Source - LSE Regulatory
RNS Number : 0291I
Baillie Gifford Shin Nippon PLC
25 March 2024
 

RNS Announcement

 

Baillie Gifford Shin Nippon PLC (BGS)

 

Legal Entity Identifier: X5XCIPCJQCSUF8H1FU83

 

Results for the year to 31 January 2024

Regulated Information Classification: Additional regulated information required to be disclosed under the applicable laws and regulations.

 

The following is the results announcement for the year to 31 January 2024 which was approved by the Board on 22 March 2024.

 

In sterling terms over five years, the Company's comparative index* was up 24.1% while the net asset value per share was down by 6.8% and the share price was down 26.3%.

¾  Portfolio performance has remained weak since the decline in impact of Covid-19 as large-cap value stocks have been very much in favour compared to high growth small cap stocks. Most of the portfolio's poor performers over the past year were companies with meaningful exposure to China. There was wide sectoral dispersion among the portfolio's top performing stocks.

¾  The Board is committing to a one-off performance-triggered tender offer for up to 15% of the Company's issued share capital if the Company's NAV per share total return underperforms the MSCI Japan Small Cap Index total return (in sterling terms) over the three years to 31 January 2027, given the period of poor performance.

¾  Portfolio turnover for the financial year was 12.1%, with seven positions exited and five new positions initiated. There are currently four private companies in the portfolio accounting for 3.7% of total assets.

¾  The Company's share price ended the period at a 14.6% discount to the NAV per share. 4,395,000 shares were bought back in the reporting period and are currently held in treasury.

¾  The persistent share price weakness of most holdings across the portfolio, together with their strong operational performance has meant that the portfolio as a whole has been de-rated significantly and, relative to the comparative index, although valued at a small premium it should deliver much faster sales growth.

¾  As the focus on fundamentals takes a firm hold, portfolio performance should recover. The Board and Managers remain of the view that exceptional long term returns are likely to be generated by young, disruptive, fast-growing and entrepreneurial smaller businesses in Japan.

¾  Revenue return per share was 0.94p (2023 1.11p). Having been in deficit for a number of years, the Company's revenue reserve has moved to a surplus. The Board is recommending a final dividend of 0.80p per share, being broadly the minimum required to maintain investment trust status. The proposed final dividend will be put before shareholders as part of the Company's Annual General Meeting ('AGM') business in May.

Shin Nippon*


Instruments (lines of stock reviewed)

4

Revaluations performed

20

Percentage of portfolio revalued at least 4 times

100%

Percentage of portfolio revalued 5+ times

50%


            Average
        movement
      in company                                                           valuation                         

Average
movement
in share price

Shin Nippon*

25.6%

15.2%

% of total assets*

2.4%

% of total assets*

2.4%

% of total assets*

2.4%

% of total assets*

2.2%

% of total assets*

2.2%

% of total assets*

2.2%

% of total assets*

2.2%

% of total assets*

2.2%

% of total assets*

2.1%

% of total assets*

2.0%

% of total assets*

1.5%

% of total assets*

0.4%

% of total assets*

0.9%

% of total assets*

1.2%

% of total assets*

1.1%

Environmental, social and governance engagement

By engaging with companies, we seek to build constructive relationships with them, to better inform our investment activities and, where necessary, effect change within our holdings, ultimately with the goal of achieving better returns for our shareholders. The issues we consider in our assessment of ESG factors are varied but may include governance arrangements, human rights, labour rights, diversity and inclusion,

climate change, nature and biodiversity, respect for legal and regulatory guidelines and consideration of stakeholder perspectives. The examples below demonstrate our approach to proxy voting and stewardship through constructive, ongoing engagement.

 

% of total assets*

0.3%

Outcome: The meeting with Itaru Tanimura provided valuable insight into the thinking of one of Japan's most exciting entrepreneurs. Tanimura san appreciated the discussion and suggested establishing some form of internal stakeholder review board to ensure these ideas are robustly discussed. This would help M3 navigate the trade-offs between the needs of pharmaceutical companies, physicians and patients, and ensure that the company's core business remains a neutral marketplace that provides doctors with all the information they need to make the best decisions for their patients. Successfully managing these evolving issues will be critical to M3's future success and its clients' returns.

Nihon M&A Center - lessons learned and building culture

% of total assets*

0.4%

Nihon M&A Center is Japan's leading M&A advisory firm, with a focus on smaller companies.

Objective: We met with Suguru Miyake, the President of Nihon M&A, to discuss the company's response to the accounting and marketing challenges it faced in late 2021. The focus was on understanding the steps taken, in the time that had elapsed since the incident, to remediation following the premature recording of deals in order to meet revenue targets.

Discussion: In our discussion Miyake san emphasised his direct involvement with measures to improve compliance and transparency, and to revitalise the company's culture. This effort led to changes in the consultant team, with some members leaving, either by encouragement or voluntarily. This paved the way for a renewed growth trajectory in consultant numbers, which saw an over 8 year-on-year increase.
The company's morale has seemingly since improved, as evidenced by a recent staff survey. Employees now see more opportunities, thanks to focused talent development initiatives. Miyake san also discussed maintaining a balance between entrepreneurship and compliance, stating they can coexist without conflict, aligning with the employees' aspirations for growth.
The company had also taken steps to improve 'group unity', an area identified as needing enhancement. This included dividing all employees into small groups for teaching sessions and face-to-face meetings with the President to improve company culture. These initiatives, coupled with feedback from 50 meetings, have reportedly improved morale. Despite a second wave of departures mid-year, following bonus pay-outs, the remaining employees are described as more cohesive, with an increase in productivity and a recovery in deal activity.

Outcome: Our meeting with Miyake san provided valuable insights into Nihon M&A's response to its recent challenges and that he had made a concerted effort to identify and rectify root causes. We learned more about the company's focused efforts on remediation, culture enhancement and employee engagement, and how they have laid a foundation for recovery and future growth.

Descente - developing a resilient portfolio of brands

% of total assets*

1.9%

Descente manufactures and sells sportswear. It has a portfolio of 14 brands across a range of price points, including the likes of ski apparel brand Descente, Le Coq Sportif, Umbro, and Srixon.

Objective: During a meeting with corporate planning officer, Tomoko Kitazawa, we discussed how Descente is considering the impacts of climate change on its portfolio of brands.

Discussion: Skiing may become increasingly difficult in some places like the Alps and there may also be increasing challenges to growing market share in a sport that will likely decline should global temperatures rise. Management is keenly aware that the long term risk is significant. Reassuringly, this is a topic of live discussion and management is actively considering how it can introduce new products to hedge against possible obsolescence.

Outcome: The meeting provided us comfort in the short term that the matter is under ongoing consideration and provided useful context to monitor how Descente will continue to evolve its portfolio in response.

Proxy voting - 'active ownership' in action

Harmonic Drive

% of total assets*

1.0%

Meeting

2023 Annual General Meeting

Vote

Abstain

Reason: We abstained on the election of the chair of the board in order to escalate our voting approach due to the ongoing practice of granting bonuses to non-executive directors. We have been opposing the resolution to grant bonuses to directors since 2014 and have fed back concerns to the company. We believe granting performance-based pay to non-executives could impact their ability to think independently and view it as a potential conflict of interest. The company continues to grant performance based pay to outsiders and did not address our concerns and we therefore escalated our response.

DaikyoNishikawa

% of total assets*

0.8% 

Meeting

2023 Annual General Meeting

Vote

Against

Reason: We opposed the election of one internal statutory auditor due to ongoing concerns with the low level of independence on the statutory auditor board. In 2022 we opposed the election of an affiliated external statutory auditor as we viewed the statutory auditor board as being only 33% independent when we believe it should be at least 50% independent to provide effective objective oversight of the audit process. We communicated our concerns to the company however as these concerns were not addressed, and the statutory auditor board remains only 33% independent, at the 2023 Annual General Meeting we continued to oppose non-independent members of the statutory auditor board. Again, we communicated our concerns to the company and encouraged increasing levels of independence.

Yonex

% of total assets*

1.3%

Meeting

2023 Annual General Meeting

Vote

Against

Reason: We opposed a resolution relating to retirement bonuses due to the lack of disclosure of the director receiving the bonus and the exact amounts to be paid. We opposed the same resolution at the 2019, 2021 and 2022 Annual General Meetings. While the company is not required to disclose this information we do not feel we have sufficient information to make a judgement on whether the retirement bonus is appropriate or not.

 

Name

Business

2024

Value

£'000

% of

total

assets #

Absolute performance

%

2023

Value

£'000

GMO Financial Gate

Face-to-face payment terminals and processing services

13,482

2.4

8.0

10,181

Megachips

Electronic components

 13,289

 2.4

 57.5

 10,209

Litalico

Provides employment support and learning
support services for people with disabilities

 13,272

 2.4

(29.1)

 17,296

Cosmos Pharmaceuticals

Drugstore chain

 12,231

 2.2

 8.3

 9,900

Toyo Tanso

Electronics company

 12,219

 2.2

 6.5

 14,181

Lifenet Insurance

Online life insurance

 12,017

 2.2

(18.0)

 13,364

Sho-Bond

Infrastructure reconstruction

 12,017

 2.2

 4.5

 12,445

Horiba

Manufacturer of measuring instruments

 11,742

 2.2

 78.1

 7,775

GA Technologies

Interactive media and services

 11,586

 2.1

 5.0

 11,594

Anest Iwata

Manufactures compressors and painting machines

 10,924

 2.0

 33.9

 7,852

Wealthnavi

Digital robo wealth-management

 10,763

 2.0

 5.6

 7,074

Asahi Intecc

Specialist medical equipment

 10,658

 1.9

 8.2

 8,774

JEOL

Manufacturer of scientific equipment

 10,589

 1.9

 57.6

 6,878

Nifco

Value-added plastic car parts

 10,387

 1.9

0.6

 10,574

Descente

Manufactures athletic clothing

 10,284

 1.9

(16.3)

 15,573

Shoei

Manufactures motor cycle helmets

 9,917

 1.8

(29.7)

 15,876

MatsukiyoCocokara

Retail company

 9,887

 1.8

 8.5

 14,731

Nakanishi

Dental equipment

 9,721

 1.8

(22.8)

 16,153

Bengo4.com

Online legal consultation

 9,371

 1.7

 29.2

 6,488

Optex

Infrared detection devices

 9,190

 1.7

(23.8)

 13,314

Top 20


 223,546

 40.7



OSG

Manufactures machine tool equipment

 9,168

 1.7

(11.6)

 11,135

Technopro

IT staffing

 9,094

 1.7

(25.0)

 15,571

Raksul

Internet based services

 8,843

 1.6

(28.3)

 12,867

SIIX

Out-sources overseas production

 8,340

 1.5

(0.9)

 6,579

Noritsu Koki

Holding company with interests in biotech
and agricultural products

 8,183

 1.5

 25.0

 8,886

Appier Group

Software as a service company providing AI platforms

8,128

1.5

  22.8*

-

Katitas

Real estate services

 8,072

 1.5

(48.6)

 12,455

eGuarantee

Guarantees trade receivables

 8,053

 1.5

(30.2)

 12,543

Enechange

IT service management company

 7,767

 1.4

 0.0

 6,922

Infomart

Internet platform for restaurant supplies

 7,714

 1.4

(16.8)

 7,751

Kumiai Chemical

Specialised agrochemicals manufacturer

 7,638

 1.4

(14.2)

 8,200

Cybozu

Develops and markets internet and intranet application software for businesses

 7,470

 1.3

(25.9)

 10,534

I-ne

Hair care range

 7,290

 1.3

(33.2)

 3,111

Kitz

Industrial valve manufacturer

 7,127

 1.3

 31.5

 5,352

Outsourcing

Employment placement services

 7,116

 1.3

 52.9

 7,076

Nikkiso

Industrial pumps and medical equipment

 6,958

 1.3

(5.3)

 5,017

Avex Group

Entertainment management and distribution

 6,916

 1.3

(28.2)

 8,960

Yonex

Sporting goods

 6,913

 1.3

(17.2)

 9,828

SpiderPlus

Construction project management platform

 6,811

 1.3

(8.3)

 5,347

Gojo & Company Inc Class D Preferred u

Diversified financial services

 6,807

 1.3

 20.5

 5,650

SWCC

Electric wire and cable manufacturer

 6,756

 1.2

                53.1 *

 -

Torex Semiconductor

Semiconductor company

 6,380

 1.2

(42.7)

 12,857

Nittoku

Coil winding machine manufacturer

 6,364

 1.2

(38.4)

 6,403

Tsugami

Manufacturer of automated machine tools

 6,357

 1.2

(25.1)

 12,250

Spiber u

Textiles

 6,172

 1.1

 20.3

 5,131

Vector

PR Company

 6,073

 1.1

(22.4)*

 -

Iriso Electronics

Specialist auto connectors

 5,962

 1.1

(30.1)

 8,500

KH Neochem

Chemical manufacturer

 5,800

 1.1

(25.3)

 7,436

Kamakura Shinsho

Information processing company

 5,732

 1.1

(48.7)

 8,937

Seria

Discount retailer

 5,712

 1.0

(16.5)

 7,120

Harmonic Drive Systems

Robotic components

 5,620

 1.0

(28.0)

 9,342

Kohoku Kogyo

Manufacturer of undersea cable lead terminals

 5,429

 1.0

(30.7)

 4,374

JEPLAN u

Chemical PET recycling

 5,372

 1.0

(5.0)

 5,653

Peptidream

Drug discovery and development platform

 5,069

 0.9

(44.1)

 7,829

Nippon Ceramic

Electronic component manufacturer

 4,852

 0.9

(1.2)

 4,882

Demae-Can

Online meal delivery service

 4,722

 0.9

(14.5)

 3,947

GMO Payment Gateway

Online payment processing

 4,674

 0.9

(34.2)

 7,351

oRo

Develops and provides enterprise planning software

 4,667

 0.9

 34.2

 2,991

Oisix

Organic food website

 4,375

 0.9

                 2.6*

-

Inter Action

Semiconductor equipment

 4,210

 0.8

(32.5)

 6,813

DaikyoNishikawa

Automobile part manufacturer

 4,203

 0.8

 8.5

 2,837

Weathernews

Weather information services

 4,155

 0.8

(33.4)

 6,935

WDB Holdings

Human resource services

 4,120

 0.8

(4.3)

 4,465

Nabtesco

Robotic components

 4,086

 0.8

(33.4)

 6,449

Crowdworks

Crowd sourcing services

 4,054

 0.7

(29.8)

 5,481

Istyle

Beauty product review website

 3,928

 0.7

(27.6)

 1,516

Kitanotatsujin

Online retailer

 3,759

 0.7

(39.5)

 7,492

Jade Group

Ecommerce services provider

 3,633

 0.7

 65.3

 2,401

Shima Seiki

Machine industry company

 3,498

 0.6

(33.3)

 5,402

Snow Peak

Designs & manufactures outdoor lifestyle goods

 3,470

 0.6

(63.7)

 14,943

MonotaRO

Online business supplies

 3,304

 0.6

(37.9)

 6,552

Nihon M&A Center

M&A advisory services

 2,307

 0.4

(40.3)

 7,907

Cellsource

Company engaged in regenerative medicine

 2,026

 0.4

(31.4)*

 -

Akatsuki

Mobile games developer

 2,004

 0.4

 2.2

 2,833

M3

Online medical services

 1,501

 0.3

(42.1)

 3,454

Moneytree K.K.
Class B Preferred
u

AI based fintech platform

 1,401

 0.3

(39.4)

 2,312

Total investments


 539,701

 99.2



Net liquid assets#


4,566

 0.8



Total assets#


544,267

 100.0



Bank loans


(86,475)

(15.9)



Shareholders' funds


457,792

 84.1




Notes

2024 Revenue £'000

2024

Capital

£'000

2024

Total

£'000

2023 Revenue £'000

2023

Capital

£'000

2023

Total

£'000

Losses on investments


-

(97,913)

(97,913)

-

(12,749)

(12,749)

Currency gains

2

 -

13,058

13,058

 -

 2,214

 2,214

Income


8,870

 -

8,870

 9,617

 -

 9,617

Investment management fee

3

(2,878)

 -

(2,878)

(3,154)

 -

(3,154)

Other administrative expenses


(628)

 -

(628)

(679)

 -

(679)

Net return before finance costs
and taxation


5,364

(84,855)

(79,491)

 5,784

(10,535)

(4,751)

Finance costs of borrowings

4

(1,533)

 -

(1,533)

(1,332)

 -

(1,332)

Net return before taxation


3,831

(84,855)

(81,024)

 4,452

(10,535)

(6,083)

Tax on ordinary activities


(887)

 -

(887)

(962)

 -

(962)

Net return after taxation


2,944

(84,855)

(81,911)

 3,490

(10,535)

(7,045)

Net return per ordinary share

6

0.94p

(27.13p)

(26.19p)

 1.11p

(3.35p)

(2.24p)

Note: Dividends per share payable and paid in respect of the year

5

0.80p



-




Notes

2024

£'000

2024

£'000

2023

£'000

2023

£'000

Fixed assets






Investments held at fair value through profit or loss

7


 539,701


 625,922

Current assets






Debtors


3,521


 3,047


Cash at bank


 2,965


 6,946




6,486


 9,993


Creditors






Amounts falling due within one year

8

(88,395)


(46,154)


Net current liabilities



(81,909)


(36,161)

Total assets less current liabilities



457,792


 589,761

Creditors






Amounts falling due after more than one year

8


-


(44,308)

Net assets



457,792


 545,453

Capital and reserves






Share capital



 6,285


 6,285

Share premium account



 260,270


 260,270

Capital redemption reserve



 21,521


 21,521

Capital reserve



167,114


 257,719

Revenue reserve



2,602


(342)

Shareholders' funds



457,792


 545,453

Net asset value per ordinary share*



147.8p


 173.6p


Notes

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 2023


6,285

260,270

21,521

257,719

(342)

545,453

Ordinary shares bought back into treasury

9

 -

 -

 -

(5,750)

 -

(5,750)

Net return on ordinary activities after taxation

6

 -

 -

 -

(84,855)

2,944

(81,911)

Shareholders' funds at 31 January 2024


 6,285

 260,270

 21,521

167,114

2,602

457,792


Notes

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 2022


6,285

260,270

21,521

268,408

(3,832)

552,652

Ordinary shares bought back into treasury

9

 -

 -

 -

(154)

 -

(154)

Net return on ordinary activities after taxation

6

 -

 -

 -

(10,535)

 3,490

(7,045)

Shareholders' funds at 31 January 2023


 6,285

 260,270

 21,521

 257,719

(342)

 545,453


Notes

2024
£'000

2024
£'000

2023
£'000

2023
£'000

Cash flows from operating activities

 

 

 

 

 

Net return on ordinary activities before taxation


(81,024)


(6,083)


Net losses on investments


 97,913


 12,749


Currency gains


(13,058)


(2,214)


Finance costs of borrowings


 1,533


 1,332


Overseas withholding tax


(922)


(892)


Decrease/(increase) in debtors, accrued income
and prepaid expenses


351


(681)


Increase in creditors


150


 27


Cash inflow from operations



4,943


 4,238

Interest paid



(1,462)


Net cash inflow from operating activities



3,481


 2,946

Cash flows from investing activities






Acquisitions of investments


(91,610)


(137,003)


Disposals of investments


 78,423


 108,576


Net cash outflow from investing activities



(13,187)


(28,427)

Ordinary shares bought back into treasury and stamp duty thereon

9

(5,750)


(154)


Bank loans repaid


 12,313


-


Net cash inflow/(outflow) from financing activities



 6,563


(154)

Decrease in cash and cash equivalents



(3,143)


(25,635)

Exchange movements



(838)


(924)

Cash and cash equivalents at 1 February

10


 6,946


 33,505

Cash and cash equivalents at 31 January*

10


2,965


 6,946

1.   The Financial Statements for the year to 31 January 2024 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' on the basis of the accounting policies set out in the Annual Report and Financial Statements for the year ended 31 January 2024.

2.   Currency gains


2024

£'000

2023

£'000

Exchange differences on bank loans

13,896

3,138

Other exchange difference

(838)

(924)


13,058

2,214

3.   Investment management fee


2024

£'000

2023

£'000

Investment management fee

2,878

3,154

Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company's Alternative Investment Fund Manager ('AIFM') and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited.

The Investment Management Agreement sets out the matters over which the Managers have authority in accordance with the policies and directions of, and subject to restrictions imposed by, the Board. The Management Agreement is terminable on not less than six months' notice. Compensation fees would only be payable in respect of the notice period if termination were to occur sooner. The annual management fee for the year to 31 January 2024 was 0.75% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remainder. The fees are calculated and paid on a quarterly basis.

4.   The Company paid interest of £23,000 (2023 - £37,000) in respect of yen deposits held by the custodian bank.

5.   Ordinary dividends

We set out below the total dividends proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. There is a revenue surplus at 31 January 2024 of £2,602,000 which is available for distribution by way of a dividend payment (2023 - a revenue deficit of £342,000).


2024

p

2023

p

2024

£'000

2023

£'000

Amounts paid and payable in respect of the financial year:





Proposed final dividend per ordinary share (payable 30 May 2024)

0.80p

-

2,478

-

If approved, the recommended final dividend on the ordinary shares will be paid on 30 May 2024 to shareholders on the register at the close of business on 19 April 2024. The ex-dividend date is 18 April 2024.

6.  Net return per ordinary share


2024

Revenue

2024

Capital

2024

Total

2023

Revenue

2023

Capital

2023

Total

Net loss on ordinary activities
after taxation

0.94p

 (27.13p)

(26.19p)

1.11p

 (3.35p)

 (2.24p)

The returns per ordinary share set out above are based on the net revenue gain of £2,944,000 (2023 - gain of £3,490,000) and net capital loss of £84,855,000 (2023 - net capital loss of £10,535,000) and on 312,785,827 ordinary shares (2023 - 314,222,074), being the weighted average number of ordinary shares in issue during the year. There are no dilutive or potentially dilutive shares in issue.

7.  Fixed assets - investments

Investments in securities are financial assets designated at fair value through profit or loss. In accordance with Financial Reporting Standard 102, the tables provide an analysis of these investments based on the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value.

Fair Value Hierarchy

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).

As at 31 January 2024

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Quoted equities

519,949

-

-

519,949

Unlisted securities

-

-

19,752

19,752

Total financial asset investments

519,949

-

19,752

539,701

 

As at 31 January 2023

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Quoted equities

607,176

-

-

607,176

Unlisted securities

-

-

18,746

18,746

Total financial asset investments

607,176

-

18,746

625,922

8.   The bank loans are stated after deducting the arrangement fees of £98,000 which are amortised over the terms of the loans. Amortisation of the arrangement fees during the year was £45,000 (2023 - £49,000).

Borrowing facilities

At 31 January 2024

ING Bank N.V. - 3 year ¥5,000 million fixed rate loan at 1.400% maturing 8 November 2024.

ING Bank N.V. - 7 year ¥2,100 million fixed rate loan at 1.693% maturing 18 December 2024.

ING Bank N.V. - 3 year ¥2,000 million revolving credit facility maturing 3 March 2026. The rollover date is 8 March 2024.

ING Bank N.V. - 3 year ¥7,000 million revolving credit facility maturing 23 November 2026. The rollover date is 27 February 2024.

At 31 January 2023

ING Bank N.V. - 3 year ¥7,000 million loan at 1.400% maturing 27 November 2023.

ING Bank N.V. - 3 year ¥5,000 million loan at 1.400% maturing 8 November 2024.

ING Bank N.V. - 7 year ¥2,100 million loan at 1.693% maturing 18 December 2024.

The fair value of the bank loans at 31 January 2024 was £86,445,000 (31 January 2023 - £87,725,000). See Glossary of terms and Alternative Performance Measures at the end of this announcement.

9.   At 31 January 2024 the Company had authority to buy back 43,046,457 shares. 4,395,000 shares were bought back at a cost of £5,750,000 during the year (2023 - 100,000 at a cost of £154,000). Share buy-backs are funded from the capital reserve.

During the year the Company issued no shares on a non pre-emptive basis (2023 - no shares)

Between 1 February and 20 March 2024 the Company did not issue any shares. The company bought back 3,375,000 shares.

10. Analysis of change in net debt


31 January 2023

£'000

Cash flows

£'000

Exchange movement

£'000

Other non-cash changes

£'000

31 January

2024

£'000

Cash and cash equivalents

6,946

(3,143)

(838)

-

2,965

Loans due within one year

(43,705)

(12,313)

13,896

(44,353)

(86,475)

Loans due in more than one year

(44,308)

-

-

44,308

-


(81,067)

(15,456)

13,058

(45)

(83,510)

11. The Annual Report and Financial Statements will be available on the Company's website shinnippon.co.uk on or around 12 April 2024.

12. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 January 2024 or 2023 but is derived from those accounts. Statutory accounts for 2023 have been delivered to the Registrar of Companies, and those for 2024 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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.


31 January 2024

31 January 2023

NAV per ordinary share (borrowings at book value)

147.8p

173.6p

Shareholders' funds (borrowings at book value)

£457,792,000

£545,453,000

Add: book value of borrowings

£86,475,000

£88,013,000

Less: fair value of borrowings

(£86,445,000)

(£87,725,000)

NAV (borrowings at fair value)

£457,822,000

£545,741,000

Shares in issue at year end

309,757,485

314,152,485

NAV per ordinary share (borrowings at fair value)

147.8p

173.7p


2024

NAV (book)

2024

NAV (fair)

2023

NAV (book)

2023

NAV (fair)

Closing NAV per share

147.8p

147.8p

173.6p

173.7p

Closing share price

126.2p

126.2p

158.8p

158.8p

Discount

(14.6%)

(14.6%)

(8.5%)

(8.6%)



31 January 2024

£'000

31 January 2023

£'000

Investment management fee


£2,878,000

£3,154,000

Other administrative expenses


£628,000

£679,000

Total expenses

(a)

£3,506,000

£3,833,000

Average daily cum-income NAV
(with borrowings at fair value)

(b)

£485,043,000

£521,337,000

Ongoing charges

 (a) as a percentage of (b)

0.72%

0.74%



31 January 2024

31 January 2023



                    Gearing *

                         £'000

         Gross gearing

                         £'000

                    Gearing *

                         £'000

         Gross gearing

                         £'000

Borrowings

(a)

86,475

86,475

88,013

88,013

Cash and cash equivalents

(b)

3,596

-

6,082

 -

Shareholders' funds

(c)

457,792

457,792

545,453

545,453



18.1%

18.9%

15.0%

16.1%

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 must provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.

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/government/publications/exchange-of-information-accountholders.

 

The EU Sustainable Finance Disclosure Regulation ('SFDR') does not have a direct impact in the UK due to Brexit, however, it applies to third-country products marketed in the EU. As Shin Nippon is marketed in the EU by the AIFM, BG & Co Limited, via the National Private Placement Regime ('NPPR') the following disclosures have been provided to comply with the high-level requirements of SFDR.

The AIFM has adopted Baillie Gifford & Co's stewardship principles and guidelines as its policy on integration of sustainability risks in investment decisions.

Baillie Gifford & Co believes that a company cannot be financially sustainable in the long run if its approach to business is fundamentally out of line with changing societal expectations. It defines 'sustainability' as a deliberately broad concept which encapsulates a company's purpose, values, business model, culture, and operating practices.

Baillie Gifford & Co's approach to investment is based on identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To do this it looks beyond current financial performance, undertaking proprietary research to build up an in-depth knowledge of an individual company and a view on its long-term prospects. This includes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment. The likely impact on the return of the portfolio from a potential or actual material decline in the value of investment due to the occurrence of an environmental, social or governance event or condition will vary and will depend on several factors including but not limited to the type, extent, complexity and duration of an event or condition, prevailing market conditions and existence of any mitigating factors.

Whilst consideration is given to sustainability matters, there are no restrictions on the investment universe of the Company, unless otherwise stated within in its investment objective and policy. Baillie Gifford & Co can invest in any companies it believes could create beneficial long-term returns for investors. However, this might result in investments being made in companies that ultimately cause a negative outcome for the environment or society.

More detail on the Manager's approach to sustainability can be found in the stewardship principles and guidelines document, available publicly on the Baillie Gifford website bailliegifford.com.

The underlying investments do not take into account the EU criteria for environmentally sustainable economic activities established under the EU Taxonomy Regulation.

- ends -

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