labour shortages and the increasing adoption of digital technologies are accelerating demand for new products, services and business models across the economy. At the same time, a supportive policy environment, continued corporate governance reform and greater capital discipline provide an encouraging backdrop for long‑term investment.

The Company's portfolio is invested in businesses that are well placed to benefit from these structural trends. Across a broad range of industries, our holdings are harnessing advances in automation, digitalisation and artificial intelligence to strengthen competitive positions and expand their growth opportunities. Encouragingly, many continue to deliver strong operational progress while trading at valuations that we believe do not fully reflect their long-term potential.

While periods of market and currency volatility are inevitable, the Board remains confident that Japan's smaller companies continue to offer a rich source of entrepreneurial businesses capable of delivering exceptional long-term capital growth. Supported by a disciplined investment process and a portfolio focused on high-quality growth companies, we believe the Company is well positioned to capture these opportunities for the benefit of shareholders.

The principal risks and uncertainties facing the Company are set out above.

J Skinner

Chair

16 September 2026

With borrowings at fair value. For a definition of terms see Glossary of terms and alternative performance measures below.

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer below.

Interim management report

Market backdrop

The six months under review began with a decisive political event. February's snap lower house election gave Sanae Takaichi's ruling coalition a supermajority, removing an important source of political uncertainty and strengthening her mandate for policies intended to encourage investment and growth. This coincided with continued signs of real wage growth for employees across numerous sectors. Meanwhile, the yen remained weak while Japanese interest rates continued to normalise - an unusual combination which creates both winners and losers across the economy.

For equity markets, however, the dominant theme driving returns was the extraordinary level of investment in artificial intelligence (AI). Capital spending by the world's largest technology companies rippled through the supply chain. In Japan, the beneficiaries included semiconductor equipment manufacturers, makers of advanced electronic components and companies supplying the infrastructure needed to move and process ever greater quantities of data. Many are smaller companies which sit several layers down the supply chain yet play a critical part in enabling AI adoption.

Performance

Over the six months to 31 July 2026, the Company's net asset value (NAV) total return* was 22.9% and its share price total return was 19.8%, compared with a return of 13.3% from the comparative index, the MSCI Japan Small Cap Index (all figures are in sterling terms). As the share price return was lower than the NAV return, the share price to NAV discount widened slightly from 7.5% at the start of the period to 9.9% at its end.

Four of our leading contributors - Tsugami Corp, Harmonic Drive Systems, Kohoku Kogyo and JEOL - are amongst the 'Hidden AI Champions' that we highlighted as a theme in the last annual report. Tsugami's high precision machine tools are required to make components for humanoid robots and the liquid cooling systems used in datacentres. Harmonic Drive is another 'physical AI' player, supplying gears for robotic joints. Kohoku Kogyo is the global leader in a niche optical part used in subsea data cables. JEOL, while best known for scientific microscopes, makes the 'Multi-Beam Mask Writers' needed to produce the world's most advanced chips. All have seen surges in demand, and their shares have benefitted from much improved sentiment.

However, performance was not solely about AI. Another of our leading contributors was Nikkiso, whose specialist pumps for liquefied natural gas, hydrogen and industrial gases make it a beneficiary of the renewed global focus on energy security. The watch company Seiko Group, a position which we initiated in the prior reporting period, has made excellent progress moving upmarket through its Grand Seiko brand. Inforich, the mobile battery rental network, was taken private by Bain Capital at a substantial premium price, a good outcome for what had been one of our weakest holdings last year.

The Company's NAV returns were enhanced by invested borrowings. As of 31 July 2026, net gearing stood at 12.9% compared to 14.9% six months earlier.

The largest detractor to performance was Yonex, the sports equipment company best known for its badminton franchise, where concerns over a softening Chinese market weighed on the share price after several years of excellent performance. We believe the share price correction was overdone and we continue to view it as having a strong global brand with scope to expand its market share across a number of sporting categories.

Peptidream, a biotech company, also detracted. Drug discovery is inherently uncertain, and the market continues to place little value on more distant opportunities. Its pipeline has not progressed as quickly as we would like, but we believe the potential remains valid and we continue to engage regularly with its management.

A common thread runs through several other weaker performers, including Bengo4.com, Appier and GA Technologies. These are digital-first businesses which the market worries could eventually be disrupted by AI, despite being aggressive adopters of it themselves. We take the risk seriously and acknowledge that the long-term uncertainties around purely digital businesses have increased. We are also open to the possibility that some will thrive in an AI age, and we stand ready to act as new dynamics emerge.

Portfolio changes

We purchased three new holdings during the period.

Baudroie is an IT infrastructure and network engineering specialist. The proliferation of cloud computing and AI adoption intensifies the need for corporates to upgrade their networks. We have been impressed by the founder-led company's unusual approach to cultivating engineering talent and its ambition to sustain a high growth trajectory. We classify Baudroie as a Rapid Scaler.

Sega Sammy combines a video games business built around iconic franchises including Sonic the Hedgehog, Persona and Football Manager with a mature pachinko business generating substantial cash. We believe its intellectual property offers compelling long-term potential, even against current headwinds such as soaring memory prices. Sega Sammy is a Cyclical Gainer.

We also took a small position in Metaplanet, a bitcoin treasury company seeking to become a next generation financial services provider in Japan as bitcoin becomes a formally recognised asset. The shares were trading at a discount to the value of the company's bitcoin holdings, and we classify it as an Emerging Prospect. The small starting position of 0.4% is deliberate.

We exited three positions. We sold Nittoku, a maker of specialist coil-winding equipment for electric motors; while still a solid business, slowing growth in electric vehicles and Japan's lagging competitiveness in them eroded our conviction. The other two exits, Raksul and Inforich, were both acquired.

We also made material reductions to several of the period's largest winners, including Tsugami and Harmonic Drive. This was not because our enthusiasm for the individual businesses disappeared. Rather, a thematically narrow group of holdings had appreciated quickly and became a large source of common risk. We halved our Tsugami holding and it remains among our largest positions; such was the strength of its share price. The stocks we described as 'Hidden AI Champions' are also less hidden today.

The proceeds were recycled into other growth businesses we believe are overlooked, including DMG Mori (machine tools), Toyo Tanso (carbon materials), Soracom (an internet of things connectivity platform) and Money Forward (cloud‑based accounting software). We also added to the position in Yonex following the correction in its share price.

These changes reflect the portfolio position-sizing framework introduced last year. The framework is about making sure that the portfolio's performance captures the risks we deliberately choose to take and guards against unintended exposure to themes that are prone to swing violently with market sentiment.

We are also mindful of the portfolio's sensitivity to macro factors for which we do not hold a strong view, for example, the direction of the yen. Historically, a weak yen has tended to work against us as the portfolio has typically been domestically orientated. The portfolio is less one-sided today as several of our largest positions are now exporters. Considerations like these are an ongoing input into our portfolio construction process.

Excluding the two unlisted holdings that are held at zero value, the portfolio ended the period with 62 names and an active share of 96%. It remains highly differentiated from the comparative index and continues to move towards the 50 to 60 holdings we consider optimal.

Outlook

AI adoption remains at an early stage, but its significance for us extends well beyond identifying the next direct beneficiary. An increasingly important question in our research is whether a company has the culture and organisational flexibility to use new tools well. Technology alone rarely creates lasting advantage when everyone has access to it. This matters particularly in Japan, where a shrinking workforce and chronically low productivity create an unusually strong incentive to automate and let employees do more valuable work.

But Shin Nippon is not an AI fund, and our opportunity set is much broader. We see growth opportunities across the spectrum, from consumer brands to healthcare companies and specialist manufacturers. Many are poorly researched and little known outside Japan. The common thread is not a sector or a fashionable theme, but our search for companies capable of becoming much more valuable over the next five years and beyond.

We are encouraged by Japan's policy direction. The government's focus on strategic growth sectors is helpful, and the latest revisions to the corporate governance code place greater emphasis on how boards allocate capital to create long-term growth rather than simply returning it. That is closer to the approach we have long encouraged, and we believe the style headwinds of recent years are beginning to abate.

Six months of good performance is welcome. It is also only six months, set against a five-year record with which we are deeply dissatisfied. We judge ourselves over five years and more, and on that measure, there remains a great deal to prove. We believe the opportunity is compelling and that the portfolio and process are in a stronger position to capture it. We are grateful to shareholders for their patience and continued support.

Brian Lum and Jared Anderson

With borrowings at fair value. For a definition of terms see Glossary of terms and alternative performance measures below.

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer below.

Past performance is not a guide to future performance.

Valuing private companies

We aim to hold our private company investments at 'fair value', i.e. the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations group at Baillie Gifford, which takes advice from an independent third party (S&P Global). The valuations group is independent from the investment team with all voting members being from different operational areas of the firm, and the investment managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three‑month rolling cycle, with one-third of the holdings reassessed each month. During stable market conditions, and assuming all else is equal, each investment would be valued four times in a twelve‑month period. For investment trusts, the prices are also reviewed twice per year by the respective boards and are subject to the scrutiny of external auditors in the annual audit process.

Beyond the regular cycle, the valuations team also monitors the portfolio for certain 'trigger events'. These may include changes in fundamentals, a takeover approach, an intention to carry out an Initial Public Offering ('IPO'), company news which is identified by the valuation team or by the portfolio managers, or meaningful changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value ('NAV'). There is no delay.

The valuations team also monitors relevant market benchmarks on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate.

List of investments as at 31 July 2026

Name	Business	Value £'000	% of total assets	Absolute performance * %
JEOL	Manufacturer of scientific equipment	16,379	4.1	32.5
Tsugami	Manufacturer of automated machine tools	16,366	4.1	86.2
Nikkiso	Industrial pumps and medical equipment	13,171	3.3	109.9
Kohoku Kogyo	Manufacturer of undersea cable lead terminals	11,659	2.9	35.2
Yonex	Sporting goods	11,515	2.9	(20.8)
Harmonic Drive Systems	Robotic components	11,341	2.8	78.9
GA Technologies	Interactive media and services	11,213	2.8	(8.0)
DMG Mori	Machine tool manufacturer	10,991	2.7	37.3
Toyo Tanso	Electronics company	10,652	2.7	21.1
Gift	Food industry operator and distributor	10,627	2.6	38.1

Name	Business	Value £'000	% of total assets	Absolute performance * %
Optex	Infrared detection devices	9,649	2.4	45.0
Katitas	Real estate services	9,335	2.3	11.3
Vector	PR company	9,019	2.2	23.4
SWCC	Electric wire and cable manufacturer	8,973	2.2	(1.9)
Nakanishi	Dental equipment	8,334	2.1	40.0
Global Security Experts	Cyber security company	8,253	2.1	54.3
Seiko	Vertically integrated manufacturer of watches, and various electronic devices	8,159	2.0	103.1
Mani	Manufactures medical goods and equipment	7,859	2.0	(0.8)
eGuarantee	Guarantees trade receivables	7,808	1.9	6.2
KH Neochem	Chemical manufacturer	7,667	1.9	30.7
Top 20		208,970	52.0
Asahi Intecc	Specialist medical equipment	7,433	1.9	39.7
Seria	Discount retailer	7,354	1.8	4.0
Nifco	Value-added plastic car parts	7,264	1.8	8.8
Appier Group	Software as a service company providing AI platforms	7,206	1.8	(9.1)
Kitz	Industrial valve manufacturer	7,033	1.8	9.5
Lifenet Insurance	Online life insurance	6,710	1.7	(17.3)
Money Forward	Accounting and back office software company	6,667	1.7	38.0
Litalico	Provides employment support and learning support services for people with disabilities	6,658	1.7	33.3
Horiba	Manufacturer of measuring instruments	6,554	1.6	40.2
Cosmos Pharmaceuticals	Drugstore chain	6,393	1.6	(8.5)
Soracom	Networking software provider	6,150	1.5	(4.1)
Anicom	Pet insurance provider	5,918	1.5	13.9
Bengo4.com	Online legal consultation	5,384	1.3	(21.3)
GMO Financial Gate	Face-to-face payment terminals and processing services	5,120	1.3	24.8
Gojo & Company Inc Ord	Diversified financial services	4,793	1.2	(6.2)
Sega Sammy†	Entertainment, gaming and pachinko group	4,759	1.2	8.9
Infomart	Internet platform for restaurant supplies	4,707	1.2	25.4
Sho-Bond	Infrastructure reconstruction	4,547	1.1	(4.2)
Kasumigaseki Capital	Real estate developer and management services	4,522	1.1	(1.7)
OSG	Manufactures machine tool equipment	4,466	1.1	40.2
Megachips	Electronic components	4,414	1.1	8.3
Cybozu	Develops and markets internet and intranet application software for business	4,279	1.1	11.8
GMO Payment Gateway	Online payment processing	4,113	1.0	9.0
JMDC	Medical statistics data services	3,956	1.0	(8.3)
Anest Iwata	Manufactures compressors and painting machines	3,944	1.0	10.5
Shinnihon	Construction company and real estate developer	3,915	1.0	6.3
Istyle	Beauty product review website	3,436	0.9	(3.4)
I-Ne	Hair care range	3,380	0.8	(6.7)
Shoei	Manufactures motor cycle helmets	3,312	0.8	8.6
Kamakura Shinsho	Information processing company	3,258	0.8	(9.0)
Oisix	Organic food website	3,220	0.8	13.2
Noritsu Koki	Holding company with interests in biotech and agricultural products	3,118	0.8	(10.9)
Peptidream	Drug discovery and development platform	2,956	0.8	(40.2)
Weathernews	Weather information services	2,922	0.7	0.4
Baudroie†	IT infrastructure services	2,733	0.7	18.7
SpiderPlus	Construction project management platform	2,332	0.6	(6.7)
Nippon Ceramic	Electronic component manufacturer	2,196	0.5	(1.0)
Genda	Operates as a holding company for entertainment businesses	2,156	0.5	(10.7)
JEPLANU	Chemical PET recycling	2,048	0.5	(16.7)
COVER	An entertainment agency that manages content creators known as Vtubers ('virtual Youtubers')	1,868	0.5	(11.0)
Metaplanet†	Bitcoin treasury company	1,668	0.4	(1.5)
Crowdworks	Crowd sourcing services	975	0.2	(11.5)
ASHAU	General financial services	-	-	-
SpiberU	Textiles	-	-	(100.0)
Total investments		394,807	98.4
Net liquid assets#		6,294	1.6
Total assets‡		401,101	100.0
Bank loans		(51,835)	(12.9)
Shareholders' funds		349,266	87.1

*   Absolute performance is in sterling terms and has been calculated on a total return basis over the period 1 February 2026 to 31 July 2026.

U   Private company (unlisted) investment.

†   Figures relate to part period returns where the investment has been acquired in the period.

See Glossary of terms and alternative performance measures below.

‡Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures below.

Source: Baillie Gifford/Revolution and relevant underlying data providers. See disclaimer below.

Income statement (unaudited)

		For the six months to 31 July 2026				For the six months ended 31 July 2025				For the year ended 31 January 2026 (audited)
	Notes	Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total £'000
Net gains on investments	3		68,950	68,950		-	4,155	4,155		-	5,584	5,584
Currency gains			97	97		-	1,896	1,896		-	5,321	5,321
Income from investments		3,276	-	3,276		3,495	-	3,495		7,052	-	7,052
Investment management fee	4	(1,046)	-	(1,046)		(1,142)	-	(1,142)		(2,270)	-	(2,270)
Other administrative expenses		(268)	-	(268)		(347)	-	(347)		(889)	-	(889)
Net return before finance costs and taxation		1,962	69,047	71,009		2,006	6,051	8,057		3,893	10,905	14,798
Finance cost of borrowings		(521)	-	(521)		(662)	-	(662)		(1,208)	-	(1,208)
Net return on ordinary activities before taxation		1,441	69,047	70,488		1,344	6,051	7,395		2,685	10,905	13,590
Tax on ordinary activities	5	(326)	-	(326)		(349)	-	(349)		(704)	-	(704)
Net return on ordinary activities after taxation		1,115	69,047	70,162		995	6,051	7,046		1,981	10,905	12,886
Net return per ordinary share	6	0.53p	32.67p	33.20p		0.37p	2.26p	2.63p		0.77p	4.22p	4.99p
Note: Dividends paid and payable per share	7	-				-				0.69p

The accompanying notes below are an integral part of the Financial Statements.

The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital 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 all gains and losses of the Company have been reflected in the above statement.

Balance sheet (unaudited)

	Notes	At 31 July 2026 £'000	At 31 January 2026 (audited) £'000
Fixed assets
Investments held at fair value through profit or loss	8	394,807	411,604
Current assets
Debtors		1,161	2,427
Cash and cash equivalents		6,881	16,689
		8,042	19,116
Creditors
Amounts falling due within one year	9	(53,583)	(71,897)
Net current liabilities		(45,541)	(52,781)
Net assets		349,266	358,823
Capital and reserves
Share capital		6,285	6,285
Distributable capital reserve	13	260,270	260,270
Capital redemption reserve		21,521	21,521
Capital reserve		58,933	68,213
Revenue reserve		2,257	2,534
Shareholders' funds		349,266	358,823
Net asset value per ordinary share (after deducting borrowings at book value)		179.11p	146.3p
Ordinary shares in issue	11	195,002,862	245,320,073

The accompanying notes below are an integral part of the Financial Statements.

Statement of changes in equity (unaudited)

For the six months ended 31 July 2026

	Notes	Share capital £'000	Distributable capital reserve £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 February 2026		6,285	260,270	21,521	68,213	2,534	358,823
Tender offer - ordinary shares bought back into treasury		-	-	-	(58,160)	-	(58,160)
Ordinary shares bought back into treasury		-	-	-	(20,167)	-	(20,167)
Net return on ordinary activities after taxation	6	-	-	-	69,047	1,115	70,162
Equity dividends paid in the year	7	-	-	-	-	(1,392)	(1,392)
Shareholders' funds at 31 July 2026		6,285	260,270	21,521	58,933	2,257	349,266

For the six months ended 31 July 2025

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve * £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 February 2025	6,285	260,270	21,521	99,445	2,169	389,690
Ordinary shares bought back into treasury	-	-	-	(27,314)	-	(27,314)
Net return on ordinary activities after taxation	-	-	-	6,051	995	7,046
Equity dividends paid in the year	-	-	-	-	(1,615)	(1,615)
Shareholders' funds at 31 July 2025	6,285	260,270	21,521	78,182	1,549	367,807

*   The capital reserve includes investment holding gains of £38,962,000 (31 July 2025 - losses of £12,240,000).

The accompanying notes below are an integral part of the Financial Statements.

Condensed cash flow statement (unaudited)

		Six months to 31 July 2026 £'000	Six months to 31 July 2025 £'000
Cash flows from operating activities
Net return on ordinary activities before taxation		70,488	7,395
Net gains on investments		(68,950)	(4,155)
Currency gains		(97)	(1,896)
Finance costs of borrowings		521	662
Overseas withholding tax		(388)	(424)
Changes in debtors and creditors		453	1,265
Cash from operations*		2,027	2,847
Interest paid		(472)	(763)
Net cash inflow from operating activities		1,555	2,084
Acquisitions of investments		(30,033)	(51,171)
Disposals of investments		115,624	81,066
Net cash inflow from investing activities		85,591	29,895
Tender offer - purchase of ordinary shares and associated costs		(58,160)	-
Other ordinary shares purchased into treasury and stamp duty thereon		(19,230)	(27,314)
Bank loan repaid		(313,634)	(241,267)
Bank loan drawn down		296,209	234,564
Net cash outflow from financing activities		(94,815)	(34,017)
Dividends paid		(1,392)	(1,615)
Decrease in cash and cash equivalents		(9,061)	(3,653)
Exchange movements		(747)	(564)
Cash and cash equivalents at 1 February		16,689	20,797
Cash and cash equivalents at 31 July		6,881	16,580

*   Cash and cash equivalents represent cash at bank and deposits repayable on demand.

The accompanying notes below are an integral part of the Financial Statements.

Notes to the financial statements (unaudited)

1.       Basis of accounting

The condensed Financial Statements for the six months to 31 July 2026 comprise the statements set out above together with the related notes below. They have been prepared in accordance with FRS 104 'Interim Financial Reporting' and the principles of the AIC's Statement of Recommended Practice issued in December 2025. They have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The Financial Statements for the six months to 31 July 2026 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 January 2026.

Going concern

The Directors have considered the nature of the Company's principal risks and uncertainties, as set out above, together with its current position, investment objective and policy, its assets and liabilities and projected income and expenditure. The Board has, in particular, considered the impact of heightened market volatility owing to macroeconomic and geopolitical concerns and reviewed the results of specific leverage and liquidity stress testing, but does not believe the Company's going concern status is affected. The Company's assets, which are primarily investments in quoted securities which are readily realisable (Level 1), exceed its liabilities significantly and could be sold to repay borrowings if required. All borrowings require the prior approval of the Board. Gearing levels and compliance with loan covenants are reviewed by the Board on a regular basis. As at 31 July 2026 the Company had a net current liability of £45.5 million, primarily as a result of drawings under a revolving credit facility which are repayable and may be redrawn on a three-monthly basis, with the facility expiring on 7 November 2027. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company)(Tax) Regulations 2011. Accordingly, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements and confirm that they are not aware of any material uncertainties which may affect the Company's ability to continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements.

2.       Financial information

The financial information contained within this Interim Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 31 January 2026 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditor's Report on these accounts was not qualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report, and did not contain a statement under sections 498 (2) or (3) of the Companies Act 2006.

3.       Net gains/(losses) on investments

	Six months to 31 July 2026 £'000	Six months to 31 July 2025 £'000	Year to 31 January 2026 £'000
Gains/ (losses) on sales of investments	21,913	108	(2,627)
Changes in investment holding gains	47,037	4,047	8,211
	68,950	4,155	5,584

4.       Investment manager

Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed by the Company as its Alternative Investment Fund Manager (AIFM) and Company Secretary. The investment management function has been delegated to Baillie Gifford & Co. The management agreement can be terminated on six months' notice.

With effect from 1 February 2026, the annual management fee is 0.65% on the first £250m of the Company's net assets and 0.55% on the remainder, calculated and payable quarterly. Prior to 1 February 2026, the annual management fee was 0.75% on the first £50m of the Company's net assets, 0.65% on the next £200m and 0.55% on the remainder, calculated and payable quarterly.

5.       Tax

The Company suffers overseas withholding tax on its equity income, currently at the rate of 10%.

6.       Net return per ordinary share

	Six months to 31 July 2026 £'000	Six months to 31 July 2025 £'000	Year to 31 January 2026 (audited) £'000
Revenue return	1,115	995	1,981
Capital return	69,047	6,051	10,905
Total return	70,162	7,046	12,886
Weighted average number of ordinary shares in issue	211,353,352	268,010,782	258,475,084

Net return per ordinary share is based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during the period. There are no dilutive or potentially dilutive shares in issue.

7.       Dividends

	Six months to 31 July 2026 £'000	Six months to 31 July 2025 £'000	Year to 31 January 2026 (audited) £'000
Amounts recognised as distributions in the period:
Previous year's final dividend of 0.69p (31 January 2025 - 0.60p), paid 26 May 2026	1,392	1,615	1,616
Amounts paid and payable in respect of the period:
Final dividend (31 January 2026 - 0.69p)	-	-	1,693

No interim dividend has been declared in respect of the current period.

8.       Fair value financial assets       

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - using unadjusted quoted prices for identical instruments in an active market;

Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and

Level 3 - using inputs that are unobservable (for which market data is unavailable).

The Company's investments are financial assets held at fair value through profit or loss. In accordance with FRS 102, an analysis of the Company's financial asset investments based on the fair value hierarchy described above is shown below.

As at 31 July 2026	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Listed equities	387,966	-	-	387,966
Private company (unlisted) securities	-	-	6,841	6,841
Total financial asset investments	387,966	-	6,841	394,807

As at 31 January 2026	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Listed equities	404,032	-	-	404,032
Private company (unlisted) securities	-	-	7,572	7,572
Total financial asset investments	404,032	-	7,572	411,604

There have been no transfers between levels of the fair value hierarchy during the period. The fair value of listed security investments is bid value, or in the case of certain recognised overseas exchanges, last traded prices. Listed investments are categorised as Level 1 if they are valued using unadjusted quoted prices for identical instruments in an active market and as Level 2 if they do not meet all these criteria but are, nonetheless, valued using market data. Private company (unlisted) investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by the Managers. The Managers' private company valuation policy applies methodologies consistent with the International Private Equity and Venture Capital Valuation guidelines 2025 ('IPEV'). The techniques applied are predominantly market-based approaches. The market-based approaches available under IPEV are set out below:

•         Multiples;

•         Industry Valuation Benchmarks; and

•         Available Market Prices.

Further information on the private company (unlisted) valuation process is provided above.

The Company's holdings in private company (unlisted) investments are categorised as Level 3 as unobservable data is a significant input to their fair value measurements.

9.       Financial liabilities

The amounts falling due within one year include bank loans of £51,835,000 (¥11.107 billion) (31 January 2026 - £70,105,000 (¥14.84 billion)) outstanding under a yen loan facility repayable on 7 November 2027. During the period, the amount drawn under the ¥16.1 billion revolving credit facility was reduced by ¥3.733 billion, from ¥14.84 billion to ¥11.107 billion.

10.     Fair value financial liabilities

The fair value of the bank loans at 31 July 2026 was £51,835,000 (31 January 2026 - £70,105,000).

11.     Share capital

The Company has the authority to issue shares/sell treasury shares at a premium to net asset value as well as to buy back shares at a discount to net asset value. During the period under review, no shares were issued (31 July 2025 - nil) and 50,317,211 shares were bought back and held in treasury at a total cost of £78,327,000 (31 July 2025 - 23,054,023 shares bought back at a cost of £27,314,000). This comprised 36,798,009 shares acquired on 19 March 2026 under the Company's tender offer, representing 15% of the shares in issue excluding treasury, at a price of 156.9528p per share and a total cost, including associated commission and stamp duty, of £58,160,000. A further 13,519,202 shares were bought back in the market at a cost of £20,167,000.

12.     Transaction costs

Transaction costs incurred on the purchase and sale of the investments are added to the purchase cost or deducted from the sale proceeds, as appropriate. During the period, transaction costs on purchases amounted to £14,000 (six months to 31 July 2025 - £24,000; year to 31 January 2026 - £48,000) and transaction costs on sales amounted to £29,000 (six months to 31 July 2025 - £30,000; year to 31 January 2026 - £113,000).

13.     Share Premium Cancellation

On 7 August 2025, the Court of Session approved the cancellation of the amount standing to the credit of the Company's share premium account and the crediting of an equivalent amount to the company's Distributable Capital Reserve. The Court Order became effective when it was filed with Companies House on 22 August 2025.

14.     Related party transactions

There have been no transactions with related parties during the first six months of the current financial year that have materially affected the financial position or the performance of the Company during that period and there have been no changes in the related party transactions described in the last Annual Report and Financial Statements that could have had such an effect on the Company during that period.

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

Further shareholder information

How to invest

Baillie Gifford Shin Nippon's shares are traded on the London Stock Exchange. They can be bought through a stockbroker or by asking a professional adviser to do so. If you are interested in investing directly in Shin Nippon you can do so online. There are a number of companies offering real time online dealing services - find out more by visiting shinnippon.co.uk.

Client relations team contact details

You can contact the Baillie Gifford Client Relations Team by telephone (your call may be recorded for training or monitoring purposes), email or post.

Share register enquiries

Computershare Investor Services PLC maintains the share register on behalf of the Company. In the event of queries regarding shares registered in your own name, please contact the Registrars on 0370 889 3223.

Automatic Exchange of Information

In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Baillie Gifford Shin Nippon PLC is required to collect and report certain information about certain shareholders.

The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, Baillie Gifford Shin Nippon PLC will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.

New shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders gov.uk/guidance/automatic-exchange-of-information-account-holders.

Glossary of terms and alternative performance measures ('APM')

An alternative performance measure is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. The APMs noted below are commonly used measures within the investment trust industry and serve to improve comparability between investment trusts.

Total assets

This is the Company's definition of Adjusted Total Assets, being the total value of all assets held less all liabilities (other than liabilities in the form of borrowings).

Shareholders' funds and 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 book value)

Borrowings are valued at adjusted net issue proceeds. The Company's yen denominated loans are valued at their sterling equivalent and adjusted for their arrangement fees. The value of the borrowings on this basis is set out in note 9 above.

Net Asset Value (borrowings at fair value) (APM)

This is a widely reported measure across the investment trust industry. Borrowings are valued at an estimate of their market worth. The Company's yen denominated loans are fair valued using methodologies consistent with International Private Equity and Venture Capital Valuation ('IPEV') guidelines. The value of the borrowings on this basis is set out in note 10 above.

	31 July 2026	31 January 2026
Net Asset Value per ordinary share (borrowings at book value)	179.1p	146.3p
Shareholders' funds (borrowings at book value)	£349,266,000	£358,823,000
Add: book value of borrowings	£51,835,000	£70,105,000
Less: fair value of borrowings	(£51,835,000)	(£70,105,000)
NAV (borrowings at fair value)	£349,266,000	£358,823,000
Shares in issue at period end	195,002,862	245,320,073
NAV per ordinary share (borrowings at fair value)	179.1p	146.3p

Net liquid assets

Net liquid assets comprise current assets less current liabilities, excluding borrowings.

Discount/premium (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.

	31 July 2026 NAV (book)	31 July 2026 NAV (fair)	31 January 2026 NAV (book)	31 January 2026 NAV (fair)
Closing NAV per share	179.1p	179.1p	146.3p	146.3p
Closing share price	161.4p	161.4p	135.4p	135.4p
Discount	(9.9%)	(9.9%)	(7.5%)	(7.5%)

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. In periods where no dividend is paid the total return equates to the capital return.

		As at 31 July 2026 NAV (fair)	As at 31 July 2026 Share price	As at 31 January 2026 NAV (fair)	As at 31 January 2026 Share price
Closing NAV per share/share price	(a)	179.1p	161.4p	146.3p	135.4p
Dividend adjustment factor*	(b)	1.0041	1.0047	1.0047	1.0052
Adjusted closing NAV per share/share price	(c) = (a) x (b)	179.8p	162.2p	147.0p	136.1p
Opening NAV per share/share price	(d)	146.3p	135.4p	139.4p	119.0p
Total return for the six months/year	(c) ÷ (d) -1	22.9%	19.8%	5.4%	14.4%

*   The dividend adjustment factor is calculated on the assumption that the final dividend of 0.69p paid by the Company during the period in respect of the year to 31 January 2026 was reinvested 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.

Gearing represents borrowings at book less cash and cash equivalents expressed as a percentage of shareholders' funds.

Gross gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

	31 July 2026		31 January 2026
	Gearing * £'000	Gross Gearing † £'000	Gearing * £'000	Gross Gearing † £'000
Borrowings (a)	51,835	51,835	70,105	70,105
Cash and cash equivalents (b)	6,881	-	16,689	-
Shareholders' funds (c)	349,266	349,266	358,823	358,823
	12.9%	14.8%	14.9%	19.5%

*   Gearing: ((a) - (b)) ÷ (c), expressed as a percentage.

†   Gross gearing: (a) ÷ (c), expressed as a percentage.

Leverage (APM)

For the purposes of the Alternative Investment Fund Managers ('AIFM') Directive, 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.

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.

Private (unlisted) company

A private (unlisted) company means a company whose shares are not available to the general public for trading and not listed on a stock exchange.

Third party data providers disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.

No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

MSCI index data

Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction.

The MSCI information is provided on an 'as is' basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information collectively, the 'MSCI Parties' expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability or any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (msci.com).

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