CC JAPAN INCOME & GROWTH
TRUST PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 OCTOBER 2024
CC Japan Income & Growth Trust plc 1
CONTENTS
Page
STRATEGIC REPORT
INVESTMENT OBJECTIVE, FINANCIAL
INFORMATION AND PERFORMANCE SUMMARY 2
CHAIRMAN’S STATEMENT 5
INVESTMENT MANAGER’S REPORT 7
TOP TEN HOLDINGS 9
INVESTMENT POLICY, RESULTS AND
OTHER INFORMATION 10
RISK AND RISK MANAGEMENT 13
APPROACH TO ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (“ESG”) 17
STAKEHOLDER ENGAGEMENT 19
HOLDINGS IN PORTFOLIO 23
TOP TEN SECTORS/BUSINESS AREAS 25
TOP TEN CONTRACTS FOR DIFFERENCE 26
GOVERNANCE
DIRECTORS’ REPORT 27
CORPORATE GOVERNANCE 32
DIRECTORS’ REMUNERATION IMPLEMENTATION
REPORT 38
REPORT OF THE AUDIT AND RISK COMMITTEE 42
STATEMENT OF DIRECTORS’ RESPONSIBILITIES 45
INDEPENDENT AUDITOR’S REPORT 46
FINANCIAL STATEMENTS
INCOME STATEMENT 52
STATEMENT OF FINANCIAL POSITION 53
STATEMENT OF CHANGES IN EQUITY 54
STATEMENT OF CASH FLOWS 55
NOTES TO THE ACCOUNTS 56
Page
OTHER INFORMATION
GLOSSARY AND ALTERNATIVE PERFORMANCE
MEASURES (“APMS”) 73
THE SECURITIES FINANCING TRANSACTIONS
REGULATION (UNAUDITED) 78
COMPANY INFORMATION 80
NOTICE OF ANNUAL GENERAL MEETING 81
FORM OF PROXY 87
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2 CC Japan Income & Growth Trust plc
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2 CC Japan Income & Growth Trust plc
INVESTMENT OBJECTIVE, FINANCIAL INFORMATION AND
PERFORMANCE SUMMARY
INVESTMENT OBJECTIVE
The investment objective of the CC Japan Income & Growth Trust plc (“the Company” or “CCJI”) is to provide
shareholders with dividend income combined with capital growth, mainly through investment in equities listed or
quoted in Japan.
FINANCIAL INFORMATION
As at
31 October
2024
As at
31 October
2023
Net assets (millions) £265.8 £235.1
Net asset value (“NAV”) per ordinary share
1
197.3p 174.5p
Share price 178.8p 162.5p
Share price discount to NAV
2
9.4% 6.9%
Ongoing charges
2
1.03% 1.06%
Gearing (net)
2
19.2% 21.2%
1 Measured on a cum-income basis.
2 This is an Alternative Performance Measure (“APM”). Definitions of APMs used in this report, together with how these measures have been calculated,
are disclosed on pages 73 to 77 of this report.
PERFORMANCE SUMMARY
1
For the year to
31 October
2024
% change
For the year to
31 October
2023
% change
NAV ex-income total return per share
2
+16.5% +19.3%
NAV cum-income total return per share
2
+16.1% +18.9%
Share price total return
2
+13.2% +20.9%
Tokyo Stock Exchange Price Index (“TOPIX”) total return +13.4% +12.0%
Revenue return per share 5.32p 5.37p
Dividends per share:
First interim dividend 1.60p 1.55p
Second interim dividend 3.85p 3.75p
Total dividends per share for the year 5.45p 5.30p
1 Total returns are stated in sterling, including dividends reinvested.
2 These are APMs.
Source: Chikara Investments LLP – The Company’s Factsheet October 2024.
CC Japan Income & Growth Trust plc 3
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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CCJI ANNUAL PERFORMANCE SUMMARY
Year to October unless
otherwise stated
Launch to
Oct 2016
1
2017 2018 2019 2020 2021 2022 2023 2024
Share price (p)
122.40 152.00 153.00 150.00 119.50 154.00 138.75 162.50 178.75
Share price total return (%)
+23.5 +27.2 +2.8 +0.7 -17.3 +32.7 -7.1 +20.9 +13.2
NAV per share (p)
123.90 146.00 148.60 158.90 136.80 165.40 151.09 174.50 197.31
NAV (cum-income) total
return per share (%) +24.9 +20.7 +4.1 +9.9 -11.1 +24.3 -5.9 +18.9 +16.1
TOPIX total return in
sterling (%) +32.7 +10.1 -0.4 +7.2 +0.3 +11.9 -9.5 +12.0 +13.4
Revenue return per share (p)
3.60 4.06 4.55 5.26 5.04 4.75 5.14 5.37 5.32
Dividends per share (p)
3.00 3.45 3.75 4.50 4.60 4.75 4.90 5.30 5.45
2
1
Period from the Company’s launch on 15 December 2015 to 31 October 2016.
2
Includes second interim dividend of 3.85p for the year ended 31 October 2024.
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
TOPIX total returns (in GBP)
CCJI NAV cum income total returns
CCJI dividend reinvested share price total returns
Dec-21
Jun-22
Dec-22
Jun-23
Dec-23
Jun-24
Oct-24
80
100
120
140
160
180
200
220
240
260
280
CCJI TOTAL NAV AND SHARE PRICE RETURN SINCE INCEPTION
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4 CC Japan Income & Growth Trust plc
0.00p
1.00p
2.00p
3.00p
4.00p
5.00p
6.00p
2016
2017 2018 2019 2020 2022 2024
Total dividends per share
3.00p
3.45p
3.75p
4.50p
4.60p
4.75p
4.90p
5.30p
2021
2023
5.45p
DIVIDEND PERFORMANCE SINCE INCEPTION
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
YE Oct 2020
YE Oct 2021
YE Oct 2022
YE Oct 2023 YE Oct 2024 5 Years to
Oct 2024
CCJI NAV total return
TOPIX total return
-11.1%
-5.9%
-9.5%
0.3%
24.3%
18.9%
12.0%
16.1%
13.4%
11.9%
43.5%
29.0%
COMPARISON OF NAV TOTAL RETURN PERFORMANCE OF THE COMPANY WITH TOPIX TOTAL RETURN
OVER 5 YEARS
INVESTMENT OBJECTIVE, FINANCIAL INFORMATION AND
PERFORMANCE SUMMARY
continued
CC Japan Income & Growth Trust plc 5
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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CHAIRMAN’S STATEMENT
Performance Review
I am pleased to report a strong performance from
the Company over the year to 31 October 2024. The
Company’s net asset value (“NAV”) total return was
+16.1%. Over the year, the discount of the share price to
NAV widened resulting in a total return to shareholders
for the year of +13.2%. While the Company has no
official benchmark, it outperformed on a NAV basis the
TOPIX total return, a widely used measure of Japanese
equity performance, which returned +13.4%. All returns
include dividends paid and are translated into sterling
terms.
The Company’s cumulative return since inception
in 2015 to 31 October 2024 was +152.5% on a NAV
total return basis, and +126.7% in share price terms,
comfortably ahead of the TOPIX total return of +100.6%.
This long-term track record of high absolute returns and
outperformance of the Index attests to the Investment
Manager’s skill in identifying companies paying income
to shareholders whilst still offering strong growth
potential.
For details on how the Company’s performance was
generated, current portfolio positioning, together with
an outlook for the region and Company, please refer to
the Investment Manager’s Report on pages 7 and 8.
Discount
Over the year, the discount at which the Company’s
shares trade versus its NAV has widened, and ended the
financial year at 9.4% (2023: 6.9%). This outcome, whilst
disappointing, is comparable with the experience of the
Company’s immediate peers, although the Company
has maintained the narrowest discount to NAV in the
peer group. The Board will consider buying back shares
to manage the level and volatility of the discount, if it
is judged to be in the best interests of shareholders to
do so.
Income and Dividends
The Company is committed to providing a progressive
dividend to shareholders, although it does not set a
specific yield target. The Board aims to increase dividend
payments annually, a trend maintained since inception
and continued this year, despite a marginal 0.9%
decrease in revenue return to 5.32 pence per share,
necessitating the use of a small amount of distributable
reserves.
The Company paid a first interim dividend of 1.60
pence per share on 2 August 2024 and the Board has
declared a second interim dividend of 3.85 pence per
share, bringing the total dividend for the year to 5.45
pence per share, an increase of 2.8% over last year and
representing a yield of 3%. The second interim dividend
will be paid on 3 March 2025 to shareholders on the
register as at 31 January 2025, with an ex-date of 30
January 2025.
In determining dividend payments, the Board prioritises
coverage by current-year earnings while also building
revenue reserves. The investment trust structure
enables flexibility, allowing the Company to draw
on reserves to support dividends when needed, as
was the case this year. Despite the recent market
volatility, the fundamental attractions of the Japanese
equity market remain, based on a combination of low
valuations, commitment to reform and broader growth
opportunities.
Gearing
The Company uses structural gearing to enhance growth
and income opportunities in the portfolio. Gearing is
undertaken through long-only contracts for difference
(“CFDs”) and equity swaps: derivative contracts which
replicate the financial effect of more conventional
sources of gearing such as bank borrowings.
Continuation Vote Pursuant to the Company’s
Articles of Association
Whilst the Company has no fixed life, the Board
is required to put a triennial continuation vote to
shareholders. As the last such vote took place in 2022,
a continuation vote will be put to shareholders at the
Company’s forthcoming Annual General Meeting. Given
the long-term performance and returns, your Board has
no hesitation in recommending to shareholders that
they vote in favour of the Company continuing as an
investment trust for a further three-year period.
Company Advisers
This year, the Board conducted a review of its
operational arrangements. Following the completion
of that review, the Board appointed Frostrow Capital
LLP (“Frostrow”) with effect from 1 January 2025 as
its Alternative Investment Fund Manager (“AIFM”),
Administrator and Company Secretary. Frostrow has
also been appointed to provide investor relations and
marketing services to the Company, alongside the team
at Chikara Investments LLP (“Chikara”). Frostrow is an
independent investment companies group and AIFM,
specialising in providing services to a number of leading
London Stock Exchange-listed investment companies.
The Board is confident that this new appointment will
enhance the quality of financial reporting and improve
the standard of governance by bringing an additional
layer of independent oversight. In consequence of
this appointment, the Company’s registered office has
changed to 25 Southampton Buildings, London WC2A
1AL and I can be contacted via email at the following
address: cosec@frostrow.com.
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Revised Management Fee Arrangements
Your Board believes that, whilst the Investment
Manager needs to remain appropriately incentivised,
shareholders should share in the benefits of scale and
the Company should demonstrably represent value
for money. To this end, the Board has agreed with the
Investment Manager that, with effect from 1 November
2024, the Company’s management fee is calculated on a
tiered basis of 0.75% per annum on the first £300 million
of net assets and 0.60% on net assets in excess of £300
million. This compares with the flat fee arrangement
of 0.75% per annum on net assets which has been
levied since the Company’s inception. The Company’s
fee arrangements remain competitive with other
comparable managed investment companies and similar
savings products. On behalf of the Board, I would like
to acknowledge the Investment Manager’s constructive
approach in engaging with this process.
Marketing, Promotion and Shareholder
Interaction
Following enhancements to investor relations and
marketing resource, as mentioned above, the Board will
be working with Chikara, Frostrow and the Company’s
broker to continue its efforts to increase the Company’s
profile with investors and potential investors across
the investment community. This includes various video
conferences, podcasts and in-person meetings, together
with ongoing interaction with national and investment
industry journalists. It is the Board’s view that enhancing
the Company’s profile will benefit all shareholders,
through a better understanding of the Company, and by
creating sustained demand for its shares.
Board Composition
The Board reviews its composition and succession
plans on a regular basis, taking into account the need to
refresh membership and maintain diversity, while also
ensuring continuity of Board experience. In an effort
to distribute responsibilities across the Board, Craig
Cleland, Senior Independent Director of the Board, was
appointed as Chairman of the Nominations Committee
with effect from 3 October 2024. Although only
comprising four Directors, I can confirm that the Board’s
current composition is compliant with all applicable
diversity targets for UK listed companies and it is the
Board’s intention that this will continue to be the case.
Annual General Meeting (‘AGM’)
The Company’s ninth AGM will be held at the offices of
Stephenson Harwood LLP, 1 Finsbury Circus, London
EC2M 7SH at 12 noon on 3 March 2025. Portfolio
Manager Richard Aston will give a presentation to
shareholders on the Company’s recent performance,
notable portfolio changes and his thoughts on the
outlook for the Japanese equity market. Shareholders
will have an opportunity to meet the Directors,
representatives from the Investment Manager and other
Company advisers.
The Board encourages shareholders to attend the AGM
but recognises that it is not possible for everyone to do
so. If shareholders are unable to attend the meeting in
person, they are strongly encouraged to vote by proxy
and to appoint the “Chair of the AGM” as their proxy.
Details of how to vote, either electronically, by proxy
form or through CREST, can be found in the Notes to the
Notice of AGM on pages 83 to 86. Questions can be put
to the Board and the Portfolio Managers at the AGM, or
in writing beforehand, by addressing questions to the
Company Secretary by email to cosec@frostrow.com.
Why Japan and why CC Japan Income & Growth
Trust plc?
Japan’s stock market has delivered strong performance
over the last decade and has proven to be one of the
few highlights for investors in recent years. The Board
and Investment Manager believe that the economic
environment in Japan is likely to remain conducive
to future strong performance returns and that Japan
remains a favourable environment for investors. For an
outlook for the region please refer to page 8.
However, for a plethora of reasons, not least including
high costs and lack of access across platforms, investing
directly into Japanese equities is challenging for
individual UK investors and we believe that investment
trusts provide a low cost and effective means by which
to do so. In a complex investment region like Japan,
active management is needed to unlock the most
attractive return profile.
We believe the Company offers a differentiated
approach for investors seeking exposure to Japan. It is
set apart from its more growth-orientated peers since
the Investment Manager has a focus on total return
– considering both capital and income growth as key
components – thus making it potentially less susceptible
to sharp style shifts. The Investment Manager is not
restrained in any way by an index and decisions are not
based on one. In fact, the Company’s portfolio tends to
diverge strongly from major Japanese equity indices as
it looks for opportunities beyond just the largest stocks
found within it. The Company typically holds a relatively
small number of stocks and this approach has paid
off as the Company has historically outperformed the
index strongly and we believe the mandate remains well
placed to continue to do so.
We thank you for your ongoing support.
June Aitken
Chairman
21 January 2025
CHAIRMAN’S STATEMENT
continued
CC Japan Income & Growth Trust plc 7
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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Performance Review
The net asset value (“NAV”) cum-income total return of
the Company rose by +16.1% in sterling terms over the
year to 31 October 2024. This return outperformed the
rise of the TOPIX, which returned +13.4%. Yen weakness
has been a notable feature of the year under review
and cause of volatility in the latter months. However,
the aggregate increase in sterling terms continues the
strong record of total return of the Company since
inception, which we believe confirms the importance
of shareholder distributions as a component of total
return in any long-term investment strategy for Japanese
equities.
In several ways, nothing has changed over the last
twelve months while in others, prospects currently
appear very different. Global monetary policy and
geopolitical tensions remain prominent considerations
for investors and, for anyone with an interest in Japan
so does the impact that these have on the foreign
exchange market. However, Japan is emerging from
decades of deflation and the transition to an inflationary
era is creating many new challenges and opportunities
for companies and consumers.
The Governor of the Bank of Japan, Kazuo Ueda,
continues to indicate a path of ‘normalisation’ for
domestic interest rates. Following on from the ending
of the negative interest rate policy (“NIRP”) in March,
a second increase in interest rates was announced
in July with expectations of further rises to come if
the economy maintains its favourable trajectory with
regard to wages and inflation in particular. Interest
rate sensitive sectors featured prominently in the
major positive contributors to performance during
the period. Holdings in the banking (Sumitomo Mitsui
Financial Group, Mitsubishi UFJ Financial Group) and
insurance (Sompo Holdings, Tokio Marine Holdings)
sectors performed strongly throughout the year as
the improving operating environment resulted in an
immediate benefit to financial performance. With
clear targets to balance growth, capital efficiency and
shareholder returns, the operating improvement led
to an attractive combination of dividend increases and
share buybacks.
The largest contributors to performance were Zozo and
Hitachi. Zozo is Japan’s leading on-line fashion retailer
which has benefited in recent years from improved
corporate governance. More recently its business
model has delivered the sustainable cashflow that will
allow it to continue to enhance its shareholder returns
consistently. Hitachi, a large business conglomerate,
has undergone a major operational restructuring and
rationalisation rendering it almost unrecognisable from
the company it was 20 years ago. Its success has been
increasingly recognised by investors.
The most significant factor in the list of detractors from
performance was the Company’s underweight allocation
to large capitalisation stocks. Smaller companies
generally lagged the performance of their larger peers
which was a modest headwind for performance.
Macnica, an electronics and software distributor,
performed less well than anticipated during the year as
demand suffered from a global inventory adjustment
of key semiconductor components. The company
maintained its commitment to shareholders with a
dividend increase and share buybacks and remains
confident in its market positioning and potential once
business conditions improve.
Portfolio Positioning
In our opinion, the renaissance of the Japanese equity
market is now into its twelfth year. The persistence
of the government, regulators and investors over this
timeframe to change the corporate culture in Japan
is having a notable impact on capital efficiency and
corporate governance standards. We believe that these
factors are the underlying dynamic which has supported
the favourable investment return for equity investors
through not only periods of economic prosperity but
also uncertainty. Further initiatives such as the action by
the Financial Services Authority to urge non-life insurers
to sell their strategic shareholdings, revisions to the
Stewardship Code and substantial changes to the TOPIX
inclusion rules will all add greater urgency to the reform
in the corporate sector.
The Company is positioned to capture the exciting
investment opportunities that are emerging in the
Japanese equity market as a consequence of these
changes. During the year under review, new holdings
have been established in several companies whose
appeal, most importantly, is based on their attractive
long-term growth prospects. This remains a primary
consideration for our investment strategy. In each case
these prospects are supported by management policies
consistent with an agenda of delivering sustainable
improvements in capital efficiency and corporate
governance.
JAFCO is Japan’s leading venture capital investment
business. The prospects for investment growth have
been enhanced by government initiatives to promote
a more entrepreneurial culture as well as the greater
opportunities created by corporate restructuring and
demography related business succession issues. The
company is achieving a steady, sustainable improvement
in capital efficiency through a redefined investment
approach, stronger fundraising capabilities and an
appropriate focus on returns to shareholders.
Japan Securities Finance provides services to
securities companies and financial institutions and is
a vital component of the daily operation of financial
exchanges in Japan. Its outlook is enhanced by the
INVESTMENT MANAGER’S REPORT
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healthier securities market, lending conditions and new
business initiatives. Returns are improving and this has
been accompanied by recent initiatives to raise capital
efficiency and shareholder returns through greater
distribution to shareholders.
Dexerials is a leading manufacturer of functional
materials used in display screens and other devices.
Advanced investment in R&D and facility expansion has
positioned the company well for the next generation
of technologies. The benefits of this forward-looking
strategy are reflected in the form of an enhanced
distribution to shareholders via dividends and share
buybacks.
The above purchases have been funded by a
combination of reductions of established positions
or entire disposals. The most significant activity
has been the outright sales of holdings in Nippon
Telegraph & Telephone and Orix. The former is due to
a sluggish earnings outlook as the company balances
the challenges of behavioural changes amongst
consumers and its regulatory requirements. The latter
was a decision based on valuation due to share price
appreciation and is representative of the opportunities
that are created during periods of market volatility.
Similarly other holdings such as Mitsubishi UFJ Financial
and Sompo Holdings were reduced after periods of
strong share price performance.
Outlook
We believe that Japanese equities continue to offer a
compelling investment opportunity despite the strong
performance of recent years. With even greater
encouragement from the government, regulators
and shareholders, Japanese companies are adopting
ever higher standards of corporate governance and
implementing more attractive capital allocation policies.
This is creating a favourable environment for investors
in which significant opportunities to generate a total
return, based on capital growth and compounding
shareholder distributions, are achievable.
Japan has remained on the periphery of investment
decisions for foreign and domestic investors alike for
several years, but we believe this is changing. The more
attractive investment landscape has encouraged heavy
participation from international private equity investors
seeking the cheap valuations on offer. Increased
participation in the market by domestic investors is
a particularly notable feature, following the revamp
of the Nippon Individual Savings Account (“NISA”)
savings programme, and recognition that companies
are delivering an attractive return profile for long-term
investors. Our optimism in the outlook is increased by
the fact that the investment opportunity created by
corporate developments now coincides with signs of
improving domestic economic fundamentals and the
potentially significant positive benefits to Japan of the
global geopolitical realignment.
Richard Aston
Chikara Investments LLP
21 January 2025
INVESTMENT MANAGER’S REPORT
continued
CC Japan Income & Growth Trust plc 9
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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 9
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
TOP TEN HOLDINGS
Sumitomo Mitsui Financial Group 7.0%
Sumitomo Mitsui Financial Group was established
through the merger of Sumitomo Bank and Sakura Bank
in 2001. It is one of Japan’s leading financial groups
offering services such as commercial banking, leasing,
securities, consumer finance and asset management.
The company targets continued growth in shareholder
value by promoting disciplined investment and alliances,
sound financials and progressive shareholder returns.
Mitsubishi UFJ Financial Group 4.9%
Mitsubishi UFJ Financial Group was established in
2005 through the merger of Mitsubishi Tokyo Financial
Group and UFJ Holdings. It is now one of Japan’s leading
financial services groups with established operations
around the world, most prominently in Asia and North
America. This includes a strategic alliance and a 23%
stake in Morgan Stanley. MUFJ continues to promote
a balanced capital management policy maintaining a
strong capital base, appropriate allocations to strategic
growth opportunities and enhancing shareholder
returns.
Itochu 4.4%
Itochu is one of Japan’s leading trading companies
involved in a broad range of businesses from the
provision of upstream raw materials to downstream
retail activities. In recent years Itochu has successfully
introduced a business investment strategy based on
high levels of capital efficiency and appropriate cash
allocation including increasing returns to shareholders
in the form of dividend and share buybacks.
Nintendo 4.1%
Nintendo is an international console and handheld
gaming company with leading positions in both
hardware and software production. Initiatives to
improve the financial return on the company’s extensive
intellectual property are being accompanied by efforts
to bolster its corporate governance. Management has
a clear policy towards dividends and is taking a more
proactive stance towards share buybacks.
Softbank 4.1%
Softbank provides telecommunication and associated
network services in Japan and is a subsidiary of the
Softbank Group. The company continues to demonstrate
strong growth in its business services segment and from
its “beyond carrier” strategy which includes e-commerce
leader Yahoo Japan, online fashion retailer Zozo, social
network Line and electronic payment service PayPay.
Tokio Marine Holdings 3.8%
Tokio Marine Holdings is a financial holding company
which operates a leading domestic property and
casualty insurance business as well as life insurance and
other services. It has a significant international presence
offering specialist insurance products in countries such
as the US, Brazil, Singapore and the UK. Management
has emphasised the importance of dividends in their
capital management policies.
Shin-Etsu Chemical 3.7%
Shin-Etsu Chemical is a manufacturer with top global
market share in PVC, semiconductor silicon wafers and a
number of other semiconductor related and functional
materials. The company established a global production
base and developed a list of top tier international
customers, which has allowed it to generate a strong
track record of growth despite underlying volatility in
individual markets. The company has, in recent years,
given greater attention to shareholder returns within
their capital policy, while maintaining emphasis on
stability and progression.
Hitachi 3.5%
Hitachi is a globally recognised manufacturer of
industrial equipment and developer of software covering
a broad range of industries including Information
Technology, Energy, Automotive, Transportation and
Consumer Electronics. After restructuring the business
operations, management has emphasised capital
efficiency and improving shareholder returns.
Tokyo Metro 3.5%
Tokyo Metro is the operator of the underground rail
network in Japan’s capital. The company was recently
listed with strong finances, stable cashflow, clear growth
opportunities from its core operations and associated
assets, and an attractive capital allocation policy. This
should reward shareholders progressively through
dividends as the benefits of previous investment and its
clear future strategy are realised.
Japan Securities Finance 3.4%
Japan Securities Finance provides services to securities
companies and financial institutions and is a vital
component of the daily operation of financial exchanges
in Japan. Its outlook is enhanced by the healthier
securities market, lending conditions and new business
initiatives. Returns are improving and this has been
accompanied by recent initiatives to raise capital
efficiency and shareholder returns through greater
distribution to shareholders.
10 CC Japan Income & Growth Trust plc
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Investment policy
The Company invests in equities listed or quoted in
Japan. The Company may also invest in exchange
traded funds in order to gain exposure to such equities.
Investment in exchange traded funds shall be limited to
not more than 20 per cent. of gross assets at the time
of investment. The Company may also invest in listed
Japanese real estate investment trusts (“J-REITs”).
The Company may enter into long only contracts for
difference or equity swaps for gearing and efficient
portfolio management purposes.
No single holding (including any derivative instrument)
will represent more than 10 per cent. of gross assets
at the time of investment and, when fully invested, the
portfolio is expected to have between 30 to 40 holdings,
although there is no guarantee that this will be the
case and it may contain a lesser or greater number of
holdings at any time.
The Company has the flexibility to invest up to 10 per
cent. of its gross assets at the time of investment in
unquoted or untraded companies.
The Company is not constrained by any index
benchmark in its asset allocation.
Borrowing policy
The Company may use borrowings for settlement of
transactions, to meet on-going expenses and may be
geared through borrowings and/or by entering into long
only contracts for difference (“CFDs”) or equity swaps
that have the effect of gearing the Company’s portfolio
to seek to enhance performance. The aggregate of
borrowings and long only CFDs and equity swap
exposure will not exceed 25 per cent. of net asset value
at the time of drawdown of the relevant borrowings or
entering into the relevant transaction, as appropriate,
although the Company’s normal policy will be to utilise
and maintain gearing to a lower limit of 20 per cent. of
net asset value at the time of drawdown of the relevant
borrowings or entering into the relevant transaction, as
appropriate. It is expected that any borrowings entered
into will principally be denominated in yen.
Hedging policy
The Company does not currently intend to enter into
any arrangements to hedge its underlying currency
exposure to investments denominated in yen, although
the Investment Manager and the Board may review this
from time to time.
Results and dividend
The Company’s revenue return after tax for the financial
year amounted to £7,173,000 (2023: £7,241,000). In
August 2024, the Company paid an interim dividend of
1.60p (2023: 1.55p) per ordinary share. On 17 January
2025, the Directors declared a second interim dividend
for the year ended 31 October 2024 of 3.85p (2023:
3.75p) per ordinary share, which will be paid on 3 March
2025 to shareholders on the register at 31 January 2025.
Therefore, the total dividend in respect of the financial
year to 31 October 2024 will be 5.45p (2023: 5.30p) per
ordinary share.
The Company made a capital gain after tax of
£30,758,000 (2023: gain of £31,099,000). The total return,
including income, after tax for the year was a gain of
£37,931,000 (2023: gain of £38,340,000).
The Company’s Purpose, Values and Culture
The primary focus of the Company is to provide
shareholders with dividend income combined with
capital growth, mainly through investment in equities
listed or quoted in Japan. The Investment Manager
identifies companies which are undervalued, have
strong balance sheets, strong business franchises, and
favourable attitudes to shareholder returns in the form
of sustainable and growing dividends and share buyback
policies.
The Company aims to meet the needs of investors
through the Investment Manager’s dual mandate of
generating income and capital growth. The Company
has been investing in Japanese equities since launch in
2015. Whilst the Company does not have a benchmark,
the Board measures performance against the TOPIX
Total Return and High Yield Indices.
To achieve this aim, the Board of Directors has engaged
Chikara Investments LLP, who have the appropriate
capability, resources and controls in place to manage
actively the Company’s assets in order to meet its
investment objective. The Investment Manager has a
well-defined investment strategy and process which is
regularly and rigorously monitored and reviewed by
the Board. As the Company has no employees and acts
through its service providers, its culture is represented
by the values and behaviour of the Board and third
parties to which it delegates the provision of services.
To ensure that the Company’s purpose, values,
strategy and culture are aligned, the Board comprises
independent Non-Executive Directors, who together
bring a wide range of knowledge, skills and experience.
The Board members contribute to a transparent
culture ensuring effective oversight, critical support
and challenge to the Investment Manager, and all other
third-party suppliers. For more information on the
Board’s engagement with stakeholders, please refer to
the Company’s section 172 statement on pages 19 to 22.
Key performance indicators (“KPIs”)
The Board measures the Company’s success in attaining
its investment objective by reference to the following
KPIs:
INVESTMENT POLICY, RESULTS AND OTHER INFORMATION
CC Japan Income & Growth Trust plc 11
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
(i) Long-term capital growth
The Board considers the Company’s net asset value
(“NAV”) total return figures to be the best indicator of
performance over time and this therefore is the main
indicator of performance used by the Board. The NAV
cum-income total return for the year to 31 October
2024 was +16.1% (2023: +18.9%) in sterling terms, and
the NAV total return from the Company’s inception in
December 2015 to 31 October 2024 was +152.5%.
The Chairman’s Statement on pages 5 and 6
incorporates a review of the highlights during the year.
The Investment Manager’s Report on pages 7 and 8
gives details on investments made during the year and
how performance has been achieved.
(ii) Revenue return per share and dividends
The Company’s revenue return per ordinary share,
based on the weighted average number of shares in
issue during the year, was 5.32p (2023: 5.37p). The
Company’s proposed total dividend payable in respect
of the year ended 31 October 2024, including an interim
dividend of 1.60p per ordinary share paid on 2 August
2024 and a second interim dividend of 3.85p payable on
3 March 2025, is 5.45p (2023: 5.30p) per ordinary share.
(iii) Discount/premium to NAV
The discount/premium relative to the NAV per share
represented by the share price is closely monitored by
the Board. The share price closed at a 9.4% discount to
the NAV as at 31 October 2024 (2023: 6.9% discount).
(iv) Control of the level of ongoing charges
The Board monitors the Company’s operating costs
carefully. Growing the size of the Company offers
many benefits, as not all of the Company’s operating
costs increase in line with the Company’s assets
under management. Based on the Company’s average
net assets for the year ended 31 October 2024, the
Company’s ongoing charges figure calculated in
accordance with the AIC methodology was 1.03% (2023:
1.06%).
Other information
Modern slavery disclosure
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. The Company considers its supply
chains to be of low risk as its suppliers are typically
professional advisers. A statement from Chikara, the
Company’s Investment Manager, on the steps it takes to
investigate and mitigate the risk of modern slavery and
human trafficking can be found on Chikara’s website
(www.chikarainvestments.com).
Greenhouse Gas Emissions and Streamlined Energy
and Carbon Reporting (“SECR”)
The Company has no employees, physical assets,
property or operations of its own, does not provide
goods or services and does not have its own customers.
It follows that the Company has little to no direct
environmental impact. In consequence, the Company
has limited greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other
sources of emissions under the Companies Act 2006
(Strategic Report and Directors’ Reports) Regulations
2013. As the Company has no material operations
and therefore has little energy use, it falls below the
threshold to produce an energy and carbon report. The
Company’s ESG policy is contained on pages 17 and 18.
Employees
The Company has no employees. As at 31 October
2024, the Company had four Directors, comprising two
males (50%) and two females (50%). Harry Wells retired
at the end of the Company’s AGM on 5 March 2024,
having served as Chairman of the Board since 2015. He
was succeeded by June Aitken, who joined the Board in
February 2022. Craig Cleland, who also joined the Board
in February 2022, was appointed to succeed June Aitken
as Senior Independent Director of the Company.
Anti-bribery, Corruption and Tax Evasion
It is the Company’s policy to conduct all of its business
in an honest and ethical manner. The Company takes
a zero-tolerance approach to bribery, corruption and
tax evasion and is committed to acting professionally,
fairly and with integrity in all its business dealings and
relationships wherever it operates. Taking account of the
nature of the Company’s business and operations, the
Board has adopted policies and procedures that allow it
to have reasonable assurance that persons associated
with the Company are prevented from engaging in
bribery, corruption or tax evasion; and has adopted the
same standard of zero tolerance.
Viability Statement
The Directors have assessed the viability of the
Company for the period until 31 October 2029 (the
“Period’’) taking into account the long-term nature of
the Company’s investment strategy and the principal
risks and emerging risks outlined on pages 13 to 16.
The Board has chosen a five-year period to assess the
Company’s viability because of the expected long-term
nature of equity investment, the Investment Manager’s
holding period and the fact that the investment objective
is unlikely to change significantly over this period.
Notwithstanding the foregoing, the continuation of the
Company is subject to approval by shareholders at the
Annual General Meeting due to be held on 3 March
2025 and, if passed, every three years thereafter. The
Board is confident that shareholders will support the
continuation vote.
12 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
In their assessment of the prospects of the Company,
the Directors have considered each of the principal and
emerging risks and uncertainties set out on pages 13 to
16 and the liquidity and solvency of the Company. The
Directors have considered the Company’s income and
expenditure projections and the fact that the Company’s
investments comprise securities which can be readily
realised and could, if necessary, be sold to meet the
Company’s funding requirements. Portfolio activity
and market developments are discussed at quarterly
Board meetings. The internal control framework of the
Company is subject to a formal review on at least an
annual basis.
The Directors do not expect there to be any material
increase in the annual ongoing charges of the
Company over the Period. The Company’s income from
investments and cash that can be realised from the
sale of its investments provide substantial cover to the
Company’s operating expenses, and any other costs
likely to be faced by the Company over the period of
their assessment.
The Chairman’s Statement and Investment Manager’s
Report present a positive long-term investment case for
Japanese equities, which also underpins the Company’s
viability for the period.
This assessment takes into account the impact of the
principal and emerging risks highlighted in the Principal
and Emerging Risks section on pages 13 to 16.
Based on this assessment, the Directors have a
reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall
due over the Period.
Outlook
The outlook for the Company is discussed in the
Chairman’s Statement on pages 5 and 6 and the
Investment Manager’s Report on pages 7 and 8.
Strategic Report
The Strategic Report set out on pages 2 to 26 of this
Annual Report was approved by the Board of Directors
on 21 January 2025.
June Aitken
Chairman
21 January 2025
INVESTMENT POLICY, RESULTS AND OTHER INFORMATION
continued
CC Japan Income & Growth Trust plc 13
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Principal and emerging risks and uncertainties
The Board is responsible for the management of risks
faced by the Company and delegates this role to the
Audit and Risk Committee (the “Committee”).
The Committee carries out, at least annually, a robust
assessment of principal and emerging risks and
uncertainties and monitors these risks on an ongoing
basis. The Committee has a dynamic risk management
register in place to help identify key risks in the business
and oversee the effectiveness of internal controls and
processes.
The risk management register and associated risk
heat map provide a visual reflection of the Company’s
identified principal and emerging risks. These fall into
three categories:
• Strategic and business risk,
• Financial and operational risk,
• Regulatory and compliance risk.
The Committee considers both the impact and
the probability of each risk occurring and ensures
appropriate controls are in place to reduce risk to an
acceptable level.
During the year under review the Committee was
particularly concerned with geopolitical risk with
conflicts in both the Middle East and Ukraine impacting
investor confidence. Levels of inflation globally started
to abate during the year, and interest rates in both the
US and the UK have started to fall. By contrast Japan’s
monetary policy continues to be very accommodative
with the Bank of Japan attempting to stimulate
inflation. Whilst the differential between Japanese and
US rates has narrowed it has still been beneficial for
global investors to borrow in yen and invest in dollar
denominated assets. The Committee continues to assess
the impact of the exchange rate movements on dividend
receipts and to consider the impact of an unwinding of
the so called “Yen carry trade”.
The Committee continues to review the processes in
place to mitigate risk; and to ensure that these are
appropriate and proportionate in the current market
environment. The principal risks, together with a
summary of the processes and internal controls used to
manage and mitigate risks where possible, are outlined
on the following pages.
Emerging Risks
A newly installed Republican administration in the
US increases the likelihood of a global trade war. The
Investment Manager and the Board will continue
to monitor closely the impact that any significant
increase in global trade tariffs has on Japan’s economy.
This emerging risk represents both a threat and an
opportunity to investors in Japanese equities.
It was announced on 13 December 2024 that following
a review of service providers, the Board had appointed
Frostrow Capital LLP to provide administration and
company secretarial services. The Committee is
confident that this new appointment will enhance the
accuracy and quality of financial reporting. Frostrow
Capital LLP has also been appointed as the Company’s
AIFM in accordance with the Alternative Investment
Fund Managers Directive (“AIFMD”). Whilst the Board
believes that a ‘new’ independent AIFM will improve
the standard of governance by bringing an additional
layer of independent oversight, the Committee is
closely monitoring the short-term risks associated with
transition to a new provider.
RISK AND RISK MANAGEMENT
14 CC Japan Income & Growth Trust plc
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Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
14 CC Japan Income & Growth Trust plc
Principal Risks Mitigation Movement During the Year
Poor investment performance
The Company’s investment
performance depends on the
Investment Manager’s ability to
identify successful investments
in accordance with the
Company’s investment policy.
The Company’s share price may
not always reflect underlying net
asset value.
– The Investment Manager has a well-defined
investment strategy and process which is
regularly reviewed by the Board.
– The Board monitors the Company’s investment
performance against its peer group over a
range of periods.
– Whilst the Company does not have a
benchmark, the Board measures performance
for reference purposes against the TOPIX
and High Yield Indices. At each meeting, the
Board discusses the Japanese investment
environment, and receives reports on the
composition of the portfolio, any recent sales
and purchases, and expectations of dividend
income.
– The Management Engagement Committee
reviews the appointment of the Investment
Manager on an annual basis.
– The Board monitors the share price discount to
NAV and has authority to buy back shares.
Market Risk
Changes in the investment,
economic or political conditions
in Japan, and/or in the countries
in which the Company’s investee
companies operate could
substantially and adversely
affect the Company’s prospects.
In addition to changing
economic factors such as
interest rates, foreign exchange
rates and employment,
unpredictable factors such as
natural disasters and diplomatic
events may impact market risk.
– The Directors acknowledge that market risk
is inherent in the investment process. The
Company maintains a diversified portfolio of
quoted investments.
– The Board reviews the impact of economic
indicators on the portfolio with the Investment
Manager at every Board meeting.
– The Company’s investment policy states that no
single holding will represent more than 10 per
cent. of the Company’s Gross Assets at the time
of investment and the portfolio is expected
to have between 30 to 40 holdings in normal
circumstances.
– In addition to receiving regular market updates
from the Investment Manager and reports at
Board meetings, the Board convenes more
often during periods of extreme volatility.
– The Company’s policy is not to hedge against
any foreign currency movements. Income
received from investee companies is translated
into sterling on receipt.
RISK AND RISK MANAGEMENT
continued
CC Japan Income & Growth Trust plc 15
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 15
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Principal Risks Mitigation Movement During the Year
Geopolitical Risk
War and conflict can impact
investor confidence and
threaten global economic
growth.
Geopolitical instability in the
region may increase volatility,
reduce economic growth, and
affect the prospects of the
companies in the portfolio.
– The Board discusses the impact of geopolitics
on the portfolio with the Investment Manager
at every Board meeting.
– The increased geopolitical tension between
the US and China is both an opportunity and a
threat for Japan.
– The portfolio is comprised of listed, liquid,
realisable securities.
– The Company has built up a revenue reserve
and the Board regularly reviews the net income
available for distribution using the Investment
Manager’s sensitivity analysis of revenue
estimates.
– The Company also has a Special Reserve
available for distribution in the event of
unforeseen revenue shortfall.
– The Manager’s emphasis on companies which
can pay sustainable dividends has helped
alleviate the impact.
Key Person Risk
Loss of investment manager or
key personnel.
The Departure of any key
individuals from the Investment
Manager without adequate
succession planning could
have a material impact on the
Company’s business.
– The Board ensures that adequate resources are
in place to manage the Company.
– Richard Aston attends all Board meetings,
and the Board also meets regularly with other
members of the Chikara team.
– During the year under review, Chikara have
announced the recruitment of another
experienced Japanese equity investor to join
the team.
– The Investment Manager’s key individuals are
significantly invested in the Company ensuring
interests with the Company’s shareholders are
aligned.
Excess leverage
The Company uses borrowings
to seek to enhance investment
returns. While this has the
potential to enhance investment
returns in rising markets, in
falling markets the impact could
be detrimental to performance.
– An ability to gear is a unique advantage
of closed-end companies and structural
gearing is a clearly stipulated component
of the Company’s investment policy. This is
highlighted in shareholder communications.
– Gearing is monitored and strict restrictions on
borrowings are imposed: gearing continues to
operate within a limit of 25% of NAV at the time
of investment.
– The gearing is achieved using derivatives in
the form of Contracts for Difference (“CFDs”).
Further information on financial instruments
and risk can be found in note 2(c) to the
Financial Statements beginning on page 57
and in note 16 to the Financial Statements
beginning on page 65.
16 CC Japan Income & Growth Trust plc
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Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
16 CC Japan Income & Growth Trust plc
Principal Risks Mitigation Movement During the Year
Cyber Risk
Cyber crime or fraud could
impact any of the Company’s
service providers, the
Investment Manager, the
Depositary or the Administrator.
Business interruption could
mean service providers are
unable to meet their contractual
obligations or that information is
late, misleading or inaccurate, or
data privacy is breached.
– The Board has appointed an experienced
independent professional Depositary,
Custodian and Administrator.
– All key service provides produce annual
internal control reports for review by the Audit
and Risk Committee. These reviews include
consideration of their business continuity plans
and the associated cyber security risks.
– Penetration testing is carried out by the
Investment Managers.
– Advances in AI and recent events like
the CrowdStrike incident have increased
vulnerability to cyber attacks.
Service Provider Operational
Risk
Poor performance of appointed
services providers including
Company Secretary, Depositary,
Custodian, Administrator
and/or Registrar can result in
operational disruption, business
interruption or reputational
damage.
– The performance of appointed professional
service providers is closely monitored by
the Board to ensure they meet contractual
obligations.
– The Company Secretary provided a summary
of internal controls reports from all service
providers.
– During the year under review and after
assessing competitive alternatives, the Board
decided to appoint Frostrow Capital LLP
to provide Administration and Company
Secretarial Services. The Board is confident
that this new appointment will enhance the
accuracy and quality of financial reporting.
Frostrow Capital LLP has also been appointed
as the Company’s AIFM in accordance with
the Alternative Investment Fund Managers
Directive (“AIFMD”).
ESG and Climate Change
Potential reputational damage
from non-compliance with
regulations or incorrect
disclosures.
Climate change leads to
additional costs and risks for
portfolio companies.
– The Company’s ESG Policy, which is updated
annually, is published on the Company’s
website and the AIC website.
– The Investment Manager’s approach is to
include ESG factors for consideration in the
investment process, such as climate change,
where they are relevant and have a material
impact on stock performance.
– Examples of responsible engagement are
detailed on page 18 of the Annual Report.
– Chikara Asset Management LLP (the Investment
Manager) is a signatory to the UN Principles
of Responsible Investment (“PRI”) and reports
annually according to the PRI reporting
framework.
– The Investment Manager also complies with the
obligations of both the UK Stewardship Code
and the Japan Stewardship Code.
– Investment trusts are currently exempt from
the Task Force on Climate-Related Financial
Disclosures (“TCFD”) disclosure, but the Board
will continue to monitor the situation.
RISK AND RISK MANAGEMENT
continued
CC Japan Income & Growth Trust plc 17
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 17
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
APPROACH TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(“ESG”)
The Board believes that ESG related issues can
affect both the performance and sustainability of
an investment portfolio and that ESG factors can
be potential indicators of management quality and
operational performance. Companies with strong,
sustainable profiles will, it believes, have greater
potential to grow and survive in all market conditions.
The Investment Manager is responsible for engagement
on ESG matters and has a structured, yet flexible
approach to incorporating ESG into the investment
process. Its fundamental, hands-on research approach
allows it to integrate seamlessly its responsible investing
efforts alongside the Company’s investment strategy
in an effective manner, which the Board believes will
achieve the best long-term results for the Company’s
investors.
ESG Research
The Investment Manager considers whether ESG factors
are relevant and where they may have a material impact
on stock performance. The factors considered by the
Investment Manager vary by the industry and company
under review and may include the following:
– Environmental: Pollution, site management /
consideration, greenhouse gas emissions, climate
change, habitat protection, recycling, water.
– Social: Human/employee rights, working conditions,
health and safety, firm-employee relations, child /
forced labour, conflict zones.
– Governance: Board composition, independence,
transparency, compensation and accountability,
shareholder rights and relations, cyber security,
protection of personal data, corruption.
The ESG factors are integrated into the Investment
Manager’s bottom-up investment process and these
issues are considered alongside financial and strategic
issues during assessment and engagement with
companies. The ESG risks are qualitative factors rather
than quantitative inputs in a financial model.
The investment team conducts its own research which
is complemented by data and research of third parties.
Chikara has engaged a third party ESG and climate data
provider, who provides ESG related metrics and analysis.
These reports are reviewed by the investment team
where available and assist them in identifying potential
areas for engagement with companies as it relates to
ESG factors. Third party reporting includes Climate
Impact Reporting and Norms Based Research.
The Investment Manager has a policy that prohibits
investment in a list of companies that manufacture
controversial weapons but does not specifically exclude
investment in industries or individual companies on
standardised ESG factors.
Engagement and Stewardship
A key component of the ESG process is engagement. The
Investment Manager dedicates a significant amount of
time and resource focusing on the ESG characteristics of
the companies in which the Investment Manager invests,
and monitoring is carried out through investment
reviews.
The strategy of the portfolio has an explicit focus on
improving relationships between corporate managers
and shareholders in Japan. Consequently, corporate
governance is a key point of discussion in every meeting
held with company management. The goal in each case
is to help the senior representatives of the company
develop not only an understanding of the role and
requirements of long-term shareholders but also the
realisation that their actions must be consistent with
mutually determined objectives.
The team at Chikara conducts over 300 meetings and
calls a year with the management of many different
companies. Engagement serves three main purposes as
it relates to ESG:
1. Due Diligence – engaging with companies,
conducting due diligence, and understanding
potential risks and opportunities relating to the
investment.
2. Education – through engagement with companies,
sharing best practices and providing insights into the
ESG practices of peers (e.g., disclosures, targets, and
benchmarking).
3. Action – engaging with companies to encourage
disclosures and target setting.
Although the Investment Manager does not seek to
agitate management through aggressive behaviour with
public disclosures or proposals, it does and will vote
on resolutions which it believes are consistent with the
future growth and development of the company.
Conversely, the Investment Manager will vote against
those that do not, and will be prepared to sell the
shareholding if this were deemed to be the most
appropriate course of action.
Japan Stewardship Code: The Investment Manager
is a signatory to the Japan Stewardship Code and its
statement of commitment is set out on its website:
https://www.chikarainvestments.com/japan-
stewardship-code.
18 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
UK Stewardship Code: The Investment Manager
is a signatory to the UK Stewardship Code and its
statement of compliance with the Code can be found
on its website: https://www.chikarainvestments.com/
stewardship-code.
Principles of Responsible Investment (“PRI”): Chikara
became a signatory to the UN-supported Principles for
Responsible Investment (“PRI”) on 6 December 2018.
The PRI is a global standard for investment managers’
ESG alignment. As a signatory to the Principles, the
Investment Manager publicly commits to adopt and
implement them, where consistent with its fiduciary
responsibilities. The Principles can be found here:
https://www.unpri.org/about-us/what-are-the-
principles-for-responsible-investment. The Investment
Manager also commits to evaluate the effectiveness
and improve the content of the Principles over
time. It believes this will improve its ability to meet
commitments to beneficiaries as well as better align
its investment activities with the broader interests
of society. Chikara reports annually to the PRI on the
firm’s responsible investment initiatives, activities and
achievements and seeks to meet the standards expected
by the PRI in doing so.
EXAMPLES OF ENGAGEMENT
Company A – Management and Consulting Services Company
Further to our monitoring of Company A following its announcement in May 2022 to invest in a
renewable facility, we spoke to the President & CEO in April 2024. Whilst the management had
previously indicated that Company A would invest more than 1 billion yen over a maximum
of five years, investment so far in FY7/23 was limited to several hundred million yen in a small
biomass power generation facility, but visibility of the return on investment (‘ROI’) remained
low. Although this project is expected to contribute to the environment and society, we raised
our concern about ROI, and thus the need to set and disclose numerical targets. We also
suggested that management could improve its communication regarding the medium to long-
term vision for investors. We emphasised that it was crucial for Company A’s management to
strike the right balance between sustainability and top and bottom-line agenda.
Following our April 2024 engagement on Company A’s disclosure of its renewable energy
capital expenditure plan and ROI, we held a follow-up discussion with the President & CEO.
During this conversation, it was confirmed that Company A had released relevant updates
on its renewable energy investments and actively communicated these developments to
investors. Additionally, Company A announced a dividend increase during the FY7/24 full-
year results announcement, reflecting management’s confidence in achieving its targets. This
announcement was well-received by the market.
We remain in dialogue with management regarding the progress of its renewable energy
projects and are pleased with the outcomes of our engagement to date.
Company B – Entertainment Technology Software and Hardware Company
We engaged with Company B to recommend the incorporation of numerical targets within its
scenario analysis such as greenhouse gas (‘GHG’) reduction targets and long-term objectives
for achieving carbon neutrality. This would enhance transparency and improve visibility
of the Company’s sustainability efforts. We will maintain our dialogue with Company B to
monitor progress and further developments in these areas.
APPROACH TO ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (“ESG”)
continued
CC Japan Income & Growth Trust plc 19
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 19
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
This section of the Annual Report covers the Board’s considerations and activities in discharging their duties under
s.172(1) of the Companies Act 2006, in promoting the success of the Company for the benefit of its members as a whole.
This statement includes consideration of the likely consequences of the decisions of the Board in the longer term,
how the Board has taken wider stakeholders’ needs into account and the impact of the Company’s operations on the
environment.
The Board, together with the Investment Manager, sets an overall investment strategy and reviews this on an ongoing
basis. In order to ensure good governance of the Company, the Board has set various limits on the investments in the
portfolio, including the size of individual holdings, investments in exchange traded funds, and the level of gearing. These
limits and guidelines are regularly monitored.
The Board is ultimately responsible for all stakeholder engagement. As an externally managed investment company,
the Company does not have any employees; rather it employs external suppliers to fulfil a range of functions, including
investment management, secretarial, administration, public and investor relations, corporate broking, depositary and
banking services. All these service providers, who are stakeholders in the Company themselves, help the Board to fulfil its
responsibility to engage with the shareholders and other stakeholders.
The aim of the Board is to ensure the long-term sustainable success of the Company and in doing so, it has identified the
following as the major stakeholders in the Company’s business.
Key stakeholders Why it is important to engage Engagement and Key Board Decisions
Shareholders The Board places great importance
on maintaining an open dialogue with
shareholders who own the Company.
This engagement is critical to the
continuing successful existence of the
Company. The Investment Manager
along with the Company’s corporate
broker regularly meets with the
Company’s shareholders to provide
Company updates and to foster
regular dialogue.
Feedback from meetings between the
Investment Manager and shareholders
is communicated to the Board. A
fundamental consideration of the
Board is whether the investment
objective of the Company is continuing
to meet shareholder expectations.
The principal forum for communicating with
shareholders is the Company’s Annual General Meeting
(“AGM”), where shareholders have the opportunity to
meet with the Board and the Investment Manager to
raise any questions and concerns.
The Board has appointed an independent research
consultancy, Kepler, to ensure that information and
news about the Company is regularly available for
existing and potential shareholders.
The Board reports formally to shareholders twice a
year by way of the Annual and Half Yearly Reports.
This information is supplemented by the Company’s
daily publication of the NAV per share, routine ad
hoc regulatory announcements, monthly factsheets
and other information placed on the Investment
Manager’s website, including a Key Information
Document (‘KID’), portfolio disclosures, terms of
reference and the Company’s share price.
The Chairman and Directors are available to meet
with shareholders on request. Shareholders wishing
to contact the Board may do so by writing to the
Company Secretary (cosec@frostrow.com).
During the year, the Company’s Broker and
Investment Manager held regular discussions with
larger shareholders.
The Company’s strategy is validated on a triennial basis,
with the last continuation vote held in March 2022,
when 99.97% of shareholders voting, voted for the
continuation of the Company. The next continuation
vote will be proposed at the forthcoming AGM in 2025.
The Board has declared a total dividend for the
2024 year of 5.45p per ordinary share, an increase
of 2.8% on last year’s full year distribution of 5.30p
per ordinary share; paid out of income received. The
dividend has risen every year since inception.
STAKEHOLDER ENGAGEMENT
20 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
20 CC Japan Income & Growth Trust plc
Key stakeholders Why it is important to engage Engagement and Key Board Decisions
Investment
Manager
Chikara is the Company’s appointed
Investment Manager. The Investment
Manager is responsible for the
management of the Company’s
portfolio in accordance with the
Company’s investment policy and the
terms of the Investment Management
Agreement.
The Board monitors the Company’s investment
performance in relation to its objectives and
investment policy and strategy. The Board regularly
assesses the experience and resources of the
Investment Management team and the commitment
of the Investment Manager to promote the Company,
foster shareholder relations and to ensure that the
Company’s objective of providing dividend income
combined with capital growth for its investors is met.
An open and active relationship is maintained with the
Investment Manager, at Board meetings, and between
meetings as required. Richard Aston has managed the
investment portfolio since launch in December 2015.
During the year, the Board received regular reports
from the team at Chikara who are responsible for
marketing the Company.
As AIFM to the Company, Chikara’s Chief Compliance
Officer attended board meetings and reported on
compliance processes and controls.
The Management Engagement Committee met during
the year and unanimously endorsed the continued
appointment of the Company’s Investment Manager.
Key decisions:
As detailed in the Chairman’s Statement on page 6,
the Board has agreed with the Investment Manager
that, with effect from 1 November 2024, the
Company’s management fee is calculated on a tiered
basis of 0.75% per annum on the first £300 million of
net assets and 0.60% on net assets in excess of £300
million. This compares with the flat fee arrangement
of 0.75% per annum on net assets which has been
levied since the Company’s inception.
STAKEHOLDER ENGAGEMENT
continued
CC Japan Income & Growth Trust plc 21
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 21
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Key stakeholders Why it is important to engage Engagement and Key Board Decisions
Service Providers As an externally managed investment
trust, the Company conducts all its
business through its key service
providers. The Board ensures that
the appropriate capability, resources,
controls and performance record
are in place to deliver the required
services. Before the engagement of a
service provider, the Board ensures
that the Service Provider’s business
outlook as well as its values are similar
to those of the Company.
The continued appointment of all service providers is
reviewed by the Board on an annual basis to ensure
that the Company continues to receive high quality
service at a competitive cost.
The Board receives comprehensive annual internal
control reports from key service providers. The Board
also seeks annual assurance from its service providers
as regards governance, including whistleblowing,
prevention of tax evasion and anti-bribery policy and
cyber security procedures.
Key decisions:
During the year, the Board conducted a review of the
current fund administration and company secretarial
service providers. After assessing competitive
alternatives, the Board decided to appoint Frostrow
Capital LLP to provide Administration and Company
Secretarial Services. Frostrow has also been appointed
as the Company’s AIFM in accordance with the
Alternative Investment Fund Managers Directive
(“AIFMD”), for the purpose of providing portfolio
management and risk management services to
the Company. The Board is confident that this new
appointment will be in the interests of all Stakeholders
and put the CC Japan Income & Growth Trust plc in a
strong position to grow.
At the AGM, shareholders approved the appointment
of the Auditor, Johnston Carmichael LLP who has
provided independent audit services to the Company
for the second time this year.
22 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
22 CC Japan Income & Growth Trust plc
Key stakeholders Why it is important to engage Engagement and Key Board Decisions
Wider
community
and environment
The Company and its appointed
professional suppliers keep abreast of
the rules and regulations affecting the
investment company sector.
The Investment Manager, Chikara,
as steward of the Company’s assets,
engages with investee companies to
ensure high standards of governance.
The investment strategy of the
Company is predicated upon the
improving standards of shareholder
governance in Japan and the
commitment of investee companies to
act in the interests of all stakeholders.
The Company Secretary and AIFM regularly report to
the Board any changes in the regulatory environment.
As Association of Investment Company (“AIC”)
members, the Board draws on their resources
including the detailing of regulatory changes.
The Company has articulated its policy on ESG factors
involved in the investment decision-making and
evidence of constructive engagement with investee
companies. See pages 17 and 18.
The ESG policy is available on both the Company’s
website and the AIC’s website.
The Investment Manager is committed to being a
responsible investor and applies, and is a signatory
to, the United Nations Principles for Responsible
Investment (PRI), which demonstrates its extensive
efforts in terms of ESG integration, active ownership,
investor collaboration and transparency.
The Investment Manager is a listed signatory to the
UK Stewardship Code 2020 and the Japan Stewardship
Code. Further information on Chikara’s approach
to the principles and guidance of the 2020 Japan
Stewardship Code can be found on their website:
https://www.chikarainvestments.com/legal-
disclosures.
The Board reviewed the governance engagement
reports and discussed the voting record with the
Investment Manager.
The Directors are cognisant of their duties laid out under Section 172 of the Companies Act 2006 to make decisions
taking into account the long-term consequences of all the Company’s key stakeholders and reflect the Board’s belief
that the long-term sustainable success of the Company is linked directly to its key stakeholders.
For and on behalf of the Board
June Aitken
Chairman
21 January 2025
STAKEHOLDER ENGAGEMENT
continued
CC Japan Income & Growth Trust plc 23
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 23
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
HOLDINGS IN PORTFOLIO
AS AT 31 OCTOBER 2024
Company Main Business Area
Tokyo Stock Exchange
(“TSE”) Sector
Market value
£’000
% of net
assets
Sumitomo Mitsui Financial Group Banks Banks 18,532 7.0
Mitsubishi UFJ Financial Group Banks Banks 13,122 4.9
Itochu Trading Company Wholesale 11,577 4.4
Nintendo Gaming Other Products 10,879 4.1
Softbank
Mobile Telecoms &
Services
Information &
Communications 10,829 4.1
Tokio Marine Holdings Insurance Insurance 10,109 3.8
Shin-Etsu Chemical Silicon Wafers & PVC Chemicals 9,862 3.7
Hitachi IT & Infrastructure Electrical Appliances 9,260 3.5
Tokyo Metro Land Transport Land Transport 9,218 3.5
Japan Securities Finance
Specialist Financial
Services
Other Financing
Business 9,025 3.4
SBI Holdings
Financial Services &
Investment
Securities &
Commodities 9,000 3.4
Mitsubishi Trading Company Wholesale 8,582 3.2
Zozo Online Fashion Retail Retail Trade 8,474 3.2
Nissan Chemical Industries Functional Materials Chemicals 7,332 2.8
Noevir Cosmetics Chemicals 6,600 2.5
JAFCO Venture Capital
Other Financing
Business 6,225 2.3
Dexerials Functional Materials Chemicals 5,777 2.2
Nitto Denko Functional Materials Chemicals 5,680 2.1
Nippon Parking Development Real Estate Real Estate 5,473 2.1
DIP Online Recruitment Services 5,435 2.0
ARE Holdings Recycling Precious Metals 5,425 2.0
Tokyo Electron
Semiconductor
Production Equipment Electrical Appliances 5,312 2.0
Sompo Holdings Insurance Insurance 5,008 1.9
Nippon Gas Utilities Electric Power & Gas 4,745 1.8
En-Japan Online Recruitment Services 4,740 1.8
Mani Medical Devices Precision Instruments 4,618 1.7
Kao Cosmetics & Toiletries Chemicals 4,617 1.7
24 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
24 CC Japan Income & Growth Trust plc
Company Main Business Area
Tokyo Stock Exchange
(“TSE”) Sector
Market value
£’000
% of net
assets
Tokyo Ohka Kogyo
Semiconductor
Production Materials Chemicals 4,537 1.7
Denso
Automotive
Components Transport Equipment 4,360 1.6
Pillar Industrial Materials Machinery 4,344 1.6
Technopro Holdings Engineer Outsourcing Services 4,171 1.6
Macnica Holdings Semiconductor Trading Wholesale 4,102 1.5
Carta Holdings Online Marketing
Information &
Communications 3,884 1.5
Kyocera Electronic Components Electrical Appliances 3,567 1.3
Socionext
Semiconductor
Solutions Electrical Appliances 3,302 1.2
GMO Internet Internet Services
Information &
Communications 2,673 1.0
Shoei Motorbike Helmets Other Products 2,493 1.0
Aoyama Zaisan Networks Property Consulting Real Estate 2,287 0.9
Nareru Group Engineer Outsourcing Construction 589 0.2
Total holdings 255,765 96.2
Other net assets 7,363 2.8
Royal London Short-Term Money
Market Fund Open-End Fund
Cash and cash
equivalents – 2,713 1.0
Net asset value 265,841 100.0
HOLDINGS IN PORTFOLIO
continued
CC Japan Income & Growth Trust plc 25
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 25
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
TSE Sector
% of
net assets
Information & Communications 14.9
Chemicals 14.6
Banks 11.9
Wholesale 7.6
Electrical Appliances 6.7
Insurance 5.7
Other Financing Business 5.7
Other Products 5.1
Retail Trade 5.0
Securities & Commodities 4.4
Top Ten 81.6
Other Sectors
1
14.6
Other net assets 3.8
Total 100.0
1
Other Sectors comprise 8 sectors, which individually, is less than 4.4% each of the net assets.
TOP TEN (MAIN BUSINESS AREAS)
AS AT 31 OCTOBER 2024
Main Business Area %
Banks 11.9
Other Financial Services 9.1
Trading Companies 7.6
Semiconductor Related 6.4
Functional Materials 7.1
Insurance 5.7
Recruitment & Staffing 5.6
Telecom & Internet 5.1
Cosmetics & Toiletries 4.2
Gaming 4.1
Top Ten 66.8
Other Main Business Areas 29.4
Other net assets 3.8
Total 100.0
TOP TEN (TOKYO STOCK EXCHANGE (“TSE”) SECTOR)
AS AT 31 OCTOBER 2024
26 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
26 CC Japan Income & Growth Trust plc
TOP TEN CONTRACTS FOR DIFFERENCE (“CFDs”)
AS AT 31 OCTOBER 2024
Company Main Business Area TSE Sector
Absolute
value
£’000
Absolute
value as a
% of
net assets
Market
value
£’000
Sumitomo Mitsui Financial
Group Banks Banks 3,706 1.4 618
Mitsubishi UFJ Financial Group Banks Banks 2,624 1.0 614
Itochu Trading Company Wholesale 2,316 0.9 534
Nintendo Gaming Other Products 2,176 0.8 409
Softbank
Mobile Telecoms &
Services
Information &
Communications 2,166 0.8 129
Tokio Marine Holdings Insurance Insurance 2,022 0.8 552
Shin-Etsu Chemical Silicon Wafers & PVC Chemicals 1,972 0.7 173
Hitachi IT & Infrastructure Electrical Appliances 1,852 0.7 573
Tokyo Metro Land Transport Land Transport 1,844 0.7 29
Japan Securities Finance
Specialist Financial
Services
Other Financing
Business 1,805 0.7 447
Top Ten CFDs 22,483 8.5 4,078
Other CFDs 28,670 10.7 3,932
Total CFDs 51,153 19.2 8,010
The Strategic Report set out on pages 2 to 26 of this Annual Report was approved by the Board of Directors on
21 January 2025.
June Aitken
Chairman
21 January 2025
CC Japan Income & Growth Trust plc 27
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 27
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
The Directors present their report and accounts for the
year ended 31 October 2024.
Strategic report
The Directors’ Report should be read in conjunction with
the Strategic Report on pages 2 to 26.
Corporate governance
The Corporate Governance Statement on pages 32 to 37
forms part of this report.
Legal and taxation status
The Company is an investment company within the
meaning of Section 833 of the Companies Act 2006. The
Company conducts its affairs to meet the requirements
for approval as an investment trust under section 1158
of the Corporation Tax Act 2010. In the opinion of the
Directors, the Company has met the conditions and
requirements for approval as an investment trust for the
year ended 31 October 2024 and intends to continue to
do so.
Management
Chikara Investments LLP has been appointed as the
Company’s Investment Manager. Chikara is authorised
and regulated by the Financial Conduct Authority.
The Investment Management Agreement is subject to
not less than six months’ written notice. There is no
compensation payable on termination of the agreement.
The Board has agreed with the Investment Manager
that, with effect from 1 November 2024, the Company’s
management fee is calculated on a tiered basis of 0.75%
per annum on the first £300 million of net assets and
0.60% on net assets in excess of £300 million. This
compares with the flat fee arrangement of 0.75% per
annum on net assets which has been levied since the
Company’s inception.
In accordance with the Directors’ policy on the allocation
of expenses between revenue and capital, 80% of the
management fee is charged to capital and the remaining
20% to revenue.
The Board reviews this policy on a periodic basis and
confirms this allocation remains consistent with their
expectations of future returns from the portfolio.
Management engagement
The Board carefully reviewed the Investment Manager’s
appointment during the year. The Directors are satisfied
that the Investment Manager has the suitable skills
and experience to manage the Company’s investments
and believe that the continuing appointment of the
Investment Manager is in the interests of shareholders
as a whole. Since inception, the Company has met
its objectives set out in the prospectus in relation to
the annual dividend, which has risen every year since
inception.
AIFM, Administrator and Company Secretary
This year the Board conducted a review of its
operational arrangements. Following the completion
of that review, the Board appointed Frostrow Capital
LLP (“Frostrow”) with effect from 1 January 2025 as
its Alternative Investment Fund Manager (“AIFM”),
Administrator and Company Secretary. Frostrow has
also been appointed to provide investor relations and
marketing services to the Company, alongside the
team at Chikara. Frostrow’s appointment will improve
the standard of governance by providing an additional
level of independent oversight. In consequence of
this appointment, the Company’s registered office
has changed to 25 Southampton Buildings, London
WC2A1AL.
Alternative Investment Fund Managers Directive
(“AIFMD”)
During the reporting year and until 1 January 2025,
Chikara has fulfilled the role as the Company’s AIFM,
in accordance with the Alternative Investment Fund
Managers Directive (“AIFMD”). With effect from 1 January
2025, Frostrow has been appointed as the Company’s
AIFM.
The AIFM must ensure that an annual report containing
certain information on the Company is made available
to investors for each financial year. The FCA Investment
Funds Sourcebook (the “Sourcebook”) details the
requirements of the annual report. All the information
required by those rules is included in this Annual Report
or will be made available on the Company’s website:
(www.ccjapanincomeandgrowthtrust.com/ ccji-
documents/report-accounts).
The AIFM is required to make certain disclosures on its
remuneration in respect of the AIFM’s relevant reporting
period which is the year ended 31 December 2023.
These disclosures are available on the website (https://
www.chikarainvestments.com/aifm-remuneration-
disclosure) or are available on request from the AIFM.
Leverage (under AIFMD)
The AIFM is required to set leverage limits as a
percentage of net assets for the Company utilising
methods prescribed under AIFMD. These methods
are known as the gross method and the commitment
method. Under both methods the AIFM has set current
maximum limits of leverage for the Company of 200%.
A leverage percentage of 100% equates to nil leverage.
DIRECTORS’ REPORT
28 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
28 CC Japan Income & Growth Trust plc
The Company’s leverage under each of these methods at
its year end is shown below:
Gross
method
1
Commitment
method
1
Maximum leverage
limit 200% 200%
Actual leverage at
31 October 2024 118% 118%
1 Alternative Performance Measure, see glossary and alternative
performance measures on pages 73 to 77.
Dividend policy
The Company intends to pay dividends on a semi-annual
basis, with dividends normally declared in January/
February and June and paid in March and July/August
each year.
In accordance with regulation 19 of the Investment
Trust (Approved Company) (Tax) Regulations 2011, the
Company will not (except to the extent permitted by
those regulations) retain more than 15% of its income
(as calculated for UK tax purposes) in respect of an
accounting year.
In order to increase the distributable reserves available
to facilitate the payment of future dividends, the amount
standing to the credit of the share premium account
of the Company immediately following completion of
the first issue of ordinary shares on 15 December 2015
was cancelled and transferred to a special distributable
reserve. The Company may, at the discretion of the
Board, pay all or part of any future dividends out of this
special distributable reserve, taking into account the
Company’s investment objective.
Dividends will normally be funded through distributions
from portfolio companies including dividends and other
distributions, taking account of share buybacks by
portfolio companies.
The Company declared an interim dividend of 1.60p per
ordinary share in June 2024 which was paid on 2 August
2024. On 17 January 2025, the Directors declared a
second interim dividend in respect of the year ended
31 October 2024 of 3.85p per ordinary share, which,
will be paid on 3 March 2025, to shareholders on the
register at 31 January 2025.
General authority to issue shares
A general authority to issue up to 13,473,061 ordinary
shares and to disapply pre-emption rights when issuing
those shares was granted at the Company’s last Annual
General Meeting. This authority will expire at the time of
the Annual General Meeting to be held in March 2025.
During the year ended 31 October 2024, the Company
did not utilise its authority to issue shares. However,
the Board recommends that the Company is granted a
new authority to issue up to a maximum of 13,473,061
ordinary shares (representing approximately 10% of
the shares in issue at the date of this document) and
to disapply pre-emption rights when issuing those
ordinary shares. Resolutions to this effect will be put to
shareholders at the Annual General Meeting.
Any ordinary share issues will be issued at a premium to
cum-income NAV.
Treasury shares
The Companies Act allows companies to hold shares
acquired by way of market purchases to be held as
Treasury shares, rather than having to cancel them. This
would give the Company the ability to re-issue ordinary
shares quickly and cost effectively, thereby improving
liquidity and providing the Company with additional
flexibility in the management of its capital base. No
ordinary shares will be sold from Treasury at a price less
than the cum-income NAV per existing ordinary share
at the time of their sale unless they are first offered pro
rata to existing shareholders.
No ordinary shares were bought back during the year
ended 31 October 2024 and no ordinary shares are
currently held in Treasury.
Discount management
The Directors recognise the importance to existing
shareholders of the Company’s shares not trading at a
significant discount to their prevailing NAV. To the extent
that the ordinary shares trade at a significant discount to
their prevailing NAV, the Board will consider whether, in
the light of the prevailing circumstances, the Company
should purchase its own ordinary shares, whether
pursuant to the general authority referred to below or
pursuant to tender offers made on appropriate terms.
There is, however, no guarantee or assurance that any
discount control mechanisms proposed by the Board
will reduce any discount.
The Directors currently have the authority to make
market purchases of up to 20,196,118 ordinary shares.
The maximum price (exclusive of expenses) which may
be paid for an ordinary share must not be more than
the higher of: (i) 5 per cent. above the average of the
mid-market values of the ordinary shares for the five
Business Days before the purchase is made: or (ii) the
higher of the price of the last independent trade and the
highest current independent bid for the ordinary shares.
Ordinary shares will be repurchased only at prices below
the prevailing NAV per ordinary share, which should
have the effect of increasing the NAV per ordinary share
for remaining shareholders.
It is intended that a renewal of the authority to make
market purchases will be sought from shareholders at
DIRECTORS’ REPORT continued
CC Japan Income & Growth Trust plc 29
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 29
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
each Annual General Meeting of the Company and such
a resolution will put forward at the forthcoming Annual
General Meeting. Purchases of ordinary shares will be
made within guidelines to be established from time to
time by the Board. Any purchase of ordinary shares
would be made only out of the available cash resources
of the Company and when shares are trading at a price
that is below the then prevailing NAV per ordinary share.
Ordinary Shares purchased by the Company may be
held in Treasury or cancelled.
Purchases of ordinary shares may be made only in
accordance with the Companies Act, the Listing Rules
and the Disclosure Guidance and Transparency Rules.
Life of the Company
The Company has no fixed life but, pursuant to the
Articles of Association, an ordinary resolution for the
continuation of the Company will be proposed at the
Annual General Meeting every three years. The last
continuation vote was in March 2022 and was supported
by 99.97% of those shareholders who voted. The next
continuation vote will be proposed at the AGM to be
held on 3 March 2025. Upon any such resolution not
being passed, within 90 days proposals will be put
forward to the effect that the Company be wound up,
liquidated, reconstructed or unitised.
Market information
The Company’s ordinary shares are admitted to the
closed-ended investment funds category of the Official
List of the FCA and are traded on the main market of
the London Stock Exchange. The daily NAV per share is
published through a regulatory information service.
Bank overdraft facility
The Company has a bank overdraft facility with The
Northern Trust Company. Under the terms of the facility
a maximum of £12 million, or the equivalent in Japanese
yen, can be drawn down. As at the year-end date, none
(2023: the equivalent of £3,180,000) of the overdraft
facility was utilised on the Japanese yen bank account.
Derivatives
The Company may use long only contracts for difference
(“CFDs”) or equity swaps for gearing and efficient
portfolio management purposes. Where the Company
uses such instruments, it takes a credit risk with regard
to the parties with whom it trades and may also bear the
risk of settlement default.
As at 31 October 2024, the Company held contracts for
difference with an absolute exposure of £51,153,000
(2023: £46,397,000).
Financial instruments
The financial instruments of the Company generate
liquidity risk, credit risk and market risk. An explanation
of these risks and how they are managed; and the policy
and practice with regard to financial instruments are
contained in note 16 of the financial statements.
Depositary and custodian
The depositary is the entity we are required by
regulation to appoint to carry out certain services in
relation to the Company, namely, safekeeping of the
assets, cash monitoring and regulatory oversight. The
trustee and depositary of the Company is Northern Trust
Investor Services Limited (“NTISL”). NTISL is a company
established in England and Wales and is authorised by
the FCA to be a trustee and depositary.
Capital structure and voting rights
At the financial year end, the Company’s issued share
capital comprised 134,730,610 ordinary shares of 1p
nominal value. Each ordinary share held entitles the
holder to one vote. All shares carry equal voting rights
and there are no restrictions on those voting rights.
Voting deadlines are stated in the Notice of Annual
General Meeting and Form of Proxy and are in
accordance with the Companies Act 2006.
There are no restrictions on the transfer of ordinary
shares, nor are there any limitations or special rights
associated with the ordinary shares.
Significant Shareholders
As at 31 October 2024, the Directors have been formally
notified of the following shareholdings comprising 3%
or more of the issued share capital of the Company in
accordance with DTR 5 (The Disclosure and Guidance
Transparency Directive):
Significant Shareholders Holding %
1607 Capital Partners LLC 15,941,741 11.8
Rathbone Investment
Management Ltd 13,404,704 10.0
Christ Church College,
Oxford University 8,706,850 6.5
Close Asset Management
Limited 6,778,757 5.0
City of London Investment
Management Company
Limited 6,589,431 4.9
WM Thomson 6,454,660 4.8
Charles Stanley Group PLC 5,689,763 4.2
J M Finn Nominees Limited 5,455,300 4.1
Brooks Macdonald Asset
Management Limited 4,725,154 3.5
30 CC Japan Income & Growth Trust plc
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30 CC Japan Income & Growth Trust plc
Since the year end, the Company has been notified by
1607 Capital Partners that it has reduced its holding in
the Company to 14,744,261 ordinary shares, or 10.9% of
the issued share capital of the Company.
Settlement of ordinary share transactions
Settlement of ordinary share transactions in the
Company are settled by the CREST share settlement
system.
Political donations
The Company does not make political donations.
Notice of general meetings
For the Annual General Meeting at least twenty-one
days’ notice shall be given to all the members and to
the auditors. All other general meetings shall also be
convened by not less than twenty-one days’ notice to all
those members and to the auditors. A special resolution
will be proposed at the Annual General Meeting to
renew the authority to reduce the period of notice for
General Meetings to fourteen days. Reduced notice will
be used only under exceptional circumstances.
Going concern
The Directors have adopted the going concern basis
in preparing the Company’s accounts. The following is
a summary of the Directors’ assessment of the going
concern status of the Company, which should be read
in conjunction with the Viability Statement on pages 11
and 12.
The Company’s ability to continue as a going concern
is for the period assessed by the Directors, being the
period to 31 January 2026, which is at least 12 months
from the date the financial statements were authorised
for issue.
The going concern assessment took account of wars in
Ukraine and the Middle East; the increase in geopolitical
tension between the US and China and the potential for
increases in global trade tariffs. The Company’s principal
risks are market-related and the recent volatile market
conditions have demonstrated the resilience of the
Company and its investment objective and policy. An
explanation of the market, liquidity and credit risks and
how they are managed is contained in note 16 to the
financial statements.
The Directors have also considered the liquidity of the
Company’s portfolio of investments as well as its cash
position, income, and expense flows. The Company’s
net assets as at 31 October 2024 were £265.8 million
(2023: £235.1 million). As at 31 October 2024, the
Company held approximately £258.5 million in quoted
investments (2023: £232.0 million) and had cash of £4.0
million (2023: £0.3 million). The results of liquidity stress
tests indicate that even in an extreme stress scenario
where the market falls by 70%, the Company would be
able to liquidate 84% of holdings within seven days and
99% of holdings within 30 days.
The total expenses (excluding finance costs and taxation)
for the year ended 31 October 2024 were £2.8 million
(2023: £2.4 million), which represented approximately
1.03% (2023: 1.06%) of average net assets during the
year. At the date of approval of this report, based on the
aggregate net assets of investments and cash held, the
Company has substantial operating expenses cover.
The Directors have fully considered and assessed the
Company’s portfolio of investments. A prolonged and
deep market decline could lead to falling values of the
investments or interruptions to cash flow. However, the
Company currently has more than sufficient liquidity
available to meet future obligations.
In accordance with the Company’s Articles of
Association, shareholders have the right to vote on the
continuation of the Company as an investment trust
every three years and a resolution to that effect was
last approved at the AGM in March 2022. Accordingly,
a continuation vote will be proposed at the AGM on 3
March 2025. The Board is confident that shareholders
will support the continuation vote.
Appointment and replacement of Directors
The rules governing the appointment and replacement
of Directors are contained in the Company’s Articles of
Association which require that Board members retire at
every third AGM after appointment. However, the Board
has agreed that all Directors will be subject to annual
re-election.
If a Board member does not put themselves forward
for re-election at the Annual General Meeting, or the
resolution to re-elect them to the Board fails, they will
step down. Furthermore, the Board may determine that
a Board member may decide to step down at any time.
No Board member is subject to compensation for loss of
office.
Articles of Association
Any amendment of the Company’s Articles of
Association requires shareholder approval.
Directors’ indemnities
Details on the Directors’ indemnities in place are
provided in the Directors’ Remuneration Implementation
Report.
DIRECTORS’ REPORT continued
CC Japan Income & Growth Trust plc 31
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CC Japan Income & Growth Trust plc 31
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Auditor information
Each of the Directors at the date of the approval of this
report confirms that:
(i) so far as the Director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware; and
(ii) the Director has taken all steps that they ought to
have taken as Director to make themself aware of
any relevant information and to establish that the
Company’s auditor is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of Section 418 of the
Companies Act 2006.
In accordance with Section 489 of the Companies Act
2006, a resolution to re-appoint Johnston Carmichael
LLP as the Company’s auditor will be put forward at the
forthcoming Annual General Meeting.
Future trends
Details of the main trends and factors likely to affect
the future development, performance and position of
the Company’s business can be found in the Investment
Manager’s Report section of this Strategic Report on
pages 7 and 8. Further details as to the risks affecting
the Company are set out in the ‘Principal and Emerging
Risks and Uncertainties’ on pages 13 to 16.
Annual General Meeting
The Company’s forthcoming AGM will be held at 12 noon
on 3 March 2025. The Notice of the AGM can be found
on pages 81 to 82 of this Annual Report and downloaded
from the website.
By order of the Board
Frostrow Capital LLP
Company Secretary
21 January 2025
32 CC Japan Income & Growth Trust plc
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32 CC Japan Income & Growth Trust plc
Introduction
The Listing Rules and the Disclosure Guidance and
Transparency Rules of the UK Listing Authority (“Listing
Rules”) require listed companies to disclose how they
have applied the principles and complied with the
provisions of the UK Corporate Governance Code 2018
(the “UK Code”), as issued by the Financial Reporting
Council (“FRC”). The UK Code can be viewed on the FRC’s
website.
The Board of the Company has considered the Principles
and Provisions of the 2019 Association of Investment
Companies Code of Corporate Governance (the “AIC
Code”). The AIC Code addresses the Principles and
Provisions set out in the UK Code, as well as setting
out additional Provisions on issues that are of specific
relevance to the Company, as an investment trust. The
AIC Code is available on the AIC website (www.theaic.
co.uk). It includes an explanation of how the AIC Code
adapts the Principles and Provisions set out in the UK
Code to make them relevant for investment companies.
The Board considers that reporting against the
Principles and Provisions of the AIC Code, which has
been endorsed by the FRC, provides more relevant
information to the Company’s shareholders. AIC
members who report against the AIC Code fully meet
their obligations under the UK Code and the related
disclosure requirements contained in the Listing Rules.
During the financial year ended 31 October 2024, the
Company complied with the recommendations of
the AIC Code and the relevant provisions of the UK
Corporate Governance Code, except as set out below.
The UK Corporate Governance Code includes provisions
relating to:
(i) the role of a chief executive;
(ii) executive Directors’ remuneration; and
(iii) the need for an internal audit function.
The Board considers that these provisions are not
relevant to this externally managed investment
company. The Company has no employees and the day-
to-day management and administrative functions are
outsourced to third parties.
The Board of Directors
As at 31 October 2024, the Company had four Non-
Executive Directors including the Chairman, comprising
two male (50%) and two female (50%) directors.
Biographical details can be found on pages 32 and 33.
At the conclusion of the AGM on 5 March 2024, Harry
Wells retired as Non-Executive Chairman of the Board,
having served on the Board since launch in December
2015. June Aitken, who joined the Board in February
2022, was appointed by the Board to succeed Harry
Wells as Chairman of the Board with effect from her re-
election as a Director at the Company’s AGM on 5 March
2024.
Craig Cleland, who joined the Board in February 2022,
is the Senior Independent Director (‘SID’), having been
appointed to succeed June Aitken in this role on 5 March
2024. Craig was appointed to the role of Chairman
of the Nomination Committee in October 2024. Kate
Cornish-Bowden is the Audit and Risk Committee
Chairman.
All Directors, including the Chairman, June Aitken, are
regarded as independent of the Company’s Investment
Manager.
The Board believes that during the year ended
31 October 2024 its composition was appropriate for an
investment company of the Company’s nature, meeting
both gender and ethnic diversity guidelines. Further
information can be found on pages 34 and 35.
All of the Directors are able to allocate sufficient time
to the Company to discharge their responsibilities
effectively.
The Directors have a broad range of relevant experience
to meet the Company’s requirements, and their
biographies are given below:
June Aitken (Chairman)
Appointed on 1 February 2022
June has over 30 years of experience in Asian and
emerging equity markets, and held numerous senior
roles at HSBC Bank plc, London and at UBS AG. June
is a Non-Executive Director and Chairman of the Audit
Committee of JPMorgan Asia Growth and Income plc,
BBGI Global Infrastructure S.A., and Schroder Income
Growth Fund plc.
June was previously on the board of HSBC Bank Japan,
Aquarius Fund, an Asian fixed income fund, Australian
Securities Exchange listed Emerging Markets Masters
Fund and the Asian Masters Fund Limited, Erudine
Holdings Ltd, a financial software consultancy firm
and the Shepherds Bush Housing Group. She was a
founding partner and investor of Osmosis Investment
Management LLP. June holds a degree in Politics,
Philosophy and Economics from Oxford University.
CORPORATE GOVERNANCE
CC Japan Income & Growth Trust plc 33
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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CC Japan Income & Growth Trust plc 33
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Kate Cornish-Bowden (Director and Chairman of the
Audit and Risk Committee)
Appointed on 3 September 2018
Kate worked for Morgan Stanley Investment
Management for 12 years, where she was a Managing
Director and head of Morgan Stanley Investment
Management’s Global Core Equity business. Prior
to joining Morgan Stanley, Kate worked for M&G
Investment Management as a research analyst. Kate is
a Non-Executive Director and Chairman of International
Biotechnology Trust plc, a Non-Executive Director
of Finsbury Growth & Income Trust plc and Senior
Independent Director of European Assets Trust plc.
Kate was formerly a Non-Executive Director and Senior
Independent Director of Schroder Oriental Income Fund
Ltd. Kate is an Associate of the Institute of Investment
Management and Research (formerly AIMR, now
Chartered Financial Analyst Institute), holds a Master’s in
Business Administration (MBA), and has completed the
Financial Times Non-Executive Director Diploma. She is
also a Mentor for The Prince’s Trust.
Craig Cleland (Director)
Appointed on 1 February 2022
Craig has over 35 years of investment trust and fund
management experience. Since 2013, he has been Head
of Corporate Development: Investment Trusts (on a
part-time basis) at CQS (UK) LLP, a multi-asset asset
management firm in London business with a focus on
credit markets. He is also a Non-Executive Director of
Invesco Global Equity Income Trust plc and BlackRock
Latin American Investment Trust. Craig also served
as a member of the AIC Technical Committee for 10
years and is an Associate of the Institute of Bankers in
Scotland. Craig was a Managing Director at JPMorgan
Asset Management (UK) Limited as a Client Director of
their investment trust business. He was also Director
and Senior Company Secretary at Fleming Investment
Trust Management, transferring to JPMorgan Chase after
the acquisition of Robert Fleming Holdings Limited.
John Charlton-Jones (Director)
Appointed on 1 October 2023
John has 36 years of experience working with
institutions who invest in the Japanese stock market,
as a stockbroker working first for James Capel/HSBC,
and then for CLSA (UK) Limited, in both cases becoming
Managing Director of Japan equity sales across UK/
Europe for over 15 years. During this time, he spent five
years living in Tokyo. John holds a degree in History from
Cambridge University. He is also a Trustee of the Daiwa
Anglo-Japanese Foundation.
Responsibilities of the Chairman, the Board, and
its Committees
The Chairman leads the Board and is responsible for
its overall effectiveness in directing the affairs of the
Company. The Company has adopted a document
setting out the responsibilities of the Chairman.
Tenure, Independence and Succession
Generally, Directors are initially appointed by the
Board, until the following AGM when, as required by
the Company’s Articles of Association, they will stand
for election by shareholders. All Directors will stand for
annual re-election on a voluntary basis.
The Board recognises the benefits to the Company
of having longer serving Directors together with
progressive refreshment of the Board. The Board does
not believe that length of service in itself necessarily
disqualifies a Director from acting independently.
However, the Board will take into account the
requirements of the AIC Code when making a
recommendation for a Director’s reappointment.
Accordingly, the Board may decide to recommend
a director with more than nine years’ service for re-
election at the Company’s AGM. In order to ensure
continuity, the Board has adopted corporate governance
best practice and has a succession plan in place that
allows for gradual refreshment.
No Director of the Company has served for nine years
or more and all Directors remain independent of the
Company’s Investment Manager. However, the Board
is mindful of when the Board members will reach their
ninth anniversary.
Induction and Training
On appointment, each Director receives a complete
induction programme including the opportunity to meet
with the Investment Manager and other service providers.
The Directors receive other relevant training as necessary.
A procedure has been adopted for Directors, in the
furtherance of their duties, to take independent
professional advice at the expense of the Company.
Copies of the Directors’ appointment letters are available
on request from the Company Secretary.
Board committees
Audit and Risk Committee
A report on pages 42 to 44 provides details of the role
and composition of the Audit and Risk Committee
together with a description of the work of the Audit and
Risk Committee in discharging its responsibilities.
Management Engagement Committee
The Company has a Management Engagement
Committee which is chaired by the Chairman of the
Board, June Aitken, and consists of all the Directors.
The Management Engagement Committee’s principal
duties are to consider the terms of appointment
of the Investment Manager and to review annually
CORPORATE GOVERNANCE continued
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34 CC Japan Income & Growth Trust plc
the appointment and the terms of the Investment
Management Agreement. The Management Engagement
Committee also reviews the continued appointment and
performance of the Company’s other service providers.
Nomination Committee
The Company also has a Nomination Committee which
is chaired by the Senior Independent Director, Craig
Cleland. The Nomination Committee is responsible for
identifying and proposing candidates for the office of
Director of the Company. The Nomination Committee
also considers and reviews remuneration payable to
the Directors and makes recommendations regarding
Directors’ fees to the Board.
The terms of reference for these committees
can be found on the Company’s website: https://
ccjapanincomeandgrowthtrust.com.
Board diversity
The Company’s policy is that the Board should have
an appropriate level of diversity in the boardroom,
taking into account relevant skills, experience, gender,
social and ethnic backgrounds, cognitive and personal
strengths. Brief biographies of the Directors are shown
on pages 32 and 33. The policy is to ensure that the
Company’s Directors bring a wide range of knowledge,
experience, skills, backgrounds and perspectives to the
Board. There will be no discrimination on the grounds
of gender, religion, race, ethnicity, sexual orientation,
age or physical ability. The overriding aim of the policy
is to ensure that the Board is composed of the best
combination of people for ensuring effective oversight
of the Company and constructive support and challenge
to the Investment Manager. Consideration is given to
the recommendations of the AIC Code and the Board
supports the recommendations of the Hampton
Alexander review, the more recent FTSE Women Leaders
review and the Parker review.
The Board appraises its collective set of cognitive and
personal strengths, independence and diversity on an
annual basis, and especially during the recruitment
process, so as to ensure it is aligned with the Company’s
strategic priorities. The performance appraisal process
is described below. The Board believes its composition is
appropriate for the Company’s circumstances. However,
in line with the Board’s succession planning and tenure
policy, or should strategic priorities change, the Board
will review and, if required, adjust its composition.
As at date of this Report, the Board comprises two
female and two male Board members.
The Board takes account of the FCA’s listing rule
(UKLR6.6.6R (9)(a)) concerning public disclosures on
whether a company has met the following targets on
board diversity:
a) at least 40% of individuals on the board are women;
b) at least one of the senior board positions (defined
by the FCA as either the chair, senior independent
director, chief executive or chief financial officer) is
held by a woman; and
c) at least one individual on the board is from a
minority ethnic background.
As at 31 October 2024, the Board meets the criteria of all
three targets as a) 50% of the Board are women, b) the
role of Chair of the Board is held by a woman, and c) one
Board member is from a minority ethnic background.
The below tables set out the diversity data required
under UKLR6.6.6R (10) as at 31 October 2024. As an
externally managed investment company, the Board
employs no executive staff, and therefore does not
have a chief executive officer (CEO) or a chief financial
officer (CFO), both of which are deemed to be senior
board positions by the FCA. Although not defined as
such under UKLR6.6.6R (9)(a), the Board considers the
Chair of the Audit and Risk Committee to be a senior
board position, given the nature of the Company as an
investment trust, the importance of the position and the
time it commands. The following information has been
provided by each Director. There have been no changes
since 31 October 2024.
Board Diversity as at 31 October 2024
Gender
Number
of Board
members
Percentage of
the Board
Number
of senior
positions on
the Board
Men 2 50% 1
1
Women 2 50% 1
2
Prefer not to say – – –
1 Craig Cleland is Senior Independent Director.
2 June Aitken is Chairman of the Board.
CORPORATE GOVERNANCE continued
CC Japan Income & Growth Trust plc 35
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CC Japan Income & Growth Trust plc 35
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Ethnic background
Number
of Board
members
Percentage of
the Board
Number
of senior
positions on
the Board
White British or Other White (including minority-white groups) 3 75% 1
1
Asian/Asian British 1 25% 1
2
Prefer not to say – – –
1 Craig Cleland is Senior Independent Director.
2 June Aitken is Chairman of the Board.
Meeting attendance
The number of formal meetings of the Board and Committees held during the year ended 31 October 2024 was as
follows, together with individual Directors’ attendance at those meetings.
Quarterly
Board
Audit and Risk
Committee
Management
Engagement
Committee
Nomination
Committee
Number of meetings held 4 3 1 2
June Aitken 4 3 1 2
Kate Cornish-Bowden 4 3 1 2
Craig Cleland 4 3 1 2
John Charlton-Jones 4 3 1 2
Harry Wells
1
2 1 0 1
1 Harry Wells retired from the Board on 5 March 2024.
Several other ad hoc Board and Committee meetings were held during the year to deal with administrative matters,
board selection, market updates and approve documentation.
Performance appraisal
A performance review of the Investment Manager
was undertaken using a programme of open and
closed ended questions from each of the Board
members which were reviewed by the Chairman of the
Management Engagement Committee and discussed
with the Board. The results were considered, and the
Board concluded that the continued appointment of
the Investment Manager was in the best interests of the
Company’s shareholders.
The Committee separately considered each of its
other service providers. As disclosed in the Chairman’s
Statement on page 5 and in the Directors’ Report on
page 27 and the Company’s London Stock Exchange
announcement on 17 December 2024, the Board has
appointed Frostrow Capital LLP (‘Frostrow’) with effect
from 1 January 2025 as its Alternative Investment Fund
Manager (‘AIFM’), Administrator and Company Secretary.
Frostrow has also been appointed to provide investor
relations and marketing services to the Company,
alongside the team at Chikara. Frostrow’s appointment
will improve the standard of governance by providing an
additional level of independent oversight.
A formal annual performance appraisal process is
performed on the Board, the committees and the
individual Directors. A programme consisting of
open and closed-ended questions was used as the
basis for this appraisal. The results were reviewed
by the Chairman of the Nomination Committee and
discussed with the Board. A separate appraisal of the
Chairman has been carried out by the other members
of the Board and the results reported back by the
Senior Independent Director to the Chairman. The
results of the performance evaluation were positive
and demonstrated that the Board, Chair, Committee
Chairs and individual Directors showed the necessary
commitment and have the requisite experience for the
fulfilment of their duties.
Conflicts of Interest
As required by law, a Director must avoid a situation
where he or she has an interest that conflicts with
the Company’s interests. The Company’s Articles of
Association provide the Directors authority to authorise
potential conflicts of interest. The Directors are able to
impose limits or conditions when giving authorisation if
they think this is appropriate. The procedure observed
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36 CC Japan Income & Growth Trust plc
by the Board in considering dealing with conflicted
matters is as follows:
• Any Board member so conflicted must recuse
themself from the discussion involving the relevant
conflict;
• Only Directors who have no interest in the matter
being considered are able to debate the matter and
take the relevant decision; and
• In taking the decision the Directors must act in a way
they consider, in good faith, will be most likely to
promote the Company’s success.
The Directors have declared any potential conflicts
of interest to the Company. These are entered into
the Company’s register of potential conflicts, which
is reviewed regularly by the Board. The Directors are
obliged to advise the Company Secretary as soon as they
become aware of any potential conflicts of interest.
Internal control
The AIC Code requires the Board to review the
effectiveness of the Company’s system of internal
controls. The Board recognises its ultimate responsibility
for the Company’s system of internal controls and for
monitoring its effectiveness. The system of internal
controls is designed to manage rather than eliminate
the risk of failure to achieve business objectives. It can
provide only reasonable assurance against material
misstatement or loss. The Board has undertaken a
review of the aspects covered by the guidance and has
identified risk management controls in the key areas of
strategic and business risk, financial risk, operational
risk, and regulatory and compliance risk. The Board
believes that the existing arrangements, set out below,
represent an appropriate framework to meet the
internal control requirements. The Directors have kept
under review the effectiveness of the internal control
system throughout the year and up to the date of this
report. The system in place accords with The FRC’s 2014
‘Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting’.
Financial aspects of internal control
The Directors are responsible for the internal financial
control systems of the Company and for reviewing their
effectiveness. These aim to ensure the maintenance of
proper accounting records, the reliability of the financial
information upon which business decisions are made
and which is used for publication and that the assets
of the Company are safeguarded. As stated above, the
Board has contractually delegated to external agencies
the services that the Company requires, but it is fully
informed of the internal control framework established
by the Investment Manager, the Administrator and the
Company’s Custodian to provide reasonable assurance
on the effectiveness of internal financial controls.
The key procedures include a review of the Company’s
management accounts and the Net Asset Value and the
monitoring of performance of the key service providers
at the quarterly Board meetings. The Directors also
employ independent auditors to perform an external
audit. The administrative function is segregated from
that of securities and cash custody, and from the
investment management function. Appropriate Directors
and Officers insurance is in place and renewed annually.
The Company’s key service providers report periodically
to the Board on their procedures to mitigate cyber
security risks. In addition, procedures have been put in
place for the authorisation of all expense payments.
The Statement of Directors’ Responsibilities in respect
of the accounts is on page 45 and a Statement of Going
Concern is on page 30. The Report of the Independent
Auditor is on pages 46 to 51.
Other aspects of internal control
The Board holds quarterly meetings, and additional
meetings as required. Between these meetings there
is regular contact with the Investment Manager, the
Company Secretary and the Administrator.
The Board has agreed policies with the Investment
Manager on key operational issues. The Investment
Manager reports in writing to the Board on operational
and compliance issues. The Investment Manager reports
direct to the Audit and Risk Committee concerning the
internal controls applicable to the Investment Manager’s
dealing, investment and general office procedures.
The Board reviews detailed management accounts from
the Administrator, including holdings in the portfolio,
transactions, and other aspects of the financial position
of the Company. The Depositary provides oversight
reports detailing performance against key performance
indicators for the quarterly Board meetings. Additional
ad hoc reports are received as required and the
Directors have access at all times to the advice and
services of the Company Secretary, ensuring that Board
procedures are followed and that the Board complies
with applicable rules and regulations.
Regular contact with the Investment Manager and
the other key service providers enables the Board to
monitor the Company’s progress towards its objectives
and encompasses an analysis of the risks involved. The
effectiveness of the Company’s risk management and
internal controls systems is monitored and a formal
review, utilising a detailed risk assessment programme
has been completed. This included consideration of
the Administrator’s, the Investment Manager’s, the
Depositary’s and the Registrar’s internal controls
reports. There are no significant findings to report from
the review.
CORPORATE GOVERNANCE continued
CC Japan Income & Growth Trust plc 37
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 37
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Principal and emerging risks
The Directors confirm that they have carried out a
robust assessment of the emerging and principal risks
facing the Company, including those that would threaten
its business model, future performance, solvency or
liquidity. The principal risks and how they are being
managed are set out in the Strategic Report.
Shareholder relations
The Notice of AGM sets out the business of the AGM.
Separate resolutions are proposed for each substantive
issue. The Investment Manager has a programme of
meetings with significant shareholders and reports
back to the Board on its findings. The Chairman and the
Board welcome direct feedback from shareholders.
Exercise of voting powers and stewardship code
The Company and the Investment Manager support the
UK Stewardship Code issued by the Financial Reporting
Council. The Investment Manager is a signatory to the
UK Stewardship code 2020 and has published its proxy
voting policy and statement of commitment to the
principles of best practice of the Stewardship Code on
its website at https://www.chikarainvestments.com/
stewardship-code It is also a signatory to the Japan
Stewardship Code and has published its statement of
commitment to its principles on its website at https://
www.chikarainvestments.com/japan-stewardship-
code.
June Aitken
Chairman
21 January 2025
38 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
38 CC Japan Income & Growth Trust plc
DIRECTORS’ REMUNERATION IMPLEMENTATION REPORT
This report has been prepared in accordance with
Schedule 8 of the Large and Medium–sized Companies
and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
The Directors’ Remuneration Implementation Report is
put forward for approval by shareholders on an annual
basis. The result of the shareholder resolution on the
Implementation Report is non–binding on the Company,
although it gives shareholders an opportunity to express
their views, which will be taken into account by the
Board. An ordinary resolution to approve this Directors’
Remuneration Implementation Report will be put
forward for approval at the Company’s Annual General
Meeting to be held on 3 March 2025.
The law requires the Company’s auditor to audit
certain of the disclosures provided. Where disclosures
are audited, they are indicated as such. The auditor’s
opinion is on page 46.
Remuneration Implementation
The Company currently has four Non–Executive
Directors.
The Board has not established a separate Remuneration
Committee. Board fees are considered annually by the
Board as a whole through the Nomination Committee.
The Board sets its fees by reference to other investment
trusts of a similar nature to that of the Company, to
RPI and CPI and other inflationary measures, the time
commitment of the Board and the size and the impact to
the Company’s ongoing charges following a rise in fees.
Board fees are not considered against any performance
measure.
No remuneration consultants were appointed during the
financial year to 31 October 2024.
Directors’ fees, with effect from 1 November 2023, were
payable at the rate of £42,750 for the Chairman of the
Board; £34,500 for the Chairman of the Audit and Risk
Committee; £29,500 for the Senior Independent Director
and £28,500 per annum for the other Board members.
Following the year end, a review was undertaken and
after careful consideration the Board approved with
effect from 1 November 2024 an increase in annual
Directors’ fees to £45,000 for the Chairman of the
Board; £36,500 for the Chairman of the Audit and Risk
Committee; £31,000 for the Senior Independent Director
and £30,000 per annum for the other Board members.
The Board believes that the level of increase and
resulting fees appropriately reflects prevailing market
rates for an investment trust of the Company’s
complexity and size, the increasing level of regulation
and resultant time spent by the Directors on matters,
and it will also enable the Company to continue to
attract appropriately experienced Directors in the future.
Due to the size and nature of the Company, it was not
deemed necessary to use a remuneration consultant
although the Nomination Committee did take into
consideration views from external search consultants on
the level of the Company’s fees against prevailing market
rates and took these into account in its deliberations.
The Directors’ fees and taxable benefits are shown in the
table on page 39.
Directors’ service contracts
The Directors do not have service contracts with
the Company. The Directors are not entitled to
compensation on the loss of office and no payment was
made to past directors for loss of office. The Directors
have appointment letters which do not provide for any
specific term. In accordance with best practice the Board
put themselves forward for annual re–election. There
are no restrictions on transfers of the Company’s shares
held by the Directors, or any special rights attached to
such shares. The Directors’ letters of appointment can
be inspected at the Company’s registered office.
Directors’ indemnities
Subject to the provisions of the Companies Act 2006, the
Company may indemnify any person who is a Director,
secretary or other officer (other than an auditor) of the
Company, against (a) any liability whether in connection
with any negligence, default, breach of duty or breach
of trust by them in relation to the Company or any
associated company or (b) any other liability incurred by
or attaching to him in the actual or purported execution
and/or discharge of his duties and/or the exercise or
purported exercise of his powers and/or otherwise in
relation to or in connection with his duties, powers or
office; and purchase and maintain insurance for any
person who is a Director, secretary, or other officer
(other than an auditor) of the Company in relation to
anything done or omitted to be done or alleged to have
been done or omitted to be done as Director, secretary
or officer.
A policy of insurance against Directors’ and Officers’
liabilities is maintained by the Company.
Director search and selection fees
No Director search and selection fees were incurred
during the year under review.
CC Japan Income & Growth Trust plc 39
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 39
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Performance
The following chart shows the performance of the Company’s share price by comparison with the TOPIX since
inception, on a total return basis. The Board deems the TOPIX to be the most appropriate comparator for this report.
Directors’ emoluments for the year ended 31 October 2024 (audited)
The Directors who served during the year ended 31 October 2024 received the following remuneration for qualifying
services.
Fees and taxable benefits
Fees
Year ended
31October
2024
£
Taxable
benefits Total
Fees
Year ended
31October
2023
£
June Aitken
1
38,253 – 38,253 27,000
Kate Cornish-Bowden 34,500 – 34,500 32,500
Craig Cleland
2
29,203 – 29,203 27,000
John Charlton–Jones 28,500 – 28,500 2,250
Harry Wells
3
14,836 – 14,836 40,500
Peter Wolton
4
– – – 26,420
Total 145,292 – 145,292 155,670
1
June Aitken was appointed as Chairman of the Board on 5 March 2024.
2
Craig Cleland was appointed as Senior Independent Director on 5 March 2024.
3
Harry Wells retired on 5 March 2024.
4
Peter Wolton retired on 10 October 2023.
In addition to the above, the Company paid £3,000 (2023: £1,000) in expenses to the Directors. None of the above
fees were paid to third parties. There were no taxable benefits claimed during the years ended 31 October 2024 or
31October 2023.
0
20
40
60
80
100
120
140
Dec-15 Oct-16
Oct-17 Oct-18
Oct-19
Oct-20 Oct-23Oct-22
CCJI Share price
TOPIX
Total Return (%)
Oct-21
Oct-24
DIRECTORS’ REMUNERATION IMPLEMENTATION REPORT
continued
40 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
40 CC Japan Income & Growth Trust plc
The current aggregate remuneration that can be paid to Directors under the Company’s Articles of Association is
£500,000 per annum, until otherwise determined by an Ordinary Resolution of the Company.
Annual Percentage Change in Directors’ Remuneration
%
change
2019 to
2020
%
change
2020 to
2021
%
change
2021 to
2022
%
change
2022 to
2023
%
change
2023 to
2024
June Aitken
1
N/A N/A N/A 3.8 41.7
Kate Cornish-Bowden 15.5 6.4 4.1 3.7 6.2
Craig Cleland
1
N/A N/A N/A 3.8 8.2
John Charlton-Jones
2
N/A N/A N/A N/A N/A
Harry Wells
3
2.0 Nil 4.0 3.8 N/A
Peter Wolton
4
2.0 Nil 4.0 3.6 N/A
1
June Aitken and Craig Cleland were appointed on 1 February 2022. June Aitken was appointed as Senior Independent Director on 10 October 2023 and
as Chairman on 5 March 2024. Craig Cleland was appointed as Senior Independent Director on 5 March 2024.
2
John Charlton-Jones was appointed on 1 October 2023.
3
Harry Wells retired on 5 March 2024.
4
Peter Wolton retired on 10 October 2023.
A non-binding ordinary resolution to approve the Directors’ Remuneration Implementation Report contained in the
Annual Report for the year ended 31 October 2023 was put forward at the Annual General Meeting held on 5 March
2024. The resolution was passed with proxies representing 99.97% of the shareholders voting, voted in favour of the
resolution.
The Directors’ Remuneration Policy was last put forward at the Annual General Meeting held on 1 March 2023. The
resolution was passed with proxies representing 99.99% of the shares voted in favour of the resolution. The Directors’
Remuneration Policy will next be put forward for approval at the Annual General Meeting to be held in 2026.
The Board takes an active role in shareholder engagement and particularly voting outcomes. Shareholders have
the opportunity to express their views and ask questions in respect of the Remuneration Policy and Remuneration
Implementation Report at the Annual General Meeting.
Relative importance of spend on pay
The following table sets out the total level of Directors’ remuneration compared with management fees and other
expenses incurred by the Company and the distributions to shareholders by way of dividends.
Year to
31 October
2024
£’000
Year to
31 October
2023
£’000
Directors’ fees 145 156
Management fees and other expenses 2,758 2,430
Dividends paid and payable to shareholders 7,343 7,140
The information in the table above is required by the regulations with the exception of management fees and other
expenses which have been included to show the total operating expenses of the Company.
DIRECTORS’ REMUNERATION IMPLEMENTATION REPORT
continued
CC Japan Income & Growth Trust plc 41
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 41
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Directors’ holdings (Audited)
The interests of the Directors in the ordinary shares of the Company as at 31 October 2024 and at 31 October 2023 were as
follows. All share holdings are beneficially owned.
Ordinary
shares as at
31October
2024
Ordinary
shares as at
31October
2023
June Aitken 42,774 41,631
Kate Cornish-Bowden 50,000 50,000
Craig Cleland 45,000 40,000
John Charlton-Jones 22,403 12,185
Directors are not specifically required to own shares in the Company.
Statement
On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Report on Remuneration
Implementation summarises, as applicable, for the year to 31 October 2024:
(a) the major decisions on Directors’ remuneration;
(b) any substantial changes relating to Directors’ remuneration made during the year; and
(c) the context in which the changes occurred, and decisions have been taken.
June Aitken
Chairman
21 January 2025
42 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
42 CC Japan Income & Growth Trust plc
The AIC Code recommends that boards should
establish audit committees consisting of at least three
independent non-executive directors. The Board is
required to satisfy itself that at least one member of
the Audit and Risk Committee has recent and relevant
financial experience. The main role and responsibilities
of the Audit and Risk Committee should be set out in
written terms of reference covering certain matters
described in the Code. The Company complies with the
AIC Code.
Composition
All the Directors of the Board are members of the
Audit and Risk Committee. Each committee member
is independent and together they bring a variety of
relevant and recent investment and financial expertise.
The UK Code recommends that the Chair of the
Board should not be a member of the Audit and Risk
Committee. However, as permitted by the AIC Code, the
Directors believe that membership of the Audit and Risk
Committee of the independent Chair of the Board, June
Aitken is appropriate, and welcome her contribution.
The Audit and Risk Committee has formal written terms
of reference and copies of these are available on the
Company’s website or on request to the Company
Secretary. The Committee has considered the need for
an internal audit function. Given that the Company has
no employees and outsources all its operating activities
to external providers, the Committee considers that an
internal audit function is not needed. The Committee
keeps the need for an internal audit function under
annual review.
Role of the Audit and Risk Committee
The Audit and Risk Committee meets formally at least
three times a year. The responsibilities of the committee
include:
• Ensuring integrity, transparency and accuracy of the
financial reports.
• Assisting in the preparation and review of the annual
and half year reports and accounts.
• Considering the appointment, independence and
objectivity, and remuneration of the auditor.
• Considering the effectiveness of the annual audit.
• Reviewing the internal controls of the Company.
• Reviewing the internal controls of the Company’s
service providers.
• Reviewing the principal and emerging risks, and the
Company’s processes to mitigate risk.
Performance Evaluation
In line with best practice, the Audit and Risk Committee
is subject to an annual review of its performance. The
evaluation of the Audit and Risk Committee conducted
this year confirmed that the Committee operates
effectively and continues to meet requirements. Further
details of the evaluation of the Committee can be found
on page 35.
Internal controls and risk management
The Board has overall responsibility for the Company’s
risk management and systems of internal controls and
for reviewing their effectiveness. In common with most
investment trusts, investment management, accounting,
company secretarial, registrar and depositary services
have been delegated to third parties. The effectiveness
of the internal controls of all service providers is
assessed by the Audit and Risk Committee on a
continuing basis and the Committee receives regular
assurance reports concerning any errors and omissions.
During the year the Committee worked with the Board
to conduct a review of the current fund administration
and company secretarial service providers. After
assessing competitive alternatives, the Board decided to
appoint Frostrow Capital LLP to provide Administration
and Company Secretarial Services. The Committee is
confident that this new appointment will enhance the
accuracy and quality of financial reporting. Frostrow
Capital LLP has also been appointed as the Company’s
AIFM in accordance with the Alternative Investment
Fund Managers Directive (“AIFMD”). An independent
AIFM will improve the standard of governance by
bringing an additional layer of independent oversight.
Risk Management
The Audit and Risk Committee meets at least once
during the financial year to review the key risks
facing the company and to ensure the effectiveness
of measures put in place to manage and mitigate
risk. These risks fall into three categories: strategic
and business risk, financial and operational risk, and
regulatory and compliance risk. The outcome of the risk
assessment and the details of the Company’s principal
and emerging risks are outlined on page 13.
Meetings
There have been three Audit and Risk Committee
meetings in the year ended 31 October 2024. Meeting
attendance is shown on page 35 of this Annual Report.
REPORT OF THE AUDIT AND RISK COMMITTEE
CC Japan Income & Growth Trust plc 43
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 43
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Financial statements and significant accounting
matters considered during the year
The Committee considered the following significant
accounting issues in relation to the Company’s financial
statements for the year ended 31 October 2024.
Valuation and existence of investments
The Company holds its assets in quoted investments,
derivatives and cash. The valuation and existence
of these investments is currently the most material
matter in the production of the financial statements.
Investments are valued using independent pricing
sources and the holding quantities at the year end
were agreed with the Depositary’s records. The
Committee reviewed the Administrator’s procedures
in place for ensuring accurate valuation and existence
of investments. The Committee also receives and
reviews any significant pricing or custody reconciliation
exceptions and reports from the Depositary.
Recognition of income
Income may not be accrued in the correct period and/
or incorrectly allocated to revenue or capital. The
Committee reviewed the Administrator’s procedures
for recognition of income and reviewed the treatment
of any special dividends receivable in the year. The
Committee also reviewed the Administrator’s forecast
of revenue against actual revenue received at each
Committee meeting.
Geopolitical Uncertainty and the Impact on the Japanese
yen
Movements in the yen exchange rate against the US
dollar and the British pound have an impact on dividend
receipts and the competitiveness of Japanese exports.
Although global interest rates have fallen this year and
the differential between US and Japanese interest rates
has narrowed, both the US dollar and British pound
continued to strengthen against the Japanese yen. The
weakening yen trend was interspersed with volatile
periods of strengthening when investors turned to the
yen as a safe haven. During the year, the Committee
has paid particular attention to the sensitivity of income
received from investee companies to volatility in the
British pound/Japanese yen foreign exchange rate.
S1158 of the Corporation Tax Act 2010
The Committee considers the reports produced by the
AIFM confirming compliance with the investment trust
qualifying rules.
Going concern and viability statements
Having reviewed the Company’s financial position,
liabilities, principal/emerging risks and uncertainties, the
Committee recommended to the Directors that it was
appropriate for the Directors to prepare the financial
statements on the going concern basis.
The Committee considered the appropriateness of
the assumptions used in the viability statement and is
confident that these are sufficiently robust. The going
concern assessment and viability statements can be
found on page 30 and pages 11 and 12, respectively.
Audit tenure
The appointment of the auditor is reviewed annually
by the Committee and is subject to approval by
shareholders. This year will be the second year that
Johnston Carmichael has been the Company’s Auditor.
Shareholders approved the appointment of Johnston
Carmichael as the Company’s Auditor at the AGM in
March 2024.
Effectiveness of external audit
The Audit and Risk Committee is responsible for
reviewing the effectiveness of the external audit process.
The Committee met to discuss the audit plan with the
auditor prior to the commencement of the 2024 audit,
and attended a presentation of the results of the audit
following completion of the main audit testing. The
Committee performed a review of the external auditor
following the presentation of the results of the audit.
The review included a discussion of the audit process
and the ability of the external auditor to fulfil its role.
I spoke to Richard Sutherland, the partner at Johnston
Carmichael, and his team during the year to discuss
feedback from the external audit and am pleased
to report that no significant issues arose during the
process. The Committee is satisfied that Johnston
Carmichael has provided effective independent
challenge in carrying out its responsibilities.
Provision of non-audit services
The Committee has reviewed the FRC’s Guidance on
Audit Committees and has formulated a policy on
the provision of non-audit services by the Company’s
auditor. The Committee has determined that the
Company’s appointed auditor will not be considered
for the provision of certain non-audit services, such as
accounting and preparation of the financial statements,
internal audit and custody. The auditor’s eligibility to
provide non-audit services will be judged on a case-
by- case basis; however no non-audit services were
provided during the financial year under review.
Audit fees
The audit fees (excluding VAT) incurred during the year
amounted to £41,000 (2023: £37,500 plus an additional
£4,500 (excluding VAT) payable by Apex, for extra
statutory audit work performed by the Auditor).
44 CC Japan Income & Growth Trust plc
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Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
44 CC Japan Income & Growth Trust plc
Auditor independence
The Committee considered the independence of the
auditor and the objectivity of the audit process and
is satisfied that Johnston Carmichael has fulfilled its
obligations to shareholders and as independent auditor
to the Company for the year.
After due consideration, the Committee recommends
the re-appointment of Johnston Carmichael, and
their re-appointment will be put to the Company’s
shareholders at the 2025 AGM.
Conclusion with respect to the Annual Report
and financial statements
Following a thorough process of review, the Committee
has concluded that the Annual Report for the year ended
31 October 2024, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s business
model, strategy and performance. The Committee has
reported its conclusions to the Board of Directors.
Kate Cornish-Bowden
Audit and Risk Committee Chairman
21 January 2025
REPORT OF THE AUDIT AND RISK COMMITTEE
continued
CC Japan Income & Growth Trust plc 45
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Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 45
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable laws and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law,
the Directors have elected to prepare the financial
statements in accordance with United Kingdom
Generally Accepted Accounting Practice, including FRS
102, which is the Financial Reporting Standard applicable
to the UK and Republic of Ireland and applicable law.
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 the Company’s
affairs as at the end of the year and of the net return for
the year. In preparing these financial statements, the
Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates, which are
reasonable and prudent;
• state whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the financial statements;
and
• prepare the financial statements on a going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and which 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 also responsible for safeguarding the
assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
The Directors are also responsible for preparing
a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance
Statement that comply with applicable laws and
regulations.
The Company Reports and Accounts are published on
its website at www.ccjapanincomeandgrowthtrust.com
which is maintained by the Company’s Investment
Manager. The work carried out by the auditors does not
involve consideration of the maintenance and integrity
of this website and, accordingly, the auditor accepts no
responsibility for any changes that have occurred to
the financial statements since being 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.
Directors’ confirmation statement
The Directors each confirm to the best of their
knowledge that:
(a) the financial statements, prepared in accordance
with applicable accounting standards, give a true and
fair view of the assets, liabilities, financial position
and profit of the Company; and
(b) this Annual Report includes a fair review of the
development and performance of the business and
position of the Company, together with a description
of the principal risks and uncertainties that it faces.
Having taken advice from the Audit and Risk Committee,
the Directors consider that 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.
For and on behalf of the Board
June Aitken
Chairman
21 January 2025
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
46 CC Japan Income & Growth Trust plc
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46 CC Japan Income & Growth Trust plc
Opinion
We have audited the financial statements of CC Japan
Income & Growth Trust plc (“the Company”), for the year
ended 31 October 2024, which comprise the Income
Statement, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash
Flows and notes to the financial statements, including
significant accounting policies. The financial reporting
framework that has been applied in their preparation
is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 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 state of the
Company’s affairs as at 31 October 2024 and of its
return 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 responsibilities for the
audit of the financial statements section of our report.
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 listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Our approach to the audit
We planned our audit by first obtaining an
understanding of the Company and its environment,
including its key activities delegated by the Board to
relevant approved third-party service providers and the
controls over provision of those services.
We conducted our audit using information maintained
and provided by Chikara Investment LLP (the
“Investment Manager”), Apex Listed Companies
Services (UK) Limited (the “Company Secretary”, and
“Administrator” for the audited period). Northern
Trust Investor Services Limited (the “Custodian” and
the “Depositary”) and MUFG Corporate Markets (the
“Registrar”) to whom the Company has delegated the
provision of services.
We tailored the scope of our audit to reflect our
risk assessment, taking into account such factors as
the types of investments within the Company, the
involvement of the Administrator, the accounting
processes and controls, and the industry in which the
Company operates.
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative
considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line
items and disclosures and in the evaluation of the effect
of misstatements, both individually and in aggregate on
the financial statements as a whole.
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 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 forming our opinion
thereon, we do not provide a separate opinion on these
matters.
We summarise below the key audit matters in arriving
at our audit opinion above, together with how our audit
addressed these matters and the results of our audit
work in relation to these matters.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
CCJAPAN INCOME & GROWTH TRUST PLC
CC Japan Income & Growth Trust plc 47
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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CC Japan Income & Growth Trust plc 47
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Key audit matter How our audit addressed the key audit matter and our
conclusions
Valuation of investments
(as per page 43 (Report of the Audit and Risk Committee),
pages 56 to 59 (Accounting Policies) and Note 3.
As at 31 October 2024 the valuation of the level 1, listed
investments portfolio was £255.8m, the valuation of the
level 2 money market fund was £2.7m and the valuation
of the level 2, Contracts for Difference (“CFDs”), was
£8.0m.
As this is the largest component of the Company’s
Statement of Financial Position, and a key driver of the
Company’s net assets and total return, this has been
designated as a key audit matter, being one of the most
significant assessed risks of material misstatement due
to error.
There is a further risk that the investments held at fair
value may not be actively traded and the quoted prices
may not therefore be reflective of fair value.
We performed a walkthrough of the investment valuation
process at the Administrator to evaluate the design of the
process and implementation of key controls.
We compared market prices and exchange rates applied
to all level 1 listed investments, level 2 money market
funds and all level 2 CFDs held at 31 October 2024 to
an independent third-party source and recalculated the
investment valuations.
We obtained average trading volumes from an
independent third-party source for all investments held at
year end and have assessed their liquidity. We have also
assessed trading activity for evidence of an active market.
From our completion of these procedures, we identified no
material misstatements in relation to the valuation of the
investments.
Revenue recognition, including allocation of special
dividends as revenue or capital returns
(as per page 43 (Report of the Audit and Risk Committee),
pages 56 to 59 (Accounting Policies) and Note 4.
Investment income recognised to 31 October 2024 was
£9.4m, consisting primarily of dividend income from
listed investments and CFDs.
Revenue-based performance metrics are often one of
the key performance indicators for stakeholders. The
investment income received by the Company during the
year directly impacts these metrics and the minimum
dividend required to be paid by the Company.
There is a risk that revenue is incomplete, did not occur
or is inaccurate through failure to recognise income
entitlements or failure to appropriately account for their
treatment. It has therefore been designated as a key
audit matter being one of the most significant assessed
risks of material misstatement due to fraud or error.
Additionally, there is a further risk of incorrect allocation
of special dividends as revenue or capital returns as
judgement is required in determining their allocation
within the Income Statement.
We performed a walkthrough of the revenue recognition,
including allocation of special dividends, process at the
Administrator to evaluate the design of the process and
implementation of key controls.
We evaluated whether income is recognised and disclosed
in accordance with the AIC SORP by assessing the
accounting policies.
We have recalculated 100% of dividends due to the
Company, from equity holdings and CFDs, based
on investment holdings throughout the year and
announcements made by investee companies.
We agreed a sample of investment income recognised to
bank statements.
We have assessed the completeness of the special dividend
population with reference to third party market data and
assessed management’s judgement for allocating special
dividend as revenue or capital returns with reference to
the underlying commercial circumstances of the dividend
payments.
From our completion of these procedures, we identified no
material misstatements in relation to revenue recognition,
including allocation of special dividends as revenue or
capital returns.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in
determining the nature and extent of our work and in evaluating the results of that work.
48 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
48 CC Japan Income & Growth Trust plc
Materiality measure Value
Materiality for the financial statements as a whole
We have set materiality as 1% of net assets as we believe that net assets is the primary
performance measure used by investors and is the key driver of shareholder value.
We determined the measurement percentage to be commensurate with the risk and
complexity of the audit and the Company’s listed status.
£2.66m
(2023: £2.35m)
Performance materiality
Performance materiality represents amounts set by the auditor at less than materiality for
the financial statements as a whole, to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole.
In setting this we consider the Company’s overall control environment, our past
experience of the audit that indicates a lower risk of material misstatements. Based on our
judgement of these factors, we have set performance materiality at 75% (2023: 50%) of our
overall financial statement materiality.
£1.99m
(2023: £1.18m)
Specific materiality
Recognising that there are transactions and balances of a lesser amount which could
influence the understanding of users of the financial statements we calculate a lower level
of materiality for testing such areas.
Specifically, given the importance of the distinction between revenue and capital for the
Company, we also applied a separate testing threshold for the revenue column of the
Income Statement, set as 5% of the net revenue return on ordinary activities before tax.
We have set a specific materiality in respect of related party transactions and Directors’
remuneration.
We used our judgement in setting these thresholds and considered our past experience of
the audit, the history of misstatements and industry benchmarks for specific materiality.
£0.41m
(2023: £0.41m)
Audit Committee reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all differences
in excess of 5% of overall materiality in addition to other identified misstatements that
warranted reporting on qualitative grounds, in our view. For example, an immaterial
misstatement as a result of fraud.
£0.13m
(2023: £0.12m)
During the course of the audit, we reassessed initial
materiality and found no reason to alter the basis of
calculation used at year end.
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:
• Evaluating management’s method of assessing going
concern, including consideration of the continuation
vote, market conditions and macro economic
uncertainties;
• Assessing and challenging the forecast cashflows
and associated sensitivity modelling used by
management in support of their going concern
assessment;
• Obtaining and recalculating management’s
assessment of the Company’s ongoing maintenance
of investment trust status; and
• Assessing the adequacy of the Company’s going
concern disclosures included in the Annual Report.
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 a period of at least twelve months
from when the financial statements are authorised for
issue.
In relation to the Company’s reporting on how it has
applied the UK Corporate Governance Code, we have
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
CCJAPAN INCOME & GROWTH TRUST PLC continued
CC Japan Income & Growth Trust plc 49
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 49
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
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 of accounting.
Our responsibilities and the responsibilities of the
Directors with respect to going concern are described in
the relevant sections of this report.
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 our 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 this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
IIn 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 the Directors’ Report 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 the 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 by
the Company, 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; or
• A corporate governance statement has not been
prepared by the Company.
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 entity’s
compliance with the provisions of the UK Corporate
Governance Code specified for our review by the 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:
• The Directors’ statement with regards to the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on page 30;
• The Directors’ explanation as to its assessment of
the Company’s prospects, the period this assessment
covers and why the period is appropriate set out on
pages 11 and 12;
• The Directors’ statement on fair, balanced and
understandable set out on page 45;
• The Directors’ statement on whether it has a
reasonable expectation that the Company will be
able to continue in operation and meets its liabilities
set out on page 30;
• The Board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on page 37;
50 CC Japan Income & Growth Trust plc
Job No: 53759 Proof Event: 19 Black Line Level: 3 Park Communications Ltd Alpine Way London E6 6LA
Customer: PraxisFM Project Title: CC Japan Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
50 CC Japan Income & Growth Trust plc
• The section of the Annual Report that describes the
review of the effectiveness of risk management and
internal control systems set out on page 36; and
• The section describing the work of the Audit and Risk
Committee set out on page 42 to 44.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 45, 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 or error.
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.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
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 material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below.
We assessed whether the engagement team collectively
had the appropriate competence and capabilities to
identify or recognise non-compliance with laws and
regulations by considering their experience, past
performance and support available.
All engagement team members were briefed on relevant
identified laws and regulations and potential fraud
risks at the planning stage of the audit. Engagement
team members were reminded to remain alert to any
indications of fraud or non-compliance with laws and
regulations throughout the audit.
We obtained an understanding of the legal and
regulatory frameworks that are applicable to the
Company and the sector in which it operates, focusing
on those provisions that had a direct effect on the
determination of material amounts and disclosures in
the financial statements. The most relevant frameworks
we identified include:
• Companies Act 2006;
• Financial Conduct Authority (FCA) listing and
Disclosure Guidance and Transparency Rules (DTR);
• The principles of the UK Corporate Governance Code
applied by the AIC Code of Corporate Governance
(the “AIC Code”);
• Industry practice represented by the Statement of
Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital
Trusts (“the SORP”) issued in July 2022;
• The Company’s qualification as an investment Trusts
under section 1158 of the Corporation Tax Act 2010;
and
• Financial Reporting Standard 102.
We gained an understanding of how the Company is
complying with these laws and regulations by making
enquiries of management and those charged with
governance. We corroborated these enquiries through
our review of relevant correspondence with regulatory
bodies and board meeting minutes.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
CCJAPAN INCOME & GROWTH TRUST PLC continued
CC Japan Income & Growth Trust plc 51
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CC Japan Income & Growth Trust plc 51
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
We assessed the susceptibility of the financial
statements to material misstatement, including how
fraud might occur, by meeting with management and
those charged with governance to understand where
it was considered there was susceptibility to fraud.
This evaluation also considered how management and
those charged with governance were remunerated
and whether this provided an incentive for fraudulent
activity. We considered the overall control environment
and how management and those charged with
governance oversee the implementation and operation
of controls. In areas of the financial statements where
the risks were considered to be higher, we performed
procedures to address each identified risk. We identified
a heightened fraud risk in relation to:
• Management override of controls; and
• Completeness and allocation of special dividends.
Audit procedures performed in response to the risks
relating to completeness and allocation of special
dividends are set out in the section on key audit matters
above, and audit procedures performed in response
to the risk of management override of controls are
included below.
In addition to the above, the following procedures were
performed to provide reasonable assurance that the
financial statements were free of material fraud or error:
• Reviewing minutes of meetings of those charged
with governance for reference to: breaches of laws
and regulation or for any indication of any potential
litigation and claims; and events or conditions that
could indicate an incentive or pressure to commit
fraud or provide an opportunity to commit fraud;
• Performing audit procedures over the risk of
management override of controls, including
testing of journal entries and other adjustments
for appropriateness, recalculating the investment
management fee, evaluating the business rationale
of significant transactions outside the normal course
of business and assessing judgements made by
management in their calculation of accounting
estimates for potential management bias;
• Completion of appropriate checklists and use of our
experience to assess the Company’s compliance with
the Companies Act 2006 and the Listing Rules; and
• Agreement of the financial statement disclosures to
supporting documentation.
Our audit procedures were designed to respond to
the risk of material misstatements in the financial
statements, recognising that 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 intentional concealment, forgery,
collusion, omission or misrepresentation. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
regulations is from the events and transactions reflected
in the financial statements, the less likely we would
become aware of it.
Other matters which we are required to address
Following the recommendation of the Audit and Risk
Committee, we were appointed by the Board on 1
March 2023 to audit the financial statements for
the year ended 31 October 2023 and subsequent
financial periods. The period of our total uninterrupted
engagement is two years, covering the years ended 31
October 2023 to 31 October 2024.
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 our
audit.
Our audit opinion is consistent with the additional report
to the Audit and Risk 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.
Richard Sutherland (Senior statutory auditor)
For and on behalf of Johnston Carmichael LLP
Statutory Auditor
Edinburgh, United Kingdom
21 January 2025
52 CC Japan Income & Growth Trust plc52 CC Japan Income & Growth Trust plc
Year ended
31 October 2024
Year ended
31 October 2023
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gains on investments 3 – 34,432 34,432 – 32,435 32,435
Currency (losses)/gains – (1,841) (1,841) – 209 209
Income 4 9,357 – 9,357 9,283 – 9,283
Investment management fee 5 (400) (1,599) (1,999) (343) (1,372) (1,715)
Other expenses 6 (759) – (759) (715) – (715)
Return on ordinary activities before finance
costs and taxation 8,198 30,992 39,190 8,225 31,272 39,497
Finance costs 7 (97) (234) (331) (63) (173) (236)
Return on ordinary activities before taxation 8,101 30,758 38,859 8,162 31,099 39,261
Taxation 8 (928) – (928) (921) – (921)
Return on ordinary activities after taxation 7,173 30,758 37,931 7,241 31,099 38,340
Return per ordinary share 13 5.32p 22.83p 28.15p 5.37p 23.08p 28.45p
The total column of the Income Statement is the profit and loss account of the Company. All revenue and capital items
in the above statement were derived from continuing operations.
Both the supplementary revenue and capital columns are prepared under guidance from the Association of
Investment Companies. There is no other comprehensive income and therefore the return for the year is also the total
comprehensive income for the year.
The notes on pages 56 to 72 form part of these financial statements.
INCOME STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2024
CC Japan Income & Growth Trust plc 53
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 53
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Note
31 October
2024
£’000
31 October
2023
£’000
Fixed assets
Investments at fair value through profit or loss 3 258,478 231,987
Current assets
Cash and cash equivalents 4,006 340
Cash collateral in respect of Contracts for Difference (“CFDs”) 413 806
Amounts due in respect of CFDs 8,027 773
Other debtors 10 4,062 3,750
16,508 5,669
Creditors: amounts falling due within one year
Cash collateral in respect of CFDs (8,837) (1,266)
Amounts payable in respect of CFDs (17) (738)
Other creditors 11 (291) (534)
(9,145) (2,538)
Net current assets 7,363 3,131
Total assets less current liabilities 265,841 235,118
Net assets 265,841 235,118
Capital and reserves
Share capital 12 1,348 1,348
Share premium 98,067 98,067
Special reserve 64,671 64,671
Capital reserve
– Revaluation gains on equity investments held at year end 3 35,561 24,636
– Other capital reserves 58,319 38,486
Revenue reserve 7,875 7,910
Total shareholders’ funds 265,841 235,118
NAV per share – ordinary shares (pence) 14 197.31p 174.51p
Approved by the Board of Directors and authorised for issue on 21 January 2025 and signed on their behalf by:
June Aitken
Director
CC Japan Income & Growth Trust plc is incorporated in England and Wales with registration number 9845783.
The notes on pages 56 to 72 form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2024
54 CC Japan Income & Growth Trust plc54 CC Japan Income & Growth Trust plc
For the year ended 31 October 2024
Note
Share
capital
£’000
Share
premium
£’000
Special
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
£’000
Balance at 1
November 2023 1,348 98,067 64,671 63,122 7,910 235,118
Return on ordinary
activities after taxation – – – 30,758 7,173 37,931
Dividends paid 9 – – – – (7,208) (7,208)
Balance at 31 October
2024 1,348 98,067 64,671 93,880 7,875 265,841
For the year ended 31 October 2023
Note
Share
capital
£’000
Share
premium
£’000
Special
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
£’000
Balance at
1 November 2022 1,348 98,067 64,671 32,023 7,473 203,582
Return on ordinary
activities after taxation – – – 31,099 7,241 38,340
Dividends paid 9 – – – – (6,804) (6,804)
Balance at
31 October 2023 1,348 98,067 64,671 63,122 7,910 235,118
The Company’s distributable reserves consist of the Special reserve, Revenue reserve and Capital reserve attributable
to realised profits.
The notes on pages 56 to 72 form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2024
CC Japan Income & Growth Trust plc 55
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 55
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Year ended
31October
2024
£’000
Year ended
31October
2023
£’000
Operating activities cash flows
Return on ordinary activities before finance costs and taxation
1
39,190 39,497
Adjustment for:
Gains on equity investments (26,332) (24,684)
Realised gains on CFDs (122) (7,656)
Movement in CFD balances (11) 758
Increase in other debtors (73) (500)
(Decrease)/increase in other creditors (52) 19
Tax withheld on overseas income (928) (921)
Net cash flow from operating activities 11,672 6,513
Investing activities cash flows
Purchases of equity investments (63,521) (57,623)
Proceeds from sales of equity investments 62,923 49,413
Realised gains on CFDs 122 7,656
Net cash flow used in investing activities (476) (554)
Financing activities cash flows
Equity dividends paid (7,208) (6,804)
Finance costs paid (322) (228)
Net cash flow used in financing activities (7,530) (7,032)
Increase/(decrease) in cash and cash equivalents 3,666 (1,073)
Cash and cash equivalents at the beginning of the year 340 1,413
Cash and cash equivalents at the end of the year 4,006 340
1
Inflow from dividends was £8,314,000 (2023: £7,888,000).
The notes on pages 56 to 72 form part of these financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2024
56 CC Japan Income & Growth Trust plc56 CC Japan Income & Growth Trust plc
1. GENERAL INFORMATION
CC Japan Income & Growth Trust plc (“the Company”) was incorporated in England and Wales on 28 October
2015 with registered number 9845783, as a closed-ended investment company. The Company commenced its
operations on 15 December 2015. The Company carries on business as an investment trust within the meaning of
Chapter 4 of Part 24 of the Corporation Tax Act 2010.
The Company’s investment objective is to provide shareholders with dividend income combined with capital
growth, mainly through investment in equities listed or quoted in Japan.
The Company’s shares were admitted to the Official List of the Financial Conduct Authority on 15 December 2015.
On the same day, trading of the ordinary shares commenced on the London Stock Exchange.
The principal activity of the Company is that of an investment trust within the meaning of section 1158 of the
Corporation Tax Act of 2010.
With effect from 1 January 2025, the Company’s registered office changed from 6th Floor, 125 London Wall,
London, EC2Y 5AS to 25 Southampton Buildings, London, WC2A 1AL, following the appointment of Frostrow Capital
LLP as AIFM, Administrator and Company Secretary.
2. ACCOUNTING POLICIES
The principal accounting policies followed by the Company are set out below:
(a) Basis of accounting
The financial statements have been prepared in accordance with FRS 102 (“the Financial Reporting Standard
applicable in the UK and Republic of Ireland”) issued by the Financial Reporting Council, with the Statement of
Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued
by the Association of Investment Companies in July 2022 and the Companies Act 2006. The financial statements
have been prepared on a historical cost basis except for the modification to a fair value basis for certain financial
instruments as specified in the accounting policies below.
They have also been prepared on the assumption that approval as an investment trust will continue to be granted.
As required by its Articles of Association, a vote for the Company’s continuation will be put forward at the next
AGM to be held on 3 March 2025, having last been passed at the AGM in 2022.
The financial statements have been prepared on a going concern basis. In forming this opinion, the Directors have
considered any potential impact of wars in Ukraine and the Middle East; and the increase in geopolitical tension
between the US and China, on the going concern and viability of the Company. In making their assessment,
the Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and
considered the mitigation measures which key service providers, including the Investment Manager, continue to
have in place to maintain operational resilience.
The Directors have also considered the liquidity of the Company’s portfolio of investments as well as its cash position,
income, and expense flows. The Company’s net assets as at 31 October 2024 were £265.8 million (2023: £235.1
million). As at 31 October 2024, the Company held approximately £258.5 million in quoted investments (2023: £232.0
million) and had cash of £4.0million (2023: £0.3 million). The total expenses (excluding finance costs and taxation)
for the year ended 31 October 2024 were £2.8 million (2023: £2.4 million), which represented approximately 1.03%
(2023: 1.06%) of average net assets during the year. At the date of approval of this report, based on the aggregate net
assets of investments and cash held, the Company has substantial operating expenses cover.
The Company’s ability to continue as a going concern for the period assessed by the Directors, being the period to
31 January 2026 which is at least 12 months from the date the financial statements were authorised for issue.
The financial statements have been presented in sterling (£), which is also the functional currency as this is the
currency of the primary economic environment in which the Company operates. The Board, having regard to the
currency of the Company’s share capital and the predominant currency in which it pays distributions, expenses
and its shareholders operate, has determined that sterling is the functional currency.
In preparing these financial statements the Directors have considered the impact of ESG and climate change risk as
an emerging risk as set out on page 16 and have concluded that while climate change impacts operating conditions
of portfolio companies and increases obligations, it does not have a material impact on the value of the Company’s
investments. In line with FRS 102, investments are valued at fair value, which for the Company are quoted bid
prices for investments in active markets at 31 October 2024 and therefore reflect market participants’ view of
climate change risk.
NOTES TO THE ACCOUNTS
CC Japan Income & Growth Trust plc 57
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2. ACCOUNTING POLICIES continued
(b) Investments
As the Company’s business is investing in financial assets with a view to profiting from their total return in the form
of increases in fair value, financial assets are held at fair value through profit or loss in accordance with FRS 102
Section 11: ‘Basic Financial Instruments’, and Section 12: ‘Other Financial Instruments’. The Company manages and
evaluates the performance of these investments on a fair value basis in accordance with its investment strategy,
and information about the investments is provided on this basis to the Board of Directors.
Upon initial recognition, investments are classified by the Company as “at fair value through profit or loss”. They
are recognised on the date they are traded and are measured initially at fair value, which is taken to be their
transaction price, excluding expenses incidental to purchases which are expensed to capital on acquisition.
Subsequently investments are revalued at fair value, which is the bid market price for listed investments over the
time until they are sold. Any unrealised gains/losses are included in the fair value of the investments.
Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are
included in the capital column of the Income Statement within “gains on investments held at fair value”.
(c) Derivatives
Derivatives comprise Contracts for Difference (“CFDs”), which are measured at fair value and valued by reference to
the underlying market value of the corresponding security, the valuation of which is detailed in Note 2b. CFDs are
held for investment purposes. Where the fair value is positive the CFD is presented as a current asset, and where
the fair value is negative the CFD is presented as a current liability. Gains or losses on these derivative transactions
are recognised in the Income Statement.
They are recognised as capital and are shown in the capital column of the Income Statement if they are of a capital
nature and are recognised as revenue and shown in the revenue column of the Income Statement if they are
of a revenue nature. To the extent that any gains or losses are of a mixed revenue and capital nature, they are
apportioned between revenue and capital accordingly. The CFD balance is made up of transactions in relation to
the underlying equity held by the Company, with the risks embedded in the CFDs disclosed in Note 16.
(d) Foreign currency
Transactions denominated in foreign currencies including dividends are translated into sterling at exchange rates
as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are
reported at the rates of exchange prevailing at the year end. Foreign exchange movements on investments and
derivatives are included in the Income Statement within gains on investments. Any other gain or loss is included as
an exchange gain or loss to capital or revenue in the Income Statement as appropriate.
(e) Income
Investment income has been accounted for on an ex-dividend basis or when the Company’s right to the income
is established. Special dividends are credited to capital or revenue in the Income Statement, according to the
circumstances surrounding the payment of the dividend. Overseas dividends are included gross of withholding tax
recoverable.
Interest receivable on deposits is accounted for on an accrual basis.
(f) Dividends payable
Interim dividends are recognised when the Company pays the dividend. Final dividends are recognised in the
period in which they are approved by the shareholders. This year, as was also the case last year, a second interim
dividend is being paid in substitution for a final dividend.
(g) Expenses
All expenses are accounted for on an accruals basis and are charged as follows:
• the investment management fee is charged 20% to revenue and 80% to capital;
• CFD finance costs are charged 20% to revenue and 80% to capital;
• investment transactions costs are allocated to capital; and
• other expenses are charged wholly to revenue.
NOTES TO THE ACCOUNTS
continued
58 CC Japan Income & Growth Trust plc58 CC Japan Income & Growth Trust plc
2. ACCOUNTING POLICIES continued
(h) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is
based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Income Statement
because it excludes items of income or expenses that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax
rates that were applicable at the financial reporting date.
Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated
between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation
taxation for the relevant accounting period.
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the
financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or
right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets
only being recognised if it is considered more likely than not that there will be suitable profits from which the
future reversal of the timing differences can be deducted. Deferred tax assets and liabilities are measured at the
rates applicable to the legal jurisdictions in which they arise.
(i) Other receivables and other payables
Other receivables and other payables do not carry any interest and are short term in nature and are accordingly
stated at their nominal value.
(j) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business, that of an
investment trust, as disclosed in note 1.
(k) Accounting estimates, judgements and assumptions
The preparation of financial statements requires the Directors to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements. Although these estimates are
based on management’s best knowledge of current facts, circumstances and, to some extent, future events and
actions, the Company’s actual results may ultimately differ from those estimates, possibly significantly.
There have not been any instances requiring any significant estimates or judgements in the year.
(l) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, including bank overdrafts and short-term, highly
liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks
of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
(m) Cash collaterals
Cash collaterals are held in segregated accounts on behalf of brokers against the CFDs. Cash collaterals are
accounted for and shown on the Statement of Financial Position either as a receivable or payable, depending on
whether cash is due from or due to the broker.
(n) Reserves
Capital reserves
Profits/(losses) from selling investments and changes in fair value arising upon the revaluation of investments
that remain in the portfolio are shown in the capital column of the Income Statement and allocated to the capital
reserve. Capital reserves attributable to realised profits are distributable.
Special distributable reserve
As stated in the Company’s prospectus dated 13 November 2015, in order to increase the distributable reserves
available to facilitate the flexibility and source of future dividends, the Company resolved that, conditional upon
First Admission to listing on the London Stock Exchange and the approval of the Court, the net amount standing
to the credit of the share premium account of the Company immediately following completion of the First Issue be
cancelled and transferred to a special distributable reserve. This reserve is distributable.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 59
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CC Japan Income & Growth Trust plc 59
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
NOTES TO THE ACCOUNTS
continued
2. ACCOUNTING POLICIES continued
Revenue reserves
The revenue reserve reflects all income and expenditure recognised in the revenue column of the Income
Statement and is distributable by way of dividends.
Share premium
The Company’s share premium is the excess of the issue price of the share over its nominal value on shares issued
subsequent to the First Issue. The share premium is not available for distribution.
3. INVESTMENTS
(a) Summary of valuation
As at
31 October 2024
£’000
As at
31 October 2023
£’000
Investments listed on a recognised overseas investment exchange 258,478 231,987
258,478 231,987
(b) Movements
During the year ended 31 October 2024
2024
£’000
2023
£’000
Book cost at the beginning of the year 207,351 193,801
Revaluation gains on equity investments held at beginning of the year 24,636 5,841
Valuation at beginning of the year 231,987 199,642
Purchases at cost 63,321 55,890
Sales:
– proceeds (63,162) (48,229)
– gains on investment holdings sold during the year 15,407 5,889
Movements in revaluation gains on investments held at year end 10,925 18,795
Valuation at end of the year 258,478 231,987
Book cost at end of the year 222,917 207,351
Revaluation gains on equity investments held at year end 35,561 24,636
Valuation at end of the year 258,478 231,987
Transaction costs on investment purchases for the year ended 31 October 2024 amounted to £26,500 (2023: £26,000)
and on investment sales for the year amounted to £27,200 (2023: £22,000).
The Company received £63,162,000 (2023: £48,229,000) from investments sold during the year. The book cost of these
investments when they were purchased was £47,755,000 (2023: £42,340,000). 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.
60 CC Japan Income & Growth Trust plc60 CC Japan Income & Growth Trust plc
3. INVESTMENTS continued
(c) Gains/(Losses) on investments
Year ended
31 October 2024
£’000
Year ended
31 October 2023
£’000
Gains on equity investment holdings sold during the year 15,407 5,889
Movements in revaluation gains on investment held at year end 10,925 18,795
Other capital gains/(losses) 3 (40)
Total gains on equity investments held at fair value 26,335 24,644
Realised gains on CFD assets and liabilities 122 7,656
Unrealised gains on CFD assets and liabilities 7,975 135
Total gains on investments held at fair value 34,432 32,435
4. INCOME
Year ended
31 October 2024
£’000
Year ended
31 October 2023
£’000
Income from investments:
Overseas dividends 9,278 9,215
Deposit interest 79 68
Total 9,357 9,283
Overseas dividend income is translated into sterling on receipt.
5. INVESTMENT MANAGEMENT FEE
Year ended
31 October 2024
£’000
Year ended
31 October 2023
£’000
Fee:
20% charged to revenue 400 343
80% charged to capital 1,599 1,372
Total 1,999 1,715
The Company’s Investment Manager during the financial year is Chikara Investments LLP. The Investment Manager
is entitled to receive a management fee payable monthly in arrears which until 31 October 2024 was payable at the
rate of one-twelfth of 0.75% of net assets per calendar month. With effect from 1 November 2024, the Company’s
management fee is calculated on a tiered basis of 0.75% per annum on the first £300 million of net assets and 0.60%
on net assets in excess of £300 million. There is no performance fee payable to the Investment Manager.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 61
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CC Japan Income & Growth Trust plc 61
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
NOTES TO THE ACCOUNTS
continued
6. OTHER EXPENSES
Year ended
31 October 2024
£’000
Year ended
31 October 2023
£’000
Secretarial services 48 48
Administration and other expenses 525 474
Auditor’s remuneration – statutory audit services 41 37
1
Directors’ fees 145 156
Other expenses – Revenue 759 715
1
For the year ended 31 October 2023, this excludes an additional £4,500 (excluding VAT) paid by Apex for extra statutory audit
work performed by the Auditor.
7. FINANCE COSTS
Year ended
31 October 2024
£’000
Year ended
31 October 2023
£’000
Interest paid – 100% charged to revenue 39 20
CFD finance cost and structuring fee – 20% charged to revenue 57 42
Structuring fees – 20% charged to revenue 1 1
97 63
CFD finance cost and structuring fee – 80% charged to capital 230 169
Structuring fees – 80% charged to capital 4 4
234 173
Total finance costs 331 236
8. TAXATION
Year ended 31 October 2024 Year ended 31 October 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
(a) Analysis of tax charge in the year:
Overseas withholding tax 928 – 928 921 – 921
Total tax charge for the year (see note 8 (b)) 928 – 928 921 – 921
62 CC Japan Income & Growth Trust plc62 CC Japan Income & Growth Trust plc
8. TAXATION continued
(b) Factors affecting the tax charge for the year:
The effective UK corporation tax rate for the year is 25.00% (2023: 23.00%). The tax charge for the Company differs
from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The
differences are explained below:
Year ended 31 October 2024 Year ended 31 October 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Total return before taxation 8,101 30,758 38,859 8,162 31,099 39,261
Effective UK corporation tax at 25.00% (2023: 23.00%) 2,025 7,690 9,715 1,877 7,153 9,030
Effects of:
Overseas withholding tax suffered 928 – 928 921 – 921
Non-taxable overseas dividends (2,320) – (2,320) (2,119) – (2,199)
Capital gains not subject to tax – (8,148) (8,148) – (7,509) (7,509)
Finance costs not tax deductible 24 59 83 14 40 54
Movement in unutilised management expenses 271 399 670 228 316 544
Total tax charge for the year 928 – 928 921 – 921
The Company has an unrecognised deferred tax asset of £1,543,000 (2023: £1,441,000) based on the long-term
prospective corporation tax rate of 25% (2023: 25%). This asset has accumulated because deductible expenses
exceeded taxable income for the year ended 31 October 2024. No asset has been recognised in the accounts because,
given the composition of the Company’s portfolio, it is unlikely that this asset will be utilised in the foreseeable future.
The Company has not provided for deferred tax on any tax losses.
9. DIVIDEND
(i) Dividends paid during the financial year
Year ended
31 October 2024
£’000
Year ended
31 October 2023
£’000
Second Interim – year ended 31 October 2023 3.75p (2022: 3.50p) 5,052 4,716
Interim dividend – year ended 31 October 2024 1.60p (2023: 1.55p) 2,156 2,088
Total 7,208 6,804
(ii) The dividend relating to the year ended 31 October 2024, which is the basis on which the requirements of
Section 1159 of the Corporation Tax Act 2010 are considered, is detailed below:
Year ended 31 October 2024 Year ended 31 October 2023
Pence per
Ordinary
Share
£’000
Pence per
Ordinary
Share
£’000
Interim dividend 1.60p 2,156 1.55p 2,088
Second interim dividend
1
3.85p 5,187 3.75p 5,052
5.45p 7,343 5.30p 7,140
1
Not included as a liability in the year ended 31 October 2024 accounts.
The Directors have declared a second interim dividend for the financial year ended 31 October 2024 of 3.85p per ordinary
share. The dividend will be paid on 3 March 2025 to shareholders on the register at the close of business on 31 January 2025.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 63
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CC Japan Income & Growth Trust plc 63
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
NOTES TO THE ACCOUNTS
continued
10. OTHER DEBTORS
As at
31 October 2024
£’000
As at
31 October 2023
£’000
Accrued income 3,588 3,552
Sales for settlement 239 –
VAT receivable 193 128
Prepayments 42 70
Total 4,062 3,750
11. OTHER CREDITORS
As at
31 October 2023
£’000
As at
31 October 2023
£’000
Amounts falling due within one year:
Purchases for future settlement – 200
Accrued finance costs 24 15
Accrued expenses 267 319
Total 291 534
12. SHARE CAPITAL
Share capital represents the nominal value of shares that have been issued. The share premium includes any
premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted
from share premium.
As at 31 October 2024 As at 31 October 2023
No. of shares £’000 No. of shares £’000
Allotted, issued & fully paid:
Ordinary shares of 1p
Opening balance 134,730,610 1,348 134,730,610 1,348
Closing balance 134,730,610 1,348 134,730,610 1,348
Since the year end, the Company has not issued any ordinary shares and there were 134,730,610 ordinary shares in
issue as at 21 January 2025.
64 CC Japan Income & Growth Trust plc64 CC Japan Income & Growth Trust plc
13. RETURN PER ORDINARY SHARE
Total return per ordinary share is based on the return on ordinary activities, including income, a profit for the year
after taxation of £37,931,000 (2023: profit of £38,340,000) and the weighted average number of ordinary shares in
issue for the year to 31 October 2024 of 134,730,610 (2023: 134,730,610).
The returns per ordinary share were as follows:
As at 31 October 2024 As at 31 October 2023
Revenue Capital Total Revenue Capital Total
Return per ordinary share 5.32p 22.83p 28.15p 5.37p 23.08p 28.45p
14. NET ASSET VALUE PER SHARE
Total shareholders’ funds and the net asset value (“NAV”) per share attributable to the ordinary shareholders at the
year end calculated in accordance with the Articles of Association were as follows:
NAV per Ordinary Share
As at
31 October 2024
As at
31 October 2023
Net Asset Value (£’000) 265,841 235,118
Ordinary shares in issue 134,730,610 134,730,610
NAV per ordinary share 197.31p 174.51p
15. RELATED PARTY TRANSACTIONS
Transactions with the Investment Manager and the Alternative Investment Fund Manager (“AIFM”)
The Company provides additional information concerning its relationship with the Investment Manager and its former
AIFM, Chikara Investments LLP. The fees for the period are disclosed in note 5 and amounts outstanding at the year
ended 31 October 2024 were £171,000 (2023: £151,000).
Research purchasing agreement
MiFID II treats investment research provided by brokers and independent research providers as a form of
“inducement” to investment managers and requires research to be paid separately from execution costs. In the
past, the costs of broker research were primarily borne by the Company as part of execution costs through dealing
commissions paid to brokers. With effect from 3 January 2018, this practice has changed, as brokers subject to MiFID
II are now required to price, and charge for, research separately from execution costs. Equally, the rules require the
Investment Manager, as an investment Manager, to ensure that the research costs borne by the Company are paid
for through a designated Research Payment Account (“RPA”) funded by direct research charges to the Investment
Manager’s clients, including the Company.
The research charge for the year 1 January 2024 to 31 December 2024, as agreed between the Investment Manager
and the Company, was US $31,000 (31 December 2023: US $34,000). The research charge for the year 1 January 2025
to 31 December 2025, as budgeted by the Investment Manager, is US $31,000.
Directors’ fees and shareholdings
The Directors’ fees and shareholdings are disclosed in the Directors’ Remuneration Implementation Report on
pages38 to 41 in this Annual Report.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 65
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 65
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
NOTES TO THE ACCOUNTS
continued
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES
Risk Management Policies and Procedures
As an investment trust the Company invests in equities and equity related derivatives for the long term so as to secure
its investment objective stated on page 2. In pursuing its investment objective, the Company is exposed to a variety
of risks that could result in either a reduction in the Company’s net assets or a reduction of the profits available for
dividends.
These risks include market risk (comprising currency risk, interest rate risk, and other price risk), liquidity risk, and
credit risk, and the Directors’ approach to the management of them is set out follows.
The objectives, policies and processes for managing the risks, and the methods used to measure the risks, are set out
below.
(a) Market Risk
Economic conditions
Changes in economic conditions in Japan (for example, interest rates and rates of inflation, industry conditions,
competition, political events and other factors) and in the countries in which the Company’s investee companies
operate could substantially and adversely affect the Company’s prospects. The Company is subject to concentration
risk as it only invests in Japanese companies but has diversified investments across the different sectors in the
Japanese market.
Sectoral diversification
The Company has no limits on the amount it may invest in any sector. This may lead to the Company having significant
concentrated exposure to portfolio companies in certain business sectors from time to time.
Concentration of investments in any one sector may result in greater volatility in the value of the Company’s
investments and consequently its NAV and may materially and adversely affect the performance of the Company and
returns to shareholders.
Unquoted companies
The Company may invest in unquoted companies from time to time. Such investments, by their nature, involve a
higher degree of valuation and performance uncertainties and liquidity risks than investments in listed and quoted
securities and they may be more difficult to realise. However, the Company does not currently hold and has never held
any unquoted securities.
Management of market risk
The Company is invested in a diversified portfolio of investments. The Company’s investment policy states that no
single holding (including any derivative instrument) will represent more than 10% of the Company’s Gross Assets at
the time of investment and, when fully invested, the portfolio is expected to have between 30 to 40 holdings although
there is no guarantee that this will be the case and it may contain a lesser or greater number of holdings at any time.
A maximum of 10% of the Company’s gross assets at the time of investment may be invested in unquoted or untraded
companies at time of investment.
The Investment Manager’s approach will in most cases achieve diversification across a number of sectors as shown in
the Holdings in Portfolio on pages 23 and 24.
(b) Currency risk
The majority of the Company’s assets will be denominated in a currency other than sterling (predominantly in yen)
and changes in the exchange rate between sterling and yen may lead to a depreciation of the value of the Company’s
assets as expressed in sterling and may reduce the returns to the Company from its investments and, therefore,
negatively impact the level of dividends paid to shareholders.
Management of currency risk
The Investment Manager monitors the currency risk of the Company’s portfolio on a regular basis. Foreign currency
exposure is regularly reported to the Board by the Investment Manager. The Company does not currently intend to
enter into any arrangements to hedge its underlying currency exposure to investment denominated in yen, although
the Investment Manager and the Board will keep this approach under regular review.
66 CC Japan Income & Growth Trust plc66 CC Japan Income & Growth Trust plc
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued
Foreign currency exposures
An analysis of the Company’s assets priced in yen are as follows:
As at
31 October 2024
£’000
As at
31 October 2023
£’000
Equity Investments: yen 258,478 231,987
Receivables (due from brokers, dividends, and other income receivable) 3,827 3,552
CFD: yen (absolute exposure) 8,010 35
Cash and cash equivalent: yen (4,849) (3,640)
Total 265,466 231,934
Foreign currency sensitivity
If the Japanese yen had appreciated or depreciated by 10% as at 31 October 2024 (2023: 10%) then the value of the
portfolio as at that date would have increased or decreased as shown below.
Increase in
Fair Value
As at
31 October
2024
£’000
Decrease in
Fair Value
As at
31 October
2024
£’000
Increase in
Fair Value
As at
31 October
2023
£’000
Decrease in
Fair Value
As at
31 October
2023
£’000
Impact on capital return – increase/(decrease) 26,547 (26,547) 23,193 (23,193)
Return after taxation – increase/(decrease) 26,547 (26,547) 23,193 (23,193)
(c) Leverage risk
Derivative instruments
The Company may utilise long only CFDs or equity swaps for gearing and efficient portfolio management purposes.
Leverage may be generated through the use of CFDs or equity swaps. Such financial instruments inherently contain
much greater leverage than a non-margined purchase of the underlying security or instrument. This is due to the fact
that, generally, only a very small portion (and in some cases none) of the value of the underlying security or instrument
is required to be paid in order to make such leveraged investments. As a result of any leverage employed by the
Company, small changes in the value of the underlying assets may cause a relatively large change in the Net Asset
Value of the Company. Many such financial instruments are subject to variation or other interim margin requirements,
which may force premature liquidation of investment positions.
Borrowing risks
The Company may use borrowings to seek to enhance investment returns. While the use of borrowings can enhance
the total return on the ordinary shares where the return on the Company’s underlying assets is rising and exceeds the
cost of borrowing, it will have the opposite effect where the return on the Company’s underlying assets is rising at a
lower rate than the cost of borrowing or falling, further reducing the total return on the ordinary shares. As a result,
the use of borrowings by the Company may increase the volatility of the Net Asset Value per ordinary share. The
Company had no borrowings at the year end.
Any reduction in the value of the Company’s investments may lead to a correspondingly greater percentage reduction
in its Net Asset Value (which is likely to adversely affect the price of an ordinary share). Any reduction in the number
of ordinary shares in issue (for example, as a result of buy backs) will, in the absence of a corresponding reduction in
borrowings, result in an increase in the Company’s level of gearing.
To the extent that a fall in the value of the Company’s investments causes gearing to rise to a level that is not
consistent with the Company’s gearing policy or borrowing limits, the Company may have to sell investments in
order to reduce borrowings, which may give rise to a significant loss of value compared with the book value of the
investments, as well as a reduction in income from investments.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 67
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CC Japan Income & Growth Trust plc 67
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
NOTES TO THE ACCOUNTS
continued
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued
Management of leverage risk
The aggregate of borrowings and long only CFDs and equity swap exposure will not exceed 25% of Net Asset Value at
the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate, although
the Company’s normal policy will be to utilise and maintain gearing to a lower limit of 20% of Net Asset Value at the
time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate. It is expected
that any borrowings entered into will principally be denominated in yen.
The Company’s level of gearing as at 31 October 2024 is disclosed in the Alternative Performance Measures section on
page 74 of this Annual Report.
(d) Interest rate risk
The Company is exposed to interest rate risk specifically through its cash holdings and on positions within the CFD
portfolio. Interest rate movements may affect the level of income receivable from any cash at bank and on deposits.
The effect of interest rate changes on the earnings of the companies held within the portfolio may have a significant
impact on the valuation of the Company’s investments. Movements in interest rates will also have an impact on the
valuation of the CFD derivative contracts. Interest receivable on cash balances or paid on overdrafts is at fixed rate.
Management of interest rate risk
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. Derivative contracts are not used to hedge against the exposure to
interest rate risk.
Interest income earned on deposits and paid on overdraft by the Company is primarily derived from fixed interest
rates, and as such does not have a material exposure to interest rate risk.
The bank overdraft is an integral part of cash management and the Company has a legal right of offset and has the
intention to settle this at net.
Interest rate exposure
The exposure at 31 October 2024 of financial assets and liabilities to interest rate risk is shown by reference to floating
interest rates – when the interest rate is due to be reset. Due to the current low interest rate environment in Japan, no
sensitivity analysis is shown as the total impact will not be material.
As at
31 October 2024
due within
one year
£’000
As at
31 October 2023
due within
one year
£’000
Exposure to floating interest rates: CFD derivative contract – (absolute exposure) 51,153 46,397
Collateral paid in respect of CFDs 413 806
(e) Credit risk
Credit risk is the possibility of a loss to the Company due to the failure of the counterparty to a transaction discharging
its obligations under that transaction.
Cash and other assets held by the Depositary
The cash and other assets held by the Depositary or its sub-custodians are subject to counterparty credit risk as the
Company’s access to its cash could be delayed should the counterparties become insolvent or bankrupt.
Derivative instruments
The Company’s holdings in CFD contracts present counterparty credit risks, with the risk of the counter party (Morgan
Stanley & Co International plc) defaulting.
68 CC Japan Income & Growth Trust plc68 CC Japan Income & Growth Trust plc
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued
Management of credit risk
Cash and other assets held by the Depositary
Cash and other assets that are required to be held in custody will be held by the depositary or its sub-custodians. Cash
and other assets may not be treated as segregated assets and will therefore not be segregated from any custodian’s
own assets in the event of the insolvency of a custodian. Cash held with any custodian will not be treated as client
money subject to the rules of the Financial Conduct Authority (”FCA”) and may be used by a custodian in the course
of its own business. The Company will therefore be subject to the creditworthiness of its custodians. In the event of
the insolvency of a custodian, the Company will rank as a general creditor in relation thereto and may not be able
to recover such cash in full, or at all. The Company has appointed Northern Trust Investor Services Limited as its
depositary. The credit rating of Northern Trust was reviewed at time of appointment and will be reviewed on a regular
basis by the Investment Manager and/or the Board. The Fitch’s credit rating of Northern Trust is AA-.
Derivative instruments
Where the Company utilises CFDs or equity swaps, it is likely to take a credit risk with regard to the parties with whom
it trades and may also bear the risk of settlement default. These risks may differ materially from those entailed in
exchange-traded transactions that generally are backed by clearing organisation guarantees, daily marking-to-market
and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions
entered into directly between counterparties generally do not benefit from such protections and expose the parties to
the risk of counterparty default. CFD contracts generally require variation margins, and the counterparty credit risk is
monitored by the Investment Manager.
The Investment Manager monitors the Company’s exposure to its counterparties on a regular basis and the position is
reviewed by the Directors at Board meetings. Investment transactions are carried out with a number of brokers, whose
credit-standing is reviewed periodically by the Investment Manager, and limits are set on the amount that may be due
from any one broker.
In summary, the exposure to credit risk as at 31 October 2024 was as follows:
As at
31 October 2024
3 months or less
£’000
As at
31 October 2023
3 months or less
£’000
Cash at bank 4,006 340
Amounts due in respect of CFDs 8,027 773
Collateral paid in respect of CFDs 413 806
Debtors 4,062 3,750
Total 16,508 5,669
None of the above assets or liabilities was impaired or past due but not impaired.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 69
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 69
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
NOTES TO THE ACCOUNTS
continued
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued
(f) Other Price Risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes
are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial
instruments traded in the market.
The Company is exposed to market price risk arising from its equity investments and its exposure to the positions
within the CFD portfolio. The movements in the prices of these investments result in movements in the performance of
the Company.
The Company’s exposure to other changes in market prices at 31 October 2024 of its equity investments was
£258,478,000 (2023: £231,987,000). In addition, the Company’s gross market exposure to these price changes through
its CFD portfolio was £51,153,000 through long positions (2023: £46,397,000).
The Company uses CFDs as part of its investment policy. These instruments can be highly volatile and potentially
expose investors to a higher risk of loss. The low initial margin deposits normally required to establish a position in
such instruments permit a high degree of leverage. As a result, a relatively small movement in the price of a contract
may result in a profit or loss which is high in proportion to the value of the net exposures in the underlying CFD
positions. In addition, daily limits on price fluctuations and speculative position limits on exchanges may prevent
prompt liquidation of positions resulting in potentially greater losses.
The Company limits the gross market exposure, and therefore the leverage, of this strategy to approximately 200% of
the Company’s net assets. The CFDs utilised have a linear performance to referenced stocks quoted on exchanges and
therefore have the same volatility profile to the underlying stocks.
Market exposure to derivative contracts is disclosed below.
The Company’s exposure to CFDs is the aggregate of long CFD Positions. The gross and net market exposure is the
same as the Company does not hold Short CFD Positions.
Exposures are monitored daily by the Investment Manager. The Company’s Board also reviews exposures regularly.
The gross underlying notional exposures within the CFD portfolio as at 31 October 2024 were:
As at 31 October 2024 As at 31 October 2023
£’000
% of net
assets £’000
% of net
assets
CFDs – (absolute exposure) 51,153 19.24% 46,397 19.73%
CFDs – (net exposure) 51,153 19.24% 46,397 19.73%
The Board of Directors manages the market price risks inherent in the investment portfolio by ensuring full and timely
access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews
investment performance. The Board monitors the Investment Manager’s compliance with the Company’s objective.
Concentration of exposure to other price risk
A sector breakdown of the portfolio can be found on page 25.
70 CC Japan Income & Growth Trust plc70 CC Japan Income & Growth Trust plc
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued
Other price risk sensitivity
The following table illustrates the sensitivity of the profit after taxation for the period to an increase or decrease of
10% in the fair values of the Company’s equities and CFDs. This level of change is considered to be reasonably possible
based on observation of current market conditions. The sensitivity analysis is based on the notional exposure of the
Company’s equities investments and long CFDs.
As at 31 October 2024 As at 31 October 2023
Increase in
Fair Value
£’000
Decrease in
Fair Value
£’000
Increase in
Fair Value
£’000
Decrease in
Fair Value
£’000
Impact on capital return – increase/(decrease) 30,162 (30,162) 27,835 (27,835)
Return after taxation – increase/(decrease) 30,162 (30,162) 27,835 (27,835)
(g) Liquidity Risk
The securities of small-to-medium-sized (by market capitalisation) companies may have a more limited secondary
market than the securities of larger companies. Accordingly, it may be more difficult to effect sales of such securities
at an advantageous time or without a substantial drop in price than it would be for securities of a company with a
large market capitalisation and broad trading market. In addition, securities of small-to-medium-sized companies may
have greater price volatility as they can be more vulnerable to adverse market factors such as unfavourable economic
reports.
Management of liquidity risk
The Company’s Investment Manager monitors the liquidity of the Company’s portfolio on a regular basis.
Liquidity risk exposure
The undiscounted gross cash outflows of the financial liabilities as at 31 October 2024, based on the earliest date on
which payment can be required, were as follows:
As at
31 October 2024
less than 3 months
£’000
As at
31 October 2023
less than 3 months
£’000
Amounts payable in respect of CFDs 8,854 2,004
Other payables 291 534
Total 9,145 2,538
The Company is exposed to liquidity risks from the leverage employed through exposure to long only CFD positions.
However, timely sale of trading positions can be impaired by many factors including decreased trading volume and
increased price volatility. As a result, the Company could experience difficulties in disposing of assets to satisfy liquidity
demands. Liquidity risk is minimised by holding sufficient liquid investments which can be readily realised to meet
liquidity demands. The Company’s liquidity risk is managed on a daily basis by the Investment Manager in accordance
with established policies and procedures in place.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 71
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 71
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
NOTES TO THE ACCOUNTS
continued
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued
(h) Fair Value Measurements of Financial Assets and Financial Liabilities
The financial assets and liabilities are either carried in the Statement of Financial Position at their Fair Value, or the
Statement of Financial Position amount is a reasonable approximation of Fair Value (due from brokers, dividends
receivable, accrued income, due to brokers, accruals and cash and cash equivalents).
The valuation techniques for investments and derivatives used by the Company are explained in the accounting
policies notes 2 (b and c) on page 57.
The table below sets out Fair Value measurements using Fair Value Hierarchy.
31 December 2024
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Assets:
Equity investments 255,765 2,713 – 258,478
CFDs – Unrealised Fair Value gains – 8,027 – 8,027
Liabilities:
CFDs – Unrealised Fair Value losses – (17) – (17)
Total 255,765 10,723 – 266,488
31 December 2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Assets:
Equity investments 231,987 – – 231,987
CFDs – Unrealised Fair Value gains – 773 – 773
Liabilities:
CFDs – Unrealised Fair Value losses – (738) – (738)
Total 231,987 35 – 232,022
There were no transfers between levels during the year (2023: nil).
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the
Fair Value measurement of the relevant asset as follows:
Level 1 – valued using quoted prices in active markets for identical assets.
Level 2 – valued by reference to valuation techniques using observable inputs including quoted prices.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
There were no Level 3 investments as at 31 October 2024 (2023: nil).
72 CC Japan Income & Growth Trust plc72 CC Japan Income & Growth Trust plc
16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued
(i) Capital Management Policies and Procedures
The Company’s capital management objectives are:
– to ensure that the Company will be able to continue as a going concern; and
– to provide dividend income combined with capital growth, mainly through investment in equities listed or quoted in
Japan and by utilising the leverage effect of CFD.
The key performance indicators are contained in the strategic report on pages 10 and 11.
The Company is subject to several externally imposed capital requirements:
– As a public company, the Company has to have a minimum share capital of £50,000.
– In order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to
be able to meet one of the two capital restriction tests imposed on investment companies by company law.
The Company’s capital at 31 October 2024 comprises called up share capital and reserves totaling £265,841,000 (2023:
£235,118,000).
The Board regularly monitors, and has complied with, the externally imposed capital requirements.
17. DISTRIBUTABLE RESERVES
The Company’s distributable reserves consist of the Special reserve, Revenue reserve and Capital reserve attributable
to realised profits. As at 31 October 2024, the total distributable Capital reserve was £58,319,000 (2023: £38,486,000),
and the total undistributable Capital reserve was £35,561,000 (2023: £24,636,000).
Special reserve: As stated in the Company’s prospectus dated 13 November 2015, in order to increase the distributable
reserves available to facilitate the flexibility and source of future dividends, the Company resolved that, conditional
upon First Admission to listing on the London Stock Exchange and the approval of the Court, the net amount standing
to the credit of the share premium account of the Company immediately following completion of the First Issue be
cancelled and transferred to a special distributable reserve. Following approval by the Court, the cancellation became
effective on 23 March 2016 and an amount of £64,671,250 was transferred to the above Special reserve at that time.
The Special reserve is distributable.
18. POST BALANCE SHEET EVENTS
There were no post balance sheet events other than those already disclosed in this report.
NOTES TO THE ACCOUNTS
continued
CC Japan Income & Growth Trust plc 73
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 73
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
Administrator The Company’s administrator, the current such administrator effective
1 January 2025 being Frostrow Capital LLP, and prior to that Apex Listed
Companies Services (UK) Limited.
AIC Association of Investment Companies
Alternative Investment Fund or “AIF” An investment vehicle under AIFMD. Under AIFMD (see below) the
Company is classified as an AIF.
Alternative Investment Fund Managers
Directive or “AIFMD”
The UK version of an European Union Directive which came into force on
22 July 2013 and which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended by The Alternative Investment Fund
Managers (Amendment etc.) (EU Exit) Regulations 2019.
Alternative Performance Measure or
“APM”
A financial measure of historical or future financial performance, financial
position, or cash flows, other than a financial measure defined or
specified in the applicable financial reporting framework.
Annual General Meeting or “AGM” A meeting held once a year, which shareholders are entitled to attend,
and where they can vote on resolutions to be put forward at the meeting
and ask Directors questions about the Company.
Absolute exposure The absolute difference between the Company’s long positions and short
positions.
Bonus Issue The distribution of subscription shares to qualifying shareholders. In
this report pertinent to the issue to qualifying shareholders of new
Transferable Subscription shares on the basis of one new Transferable
Subscription Share for every five existing ordinary shares.
Cum-dividend A dividend that has been declared but not yet paid out.
CFD or Contract for Difference A financial instrument, which provides exposure to an underlying equity
with the provider financing the cost to the buyer with the buyer receiving
the difference of any gain or paying for any loss.
Custodian An entity that is appointed to hold and safeguard a company’s assets.
Depositary Certain AIFs must appoint depositaries under the requirements of AIFMD.
A depositary’s duties include, inter alia, safekeeping of the Company’s
assets and cash monitoring. Under AIFMD the depositary is appointed
under a strict liability regime. The Company’s Depositary is Northern
Trust Investor Services Limited.
Dividend Income receivable from an investment in shares.
74 CC Japan Income & Growth Trust plc74 CC Japan Income & Growth Trust plc
Discount (APM) The amount, expressed as a percentage, by which the share price is less
than the NAV per ordinary share.
As at 31 October 2024 Page
NAV per ordinary share (pence) a 2 197.3
Share price (pence) b 2 178.8
Discount (b÷a)-1 9.4%
As at 31 October 2023 Page
NAV per ordinary share (pence) a 2 174.5
Share price (pence) b 2 162.5
Discount (b÷a)-1 6.9%
Ex-dividend date The date from which a shareholder is not entitled to receive a dividend
which has been declared and is due to be paid to shareholders.
Financial Conduct Authority or “FCA” The independent body that regulates the financial services industry in the
UK.
Gearing (APM) A way to magnify income and capital returns, but which can also magnify
losses. The Company may be geared through the CFDs and if utilised, the
overdraft facility, with The Northern Trust Company.
As at 31 October 2024 £’000
CFD notional market value
1
a 51,153
Non-base cash borrowings
2
b –
NAV c 265,841
Gearing (net) ((a+b)/c) 19.2%
As at 31 October 2023 £’000
CFD notional market value
1
a 46,397
Non-base cash borrowings
2
b 3,380
NAV c 235,118
Gearing (net) ((a+b)/c) 21.2%
1
CFD positions in underlying asset value.
2
Non-base cash borrowings represents borrowings in Yen.
Gross assets (APM) The Company’s total assets including any leverage amount.
Index A basket of stocks which is considered to replicate a particular stock
market or sector.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)
continued
CC Japan Income & Growth Trust plc 75
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 75
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)
continued
Gross market exposure The Company’s total exposure investment value in the financial market
prices.
Gross underlying notional exposure The company’s total exposure value on the underlying asset of its
derivatives.
Investment company A company formed to invest in a diversified portfolio of assets.
Investment trust A closed end investment company which is based in the United Kingdom
(“UK”) and which meets certain tax conditions which enables it to be
exempt from UK corporation tax on its capital gains. This Company is an
investment trust.
Leverage (APM) Under the Alternative Investment Fund Managers Directive (“AIFMD”),
leverage is any method by which the exposure of an Alternative
Investment Fund (“AIF”) is increased through borrowing of cash or
securities or leverage embedded in derivative positions.
Under AIFMD, leverage is broadly similar to gearing, but is expressed
as a ratio between the assets (excluding borrowings) and the net assets
(after taking account of borrowing). Under the gross method, exposure
represents the sum of the Company’s positions after deduction of cash
balances, without taking account of any hedging or netting arrangements.
Under the commitment method, exposure is calculated without the
deduction of cash balances and after certain hedging and netting
positions are offset against each other.
Under both methods the AIFM has set current maximum limits of
leverage for the Company of 200%.
As at 31 October 2024
Gross
£’000
Commitment
£’000
Security market value a 258,478 258,478
CFD notional market value b 51,153 51,153
Cash and cash equivalents
1
c 4,616 4,186
NAV d 265,841 265,841
Leverage (a+b+c)/d 118% 118%
As at 31 October 2023
Gross
£’000
Commitment
£’000
Security market value a 231,987 231,987
CFD notional market value b 46,397 46,397
Cash and cash equivalents
1
c 3,841 321
NAV d 235,118 235,118
Leverage (a+b+c)/d 120% 119%
1
Cash and cash equivalents represent gross overdraft and net overdraft with Northern Trust.
76 CC Japan Income & Growth Trust plc76 CC Japan Income & Growth Trust plc
Market liquidity The extent to which investments can be bought or sold at short notice.
Net assets An investment company’s assets less its liabilities.
Net Asset Value (NAV) per ordinary share Net assets divided by the number of ordinary shares in issue (excluding
any shares held in Treasury).
Net exposure The difference between the Company’s long positions and short
positions.
Ongoing charges (APM) A measure, expressed as a percentage of the regular, recurring annual
costs of running an investment company.
Year end 31 October 2024
Average NAV a 266,974,122
Annualised expenses b 2,758,000
Ongoing charges (b÷a) 1.03%
Year end 31 October 2023
Average NAV a 228,765,739
Annualised expenses b 2,430,000
Ongoing charges (b÷a) 1.06%
Portfolio A composition of different investment holdings constructed and held in
order to deliver returns to shareholders and to spread risk.
Share Premium to Net Asset Value (APM) The amount, expressed as a percentage, by which the share price is more
than the Net Asset Value per share.
Share buyback A purchase by a company of its own shares. Shares can either be bought
back for cancellation or held in Treasury.
Share price The price of a share as determined by buyers and sellers on the relevant
stock exchange.
Subscription Share Price The price at which the Transferable Subscription Share Rights
are exercised in accordance with the terms and conditions of the
Transferable Subscription shares.
Transferable Subscription Share Rights The right conferred by each Transferable Subscription Share to subscribe
for one ordinary share as detailed in the prospectus.
Transferable Subscription Shares (TSS) The transferable subscription shares in the capital of the Company as a
Bonus Issue.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)
continued
CC Japan Income & Growth Trust plc 77
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 77
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Treasury shares A company’s own shares held in Treasury account by the company but
which are available to be resold in the market.
Total return (APM) A measure of performance that takes into account both income and
capital returns.
Year end 31 October 2024 Page Share price NAV
Opening at 1 November 2023 (in pence) a 2 162.5 174.5
Closing at 31 October 2024 (in pence) b 2 178.8 197.3
Price movement (b÷a)-1 c n/a 10.0% 13.1%
Dividend reinvestment
1
d n/a 3.2% 3.0%
Total return (c+d) 13.2% 16.1%
Year end 31 October 2023 Page Share price NAV
Opening at 1 November 2022 (in pence) a 2 138.8 151.1
Closing at 31 October 2023 (in pence) b 2 162.5 174.5
Price movement (b÷a)-1 c n/a 17.1% 15.5%
Dividend reinvestment
1
d n/a 3.8% 3.4%
Total return (c+d) 20.9% 18.9%
1
The dividend reinvestment is calculated on the assumption that dividends paid out by the Company are reinvested into the shares
of the Company at NAV at the ex-dividend date.
Volatility A statistical measure of how much and how quickly an asset’s price
changes over time.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)
continued
78 CC Japan Income & Growth Trust plc78 CC Japan Income & Growth Trust plc
THE SECURITIES FINANCING TRANSACTIONS REGULATION
(UNAUDITED)
The Securities Financing Transactions Regulation (“SFTR”) came into effect on 12 January 2016. Article 13 requires
information to be provided as to the use of securities financing transactions (SFTs) and total return swaps (TRS).
A Securities Financing Transaction (“SFT”) is defined as per Article 3 (11) of the SFTR as:
• a repurchase transaction;
• securities or commodities lending and securities or commodities borrowing;
• a buy-sell back transaction or sell-buy back transaction; or
• a margin lending transaction.
As at 31 October 2024 the Company held the following types of SFTs: None (2023: None).
As at 31 October 2024 the Company held the following types of Total Return Swaps: Contracts for Difference (2023:
Same).
The amount of securities and commodities on loan as a proportion of total lendable assets (excluding cash and cash
equivalents) was 0% as at 31 October 2024 (2023: 0%).
GLOBAL DATA:
Type of Asset
Absolute Amount
£’000
Proportion of AUM
%
Security lending Nil Nil
Repo Nil Nil
Total return swap (CFDs) 51,153 17.2%
CONCENTRATION DATA:
The largest collateral issuer across all SFTs and Total Return Swaps is as follows:
Collateral Issuers
Volume of the
collateral securities and
commodities
£’000
JPY Cash Collateral 8,424
The top counterparties across all SFTs and Total Return Swaps is as follows:
Counterparty
Gross volume
of outstanding trades
(£’000)
Morgan Stanley & Co Intl Plc 43,143
Macquarie Bank Limited –
CC Japan Income & Growth Trust plc 79
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 79
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
AGGREGATE TRANSACTION DATA:
Type of
collateral Quality Currency
Maturity
tenor
(collateral)
Maturity
tenor
(SFTs/Total
Return
Swaps)
Country of
counterparty
establishment
(not collateral)
Settlement
and clearing
Total Return Swap
Morgan Stanley & Co
Intl Plc Cash High JPY <1 Day >1 yr UK Bilateral
Macquarie Bank
Limited Cash High JPY <1 Day >1 yr Australia Bilateral
REUSE OF COLLATERAL:
The share of collateral that is reused is 0%, this is in comparison with the maximum of 0% as expressed in the
prospectus.
The cash collateral reinvestment returns to the company were nil.
SAFEKEEPING – Collateral Received:
Custodian Collateral assets safe-kept (£’000)
Northern Trust Global Services Limited 8,424
SAFEKEEPING – Collateral Granted:
The proportion of collateral held in segregated accounts, in pooled accounts or any other accounts is 0%.
RETURN/COSTS:
Type of Asset
Cost
£’000
Absolute
Returns
£’000
% overall
returns of
Transaction Type
Alternative Investment Fund:
Total Return Swaps (287) 8,133 100
Manager of the Alternative Investment Fund:
Third parties: Nil Nil Nil
THE SECURITIES FINANCING TRANSACTIONS REGULATION
(UNAUDITED) continued
80 CC Japan Income & Growth Trust plc80 CC Japan Income & Growth Trust plc
COMPANY INFORMATION
DIRECTORS
June Aitken (Chairman)
Kate Cornish-Bowden (Audit and Risk Committee
Chairman)
Craig Cleland (Senior Independent Director and
Nomination Committee Chairman)
John Charlton-Jones
BROKER
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
DEPOSITARY AND CUSTODIAN
Northern Trust Investor Services Limited
50 Bank Street
London
E14 5NT
REGISTRAR
MUFG Corporate Markets (Previously Link Group)
Central Square
29 Wellington Street
Leeds
LS1 4DL
LEGAL ADVISER
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
INVESTMENT MANAGER
Chikara Investments LLP
31-32 St James’s Street
London
SW1A 1HD
Website – www.chikarainvestments.com
REGISTERED OFFICE*
25 Southampton Buildings
London
WC2A 1AL
AIFM, ADMINISTRATOR and COMPANY
SECRETARY (With effect from 1 January 2025)
Frostrow Capital LLP
25 Southampton Buildings
London
WC2A 1AL
Website – www.frostrow.com
AUDITOR
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh
EH3 7PE
* Registered in England no. 9845783
COMPANY SECURITY INFORMATION AND IDENTIFICATION CODES
WEBSITE www.ccjapanincomeandgrowthtrust.com
ISIN GB00BYSRMH16
SEDOL BYSRMH1
BLOOMBERG TICKER CCJI LN
LEGAL ENTITY IDENTIFIER (LEI) 549 300 FZANMYIORK 1K98
GLOBAL INTERMEDIARY IDENTIFICATION NUMBER (GIIN) 6 HEK HT–99999–SL–826
CC Japan Income & Growth Trust plc 81
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 81
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Notice is hereby given that the Annual General Meeting of CC Japan Income & Growth Trust plc will be held on 3 March
2025 at 12 noon at the offices of Stephenson Harwood LLP, at 1 Finsbury Circus, London EC2M 7SH, United Kingdom
for the following purposes:
To consider and if thought fit pass the following resolutions of which resolutions 1 to 11 will be proposed as ordinary
resolutions and resolutions 12 to 14 will be proposed as special resolutions.
Ordinary resolutions
1. To receive the Company’s Annual Report and Accounts for the year ended 31 October 2024, with the reports of the
Directors and auditors thereon.
2. To approve the Directors’ Remuneration Implementation Report included in the Annual Report for the year ended
31 October 2024.
3. To re-elect June Aitken as a Director of the Company.
4. To re-elect Kate Cornish-Bowden as a Director of the Company.
5. To re-elect Craig Cleland as a Director of the Company.
6. To re-elect John Charlton–Jones as a Director of the Company.
7. That the Company continues in existence as an investment company for a further three year period.
8. To authorise the Directors to declare and pay dividends on a semi-annual basis.
9. To re-appoint Johnston Carmichael LLP as Independent Auditor to the Company.
10. To authorise the Directors to fix the remuneration of the auditors until the conclusion of the next Annual General
Meeting of the Company.
11. That the Directors be and are hereby generally and unconditionally authorised (in substitution for all subsisting
authorities to the extent unused) to exercise all powers of the Company to allot relevant securities (as defined in
section 551 of the Companies Act 2006) up to an aggregate nominal amount equal to £134,730.61 PROVIDED THAT
the Directors may not allot relevant securities of an aggregate nominal amount more than 10% of the nominal
value of the issued ordinary share capital (excluding Treasury shares) at the date of the Annual General Meeting
and that this authority shall expire (unless previously varied, revoked or renewed by the Company in general
meeting) at the conclusion of the Annual General Meeting of the Company to be held in 2026 or, if earlier, on the
expiry of 15 months from the passing of this resolution (the “section 551 period”) but so that the Directors may, at
any time prior to the expiry of the section 551 period, make an offer or agreement which would or might require
relevant securities to be allotted after the expiry of the section 551 period and the Directors may allot relevant
securities in the pursuance of such an offer or agreement as if the authority granted by this resolution had not
expired.
Special resolutions
12. That, subject to the passing of resolution 11, in substitution for any existing power under section 570 of the
Companies Act 2006 but without prejudice to the exercise of any such power prior to the date hereof, the Directors
be and are hereby empowered, pursuant to section 570 of that Act, to allot and make offers or agreements to
allot equity securities (as defined in section 560 of that Act) and/or sell equity securities held as Treasury shares
pursuant to section 573 of that Act, in each case for cash pursuant to the authority and for the period of the
authority conferred by resolution 11, up to an aggregate nominal amount of £134,730.61 as if section 561(1) of that
Act did not apply to such allotment (subject to a maximum of 10% of the aggregate nominal value of the issued
ordinary share capital at the date of this resolution).
13. That the Company be and is hereby generally and unconditionally authorised 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 its
ordinary shares of 1p each, provided that:
NOTICE OF ANNUAL GENERAL MEETING (“AGM”)
82 CC Japan Income & Growth Trust plc82 CC Japan Income & Growth Trust plc
(a) the maximum number of ordinary shares hereby authorised to be purchased shall be 20,196,118
(representing 14.99 per cent of the Company’s issued ordinary share capital (excluding shares held in
Treasury) at the date of the notice of this meeting);
(b) the minimum price (exclusive of any expenses) which may be paid for an ordinary share is 1p;
(c) the maximum price (excluding expenses) which may be paid for an ordinary share is not more than the
higher of (i) 5 per cent above the average of the middle market quotations for the ordinary shares for the five
business days immediately before the day on which it purchases that share and (ii) the higher of the price of
the last independent trade and the highest current independent bid for the ordinary shares;
(d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company
in 2026 or, if earlier, on the expiry of 15 months from the passing of this resolution, unless such authority is
renewed prior to such time; and
(e) the Company may make a contract to purchase ordinary shares under the authority hereby conferred prior
to the expiry of such authority, which will or may be executed wholly or partly after the expiration of such
authority and may make a purchase of ordinary shares pursuant to any such contract.
14. That a general meeting of the Company other than an Annual General Meeting may be called on not less than
14 days’ notice, provided that this authority shall expire at the conclusion of the Company’s next Annual General
Meeting after the date of the passing of this resolution.
Registered Office: By order of the Board
25 Southampton Buildings Frostrow Capital LLP
London Company Secretary
WC2A 1AL
21 January 2025
NOTICE OF ANNUAL GENERAL MEETING (“AGM”) continued
CC Japan Income & Growth Trust plc 83
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 83
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
Website address
1. Information regarding the meeting, including the information required by section 311A of the Companies Act 2006,
is available from https://ccjapanincomeandgrowthtrust.com.
Entitlement to attend and vote
2. Only those holders of ordinary shares registered on the Company’s register of members at close of business on
27 February 2025 or, if this meeting is adjourned, at close of business on the day two days prior to the adjourned
meeting, shall be entitled to vote at the meeting.
Appointment of Proxies
3. Pursuant to Section 324 of the Companies Act 2006, a member entitled to attend and vote at the meeting may
appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to different
shares held by him. A proxy need not be a member of the Company.
If shareholders are not attending the AGM, shareholders are strongly urged to appoint the Chair as their proxy to vote
on their behalf.
Section 324 does not apply to persons nominated to receive information rights pursuant to Section 146 of the
Companies Act 2006. Persons nominated to receive information rights under Section 146 of the Companies Act 2006
have been sent this notice of meeting and are hereby informed, in accordance with Section 149(2) of the Companies
Act 2006, that they may have the right under an agreement with the registered member by whom they are nominated
to be appointed, or to have someone else appointed, as a proxy for this meeting. If they have such right or do not wish
to exercise it, they may have a right under such an agreement to give instructions to the member as to the exercise of
voting rights.
Nominated persons should contact the registered member by whom they were nominated in respect of these
arrangements. The statement of rights of shareholders in relation to the appointment of proxies does not apply to
nominated persons.
Proxies’ rights to vote
4. On a vote on a show of hands, each proxy has one vote.
If a proxy is appointed by more than one member and all such members have instructed the proxy to vote in the same
way, the proxy will only be entitled, on a show of hands, to vote “for” or “against” as applicable. If a proxy is appointed
by more than one member, but such members have given different voting instructions, the proxy may, on a show of
hands, vote both “for” and “against” in order to reflect the different voting instructions.
On a poll, all or any of the voting rights of the member may be exercised by one or more duly appointed proxies.
However, where a member appoints more than one proxy, Section 285(4) of the Companies Act does not authorise
the exercise by the proxies taken together of more extensive voting rights than could be exercised by the member in
person.
Voting on the Resolution will be conducted by way of a poll.
As soon as practicable following the meeting, the results of the voting will be announced via a regulatory information
service and also placed on the Company’s website.
Voting by corporate representatives
5. Corporate representatives are entitled to attend and vote on behalf of the corporate member in accordance with
Section 323 of the Companies Act provided they do not do so in relation to the same shares.
NOTES TO NOTICE OF ANNUAL GENERAL MEETING
84 CC Japan Income & Growth Trust plc84 CC Japan Income & Growth Trust plc
Receipt and termination of proxies
6. The Form of Proxy and any power of attorney (or a notarially certified copy or office copy thereof) under which it
is executed must be received by MUFG Corporate Markets (“MUFG”) at 12 noon on 27 February 2025 in respect of
the meeting. Any Forms of Proxy received before such time will be deemed to have been received at such time.
In the case of an adjournment, the Form of Proxy must be received by MUFG no later than 48 hours before the
rescheduled meeting. We strongly urge you to appoint the Chair of the meeting as your proxy. On completing the
Form of Proxy, sign it and return it to MUFG at the address shown on the Form of Proxy in the envelope provided.
As postage has been pre-paid no stamp is required.
A member may terminate a proxy’s authority at any time before the commencement of the AGM. Termination must
be provided in writing and submitted to the Company’s Registrar. In accordance with the Company’s Articles of
Association, in determining the time for delivery of proxies, no account shall be taken of any part of a day that is not
a working day.
Alternatively, you may appoint a proxy or proxies electronically by visiting https://www.signalshares.com/. You
willneed to register using your investor code and follow the instructions on how to vote. Proxies submitted via
www.signalshares.com for the AGM must be transmitted so as to be received by the Company’s Registrar, MUFG,
no later than 48 hours before the time appointed for the meeting (excluding weekends and public holidays) or any
adjournment of the meeting. Proxies received after that date will not be valid.
If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a
process which has been agreed by the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12.00 noon on 27 February 2025 in
order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time of the
adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read these carefully as you will be bound by them and
they will govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity
platform may be revoked completely by sending an authenticated message via the platform instructing the removal
of your proxy vote.
Appointment of Proxy through CREST
7. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service
may do so for the meeting to be held on the above date and any adjournment(s) thereof by using the procedures
described in the CREST Manual. 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.
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
& International Limited’s specifications and must contain the information required for such instructions, as
described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or
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 agent (ID: RA10) by the latest time(s) for receipt of proxy appointments
specified in the notice of meeting. 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 Applications Host) from which the Company’s agent is able
to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of
instructions to a proxy’s appointee through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear
UK & International Limited does not make available special procedures in CREST for any particular messages.
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 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, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings.
NOTES TO NOTICE OF ANNUAL GENERAL MEETING
continued
CC Japan Income & Growth Trust plc 85
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
CC Japan Income & Growth Trust plc 85
STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION
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.
All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy, which are
to be transmitted through CREST, must be lodged at 12 noon on 27 February 2025 in respect of the meeting. Any
such messages received before such time will be deemed to have been received at such time. In the case of an
adjournment, all messages must be lodged with MUFG no later than 48 hours before the rescheduled meeting.
Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any other electronic voting instruction, the
proxy will vote as they think fit or, at their discretion, withhold from voting.
Nominated Persons
8. If you are a person who has been nominated under section 146 of the Companies Act 2006 to enjoy information
rights:
• You may have a right under an agreement between you and the member of the Company who has nominated
you to have information rights (Relevant Member) to be appointed or to have someone else appointed as a
proxy for the meeting.
• If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a
right under an agreement between you and the Relevant Member to give instructions to the Relevant Member
as to the exercise of voting rights.
• Your main point of contact in terms of your investment in the Company remains the Relevant Member (or,
perhaps, your custodian or broker) and you should continue to contact them (and not the Company) regarding
any changes or queries relating to your personal details and your interest in the Company (including any
administrative matters). The only exception to this is where the Company expressly requests a response from
you.
If you are not a member of the Company but you have been nominated by a member of the Company to enjoy
information rights, you do not have a right to appoint any proxies under the procedures set out in the notes to the
form of proxy.
Questions at the Meeting
9. Under section 319A of the Companies Act 2006, the Company must answer any question you ask relating to the
business being dealt with at the meeting unless:
• answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of
confidential information;
• the answer has already been given on a website in the form of an answer to a question; or
• it is undesirable in the interests of the Company or the good order of the meeting that the question be
answered.
If shareholders would like to ask any questions prior to the meeting, shareholders are invited to submit their
questions to cosec@frostrow.com. Please note all questions should be submitted by close of business on
28February 2025.
Issued shares and total voting rights
10. The total number of shares in the Company in respect of which members are entitled to exercise voting rights
is 134,730,610 ordinary shares of £0.01 each, of which 0 is held in Treasury. The total number of voting rights in
relation to the ordinary shares in the Company is 134,730,610.
NOTES TO NOTICE OF ANNUAL GENERAL MEETING
continued
86 CC Japan Income & Growth Trust plc86 CC Japan Income & Growth Trust plc
Communication
11. Except as provided above, members who have general queries about the meeting should use the following means
of communication (no other methods of communication will be accepted):
• calling MUFG’s shareholder helpline (lines are open from 9:00 a.m. to 5:30 p.m. Monday to Friday, excluding
public holidays in England and Wales) +44 371 664 0300 (calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate;
• emailing MUFG at shareholderenquiries@cm.mpms.mufg.com; or
• in writing to MUFG at Central Square, 29 Wellington Street, Leeds, LS1 4DL. You may not use any electronic
address provided either in this notice of meeting or in any related documents (including the Form of Proxy for
this meeting) to communicate with the Company for any purposes other than those expressly stated.
NOTES TO NOTICE OF ANNUAL GENERAL MEETING
continued
I/We .......................................................................................................................................................................................................
of ...........................................................................................................................................................................................................
(BLOCK CAPITALS PLEASE)
being (a) member(s) of CC Japan Income & Growth Trust plc appoint the Chair of the meeting, or .......................................
(see note 1) ..........................................................................................................................................................................................
of ...........................................................................................................................................................................................................
as my/our proxy and, on a poll, to vote for me/us on my/our behalf at the Annual General Meeting of the Company to
be held on 3 March 2025 at 12 noon and any adjournment thereof.
Please indicate with an ‘X’ in the spaces provided how you wish your votes to be cast on the resolutions specified.
Resolution For Against Withheld Discretionary
1.
To receive and adopt the Annual Report and Accounts
for the year ended 31 October 2024
2.
To approve the Directors’ remuneration implementation
report
3.
To re-elect June Aitken as a Director of the Company
4.
To re-elect Kate Cornish-Bowden as a Director of the
Company
5.
To re-elect Craig Cleland as a Director of the Company
6.
To re-elect John Charlton-Jones as a Director of the
Company
7.
That the Company continues in existence as an
investment company for a further three year period
8.
To authorise the Directors to declare and pay dividends
on a semi-annual basis
9.
To re-appoint Johnston Carmichael LLP as Independent
Auditor to the Company
10.
To authorise the Directors to fix the remuneration of the
Independent Auditor
11.
To give authority to allot new shares
12.
To give authority to allot new shares free from pre-
emption rights
13.
To give authority for the Company to purchase its own
shares
14.
To authorise calling general meetings (other than Annual
General Meetings) on 14 clear days’ notice
Subject to any voting instructions so given the proxy will vote, or may abstain from voting, on any resolution as he may think fit.
Signature ...................................................................................... Dated this .................. day of ...........................................2025
NOTES
1. If any other proxy is preferred, strike out the words “Chair of the Meeting” and add the name and address of the proxy you wish to appoint and initial
the alteration. The proxy need not be a member.
2. If the appointer is a corporation this form must be completed under its common seal or under the hand of some officer or attorney duly authorised
in writing.
3. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against a resolution.
4. The signature of any one of joint holders will be sufficient, but the names of all the joint holders should be stated.
5. To appoint more than one proxy you may photocopy this form. Please indicate the proxy holder’s name and the number of shares in relation to
which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the
proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope.
6. To be valid, this form and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power, must
reach the registrars of the Company, MUFG not less than forty-eight hours before the time appointed for holding the Annual General Meeting or
adjournment as the case may be.
7. The completion of this form will not preclude a member from attending the Meeting and voting in person.
8. Any alteration of this form must be initialled. Your completed and signed proxy form should be posted, in the enclosed reply paid envelope, to the
Company’s Registrars, MUFG, PXS 1, MUFG, Central Square, 29 Wellington Street, Leeds, LS1 4DL, so as to arrive by 12 noon on 27 February 2025.
CC JAPAN INCOME & GROWTH TRUST PLC
FORM OF PROXY
✁
88 CC Japan Income & Growth Trust plc88 CC Japan Income & Growth Trust plc