List of Investments

As at 31 August 2025

*   Absolute performance has been calculated on a daily basis over the period 1 September 2024 to 31 August 2025 using the change in valuation, adjusted for income, purchases, and sales during the period. For investments held for part of the year, the return is for the period they were held. Absolute performance is in sterling terms.

†   Figures relate to part period returns.

#   New purchase during the year. Complete sales in the year were Digital Garage, LY Corp, Mercari, SWCC Showa, Tokyo Tatemono and Topcon.

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

Past performance is not a guide to future performance.

Income Statement

For the year ended 31 August

Total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is both the profit and total comprehensive income for the year.

Balance Sheet

Statement of Changes in Equity

For the year ended 31 August 2025

For the year ended 31 August 2024

Cash Flow Statement

For the year ended 31 August

*   Cash and cash equivalents represent cash at bank and short-term money market deposits repayable on demand.

†   Cash from operations includes dividends received of £15,054,000 (2024 - £15,810,000) and interest received of £1,000 (2024 - £3,000).

Notes to the Financial Statements

1.       Principal Accounting Policies

          The Financial Statements for the year to 31 August 2025 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' on the basis of the accounting policies set out below which are unchanged from the prior year and have been applied consistently.

          The Financial Statements have also been prepared in accordance with the Companies Act 2006, and with the AIC's Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in July 2022 with consequential amendments.

          All of the Company's operations are of a continuing nature and the Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include the revaluation of fixed asset investments and derivative financial instruments at fair value through profit or loss, and on the assumption that approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 will be retained. The Board has, in particular, considered the impact of heightened market volatility and macroeconomic and geopolitical concerns, including inflation and interest rates. It has reviewed the results of specific leverage and liquidity stress testing and does not believe the Company's going concern status is affected. In addition, the Company is subject to an annual continuation vote which in previous years has been passed with a significant majority. The Directors have no reason to believe that the vote will not continue to be in favour based on their assessment of the Company's performance and the views collated from shareholders. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis.

          The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. The Company's primary third party suppliers, including its Managers and Secretaries, Depositary and Custodian, Registrar, Auditor and Broker, are not experiencing significant operational difficulties affecting their respective services to the Company.

          In preparing these Financial Statements, the Directors have considered the impact of climate change risk as a principal risk set out on page 34 of the Annual Report and Financial Statements and have concluded that it does not have a material impact on the Company's investments. The Directors consider the impact of climate change on the value of the investments included in the Financial Statements to already be reflected in their prices as quoted on a stock exchange.

          Accordingly, the Financial Statements have been prepared on a going concern basis as it is the Directors' opinion, having assessed the principal and emerging risks and other matters set out in the Viability Statement on page 27 of the Annual Report and Financial Statements which assesses the prospects of the Company over a period of five years, that the Company will continue in operational existence until at least 31 October 2026, which is for a period of at least twelve months from the date of approval of these Financial Statements.

          In order to better reflect the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented.

          Financial assets and financial liabilities are recognised in the Company's Balance Sheet when it becomes a party to the contractual provisions of the instrument.

          The Directors consider the Company's functional and presentation currency to be sterling, (see consideration in accounting policy (j)), as the Company's shareholders are predominantly based in the UK, the Company pays its dividends and expenses in sterling and the Company and its Manager, who are subject to the UK's regulatory environment, are also UK based.

2.       Income

          Special dividends received during the year amounted to £188,000 (2024 - £93,000) with £188,000 (2024 - £93,000) classed as revenue and none (2024 - none) classed as capital.

3.       Investment Management Fee - All Charged to Revenue

          Details of the Investment Management Agreement are disclosed on page 39 of the Annual Report and Financial Statements. For the year to 31 August 2025, the annual management fee is 0.65% on the first £250 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly. For the year to 31 August 2024, the annual management fee was 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly.

4.       Net Return Per Ordinary Share

          Net revenue return per ordinary share is based on the net revenue profit after taxation of £5,974,000 (2024 - net revenue profit of £7,416,000) and on 81,645,278 (2024 - 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

          Capital return per ordinary share is based on the net capital profit for the financial year of £117,456,000 (2024 - net capital profit of £56,343,000) and on 81,645,278 (2024 - 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

          Total return per ordinary share is based on the total profit for the financial year of £123,430,000 (2024 - total profit of £63,759,000) and on 81,645,278 (2024 - 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

          There are no dilutive or potentially dilutive shares in issue.

5.       Ordinary Dividends

          Set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution out of current year profits by way of dividend for the year is £5,974,000. The revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable by way of dividend.

*   Based on ordinary shares in issue at 31 August 2025.

6.       Total borrowings at 31 August 2025 were ¥23 billion (2024 - ¥26.9 billion) and a detailed in note 11 on page 75 of the Annual Report and Financial Statements.

7.       The transaction costs of purchases and sales were £22,000 (2024 - £49,000) and £48,000 (2024 - £45,000) respectively.

8.       The Company's authority permits it to hold shares bought back in 'treasury'. Such treasury shares may be subsequently either sold for cash at a premium to net asset value per ordinary share or cancelled. In the year to 31 August 2025, 10,041,174 shares with a nominal value of £502,000, representing 11.5% of the issued share capital at 31 August 2024, were bought back at a cost of £75,180,000 and held in treasury (31 August 2024 - 5,515,000 shares with a nominal value of £276,000 representing 5.9% of the issued share capital at 31 August 2023, were bought back at a cost of £39,186,000 and held in treasury). At 31 August 2025 the Company had authority to buy back 6,318,845 ordinary shares. Over the period from 1 September 2025 to 16 October 2025 a further 570,000 shares have been bought back and held in treasury at a cost of £5,233,000.

          Under the provisions of the Company's Articles, the share buy-backs are funded from the capital reserve.

          In the year to 31 August 2025, the Company sold no ordinary shares from treasury (2024 - no ordinary shares). The Company issued no ordinary shares (2024 - no ordinary shares). As at 31 August 2025 the Company had the authority to issue 8,608,761 ordinary shares. Over the period from 1 September 2025 to 16 October 2025 no further shares were issued by the Company.

9.       The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 August 2025 or 2024 but is derived from those accounts. Statutory accounts for 2024 have been delivered to the registrar of companies, and those for 2025 will be delivered in due course. The Auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report; and, (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

10.     The Annual Report and Financial Statements will be available on the Company's page on the Managers' website japantrustplc.co.uk^‡ on or around 6 November 2025.

‡   Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

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

Glossary of Terms and Alternative Performance Measures ('APM')

Total Assets

The total value of all assets held less all liabilities (other than liabilities in the form of borrowings).

Net Asset Value

Also described as shareholders' funds, net asset value ('NAV') is the value of total assets less liabilities (including borrowings). The NAV per ordinary share is calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares). Borrowings are valued at their book value. The Company's yen denominated loans are valued at their sterling equivalent.

Net Asset Value can also be expressed with borrowings valued at an estimate of their market worth or "fair value". The value of the borrowings at book and fair value are set out on page 81 of the Annual Report and Financial Statements.

Net Asset Value (reconciliation of NAV at book value to NAV at fair value)

(Discount)/Premium (APM)

As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per ordinary share it is said to be trading at a discount. The size of the discount is calculated by subtracting the NAV per ordinary share from the share price and is usually expressed as a percentage of the NAV per ordinary share. If the share price is higher than the NAV per ordinary share, this situation is called a premium. Average discount has been calculated on the basis of average daily discount for the year to 31 August 2025.

Total Return (APM)

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

*   The dividend adjustment factor is calculated on the assumption that the dividend of 10.0p (2024 - 10.0p) paid by the Company during the year was invested into shares of the Company at the cum income NAV per ordinary share/share price, as appropriate, at the ex-dividend date.

Turnover

Annual turnover of the investment portfolio shares is calculated on a rolling 12 month basis. The lower of purchases and sales for the 12 months is divided by the average assets, with average assets being calculated on assets as at each month's end.

Ongoing Charges (APM)

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value.

*   Average of daily net asset values calculated during the year.

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. The level of gearing can be adjusted through the use of derivatives which affect the sensitivity of the value of the portfolio to changes in the level of markets.

Net gearing is the Company's borrowings less cash and cash equivalents expressed as a percentage of shareholders' funds.

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

*   Net gearing: ((a) - (b)) divided by (c), expressed as a percentage.

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

Leverage (APM)

For the purposes of the UK Alternative Investment Fund Managers ('AIFM') Regulations, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Active Share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Sustainable Finance Disclosure Regulation ('SFDR')

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

The AIFM has adopted Baillie Gifford & Co's ESG Principles and Guidelines as its policy on integration of sustainability risks in investment decisions.

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

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

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

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

More detail on the Manager's approach to sustainability can be found in the ESG Principles and Guidelines document, available publicly on the Baillie Gifford website bailliegifford.com and by scanning the QR code below.

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No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data.

No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom. No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

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

Regulated Information Classification: Additional regulated information required to be disclosed under applicable law.

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