Annual Report and
Financial Statements
The Baillie Gifford
Japan Trust PLC
31 August 2025
japantrustplc.co.uk
The Baillie Gifford Japan Trust PLC
01
Introduction
Company Overview 02
Financial Highlights 03
Strategic Report
Chairman’s Statement 05
Managers’ Review 08
Relative Contribution 11
Review of Investments 12
Distribution of Total Assets and Main Portfolio Themes 16
Portfolio Positioning 17
List of Investments 19
Environmental, Social and Governance Engagement 21
Business Review 25
Governance Report
Directors 36
Directors’ Report 39
Corporate Governance Report 44
Directors’ Remuneration Report 49
Audit Committee Report 52
Statement of Directors’ Responsibilities 55
Financial Report
Independent Auditor’s Report 58
Income Statement 65
Balance Sheet 66
Statement of Changes in Equity 67
Cash Flow Statement 68
Notes to the Financial Statements 69
Glossary of Terms and Alternative Performance Measures 82
Shareholder Information
Notice of Annual General Meeting 86
Further Shareholder Information 91
Third Party Data Provider Disclaimer 93
One Year Summary 94
Five Year Summary 95
Ten Year Record 96
Sustainable Finance Disclosure Regulation 97
Communicating with Shareholders 98
Company Information 100
Contents
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you reside in the UK and you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager,
solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 immediately.
If you are outside the UK, you should consult an appropriately authorised financial adviser.
If you have sold or otherwise transferred all of your ordinary shares in The Baillie Gifford Japan Trust PLC, please forward this
document, together with any accompanying documents, but not your personalised Form of Proxy, as soon as possible to the purchaser
or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was or is being effected for delivery to
thepurchaser or transferee.
Introduction
Annual Report and Financial Statements 2025
02
Company Overview
* Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84.
†
The benchmark is the TOPIX total return (in sterling terms).
** Based on eVestment Japan Universe as at 31 August 2025.
Source: LSEG, Baillie Gifford, Japan Exchange Group and underlying data providers. See disclaimer on page 93.
Past performance is not a guide to future performance.
Bottom-up:
Willing to bedifferent
84%
Long-term:
Sticking withconviction
7%
Growth:
Supporting innovation and
entrepreneurship
42%
Active share
*
Turnover versus 57%
**
industry average
Founder/family run vs
12% for the index
Backing businesses, not the economy
Objective
The Baillie Gifford Japan Trust PLC aims to achieve long-term capital growth principally
through investment in medium to smaller sized Japanese companies, which are believed
to have above average prospects for growth.
Framing Japan through a unique lens
● Net asset value ● Share price ● Benchmark
†
2025202420232022202120202019201820172016
(30%)
(20%)
(10%)
0%
10%
30%
40%
50%
20%
NAV, Share Price and Comparative Index Total Return
*
The Baillie Gifford Japan Trust PLC
03
* Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84.
†
The benchmark is the TOPIX total return (in sterling terms).
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93.
Past performance is not a guide to future performance.
NAV, Share Price and Benchmark Total Return
*
(figures rebased to 100 at 31August 2024)
A
2025
A
2024
S O N D J F M A M J
J
● Share price● NAV ● Benchmark
90%
95%
100%
105%
110%
115%
120%
125%
Financial Highlights
Year to 31August 2025
Share Price
20.9%
NAV
20.5%
Benchmark
†
12.1%
Total returns
*
Discount
*
to Net Asset Value
(figures plotted on a weekly basis)
A
2025
A
2024
SONDJFMA
MJ
J
● Discount ● Average discount
(18%)
(16%)
(14%)
(12%)
(10%)
(8%)
Discount
*
(11.4%)
Average discount
*
(12.5%)
Ongoing charges
*
0.71%
The Strategic Report, which
comprises pages 05 to
34 and incorporates the
Chairman’s statement, has been
preparedin accordance with
the Companies Act 2006.
Strategic Report
The Baillie Gifford Japan Trust PLC
05
Chairman’s Statement
* Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84.
†
The benchmark is the TOPIX total return (in sterling terms).
Source: LSEG and underlying data providers. See disclaimer on page 93.
Past performance is not a guide to future performance.
Introduction
This past year has seen Japan’s equity market
continue to build on the momentum of its long-
awaited resurgence, with corporate reforms, robust
earnings growth, and renewed global investor
attention combining to push valuations to levels not
seen in decades. Although growth investing has
continued to face headwinds in global markets, the
Board retains strong conviction that the Company’s
portfolio of innovative Japanese companies is well
positioned to deliver sustainable value creation and
attractive returns for shareholders over time.
Performance
In the year to 31 August 2025, the net asset value
(‘NAV’) total return was 20.5% and the share price
total return was 20.9%. The comparative index
(TOPIX total return in sterling terms) appreciated by
12.1% over the same period.
The Company’s objective is to achieve long-term
capital growth, and the NAV returns remain ahead of
the benchmark on a 10-year time horizon.
Long Term Performance (Total Return
*
)
Compound Annual Returns
1 year 5 year 10 year 5 year 10 year
Share price 20.9% 16.0% 114.2% 3.0% 7.9%
Net asset value 20.5% 2 7. 0% 152.2% 4.9% 9.7%
Benchmark
†
12.1% 53.4% 137.2% 8.9% 9.0%
David Kidd
Chairman
Appointed to the
Board in 2015,
andas Chairman
in2022
Strategic Report
Annual Report and Financial Statements 2025
06
Share Capital and Discount Management
Over the course of the year, the share price discount
to NAV narrowed very slightly from 11.6% to 11.4%.
The Board believes that if the Company’s shares
trade at a double-digit discount, this presents an
attractive opportunity to add value for shareholders
through buybacks. During the financial year, 11.5%
of the Company’s issued share capital was bought
back for a total consideration of £75.2 million. This
increased the Company’s net asset value by 1.5%.
The shares bought back are held in Treasury and are
available to be reissued, at a premium, when market
conditionsallow.
Issuance and Buybacks
202520242023202220212020
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
● No of shares issued ● No of shares bought back
Your Board believes it is important that the Company
retains the power to buy back equity during the year
and so, at the AGM, is seeking to renew this facility.
Further details of the buy back facility can be found
on page 41.
The Company also has authority to issue new shares
and to reissue any shares held in Treasury for cash
on a non-pre-emptive basis. Shares are issued
or reissued only at a premium to net asset value,
thereby enhancing net asset value per share for
existing shareholders. The Directors are, once again,
seeking 10% share issuance authority at the AGM.
This authority would expire at the conclusion of the
AGM in 2026.
Over the financial year to 31 August 2025, the
Company delivered improved performance, both
in absolute terms and relative to its benchmark.
This reflects a combination of strong operational
progress from many of the portfolio’s holdings and
a more supportive market backdrop for growth
equities. The Board is encouraged to see that the
Managers’ patient, bottom-up approach – investing
in companies with the potential for sustained
and idiosyncratic growth – has been rewarded as
earnings delivery and long-term prospects regained
investors’ focus. The Japanese equity market
continues to offer abundant opportunities for
discerning stock-pickers, and the Board remains
confident that the strategy of concentrating on
innovative, growth-oriented businesses positions
the Company well to generate superior returns over
time. The recovery in performance over the past year
provides a timely reminder that, while short-term
market conditions can at times be unfavourable,
the long-term prospects for the portfolio
remaincompelling.
Gearing and Borrowing
The Board believes borrowing is likely to enhance
long-term returns. It also recognises the risks
associated with borrowing. Net gearing decreased
from 18.1% to 12.8% for the year ending 31 August
2025. The Board is pleased to announce that in
August 2025, the Company secured a ¥15 billion
revolving credit facility with The Bank of New York
Mellon at a competitive rate. The proceeds were
used to repay the ¥15 billion term loan with the same
bank which expired in August 2025.
Dividend
The Board is recommending a dividend of 10p per
ordinary share (2024: 10p per ordinary share). This
will be put to shareholders for approval at the Annual
General Meeting (‘AGM’) to be held on 10 December
2025. If approved, the dividend will be paid on
15December 2025 to shareholders on the register at
close of business on 14 November 2025. A dividend
reinvestment plan (‘DRIP’) is available to shareholders
who would prefer to invest their dividends in the
shares of the Company. For those shareholders
electing to receive the DRIP, the last date for receipt
of DRIP elections is 24 November 2025.
The Baillie Gifford Japan Trust PLC
07
Annual General Meeting (AGM)
The Company’s AGM is scheduled for 11.30am on
10 December 2025 at Baillie Gifford’s offices in
Edinburgh. The Board encourages shareholders
to attend in person but also to exercise their votes
by completing and submitting a form of proxy.
Shareholders who hold their shares via a platform
can find further details on page 92 as to how to vote
their shares.
We also encourage shareholders to monitor the
Company’s website at japantrustplc.co.uk where any
updates will be posted and market announcements
will be made, as appropriate. Should shareholders
have questions for the Board or the Managers or any
queries as to how to vote, they are welcome to submit
these by email to enquiries@bailliegifford.com or call
0800 917 2113.
Information on the resolutions can be found
on pages 87 and 88 of the Annual Report and
Financial Statements. The Directors consider that
all resolutions to be put to shareholders are in their
and the Company’s best interests as a whole and
recommend that shareholders vote in their favour.
In particular, shareholders have the right to vote
annually on whether the Company should continue
in business and will have the opportunity to do
so again this year. Last year, the Company again
received support for its continuation, with 85.4%
of votes cast in favour. Your Directors believe there
are attractive opportunities in selected, well-run
Japanese companies benefiting the long-term
favourable outlook for the Japan Trust. To that end,
my fellow Directors and I intend, where possible,
to vote our own shareholdings in favour of the
resolution and hope that all shareholders will feel
disposed to do likewise.
Board
As detailed in my Chairman’s Statement of last year,
the Board is cognisant of good corporate governance
practice and as such I will be stepping down from the
Board at the AGM. Sam Davis will be my successor.
Sam joined the Board in 2021 and is currently Chair
of the Management Engagement Committee. I am
confident that he will be a highly effective Chair of
your Company following my retirement at the AGM.
The Board intends to recruit a new director early in
2026 with the assistance of an executive search firm,
the selection of which is at an advanced stage.
I would like to thank all of my Board colleagues –
past and present – for their friendship, support, and
tolerance over the past decade or so. A special note
of gratitude is due to Matthew Brett for delivering
excellent long-term performance. The entire Baillie
Gifford team is to be commended not only for their
effective support but also for their responses to my
occasionally unconventional questions and requests.
Outlook
The Japanese equity market is reaching new highs.
Our investment manager’s strategy is once again
bearing fruit. I intend to remain a happy, supportive
shareholder for a very long time.
Your investment is in fine hands.
David Kidd
Chairman
20 October 2025
Strategic Report
Annual Report and Financial Statements 2025
08
Matthew is an Investment Manager in the Japanese Equities Team. He joined Baillie
Gifford in 2003 and became a Partner of Baillie Gifford in 2018. He has managed The
Baillie Gifford Japan Trust since 2018. Matthew has managed the Japanese All Cap
Strategy since 2008 and is Co-Manager of the Japanese Income Growth Strategy.
Matthew graduated BA (Hons) in Natural Sciences (Psychology) from the University of
Cambridge in 2000 and holds a PhD in Psychology from the University of Bristol.
Matthew Brett
Manager
Managers’ Review
Summary
The sun has shone on your Company’s portfolio this
year, with an NAV total return of +20.5%, ahead of the
TOPIX total return (in sterling terms) of +12.1%. Most
of this positive absolute and relative return came in the
second half of the fiscal year, with SoftBank Group
making a key positive contribution. We believe that the
journey towards realising the substantial opportunity
highlighted in recent reports has properly begun.
Investment Background
Artificial Intelligence (‘AI’) remains a central theme
globally. Large language models (‘LLMs’), such
as ChatGPT, continue to make rapid strides in
capability. Investments are being made in training
models, chips, data centres, and applications. This
will be a mega-theme over the next decade that
will likely surpass the development of the internet
in its significance. Over time we expect it to result
in profound changes to operating environments
for businesses and believe that it is important for
investors to keep looking forward to maximise the
opportunities and avoid the risks.
Right now, it is challenging to speak with confidence
about the global macroeconomic backdrop,
geopolitical environment, or even domestic Japanese
politics. However, your Company’s focus is not on
these broad and unpredictable factors, but rather on
carefully selected individual businesses chosen for
their long-term growth potential and resilience.
Performance Review
Superficially it may be surprising that our growth-
orientated portfolio has performed so well given
political challenges and a slowing global economy.
However, our long experience suggests that in slightly
tougher conditions, genuine growth businesses are
more appreciated as they are able to keep making
progress in spite of headwinds. Indeed, our lack of
relative returns in recent years has been partly due to a
lack of exposure to the very strong returns from some
of Japan’s most cyclical businesses, which enjoyed a
dramatic earnings up-cycle as Covid came to an end.
Over 5 years, the cumulative NAV total return was
+27.0% and over 10 years +152.2%. This compares to
increases in the TOPIX total return (in sterling terms) of
+53.4% over 5 years and +137.2% over 10 years.
The Baillie Gifford Japan Trust PLC
09
For a definition of terms, see Glossary of Terms and Alternative Performance Measures
onpages82to 84.
Past performance is not a guide to future performance.
Over the past year, 6 stocks contributed +1ppt or more
to the relative performance of the gross portfolio.
These were SoftBank Group (+3.8ppt), SBI Holdings
(+2.7ppt), CyberAgent (+1.5ppt), GA Technologies
(+1.3ppt), GMO Internet (+1.1ppt), and Topcon (+1.0ppt).
SoftBank Group, the technology holding company
and largest position in your Company’s portfolio, has
become better appreciated as one of the leaders
in this area. After doing nothing in the first half of
the year, the shares rose 96% in the second half.
Mr Son, the founder with a very large personal
stake in the company, has regained his position
as Japan’s richest person. In addition to the 90%
stake in Arm Holdings, whose designs power almost
every smartphone globally, SoftBank has invested
in OpenAI, the company behind ChatGPT, which is
a key driver of AI advancements globally. It should
stand to benefit accordingly.
SBI Holdings, Japan’s leading online financial services
company and second-largest position, has continued
to make progress across many areas. Its successful
transformation from an online financial broker into a
diversified financial conglomerate is well underway.
Through the integration of Shinsei Bank, which it
acquired in 2021, banking has grown to represent
over half of the group’s core profitability. A doubling of
deposits since the acquisition is laying the foundation
for a potential partial re-listing, likely at a significant
premium to the acquisition price.
CyberAgent, GMO Internet, and GA Technologies
all continued to make solid progress. Finally, Topcon
accepted an offer from a private equity investor at a
significant premium to the prevailing share price.
Just 1 stock contributed more than -1ppt to
relative performance. This was Rakuten (-1.3ppt),
a large position and the top contributor to relative
performance in the previous year. In our view,
the market has yet to appreciate fully either the
significant operational improvement in the telecoms
business, or the long-term growth opportunity ahead
of the company. We retain conviction in the holding.
Gearing also made a positive contribution to
performance of +2.2ppt as the portfolio delivered a
positive absolute return in Yen terms.
Portfolio
During the year we bought 4 new holdings and sold
6 holdings. Turnover was particularly low this year
at 7%, reflecting the extreme attractiveness of the
starting portfolio.
The new holdings were Money Forward (online
accounting software), Shimano (bicycle component
manufacturer), Square Enix (computer gaming) and
Sega Sammy (also computer gaming). Money Forward
is Japan’s leading online accounting software platform,
scaling into a vast and relevant market. Shimano is
the world’s leading manufacturer of high-end bicycle
components. We sold it during Covid when demand
for bicycles became artificially inflated, but the
subsequent significant share price correction has
presented another opportunity. Square Enix and Sega
Sammy are gaming businesses with strong global
franchises (Final Fantasy and Sonic the Hedgehog)
and significant untapped monetisation potential.
Both companies have robust balance sheets and are
well placed to capture the structural growth in digital
entertainment and gaming revenues.
Strategic Report
Annual Report and Financial Statements 2025
10
We sold holdings for a variety of reasons. As previously
mentioned, Topcon (positioning systems manufacturer)
accepted an offer from private equity at a significant
premium. SWCC Corporation (electric cables) delivered
a very high return since purchase, and we therefore
concluded that there was limited further upside
potential. Tokyo Tatemono (real estate) was sold
because we saw larger long-term opportunity in online
real-estate company GA Technologies. Finally, we sold
several internet names (Digital Garage, Mercari, LY
Corp) to fund additions to those names where we had
higher long-term conviction.
Overall, the portfolio retains significant exposure
to entrepreneurial growth companies, particularly
those operating in the internet sector. Although it
invests across the market cap spectrum, it has much
more in medium sized than very large companies
compared with the TOPIX index. It has no exposure
to car assemblers or many of Japan’s manufacturing
conglomerates. Reflecting our focus on growth
companies, the portfolio has exhibited sales growth
significantly ahead of the market over the past
5years and is forecast to continue to grow faster.
While earnings growth has been good over the past
5 years, it has lagged the market due to the lack
of exposure to the very strong returns from some
of Japan’s most cyclical companies, as previously
mentioned. However, looking forward, the earnings
growth is forecast to be ahead of the market again.
● Portfolio ● TOPIX
Earnings
3Y Forward
Growth
per annum
Historic
Earnings
5Y Growth
per annum
Sales 3Y
Forward
Growth
per annum
Historic Sales
5Y Growth
per annum
0%
2%
4%
8%
10%
14%
16%
18%
12%
6%
Outlook
We believe that there remains a large return
opportunity for long-term growth investing in
Japan. Our positioning in companies aligned with
long-term secular growth – many of which have not
been fully appreciated in recent years – presents
a good opportunity for outperformance ahead.
Reflecting this view, net gearing ended the year at
12.8%, putting us in a healthy position to benefit
from further share price appreciation while retaining
the flexibility to take advantage of any short-term
setbacks. Over the long run, we continue to believe
that a long-term approach to investing in Japan’s
best companies is capable of delivering excellent
results for shareholders.
Baillie Gifford
20 October 2025
The Baillie Gifford Japan Trust PLC
11
Relative Contribution
Top Ten Relative Stock Contributors
Year to 31August 2025
Name
Portfolio
(average
weight)
%
Index
(average
weight)
%
Relative
contribution
%
SoftBank Group 6.9 1.2 3.8
SBI Holdings 4.4 0.2 2.7
CyberAgent 3.3 0.1 1.5
GA Technologies 2.2 0.0 1.3
GMO Internet 3.5 0.0 1.1
Topcon 0.7 0.0 1.0
Daiichi Sankyo 0.0 1.0 0.7
Chugoku Marine Paints 1.3 0.0 0.6
Shin-Etsu Chemical 0.0 1.1 0.6
SWCC Corporation 0.6 0.0 0.5
Top Ten Relative Stock Contributors
5 years to 31August 2025
Name
Portfolio
(average
weight)
%
Index
(average
weight)
%
Relative
contribution
%
SoftBank Group 5.7 1.4 3.4
SBI Holdings 3.7 0.1 2.6
INPEX 0.7 0.2 1.7
Sumitomo Mitsui Trust Group 3.4 0.3 1.4
MS&AD Insurance 1.7 0.4 1.3
SWCC Corporation 0.3 0.0 1.2
Chugoku Marine Paints 0.7 0.0 1.0
Denso 1.6 0.6 1.0
Topcon Corp 1.0 0.0 0.9
Nintendo 1.6 1.4 0.9
Source: Revolution and relevant underlying index providers. Baillie Gifford Japan Trust relative to TOPIX total return (in sterling terms).
See disclaimer on page 93.
Bottom Ten Relative Stock Contributors
Year to 31August 2025
Name
Portfolio
(average
weight)
%
Index
(average
weight)
%
Relative
contribution
%
Rakuten 4.9 0.2 (1.3)
Calbee 2.8 0.0 (0.9)
Unicharm 1.5 0.2 (0.9)
Mitsubishi UFJ Financial Group 0.0 3.0 (0.8)
Mitsubishi Heavy Industries 0.0 1.2 (0.6)
Misumi 1.8 0.1 (0.6)
Eisai 1.5 0.1 (0.5)
Kubota 1.9 0.2 (0.5)
Shiseido 1.2 0.1 (0.5)
Mizuho Financial Group 0.0 1.3 (0.5)
Bottom Ten Relative Stock Contributors
5 years to 31August 2025
Name
Portfolio
(average
weight)
%
Index
(average
weight)
%
Relative
contribution
%
Shiseido 1.5 0.4 (2.3)
Mitsubishi UFJ Financial Group 0.0 2.1 (2.2)
Calbee 2.7 0.0 (2.0)
Misumi 2.2 0.1 (1.8)
Rakuten 3.7 0.2 (1.8)
Demae-can 0.6 0.0 (1.7)
COLOPL 1.3 0.0 (1.7)
Sysmex 2.1 0.3 (1.6)
Pola Orbis Holdings 1.6 0.0 (1.5)
Kubota 2.5 0.4 (1.5)
Strategic Report
Annual Report and Financial Statements 2025
12
Review of Investments
The Company’s tenlargest
investments as at31August
2025.
SoftBank Group
Diversified holding company
run by dynamic entrepreneur
Masayoshi Son, who holds
over 25% of the shares. It
encompasses investments in Arm
Holdings (global semiconductor
designer), OpenAI (ChatGPT),
mobile telecoms, and, through its
Vision Funds, many early-stage
technology investments. The
underlying businesses continue
to grow, some very rapidly; we
believe Mr Son to be an excellent
allocator of capital and the
discount that the shares trade
at to the value of the underlying
holdings remains significant.
Valuation at 31 August 2025 £77,931,000
% of total investments 8.8%
Valuation at
31 August 2024
£55,926,000
% of total investments 6.3%
Net purchases/(sales) in
yearto 31 August 2025
(£9,410,000)
Valuation at 31 August 2025 £53,993,000
% of total investments 6.1%
Valuation at
31 August 2024
£34,395,000
% of total investments 3.9%
Net purchases/(sales) in
yearto 31 August 2025
(£3,673,000)
SBI Holdings
Leading internet-focused financial
services company in Japan
offering online brokerage, internet
banking, online life insurance
and venture capital. As the
company once put it: ‘utilising
opportunities provided by the
powerful price-destruction forces
of the internet and developing
financial services that further
enhance benefits to customers.’
The founder, Yoshitaka Kitao, has
succeeded in building a company
with a very good reputation
among its customers and
been alert to the opportunities
presented by new technologies.
The Baillie Gifford Japan Trust PLC
13
Valuation at 31 August 2025 £40,477,000
% of total investments 4.5%
Valuation at
31 August 2024
£49,690,000
% of total investments 5.6%
Net purchases/(sales) in
yearto 31 August 2025
(£2,090,000)
Rakuten
Internet conglomerate with
strength in e-commerce and
online financial services and an
innovative points system that
links them together. Successes
include building Japan’s
largest credit card business
and large online banking and
brokerage operations. Recently
the company has built a new
mobile phone network in Japan
and is growing the customer
base. The dynamic founder,
Hiroshi Mikitani, owns around
a third of the shares, providing
close alignment of interests.
Valuation at 31 August 2025 £37,990,000
% of total investments 4.3%
Valuation at
31 August 2024
£38,903,000
% of total investments 4.4%
Net purchases/(sales) in
yearto 31 August 2025
(£3,677,000)
Sumitomo Mitsui Trust Group
Sole remaining independent
trust bank in Japan following
consolidation of the sector.
It has a significant asset
management business and
fees form a major part of the
business, which differentiates
it from the megabanks. It
could be a major beneficiary of
reflation as domestic investors
shift from vast cash savings
into risk assets. We believe that
management show a healthy
balance between ambition and
conservatism, which is especially
important in managing a bank.
Valuation at 31 August 2025 £38,162,000
% of total investments 4.3%
Valuation at
31 August 2024
£22,648,000
% of total investments 2.6%
Net purchases/(sales) in
yearto 31 August 2025
(£350,000)
CyberAgent
CyberAgent is an internet
company focused on advertising,
gaming and providing streaming
video content. The online
streaming video service,
AbeemaTV, has attracted
significant viewer numbers and
we think has considerable future
value. We believe that the different
businesses mutually support each
other allowing for the development
and curation of new content.
The Founder-President, Susumu
Fujita, has resolutely pursued
domestic growth opportunities
and we continue to see strong
growth prospects ahead.
Strategic Report
Annual Report and Financial Statements 2025
14
Valuation at 31 August 2025 £32,076,000
% of total investments 3.6%
Valuation at
31 August 2024
£26,447,000
% of total investments 3.0%
Net purchases/(sales) in
yearto 31 August 2025
(£603,000)
Sony
Major owner of game, music and
film content with some hardware
businesses. The PlayStation is
the leading console platform
for networked games and a
front-runner in virtual reality
(VR). Sony is the world’s largest
music publisher and a major
film producer and benefits
from growing content demand.
It is investing in its areas of
strength, notably content and
its dominant position in image
sensors. We believe CEO
Kenichiro Yoshida continues to
provide effective leadership.
Valuation at 31 August 2025 £37,044,000
% of total investments 4.2%
Valuation at
31 August 2024
£24,468,000
% of total investments 2.8%
Net purchases/(sales) in
yearto 31 August 2025
(£23,000)
GMO Internet
Domestic internet conglomerate
and leading provider of internet
infrastructure. It is the number
one provider of domain name
registrations and hosting services
and has a strong position in
hosting e-commerce websites
and processing transactions
as well as providing a variety
of internet-related services.
Founder Masatoshi Kumagai
owns over 40% of the shares,
providing alignment between
management and shareholders.
Finally, the company trades
at a significant discount to
the value of its holdings.
Valuation at 31 August 2025 £29,129,000
% of total investments 3.3%
Valuation at
31 August 2024
£12,614,000
% of total investments 1.4%
Net purchases/(sales) in year
to 31 August 2025
£3,691,000
GA Technologies
GA Technologies is an online
real estate technology company,
transforming Japan’s $2 trillion
real-estate market with digital
tools for property management.
Specialising in online B2B
services, the company offers
solutions such as RENOSY,
which uses AI software to buy
and sell second-hand investment
properties, and ITANDI, a SaaS
product automating property
management. GA Technologies
is targeting Japan’s fragmented
and inefficient real estate
market, where traditional agents
dominate and generate significant
commission revenues, providing
ample growth opportunities.
The company’s proprietary AI
technology, coupled with a team
of software engineers, positions
it as a leader in Japan’s digital
transformation of real estate.
The Baillie Gifford Japan Trust PLC
15
Valuation at 31 August 2025 £22,018,000
% of total investments 2.5%
Valuation at
31 August 2024
£23,915,000
% of total investments 2.7%
Net purchases/(sales) in
yearto 31 August 2025
(£628,000)
FANUC
FANUC manufactures factory
automation systems and
robots, with strength in CNCs
(computerised numerical controls)
which are specialist computers
attached to machine tools to
synchronise the actions. We
expect the global automation
market to continue to grow as
companies focus on efficiency
and productivity to improve their
competitiveness. We believe that
FANUC’s high market share and
reputation in automation and
robotics will allow it to continue
generating attractive returns on
capital and grow profitably.
Valuation at 31 August 2025 £21,095,000
% of total investments 2.4%
Valuation at
31 August 2024
£16,778,000
% of total investments 1.9%
Net purchases/(sales) in
yearto 31 August 2025
(£2,980,000)
Nintendo
Nintendo is a global leader in
gaming and one of Japan’s most
iconic brands, underpinned by a
portfolio of enduring characters
such as Mario and Zelda.
TheSwitch console exemplifies its
ingenuity in hardware, widening
the user base and deepening
engagement. The upside case
rests on the combination of
valuable first-party content
(Mario, Pokémon, Zelda) and
a reputation for innovative
hardware, which together have
created strong goodwill and a
notably loyal user community.
©Matthieu Tuffet – stock.adobe.com
Strategic Report
Annual Report and Financial Statements 2025
16
Main Portfolio Themes
Distribution of Total Assets
and Main Portfolio Themes
Agile ecosystems and rising pricing power
SBI Holdings, Sumitomo Mitsui Trust Group
Powering Japan’s productivity revolution
Softbank Group, Rakuten, CyberAgent, Money Forward
The monetisation of evergreen franchises
Nintendo, Sony, Sega Sammy
Reflationary
opportunities
Digitalisation
and AI
Gaming
Sectoral 2025
1
2
3
4
6
5
7
8
9
11
10
Sectoral 2025
%
2024
%
1 Information, communication and utilities 22.6 16.8
2 Commerce and services 17.0 18.0
3 Manufacturing and machinery 14.4 14.5
4 Chemicals and other materials 11.3 10.1
5 Financials 11.3 9.2
6 Electricals and electronics 11.1 14.5
7 Pharmaceuticals and foods 5.4 6.7
8 Retail 5.2 5.7
9 Real estate and construction 1.0 2.9
10 Consumer staples 0.7 0.9
11 Communication services – 0.7
The Baillie Gifford Japan Trust PLC
17
Portfolio Positioning
As at 31August 2025
Holding period Secular Growth 55.4%* Growth Stalwarts 16.4%* Holding period Special Situations 15.1%* Cyclical Growth 13.1%*
>10 Years
61.2%
SBI Holdings 6.1 Nintendo 2.4 >10 Years SoftBank Group 8.8 Sumitomo Mitsui Trust Group 4.3
Rakuten 4.5 Unicharm 1.4 Sony 3.6 Sumitomo Metal Mining 1.5
CyberAgent 4.3
PARK24
1.0 Nifco 1.4
GMO Internet 4.2
Olympus
0.9
Murata
1.2
FANUC 2.5
Kose
0.7
Rohm
0.6
Misumi 1.7
Pigeon
0.5
Recruit 1.7
Kubota 1.5
M3 1.3
SMC 1.3
Broadleaf 0.9
Lifenet Insurance 0.9
Nidec 0.9
Sysmex 0.7
Infomart 0.4
5-10 years
18.9%
Sato 2.0
Calbee 2.3 5-10 years
MIXI 1.7 Bridgestone 1.7
Keyence 1.8 Pola Orbis 1.4 COLOPL 1.0 DMG Mori 1.0
Raksul 1.1
Sugi
1.2
Shimano 0.7
Bengo4.com 0.5
Noritsu Koki 0.5
istyle 0.4
Rizap 0.4
Demae-Can 0.3
MonotaRO 0.3
Nippon Ceramic 0.3
PeptiDream 0.3
<5 years
19.9%
GA Technologies 3.3 Kansai Paint
1.1 <5 years Chugoku Marine Paints 0.7
Oisix 2.4
Nippon Paint 1.0 Sega Sammy 0.4
Eisai 1.6
Shiseido 1.0 Shima Seiki 0.3
Seria 1.3
Kao 0.8
TKP 1.1
Square Enix 0.4
Daikin Industries 1.0
Sawai Pharmaceutical 0.3
Money Forward 0.7
Vector 0.6
freee K.K. 0.5
Nakanishi 0.5
Nihon M&A Center 0.5
BASE 0.4
Time
Growth is less rapid but more predictable.
Growth Stalwarts
Earnings
Secular Growth
Earnings
Time
Opportunity to grow rapidly but where there are a
number of potential outcomes.
* % of total investments.
Strategic Report
Annual Report and Financial Statements 2025
18
* % of total investments.
Special Situations
Earnings
Time
Performance has not been good but there is a
reason to believe improvements are underway.
Cyclical Growth
Earnings
Time
Earnings do not rise every year but are expected to
be higher from one cycle to the next.
Holding period Secular Growth XX%* Growth Stalwarts XX%* Holding period Special Situations 15.1%* Cyclical Growth 13.1%*
>10 Years
41.5%
Rakuten XX Park24 XX >10 Years SoftBank Group 8.8 Sumitomo Mitsui Trust Group 4.3
SBI Holdings XX Sawai Pharmaceutical XX Sony 3.6 Sumitomo Metal Mining 1.5
GMO Internet XX Nifco 1.4
CyberAgent XX
Murata
1.2
Kubota XX
Rohm
0.6
Misumi XX
Sysmex XX
Broadleaf XX
SMC XX
Digital Garage XX
5-10 years
23.4%
FANUC XX
5-10 years
MIXI 1.7 Bridgestone 1.7
Recruit XX COLOPL 1.0 DMG Mori 1.0
Keyence XX
Sato XX
MonotaRO XX
Mercari XX
PeptiDream XX
Noritsu Koki XX
Rizap XX
Istyle XX
Infomart XX
Nippon Ceramic XX
<5 years
35.1%
Oisix XX Calbee XX
<5 years Chugoku Marine Paints 0.7
Eisai XX Nintendo XX
Sega Sammy 0.4
GA Technologies XX Unicharm XX
Shima Seiki 0.3
Seria XX Pola Orbis XX
TKP XX Shiseido XX
M3 XX Olympus XX
Vector XX Kansai Paint XX
Nakanishi XX Pigeon XX
Demae-can XX
Bengo4.com XX
Nihon M&A Center XX
BASE XX
The Baillie Gifford Japan Trust PLC
19
List of Investments
As at 31August 2025
Name Business
2025
Value
£’000
2025
% of total
investments
Absolute*
performance
%
SoftBank Group Technology investment and telecommunications
conglomerate
77,931 8.8 86.8
SBI Holdings Online financial services holding company 53,993 6.1 96.5
Rakuten E-commerce marketplace and fintech operator 40,477 4.5 (14.4)
CyberAgent Digital advertising and mobile gaming company 38,162 4.3 73.7
Sumitomo Mitsui Trust Group Trust bank and asset management services 37,990 4.3 17.3
GMO Internet Internet infrastructure and domain services provider 37,044 4.2 54.0
Sony Electronics, gaming and entertainment conglomerate 32,076 3.6 39.5
GA Technologies AI real estate investment platform 29,129 3.3 77.6
FANUC Industrial automation and robotics manufacturer 22,018 2.5 (4.1)
Nintendo Video game console and software developer 21,095 2.4 64.2
Oisix Organic food delivery subscription service 20,996 2.4 21.6
Calbee Snack food and cereal manufacturer 20,206 2.3 (18.8)
Sato Barcode printer and labelling solutions 17,728 2.0 9.2
Keyence Industrial automation sensors and equipment 16,258 1.8 (21.0)
Recruit Human resources and job placement services 15,440 1.7 (8.2)
MIXI Social networking and mobile gaming platform 15,113 1.7 18.5
Bridgestone Tyre and rubber products manufacturer 14,985 1.7 18.0
Misumi Online mechanical components supplier 14,824 1.7 (19.7)
Eisai Pharmaceutical drug developer and manufacturer 14,460 1.6 (26.2)
Kubota Agricultural machinery and tractor manufacturer 13,339 1.5 (15.9)
Sumitomo Metal Mining Non-ferrous metals mining company 13,167 1.5 (2.4)
Unicharm Personal care and hygiene products 12,731 1.4 (43.2)
Pola Orbis Direct-sales cosmetics manufacturer 12,408 1.4 (12.2)
Nifco Automotive plastic components manufacturer 12,155 1.4 12.3
Seria Retail chain 11,770 1.3 (13.6)
M3 Healthcare platform and medical services provider 11,436 1.3 51.4
SMC Pneumatic equipment and automation manufacturer 11,425 1.3 (33.9)
Murata Electronic components manufacturer 11,344 1.2 (21.2)
Sugi Drugstore chain operator 10,775 1.2 43.2
Kansai Paint Automotive and industrial paint manufacturer 10,626 1.1 (6.2)
TKP Meeting room rental operator 10,563 1.1 12.1
Raksul Online printing services platform 9,716 1.1 7.4
DMG Mori CNC machine tools manufacturer 9,192 1.0 (10.8)
Daikin Industries Air conditioning systems manufacturer 8,842 1.0 (1.9)
PARK24 Parking lot and car-sharing operator 8,728 1.0 12.6
Shiseido Global cosmetics and beauty products 8,572 1.0 (28.1)
COLOPL Mobile game developer 8,496 1.0 (10.7)
Nippon Paint Paint and coatings manufacturer 8,468 1.0 13.8
Nidec Electric motor manufacturer 8,396 0.9 5.5
Broadleaf Vertical SaaS and e-ordering platforms for the automotive
aftermarket and other industries
8,038 0.9 (0.6)
Strategic Report
Annual Report and Financial Statements 2025
20
Name Business
2025
Value
£’000
2025
% of total
investments
Absolute*
performance
%
Lifenet Insurance Online life insurance provider 7,875 0.9 23.4
Olympus Endoscopy-led medical device company 7,699 0.9 (37.0)
Kao Personal care and cleaning products 7,232 0.8 1.0
Shimano
#
Bicycle and fishing equipment manufacturer 6,386 0.7 (25.8)
†
Money Forward
#
Financial technology and accounting software 6,234 0.7 29.0
†
Chugoku Marine Paints Marine coatings and paint manufacturer 6,182 0.7 76.3
Kose Cosmetics and skincare manufacturer 5,947 0.7 (36.7)
Sysmex Medical diagnostics equipment manufacturer 5,939 0.7 (35.4)
Vector Japan’s largest PR company 5,256 0.6 19.9
Rohm Semiconductor and electronics manufacturer 5,146 0.6 18.7
freee K.K. Cloud accounting software provider 4,888 0.5 8.5
Noritsu Koki Diversified holding company with manufacturing and
healthcare businesses
4,516 0.5 19.1
Pigeon Baby care products manufacturer 4,456 0.5 15.0
Nakanishi Dental equipment manufacturer 4,279 0.5 (19.9)
Nihon M&A Center Merger and acquisition advisory services 4,213 0.5 11.6
Bengo4.com Legal services portal operator; provider of CloudSign
e-signature/contract management
4,079 0.5 (3.9)
istyle Beauty e-commerce platform 3,928 0.4 15.0
Sega Sammy
#
Video games and entertainment developer 3,896 0.4 1.9
†
Infomart B2B transaction platforms (ordering, e-invoicing,
contracts), strong in food-service
3,530 0.4 18.1
Rizap Personal fitness training company 3,373 0.4 (28.5)
BASE E-commerce platform provider 3,346 0.4 35.7
Square Enix
#
Video game publisher and developer 3,347 0.4 42.2
†
Nippon Ceramic Advanced ceramics manufacturer 3,277 0.3 30.3
MonotaRO Industrial supplies e-commerce platform 3,198 0.3 7.9
Demae-can Food delivery platform 3,180 0.3 (38.9)
PeptiDream Biotechnology and drug discovery company 3,040 0.3 (43.5)
Sawai Pharmaceutical Generic pharmaceutical manufacturer 2,630 0.3 (10.5)
Shima Seiki Textile machinery manufacturer 2,584 0.3 (25.5)
Total investments 889,768 100.0
Net liquid assets 14,327
Total assets 904,095
Borrowings
(115,947)
Equity shareholders’ funds 788,148
*
Absolute performance has been calculated on a daily basis over the period 1 September 2024 to 31 August 2025 using the change in valuation,
adjusted for income, purchases, and sales during the period. For investments held for part of the year, the return is for the period they were held.
Absolute performance is in sterling terms.
†
Figures relate to part period returns.
#
New purchase during the year. Complete sales in the year were Digital Garage, LY Corp, Mercari, SWCC Showa, Tokyo Tatemono and Topcon.
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93.
Past performance is not a guide to future performance.
The Baillie Gifford Japan Trust PLC
21
The Board believes that it is in the shareholders’
interests to consider environmental, social and
governance (‘ESG’) factors when selecting and
retaining investments and has asked the Managers
to take these issues into account. The Managers
do not exclude companies from their investment
universe purely on the grounds of ESG factors but
adopt a positive engagement approach whereby
matters are discussed with management with the aim
of improving the relevant policies and management
systems and enabling the Managers toconsider
how ESG factors could impact long-term investment
returns. The Managers’ Statement of Compliance
with the UK Stewardship Code can be found on the
Managers’ website: bailliegifford.com. The Managers’
policy has been reviewed and endorsed by the
Board. The Managers are signatories to the United
Nations Principles for ResponsibleInvestment and
have considered the Sustainable Finance Disclosures
Regulations (‘SFDR’). Further details can be found on
page 97.
As long-term investors, the Managers believe
due consideration of a company’s material
environmental, social and governance
characteristics will enable them to understand its
long-term resilience and growth potential better.
As such, ESG factors are not just complementary
to achieving attractive long-term returns, but they
enable it when done sensibly and thoughtfully. At the
most fundamental and integratedlevel, the Japan
team’s investment research framework includes an
explicitlyESG-themed question:
‘Taking in turn environmental, social and governance
factors, which do you believe are important and
relevant to the investment case?’
Environmental, Social and
Governance Engagement
This enables the investment analyst to assess
relevant ESG factors alongside growth opportunity,
competitive advantage and financial characteristics
for every company the Managers analyse.
Importantly, the Managers’ focus on materiality
means the precise ESG considerations will vary
depending on several variables, including core
business model, size andsector.
The Japan team also has a designated ESG analyst
who provides additional expertise and support on
ESG matters, contributes to stock discussions and
assists the investors in further integrating ESG
considerations into their investment research and
analysis process. Where a particular ESG issue
warrants additional work, the team may also avail
itself of the support of the Manager’s central
ESG function on voting, ESG data and emerging
ESG-related regulations. The Managers also have
independent researchers based in Tokyo who can
conduct ESG research where an on the ground
perspective is helpful. This process ensures that
despite ESG’s vast complexity, for any individual
company, the Managers have the scope and flexibility
to go into the appropriate degree of detail to support
the delivery of long-term returns for shareholders.
By engaging with companies, the Managers 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 Managers engaged with
47.7% of the companies in the portfolio on at
least one of environmental, social or governance
factors during the 12 months to 31August 2025.
The examples on pages 22 and 23 demonstrate our
stewardship approach through constructive, ongoing
engagement.
†
The benchmark is the TOPIX total return (in sterling terms).
Strategic Report
Annual Report and Financial Statements 2025
22
Engagement Themes
0
10
20
30
40
50
60
70
EnvironmentalSocialGovernance
%
Portfolio Company Engagement Examples:
Environmental
Sumitomo Metal Mining
Sumitomo Metal Mining (‘SMM’) engages in mining,
smelting, and refining non-ferrous metals in Japan and
internationally.
Objective: The meeting focused on exploring
decarbonisation strategies, regulatory risks, and
challenges within SMM’s operations.
Discussion: Decarbonisation efforts are currently
constrained by technological and market limitations.
The company’s near-term strategy centres on
transitioning to liquefied natural gas (‘LNG’) and
renewable energy for smelting, with long-term
ambitions focused on green hydrogen and ammonia.
Regulatory risks are presently limited, as Japanese
policies are not aggressively targeting the sector.
European regulation was noted as a potential but
uncertain future challenge. SMM has implemented
internal carbon pricing, influencing some investment
decisions towards lower carbon options.
The company also highlighted the lack of incentives
and opportunities to accelerate the shift to more
sustainable practices. Low demand for greener
alternatives remains a barrier to driving change in
both technology and operations.
Outcome: SMM is taking a cautious, incremental
approach to decarbonisation as it builds capacity and
understanding. The engagement helped clarify the
structural challenges slowing progress and provided
insight into how the company is positioning itself to
navigate evolving regulatory and market dynamics.
The charts below set out engagement topics and the key engagement themes of meetings held with the
Company’s portfolio holdings.
Engagement Topics
● Environmental ● Social ● Governance
Climate
Number of engagements
Customer
experience
Inequality
Supply chain
Human rights
Proxy voting
Board effectiveness
and leadership
Remuneration
Board Diversity
Business conduct
Board Independence
Shareholder rights
Governance of
strategy
Risk management
Environmental
impacts
0
5
10
15
20
30
25
The Baillie Gifford Japan Trust PLC
23
Portfolio Company Engagement Examples:
Social
CyberAgent
CyberAgent together with its subsidiaries engages
in internet advertising, video streaming and gaming.
WinTicket is an online betting service for sports events,
such as bicycle (keirin) and auto (motorcycle) racing.
Objective: The meeting aimed to understand
CyberAgent’s approach to problem gambling,
particularly in their expanding keirin betting business.
Problem gambling, also known as gambling addiction
or compulsive gambling, is characterised by
continued gambling despite the negative impact it
may have on an individual’s life.
Discussion: CyberAgent sees potential in integrating
gambling with its AbemaTV platform as part
of a broader media ecosystem. This business
currently represents less than 10% of overall group
revenues. However, the company currently lacks a
comprehensive strategy for addressing potential
problem gambling, particularly given that many
WinTicket users are first-time gamblers.
Initial consideration is being given to using artificial
intelligence analysis to identify incidents of problem
gambling, although this initiative is still in its infancy.
Current efforts are primarily focused on disclosing
information concerning addiction risks. This stands in
contrast with their mobile gaming operations, where
stronger protections are in place due to a younger
audience demographic.
Outcome: CyberAgent’s approach to problem
gambling is currently limited, and engagement on this
issue will remain a priority going forward.
Portfolio Company Engagement Examples:
Governance
Eisai
Eisai is a pharmaceutical research, development and
manufacturing company. Eisai’s drug, Leqembi, was the
first fully FDA-approved, disease-modifying drug for
treating Alzheimer’s disease.
Objective: We met with seven independent directors
of Eisai’s board to understand their oversight of
management, discuss board composition and
capital allocation priorities, and explore governance
considerations related to the Leqembi drug rollout
and the company’s long-term strategy.
Discussion: We started by discussing the board’s
main areas of focus. Directors highlighted the US
rollout of the Alzheimer’s drug, Leqembi, as a key
priority, noting some challenges. They also shared
their thinking on the company’s long-term strategy,
including enhancing digital technology capabilities
and developing its approach to data use and privacy.
Board composition was also discussed, particularly
how it might evolve to support long-term strategic
priorities. We explored the skill sets the board may
look to add, with data science and greater medical or
scientific expertise identified as priority areas.
On capital allocation, the board plans to remain open
to buybacks but is currently prioritising pipeline
expansion to drive sustainable growth.
Succession planning for CEO Haruo Naito was also
addressed, underscoring the board’s commitment
to a rigorous and orderly leadership transition. The
selection process is in its early stages, and we offered
to act as a sounding board if needed.
Outcome: The engagement reinforced the board’s
focus on aligning future skill needs with long-term
strategic priorities and highlighted the importance
of a structured approach to leadership transition.
Directors showed openness to incorporating these
perspectives into ongoing board development and
succession planning discussions.
Strategic Report
Annual Report and Financial Statements 2025
24
Proxy Voting
The Board has given discretionary voting powers to
Baillie Gifford. The Manager believes that ‘active
ownership’ of its clients’ holdings is as important as
selecting the right investments in the first instance.
The Managers vote against resolutions they consider
may damage shareholders’ rights or economic
interests and report their actions to the Board.
These guidelines are aligned with BaillieGifford’s
stewardship principles and describe their approach
to proxy voting and company engagement, the key
levers of active ownership, often described as
‘stewardship’.
While these guidelines are intended to provide an
insight into how Baillie Gifford approaches voting
on its clients’ behalf, it is important to note that
every company is individually assessed. In voting,
proposals will always be evaluated on a case-by-case
basis, based on what Baillie Gifford believes to be in
the best long-term interests of its clients, rather than
rigidly applying a policy.
A broad cross section of Baillie Gifford’s investment
staff is involved in its ongoing work on stewardship.
In the same way that the investment approach is
based around empowered and independent teams,
voting and engagement is led by the individual
investment teams. In keeping with a decentralised
and autonomous culture, investment teams will,
on occasion, elect to vote differently on the same
general meeting resolutions. Where this happens, it
is reported accordingly in the proxy voting disclosure
on the website. Baillie Gifford also has clear
processes in place to identify, prevent and manage
potential proxy voting related conflicts of interest to
ensure that in all cases the firm acts in the clients’
best interest. Baillie Gifford’s firm-wide conflict of
interest disclosure is available on its website.
Prior to taking any voting action, specific ESG
concerns are usually addressed by engaging directly
with the company, using voting as an escalation
mechanism if sufficient progress has not been seen.
Voting activity and the reasons for any resolutions
voted against in the period is disclosed on the
Company’s page of the Managers’ website and can
be viewed at japantrustplc.co.uk.
Company Meeting Record
Number of meetings voted
with management
61
Number of meetings with at least
one against, withhold or abstain
9
Number of votes for 9 7.1 %
Number of votes against 2.8%
Number of votes abstain 0.1%
Voting Distribution
The Baillie Gifford Japan Trust PLC
25
Business Model
Business and Status
The Company is an investment company within the
meaning of section 833 of the Companies Act 2006
and carries on business as an investment trust.
Investment trusts are UK public listed companies
and their shares are traded on the London Stock
Exchange. They invest in a portfolio of assets in
order to spread risk. The Company has a fixed share
capital, although, subject to shareholder approval
sought annually, it may purchase its own shares
orissue shares. The price of the Company’s shares
is determined, like other listed shares, by supply
anddemand.
The Company has been approved as an investment
trust by HM Revenue & Customs subject to the
Company continuing to meet the eligibility conditions.
The Directors are of the opinion that the Company
has continued to conduct its affairs so as to enable
itto comply with the ongoing requirements of
section 1158 of the Corporation Tax Act 2010 and
the Investment Trust (Approved Company) (Tax)
Regulations 2011.
The Company is an Alternative Investment Fund
(‘AIF’) for the purposes of the UK Alternative
Investment Fund Managers Regulations.
Objective and Policy
The Baillie Gifford Japan Trust aims to achieve
long-term capital growth principally through
investment in medium to smaller sized Japanese
companies, which are believed to have above
average prospects for growth, although it invests in
larger companies when considered appropriate.
The Company’s holdings are generally listed in Japan
although the portfolio can also include companies
listed elsewhere whose business is predominantly
in Japan as well as unlisted companies. From
time to time, fixed interest holdings, or non equity
investments, may be held.
The portfolio is constructed through the identification
of individual companies which offer long-term growth
potential, typically over a three to five year horizon.
The portfolio is actively managed and does not seek
to track the benchmark; hence a degree of volatility
against the index is inevitable.
In constructing the equity portfolio, a spread of risk
is achieved by diversifying the portfolio through
investment in 40 to 70 holdings. Although sector
concentration and the thematic characteristics
ofthe portfolio are carefully monitored, there are
nomaximum limits to deviation from benchmark,
stock or sector weights, except as imposed by
banking covenants on borrowings.
On acquisition, no holding shall exceed 5% of the
portfolio at the time of purchase and any holding
that as a result of good performance exceeds 5%
of the portfolio is subject to particular scrutiny.
Aholding greater than 5% will be retained only if
the Managers continue to be convinced of the merits
of the investment case.
On acquisition, no more than 15% of the Company’s
total assets will be invested in other UK listed
investment companies.
The Company may use derivatives which will be
principally, but not exclusively, for the purpose of
efficient portfolio management (i.e. for the purpose
of reducing, transferring or eliminating investment
risk in its investments, including protection against
currency risks).
The Company recognises the long-term advantages
of gearing and has a maximum equity gearing level
of 30% of shareholders’ funds.
Borrowings are invested in securities when it is
considered that investment grounds merit the
Company taking a geared position. Gearing levels,
and the extent of equity gearing, are discussed by
the Board and Managers at every Board meeting.
A detailed analysis of the Company’s Investment
Portfolio is set out on pages 16 to 20 and in the
Managers’ Review and Review of Investments
onpages 08 to 15.
Business Review
Strategic Report
Annual Report and Financial Statements 2025
26
The Board uses key performance indicators (KPIs) to measure the progress and performance of the Company over
time when discharging its duties as set out on pages 55 and 56. These KPIs are established industry measures.
Share price, net asset value and
benchmarktotal returns
*
The total return is the return to shareholders after
reinvesting the net dividend on the date that the
share price goes ex-dividend.
0
20
40
60
80
100
120
140
160
%
● Net asset
value total
return*
● Share
price total
return*
● Benchmark
total return*
†
1 year 5 years 10 years
Share price (discount)/premium
*
As stock markets and share prices vary, an
investment trust’s share price is rarely the same as
its net asset value (NAV). When the share price is
lower than the NAV per ordinary share it is said to
betrading at a discount. If the share price is higher
than the NAV per ordinary share, this situation is
called apremium.
-14
-12
-10
-8
-6
-4
-2
0
● Average (discount)/premium* of NAV to share price over stated
period to 31 August 2025
1 year 5 years 10 years
%
Ongoing charges
*
Ongoing charges are the total recurring expenses
(excluding the Company’s cost of dealing in
investments and borrowing costs) incurred by the
Company as a percentage of the daily average
netasset value.
0.0
0.2
0.8
1.0
0.4
0.6
● Ongoing charges*
2015 2024
%
20232022202120202019201820172016 2025
Key Performance Indicators
In addition to the total return of theCompany’s principal comparative index (TOPIXTotal Return
(in sterling terms)) the Board considers the performance of comparable companies. Across
these measures, the Board looks for relative outperformance over the long-term, while remaining
mindful that the nature of the investment policy and the growth characteristics of the portfolio
investments may entail periods of underperformance over the short and medium-term.
* Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84.
†
The benchmark is the TOPIX total return (in sterling terms).
Past performance is not a guide to future performance.
The Baillie Gifford Japan Trust PLC
27
Borrowings
Borrowings at 31 August 2025 and 2024 are set out
below and further details can be found in note 11 and
12 on page 75.
As noted in the Chairman’s statement on page 06, the
Company secured a ¥15 billion revolving credit facility
with The Bank of New York Mellon. The proceeds
were used to repay the ¥15 billion term loan with the
same bank which expired in August 2025. Proceeds
from private placement notes arranged in 2024
repaid the ING and Mizuho loans that matured in late
2024 and early 2025 respectively.
Facility Lender
Maturity
date 2025 2024
¥15,000
million
Revolving
Credit
Facility
Bank of
New York
Mellon
August
2026
£55.453
million
–
¥15,000
million
Term Loan
Bank of
New York
Mellon
August
2025
– £78.386
million
¥9,300
million
ING Bank
N .V.
November
2024
– £48.599
million
¥2,600
million
Mizuho
Bank Ltd
March
2025
– £13.587
million
Unsecured
loan notes Fixed rate
Maturity
date 2025 2024
¥4,000
million
1.56% November
2029
£20.165
million
–
¥4,000
million
2.05% November
2034
£20.165
million
–
¥4,000
million
2.55% November
2038
£20.164
million
–
The main loan covenants are: total borrowings shall
not exceed 30% of the Company’s net asset value;
and, the Company’s minimum net asset value shall
be ¥48,545,000,000 (£315,000,000). There were
no breaches of loan covenants during the year.
Currency Hedging
It is extremely difficult to predict currency
movements and currencies can appear cheap or
expensive for long periods of time. The Board
remains of the view that it will not engage in
currency hedging.
Viability Statement
Notwithstanding that the continuation vote of the
Company is subject to the approval of shareholders
annually, the Directors have, in accordance with
provision 31 of the UK Corporate Governance Code,
assessed the prospects of the Company over a
period of five years from the Balance Sheet date.
The Directors continue to believe this period to be
appropriate as it reflects the Company’s longer term
investment strategy and to be a period during which,
in the absence of any adverse change to the
regulatory environment and to the tax treatment
afforded to UK investment trusts, they do not expect
there to be any significant change to the current
principal and emerging risks facing the Company nor
to the effectiveness of the controls employed to
mitigate those risks. Furthermore, the Directors do
not reasonably envisage any change in strategy or
any events which would prevent the Company from
operating over a period of five years. The Directors
have no reason to believe that the continuation
resolution will not be passed at the Annual
GeneralMeeting.
In considering the viability of the Company, the
Directors have conducted a robust assessment
of each of the principal and emerging risks and
uncertainties detailed on pages 28 to 31, and
in particular the impact of market risk where a
significant fall in Japanese equity markets would
adversely impact the value of the investment
portfolio. Specific leverage and liquidity stress testing
was conducted during the year, including the impact
of heightened market volatility and macroeconomic
and geopolitical concerns, including inflation and
interest rates. The Company’s investments are
listed and readily realisable and can be sold to meet
its liabilities as they fall due with the main liability
currently being the bank borrowings. The Company’s
primary third party suppliers including its Managers
and Secretaries, Depositary and Custodian, Registrar,
Auditor and Broker are not experiencing significant
operational difficulties affecting their respective
services to the Company. In addition, all of the key
operations required by the Company are outsourced
to third party service providers and it is reasonably
considered that alternative providers could be
engaged at relatively short notice.
The Board has considered the Company’s leverage
and liquidity in the context of its borrowings. The
leverage stress testing identified the impact of
leverage in scenarios where gross assets fall by
25% and 50%, reflecting a range of market
conditions that may adversely impact the portfolio.
The liquidity stress testing identified the reduction
in value of assets that can be liquidated within one
month that would result in the value of those assets
falling below the value of the borrowings. The stress
testing did not indicate any matters of concern.
Strategic Report
Annual Report and Financial Statements 2025
28
financial controls, the Directors have concluded that
there is a reasonable expectation that the Company
will be able to continue in operation and meet its
liabilities as they fall due over the next five years.
Based on the Company’s processes for monitoring
revenue projections, share price premium/discount,
the Managers’ compliance with the investment
objective, asset allocation, the portfolio risk profile,
leverage, counterparty exposure, liquidity risk and
Principal and Emerging Risks
As explained on pages 46 and 47 there is an ongoing process for identifying, evaluating and managing the
risks, including emerging risks, faced by the Company on a regular basis. The Directors have carried out
a robust assessment of the principal and emerging risks facing the Company including those that would
threaten its business model, future performance, solvency or liquidity. There have been no material changes
to the principal risks during the year. Baillie Gifford’s Business Risk Department provides regular updates
covering the Company’s principal and emerging risks. A description of these risks and how they are being
managed or mitigated is set out below.
The Board considers the current global economic environment to be a factor which exacerbates existing risks,
rather than it being a new emerging risk. The impact of this is considered within the relevant risks.
Investment and Strategic Risks
Financial risk
What is the risk?
The Company’s assets consist of listed
securities and its principal financial risks
are therefore market related and include
market risk (comprising currency risk,
interest rate risk and other price risk),
liquidity risk and credit risk. An explanation
of those risks and how they are managed
is contained in note 19 to the Financial
Statements and on pages 78 to81.
How is it managed?
The Board has, in particular, considered
the impact of heightened market volatility
due to macroeconomic factors such as
inflation, interest rates and geopolitical
concerns. To mitigate this risk the Board
considers various portfolio metrics
including individual stock performance,
the composition and diversification of the
portfolio by growth category, purchases and
sales of investments, the holding period of
each investment, liquidity characteristics
and the top and bottom contributors to
performance. TheManager provides
rationale for stock selection decisions. A
strategy meeting isheldannually.
The value of the Company’s investment
portfolio would be affected by any impact,
positively or negatively, on sterling but
such impact would be partially offset by
the effect of exchange movements on the
Company’s yen denominated borrowings.
Rating and
change
Current assessment of risk
The prospect of market volatility
remains, given continuing
geopolitical instability.
Discount risk
What is the risk?
The premium/discount at which the
Company’s shares trade relative to its
net asset value can change. The risk of a
widening discount is that it may undermine
investor confidence in the Company.
How is it managed?
The Board monitors the level of premium/
discount at which the shares trade and
the Company has authority to issue new
shares or buy back its existing shares
when deemed by the Board to be in
the best interests of the Company and
itsshareholders.
Rating and
change
Current assessment of risk
The Company’s shares traded
at an average discount of
12.5% throughout the year
and it bought back 10,041,174
ordinary shares during the year.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
The Baillie Gifford Japan Trust PLC
29
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
Investment strategy and smaller company risk
What is the risk?
Pursuing an investment strategy to fulfil
theCompany’s objective which the market
perceives to be unattractive or inappropriate,
or the ineffective implementation of an
attractive or appropriate strategy, may lead
to reduced returns for shareholders and, as a
result, a decreased demand for the
Company’s shares. This may lead to the
Company’s shares trading at a widening
discount to their net asset value.
The Company has investments in smaller
companies which are generally considered
higher risk as changes in their share prices
may be greater and the shares may be
harder to sell. Smaller companies may
do less well in periods of unfavourable
economic conditions.
How is it managed?
To mitigate these risks, the Board regularly
reviews and monitors: the Company’s
objective and investment policy and
strategy; the investment portfolio,
discussing the investment case and
portfolio weightings with the Managers,
and its performance; the level of premium/
discount to net asset value at which
the shares trade; and movements in the
shareregister and raises any matters of
concern with the Managers. A spread of
risk is achieved by holding a minimum of
40 stocks.
Rating and
change
Current assessment of risk
During the year, the Company’s
NAV total return was ahead of
the benchmark. Furthermore,
there are signs that the market’s
appetite for growth stocks,
typically held by the Company,
is recovering.
Climate and governance risk
What is the risk?
Perceived problems on environmental,
social and governance (‘ESG’) matters in
an investee company could lead to that
company’s shares being less attractive to
investors, adversely affecting its share price,
in addition to potential valuation issues
arising from any direct impact of the failure to
address the ESG weakness on the operations
or management of the investee company
(for example in the event of an industrial
accident or spillage). Repeated failure by
the Managers to identify ESG weaknesses
in investee companies could lead to the
Company’s own shares being less attractive
to investors, adversely affecting its own share
price. In addition, the valuation of investments
could be impacted by climate change.
How is it managed?
This is mitigated by the application of
the Manager’s ESG stewardship and
engagement policies, which are integrated
into the investment process, as well as
the extensive upfront and ongoing due
diligence which the Manager undertakes
on each investee company. This includes
the risk inherent in climate change (see
page 34). The Directors have considered
the impact of climate change on the
Financial Statements of the Company and
this is included in note 1a tothe Financial
Statements on page 69.
Rating and
change
Current assessment of risk
The Manager continues to
employ strong ESGstewardship
and engagementpolicies.
Leverage risk
What is the risk?
The Company may borrow money
for investment purposes (sometimes
known as‘gearing’ or ‘leverage’). If the
investments fall in value, any borrowings
will magnify the extent of this loss. If
borrowing facilities are not renewed, the
Company may have to sell investments to
repay borrowings.
How is it managed?
To mitigate this risk, all borrowings require
the prior approval of the Board and leverage
levels are discussed by the Board and
Managers at every meeting. Covenant levels
are monitored regularly. The Company has
a maximum equity gearing level of 30%
of shareholders’ funds. The Company’s
investments are in listed securities that
are readily realisable. Further information
on leverage can be found on page 84 and
in the Glossary of Terms and Alternative
Performance Measures on pages 82 to 84.
Rating and
change
Current assessment of risk
No significant change in risk
level. Proceeds from private
placement notes repaid the ING
and Mizuho loans that matured
in late 2024/early 2025. The
Company also entered into a
revolving credit facility with
Bank of New York Mellon to
refinance its existing term loan
with the same bank. Average
gross gearing during the year to
31August 2025 was 20.1%.
Strategic Report
Annual Report and Financial Statements 2025
30
Operational Risks
Custody, Depositary and reliance on third party service provider risk
What is the risk?
Safe custody of the Company’s assets may
be compromised through control failures
by the Depositary, including cyber security
incidents.
Failure of Baillie Gifford’s systems or
those of other third party service providers
could lead to an inability to provide
accurate reporting and monitoring or a
misappropriation of assets.
How is it managed?
To mitigate this risk, the Audit Committee
receives six monthly reports from the
Depositary confirming safe custody of the
Company’s assets held by the Custodian.
Cash and portfolio holdings are independently
reconciled to the Custodian’s records by
the Managers and the existence of assets is
subject to annual external audit. Baillie Gifford
has a comprehensive business continuity plan
which facilitates continued operation of the
business in the event of a service disruption or
major disaster. The Audit Committee reviews
Baillie Gifford’s Report on Internal Controls
and the reports of the Depositary, Custodian
and other key third party service providers are
reviewed by Baillie Gifford on behalf of the
Board and any concerns investigated.
Rating and
change
Current assessment of risk
Control procedures are working
effectively with no interruption
to Depositary, Custodian,
Broker or Registrar services
during theyear.
Cyber security risk
What is the risk?
A cyber attack on Baillie Gifford’s network
or that of a third party service provider
could impact the confidentiality, integrity
or availability of data and systems.
Emerging technologies, including AI and
quantum computing capabilities, may
introduce new, and increase existing
information security risks that impact
operations.
How is it managed?
To mitigate this risk, the Audit Committee
reviews reports on Internal Controls
published by Baillie Gifford and other third
party service providers. Baillie Gifford’s
Business Risk Department reports to the
Audit Committee on the effectiveness of
information security controls in place at
Baillie Gifford and its business continuity
framework. Cyber security due diligence is
performed by Baillie Gifford on third party
service providers which includes a review
of crisis management and business
continuity frameworks.
Rating and
change
Current assessment of risk
Cyber attacks are on a steep rise
globally and could proliferate
further. Emerging technologies,
including AI, could potentially
increase information security
risks.
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
The Baillie Gifford Japan Trust PLC
31
External Risks
Decreasing RiskIncreasing Risk Stable Risk
Moderate RiskHigh Risk Low Risk
Regulatory risk
What is the risk?
Failure to comply with applicable legal and
regulatory requirements such as the tax
rules for investment trust companies, the
FCA Listing Rules and the Companies Act
could lead to suspension of the Company’s
Stock Exchange listing, financial penalties,
a qualified Audit Report and the Company
being subject to tax on capital gains.
Changes to the regulatory environment
could negatively impact the Company.
How is it managed?
To mitigate this risk, Baillie Gifford’s
Business Risk, Internal Audit and
Compliance Departments provide regular
reports to the Audit Committee on Baillie
Gifford’s monitoring programmes. Should
major regulatory change seem likely to
impose disproportionate compliance burdens
on the Company, representations are made
to the relevant authorities to ensure that the
special circumstances of investment trusts
are recognised. Shareholder documents and
announcements, including the Company’s
published Interim and Annual Report
and Financial Statements, are subject to
stringent review processes and procedures
are in place to ensure adherence to the
Transparency Directive and the Market
Abuse Directive with reference to inside
information.
Rating and
change
Current assessment of risk
All control procedures are
working effectively. There have
been no material regulatory
changes that have impacted the
Company during the year.
Political and associated economic risk
What is the risk?
Political change in areas in which the
Company invests or may invest may have
practical consequences for the Company.
How is it managed?
To mitigate this risk, developments are
closely monitored and considered by
the Board and are regularly discussed at
Board meetings.
Rating and
change
Current assessment of risk
The prospect of market volatility
remains, given continuing
geopolitical instability.
Emerging Risks
As explained on pages 46 and 47, the Board has regular discussions on principal and emerging risks, including any risks which are not
an immediate threat but could arise in the longer term. The Board considers emerging risks at each Board meeting and discusses any
mitigations required.
Strategic Report
Annual Report and Financial Statements 2025
32
Promoting the Success of the Company
(Section 172 Statement)
Under section 172 of the Companies Act 2006,
the directors of a company must act in the way
they consider, in good faith, would be most likely
to promote the success of the company for the
benefit of its members as a whole, and in doing
so have regard (amongst other matters and to the
extent applicable) to: a) the likely consequences
of any decision in the long-term; b) the interests
of the company’s employees; c) the need to
foster the company’s business relationships with
suppliers, customers and others; d) the impact of
the company’s operations on the community and
the environment; e) the desirability of the company
maintaining a reputation for high standards of
business conduct; and f) the need to act fairly as
between members of the company.
In this context, having regard to Baillie Gifford
JapanTrust being an externally managed investment
company with no employees, the Board considers
the Company’s key stakeholders to be: its existing
and potential new shareholders; its externally-
appointed Managers and Secretaries (Baillie Gifford);
its portfolio companies; other professional service
providers (Corporate Broker, Registrar, Auditorsand
Depositary); lenders; and wider society and
theenvironment.
The Board considers that the interests of the
Company’s key stakeholders are aligned, in terms
of wishing to see the Company deliver sustainable
long-term capital growth, in line with the Company’s
stated objective and strategy, and meet the highest
standards of legal, regulatory, and commercial
conduct, with the differences between stakeholders
being merely a matter of emphasis on those elements.
The Board recognises the importance of keeping
the interests of the Company and its stakeholders, in
aggregate, firmly front of mind in its decision making.
The Company Secretaries are available at all times
to the Board to ensure that suitable consideration is
given to the range of factors to which the Directors
should have regard. In addition to ensuring that the
Company’s stated investment objective was being
pursued, key decisions and actions during the year
which required the Directors to have regard to
applicable section 172 factors included:
• The proceeds from the private placement loan
notes were used to repay the ING and Mizuho
loans which matured in late 2024/early 2025.
During the year, the Company entered into a
Revolving Credit Facility with the Bank of New
York Mellon to refinance the Term loan which
matured in August 2025;
• the purchase of 10,041,174 of the Company’s own
shares into Treasury at a discount to net asset
value, for subsequent reissue, in order to ensure
the Company’s shareholders found liquidity for
their shares when natural market demand was
insufficient, and on terms that enhance net asset
value for remaining shareholders;
• between 1 September and 16 October 2025,
the purchase of 570,000 shares, at a discount,
enhancing net asset value for continuing
shareholders; and,
• the Board’s decision to declare a final dividend of
10p per ordinary share.
Stakeholder Why we engage How we engage and what we do
Shareholders Shareholders are, collectively, the Company’s
owners: providing them with a return for their
investment in accordance with the Company’s
investment policy and objective is the reason
for its existence.
The Board places great importance on communication with
shareholders. The Annual General Meeting provides the key
forum for the Board and Managers to present to shareholders
on the Company’s performance, future plans and prospects.
Italso allows shareholders the opportunity to meet with the
Board and Managers and raise questions and concerns.
TheChairman is available to meet with shareholders as
appropriate. The Managers meet regularly with shareholders
and their representatives, reporting their views back to the
Board. Directors also attend certain shareholder presentations,
in order to gauge shareholder sentiment first hand.
Shareholders may also communicate with members of the
Board at any time by writing to them at the Company’s
registered office or to the Company’s Broker. These
communication opportunities help inform the Board when
considering how best to promote the success of the Company
for the benefit of all shareholders over the long-term.
The Baillie Gifford Japan Trust PLC
33
Stakeholder Why we engage How we engage and what we do
Baillie Gifford –
Managers and
Secretaries
The Company’s Board has delegated the
management of the Company’s portfolio,
and the administration of the Company’s
operations including fulfilment of regulatory
and taxation reporting requirements,
toBaillieGifford.
The Board seeks to engage with its Managers, and other
service providers, in a collaborative and collegiate manner,
encouraging open and constructive discussion and debate,
while also ensuring that appropriate and regular challenge
is brought and evaluation conducted. This approach aims to
enhance service levels and strengthen relationships with the
Company’s providers, with a view to ensuring the interests of
the Company’s shareholders are best served by keeping cost
levels proportionate and competitive, and by maintaining the
highest standards of business conduct.
Portfolio companies As all of the Company’s operations are
conducted by third party professional
providers, it is the companies held in its
investment portfolio which have the primary
real-world impact in terms of social and
environmental change, both positively and
negatively, as well as generating, through their
commercial success, the investment growth
sought by the Company’s shareholders.
The Board is cognisant of the need to consider the impact of
the Company’s investment strategy and policy on wider society
and the environment. In addition to monitoring the performance
of the Company’s investment portfolio, the Board considers
that its oversight of environmental, social and governance
(‘ESG’) matters is an important part of its responsibility to all
stakeholders and that proper consideration of ESG factors sits
naturally with Baillie Gifford Japan Trust’s aim of providing a
sustainable basis for adding value for shareholders. The Board’s
review of the Managers includes an assessment of their ESG
approach and its application in making investment decisions.
Information on how the Managers engage with investee
companies can be found on pages 21 to 24.
Service providers
• Broker
• Depositary
• Custodian
• Registrar
The Company’s third party service providers
ensure the Company’s day-to-day operations
run smoothly.
The Board ensures that it promotes the success of the
Company by engaging third party service providers who have
the resources to deliver the service required. The service
providers report regularly to the Board throughout the year
and the Managers also engage regularly with the providers
and inform the Board should any areas of concern arise.
TheManagement Engagement Committee carries out a review
annually of the level of services delivered by each service
provider and the terms on which they are engaged. The Board
seeks assurance that there has been no disruption to services
provided to the Company during the year.
Auditor The Company’s Auditor has a responsibility to
provide an opinion on whether the Company’s
Financial Statements as a whole are free from
material misstatement, as set out in more
detail in the Auditor’s Report to the Members
on pages 58 to 64.
The Company’s Auditor meets with the Audit Chair and
the Board, in the absence of the Managers where deemed
necessary, and the Managers undertake to provide all
information requested by the Auditor in connection with the
Company’s annual audit promptly and to ensure that it is
complete and accurate in all respects.
Lenders Lenders such as holders of debt instruments
(private placement loan notes) and banks
providing fixed, floating or revolving credit
facilities have an interest in the Company’s
ongoing financial health and viability.
The Company’s legal advisers review all legal agreements in
connection with the Company’s debt arrangements and advise
the Board on the appropriateness of the terms and covenants.
The Managers and Secretaries ensure compliance with lenders’
covenants and maintain a good working relationship.
AIC/industry peers The Association of Investment Companies
(‘AIC’) and the Company’s investment
trust industry peers have an interest in
the Company’s conduct and performance,
asadverse market sentiment towards
one investment trust can affect attitudes
towardsthe wider industry.
The Company is a member of the AIC, and the Directors and/
or the Managers and Secretaries (as appropriate) participate
in technical reviews, requests for feedback on proposed
legislation or regulatory developments, corporate governance
discussions and/or training.
Strategic Report
Annual Report and Financial Statements 2025
34
Culture
As an externally managed investment company
with no employees, Baillie Gifford Japan’s culture
is expressed through its Board and its third party
service providers, in particular its Managers, in
their interactions with shareholders and other
stakeholders. The Board’s assessment of its
own interactions is described in its Section 172
Statement on pages 32 and 33 and the Baillie
Gifford Statement on Stewardship, which describes
the Managers’ culture of constructive engagement,
which can be found on the Managers’ website:
bailliegifford.com.
Employees, Human Rights
andCommunityIssues
The Board recognises the requirement to provide
information about employees, human rights
and community issues. As the Company has no
employees, all its Directors are non-executive
and all its functions are outsourced, there are no
disclosures to be made in respect of employees,
human rights and community issues. Further
information on the Company’s approach to
environmental, social and governance (‘ESG’)
matters is provided on pages 21 to 24.
Environmental, Social and Governance
Policy
Details of the Company’s policy on socially
responsible investment can be found on page 21.
The Company considers that it does not fall within
the scope of the Modern Slavery Act 2015 and it
is not, therefore, obliged to make a slavery and
human trafficking statement. In any event, the
Company considers its supply chains to be of
low risk as its suppliers are typically professional
advisers. Astatement by the Managers under the
Act has beenpublished on the Managers’ website
atbailliegifford.com.
Climate Change
The Board recognises that climate change poses a
serious threat to our environment, our society and
to economies and companies around the globe.
Addressing the underlying causes is likely to result
in companies that are high emitters of carbon
facing greater societal and regulatory scrutiny and
higher costs to account for the true environmental
impact of their activities. BaillieGifford’s Task
Forceon Climate-Related Financial Disclosures
(‘TCFD’) ClimateReport is available on the
Managers’ websiteat bailliegifford.com. A Japan
Trust specific TCFD climate report is also available
on the Company’s page of the Managers’ website
at japantrustplc.co.uk and is a means by which
the portfolio’s carbon footprint and exposure to
climate risk are measured and reported. Companies
disclosing their emissions and communicating
emissions plans will be a helpful place from which
to begin more useful discussions with management
teams, industry experts and regulators. Although
this can direct our efforts, the Managers believe that
carbon footprint metrics in isolation are unhelpful –
that some firms pollute more than others is a mostly
meaningless observation. More significant is the
Managers’ pursuit of long-term growth opportunities
which typically involves investment in entrepreneurial,
disruptive and technology-driven businesses. These
companies are often capital-light with a low carbon
footprint. The Managers utilise data sourced from a
third party provider (MSCI via the Factset platform) to
map the carbon footprint of TheBaillie Gifford Japan
Trust’s portfolio which is estimated to be 75.8% lower
than the Company’s benchmark (TOPIX) and is based
on 99.2% of the value of the Company’s equity
portfolio which reports on carbon emissions and other
carbon relatedcharacteristics.
The Managers, Baillie Gifford & Co, are signatories
to the Carbon Disclosure Project and are also
members of the Asian Corporate Governance
Association and the International Corporate
Governance Network.
Gender Representation
At 31August 2025, the Board comprises five
Directors, two male and three female. The Company
has no employees. The Board’s policy on diversity
isset out on page 45.
Future Developments of the Company
The outlook for the Company for the next 12 months
is set out in the Chairman’s Statement on page 07
and the Managers’ Review on page 10.
The Strategic Report which comprises pages 05
to 34 was approved by the Board of Directors and
signed on its behalf on 20 October 2025.
David Kidd
Chairman
Governance Report
This Governance Report, which includes
pages 36 to 56 outlines the Board’s
approach to the governance of your
Company. We believe that good governance
builds better outcomes and we are
committed to high standards of corporate
governance and transparency.
Governance Report
Annual Report and Financial Statements 2025
36
Directors
David Kidd
Chairman
Appointed 2015
David Kidd was appointed a Director in 2015
and became Chairman in June 2022. He has
over 40years investment experience in the
City, in the roles of chief investment officer and
independent professional trustee. He is chairman
of MidWynd International Investment Trust PLC.
Hewas previously a director of Shires Income PLC,
Martin Currie International Portfolio Trust PLC,
theSalvation Army International Trustee Company,
andTheGolden Charter Trust.
Sharon Brown
Director
Appointed 2019
Sharon Brown was appointed a Director in 2019.
She is Chair of the Audit Committee and a qualified
accountant. She is currently a director and audit
committee chair of Personal Assets Trust plc,
European Opportunities Trust plc and Celtic plc. She
was previously finance director ofDobbies Garden
Centres plc and a director of McColl’s Retail Group
plc, Fidelity Special Values plc, CT UK Capital and
Income Investment Trust PLC and anumber of unlisted
companies in the retailsector.
Joanna Pitman was appointed a Director in 2018
and appointed Senior Independent Director in June
2022. She is Chair of the Remuneration Committee.
She read Japanese Studies at Cambridge University
and speaks Japanese. She was Tokyo Bureau Chief
of The Times from 1989 to 1994 and has since
worked as a corporate research analyst focused
on Japan. She is vice chair of the Great Britain
Sasakawa Foundation and UK chair of SAIDIA.
Joanna Pitman
Director
Appointed 2018
The Baillie Gifford Japan Trust PLC
37
Sam Davis
Director
Appointed 2021
Sam Davis was appointed a Director in 2021. He is
Chair of the Management Engagement Committee.
Sam studied Japanese at Oxford before joining
Morgan Grenfell & Co. Ltd, working initially in
corporate finance in both London and Tokyo. He
moved to Morgan Grenfell Asset Management in
1996 to work with a Tokyo-based team. In 2000 he
joined Putnam Investments first in Boston, MA and
then in London where, over his 19 year tenure, he
managed Asian, European and broad international
equity portfolios. As Putnam’s co-head of equities
heoversaw a global investment team and was
CEOof Putnam Investments Ltd, the group’s UK
regulated entity. Sam is a non-executive director of
Allianz Technology Trust PLC and Schroder Oriental
Income Fund Limited.
Patricia Lewis
Director
Appointed 2023
Patricia Lewis was appointed a Director in 2023.
Sheis a financial services executive with over
25years of experience in investment and capital
management across the U.S. and Europe. She
previously served as Managing Director and Head of
EMEA Loans and Special Situations Sales at Bank of
America Merrill Lynch. Patricia was also a director of
Snowball Impact Management Ltd, prior to its
acquisition by Tribe Impact Capital LLP, where she
chaired the Audit and Risk Committee and continues
as Deputy Chair of its Impact Investment Committee.
All Directors are members of the following Committees: Nomination,
Remuneration and Management Engagement. With the exception
of David Kidd, all are members of the Audit Committee. No Director
holds a Directorship in common with another member of the Board.
Governance Report
Annual Report and Financial Statements 2025
38
Board of Directors
Comprises independent
non-executive directors
Chair: David Kidd
Senior Independent Director:
Joanna Pitman
Audit
Committee
Chair: Sharon Brown
Purpose: To provide oversight
of the financial reporting
process, the audit process,
the Company’s system of
internal controls and
compliance with laws and
regulations.
Management
Engagement Committee
Chair: Sam Davis
Purpose: To ensure that the Managers
remain suitable to manage the portfolio,
the management contract is competitive
and reasonable for shareholders, the
Company maintains appropriate
administrative and company secretarial
support and performance of other third
party service providers is reviewed.
Nomination
Committee
Chair: David Kidd
Purpose: To oversee Board
recruitment, succession
planning and Board
appraisalsincluding
identifying training needs.
Remuneration
Committee
Chair: Joanna Pitman
Purpose: To review the level of
remuneration paid to Directors
within the limits approved by
shareholders and to set the
Company’s
remunerationpolicy.
Key Third Party Service Providers Appointed by the Board
Alternative Investment Fund Manager and Company Secretaries:
Baillie Gifford & Co Limited (wholly owned subsidiary of Baillie Gifford & Co)
Dealing activity and transaction reporting:
Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited
Ernst & Young LLP
Auditor
The Bank of
New York Mellon
(International)
Limited
Depositary and Custodian
Computershare
Investor Services
PLC
Registrar
Investec
Bankplc
Company broker
The Baillie Gifford Japan Trust PLC
39
The Directors present their Report together with the Financial Statements of the Company for the year to
31August 2025.
Directors’ Report
Corporate Governance
The Corporate Governance Report is set out
onpages 44 to 48 and forms part of this Report.
Managers and Company Secretaries
Baillie Gifford is one of the largest investment trust
managers in the UK and currently manages twelve
closed-ended investment companies. Baillie Gifford
also manages open-ended investment companies,
together with investment portfolios on behalf of
pension funds, charities and other institutional
clients, both in the UK and overseas. Funds under
the management or advice of Baillie Gifford total
around £212.7 billion at 16 October 2025. Based in
Edinburgh, it is one of the leading privately owned
investment management firms in the UK, with
59partners and approximately 1,640 employees.
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 and Baillie Gifford & Co
are both authorised and regulated by the Financial
Conduct Authority. Baillie Gifford & Co Limited has
delegated portfolio management and 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.
Baillie Gifford & Co is an investment management
firm formed in 1927 out of the legal firm Baillie Gifford,
WS, which had been involved in investment
management since 1908.
The Investment Management Agreement between
the AIFM and the Company 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 6 months’
notice or on shorter notice in certain circumstances.
Compensation would only be payable if termination
occurred prior to the expiry of the notice period.
Careful consideration has been given by the Board
as to the basis on which the management fee is
charged. The Board considers that maintaining a
relatively low ongoing charges ratio is in the best
interests of shareholders. The Board is also of the
view that calculating the fee with reference to
performance would be unlikely to exert a positive
influence over the long-term performance. With
effect from 1 September 2024, the annual
management fee is 0.65% on the first £250 million
of net assets and 0.55% on the remaining net
assets, calculated and payable quarterly. Prior to
1September 2024, the annual management fee
was0.75% on the first £50million of net assets,
0.65% on the next £200million of net assets and
0.55% onthe remaining net assets, calculated and
payable quarterly.
The Board considers the Company’s investment
management and secretarial arrangements on an
ongoing basis and a formal review is conducted by
the Management Engagement Committee annually.
The Committee considers, amongst others, the
following topics in its review: the quality of the
personnel assigned to handle the Company’s affairs;
the investment process and the results achieved to
date; investment performance; the administrative
services provided by the Secretaries and the quality
of information provided; the marketing efforts
undertaken by the Managers; and the relationship
with the Managers.
Following the most recent review, it is the opinion
of the Management Engagement Committee that
the continuing appointment of Baillie Gifford on the
terms agreed is in the best interests of the Company
and shareholders as a whole. This is due to the
strength and quality of the investment management
team, the Managers’ commitment to the investment
trust sector and the comprehensive efficiency of the
secretarial and administrative functions.
Governance Report
Annual Report and Financial Statements 2025
40
Depositary
The Bank of New York Mellon (International) Limited
has been appointed as the Company’s Depositary
in accordance with the requirements of the UK
Alternative Investment Fund Managers (‘AIFM’)
Regulations.
The Company’s Depositary also acts as the Company’s
Custodian. The Depositary’s responsibilities include
cash monitoring, safe keeping of the Company’s
financial instruments, verifying ownership and
maintaining a record of other assets and monitoring
the Company’s compliance with investment limits
and leverage requirements.
Directors
Information about the Directors, including their
relevant experience, can be found on pages 36
and37.
All of the Directors will retire at the Annual General
Meeting and will offer themselves for re-election,
with the exception of David Kidd who will be
standing down from the Board. Following formal
performance evaluation, the Chairman confirms
that the Board considers that each Director’s
performance continues to be effective and that
they remain committed to the Company. The
Board therefore recommends their re-election to
shareholders.
Director Indemnification and Insurance
The Company has entered into qualifying third party
deeds of indemnity in favour of each of its Directors.
The deeds which were in force during the year to
31August 2025 and up to the date of approval of
this Report, cover any liabilities that may arise to a
third party, other than the Company, for negligence,
default or breach of trust or duty. The Directors
are not indemnified in respect of liabilities to the
Company, any regulatory or criminal fines, any costs
incurred in connection with criminal proceedings in
which the Director is convicted or civil proceedings
brought by the Company in which judgement is given
against him/her. In addition, the indemnity does not
apply to any liability to the extent that it is recovered
from another person.
The Company maintains Directors’ and Officers’
liability insurance.
Conflicts of Interest
A register of potential conflicts of interest of each
Director is maintained and considered at each
Board meeting and also annually by the Nomination
Committee. The Board and Nomination Committee
consider these carefully, taking into account the
circumstances surrounding them and confirms
whether or not the potential conflicts should be
authorised. Having considered the lists of potential
conflicts there were no situations which gave rise
to a direct or indirect interest of a Director which
conflicted with the interests of the Company.
Dividends
The Board recommends a final dividend of 10p
per ordinary share. If approved, the recommended
final dividend will be paid on 15December 2025
to shareholders on the register at the close of
business on 14November 2025. The ex-dividend
date is 13November 2025. A dividend reinvestment
plan (‘DRIP’) is available to shareholders who would
prefer to invest their dividends in the shares of the
Company. For those shareholders electing to receive
the DRIP, the last date for receipt of the election is
24November 2025.
The ordinary shares carry a right to receive
dividends. Interim dividends are determined by the
Directors, whereas the proposed final dividend is
subject to shareholder approval.
Share Capital
Capital Structure
The Company’s capital structure consists of
77,491,440 ordinary shares of 5p each at 31August
2025 (2024 – 87,532,614). At 31August 2025,
16,836,769 shares were held in treasury (2024 –
6,795,595). There are no restrictions concerning the
holding or transfer of the Company’s ordinary shares
and there are no special rights attached to any of
the shares.
Capital Entitlement
On a winding up, after meeting the liabilities of the
Company, the surplus assets would be paid to ordinary
shareholders in proportion to their shareholdings.
Voting
Each ordinary shareholder present in person or by
proxy is entitled to one vote on a show of hands and,
on a poll, to one vote for every share held.
Information on the deadlines for proxy appointments
can be found on pages 89 and 90.
The Baillie Gifford Japan Trust PLC
41
The Company has received notifications in
accordance with the Financial Conduct Authority’s
Disclosure and Transparency Rules of the following
interests in the voting rights attached to the
Company’s issued share capital.
Major Interests Disclosed in the Company’s Shares
Name
No. of ordinary
5p shares held
at 31August
2025
% of
issue*
Rathbones Investment Management
Ltd (indirect)
9,053,564 11.7
1607 Capital Partners LLC (indirect) 8,583,104 11.1
Allspring Global Investments
Holdings LLC (indirect)
7,831,067 10.1
Brewin Dolphin Limited (indirect) 4,635,012 6.0
City of London Investment
Management Ltd (indirect)
4,598,778 5.9
Quilter plc (indirect) 3,874,118 5.0
* Ordinary shares in issue excluding treasury shares.
In the period from 31 August 2025 to 16 October
2025, the Company was notified that Allspring Global
Investments Holdings LL (indirect) held 8,534,663
shares (11.1% of shares in issue as at 16 October
2025) and Quilter plc (indirect) held 3,826,205
(5.0% of shares in issue as at 16 October 2025).
There have been no other changes to the major
interests in the Company’s shares intimated up to
16October 2025.
Analysis of Shareholders at 31August
2025 2024
Number of
shares held %
Number of
shares held %*
Institutions 21,677,219 28.0 32,822,402 37.5
Intermediaries/
Retail savings
Platforms
52,281,649 6 7. 5 53,392,298 61.0
Individuals 352,352 0.4 48,733 0.1
Marketmakers 3,180,220 4.1 1,269,181 1.4
77,491,440 100.0 87,532,614 100.0
* Ordinary shares in issue excluding treasury shares.
Share Issuance Authority
At the last Annual General Meeting, the Directors
were granted authority to issue shares up to an
aggregate nominal amount of £430,438.07 and
to issue shares or sell shares held in treasury on a
non pre-emptive basis for cash up to an aggregate
nominal amount of £430,438.07. These authorities
are due to expire at the Annual General Meeting on
10December 2025.
Resolution 11 in the Notice of Annual General
Meeting seeks to renew the Directors’ general
authority to issue shares up to an aggregate nominal
amount of £384,607.20. This amount represents
10% of the Company’s total ordinary share capital
in issue at 16 October 2025 and meets institutional
guidelines. No issue of ordinary shares will be made
pursuant to the authorisation in Resolution11 which
would effectively alter the control of the Company
without the prior approval of shareholders in
generalmeeting.
Resolution 12, which is proposed as a special
resolution, seeks to provide the Directors with
authority to issue shares or sell shares held in
treasury on a non pre-emptive basis for cash
(i.e. without first offering such shares to existing
shareholders pro-rata to their existing holdings) up
to an aggregate nominal amount of £384,607.20
(representing 10% of the issued ordinary share
capital of the Company as at 16 October 2025).
The authorities sought in Resolutions 11 and 12
will continue until the conclusion of the Annual
General Meeting to be held in 2026 or on the expiry
of 15months from the passing of this Resolution,
ifearlier.
Such authorities will only be used to issue shares
or re-sell shares from treasury at a premium to net
asset value and only when the Directors believe that
it would be in the best interests of the Company
to do so. The Directors believe that the ability to
buy back shares at a discount and re-sell them or
issue new shares at a premium are useful tools in
smoothing supply and demand.
Market Purchases of Own Shares
At the last Annual General Meeting, the Company
was granted authority to purchase up to 12,550,019
ordinary shares (equivalent to 14.99% of its issued
share capital), such authority to expire at the 2025
Annual General Meeting. The Directors are seeking
shareholders’ approval at the Annual General
Meeting to renew the authority to make market
purchases up to 14.99% of the Company’s ordinary
shares in issue, excluding treasury shares, at the
date of passing of the Resolution, such authority
to expire at the Annual General Meeting of the
Company to be held in 2026.
During the year to 31August 2025, 10,041,174
ordinary shares were bought back at a cost of
£75,180,000 and held in treasury (2024 – 5,515,000
ordinary shares were bought back at a cost of
£39,186,000 and held in treasury). Between
1September and 16 October 2025, the Company
bought back 570,000 ordinary shares into treasury
at a cost of £5,236,000 ordinary shares were held in
treasury as at 16 October 2025.
Governance Report
Annual Report and Financial Statements 2025
42
The principal reasons for share buybacks are:
• to enhance net asset value for continuing
shareholders by purchasing shares at a discount
to the prevailing net asset value; and
• to address any imbalance between the supply of
and the demand for the Company’s shares that
results in a discount of the quoted market price to
the published net asset value per ordinary share.
The Company may hold bought-back shares ‘in
treasury’ and then:
• sell such shares (or any of them) for cash (or its
equivalent under the Companies Act 2006); or
• cancel the shares (or any of them).
All buybacks will initially be held in treasury and
shareswill only be resold from treasury at a premium
to net asset value per ordinary share. Treasury
shares do not receive distributions and the Company
shall not be entitled to exercise the voting rights
attaching to treasury shares.
In accordance with the Listing Rules of the FCA,
the maximum price (excluding expenses) that may
be paid on the exercise of the authority must not
exceed the higher of:
• 5 per cent above the average closing price on the
London Stock Exchange of an ordinary share over
the five business days immediately preceding the
date of purchase; and
• an amount equal to the higher of the price of
the last independent trade of an ordinary share
and the highest current independent bid for an
ordinary share on the trading venue where the
purchase is carried out.
The minimum price (exclusive of expenses) that may
be paid will be 5p per ordinary share. Purchases of
shares will be made within guidelines established,
from time to time, by the Board. Your attention is
drawn to the authority sought in Resolution 13 in the
Notice of Annual General Meeting, which relates to
the renewal of the Company’s authority to buy back
ordinary shares. This authority, if conferred, will only
be exercised if to do so would result in an increase in
net asset value per ordinary share for the remaining
shareholders and if it is considered in the best interests
of shareholders generally.
Directors’ Fee Limit
The Company’s Articles of Association provide that
Directors’ fees may not exceed £200,000 per annum
in aggregate, or such larger amount as may be
agreed by the Company by ordinary resolution.
Articles of Association
The Company’s Articles of Association may only be
amended by special resolution at a general meeting
of shareholders.
Continuation of the Company
The Company’s Articles of Association give
shareholders the right to vote annually at the Annual
General Meeting of the Company on whether to
continue the Company. The Directors wish to draw
your attention to Resolution 10 in the Notice of
Annual General Meeting, which proposes that the
Company continues in operation until the 2026
Annual General Meeting.
Financial Instruments
The Company’s financial instruments comprise
its investment portfolio, cash balances, bank
borrowings and debtors and creditors that arise
directly from its operations such as sales and
purchases awaiting settlement and accrued income.
The financial risk management objectives and
policies arising from its financial instruments and
the exposure of the Company to risk are disclosed in
note 19 to the Financial Statements.
Disclosure of Information to Auditor
The Directors confirm that, so far as each of them is
aware, there is no relevant audit information of which
the Company’s Auditor is unaware and the Directors
have taken all the steps that they might reasonably be
expected to have taken as Directors in order to make
themselves aware of any relevant audit information
and to establish that the Company’s Auditor is aware
of thatinformation.
Independent Auditor
The Auditor, Ernst & Young LLP, is willing to
continue in office and in accordance with section
489(1) of the Companies Act 2006, resolutions
concerning Ernst & Young LLP’s appointment and
remuneration will be submitted to the Annual
General Meeting.
The Baillie Gifford Japan Trust PLC
43
Post Balance Sheet Events
The Directors confirm that there have been no
significant post Balance Sheet events up to
16October 2025.
Greenhouse Gas Emissions and Streamlined
Energy and Carbon Reporting (‘SECR’)
All of the Company’s activities are outsourced to
third parties. The Company therefore has no
greenhouse gas emissions to report from its
operations, nor does it have responsibility for any
other emissions producing sources under the
Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2013. For the same reasons as
set out above, the Company considers itself to be a
low energy user under the SECR regulations and
therefore, is not required to disclose energy and
carbon information.
Bribery Act
The Company has a zero tolerance policy towards
bribery and is committed to carrying out business
fairly, honestly and openly. The Managers also adopt
a zero tolerance approach and have policies and
procedures in place to prevent bribery.
Criminal Finances Act 2017
The Company has a commitment to zero tolerance
towards the criminal facilitation of tax evasion.
Recommendation
The Directors consider each resolution being
proposed at the Annual General Meeting to be in the
best interests of the Company and its shareholders
as a whole and they unanimously recommend that
all shareholders vote in favour of them, as they
intend to do where possible in respect of their own
beneficial holdings.
On behalf of the Board
David Kidd
Chairman
20 October 2025
Governance Report
Annual Report and Financial Statements 2025
44
comprising entirely non-executive Directors, there is no
chief executive officer.
The Directors believe that the Board has a balance
of skills and experience that enables it to provide
effective strategic leadership and proper governance
of the Company. Information about the Directors,
including their relevant experience, can be found
onpages 36 and 37.
There is an agreed procedure for Directors to seek
independent professional advice, if necessary, at the
Company’s expense.
Appointments to the Board
The terms and conditions of Directors’ appointments
are set out in formal letters of appointment which are
available for inspection on request.
Under the provisions of the Company’s Articles of
Association, a Director appointed during the year is
required to retire and seek election by shareholders
at the next Annual General Meeting. In accordance
with the Code, all Directors are subject to annual
re-election by shareholders.
As mentioned in the Chairman’s statement, the
Board plans to recruit a new director in early 2026,
with the selection of an executive search firm
already at an advanced stage.
Chairman and Directors’ Tenure
It is the Board’s policy that all Directors, including
the Chairman, shall normally have tenure limited
to nine years from their first appointment to the
Board. Exceptions may be made in particular
circumstances, for example to facilitate effective
succession planning or if the Company were in the
middle of a corporate action, when an extension
maybe appropriate. As noted in the Chairman’s
statement on page 07, Mr David Kidd will be standing
down from the Board at the conclusion of this year’s
AGM taking place on 10 December 2025. Mr Sam
Davis, a seasoned equity investor who is currently
Chair of the Management Engagement Committee,
Compliance
The Financial Reporting Council (‘FRC’) has confirmed
that AIC member companies who report against the
AIC Code will be meeting their obligations in relation to
the UK Code. The Company has complied throughout
the year under review with the relevant provisions of
the Code and the recommendations of the AIC Code
except that the Company does not have a separate
internal audit function, as explained on page 52. Given
that the Company is an externally managed investment
trust, the Board considers the provisions relating to
the role of the chief executive and executive-directors
remuneration are not relevant.
The Board
The Board has overall responsibility for the
Company’s affairs. It has a number of matters
formally reserved for its approval including strategy,
investment policy, currency hedging, gearing, treasury
matters, dividend and corporate governance policy. A
separate strategy session is held annually. The Board
also reviews the Financial Statements, investment
transactions, revenue budgets and performance of
the Company. Full and timely information is provided
to the Board to enable it to function effectively and to
allow Directors to discharge their responsibilities.
At 31August 2025, the Board comprises five
Directors, each of whom are non-executive. The
Chairman, David Kidd, is responsible for organising
the business of the Board, ensuring its effectiveness
and setting its agenda.
The Senior Independent Director (‘SID’) is Joanna
Pitman, and as such, is available to shareholders if
they have concerns not properly addressed by the
Chairman. The SID leads the Chairman’s appraisal
and chairs the Nomination Committee when it
considers the Chairman’s succession.
The executive responsibility for investment
management has been delegated to the Company’s
Alternative Investment Fund Manager (‘AIFM’), Baillie
Gifford & Co Limited, and, in the context of a Board
Corporate Governance Report
The Board is committed to achieving and demonstrating high standards of corporate governance. This
statement outlines how the principles of the 2018 UK Corporate Governance Code (the ‘Code’), which can
be found at frc.org.uk, and the relevant principles of the Association of Investment Companies Code of
Corporate Governance (the ‘AIC Code’) issued in 2019 were applied throughout the financial year. TheAIC
Code provides a framework of best practice for investment companies and can be found at theaic.co.uk
The Baillie Gifford Japan Trust PLC
45
and who has been a member of the Board for 3
years, will assume the Chair at this point.
Independence of Directors
All the Directors are considered by the Board to
be independent of the Managers and free of any
business or other relationship which could interfere
with the exercise of their independent judgement.
The Directors recognise the importance of
succession planning for company boards and review
the Board composition annually.
The Board is of the view that length of service will
not necessarily compromise the independence or
contribution of Directors of an investment trust
company, where continuity and experience can be
a benefit to the Board. The Board concurs with the
view expressed in the AIC Code that long serving
Directors should not be prevented from being
considered independent.
Meetings
There is an annual cycle of Board meetings which
is designed to address, in a systematic way, overall
strategy, review of investment policy, investment
performance, marketing, revenue budgets, dividend
policy and communication with shareholders. The
Board considers that it meets sufficiently regularly to
discharge its duties effectively. The table below shows
the attendance record for the Board and Committee
meetings held during the year. The Annual General
Meeting was attended by all Directors.
Directors’ Attendance at Meetings
Board
Audit
Committee
Nomination
Committee
Management
Engagement
Committee
Number of meetings 4 2 1 1
David Kidd* 4 – 1 1
Sharon Brown 4 2 1 1
Sam Davis 4 2 1 1
Joanna Pitman 4 2 1 1
Patricia Lewis 4 2 1 1
* David Kidd is not a member of the Audit Committee but attends by invitation.
Nomination Committee
The Nomination Committee consists of the whole
Board and the Chairman of the Board is the Chairman
of the Committee. The Committee meets on an
annual basis and at such other times as may be
required. The Committee has written terms of
reference which include reviewing the composition of
the Board, identifying and nominating new candidates
for appointment to the Board, Board appraisal,
succession planning and training. The Committee
also considers whether Directors should be
recommended for re-election by shareholders.
TheCommittee is responsible for considering
Directors’ potential conflicts of interest and for
making recommendations to the Board on whether
or not the potential conflicts should be authorised.
The Committee’s terms of reference are available on
request from the Company and on the Company’s
website: japantrustplc.co.uk.
Board Diversity
Appointments to the Board are made on merit with
due regard for the benefits of diversity including
gender, social and ethnic backgrounds, and
cognitive and personal strengths. The priority in
succession planning and appointing new Directors
is to identify the candidate with the best range
of skills and experience to complement existing
Directors, with a view to ensuring that the Board
remains well placed to help the Company achieve its
investment and governance objectives. The following
disclosures are provided in respect of the FCA
Listing Rules targets that i) 40% of a board should
be women, ii) at least one senior role should be held
by a woman; and iii) at least one board member
should be from a non-white ethnic background as
defined by the Office of National Statistics criteria.
At 31 August 2025, the Board complies in all respects
with the FCA Listing Rules targets. There have been
no changes since 31 August 2025, data has been
collected on a self-reporting basis.
Gender identity Number %
Senior
roles
*
Men 2 40
1
Women 3 60
2
Ethnic background Number %
Senior
roles
*
White 4 80
3
Black/African/Caribbean/
Black British
1 20 –
* As an externally managed investment company with no chief executive
officer or chief financial officer, the roles which qualify as senior under
FCA guidance are Chairman and Senior Independent Director (‘SID’).
The Chairman is a man and the SID a woman. The Board also considers
the role of Audit Committee Chair to represent a senior role within this
context and this role is performed by a woman.
Governance Report
Annual Report and Financial Statements 2025
46
The Board currently complies in all respects with the
FCA Listing Rules targets.
Board Composition
The Committee reviewed the Board’s composition
during the year. The Board recognises the
importance of having Directors with a range of skills
and experiences balancing the benefits of length of
service and knowledge of the Company with the
desirability of ensuring refreshment of the Board.
Performance Evaluation
During the year the Board appointed Lintstock, a
firm which assists companies with the external board
evaluations. Lintstock has no other connection with
the Company or its Directors. Each Director completed
a questionnaire, provided by Lintstock, which was
followed up with an in-depth review. The Board
evaluation included a review of the following areas:
• Board composition and expertise;
• Board dynamics;
• Management and focus of meetings;
• Board information and support;
• Board Committees;
• Investment strategy and performance;
• ESG activities;
• External relations;
• Risk management; and
• Succession.
The initial survey conducted by Lintstock concluded
the Company’s Board, Committees and Directors
to be operating effectively. A number of minor
recommendations were made to improve the
performance of the Board, and these have been
considered and implemented. It is intended that an
external evaluation will be carried out every three years.
Following this process, it was concluded that the
performance of each Director, the Chairman, the
Board and its Committees continues to be effective
and each Director, including the Chairman, remains
committed to the Company.
A review of the Chairman’s and the other Directors’
commitments was carried out and the Nomination
Committee is satisfied that they are capable of
devoting sufficient time to the Company.
There were no significant changes to the Chairman’s
other commitments during the year.
Induction and Training
New Directors are provided with an induction
programme which is tailored to the particular
circumstances of the appointee. Briefings were
provided during the year on industry and regulatory
matters. Directors receive other relevant training
asnecessary.
Management Engagement Committee
The Management Engagement Committee consists
of all Directors and Sam Davis is Chair of the
Committee. The Board considers each member of
the Committee to be independent. To discharge its
duties, the Committee met on one occasion during
the year to consider: the performance and suitability
of the Manager; the terms and conditions of the
AIFM Agreement, including fees; the performance
of other third party service providers; and the
Committee’s Terms of Reference.
The Committee’s Terms of Reference are available
on request from the Company and on the Company’s
pages of the Managers’ website: japantrustplc.co.uk.
Remuneration Committee
The Remuneration Committee consists of all
Directors and Joanna Pitman is Chair of the
Committee. The Remuneration Committee reviews
and makes recommendations to the Board in respect
of the level of remuneration paid to Directors within
the limits approved by shareholders. The Company’s
policy on remuneration is set out in the Directors’
Remuneration Report on page 49.
The Committee’s Terms of Reference are available
on request from the Company and on the Company’s
page of the Managers’ website: japantrustplc.co.uk.
Audit Committee
The report of the Audit Committee is set out on
pages 52 to 54.
Internal Controls and Risk Management
The Directors acknowledge their responsibility for
the Company’s risk management and internal control
systems and for reviewing their effectiveness. The
systems are designed to manage rather than eliminate
the risk of failure to achieve business objectives
and can only provide reasonable but not absolute
assurance against material misstatement or loss.
The Board confirms that there is an ongoing
process for identifying, evaluating and managing
the significant risks faced by the Company in
accordance with the FRC guidance ‘Guidance on
Risk Management, Internal Control and Related
Financial and Business Reporting’.
The Baillie Gifford Japan Trust PLC
47
The practical measures in relation to the design,
implementation and maintenance of control policies
and procedures to safeguard the Company’s
assets and to manage its affairs properly, including
the maintenance of effective operational and
compliance controls, have been delegated to the
Managers and Secretaries.
The Board oversees the functions delegated to the
Managers and Secretaries and the controls managed
by the AIFM in accordance with the UK Alternative
Investment Fund Managers Regulations (as detailed
below). Baillie Gifford & Co’s Internal Audit and
Compliance Departments and the AIFM’s permanent
risk function provide the Audit Committee with
regular reports on their monitoring programmes.
The reporting procedures for these departments
are defined and formalised within a service level
agreement. Baillie Gifford & Co conducts an annual
review of its system of internal controls which is
documented within an internal controls report which
complies with ISAE 3402 – Assurance Reports on
Controls at a Service Organisation. This report is
independently reviewed by Baillie Gifford & Co’s
Auditor and a copy of the report is submitted to the
Audit Committee.
A report identifying the material risks faced by the
Company and the key controls employed to manage
these risks is reviewed by the Audit Committee.
These procedures ensure that consideration is given
regularly to the nature and extent of risks facing the
Company and that they are being actively monitored.
Where changes in risk have been identified during
the year they also provide a mechanism to assess
whether further action is required to manage
theserisks.
The Directors confirm that they have reviewed the
effectiveness of the Company’s risk management
and internal controls systems, which accord with
the FRC’s ‘Guidance in the Risk Management,
Internal Control and Related Financial and Business
Reporting’ and they have procedures in place to
review their effectiveness on a regular basis. No
significant weaknesses were identified in the year
under review and up to the date of this Report.
The Board confirms that these procedures have
been in place throughout the Company’s financial
year and continue to be in place up to the date of
approval of this Report.
To comply with the UK Alternative Investment Fund
Managers Regulations, The Bank of New York
Mellon (International) Limited acts as the Company’s
Depositary, and Baillie Gifford & Co Limited as AIFM.
The Depositary’s responsibilities include cash
monitoring, safe keeping of the Company’s financial
instruments, verifying ownership and maintaining a
record of other assets and monitoring the Company’s
compliance with investment limits and leverage
requirements. The Depositary is liable for the loss of
financial instruments held in custody. The Depositary
will ensure that any delegate segregates the assets
of the Company. As explained on page 40, the
Company’s Depositary also acts as the Company’s
Custodian. The Custodian prepares a report on its
key controls and safeguards which is independently
reviewed by KPMG LLP. The reports are reviewed
by Baillie Gifford’s Business Risk Department and a
summary of the key points is reported to the Audit
Committee and any concerns are investigated.
The Depositary provides the Audit Committee with
areport on its monitoring activities twice a year.
The AIFM has established a permanent risk
management function to ensure that effective risk
management policies and procedures are in place
and to monitor compliance with risk limits. The AIFM
has a risk management policy which covers the risks
associated with the management of the portfolio,
and the adequacy and effectiveness of this policy is
reviewed and approved at least annually. This review
includes the risk management processes and
systems and limits for each risk area.
The risk limits, which are set by the AIFM and
approved by the Board, take into account the
objectives, strategy and risk profile of the portfolio.
These limits, including leverage (see page 84),
aremonitored and the sensitivity of the portfolio to
key risks is undertaken periodically as appropriate
to ascertain the impact of changes in key variables
in the portfolio. Exceptions from limits monitoring
and stress testing are escalated to the AIFM and
reported to the Board along with remedial measures
being taken.
Going Concern
In accordance with FRC’s guidance on going concern
and liquidity risk, the Directors have undertaken a
rigorous review of the Company’s ability to continue
as a going concern.
Governance Report
Annual Report and Financial Statements 2025
48
The Company’s principal and emerging risks are
market related and include market risk, liquidity risk
and credit risk. An explanation of these risks and
how they are managed is contained in note 19 to
theFinancial Statements.
The Board has considered severe but plausible
downside scenarios, which include the impact of
heightened market volatility and macroeconomic
and geopolitical concerns, including inflation and
interest rates through the performance of stress
testing using a variety of parameters which have
the potential to impact the Company’s share price
and net asset value. The Directors do not believe
the Company’s going concern status is affected.
Inaddition, in accordance with the Company’s
Articles of Association, the Company is subject to
an annual continuation vote which in previous years
has been passed with a significant majority. At the
December 2024 Annual General Meeting, of the
votes received in respect of continuation, 85.3%
were in favour, 14.6% were against and 0.1% were
withheld. The Directors have no reason to believe
that the vote will not continue to be in favour based
on their assessment of the Company’s performance
and the views collated from shareholders. For these
reasons the Directors have prepared the Financial
Statements on a going concern basis.
The Company’s assets, the majority of which
areinvestments in quoted securities which are
readily realisable, exceed its liabilities significantly.
All borrowings, excluding revolver facility rollovers,
require the prior approval of the Board. Gearing
levels and compliance with borrowing covenants are
reviewed by the Board onaregular basis.
During the year, the Company raised ¥15 billion through
a revolving credit facility with Bank of New York
Mellon to refinance its term loan with the same bank.
Additionally, proceeds from fixed rate, senior unsecured
private notes were used to repay ¥9.3 billion in ING
fixed rate loans and ¥2.6 billion in Mizuho revolving
credit facilities.
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) Regulations 2011.
The Company’s third party suppliers, including
its Managers and Secretaries, Custodian and
Depositary, Registrar, Auditor and Broker are not
experiencing significant operational difficulties
affecting their respective services to the Company.
Accordingly, the Financial Statements have been
prepared on the going concern basis as it is the
Directors’ opinion, having assessed the principal
and emerging risks and other matters set out in
the Viability Statement on page 27 which assesses
the prospects of the Company over a period of five
years, that the Company will continue in operational
existence until at least 31 October 2026, which
is for a period of at least twelve months from the
date of approval of these Financial Statements.
If the continuation resolution is not passed, the
Articles provide that the Directors shall convene
a General Meeting within three months at which
a special resolution will be proposed to wind up
the Company voluntarily. If the Company is wound
up, itsinvestments may not be realised at their full
market value.
Relations with Shareholders
The Board places great importance on communication
with shareholders. The Company’s Managers meet
regularly with shareholders and their representatives,
accompanied by the Chairman when requested and
report shareholders’ views to the Board. The
Chairman is available to meet with shareholders as
appropriate. Shareholders wishing to communicate
with any members of the Board may do so by writing
to them at the Company’s registered office or
through the Company’s Broker, Investec Bank plc
(see contact details on page 100).
The Company’s Annual General Meeting (‘AGM’)
provides a forum for communication with all
shareholders. The level of proxies lodged for
each resolution is announced at the Meeting and
is published at japantrustplc.co.uk subsequent
to themeeting. The notice period for the AGM
is at least twenty working days. Shareholders
and potential investors may obtain up-to-date
information on the Company from the Managers’
website at japantrustplc.co.uk.
On behalf of the Board
David Kidd
Chairman
20 October 2025
The Baillie Gifford Japan Trust PLC
49
Directors’ Remuneration Report
Composition
The Remuneration Committee consists of all
Directors, none of whom has a service contract
with the Company. Joanna Pitman is Chair of the
Remuneration Committee.
Role
The determination of the Directors’ fees is a matter
considered by the Remuneration Committee and
recommended to the Board for approval. Baillie
Gifford & Co Limited, the Company Secretaries,
provide comparative information when the Board
considers the level of Directors’ fees.
The Committee’s authority and duties are clearly
defined within its written terms of reference
which are available on request from the Company
Secretaries and at japantrustplc.co.uk. The terms
ofreference are reviewed annually.
Review of Directors’ Fees
The Board reviewed the level of fees during the year
and it was agreed that, with effect from 1September
2025, the Chairman’s fee would increase from
£44,000 to £45,000, the other Directors’ fees
would increase from £31,500 to £32,000 and the
additional fee for the Chair of the Audit Committee
would remain at £6,000. The fees were last
increased on 1September 2024.
Directors’ Remuneration Policy
The Directors’ Remuneration Policy is subject
to shareholder approval every three years or
sooner if an alteration to the policy is proposed.
The Remuneration Policy which is set out below
was approved at the Annual General Meeting in
December 2024 and no changes to the policy
areproposed.
The Board’s policy is that the remuneration of
Directors should be set at a reasonable level that is
commensurate with the duties and responsibilities
of the role and consistent with the requirement
to attract and retain Directors of the appropriate
quality and experience. The Board believes that
the fees paid to the Directors should reflect the
experience of the Board as a whole, be fair and
should take account of the level of fees paid by
comparable investment trusts. Any views expressed
by shareholders on the fees being paid to Directors
will be taken into consideration by the Board when
reviewing the Board’s policy on remuneration.
Non-executive Directors are not eligible for any
other remuneration or benefits apart from the
reimbursement of allowable expenses. There are no
performance conditions relating to Directors’ fees
and there are no long-term incentive schemes or
pension schemes. No compensation is payable on
loss of office.
Limits on Directors’ Remuneration
The fees for the non-executive Directors are payable
monthly and are determined within the limit set out
in the Company’s Articles of Association which is
currently £200,000 per annum in aggregate.
The fees paid to Directors in respect of the year
ended 31August 2025 and the expected fees
payable in respect of the year ending 31August 2026
are set out in the table below. The fees payable to the
Directors in the subsequent financial periods will be
determined following an annual review of the
Directors’ fees.
Expected
fees for the
year ending
31August
2026
£
Fees as at
31August
2025
£
Chairman’s fee 45,000 44,000
Non-executive Director fee 32,000 31,500
Additional fee for Audit
CommitteeChair
6,000 6,000
Total aggregate annual fees that can
be paid to the Directors in any year
under the Directors’ Remuneration
Policy, as set out in the Company’s
Articles of Association
200,000 200,000
This report has been prepared in accordance with the requirements of the Companies Act 2006.
Governance Report
Annual Report and Financial Statements 2025
50
Directors’ Remuneration for the Year (Audited)
The Directors who served during the year received the following remuneration in the form of fees and taxable
benefits. This represents the entire remuneration paid to the Directors. The table below also sets out the
annual percentage changes in Directors’ fees to 31 August (where Directors have served for a full year in
each of the two years and therefore fees can be compared on a like-for-like basis).
2025
2024
Percentage change of basic fees
Name
Fees
£
Taxable
benefits*
£
Total
£
Fees
£
Taxable
benefits*
£
Total
£
2025
%
2024
%
2023
%
2022
%
2021
%
David Kidd
†
44,000 2,535 46,535 43,000 2,483 45,483 2.3 7.5 35.6 13.5 0.0
Sharon Brown
#
37,500 1,627 39,127 37,000 1,229 38,229 1.4 8.8 9.7 5.1 n/a
Sam Davis
‡
31,500 2,585 34,085 31,000 2,390 33,390 1.6 6.9 n/a n/a n/a
Joanna Pitman 31,500 2,008 33,508 31,000 1,686 32,686 1.6 6.9 7.4 3.8 0.0
Patricia Lewis
¶
31,500 3,037 34,537 31,000 3,304 34,304 1.6 n/a n/a n/a n/a
176,000 11,792 187,792 173,000
11,092
184,092
* Comprises expenses incurred by Directors in the course of travel to attend Board and Committee meetings. These amounts have been grossed up for
income tax.
†
Appointed Chairman 1 June 2022.
#
Appointed Audit Chair 5 December 2019.
‡
Appointed a Director 1 October 2021.
¶
Appointed a Director 1 August 2023.
Directors’ Interests (Audited)
The Directors at the end of the year under review, and their interests in the Company, are shown in the following
table. There have been no further changes in the Directors’ interests up to 16 October 2025.
Name
Nature
of interest
Ordinary
5p shares
held at
31August
2025
Ordinary
5p shares
held at
31August
2024
David Kidd Beneficial
42,500
42,500
Sharon Brown Beneficial
3,995
3,995
Sam Davis Beneficial
8,782
7,887
Joanna Pitman Beneficial
5,262
5,262
Patricia Lewis Beneficial
5,319
5,100
The Baillie Gifford Japan Trust PLC
51
Annual Report on Remuneration
An ordinary resolution for the approval of this report
will be put to the members at the forthcoming Annual
General Meeting.
The law requires the Company’s Auditor to audit
certain of the disclosures provided in this report.
Where disclosures have been audited, they are
indicated as such. The Auditor’s opinion is included
in the Independent Auditor’s Report on pages 58
to64.
Statement of Voting at Annual General Meeting
At the last Annual General Meeting, of the
proxy votes received in respect of the Directors’
Remuneration Report, 99.8% were in favour, 0.1%
were against and 0.1% of votes were withheld.
At the last Annual General Meeting at which the
Directors’ Remuneration Policy was considered
(December 2024), 99.5% were in favour, 0.2%
were against and 0.3% of votes were withheld.
Relative Importance of Spend on Pay
The table below shows the actual expenditure
during the year in relation to Directors’ fees and
distributions to shareholders.
Name
2025
£’000
2024
£’000
%
change
Directors’ fees
176
173 1.7
Dividends paid
to shareholders
*
8,481 9,157 (7.4 )
* The total dividend paid decreased due to share buybacks. The dividend
per share remained unchanged at 10.0ppershare.
Company Performance
The graph below compares the share price total
return (assuming all dividends are reinvested) to
ordinary shareholders compared with the total
shareholder return on a notional investment made up
of shares in the component parts of the TOPIX total
return (in sterling terms). This index was chosen for
comparison purposes as it is the index against which
the Company has measured its performance over
the period covered by the graph.
Performance Graph
(figures rebased to 100 at 31August 2015)
Cumulative to 31 August
2024 20252016 2019 2021 20232015 20182017 2020 2022
Source: LSEG/Baillie Gifford and relevant underlying index providers.
See disclaimer on page 93.
●
NAV total return
* ●
TOPIX total return
(in sterling terms)
*
0
50
100
150
200
250
●
Share price total return
*
* Alternative Performance Measure – see Glossary of Terms and
Alternative Performance Measures on pages 82 to 84.
Past performance is not a guide to future performance.
Approval
The Directors’ Remuneration Report on pages 49
to 51 was approved by the Board of Directors and
signed on its behalf on 20 October 2025.
Joanna Pitman
Remuneration Committee Chair
Governance Report
Annual Report and Financial Statements 2025
52
Audit Committee Report
Composition
The Audit Committee consists of all Directors with the
exception of David Kidd, who attends by invitation.
Sharon Brown is Chair of the Audit Committee. The
members of the Committee consider that they have
the requisite financial skills and experience to fulfil
the responsibilities of the Committee.
Role
The Committee’s authority and duties are clearly
defined within its written terms of reference
which are available on request from the Company
Secretaries and at japantrustplc.co.uk. The terms of
reference are reviewed annually.
The Committee’s effectiveness is reviewed on an
annual basis as part of the Board’s performance
evaluation process.
At least once a year the Committee meets with the
external Auditor without any representative of the
Manager being present.
Main Activities of the Committee
The Committee met two times during the year
and Ernst & Young, the external Auditor, attended
both of these meetings. In addition, Ernst & Young
met with the Audit Chair on two occasions during
the year. Baillie Gifford & Co’s Internal Audit and
Compliance Departments and the AIFM’s permanent
risk function provided reports on their monitoring
programmes for each of these meetings.
The matters considered, monitored and reviewed
by the Committee during the course of the year
included the following:
• the results announcements and the Annual and
Interim reports;
• the Company’s accounting policies and practices;
• the regulatory changes impacting the Company;
• the fairness, balance and understandability of
the Annual Report and Financial Statements and
whether it provided the information necessary
for shareholders to assess the Company’s
performance, business model and strategy;
• the effectiveness of the Company’s internal
control environment including the internal audit
work of the Manager;
• the reappointment, remuneration and terms of
engagement of the external Auditor;
• the policy on the engagement of the external
Auditor to supply non-audit services;
• the independence and objectivity of the external
Auditor and the effectiveness of the audit process;
• the need for the Company to have its own internal
audit function;
• the internal controls reports received from the
Managers and Custodian; and
• the arrangements in place within Baillie Gifford
&Co whereby their staff may, in confidence, raise
concerns about possible improprieties in matters
of financial reporting or other matters.
Internal Audit
The Committee continues to believe that the
compliance and internal control systems and the
internal audit function in place within Baillie Gifford
provide sufficient assurance that a sound system
of internal control, which safeguards shareholders’
investment and the Company’s assets, is maintained.
An internal audit function, specific to the Company,
is therefore considered unnecessary.
The Baillie Gifford Japan Trust PLC
53
Financial Reporting
The Committee considers that the most significant
areas of risk likely to impact the Financial
Statements are the existence and valuation of
investments, as they represent 98.0% of total
assets. Another area of risk considered by the
Committee is the accuracy, completeness and
allocation of income from investments.
All of the investments are quoted securities and
market prices are readily available from independent
external pricing sources. The Committee reviewed
the Managers’ Report on Internal Controls which
details the controls in place regarding recording
and pricing of investments, accurate recording
of investment income and the reconciliation of
investment holdings to third party data.
The value of all the investments at 31August 2025
were agreed by the Managers to external price
sources and the portfolio holdings agreed to
confirmations from the Company’s Custodian.
The Committee reviewed the Managers’ Report on
Internal Controls which details the controls in place
regarding completeness and accurate recording of
investment income. The accounting treatment of
each special dividend received or receivable during
the year was reviewed by the Managers. Seven
special dividends totalling £188,000 were received
in the year to 31August 2025 and were all classified
as revenue.
The Committee considered the factors, including
increasing geopolitical tensions, that might affect
the Company’s viability over a period of five years
and its ability to continue as a going concern for
at least twelve months from the date of signing of
the Financial Statements, together with reports
from the Managers on the cash position and cash
flow projections of the Company, the liquidity of
its investment portfolio, compliance with debt
covenants, availability of borrowing facilities, and
the Company’s ability to meet its obligations as
they fall due. The Committee also reviewed the
Viability Statement on page 27 and statement on
Going Concern on pages 47 and 48. Following this
assessment, the Committee recommended to the
Board the appropriateness of the Going Concern
basis in preparing the Financial Statements and
confirmed the accuracy of the Viability Statement
and statement on Going Concern.
The Managers confirmed to the Committee that they
were not aware of any material misstatements in the
context of the Financial Statements as a whole and
that the Financial Statements are in accordance with
applicable law and accounting standards.
Internal Controls and Risk Management
The Committee reviewed the effectiveness of the
Company’s risk management and internal controls
systems as described on pages 53 and 54. No
significant weaknesses were identified in the year
under review.
External Auditor
Following a formal audit tender process in 2022,
Ernst & Young LLP was appointed as the Company’s
Auditor at the Annual General Meeting held on
15December 2022.
Ernst & Young LLP has confirmed that it believes it
is independent within the meaning of regulatory and
professional requirements and that the objectivity of
the audit partner and staff is not impaired.
To fulfil its responsibility regarding the independence
and objectivity of the external Auditor, the
Committee reviewed:
• the audit plan for the current year;
Governance Report
Annual Report and Financial Statements 2025
54
• a report from the Auditor describing their
arrangements to manage Auditor independence
and received confirmation of its independence; and
• the extent of non-audit services provided by the
external Auditor. The Auditor will not provide any
non-audit services unless approved in advance by
the Committee. There were no non-audit fees for
the year to 31August 2025 or 31August 2024.
To assess the effectiveness of the external Auditor,
the Committee reviewed and considered:
• the Auditor’s fulfilment of the agreed audit plan;
• feedback from the Managers on the performance
of the audit team; and
• the Audit Quality Review from the FRC.
To fulfil its responsibility for oversight of the external
audit process the Committee considered and
reviewed:
• the Auditor’s engagement letter;
• the Auditor’s proposed audit strategy;
• the audit fee; and
• a report from the Auditor on the conclusion of
theaudit.
The audit partner responsible for the audit will be
rotated at least every five years in accordance with
professional and regulatory standards in order to
protect independence and objectivity and to provide
fresh challenge to the business. Caroline Mercer, the
current partner, has held this role for 3years and will
continue as audit partner until the conclusion of the
2027 audit.
Having carried out the review described above, the
Committee is satisfied that the Auditor remains
independent and effective for the purposes of this
year’s audit.
There are no contractual obligations restricting the
Committee’s choice of external Auditor.
The audit fee has increased from £51,450 to
£53,000, in line with inflation.
Regulatory Compliance
The Committee confirms that the Company is in
compliance with the requirements of the Statutory
Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities)
Order 2014, which relates to the frequency and
governance of tenders for the appointment of the
external Auditor and the setting of policy on the
provision of non-audit services.
Accountability and Audit
The respective responsibilities of the Directors
and the Auditor in connection with the Financial
Statements are set out on pages 55 to 64.
On behalf of the Board
Sharon Brown
Audit Committee Chair
20 October 2025
The Baillie Gifford Japan Trust PLC
55
The Directors are responsible for preparing
the Annual Report and Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
Financial Statements for each financial year.
Under that law they are required to prepare the
Financial Statements in accordance with applicable
law and United Kingdom Accounting Standards,
including FRS 102, the Financial Reporting Standard
applicable in the UK and Republic of Ireland.
Under company law the Directors must not approve
the Financial Statements unless they are satisfied
that they give a true and fair view of the state of
affairs of the Company and of the profit or loss
of the Company for that year. In preparing these
Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• state whether applicable United Kingdom
Accounting Standards have been followed, subject
to any material departures disclosed and explained
in the Financial Statements;
• make judgements and accounting estimates that
are reasonable and prudent;
• assess the Company’s ability to continue as a
going concern, disclosing as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless
they either intend to liquidate the Company or to
cease operations, or have no realistic alternative
but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to ensure
that the Financial Statements comply with the
Companies Act 2006. They are responsible for such
internal control as they determine is necessary to
enable the preparation of Financial Statements that
are free from material misstatement, whether due
to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic
Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that
complies with those laws and regulations.
In accordance with Disclosure Guidance and
Transparency Rule 4.1.14R, the Financial Statements
will form part of the Annual Financial Report
prepared using the single electronic reporting
format under the TD ESEF Regulation. The Auditor’s
Report on these Financial Statements provides no
assurance over the ESEF format.
The Directors are responsible for the maintenance
and integrity of the Company’s page on the
Managers’ website. Legislation in the United
Kingdom governing the preparation and
dissemination of Financial Statements may
differfrom legislation in other jurisdictions.
Statement of Directors’
Responsibilities
in respect of the Annual Report and the Financial Statements
Governance Report
Annual Report and Financial Statements 2025
56
Responsibility Statement of the Directors in Respect
of the Annual Financial Report
We confirm to the best of our knowledge:
• the Financial Statements, which have been
prepared in accordance with applicable law and
United Kingdom Accounting Standards, give a
true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
• the Strategic Report and Directors’ Report
includes a fair review of the development and
performance of the business and the position of
the Company, together with a description of the
principal risks and uncertainties that it faces.
We consider the Annual Report and Financial
Statements taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
On behalf of the Board
David Kidd
20 October 2025
Notes
The following notes relate to financial statements published on a website and are not included in the printed
version of the Annual Report and Financial Statements:
• The maintenance and integrity of the Baillie Gifford & Co website is the responsibility of Baillie Gifford &
Co; the work carried out by the auditors does not involve consideration of these matters and accordingly,
the auditors accept no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website.
• Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Financial Report
The Financial Statements for the
year to 31August 2025 set out
on pages 65 to 81 have been
prepared in accordance with FRS
102 ‘The Financial Reporting
Standard applicable in the UK
andRepublic of Ireland’.
Financial Report
Annual Report and Financial Statements 2025
58
Independent Auditor’s Report
to the members of The Baillie Gifford Japan Trust PLC
Opinion
We have audited the financial statements of Baillie
Gifford Japan Trust plc (‘the Company’) for the
year ended 31 August 2025 which comprise the
Income Statement, Balance Sheet, Statement
of Changes in Equity, Cash Flow Statement, and
the related notes 1 to 19, including the summary
of significant accounting policies. The financial
reporting framework that has been applied in their
preparation is applicable law and United Kingdom
Accounting Standards including FRS 102 “The
Financial Reporting Standard applicable in the UK
and Republic of Ireland” (United Kingdom Generally
Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the Company’s affairs
as at 31 August 2025 and of its profit for the year
then ended;
• have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the
audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to public
interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these
requirements.
The non-audit services prohibited by the FRC’s
Ethical Standard were not provided to the Company
and we remain independent of the Company in
conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation
of the directors’ assessment of the Company’s ability
to continue to adopt the going concern basis of
accounting included:
• Confirmation of our understanding of the
Company’s going concern assessment process
and engagement with the Directors and the
Company secretaries to determine if all key factors
that we have become aware of during our audit
were considered in their assessment.
• Inspection of the directors’ assessment of going
concern, including the revenue forecast, for the
period to 31 October 2026 which is at least twelve
months from the date the financial statements
were authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is
able to continue to meet its ongoing costs as they
fall due.
The Baillie Gifford Japan Trust PLC
59
• Review of the factors and assumptions, including
the impact of the current economic environment,
as applied to the revenue forecast and the liquidity
assessment of the investments. We considered
the appropriateness of the methods used to
calculate the revenue forecast and the liquidity
assessment and determined, through testing
of the methodology and calculations, that the
methods, inputs and assumptions utilised were
appropriate to be able to make an assessment for
the Company.
• In relation to the Company’s borrowing
arrangements, we have inspected the directors’
assessment of the risk of breaching the debt
covenants as a result of a reduction in the value
of the Company’s portfolio. We recalculated the
Company’s compliance with debt covenants
in the scenarios assessed by the directors and
performed reverse stress testing in order to
identify what factors would lead to the Company
breaching the financial covenants.
• Consideration of the mitigating factors included
in the revenue forecast and covenant calculations
that are within the control of the Company. We
reviewed the Company’s assessment of the
liquidity of investments held and evaluated the
Company’s ability to sell those investments in
order to cover working capital requirements should
revenue decline significantly.
• For the continuation vote to be held at the AGM
in 2025, we reviewed analysis of the shareholder
base; voting results of previous AGMs to establish
voting patterns; and obtained feedback from the
Company’s shareholders and brokers on their
assessment of expected voting intentions, to
ascertain the likely outcome of the vote.
• Review of the Company’s going concern
disclosures included in the annual report in order
to assess that the disclosures were appropriate
and in conformity with the reporting standards.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Company’s ability to continue
as a going concern for the period to 31 October 2026
which is at least 12 months from when these financial
statements are authorised for issue.
In relation to the Company’s reporting on how they
have applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to
in relation to the directors’ statement in the financial
statements about whether the directors considered
it appropriate to adopt the going concern basis
ofaccounting.
Our responsibilities and the responsibilities of
the directors with respect to going concern are
described in the relevant sections of this report.
However, because not all future events or conditions
can be predicted, this statement is not a guarantee
as to the Company’s ability to continue as a going
concern.
Overview of our audit approach
Key audit
matters
Risk of incomplete or inaccurate revenue
recognition, including the classification of special
dividends as revenue or capital items in the
Income Statement.
Risk of incorrect valuation or ownership of the
investment portfolio
Materiality Overall materiality of £7.88m which represents
1% of shareholders’ funds.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determine our audit scope for the
Company. This enables us to form an opinion on
the financial statements. We take into account
size, risk profile, the organisation of the Company
and effectiveness of controls, the potential impact
of climate change and changes in the business
environment when assessing the level of work to
beperformed.
Climate change
Stakeholders are increasingly interested in how
climate change will impact companies. The
Company has determined that the impact of climate
change could affect the Company’s investments and
the overall investment process. This is explained
on page 29 in the principal and emerging risks
section, which form part of the “Other information,”
rather than the audited financial statements. Our
procedures on these unaudited disclosures therefore
consisted solely of considering whether they are
materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit
or otherwise appear to be materially misstated.
Our audit effort in considering the impact of climate
change on the financial statements was focused
on the adequacy of the Company’s disclosures
in the financial statements as set out in Note 1a
and concluded that there was no further impact
of climate change to be taken into account as the
investments are valued based on market pricing
as required by FRS 102. We also challenged the
directors’ considerations of climate change in their
assessment of viability and associated disclosures.
Financial Report
Annual Report and Financial Statements 2025
60
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due
to fraud) that we identified. These matters included
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Incomplete or inaccurate
revenue recognition, including
the classification of special
dividends as revenue or capital
items in the Income Statement
Refer to the Audit Committee
Report (page 53); Accounting
policies (page 70); and
Note02 of the Financial
Statements (page 71)
The total revenue for the
year to 31 August 2025 was
£14.94m (2024: £15.80m),
consisting primarily of dividend
income from listed equity
investments.
The investment income
receivable by the Company
during the year directly affects
the Company’s revenue return.
There is a risk of incomplete
or inaccurate recognition of
revenue through the failure
to recognise proper income
entitlements or to apply
an appropriate accounting
treatment.
In addition, the directors
may be required to exercise
judgment in determining
whether income receivable in
the form of special dividends
should be classified as
‘revenue’ or ‘capital’ in the
Income Statement.
We have performed the following procedures:
We obtained an understanding of Baillie Gifford’s processes
and controls surrounding revenue recognition, including the
classification of special dividends, by performing walkthrough
procedures.
For all dividends received, we recalculated the dividend income
by multiplying the investment holdings at the ex-dividend date,
traced from the accounting records, by the dividend per share,
which was agreed to an independent data vendor. We also
agreed all exchange rates to an external source. In addition, we
agreed the dividends received to bank statements.
For all dividends accrued at the year end, we reviewed the
investee company announcements to assess whether the
entitlement arose prior to 31 August 2025. We agreed the
dividend rate to corresponding announcements made by the
investee company, recalculated the amount receivable and
agreed the subsequent cash receipts to post-year end bank
statements where received.
To test completeness of recorded income, we verified that
dividends had been recorded for each investee company
held during the year with reference to investee company
announcements obtained from an independent data vendor.
For all investments held during the year, we reviewed the type
of dividends paid with reference to an external data source
to identify those which were ‘special’ dividends. We identified
seven (2024: one) special dividends, amounting to £0.19m
(2024: £0.09m), received during the year. We assessed the
appropriateness of one special dividend which, in aggregate,
exceeded our testing threshold. All other special dividends,
individually and collectively, were below our testing threshold.
For the selected dividend, we evaluated management’s
classification as revenue by reviewing the underlying rationale
of the distributions.
The results of our procedures
identified no material
misstatement in relation
to the risk of incomplete
or inaccurate revenue
recognition, including
incorrect classification of
special dividends as revenue
or capital items in the Income
Statement.
those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement
team. These matters were addressed in the context
of our audit of the financial statements as a whole,
and in our opinion thereon, and we do not provide a
separate opinion on these matters.
The Baillie Gifford Japan Trust PLC
61
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Risk of incorrect valuation
orownership of the
investmentportfolio
Refer to the Audit Committee
Report (page 53); Accounting
policies (page 70); and
Note09 of the Financial
Statements (pages 73 and 74)
The valuation of the investment
portfolio at 31 August 2025
was £889.77m (2024:
£886.34m) consisting of listed
equities.
The valuation of investments
held in the investment
portfolio is the key driver
of the Company’s net asset
value and total return.
Incorrect investment pricing,
or failure to maintain proper
legal title of the investments
held by the Company, could
have a significant impact
on the portfolio valuation
and the return generated for
shareholders.
The fair value of listed
investments is determined
using listed market bid prices
at close of business on the
reporting date.
We have performed the following procedures:
We obtained an understanding of Baillie Gifford’s processes
and controls surrounding investment valuation and legal title by
performing walkthrough procedures.
For all investments in the portfolio, we compared the market
prices and exchange rates applied to an independent pricing
vendor and recalculated the investment valuations as at the
year end.
We inspected the stale pricing reports produced by Baillie
Gifford to identify prices that have not changed within one
business day and verified whether the listed price is a valid fair
value. We did not identify any investments with stale pricing.
We compared the Company’s investment holdings at 31 August
2025 to independent confirmations received directly from the
Company’s Depositary.
The results of our procedures
identified no material
misstatements in relation
to the risk of incorrect
valuation or ownership of the
investment portfolio.
Our application of materiality
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably
be expected to influence the economic decisions
of the users of the financial statements. Materiality
provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Company to be
£7.88m (2024: £7.48m), which is 1% (2024: 1%) of
shareholders’ funds. We believe that shareholders
funds’ provides us with a materiality aligned with the
Company’s performance.
Performance materiality
The application of materiality is at the individual
account or balance level. It is set at an amount to
reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with
our assessment of the Company’s overall control
environment, our judgement was that performance
materiality was 75% (2024: 75%) of our planning
materiality, namely £5.91m (2024: £5.61m). We have
set performance materiality at this percentage due
to our past experience of the audit that indicates
a lower risk of misstatements, both corrected and
uncorrected.
Given the importance of the distinction between
revenue and capital for investment trusts, we
also applied a separate testing threshold for
the revenue column of the Income Statement of
£0.39m (2024: £0.45m).
Financial Report
Annual Report and Financial Statements 2025
62
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would
report to them all uncorrected audit differences in
excess of £0.39m (2024: £0.37m), which is set at
5% of planning materiality, as well as differences
below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against
both the quantitative measures of materiality
discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information
included in the annual report, other than the
financial statements and our auditor’s report
thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not
cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information
and, in doing so, consider whether the other
information is materially inconsistent with the
financial statements or our knowledge obtained in
the course of the audit or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives
rise to a material misstatement in the financial
statements themselves. If, based on the work we
have performed, we conclude that there is a material
misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by
theCompanies Act 2006
In our opinion the part of the directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the strategic report and
the directors’ report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
• the strategic report and directors’ reports have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required
to report by exception
In the light of the knowledge and understanding of
the Company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or directors’
report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept,
or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements and the part of the
Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Corporate Governance Statement
We have reviewed the directors’ statement in relation
to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to
the Company’s compliance with the provisions of the
UK Corporate Governance Code specified for our
review by the UK Listing Rules.
Based on the work undertaken as part of our audit,
we have concluded that each of the following
elements of the Corporate Governance Statement is
materially consistent with the financial statements or
our knowledge obtained during the audit:
• Directors’ statement with regards to the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on pages 47 and 48;
• Directors’ explanation as to their assessment
of the Company’s prospects, the period this
assessment covers and why the period is
appropriate set out on page 27;
• Directors’ statement on whether they have a
reasonable expectation that the Company will
be able to continue in operation and meets its
liabilities set out on pages 47 and 48;
The Baillie Gifford Japan Trust PLC
63
• Directors’ statement on fair, balanced and
understandable set out on page 56;
• Board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on pages 28 to 31;
• The section of the annual report that describes
the review of effectiveness of risk management
and internal control systems set out on pages 46
and47; and;
• The section describing the work of the audit
committee set out on pages 52 to 54.
Responsibilities of Directors
As explained more fully in the directors’
responsibilities statement set out on pages 55 and
56, the directors are responsible for the preparation
of the financial statements and for being satisfied
that they give a true and fair view, and for such
internal control as the directors determine is
necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud orerror.
In preparing the financial statements, the directors
are responsible for assessing the Company’s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern
and using the going concern basis of accounting
unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit
was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the
prevention and detection of fraud rests with both
those charged with governance of the Company and
management.
• We obtained an understanding of the legal and
regulatory frameworks that are applicable to
the Company and determined that the most
significant are United Kingdom Generally
Accepted Accounting Practice, the Companies
Act 2006, the Listing Rules, UK Corporate
Governance Code, the Association of
Investment Companies’ Code and Statement
of Recommended Practice, Section 1158 of the
Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
• We understood how the Company is complying
with those frameworks through discussions with
the Audit Committee and Company Secretaries
and review of Board minutes and the Company’s
documented policies and procedures within the
financial statements.
• We assessed the susceptibility of the Company’s
financial statements to material misstatement,
including how fraud might occur by considering
the key risks impacting the financial statements.
We identified a fraud risk with respect to the
incomplete or inaccurate revenue recognition
through incorrect classification of special
dividends as revenue or capital items in the
Income Statement. Further discussion of our
approach is set out in the section on key audit
matters above.
Financial Report
Annual Report and Financial Statements 2025
64
• Based on this understanding we designed our
audit procedures to identify non-compliance
with such laws and regulations. Our procedures
involved review of the reporting to the directors
with respect to the application of the documented
policies and procedures and review of the financial
statements to ensure compliance with the
reporting requirements of the Company.
A further description of our responsibilities for
theaudit of the financial statements is located
on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities.
Thisdescription forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the Audit
Committee, we were appointed by the Company
on 15 December 2022 to audit the financial
statements for the year ending 31 August 2023
and subsequent financial periods.
• The period of total uninterrupted engagement
including previous renewals and reappointments is
three years, covering the years ending 31 August
2023 to 31 August 2025.
• The audit opinion is consistent with the additional
report to the audit committee.
Use of our report
This report is made solely to the Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the Company’s members those matters we are
required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s
members as a body, for our audit work, for this
report, or for the opinions we have formed.
Caroline Mercer (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
Edinburgh
20 October 2025
The Baillie Gifford Japan Trust PLC
65
For the year ended 31August
Notes
2025
Revenue
£’000
2025
Capital
£’000
2025
Total
£’000
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
Gains on investments 9 – 114,301 114,301 – 51,567 51,567
Currency gains 14 – 3,155 3,155 – 4,776 4,776
Income 2 14,939 – 14,939 15,803 – 15,803
Investment management fee 3 (4,190) – (4,190) (4,297) – (4,297)
Other administrative expenses 4 (781) – (781) (715) – (715)
Net return before finance costs
and taxation
9,968 117,456 127,424 10,791 56,343 67,134
Finance costs of borrowings 5 (2,507) – (2,507) (1,795) – (1,795)
Net return on ordinary activities
before taxation
7,461 117,456 124,917 8,996 56,343 65,339
Tax on ordinary activities
6
(1,487) – (1,487) (1,580) – (1,580)
Net return on ordinary activities
after taxation for the financial year
attributable to equity shareholders
5,974 117,456 123,430 7,416 56,343 63,759
Return per ordinary share 7 7.32p 143.86p 151.18p 8.23p 62.55p 70.78p
Total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under
guidance published by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing operations.
A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is
both the profit and total comprehensive income for the year.
The accompanying notes on pages 69 to 81 are an integral part of the Financial Statements.
Income Statement
Financial Report
Annual Report and Financial Statements 2025
66
As at 31 August As at 31 August
Notes
2025
£’000
2025
£’000
2024
£’000
2024
£’000
Fixed assets
Investments 9 889,768 886,335
Current assets
Debtors 10 2,473 2,871
Cash and cash equivalents 19 15,515 5,305
17,988 8,176
Creditors
Amounts falling due within one year 11 (59,114) (146,132)
Net current liabilities (41,126) (137,956)
Total assets less current liabilities 848,642 748,379
Creditors
Amounts falling due after more than one year 12 (60,494) –
Net assets 788,148 748,379
Capital and reserves
Share capital 13 4,717 4,717
Share premium 14 213,902 213,902
Capital redemption reserve 14 203 203
Capital reserve 14 556,398 514,122
Revenue reserve 14 12,928 15,435
Equity shareholders’ funds 788,148 748,379
Net asset value per ordinary share 15 1,017.1p 855.0p
The Financial Statements of The Baillie Gifford Japan Trust PLC (Company registration number SC075954) on
pages 65 to 81 were approved and authorised for issue by the Board and were signed on 20 October 2025.
David Kidd
Chairman
The accompanying notes on pages 69 to 81 are an integral part of the Financial Statements.
Balance Sheet
The Baillie Gifford Japan Trust PLC
67
For the year ended 31August 2025
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 September 2024 4,717 213,902 203 514,122 15,435 748,379
Ordinary shares bought back 13, 14 – – – (75,180) – (75,180)
Net return on ordinary activities
aftertaxation
14 – – – 117,456 5,974 123,430
Dividends paid during the year 8 – – – – (8,481) (8,481)
Shareholders’ funds at 31 August 2025 4,717 213,902 203 556,398 12,928 788,148
For the year ended 31August 2024
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 September 2023 4,717 213,902 203 496,965 17,176 732,963
Ordinary shares bought back 13, 14 – – – (39,186) – (39,186)
Net return on ordinary activities
after taxation
14 – – – 56,343 7,416 63,759
Dividends paid during the year 8 – – – – (9,157) (9,157)
Shareholders’ funds at 31 August 2024 4,717 213,902 203 514,122 15,435 748,379
The accompanying notes on pages 69 to 81 are an integral part of the Financial Statements.
Statement of Changes in Equity
Financial Report
Annual Report and Financial Statements 2025
68
The accompanying notes on pages 69 to 81 are an integral part of the Financial Statements.
For the year ended 31August
Notes
2025
£’000
2025
£’000
2024
£’000
2024
£’000
Cash flows from operating activities
Net return on ordinary activities before taxation 124,917 65,339
Adjustments to reconcile company profit before tax to
net cash flow from operating activities
Net gains on investments 9 (114,301) (51,567)
Currency gains 14 (3,155) (4,776)
Finance costs of borrowings 5 2,507 1,795
Other capital movements
Changes in debtors 147 (250)
Changes in creditors 136 22
Taxation
Overseas withholding tax incurred (1,505) (1,580)
Cash from operations
†
8,746 8,983
Interest paid (2,371) (1,783)
Net cash inflow from operating activities 6,375 7,200
Cash flows from investing activities
Acquisitions of investments (59,469) (103,973)
Disposals of investments
169,229 128,098
Net cash inflow from investing activities 109,760 24,125
Cash flows from financing activities
Ordinary shares bought back (76,206) (36,519)
Dividends paid 8 (8,481) (9,157)
Bank loans drawn down 140,219 184,231
Loan notes drawn down 61,539 –
Bank loans repaid (221,146) (170,352)
Net cash outflow from financing activities (104,075) (31,797)
Increase/(decrease) in cash and cash equivalents 12,060 (472)
Exchange movements (1,850) (253)
Cash and cash equivalents at start of period 19 5,305 6,030
Cash and cash equivalents at end of period* 15,515 5,305
* Cash and cash equivalents represent cash at bank and short-term money market deposits repayable on demand.
†
Cash from operations includes dividends received of £15,054,000 (2024 – £15,810,000) and interest received of £1,000 (2024 – £3,000).
Cash Flow Statement
The Baillie Gifford Japan Trust PLC
69
01 Principal Accounting Policies
The Financial Statements for the year to 31August 2025
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 below which are unchanged from the prior year and
have been applied consistently.
The Financial Statements have also been prepared in
accordance with the Companies Act 2006, and with the
AIC’s Statement of Recommended Practice ‘Financial
Statements of Investment Trust Companies and Venture
Capital Trusts’ issued in November 2014 and updated
inJuly2022 with consequential amendments.
a. Basis of Accounting
All of the Company’s operations are of a continuing
nature and the Financial Statements are prepared
on a going concern basis under the historical cost
convention, modified to include the revaluation of fixed
asset investments and derivative financial instruments at
fair value through profit or loss, and on the assumption
that approval as an investment trust under section 1158
of the Corporation Tax Act 2010 and the Investment
Trust (Approved Company) (Tax) Regulations 2011 will
be retained. The Board has, in particular, considered
the impact of heightened market volatility and
macroeconomic and geopolitical concerns, including
inflation and interest rates. It has reviewed the results
of specific leverage and liquidity stress testing and
does not believe the Company’s going concern status
is affected. In addition, the Company is subject to an
annual continuation vote which in previous years has been
passed with a significant majority. The Directors have
no reason to believe that the vote will not continue to be
in favour based on their assessment of the Company’s
performance and the views collated from shareholders.
The Company’s assets, the majority of which are
investments in quoted securities which are readily
realisable, exceed its liabilities significantly. All borrowings
require the prior approval of the Board. Gearing levels and
compliance with borrowing covenants are reviewed by the
Board on a regular basis.
Notes to the Financial Statements
The Baillie Gifford Japan Trust PLC (the ‘Company’) was incorporated under the Companies Act 2006 in
Scotland as a public limited company with registered number SC075954. The Company is an investment
company within the meaning of section 833 of the Companies Act 2006 and carries on business as an
investment trust.
The Company has continued to comply with the
investment trust status requirements of section 1158
ofthe Corporation Tax Act 2010 and the Investment
Trust(Approved Company) (Tax) Regulations 2011.
TheCompany’s primary third party suppliers, including
itsManagers and Secretaries, Depositary and Custodian,
Registrar, Auditor and Broker, are not experiencing
significant operational difficulties affecting their
respective services to the Company.
In preparing these Financial Statements, the Directors
have considered the impact of climate change risk as a
principal risk set out on page 34, and have concluded that
it does not have a material impact on the Company’s
investments. The Directors consider the impact of climate
change on the value of the investments included in the
Financial Statements to already be reflected in their
prices as quoted on a stock exchange.
Accordingly, the Financial Statements have been
prepared on a going concern basis as it is the Directors’
opinion, having assessed the principal and emerging risks
and other matters set out in the Viability Statement on
page 27 which assesses the prospects of the Company
over a period of five years, that the Company will continue
in operational existence until at least 31October 2026,
which is for a period of at least twelve months from the
date of approval of these Financial Statements.
In order to better reflect the activities of the Company
and in accordance with guidance issued by the AIC,
supplementary information which analyses the Income
Statement between items of a revenue and capital nature
has been presented.
Financial assets and financial liabilities are recognised
inthe Company’s Balance Sheet when it becomes aparty
to the contractual provisions of the instrument.
The Directors consider the Company’s functional and
presentation currency to be sterling, (see consideration
in accounting policy (j)), as the Company’s shareholders
are predominantly based in the UK, the Company pays
its dividends and expenses in sterling and the Company
and its Manager, who are subject to the UK’s regulatory
environment, are also UK based.
Financial Report
Annual Report and Financial Statements 2025
70
b. Financial Instruments
The Company’s investments are classified as held at fair
value through profit and loss in accordance with sections
11 and 12 of FRS 102.
Purchases and sales of investments are recognised on a
trade date basis.
Investments in securities are initially recognised at fair
value which is taken to be their cost excluding expenses
incidental to purchases, and are subsequently measured
at fair value through profit and loss. The fair value of listed
investments is the last traded price which is equivalent
to the bid price on Japanese markets. Changes in the fair
value of investments and gains and losses on disposal are
recognised as capital items in the Income Statement.
c. Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and
deposits repayable on demand. Deposits are repayable
on demand if they can be withdrawn at any time without
notice and without penalty or if they have a maturity or
period of notice of not more than one working day.
d. Income
i. Income from equity investments is brought into account
on the date on which the investments are quoted
ex-dividend or, where no ex-dividend date is quoted, when
the Company’s right to receive payment is established.
ii. Special dividends are treated as repayments of capital
or income depending on the facts of each particular
case.
iii. If scrip is taken in lieu of dividends in cash, the net
amount of the cash dividend declared is credited to the
revenue account. Any excess in the value of the shares
received over the amount of the cash dividend foregone
is recognised as capital.
iv. Interest from fixed interest securities is recognised on
an effective yield basis (none were held in the period).
v. Overseas dividends include withholding tax deducted
atsource.
vi. Interest receivable on bank deposits is recognised on
an accruals basis.
e. Expenses
All expenses are accounted for on an accruals basis
and are charged to the revenue account except where
they relate directly to the acquisition or disposal of an
investment (transaction costs), in which case they are
recognised as capital within gains/losses on investments.
Expenses directly relating to the issuance of shares are
deducted from the proceeds of such issuance.
f. Finance Costs
Long-term borrowings are carried in the Balance Sheet
at amortised cost, representing the cumulative amount
of net proceeds after issue, plus accrued finance costs.
The finance costs of such borrowings are allocated
to the revenue account at a constant rate on the
carryingamount.
Gains and losses on the repurchase or early settlement
ofdebt are wholly charged to capital.
g. Taxation
The taxation charge represents non-recoverable overseas
taxes which is charged to the revenue account as it
relates to income received. Deferred taxation is provided
on all timing differences which have originated but not
reversed by the Balance Sheet date, calculated on a non-
discounted basis at the tax rates expected to apply when
the timing differences reverse, based on what has been
enacted or substantially enacted, relevant to the benefit
or liability. Deferred tax assets are recognised only to
the extent that it is more likely than not that there will be
taxable profits from which underlying timing differences
can be deducted.
h. Foreign Currencies
Transactions involving foreign currencies are converted
at the rate ruling at the time of the transaction. Monetary
assets, liabilities and equity investments held at fair value
in foreign currencies are translated at the closing rates
of exchange at the Balance Sheet date. Any gain or loss
arising from a change in exchange rate subsequent to the
date of the transaction is included as an exchange gain or
loss in the Income Statement and classified as a revenue
or capital item as appropriate.
i. Capital Reserve
Gains and losses on disposal of investments, changes in
the fair value of investments held, exchange differences of
a capital nature and the amount by which other assets and
liabilities valued at fair value differ from their book cost are
dealt with in this reserve. Purchases of the Company’s own
shares for cancellation are also funded from this reserve.
j. Significant Estimates and Judgements
The Directors do not believe that any accounting
judgements or estimates have been applied to these
accounting statements that have a significant risk of
causing material adjustment to the carrying amount
ofassets and liabilities within the next financialyear.
TheDirectors consider that the preparation of the
Financial Statements involves the following key
judgements:
(i) the functional currency of the Company is sterling
(seerationale in 1(a) above); and
(ii) the determination as to whether special dividends
should be treated as a repayment of capital or income
depending on the facts of each particular case.
k. Single Segment Reporting
The Company is engaged in a single segment of business,
being that of an investment trust company, consequently
no business segmental analysis is required.
The Baillie Gifford Japan Trust PLC
71
02 Income
2025
£’000
2024
£’000
Income from investments
Overseas dividends 14,938 15,800
Other income
Deposit interest 1 3
Total income 14,939 15,803
Special dividends received during the year amounted to £188,000 (2024 – £93,000) with £188,000 (2024 – £93,000) classed as
revenue and none (2024 – none) classed as capital.
03 Investment Management Fee – All Charged to Revenue
2025
£’000
2024
£’000
Investment management fee 4,190 4,297
Details of the Investment Management Agreement are disclosed on page 39. For the year to 31 August 2025, the annual
management fee is 0.65% on the first £250million of net assets and 0.55% on the remaining net assets, calculated and payable
quarterly. For the year to 31August 2024, the annual management fee was 0.75% on the first £50million of net assets, 0.65%
on the next £200 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly.
04 Other Administrative Expenses – All Charged to Revenue
2025
£’000
2024
£’000
General administrative expenses 103 48
Directors’ fees 176 173
Marketing* 100 95
Custody charges 79 109
Depositary fees 77 79
Auditors’ remuneration for audit services
†
53 51
Stock Exchange Listings 36 34
Regulatory Fees 35 32
Legal Fees 32 3
Broker Fees 30 30
Registrar fees 24 26
AIC Fees 22 21
Director’s liability insurance 14 14
781 715
* The Company is part of a marketing programme which includes all the Investment Trusts managed by the Manager. The marketing strategy has an
ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy is borne in partnership by the Company and
the Manager. The Manager matches the Company’s marketing contribution and provides the resource to manage and run the programme.
†
Auditor’s remuneration above is exclusive of VAT. There were no non-audit fees paid to the Auditor during the year (2024 – nil).
Financial Report
Annual Report and Financial Statements 2025
72
05 Finance Costs of Borrowings
2025
£’000
2024
£’000
Bank loans 1,501 1,795
Loan notes 1,006 –
2,507 1,795
The bank loan interest disclosed includes Nil (2024 – £17,000) paid in respect of yen deposits held at the Custodian bank.
06 Tax on Ordinary Activities
2025
£’000
2024
£’000
Analysis of charge in year
Overseas taxation 1,487 1,580
Factors affecting tax charge for year
The tax assessed for the year is lower than the average standard rate of corporation tax in the
UK of 25% (2024 – 25%). The differences are explained below:
Net return on ordinary activities before taxation 124,917 65,339
Net return multiplied by the average standard rate of corporation tax in the UK of 25%
(2024 – 25%)
31,229 16,335
Effects of:
Capital returns not taxable (29,364) (14,086)
Income not taxable (3,734) (3,950)
Overseas withholding tax 1,487 1,580
Taxable losses in year not utilised 1,869 1,701
Tax charge for the year 1,487 1,580
Factors that may affect Future Tax Charges
At 31August 2025 the Company had surplus management expenses and losses on non-trading loan relationships of £23,020,000
(2024 – £21,151,000). No deferred tax asset has been recognised in respect of these amounts because the Company is
not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and,
accordingly, it is unlikely that the Company will make taxable revenue profits in the future and it is not liable to tax on its capital
gains. The potential deferred tax asset has been calculated using a corporation tax rate of 25% (2024 – 25%).
Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to maintain
that status in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the
revaluation or disposal of investments.
The Baillie Gifford Japan Trust PLC
73
07 Net Return Per Ordinary Share
2025
Revenue
2025
Capital
2025
Total
2024
Revenue
2024
Capital
2024
Total
Net return per ordinary share 7.32p 143.86p 151.18p 8.23p 62.55p 70.78p
Net revenue return per ordinary share is based on the net revenue profit after taxation of £5,974,000 (2024 – net revenue profit of
£7,416,000) and on 81,645,278 (2024 – 90,078,258) ordinary shares, being the weighted average number of ordinary shares in
issue (excluding treasury shares) during the year.
Capital return per ordinary share is based on the net capital profit for the financial year of £117,456,000 (2024 – net capital profit
of £56,343,000) and on 81,645,278 (2024 – 90,078,258) ordinary shares, being the weighted average number of ordinary shares
in issue (excluding treasury shares) during the year.
Total return per ordinary share is based on the total profit for the financial year of £123,430,000 (2024 – total profit of £63,759,000)
and on 81,645,278 (2024 – 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding
treasury shares) during the year.
There are no dilutive or potentially dilutive shares in issue.
08 Ordinary Dividends
Set out below are the total dividends paid and 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. The revenue available for distribution out of current year profits by
way of dividend for the year is £5,974,000. The revenue reserve and the capital reserve (to the extent it constitutes realised profits)
are distributable by way of dividend.
2025 2024 2025
£’000
2024
£’000
Amounts recognised as distributions in the year:
Previous year’s final (paid 18 December 2024, 2023 paid on
20December 2023)
10.00p 10.00p 8,481 9,157
2025 2024 2025
£’000
2024
£’000
Dividends paid and payable in respect of the year:
Proposed final dividend (payable 15 December 2025, 2024 paid
18December 2024)
10.00p 10.00p 7,749* 8,753
* Based on ordinary shares in issue at 31 August 2025.
09 Investments
2025
£’000
2024
£’000
Financial assets
Listed equities 889,768 886,335
Total financial asset investments 889,768 886,335
Financial Report
Annual Report and Financial Statements 2025
74
09 Investments (continued)
Listed
equities
£’000
Listed
equities
£’000
Cost of investments held at start of year 847,222 814,448
Unrealised appreciation at start of year 39,113 44,038
Value of investments held at start of year 886,335 858,486
Movements in year:
Purchases at cost 58,341 105,190
Sales – proceeds (169,209) (128,908)
Sales – realised gains on sales 59,484 56,492
Movement in unrealised appreciation 54,817 (4,925)
Value of investments held at end of year 889,768 886,335
Cost of investments held at end of year 795,838 847,222
Unrealised appreciation at end of year 93,930 39,113
Value of investments held at end of year 889,768 886,335
The transaction costs of purchases and sales were £22,000 (2024 – £49,000) and £48,000 (2024 – £45,000) respectively.
The Company received £169,209,000 (2024 – £128,908,000) from investments sold during the year. The book costs of these
investments when they were purchased was £109,725,000 (2024 – £72,416,000). These investments have been revalued over
time and until they were sold, any unrealised gains/losses were included in the fair value of the investments.
2025
£’000
2024
£’000
Gains on investments
Realised gains on sales 59,484 56,492
Changes in investment holding gains 54,817 (4,925)
114,301 51,567
10 Debtors
2025
£’000
2024
£’000
Due within one year:
Income accrued and prepaid expenses 1,675 2,001
Sales for subsequent settlement 790 810
Other debtors 8 60
2,473 2,871
The carrying amount of debtors is a reasonable approximation of fair value.
The Baillie Gifford Japan Trust PLC
75
11 Creditors – Amounts Falling Due Within One Year
2025
£’000
2024
£’000
Bank loans 55,453 140,572
Purchases for subsequent settlement 270 1,399
Buybacks payable 1,640 2,666
Other creditors and accruals 1,751 1,495
59,114 146,132
Included in other creditors is £1,146,000, (2024 – £1,104,000) in respect of the investment management fee.
Borrowing facilities
At 31August 2025
Drawings
At 31August 2024
Drawings
Due within one year:
Revolving credit facility with Mizuho
Bank, Ltd. for ¥2,600 million, expired
March 2025
– ¥500 million (£2.613 million)
at 1.22%
¥1,000 million (£5.226 million)
at 1.43%
¥1,100 million (£5.748 million)
at 1.28%
1 year floating rate revolving credit
facility with Bank of New York Mellon for
¥15,000 million, expiring August 2026
¥11,000 million (£55.453 million)
at 1.92%
–
7 year fixed rate loan facility with ING
Bank N.V. for ¥9,300 million, expired
November 2024
– ¥9,300 million (£48.599 million)
at 1.58%
2 year floating rate loan facility with
Bank of New York Mellon for
¥
15,000
million, expired August 2025
– ¥15,000 million (£78.386 million)
at 1.16%
The main covenants relating to the above loans are:
i. Total borrowings shall not exceed 30% of the Company’s net asset value; and
ii. The Company’s minimum net asset value shall be ¥48,545,000,000 (£315,000,000).
There were no breaches of loan covenants during the year.
12 Creditors – Amounts Falling Due After More Than One Year
2025
£’000
Drawings
2024
£’000
Drawings
Loan notes
Due after one year:
Fixed rate unsecured private notes with
Canada Life:
– ¥4,000 million Series A Senior Notes
due 20 November 2029
¥4,000 million at 1.56% (£20,165,000) –
– ¥4,000 million Series B Senior Notes
due 20 November 2034
¥4,000 million at 2.05% (£20,165,000) –
– ¥4,000 million Series C Senior Notes
due 20 November 2038
¥4,000 million at 2.55% (£20,164,000) –
60,494 –
The main covenants relating to the above loan notes are:
i. Net borrowings shall not exceed 30% of the Company’s adjusted assets; and
ii. The Company’s minimum net asset value shall be ¥48,545,000,000 (£315,000,000).
There were no breaches of loan covenants during the year.
Financial Report
Annual Report and Financial Statements 2025
76
13 Called-up Share Capital
2025
Number
2025
£’000
2024
Number
2024
£’000
Authorised ordinary shares of 5p each 77,491,440 3,875 87,532,614 4,377
Treasury shares of 5p each 16,836,769 842 6,795,595 340
Allotted, called-up and fully paid ordinary shares of 5p each 94,328,209 4,717 94,328,209 4,717
The Company’s authority permits it to hold shares bought back in ‘treasury’. Such treasury shares may be subsequently either sold
for cash at a premium to net asset value per ordinary share or cancelled. In the year to 31August 2025, 10,041,174 shares with
a nominal value of £502,000, representing 11.5% of the issued share capital at 31August 2024, were bought back at a cost of
£75,180,000 and held in treasury (31August 2024 – 5,515,000 shares with a nominal value of £276,000 representing 5.9% of
the issued share capital at 31August 2023, were bought back at a cost of £39,186,000 and held in treasury). At 31August 2025
the Company had authority to buy back 6,318,845 ordinary shares. Over the period from 1September 2025 to 16 October 2025 a
further 570,000shares have been bought back and held in treasury at a cost of £5,236,000.
Under the provisions of the Company’s Articles, the share buy-backs are funded from the capital reserve.
In the year to 31August 2025, the Company sold no ordinary shares from treasury (2024 – no ordinary shares). The Company
issued no ordinary shares (2024 – no ordinary shares). As at 31August 2025 the Company had the authority to issue
8,608,761ordinary shares. Over the period from 1September 2025 to 16 October 2025 no further shares were issued by
theCompany.
14 Capital and Reserves
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 September 2024 4,717 213,902 203 514,122 15,435 748,379
Ordinary shares bought back – – – (75,180) – (75,180)
Gains on investments – – – 59,484 – 59,484
Changes in investment holding gains – – – 54,817 – 54,817
Exchange differences on borrowings – – – 5,005 – 5,005
Exchange differences on settlement
of investment transactions
– – – (353) – (353)
Other exchange differences – – – (1,497) – (1,497)
Dividends paid in the year – – – – (8,481) (8,481)
Revenue for the year – – – – 5,974 5,974
At 31 August 2025
4,717 213,902 203 556,398 12,928 788,148
The Baillie Gifford Japan Trust PLC
77
14 Capital and Reserves (continued)
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholders’
funds
£’000
At 1 September 2023 4,717 213,902 203 496,965 17,176 732,963
Ordinary shares bought back (39,186) – (39,186)
Gains on investments – – – 56,492 – 56,492
Changes in investment holding gains – – – (4,925) – (4,925)
Exchange differences on bank loans – – – 5,029 – 5,029
Other exchange differences – – – (253) – (253)
Dividends paid in the year – – – – (9,157) (9,157)
Revenue for the year – – – – 7,416 7,416
At 31 August 2024
4,717 213,902 203 514,122 15,435 748,379
The capital reserve includes unrealised investment holding gains of £93,931,000 (2024 – £39,113,000) as disclosed in note 9.
The revenue reserve of £12,928,000 and the capital reserve (to the extent it constitutes realised profits) of £461,839,000 are
distributable.
15 Shareholders’ Funds
The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in
accordance with the Articles of Association were as follows:
2025 2024
Shareholders’ funds £788,148,000 £748,379,000
Number of ordinary shares in issue at the year end
* 77,491,440 87,532,614
Shareholders’ funds per ordinary share
1,017.1p 855.0p
* Excluding shares held in treasury at 31August 2025 and 31August 2024.
16 Analysis of Change in Net Debt
At
1September
2024
£’000
Cash flows
£’000
Other
non-cash
changes
£’000
Exchange
movement
£’000
At
31August
2025
£’000
Cash at bank and in hand 5,305
12,060 –
(1,850) 15,515
Loans due within one year (140,572) 80,927 – 4,192
(55,453)
Loan notes due after one year –
(61,539) 232
813 (60,494)
(135,267) 31,095 232 3,508 (100,432)
17 Contingent Liabilities, Guarantees and Financial Commitments
There were no contingent liabilities, guarantees or financial commitments as at 31 August 2025.
At 31 August 2024, the Company had a commitment to draw down ¥12 billion of fixed rate, senior unsecured private notes which
had been arranged in July 2024, with funds subsequently drawn down on 20 November 2024.
Financial Report
Annual Report and Financial Statements 2025
78
18 Related Party Transactions and Transactions with Manager
Related Party Transactions
The Directors’ fees for the year and Directors’ shareholdings at 31August 2025 are detailed in the Directors’ Remuneration Report
on pages 49 to 51 respectively. No Director has a contract of service with the Company.
Transactions with Manager
The management fee due to Baillie Gifford and Co Limited is set out in note 3 on page 71 and the amount accrued at 31August 2025
is set out in note 11 on page 75. Details of the Investment Management Agreement are set out on page 39.
19 Financial Instruments
The Company invests in medium to smaller sized Japanese companies and makes other investments so as to achieve its
investment objective of long-term capital growth. The Company borrows money when the Board and Managers have sufficient
conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its
investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and
markets in which it invests and could result in a reduction in the Company’s net assets.
These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and
credit risk. The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood of a
permanent loss of capital rather than to minimise the short-term volatility.
The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting
period.
Market Risk
The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of
changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The
Board of Directors reviews and agrees policies for managing these risks and the Company’s Manager assesses the exposure
to market risk when making individual investment decisions as well as monitoring the overall level of market risk across the
investment portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown on pages 19 and 20.
i. Currency Risk
The Company’s assets, liabilities and income are principally denominated in yen. The Company’s functional currency and that in
which it reports its results is sterling. Consequently, movements in the yen/sterling exchange rate will affect the sterling value of
those items.
The Manager monitors the Company’s yen exposure (and any other overseas currency exposure) and reports to the Board on a
regular basis. The Manager assesses the risk to the Company of the overseas currency exposure by considering the effect on the
Company’s net asset value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income
and expenses are exposed. However, the currency in which a company’s share price is quoted is not necessarily the one in which
it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company’s
valuation than a simple translation of the currency in which the share price of the company is quoted.
Yen borrowings are used periodically to limit the Company’s exposure to anticipated future changes in the yen/sterling exchange
rate which might otherwise adversely affect the value of the portfolio of investments. The Company has the authority to use
forward currency contracts to limit the Company’s exposure to anticipated future changes in exchange rates so that the currency
risks entailed in holding the assets are mainly eliminated. No forward currency contracts have been used in the current or
prioryear.
Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability
is quoted, is shown below.
At 31August 2025
Investments
£’000
Cash and cash
equivalents
£’000
Borrowings
£’000
Other debtors
and creditors
£’000
Net
exposure
£’000
Yen 889,768 15,455 (115,947) 1,741 791,017
US$ – – – – –
Total exposure to currency risk 889,768 15,455 (115,947) 1,741 791,017
Sterling – 60 – (2,929) (2,869)
889,768 15,515 (115,947) (1,188) 788,148
The Baillie Gifford Japan Trust PLC
79
19 Financial Instruments (continued)
i. Currency Risk (continued)
At 31August 2024
Investments
£’000
Cash and cash
equivalents
£’000
Bank
loans
£’000
Other debtors
and creditors
£’000
Net
exposure
£’000
Yen 886,335 5,248 (140,572) 849 751,860
US$ – 1 – – 1
Total exposure to currency risk 886,335 5,249 (140,572) 849 751,861
Sterling – 56 – (3,538) (3,482)
886,335 5,305 (140,572) (2,689) 748,379
Currency Risk Sensitivity
At 31August 2025, if sterling had strengthened by 10% against the yen, with all other variables held constant, total net assets
and net return on ordinary activities after taxation would have decreased by £79,102,000 (2024 – £75,186,000). A 10%
weakening of sterling against the yen, with all other variables held constant, would mean total net assets and net return on
ordinary activities after taxation would have had a similar but opposite effect on the Financial Statement amounts.
ii. Interest Rate Risk
Interest rate movements may affect the level of income receivable on cash deposits. They may also impact upon the market value
of the Company’s investments as the effect of interest rate movements upon the earnings of a company may have a significant
impact upon the valuation of that company’s equity.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account
when making investment decisions and when entering borrowing agreements.
The Board reviews on a regular basis the amount of investments in cash and the income receivable on cash deposits.
The Company finances part of its activities through borrowings at approved levels. The amount of such borrowings and the
approved levels are monitored and reviewed regularly by the Board.
The interest rate risk profile of the Company’s interest bearing financial assets and liabilities at 31August 2025 is shown below.
Financial Assets
2025
£’000
2025
Weighted
average
interest rate
2025
Weighted
average
period until
maturity*
2024
£’000
2024
Weighted
average
interest rate
2024
Weighted
average
period until
maturity*
Cash:
Yen 15,455 – n/a 5,248 (<0.1%) n/a
US$ – n/a n/a 1 n/a n/a
Sterling 60 1.4% n/a 56 0.7% n/a
15,515 5,305
* Based on expected maturity date.
The cash deposits generally comprise overnight call or short-term money deposits and earn, or are charged, interest at floating
rates based on prevailing bank base rates.
Financial Report
Annual Report and Financial Statements 2025
80
19 Financial Instruments (continued)
Financial Liabilities
The interest rate risk profile of the Company’s borrowings at 31August was:
2025
Book value
£’000
2025
Weighted
average
interest rate
2025
Weighted
average
period until
maturity*
2024
Book value
£’000
2024
Weighted
average
interest rate
2024
Weighted
average
period until
maturity*
Borrowings:
Floating rate – Yen denominated 55,453 1.9% 12 months 140,572 1.3% 8 months
Fixed rate – Yen denominated 60,494 2.1% 108 months – – –
Interest Rate Risk Sensitivity
An increase of 100 basis points in interest rates, with all other variables held constant, would have decreased the Company’s total
net assets and total return on ordinary activities for the year ended 31August 2025 by £39,000 (2024 – decreased by £149,000).
Thisis mainly due to the Company’s exposure to interest rates on its cash balances and floating rate bank loans. Adecrease of
100 basis points would have had an equal but opposite effect. The Company does not hold bonds.
iii. Other Price Risk
Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s
net assets.
The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant
information from the Manager. The Board meets regularly and at each meeting reviews investment performance, the investment
portfolio and the rationale for the current investment positioning to ensure consistency with the Company’s objectives and
investment policies. The portfolio does not seek to reproduce the index, investments are selected based upon the merit of
individual companies and therefore performance is highly likely to diverge from the comparative index.
Other Price Risk Sensitivity
A full list of the Company’s investments is shown on pages 19 and 20. In addition, analyses of the sector listing and portfolio
positioning are shown on pages 16 to 18.
113% (2024 – 118%) of the Company’s net assets are invested in Japanese quoted equities. A 20% (2024 – 20%) increase in
quoted equity valuations at 31August 2025 would have increased total net assets and net return on ordinary activities after taxation
by £177,954,000 (2024 – £177,267,000). A decrease of 20% (2024 – 20%) would have had an equal but opposite effect.
Liquidity Risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is
not significant as the majority of the Company’s assets are in investments that are readily realisable.
The Board provides guidance to the Manager as to the maximum exposure to any one holding (see Investment Policy on page 25).
The Company has the power to take out borrowings, which give it access to additional funding when required. The Company’s
borrowing facilities are detailed in note 11 and 12.
The maturity profile of the Company’s undiscounted financial liabilities at 31 August was:
2025
£’000
2024
£’000
In less than one year 55,453 140,572
In more than one year, but not more than five years 20,165 –
In more than five years 40,329 –
115,947 140,572
Credit Risk
This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in
the Company suffering a loss. This risk is managed as follows:
• where the Manager makes an investment in a bond or other security with credit risk, that credit risk is assessed and then
compared to the prospective investment return of the security in question;
• the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate
segregates the assets of the Company. The Depositary has delegated the custody function to Bank of New York Mellon
(International) Limited. Bankruptcy or insolvency of the Custodian may cause the Company’s rights with respect to securities
held by the Custodian to be delayed. The Manager monitors the Company’s risk by reviewing the Custodian’s internal control
reports and reporting its findings to the Board.
The Baillie Gifford Japan Trust PLC
81
19 Financial Instruments (continued)
Credit Risk (continued)
• investment transactions are carried out with a large number of Brokers whose creditworthiness is reviewed by the Manager.
Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s Custodian bank ensures
that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of
cash or securities away from the Company is completed;
• the creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements,
wherein the creditworthiness of the entity acting as Broker or counterparty to the transaction is likely to be of sustained
interest, are subject to rigorous assessment by the Manager; and
• cash is only held at banks that have been identified by the Managers as reputable and of high credit quality. Credit quality of
our banking provider is publicly available.
Credit Risk Exposure
The exposure to credit risk at 31August was:
2025
£’000
2024
£’000
Cash and cash equivalents 15,515 5,305
Debtors 2,473 2,871
17,988 8,176
None of the Company’s financial assets are past due or impaired.
Fair Value of Financial Assets and Financial Liabilities
The Company’s investments are stated at fair value and the Directors are of the opinion that the reported values of the Company’s
other financial assets and liabilities approximate to fair value with the exception of the long-term borrowings related to loan notes
which are stated at amortised cost. The fair value of borrowings is shown below.
2025
Book
value
£’000
2025
Fair*
value
£’000
2024
Book
value
£’000
2024
Fair*
value
£’000
Bank loans due within one year 55,453 55,453 140,572 140,653
Loan notes
¥4,000 million at 1.56% 2029 20,165 20,153 – –
¥4,000 million at 2.05% 2034 20,165 20,276 – –
¥4,000 million at 2.55% 2038 20,164 19,974 – –
* The fair value of each debt instrument issued by the Company is calculated based on similar such instruments issued by comparable investment
vehicles and corporate entities with similar geographic exposure.
Capital Management
The Company does not have any externally imposed capital requirements other than the loan covenants detailed in note 11 and
note 12 on page 75. The capital of the Company is the ordinary share capital as detailed in note 13. It is managed in accordance
with its investment policy in pursuit of its investment objective, both of which are detailed on page 25, and shares may be
repurchased or issued as explained on pages 41 and 42.
Fair Value of Financial Instruments
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 financial assets designated as valued at fair value through profit or loss are all categorised as Level 1 in the above hierarchy
(2024 – all categorised as Level 1). None of the financial liabilities are designated at fair value through profit or loss in the
Financial Statements.
Financial Report
Annual Report and Financial Statements 2025
82
Glossary of Terms and Alternative
Performance Measures (‘APM’)
Total Assets
The total value of all assets held less all liabilities (other than liabilities in the form of borrowings).
Net Asset Value
Also described as shareholders’ funds, net asset value (‘NAV’) is the value of total assets less liabilities (including
borrowings). The NAV per ordinary share is calculated by dividing this amount by the number of ordinary shares
in issue (excluding treasury shares). Borrowings are valued at their book value. The Company’s yen denominated
loans are valued at their sterling equivalent.
Net Asset Value can also be expressed with borrowings valued at an estimate of their market worth or “fair value”.
The value of the borrowings at book and fair value are set out on page 81.
Net Asset Value (reconciliation of NAV at book value to NAV at fair value)
2025
£’000
2024
£’000
Net asset value per ordinary share (borrowings at book value) 1,017.1p 855.0p
Shareholders’ funds (borrowings at book value) 788,148 748,379
Add: book value of borrowings 115,947 140,572
Less: fair value of borrowings (115,856) (140,653)
Shareholders’ funds (borrowings at fair value) 788,239 748,298
Number of shares in issue 77,491,440 87,532,614
Net asset value per ordinary share (borrowings at fair value) 1,017.2p 854.9p
(Discount)/Premium (APM)
As stockmarkets and share prices vary, an investment trust’s share price is rarely the same as its NAV.
Whenthe share price is lower than the NAV per ordinary share it is said to be trading at a discount. The size of the
discount is calculated by subtracting the NAV per ordinary share from the share price and is usually
expressed as a percentage of the NAV per ordinary share. If the share price is higher than the NAV per
ordinary share, this situation is called a premium. Average discount has been calculated on the basis of
average daily discount for the year to 31 August 2025.
31August
2025
31August
2024
NAV (book) NAV (fair) NAV (book) NAV (fair)
NAV 1,017.1p 1,017.2p 855.0p 854.9p
Share price 901.0p 901.0p 756.0p 756.0p
Discount (11.4%) (11.4%) (11.6%) (11.6%)
The Baillie Gifford Japan Trust PLC
83
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.
2025
NAV
(book)
2025
NAV
(fair)
2025
Share
price
2024
NAV
(book)
2024
NAV
(fair)
2024
Share
price
Closing NAV per ordinary share/share price (a) 1,017.1p 1,017.2p 901.0p 855.0p 854.9p 756.0p
Dividend adjustment factor
* (b) 1.0127 1.0127 1.0142 1.0135 1.0135 1.0150
Adjusted closing NAV per ordinary share/
shareprice
(c) = (a) x (b) 1,030.0p 1,030.1p 913.8p 866.5p 866.4p 767.3p
Opening NAV per ordinary share/share price
(d) 855.0p 854.9p 756.0p 787.7p 787.9p 735.0p
Total return
((c) ÷ (d)) –1 20.5% 20.5% 20.9% 10.0% 10.0% 4.4%
* The dividend adjustment factor is calculated on the assumption that the dividend of 10.0p (2024 – 10.0p) paid by the Company during the year was
invested into shares of the Company at the cum income NAV per ordinary share/share price, as appropriate, at the ex-dividend date.
Turnover
Annual turnover of the investment portfolio shares is calculated on a rolling 12 month basis. The lower of
purchases and sales for the 12 months is divided by the average assets, with average assets being calculated
on assets as at each month’s end.
Ongoing Charges (APM)
The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average
netasset value.
2025
£’000
2024
£’000
Investment management fee 4,190 4,297
Other administrative expenses 781 715
Total expenses (a) 4,971 5,012
Average net asset value
* (b)
698,645 723,432
Ongoing charges (a) ÷ (b) expressed as a percentage 0.71%
0.69%
* Average of daily net asset values calculated during the year.
Financial Report
Annual Report and Financial Statements 2025
84
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow
money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders’
assets is called ‘gearing’. If the Company’s assets grow, the shareholders’ assets grow proportionately more
because the debt remains the same. But if the value of the Company’s assets falls, the situation is reversed.
Gearing can therefore enhance performance in rising markets but can adversely impact performance
in falling markets. The level of gearing can be adjusted through the use of derivatives which affect the
sensitivity of the value of the portfolio to changes in the level of markets.
Net gearing is the Company’s borrowings 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.
2025 2024
Net
gearing*
£’000
Gross
gearing
†
£’000
Net
gearing*
£’000
Gross
gearing
†
£’000
Borrowings (a) 115,947 115,947 140,572 140,572
Cash and cash equivalents
(b) 15,515 – 5,305 –
Shareholders’ funds
(c) 788,148 788,148 748,379 748,379
Gearing
12.8% 14.7% 18.1% 18.8%
* Net gearing: ((a) – (b)) divided by (c), expressed as a percentage.
†
Gross gearing: (a) divided by (c), expressed as a percentage.
Leverage (APM)
For the purposes of the UK Alternative Investment Fund Managers (‘AIFM’) Regulations, leverage is any
method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives.
It is expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on
a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s
positions after the deduction of sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash
balances and after certain hedging and netting positions are offset against each other.
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.
Shareholder
Information
Shareholder Information
Annual Report and Financial Statements 2025
86
Notice of Annual
General Meeting
John
Lewis
A8 Princes Street
Ge
orge Street
Calton Square
Bus
Station
Omni
Centre
Balmoral
Hotel
L
e
i
t
h
S
t
r
e
e
t
Queen Street
W
a
t
e
r
l
o
o
P
l
a
c
e
C
a
l
t
o
n
H
i
l
l
C
a
l
t
o
n
R
o
a
d
St Andrew Square
Edinburgh
Waverley
Station
Leith
Walk
A7 North Bridge
York Place
G
r
e
e
n
sid
e
R
o
w
Tram
Stop
St Andrew Square
St Andrew Square
Tram
Stop
By Rail:
Edinburgh Waverley – approximately a 5 minute walk away
By Bus:
Lothian Buses local services include:
1, 3, 5, 7, 8, 10, 14, 15, 16, 25, 34
By Tram:
Stops at St Andrew Square and Picardy Place
Access to Waverley Train Station on foot
The Annual General Meeting of The Baillie Gifford
Japan Trust PLC will be held at the offices of
BaillieGifford & Co, Calton Square, 1Greenside Row,
Edinburgh EH1 3AN, on Wednesday, 10December
2025 at 11.30am. You will find directions to the venue
by scanning the QR code above.
To accurately reflect the views of shareholders of the
Company, the Board intends to hold the AGM voting
on a poll.
The Board encourages all shareholders to
submit proxy voting forms as soon as possible
and, in any event, by no later than 11.30am on
Monday, 8December 2025. We would encourage
shareholders to monitor the Company’s website
at japantrustplc.co.uk. Should shareholders
have questions for the Board or the Managers
or any queries as to how to vote, they are
welcome, as always, to submit them by email to
enquiries@bailliegifford.com or call 08009172113.
Baillie Gifford may record your call. Further details on
voting can be found on pages89to90.
The Baillie Gifford Japan Trust PLC
87
Notice is hereby given that the forty fourth Annual
General Meeting of The Baillie Gifford Japan Trust
PLC will be held at the offices of Baillie Gifford &
Co, Calton Square, 1 Greenside Row, Edinburgh
EH13AN, on Wednesday, 10December 2025 at
11.30am for the following purposes:
Ordinary Business
To consider and, if thought fit, to pass the following
Resolutions as Ordinary Resolutions.
01. To receive and adopt the Financial Statements
of the Company for the year to 31August 2025
with the Reports of the Directors and of the
Independent Auditor thereon.
02. To approve the Directors’ Annual Report on
Remuneration for the year to 31August 2025.
03. To declare a final dividend of 10p per ordinary
share.
04. To re-elect Sam Davis as a Director.
05. To re-elect Sharon Brown as a Director.
06. To re-elect Joanna Pitman as a Director.
07. To re-elect Patricia Lewis as a Director.
08. To re-appoint Ernst & Young LLP as Independent
Auditor of the Company to hold office from the
conclusion of this meeting until the conclusion
of the next Annual General Meeting at which
the Financial Statements are laid before the
Company.
09. To authorise the Directors to determine the
remuneration of the Independent Auditor of
theCompany.
10. That, pursuant to article 165 of the Articles
of Association of the Company, this meeting
hereby approves the continuance of the
Company until the Annual General Meeting
of the Company held in respect of the year
to31August 2026.
11. That, in substitution for any existing authority,
but without prejudice to the exercise of any such
authority prior to the date hereof, the Directors
of the Company be and they are hereby
generally and unconditionally authorised in
accordance with section 551 of the Companies
Act 2006 (the ‘Act’) to exercise all the powers of
the Company to allot shares in the Company and
to grant rights to subscribe for or to convert any
security into shares in the Company (‘Securities’)
provided that such authority shall be limited to
the allotment of shares and the grant of rights
in respect of shares with an aggregate nominal
value of up to £384,607.20 such authority to
expire at the conclusion of the next Annual
General Meeting of the Company after the
passing of this resolution or on the expiry of
15 months from the passing of this resolution,
whichever is the earlier, unless previously
revoked, varied or extended by the Company in
a general meeting, save that the Company may
at any time prior to the expiry of this authority
make an offer or enter into an agreement which
would or might require Securities to be allotted
or granted after the expiry of such authority
and the Directors shall be entitled to allot or
grant Securities in pursuance of such an offer or
agreement as if such authority had not expired.
To consider and, if thought fit, to pass Resolutions
12 and 13 as Special Resolutions.
12. That, subject to the passing of Resolution 11
above, and in substitution for any existing power
but without prejudice to the exercise of any such
power prior to the date hereof, the Directors of
the Company be and they are hereby generally
empowered, pursuant to sections 570 and 573
of the Companies Act 2006 (the ‘Act’), to allot
equity securities (within the meaning of section
560(1) of the Act), for cash pursuant to the
authority given by Resolution 11 above, and to
sell treasury shares for cash, as if section 561(1)
of the Act did not apply to any such allotment or
sale, provided that this power:
a. expires at the conclusion of the next Annual
General Meeting of the Company after the
passing of this Resolution or on the expiry of
15 months from the passing of this Resolution,
whichever is the earlier, save that the Company
may, before such expiry, make an offer or
agreement which would or might require
equity securities to be allotted or treasury
shares to be sold after such expiry and the
Directors may allot equity securities or sell
treasury shares in pursuance of any such offer
or agreement as if the power conferred hereby
had not expired; and
Shareholder Information
Annual Report and Financial Statements 2025
88
b. shall be limited to the allotment of equity
securities or the sale of treasury shares up to
an aggregate nominal value of £384,607.20
being approximately 10% of the nominal value
of the issued share capital of the Company, as
at 16 October 2025.
13. That, in substitution for any existing authority
but without prejudice to the exercise of any such
authority prior to the date hereof, the Company
be and is hereby generally and unconditionally
authorised, pursuant to and in accordance
with section 701 of the Companies Act 2006
(the ‘Act’) to make market purchases (within
the meaning of section 693(4) of the Act) of
fully paid ordinary shares of 5 pence each in
the capital of the Company (‘ordinary shares’)
(either for retention as treasury shares for
future reissue, resale, transfer or cancellation),
provided that:
a. the maximum aggregate number of ordinary
shares hereby authorised to be purchased
is 11,530,523.86, or, if less, the number
representing approximately 14.99% of
the issued ordinary share capital of the
Company as at the date of the passing of
this Resolution;
b. the minimum price (excluding expenses)
which may be paid for each ordinary share is
5 pence;
c. the maximum price (excluding expenses)
which may be paid for each ordinary share
shall not be more than the higher of:
i. 5% above the average closing price
on the London Stock Exchange of an
ordinary share over the five business
days immediately preceding the date of
purchase; and
ii. the amount equal to the higher of the price
of the last independent trade of an ordinary
share and the highest current independent
bid for an ordinary share on the trading
venue where the purchase is carried out; and
d. unless previously varied, revoked or renewed
by the Company in a general meeting, the
authority hereby conferred shall expire at the
conclusion of the Annual General Meeting
of the Company to be held in respect of the
year ending 31 August 2026, save that the
Company may, prior to such expiry, enter
into a contract to purchase ordinary shares
under such authority which will or might be
completed or executed wholly or partly after
the expiration of such authority and may make
a purchase of ordinary shares pursuant to any
such contract.
By Order of the Board
Baillie Gifford & Co Limited
Company Secretaries
20 October 2025
The Baillie Gifford Japan Trust PLC
89
Notes
01. As a member you are entitled to appoint a proxy
or proxies to exercise all or any of your rights
to attend, speak and vote at the AGM. A proxy
need not be a member of the Company but
must attend the AGM to represent you. You may
appoint more than one proxy provided each
proxy is appointed to exercise rights attached to
different shares. You can only appoint a proxy
using the procedure set out in these notes and
the notes to the proxy form. You may not use
any electronic address provided either in this
notice or any related documents (including
the Financial Statements and proxy form) to
communicate with the Company for any purpose
other than those expressly stated.
02. To be valid any proxy form or other instrument
appointing a proxy, together with any power
of attorney or other authority under which it
is signed or a certified copy thereof, must be
received by post or (during normal business
hours only) by hand at the Registrars of the
Company at Computershare Investor Services
PLC, The Pavilions, Bridgwater Road, Bristol,
BS99 6ZY or eproxyappointment.com no later
than 2 days (excluding non-working days)
before the time of the meeting or any adjourned
meeting.
03. CREST members who wish to appoint a proxy
or proxies through the CREST electronic
proxyappointment service may do so by
usingthe procedures described in the CREST
Manual and/or by logging on to the website
euroclear.com/CREST. CREST personal
members or other CREST sponsored members,
and those CREST members who have appointed
a voting service provider(s), should refer to their
CREST sponsor or voting service provider(s),
who will be able to take the appropriate action
on their behalf.
04. In order for a proxy appointment or instruction
made using the CREST service to be valid, the
appropriate CREST message (a ‘CREST Proxy
Instruction’) must be properly authenticated
in accordance with Euroclear UK & Ireland
Limited’s specifications, and must contain the
information required for such instruction, as
described in the CREST Manual. The message,
regardless of whether it constitutes the
appointment of a proxy or is an amendment to
the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted
so as to be received by the Company’s Registrar
(ID 3RA50) no later than 2 days (excluding
non-working days) before the time of the
meeting or any adjournment. For this purpose,
the time of receipt will be taken to be the time
(as determined by the timestamp applied to
the message by the CREST Application Host)
from which the Company’s Registrar is able to
retrieve the message by enquiry to CREST in
the manner prescribed by CREST. After this time
any change of instructions to proxies appointed
through CREST should be communicated to the
appointee through other means.
05. CREST members and, where applicable, their
CREST sponsors, or voting service providers
should note that Euroclear UK & Ireland Limited
does not make available special procedures
in CREST for any particular message. Normal
system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST
member is a CREST personal member, or
sponsored member, or has appointed a voting
service provider(s), to procure that his/her
CREST sponsor or voting service provider(s)
take(s)) such action as shall be necessary to
ensure that a message is transmitted by means
of the CREST system by any particular time. In
this connection, CREST members and, where
applicable, their CREST sponsors or voting
service providers are referred, in particular,
tothose sections of the CREST Manual
concerning practical limitations of the CREST
system and timings.
06. The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out
in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
07. The return of a completed proxy form or other
instrument of proxy will not prevent you attending
the AGM and voting in person if you wish.
Shareholder Information
Annual Report and Financial Statements 2025
90
08. Pursuant to Regulation 41 of the Uncertificated
Securities Regulations 2001 and section 311 of
the Companies Act 2006 the Company specifies
that to be entitled to attend and vote at the
Annual General Meeting (and for the purpose of
the determination by the Company of the votes
they may cast), shareholders must be registered
in the Register of Members of the Company no
later than 2 days (excluding non-working days)
prior to the commencement of the AGM or any
adjourned meeting. Changes to the Register
of Members after the relevant deadline shall
be disregarded in determining the rights of any
person to attend and vote at the meeting.
09. Any person to whom this notice is sent who is
a person nominated under section 146 of the
Companies Act 2006 to enjoy information rights
(a ‘Nominated Person’) may, under an agreement
between him/her and the shareholder by whom
he/she was nominated, have a right to be
appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting.
If a Nominated Person has no such proxy
appointment right or does not wish to exercise it,
he/she may, under any such agreement, have a
right to give instructions to the shareholder as to
the exercise of voting rights.
10. The statement of the rights of shareholders in
relation to the appointment of proxies in notes
1 and 2 above does not apply to Nominated
Persons. The rights described in those notes
can only be exercised by shareholders of
theCompany.
11. The members of the Company may require the
Company to publish, on its website, (without
payment) a statement (which is also passed
to the Auditor) setting out any matter relating
to the audit of the Company’s Financial
Statements, including the Auditor’s Report and
the conduct of the audit. The Company will
be required to do so once it has received such
requests from either members representing
at least 5% of the total voting rights of the
Company or at least 100 members who have
a relevant right to vote and hold shares in the
Company on which there has been paid up an
average sum per member of at least £100. Such
requests must be made in writing and must state
your full name and address and be sent to the
Company at Calton Square, 1 Greenside Row,
Edinburgh, EH1 3AN.
12. Information regarding the Annual General
Meeting, including information required by
section 311A of the Companies Act 2006,
isavailable from the Company’s page of the
Managers’ website at japantrustplc.co.uk.
13. Members have the right to ask questions at the
meeting in accordance with section 319A of the
Companies Act 2006.
14. Any corporation which is a member can appoint
one or more corporate representatives who
may exercise on its behalf all of its powers as a
member provided that each representative does
so in relation to distinct shares.
15. As at 16 October 2025 (being the last
practicable day prior to the publication of this
notice) the Company’s issued share capital
consisted of 76,921,440 ordinary shares,
carrying one vote each. Therefore, the total
voting rights in the Company as at 16October
2025 were 76,921,440 votes.
16. Any person holding 3% or more of the total
voting rights of the Company who appoints a
person other than the Chairman of the meeting
as his/her proxy will need to ensure that both
he/she and his/her proxy complies with their
respective disclosure obligations under the UK
Disclosure and Transparency Rules.
17. No Director has a contract of service with
theCompany.
The Baillie Gifford Japan Trust PLC
91
Investor Disclosure Document
The UK Alternative Investment Fund Managers
Regulations require certain information to be made
available to investors prior to their investment in
the Company. The Company’s Investor Disclosure
Document is available for viewing at
japantrustplc.co.uk.
How to Invest
The Company’s shares are traded on the London
Stock Exchange. They can be bought by placing
an order with a stockbroker or by asking a
professional adviser to do so. If you are interested
in investing directly in Baillie Gifford Japan, you
can do so online. There are a number of companies
offering real time online dealing services. Find
out more byvisiting the investment trust pages at
bailliegifford.com.
Sources of Further Information
on the Company
The price of shares is quoted daily in the Financial
Times and can also be found on the Company’s page
of the Managers’ website at japantrustplc.co.uk,
Trustnet at trustnet.com and on other financial
websites. Monthly factsheets are also available on
the Baillie Gifford website. These are available from
Baillie Gifford on request.
Baillie Gifford Japan Identifiers
ISIN GB0000485838
Sedol 0048583
Ticker BGFD
Legal Entity Identifier 54930037AGTKN765Y741
Key Dates
The Annual Report and Financial Statements
are normally issued in October and the AGM is
normally held in December. Dividends will be paid
by way of a single final payment shortly after the
Company’sAGM.
Capital Gains Tax
The cost for capital gains taxation purposes to
shareholders who subscribed for ordinary shares
(with warrants attached) is apportioned between
theordinary shares and the warrants on the
following basis:
Cost of each ordinary share 96.548p
Cost of fraction for warrant 3.452p
100.000p
The market value of the ordinary shares on 31March 1982 was
15.4p. The market values on 20November 1991 (first day of
dealing of new warrants) were as follows:
Ordinary shares 120p
Warrants 26p
The above cost and market value figures have
beenrestated for the five for one share split in
November 2000.
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
03708893221.
This helpline also offers an automated self-service
functionality (available 24 hours a day, 7 days a
week) which allows you to:
• hear the latest share price;
• confirm your current share holding balance; and
• order Change of Address and Stock Transfer
forms.
You can also check your holding on the Registrars’
website at investorcentre.co.uk. They also offer a
free, secure share management website service
which allows you to:
• view your share portfolio and see the latest market
price of your shares;
Further Shareholder
Information
Shareholder Information
Annual Report and Financial Statements 2025
92
• calculate the total market price of each
shareholding;
• view price histories and trading graphs;
• change address details; and
• use online dealing services.
To take advantage of this service, please log in at
investorcentre.co.uk and enter your Shareholder
Reference Number and Company Code (this
information can be found on your share certificate).
Dividend Reinvestment Plan
Computershare operates a Dividend Reinvestment
Plan which can be used to buy additional shares
instead of receiving your dividend via cheque or into
your bank account. For further information log into
investorcentre.co.uk and follow the instructions or
telephone 0370 707 1694.
Electronic Proxy Voting
If you hold stock in your own name you can choose
to vote by returning proxies electronically at
eproxyappointment.com.
If you have any questions about this service please
contact Computershare on 0370 889 3221.
CREST Proxy Voting
If you are a user of the CREST system (including
a CREST Personal Member), you may appoint
oneor more proxies or give an instruction to a
proxy byhaving an appropriate CREST message
transmitted. For further information please refer to
the CREST Manual.
Voting via an Investment Platform
If you are a shareholder who holds shares via a
platform, you should be able to exercise your right
to vote by contacting the platform provider directly.
You can instruct the platform how to vote your
shares or ask to be appointed as a proxy in respect
of your shareholding should you wish to attend,
speak and vote at the Annual General Meeting.
Further guidance can be obtained from your platform
provider or the Association of Investment Companies
at the aic.co.uk/how-to-vote-your-shares.
Data Protection
The Company is committed to ensuring the
confidentiality and security of any personal data
provided to it. Further details on how personal data
is held and processed on behalf of the Company
can be found in the privacy policy available on the
Company’s website japantrustplc.co.uk.
UK Alternative Investment Fund
Managers (AIFM) Regulations
In accordance with the UK AIFM Regulations,
information in relation to the Company’s leverage
and the remuneration of the Company’s AIFM,
Baillie Gifford & Co Limited, is required to be
made available to investors. In accordance with
the Regulations, the AIFM remuneration policy
is available at bailliegifford.com or on request
(see contact details on page 98). The numerical
remuneration disclosures in respect of the AIFM’s
reporting period (year ended 31March 2025) are
available at bailliegifford.com.
The Company’s maximum and actual leverage
(see Glossary of Terms and Alternative
PerformanceMeasures on pages 82 to 84) levels at
31August 2025 are shown on the next page:
Leverage
Gross
method
Commitment
method
Maximum limit 2.50:1 2.00:1
Actual 1.17:1 1.17:1
The Baillie Gifford Japan Trust PLC
93
Automatic Exchange of Information
In order to fulfil its obligations under UK Tax
Legislation relating to the automatic exchange of
information, the Company 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.
As an affected company, The Baillie Gifford Japan
Trust 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.
All 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/government/publications/exchange-of-
information-account-holders.
Third Party Data Provider 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.
Notes
None of the views expressed in this document
should be construed as advice to buy or sell a
particular investment.
Investment trusts are UK public listed companies
and as such comply with the requirements of the
Financial Conduct Authority (FCA). They are not
authorised or regulated by the FCA.
The Baillie Gifford Japan Trust PLC currently
conducts its affairs, and intends to continue to
conduct its affairs, so that the Company’s ordinary
shares can qualify to be considered as a mainstream
investment product and can be recommended by
Independent Financial Advisers to ordinary retail
investors in accordance with the rules of the FCA in
relation to non-mainstream investment products.
Shareholder Information
Annual Report and Financial Statements 2025
94
One year summary
Year to 31August 2025
31August
2025
31August
2024
%
change
Total return (%)*
Net asset value per ordinary share 20.5 10.0
Net asset value per ordinary share (borrowings at fair value)
20.5 10.0
Share price 20.9 4.4
Benchmark
†
12.1 14.7
Total assets (before deduction of borrowings) £904.0m £889.0m
Borrowings £115.9m £140.6m
Shareholders’ funds £788.1m £748.4m
Net asset value per ordinary share 1,017.1p 855.0p 19.0%
Net asset value per ordinary share (borrowings at fair value) 1,017.2p 854.9p 19.0%
Share price 901.0p 756.0p 19.2%
Discount* (11.4%) (11.6%)
Revenue earnings per ordinary share 7.32p 8.23p
Dividend per ordinary share payable and paid in respect of the financial year 10.00p 10.00p –
Dividend yield 1.1% 1.3%
Ongoing charges* 0.71% 0.69%
Yen/sterling exchange rate
198.4 191.4 3.7%
Active share*
84% 84%
Year to 31August 2025 2025 2024 2024
Year’s high and low High Low High Low
Net asset value per ordinary share 1,030.4p 708.4p 879.7p 707.5p
Share price 915.0p 657.0p 766.0p 641.0p
Premium/(discount)* (7.2%) (16.5%) (6.1%) (14.8%)
Year to 31August 2025 2024
Net return per ordinary share
Revenue return 7.32p 8.23p
Capital return 143.86p 62.55p
Total return 151.18p 70.78p
* Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84.
†
The benchmark is the TOPIX total return (in sterling terms).
Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93.
Past performance is not a guide to future performance.
The following information illustrates how the Company has performed over the year to 31 August 2025.
Thenet asset value total return was 20.5% outperforming the Company’s benchmark total return which
was12.1%.
The Baillie Gifford Japan Trust PLC
95
* Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84.
†
The benchmark is the TOPIX total return (in sterling terms).
Source: Refinitiv/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93.
Past performance is not a guide to future performance.
Five Year Summary
The following charts indicate how an investment in Baillie Gifford Japan has performed relative to its
benchmark
†
over the five year period to 31August 2025.
Five Year Total Return Performance
*
(figures rebased to 100 at 31August 2019)
20252020 2021 2022 2023 2024
Cumulative to 31 August
●
NAV total return
Source: Refinitiv/Baillie Gifford and relevant underlying index providers
#
.
● Share price
total return
● Benchmark
total return
60
160
140
120
100
80
Annual Change in Net Asset Value Total Return and
Share Price Total Return
*
Years to 31 August
2021 2022 2023 2024 2025
● NAV total return ●
Share price total return
(30%)
30%
15%
0%
(15%)
Years to 31 August
2021 2022 2023 2024 2025
-30%
-20%
-10%
0%
10%
20%
●
NAV total return relative
to the benchmark
●
Share price total return
relative
to the benchmark
Annual Change in Net Asset Value Total Return and
Share Price Total Return
*
Relative to the Benchmark
†
Premium/(Discount)
*
to Net Asset Value
(figures plotted on a monthly basis)
20252020 2021 2022 2023 2024
Cumulative to 31 August
●
Baillie Gifford Japan
premium/(discount)
● Baillie Gifford Japan
average discount
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Shareholder Information
Annual Report and Financial Statements 2025
96
At 31August 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Capital
Total assets (£’m) 904.0 889.0 864.7 940.4 1,097.6 923.8 859.7 870.6 657.7 500.3 377.9
Borrowings (£’m) 115.9 140.6 131.7 149.4 142.2 151.4 127.6 114.5 82.5 75.3 54.7
Shareholders' funds (£’m) 788.1 748.4 733.0 791.0 955.4 772.4 732.1 756.1 575.2 425.0 323.2
Net asset value per ordinary
share (book) (p)
#
1,017.1 855.0 787.7 842.2 1,012.6 840.8 792.1 835.8 685.8 539.8 430.2
Net asset value per ordinary
share (fair) (p)
#
1,017.2 854.9 787.9 841.6 1,010.4 839.8 789.3 834.0 682.4 534.6 425.4
Share price (p) 901.0 756.0 735.0 774.0 1,022.0 817.0 791.0 855.0 711.5 517.5 444.8
(Discount)/premium (%)* (11.4) (11.6) (6.7) (8.1) 0.9 (2.8) (0.1) 2.3 3.7 (4.1) 3.4
Revenue
Income (£’m) 14.90 15.80 18.71 20.08 17.22 15.34 13.50 10.87 8.48 7.09 4.32
Revenue after tax (£’m) 5.97 7.42 9.83 10.66 7.34 6.05 4.76 2.23 2.24 1.82 0.20
Net return per ordinary share (p) 7.32 8.23 10.52 11.31 7.89 6.56 5.18 2.54 2.80 2.35 0.28
Dividend paid and proposed
perordinary share (p)
10.00 10.00 10.00 9.00 6.00 4.50 3.50 0.60 – – –
Ongoing charges (%)* 0.71 0.69 0.67 0.66 0.66 0.68 0.70 0.73 0.77 0.87 0.90
Gearing
Net gearing (%)* 13 18 17 18 10 4 12 11 13 17 14
Gross gearing (%)* 15 19 18 19 15 20 17 15 14 18 17
Performance Total Returns*
Net asset value per ordinary
share (p) % change
#
20.5 10.0 (5.4) (16.3) 21.0 6.6 (5.2) 21.9 27.0 25.5 19.9
Net asset value per ordinary
share (fair) % change
#
20.5 9.9 (5.3) (16.2) 20.8 6.9 (5.2) 22.1 27.6 25.7 22.2
Share price %change 20.9 4.4 (4.0) (23.8) 25.7 3.7 (7.4) 20.2 37.5 16.4 26.3
Benchmark %change
†
12.1 14.7 6.7 (3.9) 16.3 (0.1) (0.6) 7.8 18.8 21.5 13.4
Yen/sterling exchange rate 198.4 191.4 184.5 161.3 151.2 142.0 129.3 144.1 141.8 135.5 186.4
Active share (%)* 84 84 83 82 81 82 84 84 85 86 87
*
Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84.
†
The benchmark is the TOPIX total return (in sterling terms).
#
Net asset value per ordinary share and net asset value total returns have been calculated after deducting long term borrowings at either fair or book
value. See note 19, page 81 and Glossary of Terms on pages 82 and 83.
Source: Refinitiv/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93.
Past performance is not a guide to future performance.
Ten Year Record
at 31 August 2025
Cumulative to 31 August
20252015 2017 2020 2022 20242016 20192018 2021 2023
● Share price total return● NAV total return ●
Benchmark total return
0
50
100
150
200
250
300
Ten Year Total Return Performance*
The Baillie Gifford Japan Trust PLC
97
Sustainable Finance Disclosure
Regulation (‘SFDR’)
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 Baillie
Gifford Japan is marketed in the EU by the AIFM,
BaillieGifford & 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 ESG
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
growthbusinesses 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
factorsincluding 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
statedwithin its Investment Objective & 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.
The underlying investments do not take into account
the EU criteria for environmentally sustainable
economic activities established under the EU
Taxonomy Regulation.
More detail on the Manager’s approach to
sustainability can be found in the ESG Principles
and Guidelines document, available publicly on the
Baillie Gifford website bailliegifford.com and by
scanning the QR code below.
Shareholder Information
Annual Report and Financial Statements 2025
98
Communicating
with Shareholders
Trust magazine
Trust Magazine
Trust is the Baillie Gifford investment trust magazine
which is published twice a year. It provides an insight
to our investment approach by including interviews
with our fund managers, as well as containing
investment trust news, investment features and
articles about the trusts managed by Baillie Gifford,
including Baillie Gifford Japan. Trust plays an
important role in helping to explain our products
sothat readers can really understand them.
You can subscribe to Trust magazine or view
adigitalcopy at bailliegifford.com/trust
Suggestions and Questions
Any suggestions on how communications with
shareholders can be improved are welcomed,
soplease contact the Baillie Gifford Client
RelationsTeam and give them your suggestions.
They will also be very happy to answer questions
that you may have about Baillie Gifford Japan.
Baillie Gifford Japan on the Web
Up-to-date information about Baillie Gifford
Japan can be found on the Company website at
japantrustplc.co.uk. You will find full details on Baillie
Gifford Japan, including recent portfolio information
and performance figures.
Client Relations Team Contact Details
You can contact the Baillie Gifford Client
RelationsTeam by telephone, email or post:
Telephone: 0800 917 2113
Your call may be recorded for training or
monitoring purposes.
Email: enquiries@bailliegifford.com
Website: bailliegifford.com
Address:
Baillie Gifford Client Relations Team
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
Please note that Baillie Gifford is not permitted to give
financial advice. If you would like advice, please ask an
authorised intermediary.
Trust magazine
The Baillie Gifford Japan Trust PLC
99
Tour de France: the
Japanese connection
by Thomas Patchett
Japan’s quiet influence on
cycling’s biggest stage and
what it signals about enduring
innovation and growth.
Healthy returns: Japan’s
assault on old-age disease
by Joji Sakurai
Ageing Japan is catalysing
healthcare innovators, from
Alzheimer’s diagnostics to
peptide therapies, creating
durable growth tailwinds.
Japan Trust:
rethinking Japan
by Matthew Brett
Matthew Brett explores how
Japan’s reforms and inflation
are driving opportunities in AI,
gaming and healthcare.
These articles can be viewed by scanning the QR codes below each.
Recent Articles
Shareholder Information
Annual Report and Financial Statements 2025
100
Company
Information
Directors
Chairman: David Kidd
Sharon Brown
Sam Davis
Patricia Lewis
Joanna Pitman
Registrar
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
T: +44 (0)370 889 3221
Alternative Investment Fund
Managers, Secretaries and
Registered Office
Baillie Gifford & Co Limited
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)131 275 2000
bailliegifford.com
Independent Auditor
Ernst & Young LLP Chartered Accountants
and Statutory Auditors
Atria One
144 Morrison Street
Edinburgh EH3 8EX
Company Details
japantrustplc.co.uk
Company Registration No. SC075954
ISIN: GB0000485838
Sedol: 0048583
Ticker: BGFD
Legal Entity Identifier:
54930037AGTKN765Y741
Further Information
Client Relations Team
Baillie Gifford & Co
Calton Square
1 Greenside Row
Edinburgh EH1 3AN
T: +44 (0)800 917 2113
enquiries@bailliegifford.com
Depositary
The Bank of New York Mellon
(International) Limited
180 Queen Victoria Street
London EC4V 4LA
Company Broker
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Calton Square, 1 Greenside Row, Edinburgh EH1 3AN
Telephone +44 (0)131 275 2000
japantrustplc.co.uk