Half Year
Report
Schroder Japan Trust plc hereby
submits its Half Year Report for the period ended 31 January 2024
as required by the Financial
Conduct Authority's Disclosure Guidance and
Transparency Rule 4.2.
The Half Year Report is also being
published in hard copy format and an electronic copy of that
document will shortly be available to download from the Company's
webpages www.schroders.com/japantrust. Please click on
the following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/8654K_1-2024-4-16.pdf
The Company has submitted its Half
Year Report to the National Storage Mechanism and it will shortly
be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Enquiries:
Schroder Investment Management
Limited
Katherine
Fyfe
020 7658 6000
Augustine Chipungu
020
7658 6000
Half Year Report and Accounts
for the six months ended 31 January 2024
CHAIRMAN'S
STATEMENT
Performance
I am pleased to report that during
the six-month period to 31 January 2024, the Company produced
a NAV total return of 10.3%, outperforming the Benchmark total
return of 9.1%. The share price also produced a positive total
return of 5.8% during the period. Our Investment Manager, Masaki
Taketsume, continues to manage a high conviction, balanced
portfolio of large and smaller companies with a strong emphasis on
valuation.
Performance over the period was
helped by strong stock selection across machinery, glass and
ceramics, and information and communication. From a style
perspective, holdings of value stocks outperformed the growth
portion of the portfolio. The use of financial leverage was also
helpful to performance over the period.
Further comment on performance and
the investment policy can be found in the Investment Manager's
review.
Discount management
During the period under review, the
Company's shares continued to trade at a discount to NAV, and the
Board utilised its buy-back authority to purchase 1,381,226 shares
for cancellation at an average discount of 10.3%. Although the
discount widened during the reporting period from 7.2% to 11.1%,
this was broadly in line with the move in the average discount for
the AIC Japan Sector as a whole over the same timescale. The
Board continues to monitor the Company's discount actively and to
authorise the Company to purchase shares when appropriate. In
addition, in February 2024, the Company appointed J.P. Morgan
Securities plc (which conducts its UK investment banking business
activities as "J.P. Morgan Cazenove") as the Company's sole
corporate broker. J.P. Morgan Cazenove is actively working with the
Board to consider discount mechanics and other strategic
initiatives.
Gearing
The Investment Manager actively used
gearing throughout the period. The Company's term loan remained
fully utilised, and the revolving credit facility was drawn down.
The average gearing during the six months to 31 January 2024 was
9.5% and, as at 15 April 2024, the gearing was
11.6%.
At the 2023 AGM, shareholders
approved a change of the Company's investment policy to allow it to
use contracts for difference to provide exposure to Japanese
equities on a geared basis as an alternative to utilising bank
borrowings. The onboarding process for the implementation of this
facility is currently in progress.
The Company intends to continue to
use leverage.
Conditional tender offer
As I stated in my last year-end
Chairman's Statement, the Board continues to monitor the Company's
performance against its tender performance target each
year.
The Company has a target to deliver
NAV total return performance of at least 2% per annum above the
Benchmark over a four-year period starting from 1 August 2020.
Should this target not be met, the Board will put to shareholders a
proposal for a tender offer of 25% of the issued share capital at a
price equal to the prevailing net asset value less costs. This
would be contingent on the next continuation vote of the Company at
this year's AGM being successful.
The Investment Manager has continued
to deliver strong outperformance during the fourth year of the
performance target, delivering a NAV total return for the period
from 1 August 2020 to 31 January 2024 of 4.4% above the Benchmark
on an annualised basis. Over three and a half years, the Company
has now returned 12.8% on an annualised basis, which compares
favourably to the annualised 8.4% return from the
Benchmark.
Outlook
The Japanese equity market has
enjoyed a strong start to 2024 and, symbolically, the Nikkei 225
Index has recently exceeded its previous high achieved in
1989.
The Board remains very positive on
the long-term equity market outlook because corporate Japan is in
the middle of a major transformation which is already resulting in
improved shareholder returns. This transformation has been a long
time in the making: it is now ten years since the introduction of
the Japanese government's Stewardship Code and nine years since the
publication of its Corporate Governance Code, so it is not
surprising that it has slipped under the radars of many
international investors. But the speed of change is now
accelerating. In January, the Tokyo Stock Exchange announced that
half the companies listed on its Prime Market had developed plans
(within a few months of being requested to do so) to boost their
capital efficiency and improve returns on capital.
Cross-shareholdings are being unwound. Dividend payouts and share
buybacks are at record highs. More takeovers, management buyouts,
and private equity deals are taking place. Greater capital
efficiency and improvements in shareholder value will result. In
addition, as detailed in the Investment Manager's Review, the
recent launch of an enhanced Nippon Individual Savings Account or
"NISA" (originally modelled on the UK's ISA) should encourage
additional demand from domestic retail investors. At the macro
level, deflation has finally given way to moderate inflation,
making it easier for companies to raise prices, and early results
of this year's "Shunto" (the annual wage negotiations between
labour unions and employers) are suggesting a base pay rise of 3.7%
- the highest since 1991. This combination of real wage improvement
and subdued inflation should lead to increased demand from Japanese
consumers. Finally, the recent end to the Bank of Japan's
8-year-long negative interest rate policy represents a watershed
moment since the normalisation of Japan's monetary policy will, we
believe, be a net positive for the Japanese equity
market.
All these developments should result
in improved shareholder returns and higher valuations and provide
exciting opportunities for the high-conviction stock-picking
strategy of the Schroder Japan Trust.
As I mentioned in my last Chairman's
statement, there have been many false dawns when the performance of
the Japanese equity market has failed to live up to investor
expectations. But your Board believes that, this time, there are
real positive structural shifts in motion. We remain very positive
on the long-term outlook for the Japanese market and are firmly of
the view that the Company is the best vehicle through which to
capitalise on the opportunities presented by corporate change and
an improving fundamental backdrop. The Company has delivered solid
outperformance of its Benchmark over the three and a half years
since its conditional tender offer was implemented and yet still
trades at a discount to NAV, providing considerable
upside.
Philip Kay
Chairman
16 April 2024
INVESTMENT MANAGER'S
REVIEW
Over the first six months of the
Company's financial year to 31 January 2024, the Company's NAV
produced a total return of 10.3%, while its Benchmark produced a
total return of 9.1%. Before we delve into the drivers of recent
performance, we would like to explain the investment philosophy and
approach that sits behind our decision-making. This should provide
some important context to help you understand why the portfolio is
positioned the way it is, and what you should expect in terms of
future performance.
Our
investment approach
We believe that the Japanese equity
market ultimately acts efficiently in reflecting the intrinsic
value of companies. However, in the short to medium-term
considerable inefficiencies are frequently evident
in individual stocks. These inefficiencies provide repeatable
opportunities to identify and invest in undervalued stocks, with
the aim of delivering a better return than the market as a whole on
a rolling three-to-five year view.
Our investment resource is entirely
devoted to this aim, focusing on individual company fundamentals to
understand the true worth of a stock and investing in a
portfolio of 60-70 of the highest conviction ideas. These then tend
to be held for the long term, with value being realised as the
market gradually reflects their true value more
efficiently.
Portfolio holdings tend to fall into
three categories of inefficiency:
1. Market misperception - companies with
self-improving credentials, with management initiatives to
sustainably enhance operational performance being under-appreciated
by other investors.
2. Market oversight - undervalued
companies, especially among small and mid-caps where research
coverage is less widespread, with strong and defendable business
franchises in niche product areas.
3. Short-term overreaction - ideas arising
from abrupt but transitory events which push valuations of quality
companies temporarily to unsustainably low levels.
Outside these three categories, the
balance of the portfolio represents "best in class" stocks with
reasonable valuations. The weighting given to each of these
segments evolves over time, but a reasonable exposure to each
category ensures a good level of diversification for the portfolio
as a whole. Meanwhile, the approach tends to result in a bias
towards value stocks1 and smaller companies, as well as
an overall focus on quality.
The portfolio tends to exhibit a
high "active share", which means that its constituents deviate
significantly from the Benchmark. Gearing (financial leverage)
typically ranges between 10% and 17.5%, allowing shareholders to
potentially benefit even more as the inefficiencies we have
identified become more appropriately priced by the
market.
1 The term 'value stocks'
refers to shares of a company that appears to trade at a lower
price relative to its fundamentals, such as dividends, earnings, or
sales, making it appealing to value investors.
Portfolio strategy
So, what does this mean for current
portfolio strategy and positioning? Currently, the biggest category
within the portfolio is market
misperception which accounts for almost 40% of assets. This
includes companies such as industrials conglomerate Hitachi and
metals and mining business Nippon Steel. In both cases, we
see management teams pursuing strategies that should deliver
a transformative and sustainable improvement in returns, the
effects of which are not yet reflected in valuations.
Almost 30% of the portfolio is in
market oversights, such as
industrial cooling business Fukushima Galilei and powder processing
specialist Hosokawa Micron, where we find highly competitive
smaller businesses trading at a significant discount to their large
cap and global peers. Less than 10% of the portfolio is invested in
short-term overreactions,
including out-of-favour opportunities such as IT services business
Nomura Research Institute and food packaging specialist FP
Corporation. These businesses are beneficiaries of long-term
structural tailwinds, but their shares have recently been sold down
aggressively - in our view, too aggressively, hence the opportunity
to add them to the portfolio.
The remaining 20% of the portfolio
is invested in what we consider to be "best in class" operators,
such as the financial services company Sumitomo Mitsui Financial
and the insurance business Tokio Marine.
From a sector perspective, this
means a bias towards machinery, glass and ceramic products, and
information and communication. As is typical, the portfolio is also
leaning towards small and mid-sized businesses, where valuations
look particularly attractive as the domestic Japanese economy
continues to recover.
Recent performance drivers
The Japanese stock market was strong
throughout the period, buoyed by growing global interest in the
structural changes that are occurring in Japan as a result of
continuing corporate governance reforms. The recent return of
inflation has also helped to improve sentiment towards Japanese
equities, as has a period of robust earnings growth from Japanese
companies.
Overall, the Company performed well
over the six months to 31 January 2024, as reflected in the
positive NAV return and the modest outperformance of the Benchmark.
Value stocks continued to outperform growth stocks during the
period, which was generally helpful to the portfolio's performance,
as was the Company's gearing which helped to amplify returns. This
was partly offset by the under-performance of smaller companies,
which lagged in a rally that was driven mainly by large-cap
stocks.
In terms of stock specifics, we saw
positive corporate earnings developments at several individual
companies. Niterra, a mid-cap automotive component manufacturer
that specialises in spark plugs and other ceramic parts, was the
largest individual contributor to performance. The business is
enjoying very strong earnings growth, as the recovery in Japanese
automotive production that we had anticipated continues to play out
positively.
Hitachi, the large-cap industrials
conglomerate, also provided a solid performance, supported by
strong financial results and its continuing transformation.
Management has shifted the company's focus towards digital
solutions, IT services and sustainable energy, in an ongoing effort
to sustainably improve shareholder returns. It is encouraging to
see the stock market start to recognise the power of this
transformation, but we believe there is significant further upside
potential as the company's financial performance continues to
improve and as the shares attain a more appropriate market
rating.
By contrast, some of the portfolio's
technology companies saw share price declines after strong
performance in the previous period. In some cases, including
electronic component makers Ibiden and Rohm, financial results also
fell short of expectations, due to continued cyclical weakness in
the semiconductor industry.
Top
10 contributors and detractors
Six months to 31 January
2024
Top
10 contributors
|
Portfolio
weight
|
Benchmark1
weight
|
Portfolio
return
|
Benchmark1
return
|
Total
effect
|
Niterra Co., Ltd.
|
2.1
|
0.1
|
33.4
|
33.4
|
0.4
|
Hitachi, Ltd.
|
4.3
|
1.6
|
24.2
|
24.2
|
0.4
|
Disco Corporation
|
1.7
|
0.5
|
49.2
|
49.2
|
0.3
|
Hosokawa Micron
Corporation
|
1.6
|
0.0
|
30.0
|
30.0
|
0.3
|
Daikin Industries, Ltd.
|
-
|
0.8
|
-
|
-17.9
|
0.3
|
Nidec Corporation
|
-
|
0.3
|
-
|
-35.3
|
0.3
|
NEC Networks & System
Integration
|
1.6
|
0.0
|
26.7
|
26.7
|
0.2
|
SoftBank Group Corp.
|
-
|
0.9
|
-
|
-12.1
|
0.2
|
Tazmo Co., Ltd.
|
1.2
|
0.0
|
31.7
|
31.7
|
0.2
|
Panasonic Holdings
Corporation
|
-
|
0.5
|
-
|
-20.7
|
0.2
|
Top
10 detractors
|
Portfolio
weight
|
Benchmark1
weight
|
Portfolio
return
|
Benchmark1
return
|
Total
effect
|
Rohm Co., Ltd.
|
1.7
|
0.1
|
-23.2
|
-23.2
|
-0.6
|
Ibiden Co., Ltd.
|
1.8
|
0.1
|
-13.9
|
-13.9
|
-0.5
|
Kohoku Kogyo Co. Ltd.
|
0.9
|
-
|
-19.1
|
-
|
-0.3
|
Miura Co., Ltd.
|
0.7
|
0.0
|
-25.0
|
-25.0
|
-0.3
|
Ricoh Company, Ltd.
|
1.6
|
0.1
|
-8.2
|
-8.2
|
-0.3
|
Tokyo Electron Ltd.
|
-
|
1.6
|
-
|
29.6
|
-0.3
|
Asahi Group Holdings, Ltd.
|
2.6
|
0.3
|
-2.4
|
-2.4
|
-0.3
|
Mitsubishi UFJ Financial Group,
Inc.
|
-
|
2.3
|
-
|
21.1
|
-0.3
|
Nintendo Co., Ltd.
|
-
|
1.5
|
-
|
27.9
|
-0.2
|
Lasertec Corp
|
-
|
0.5
|
-
|
82.2
|
-0.2
|
Source: FactSet, GBP, 1TOPIX. Stocks
mentioned are show for illustrative purposes only and should not be
viewed as a recommendation to buy/sell. Past performance is not a
guide to future performance and may not be repeated. The value of
investment can go down as well as up and is not guaranteed. The
return may increase or decrease as a result of currency
fluctuations.
Portfolio activity
We initiated a position in a new
market misperception idea:
Nippon Steel, Japan's largest and the world's leading steel maker.
The starting valuation looks highly attractive, and we foresee the
potential for a much higher multiple in the future, supported by
management efforts to improve the stability and growth profile of
its earnings. The business has become increasingly focused on
profitability through price discipline, and the strategy of
expanding the business into new territories, such as India, holds
significant future potential. Ultimately, the strategy being
pursued by Nippon Steel's management team should allow the business
to become much more resilient, even in the event of a cyclical
downturn in its core markets. This development is under-appreciated
by investors and comes at a time when the Asian steel market
appears poised for a cyclical upswing. Hence, we view this as an
opportune time to build an exposure, before improving fundamentals
can be fully reflected in market prices.
We also initiated a position in food
packaging manufacturer, FP Corporation, as a new short-term overreaction opportunity.
The company saw increased operational volatility during the COVID
years, but we have subsequently seen a stabilisation of growth
rates, and the business has been steadily increasing its market
share. We are also impressed by management's ability to control
costs and raise prices in response to inflation, which should
continue to support improvements in returns, margins, and growth.
Nevertheless, the share price hit a six-year low in 2023, giving us
the opportunity to build a position at a very attractive valuation.
We see significant potential for a revaluation of the shares in
2024.
In terms of exits, we sold out of
several positions including Yokowo, Astellas Pharma, Aeon Financial
Services and Toho, mainly due to weaker-than-expected earnings
progress. We used the proceeds to build positions in opportunities
in which we have increasing confidence, such as those outlined
above.
Outlook
The Japanese equity market has shown
encouraging strength this year, with the Nikkei 225 Index finally
exceeding the bubble-era high seen in December 1989. The conditions
are now in place for a bold new era of prosperity for the Japanese
stock market.
Importantly, the market's rise has
been supported by strong and improving corporate fundamentals.
Profits from Japanese companies are generally heading in the right
direction, with the most recent quarterly earnings season seeing
plenty of upwards revisions of profit estimates. The performance of
domestically-oriented companies has been particularly impressive,
with many companies demonstrating strong demand and displaying
signs of regained pricing power. After years of entrenched
deflation, the importance of this last point should not be
underestimated.
Meanwhile, thanks to the ongoing
efforts of the Tokyo Stock Exchange, corporate governance reforms
have continued. After a long period of overseas apathy towards
Japanese equities, these reforms are now resulting in growing
interest from the global investment community. The unwinding of
cross-shareholdings is progressing and there has been an increasing
number of Japanese companies involved in corporate actions.
According to the Nikkei newspaper, the number of take-over bids in
Japan was 65 in 2023, up by 35% year on year and the highest figure
since 2000. Notably, share buy-backs have continued to increase,
and by the end of February 2024, the share buy-back plans announced
by Japanese companies for the fiscal year to March 2024 had already
exceeded the level of the full preceding fiscal year to March 2023.
We would expect these trends in corporate activity to continue as
more and more companies are compelled to take steps to improve
their returns and address persistent under-valuations.
There has also been an increase in
the level of Japanese retail participation in the equity market as
a result of the revised tax-exempt scheme for individual investors,
known as NISA. The revised NISA scheme now allows individual
investors to invest more assets with tax exemptions for an
unlimited period of time. The changes in the NISA scheme came at an
ideal time, just as retail investors started to recognise a shift
towards a more inflationary environment in Japan and thus the need
for the retail investor to move money out of their bank deposits
and to rotate it towards investment in the equity
market.
To conclude, there are many reasons
to believe that we are in a period of sustained outperformance
from the Japanese stock market. The overall valuation of the market
looks reasonable, but this masks a considerable divergence between
larger companies that have become relatively fully-priced, and
smaller companies to which the Company is currently biased, where
valuations are, in general, much more appealing. We believe that
the Japanese market as a whole can make good long-term progress
from here, but this represents a particularly exciting environment
for active, high conviction stock pickers. By focusing the
portfolio towards undervalued businesses with strong growth
prospects and the potential to improve returns, we are confident in
the opportunity that lies ahead for investors in the
Company.
Masaki Taketsume
Portfolio Manager
16 April 2024
INTERIM MANAGEMENT
STATEMENT
Principal risks and uncertainties
The principal risks and
uncertainties with the Company's business fall into the following
risk categories: strategic; investment management; financial and
currency; custody; gearing and leverage; accounting, legal and
regulatory; service provider; and cyber. A detailed
explanation of the risks and uncertainties in each of these
categories can be found on pages 23 and 24 of the Company's
published annual report and accounts for the year ended 31 July
2023.
These risks and uncertainties have
not materially changed during the six months ended 31 January 2024.
However, the Board undertook a review of principal and emerging
risks for the Company while reviewing these accounts. The Directors
noted that geopolitical risk and climate change risk in particular
continue to develop and will be reported on in the next annual
report as appropriate.
Going concern
Having assessed the principal risks
and uncertainties, and the other matters discussed in connection
with the viability statement as set out on page 25 of the published
annual report and accounts for the year ended 31 July 2023, the
Directors consider it appropriate to adopt the going concern basis
in preparing the accounts.
Related party transactions
There have been no transactions with
related parties that have materially affected the financial
position or the performance of the Company during the six months
ended 31 January 2024.
Directors' responsibility statement
In respect of the half year report
for the six months ended 31 January 2024, we confirm that, to
the best of our knowledge:
- the condensed set of
Financial Statements contained within have been prepared in
accordance with IAS 34 Interim Financial Reporting and give a true
and fair view of the assets, liabilities, financial position and
profit and loss of the Company as at 31 January 2024, as
required by the Disclosure Guidance and Transparency Rule
4.2.4R;
- the half year report
includes a fair review as required by the Disclosure Guidance and
Transparency Rule 4.2.7R, of important events that have occurred
during the six months to 31 January 2024, and their impact on the
condensed set of Financial Statements, and a description of the
principal and emerging risks for the remaining six months of the
financial year; and
- the half year report
includes a fair review of the information concerning related party
transactions as required by the Disclosure Guidance and
Transparency Rule 4.2.8R.
The half year report has not been
reviewed or audited by the Company's auditors.
The half year report for the six
months ended 31 January 2024 was approved by the Board and the
above Responsibilities Statement has been signed on its
behalf.
STATEMENT OF COMPREHENSIVE
INCOME
for the six months ended 31 January
2024 (unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
For the six
months
|
For the six
months
|
For the
year
|
|
|
ended 31 January
2024
|
ended 31 January
2023
|
ended 31 July
2023
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Gains on investments held
at
|
|
|
|
|
|
|
|
|
|
fair value through profit or
loss
|
-
|
27,118
|
27,118
|
-
|
12,757
|
12,757
|
-
|
22,484
|
22,484
|
Net foreign currency
|
|
|
|
|
|
|
|
|
|
gains/(losses)
|
-
|
684
|
684
|
-
|
(610)
|
(610)
|
-
|
3,920
|
3,920
|
Income from investments
|
4,209
|
-
|
4,209
|
4,198
|
-
|
4,198
|
8,766
|
-
|
8,766
|
Other interest receivable
and
|
|
|
|
|
|
|
|
|
|
similar income
|
39
|
-
|
39
|
5
|
-
|
5
|
20
|
-
|
20
|
Gross return
|
4,248
|
27,802
|
32,050
|
4,203
|
12,147
|
16,350
|
8,786
|
26,404
|
35,190
|
Management fee
|
(329)
|
(768)
|
(1,097)
|
(300)
|
(700)
|
(1,000)
|
(607)
|
(1,416)
|
(2,023)
|
Administrative expenses
|
(354)
|
-
|
(354)
|
(314)
|
-
|
(314)
|
(653)
|
-
|
(653)
|
Net
return before finance
|
|
|
|
|
|
|
|
|
|
costs and taxation
|
3,565
|
27,034
|
30,599
|
3,589
|
11,447
|
15,036
|
7,526
|
24,988
|
32,514
|
Finance costs
|
(41)
|
(96)
|
(137)
|
(45)
|
(106)
|
(151)
|
(86)
|
(200)
|
(286)
|
Net
return before taxation
|
3,524
|
26,938
|
30,462
|
3,544
|
11,341
|
14,885
|
7,440
|
24,788
|
32,228
|
Taxation
|
(421)
|
-
|
(421)
|
(420)
|
-
|
(420)
|
(877)
|
-
|
(877)
|
Net
return after taxation
|
3,103
|
26,938
|
30,041
|
3,124
|
11,341
|
14,465
|
6,563
|
24,788
|
31,351
|
Return per share (pence)
|
2.60
|
22.56
|
25.16
|
2.57
|
9.31
|
11.88
|
5.41
|
20.45
|
25.86
|
|
|
|
|
|
|
|
|
|
|
|
The "Total" column of this statement
is the profit and loss account of the Company. The "Revenue" and
"Capital" columns represent supplementary information prepared
under guidance issued by The Association of Investment Companies.
The Company has no other items of other comprehensive income and
therefore the net return/(loss) after taxation is also the total
comprehensive income/(loss) for the period.
All revenue and capital items in the
above statement derive from continuing operations. No operations
were acquired or discontinued in the period.
STATEMENT OF CHANGES IN
EQUITY
for the six months ended 31 January
2024 (unaudited)
|
Called-up
|
|
Capital
|
Warrant
|
Share
|
|
|
|
|
share
|
Share
|
redemption
|
exercise
|
purchase
|
Capital
|
Revenue
|
|
|
capital
|
premium
|
reserve
|
reserve
|
reserve
|
reserves
|
reserve
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At 31 July 2023
|
11,990
|
7
|
511
|
3
|
86,878
|
195,135
|
7,936
|
302,460
|
Repurchase of the
Company's
|
|
|
|
|
|
|
|
|
own shares for
cancellation
|
(138)
|
-
|
138
|
-
|
(3,250)
|
-
|
-
|
(3,250)
|
Net return after taxation
|
-
|
-
|
-
|
-
|
-
|
26,938
|
3,103
|
30,041
|
Dividend paid in the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,439)
|
(6,439)
|
At
31 January 2024
|
11,852
|
7
|
649
|
3
|
83,628
|
222,073
|
4,600
|
322,812
|
for the six months ended 31 January
2023 (unaudited)
|
|
Called-up
|
|
Capital
|
Warrant
|
Share
|
|
|
|
|
share
|
Share
|
redemption
|
exercise
|
purchase
|
Capital
|
Revenue
|
|
|
capital
|
premium
|
reserve
|
reserve
|
reserve
|
reserves
|
reserve
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At 31 July 2022
|
12,200
|
7
|
301
|
3
|
91,237
|
170,347
|
7,334
|
281,429
|
Repurchase of the
Company's
|
|
|
|
|
|
|
|
|
own shares for
cancellation
|
(38)
|
-
|
38
|
-
|
(750)
|
-
|
-
|
(750)
|
Net return after taxation
|
-
|
-
|
-
|
-
|
-
|
11,341
|
3,124
|
14,465
|
Dividend paid in the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,961)
|
(5,961)
|
At
31 January 2023
|
12,162
|
7
|
339
|
3
|
90,487
|
181,688
|
4,497
|
289,183
|
for the year ended 31 July 2023
(audited)
|
|
Called-up
|
|
Capital
|
Warrant
|
Share
|
|
|
|
|
share
|
Share
|
redemption
|
exercise
|
purchase
|
Capital
|
Revenue
|
|
|
capital
|
premium
|
reserve
|
reserve
|
reserve
|
reserves
|
reserve
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At 31 July 2022
|
12,200
|
7
|
301
|
3
|
91,237
|
170,347
|
7,334
|
281,429
|
Repurchase of the
Company's
|
|
|
|
|
|
|
|
|
own shares for
cancellation
|
(210)
|
-
|
210
|
-
|
(4,359)
|
-
|
-
|
(4,359)
|
Net return after taxation
|
-
|
-
|
-
|
-
|
-
|
24,788
|
6,563
|
31,351
|
Dividend paid in the year
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,961)
|
(5,961)
|
At
31 July 2023
|
11,990
|
7
|
511
|
3
|
86,878
|
195,135
|
7,936
|
302,460
|
STATEMENT OF FINANCIAL
POSITION
as at 31 January 2024
(unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
At 31
January
|
At 31
January
|
At 31 July
|
|
2024
|
2023
|
2023
|
|
£'000
|
£'000
|
£'000
|
Fixed assets
|
|
|
|
Investments held at fair value
through profit or loss
|
365,629
|
324,533
|
331,756
|
Current assets
|
|
|
|
Debtors
|
1,968
|
471
|
1,113
|
Cash and cash equivalents
|
1,037
|
2,718
|
4,081
|
|
3,005
|
3,189
|
5,194
|
Current liabilities
|
|
|
|
Creditors: amounts falling due within
one year
|
(45,822)
|
(1,062)
|
(1,669)
|
Net
current assets
|
(42,817)
|
2,127
|
3,525
|
Total assets less current liabilities
|
322,812
|
326,660
|
335,281
|
Creditors: amounts falling due after
more than one year
|
-
|
(37,477)
|
(32,821)
|
Net
assets
|
322,812
|
289,183
|
302,460
|
Capital and reserves
|
|
|
|
Called-up share capital
|
11,852
|
12,162
|
11,990
|
Share premium
|
7
|
7
|
7
|
Capital redemption reserve
|
649
|
339
|
511
|
Warrant exercise reserve
|
3
|
3
|
3
|
Share purchase reserve
|
83,628
|
90,487
|
86,878
|
Capital reserves
|
222,073
|
181,688
|
195,135
|
Revenue reserve
|
4,600
|
4,497
|
7,936
|
Total equity shareholders' funds
|
322,812
|
289,183
|
302,460
|
Net
asset value per share (pence)
|
272.36
|
237.77
|
252.25
|
Schroder Japan Trust plc
Registered in England and Wales as a
public company limited by shares
Company Registration Number:
02930057
NOTES TO THE FINANCIAL
STATEMENTS
1. Financial
Statements
The information contained within the
accounts in this half year report has not been audited or reviewed
by the Company's independent auditor.
The figures and financial
information for the year ended 31 July 2023 are extracted from the
latest published accounts of the Company and do not constitute
statutory accounts for that year. Those accounts have been
delivered to the Registrar of Companies and included the report of
the auditors which was unqualified and did not contain a statement
under either section 498(2) or 498(3) of the Companies Act
2006.
2. Accounting
policies
Basis of accounting
The accounts have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice, in particular with Financial Reporting Standard 104
"Interim Financial Reporting" and with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" issued by the Association of Investment
Companies in July 2022.
All of the Company's operations are
of a continuing nature.
The accounting policies applied to
these accounts are consistent with those applied in the accounts
for the year ended 31 July 2023.
3. Taxation on
ordinary activities
The Company's effective corporation
tax rate is nil, as deductible expenses exceed taxable income. The
tax charge comprises irrecoverable overseas withholding
tax.
4.
Return/(loss) per share
|
(Unaudited)
|
(Unaudited)
|
|
|
For the six
|
For the six
|
(Audited)
|
|
months
ended
|
months
ended
|
Year ended
|
|
31 January
|
31 January
|
31 July
|
|
2024
|
2023
|
2023
|
|
£'000
|
£'000
|
£'000
|
Revenue return
|
3,103
|
3,124
|
6,563
|
Capital return
|
26,938
|
11,341
|
24,788
|
Total return
|
30,041
|
14,465
|
31,351
|
Weighted average number of shares in
issue during the period
|
119,383,962
|
121,782,314
|
121,214,425
|
Revenue return per share
(pence)
|
2.60
|
2.57
|
5.41
|
Capital return per share
(pence)
|
22.56
|
9.31
|
20.45
|
Total return per share (pence)
|
25.16
|
11.88
|
25.86
|
5. Dividends
paid
|
(Unaudited)
|
(Unaudited)
|
|
|
Six months
|
Six months
|
(Audited)
|
|
ended
|
ended
|
Year ended
|
|
31 January
|
31 January
|
31 July
|
|
2024
|
2023
|
2023
|
|
£'000
|
£'000
|
£'000
|
2023 final dividend paid of 5.4p
(2022: 4.9p)
|
6,439
|
5,961
|
5,961
|
No interim dividend has been
declared in respect of the six months ended 31 January 2024 (2023:
nil).
6. Creditors:
amounts falling due within one year
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
31 January
|
31 January
|
31 July
|
|
2024
|
2023
|
2023
|
|
£'000
|
£'000
|
£'000
|
Securities purchased awaiting
settlement
|
1,486
|
422
|
951
|
Other creditors and
accruals
|
1,359
|
640
|
718
|
Bank loan
|
42,977
|
-
|
-
|
|
45,822
|
1,062
|
1,669
|
The bank loan is a yen 6.0 billion
three-year term loan from SMBC Bank International plc, expiring on
17 January 2025 and carrying a floating interest rate, calculated
at the daily Compounded Risk Free Rate, plus a margin. The bank
loan also includes a yen 2.0 billion credit facility with SMBC Bank
International plc, repayment date in 10 May 2024 (2023:
undrawn).
7. Creditors:
amounts falling due after more than one year
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
31 January
|
31 January
|
31 July
|
|
2024
|
2023
|
2023
|
|
£'000
|
£'000
|
£'000
|
Bank loan
|
-
|
37,477
|
32,821
|
8. Called-up
share capital
|
(Unaudited)
|
(Unaudited)
|
|
|
For the six
|
For the six
|
(Audited)
|
|
months
ended
|
months
ended
|
Year ended
|
|
31 January
|
31 January
|
31 July
|
|
2024
|
2023
|
2023
|
|
£'000
|
£'000
|
£'000
|
Opening balance of ordinary shares of
10p each
|
11,990
|
12,200
|
12,200
|
Repurchase and cancellation of
shares
|
(138)
|
(38)
|
(210)
|
Closing balance of ordinary shares of
10p each
|
11,852
|
12,162
|
11,990
|
Changes in the number of shares in
issue during the period were as follows:
|
|
|
|
|
|
(Unaudited)
|
(Unaudited)
|
|
|
Six months
|
Six months
|
(Audited)
|
|
ended
|
ended
|
Year ended
|
|
31 January
|
31 January
|
31 July
|
|
2024
|
2023
|
2023
|
|
£'000
|
£'000
|
£'000
|
Ordinary shares of 10p each,
allotted, called-up and fully paid
|
|
|
|
Opening balance of shares in
issue
|
119,903,965
|
122,000,562
|
122,000,562
|
Repurchase and cancellation of
shares
|
(1,381,226)
|
(375,690)
|
(2,096,597)
|
Closing balance of shares in
issue
|
118,522,739
|
121,624,872
|
119,903,965
|
9. Net asset
value per share
Net asset value per share is
calculated by dividing shareholders' funds by the number of shares
in issue of 118,522,739 (31 January 2023: 121,624,872 and 31 July
2023: 119,903,965).
10. Financial instruments
measured at fair value
The Company's financial instruments
that are held at fair value comprise its investment portfolio. At
31 January 2024, all investments in the Company's portfolio were
categorised as Level 1 in accordance with the criteria set out in
paragraph 34.22 (amended) of FRS 102. That is, they are all valued
using unadjusted quoted prices in active markets for identical
assets (31 January 2023 and 31 July 2023: all valued using
unadjusted quoted prices in active markets for identical
assets).
11. Events after the
interim period that have not been reflected in the financial
statements for the interim period
The Directors have evaluated the
period since the interim date and have not noted any significant
events which have not been reflected in the financial
statements.
Neither the contents of the
Company's website nor the contents of any website accessible from
hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.