Annual Report and 31 August 2025 Financial Statements ## The Baillie Gifford ## Japan Trust PLC ## japantrustplc.co.uk The Baillie Gifford Japan Trust PLC ## Contents Introduction Company Overview 02 Financial Highlights 03 Strategic Report Chairman’s Statement 05 Managers’ Review 08 Relative Contribution 11 Review of Investments 12 Distribution of Total Assets and Main Portfolio Themes 16 Portfolio Positioning 17 List of Investments 19 Environmental, Social and Governance Engagement 21 Business Review 25 Governance Report Directors 36 Directors’ Report 39 Corporate Governance Report 44 Directors’ Remuneration Report 49 Audit Committee Report 52 Statement of Directors’ Responsibilities 55 Financial Report Independent Auditor’s Report 58 Income Statement 65 Balance Sheet 66 Statement of Changes in Equity 67 Cash Flow Statement 68 Notes to the Financial Statements 69 Glossary of Terms and Alternative Performance Measures 82 Shareholder Information Notice of Annual General Meeting 86 Further Shareholder Information 91 Third Party Data Provider Disclaimer 93 One Year Summary 94 Five Year Summary 95 Ten Year Record 96 Sustainable Finance Disclosure Regulation 97 Communicating with Shareholders 98 Company Information 100 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you reside in the UK and you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 immediately. If you are outside the UK, you should consult an appropriately authorised financial adviser. If you have sold or otherwise transferred all of your ordinary shares in The Baillie Gifford Japan Trust PLC, please forward this document, together with any accompanying documents, but not your personalised Form of Proxy, as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was or is being effected for delivery to thepurchaser or transferee. 01 Introduction ## Company Overview ### Objective The Baillie Gifford Japan Trust PLC aims to achieve long-term capital growth principally through investment in medium to smaller sized Japanese companies, which are believed to have above average prospects for growth. ### Framing Japan through a unique lens Bottom-up: Long-term: Growth: Willing to bedifferent Sticking withconviction Supporting innovation and entrepreneurship | 84% | | | | 7% | | | | 42% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | * | | | | ** | | | | | Active share | | Turnover versus 57% | | | | Founder/family run vs | | | | | | | industry average | | | | 12% for the index | | ### Backing businesses, not the economy ### NAV, Share Price and Comparative Index Total Return * 50% 40% 30% 20% 10% 0% (10%) (20%) (30%) 2025202420232022202120202019201820172016 † ● Net asset value ● Share price ● Benchmark * Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84. † The benchmark is the TOPIX total return (in sterling terms). ** Based on eVestment Japan Universe as at 31 August 2025. Source: LSEG, Baillie Gifford, Japan Exchange Group and underlying data providers. See disclaimer on page 93. Past performance is not a guide to future performance. 02 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Financial Highlights Year to 31August 2025 Total returns * † Share Price NAV Benchmark ## 20.9% 20.5% 12.1% * * * Discount Average discount Ongoing charges ## (11.4%) (12.5%) 0.71% NAV, Share Price and Benchmark Total Return * Discount * to Net Asset Value (figures rebased to 100 at 31August 2024) (figures plotted on a weekly basis) 115% 110% 95% 90% A S O N D J F M A M J J A A SONDJFMA J 2024 2025 2024 (8%) 125% ● Share price● NAV ● Benchmark ● Discount ● Average discount (10%) 120% (12%) (14%) 105% 100% (16%) * Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84. | | † The benchmark is the TOPIX total return (in sterling terms). | | | | --- | --- | --- | --- | | (18%) | Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93. | | | | | Past performance is not a guide to future performance. | MJ | A | 2025 03 ## Strategic Report The Strategic Report, which comprises pages 05 to 34 and incorporates the Chairman’s statement, has been preparedin accordance with the Companies Act 2006. The Baillie-Gifford Japan Trust PLC # Chairman's Statement ![img-0.jpeg](img-0.jpeg) David Kidd Chairman Appointed to the Board in 2015, and as Chairman in 2022 ## Introduction This past year has seen Japan's equity market continue to build on the momentum of its long-awaited resurgence, with corporate reforms, robust earnings growth, and renewed global investor attention combining to push valuations to levels not seen in decades. Although growth investing has continued to face headwinds in global markets, the Board retains strong conviction that the Company's portfolio of innovative Japanese companies is well positioned to deliver sustainable value creation and attractive returns for shareholders over time. ## Performance In the year to 31 August 2025, the net asset value ('NAV') total return was 20.5% and the share price total return was 20.9%. The comparative index (TOPIX total return in sterling terms) appreciated by 12.1% over the same period. The Company's objective is to achieve long-term capital growth, and the NAV returns remain ahead of the benchmark on a 10-year time horizon. ## Long Term Performance (Total Return*) | | Compound Annual Returns | | | | | | --- | --- | --- | --- | --- | --- | | | 1 year | 5 year | 10 year | 5 year | 10 year | | Share price | 20.9% | 16.0% | 114.2% | 3.0% | 7.9% | | Net asset value | 20.5% | 27.0% | 152.2% | 4.9% | 9.7% | | Benchmark† | 12.1% | 53.4% | 137.2% | 8.9% | 9.0% | * Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84. † The benchmark is the TOPIX total return (in sterling terms). Source: LSEG and underlying data providers. See disclaimer on page 93. Past performance is not a guide to future performance. 06 Strategic Report Over the financial year to 31 August 2025, the Company delivered improved performance, both in absolute terms and relative to its benchmark. This reflects a combination of strong operational progress from many of the portfolio's holdings and a more supportive market backdrop for growth equities. The Board is encouraged to see that the Managers' patient, bottom-up approach – investing in companies with the potential for sustained and idiosyncratic growth – has been rewarded as earnings delivery and long-term prospects regained investors' focus. The Japanese equity market continues to offer abundant opportunities for discerning stock-pickers, and the Board remains confident that the strategy of concentrating on innovative, growth-oriented businesses positions the Company well to generate superior returns over time. The recovery in performance over the past year provides a timely reminder that, while short-term market conditions can at times be unfavourable, the long-term prospects for the portfolio remain compelling. ### Gearing and Borrowing The Board believes borrowing is likely to enhance long-term returns. It also recognises the risks associated with borrowing. Net gearing decreased from 18.1% to 12.8% for the year ending 31 August 2025. The Board is pleased to announce that in August 2025, the Company secured a ¥15 billion revolving credit facility with The Bank of New York Mellon at a competitive rate. The proceeds were used to repay the ¥15 billion term loan with the same bank which expired in August 2025. ### Dividend The Board is recommending a dividend of 10p per ordinary share (2024: 10p per ordinary share). This will be put to shareholders for approval at the Annual General Meeting (AGM) to be held on 10 December 2025. If approved, the dividend will be paid on 15 December 2025 to shareholders on the register at close of business on 14 November 2025. A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the Company. For those shareholders electing to receive the DRIP, the last date for receipt of DRIP elections is 24 November 2025. ### Share Capital and Discount Management Over the course of the year, the share price discount to NAV narrowed very slightly from 11.6% to 11.4%. The Board believes that if the Company's shares trade at a double-digit discount, this presents an attractive opportunity to add value for shareholders through buybacks. During the financial year, 11.5% of the Company's issued share capital was bought back for a total consideration of £75.2 million. This increased the Company's net asset value by 1.5%. The shares bought back are held in Treasury and are available to be reissued, at a premium, when market conditions allow. #### Issuance and Buybacks ![img-1.jpeg](img-1.jpeg) Your Board believes it is important that the Company retains the power to buy back equity during the year and so, at the AGM, is seeking to renew this facility. Further details of the buy back facility can be found on page 41. The Company also has authority to issue new shares and to reissue any shares held in Treasury for cash on a non-pre-emptive basis. Shares are issued or reissued only at a premium to net asset value, thereby enhancing net asset value per share for existing shareholders. The Directors are, once again, seeking 10% share issuance authority at the AGM. This authority would expire at the conclusion of the AGM in 2026. 06 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Annual General Meeting (AGM) Board The Company’s AGM is scheduled for 11.30am on As detailed in my Chairman’s Statement of last year, 10 December 2025 at Baillie Gifford’s offices in the Board is cognisant of good corporate governance Edinburgh. The Board encourages shareholders practice and as such I will be stepping down from the to attend in person but also to exercise their votes Board at the AGM. Sam Davis will be my successor. by completing and submitting a form of proxy. Sam joined the Board in 2021 and is currently Chair Shareholders who hold their shares via a platform of the Management Engagement Committee. I am can find further details on page 92 as to how to vote confident that he will be a highly effective Chair of their shares. your Company following my retirement at the AGM. We also encourage shareholders to monitor the The Board intends to recruit a new director early in Company’s website at japantrustplc.co.uk where any 2026 with the assistance of an executive search firm, updates will be posted and market announcements the selection of which is at an advanced stage. will be made, as appropriate. Should shareholders I would like to thank all of my Board colleagues – have questions for the Board or the Managers or any past and present – for their friendship, support, and queries as to how to vote, they are welcome to submit tolerance over the past decade or so. A special note these by email to enquiries@bailliegifford.com or call of gratitude is due to Matthew Brett for delivering 0800 917 2113. excellent long-term performance. The entire Baillie Information on the resolutions can be found Gifford team is to be commended not only for their on pages 87 and 88 of the Annual Report and effective support but also for their responses to my Financial Statements. The Directors consider that occasionally unconventional questions and requests. all resolutions to be put to shareholders are in their and the Company’s best interests as a whole and Outlook recommend that shareholders vote in their favour. The Japanese equity market is reaching new highs. In particular, shareholders have the right to vote Our investment manager’s strategy is once again annually on whether the Company should continue bearing fruit. I intend to remain a happy, supportive in business and will have the opportunity to do shareholder for a very long time. so again this year. Last year, the Company again Your investment is in fine hands. received support for its continuation, with 85.4% of votes cast in favour. Your Directors believe there are attractive opportunities in selected, well-run David Kidd Japanese companies benefiting the long-term Chairman favourable outlook for the Japan Trust. To that end, 20 October 2025 my fellow Directors and I intend, where possible, to vote our own shareholdings in favour of the resolution and hope that all shareholders will feel disposed to do likewise. 07 Strategic Report # Managers' Review ![img-2.jpeg](img-2.jpeg) Matthew is an Investment Manager in the Japanese Equities Team. He joined Baillie Gifford in 2003 and became a Partner of Baillie Gifford in 2018. He has managed The Baillie Gifford Japan Trust since 2018. Matthew has managed the Japanese All Cap Strategy since 2008 and is Co-Manager of the Japanese Income Growth Strategy. Matthew graduated BA (Hons) in Natural Sciences (Psychology) from the University of Cambridge in 2000 and holds a PhD in Psychology from the University of Bristol. Matthew Brett Manager ## Summary The sun has shone on your Company's portfolio this year, with an NAV total return of +20.5%, ahead of the TOPIX total return (in sterling terms) of +12.1%. Most of this positive absolute and relative return came in the second half of the fiscal year, with SoftBank Group making a key positive contribution. We believe that the journey towards realising the substantial opportunity highlighted in recent reports has properly begun. ## Investment Background Artificial Intelligence ('AI') remains a central theme globally. Large language models ('LLMs'), such as ChatGPT, continue to make rapid strides in capability. Investments are being made in training models, chips, data centres, and applications. This will be a mega-theme over the next decade that will likely surpass the development of the internet in its significance. Over time we expect it to result in profound changes to operating environments for businesses and believe that it is important for investors to keep looking forward to maximise the opportunities and avoid the risks. Right now, it is challenging to speak with confidence about the global macroeconomic backdrop, geopolitical environment, or even domestic Japanese politics. However, your Company's focus is not on these broad and unpredictable factors, but rather on carefully selected individual businesses chosen for their long-term growth potential and resilience. ## Performance Review Superficially it may be surprising that our growth-orientated portfolio has performed so well given political challenges and a slowing global economy. However, our long experience suggests that in slightly tougher conditions, genuine growth businesses are more appreciated as they are able to keep making progress in spite of headwinds. Indeed, our lack of relative returns in recent years has been partly due to a lack of exposure to the very strong returns from some of Japan's most cyclical businesses, which enjoyed a dramatic earnings up-cycle as Covid came to an end. Over 5 years, the cumulative NAV total return was +27.0% and over 10 years +152.2%. This compares to increases in the TOPIX total return (in sterling terms) of +53.4% over 5 years and +137.2% over 10 years. 08 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Over the past year, 6 stocks contributed +1ppt or more Just 1 stock contributed more than -1ppt to to the relative performance of the gross portfolio. relative performance. This was Rakuten (-1.3ppt), These were SoftBank Group (+3.8ppt), SBI Holdings a large position and the top contributor to relative (+2.7ppt), CyberAgent (+1.5ppt), GA Technologies performance in the previous year. In our view, (+1.3ppt), GMO Internet (+1.1ppt), and Topcon (+1.0ppt). the market has yet to appreciate fully either the significant operational improvement in the telecoms SoftBank Group, the technology holding company business, or the long-term growth opportunity ahead and largest position in your Company’s portfolio, has of the company. We retain conviction in the holding. become better appreciated as one of the leaders in this area. After doing nothing in the first half of Gearing also made a positive contribution to the year, the shares rose 96% in the second half. performance of +2.2ppt as the portfolio delivered a Mr Son, the founder with a very large personal positive absolute return in Yen terms. stake in the company, has regained his position as Japan’s richest person. In addition to the 90% Portfolio stake in Arm Holdings, whose designs power almost During the year we bought 4 new holdings and sold every smartphone globally, SoftBank has invested 6 holdings. Turnover was particularly low this year in OpenAI, the company behind ChatGPT, which is at 7%, reflecting the extreme attractiveness of the a key driver of AI advancements globally. It should starting portfolio. stand to benefit accordingly. The new holdings were Money Forward (online SBI Holdings, Japan’s leading online financial services accounting software), Shimano (bicycle component company and second-largest position, has continued manufacturer), Square Enix (computer gaming) and to make progress across many areas. Its successful Sega Sammy (also computer gaming). Money Forward transformation from an online financial broker into a is Japan’s leading online accounting software platform, diversified financial conglomerate is well underway. scaling into a vast and relevant market. Shimano is Through the integration of Shinsei Bank, which it the world’s leading manufacturer of high-end bicycle acquired in 2021, banking has grown to represent components. We sold it during Covid when demand over half of the group’s core profitability. A doubling of for bicycles became artificially inflated, but the deposits since the acquisition is laying the foundation subsequent significant share price correction has for a potential partial re-listing, likely at a significant presented another opportunity. Square Enix and Sega premium to the acquisition price. Sammy are gaming businesses with strong global CyberAgent, GMO Internet, and GA Technologies franchises (Final Fantasy and Sonic the Hedgehog) all continued to make solid progress. Finally, Topcon and significant untapped monetisation potential. accepted an offer from a private equity investor at a Both companies have robust balance sheets and are significant premium to the prevailing share price. well placed to capture the structural growth in digital entertainment and gaming revenues. For a definition of terms, see Glossary of Terms and Alternative Performance Measures onpages82to 84. Past performance is not a guide to future performance. 09 Strategic Report We sold holdings for a variety of reasons. As previously mentioned, Topcon (positioning systems manufacturer) 16% accepted an offer from private equity at a significant 14% premium. SWCC Corporation (electric cables) delivered a very high return since purchase, and we therefore 12% concluded that there was limited further upside 10% potential. Tokyo Tatemono (real estate) was sold 8% because we saw larger long-term opportunity in online 6% real-estate company GA Technologies. Finally, we sold several internet names (Digital Garage, Mercari, LY 4% Corp) to fund additions to those names where we had 2% higher long-term conviction. 0% Overall, the portfolio retains significant exposure | | Historic Sales | Sales 3Y | Historic | Earnings | | --- | --- | --- | --- | --- | | to entrepreneurial growth companies, particularly | 5Y Growth | Forward | Earnings | 3Y Forward | | | per annum | Growth | 5Y Growth | Growth | those operating in the internet sector. Although it per annum per annum per annum invests across the market cap spectrum, it has much ● Portfolio ● TOPIX more in medium sized than very large companies compared with the TOPIX index. It has no exposure to car assemblers or many of Japan’s manufacturing conglomerates. Reflecting our focus on growth Outlook companies, the portfolio has exhibited sales growth We believe that there remains a large return significantly ahead of the market over the past opportunity for long-term growth investing in 5years and is forecast to continue to grow faster. Japan. Our positioning in companies aligned with While earnings growth has been good over the past long-term secular growth – many of which have not 5 years, it has lagged the market due to the lack been fully appreciated in recent years – presents of exposure to the very strong returns from some a good opportunity for outperformance ahead. of Japan’s most cyclical companies, as previously Reflecting this view, net gearing ended the year at mentioned. However, looking forward, the earnings 12.8%, putting us in a healthy position to benefit growth is forecast to be ahead of the market again. from further share price appreciation while retaining the flexibility to take advantage of any short-term 18% setbacks. Over the long run, we continue to believe that a long-term approach to investing in Japan’s best companies is capable of delivering excellent results for shareholders. Baillie Gifford 20 October 2025 10 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Relative Contribution | Top Ten Relative Stock Contributors | | | | | | | | | Bottom Ten Relative Stock Contributors | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Year to 31August 2025 | | | | | | | | | Year to 31August 2025 | | | | | | | | | | | Portfolio | | | Index | | | | | | Portfolio | | | Index | | | | | | | (average | | (average | | | | Relative | | | (average | | (average | | | | Relative | | | | weight) | | weight) | | | contribution | | | | weight) | | weight) | | | contribution | | | | Name | | % | | | % | | | % | Name | | % | | | % | | | % | | SoftBank Group 6.9 1.2 3.8 | | | | | | | | | Rakuten 4.9 0.2 (1.3) | | | | | | | | | | SBI Holdings 4.4 0.2 2.7 | | | | | | | | | Calbee 2.8 0.0 (0.9) | | | | | | | | | | CyberAgent 3.3 0.1 1.5 | | | | | | | | | Unicharm 1.5 0.2 (0.9) | | | | | | | | | | GA Technologies 2.2 0.0 1.3 | | | | | | | | | Mitsubishi UFJ Financial Group 0.0 3.0 (0.8) | | | | | | | | | | GMO Internet 3.5 0.0 1.1 | | | | | | | | | Mitsubishi Heavy Industries 0.0 1.2 (0.6) | | | | | | | | | | Topcon 0.7 0.0 1.0 | | | | | | | | | Misumi 1.8 0.1 (0.6) | | | | | | | | | | Daiichi Sankyo 0.0 1.0 0.7 | | | | | | | | | Eisai 1.5 0.1 (0.5) | | | | | | | | | | Chugoku Marine Paints 1.3 0.0 0.6 | | | | | | | | | Kubota 1.9 0.2 (0.5) | | | | | | | | | | Shin-Etsu Chemical 0.0 1.1 0.6 | | | | | | | | | Shiseido 1.2 0.1 (0.5) | | | | | | | | | | SWCC Corporation 0.6 0.0 0.5 | | | | | | | | | Mizuho Financial Group 0.0 1.3 (0.5) | | | | | | | | | | Top Ten Relative Stock Contributors | | | | | | | | | Bottom Ten Relative Stock Contributors | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 5 years to 31August 2025 | | | | | | | | | 5 years to 31August 2025 | | | | | | | | | | | Portfolio | | | Index | | | | | | Portfolio | | | Index | | | | | | | (average | | (average | | | | Relative | | | (average | | (average | | | | Relative | | | | weight) | | weight) | | | contribution | | | | weight) | | weight) | | | contribution | | | | Name | | % | | | % | | | % | Name | | % | | | % | | | % | | SoftBank Group 5.7 1.4 3.4 | | | | | | | | | Shiseido 1.5 0.4 (2.3) | | | | | | | | | | SBI Holdings 3.7 0.1 2.6 | | | | | | | | | Mitsubishi UFJ Financial Group 0.0 2.1 (2.2) | | | | | | | | | | INPEX 0.7 0.2 1.7 | | | | | | | | | Calbee 2.7 0.0 (2.0) | | | | | | | | | | Sumitomo Mitsui Trust Group 3.4 0.3 1.4 | | | | | | | | | Misumi 2.2 0.1 (1.8) | | | | | | | | | | MS&AD Insurance 1.7 0.4 1.3 | | | | | | | | | Rakuten 3.7 0.2 (1.8) | | | | | | | | | | SWCC Corporation 0.3 0.0 1.2 | | | | | | | | | Demae-can 0.6 0.0 (1.7) | | | | | | | | | | Chugoku Marine Paints 0.7 0.0 1.0 | | | | | | | | | COLOPL 1.3 0.0 (1.7) | | | | | | | | | | Denso 1.6 0.6 1.0 | | | | | | | | | Sysmex 2.1 0.3 (1.6) | | | | | | | | | | Topcon Corp 1.0 0.0 0.9 | | | | | | | | | Pola Orbis Holdings 1.6 0.0 (1.5) | | | | | | | | | | Nintendo 1.6 1.4 0.9 | | | | | | | | | Kubota 2.5 0.4 (1.5) | | | | | | | | | Source: Revolution and relevant underlying index providers. Baillie Gifford Japan Trust relative to TOPIX total return (in sterling terms). See disclaimer on page 93. 11 Strategic Report ## Review of Investments The Company’s tenlargest investments as at31August 2025. | SoftBank Group | SBI Holdings | | --- | --- | | Diversified holding company | Leading internet-focused financial | | run by dynamic entrepreneur | services company in Japan | | Masayoshi Son, who holds | offering online brokerage, internet | | over 25% of the shares. It | banking, online life insurance | | encompasses investments in Arm | and venture capital. As the | | Holdings (global semiconductor | company once put it: ‘utilising | | designer), OpenAI (ChatGPT), | opportunities provided by the | | mobile telecoms, and, through its | powerful price-destruction forces | | Vision Funds, many early-stage | of the internet and developing | | technology investments. The | financial services that further | | underlying businesses continue | enhance benefits to customers.’ | | to grow, some very rapidly; we | The founder, Yoshitaka Kitao, has | | believe Mr Son to be an excellent | succeeded in building a company | | allocator of capital and the | with a very good reputation | | discount that the shares trade | among its customers and | | at to the value of the underlying | been alert to the opportunities | | holdings remains significant. | presented by new technologies. | | Valuation at 31 August 2025 £77,931,000 | | Valuation at 31 August 2025 £53,993,000 | | | --- | --- | --- | --- | | % of total investments 8.8% | | % of total investments 6.1% | | | Valuation at | £55,926,000 | Valuation at | £34,395,000 | | 31 August 2024 | | 31 August 2024 | | | % of total investments 6.3% | | % of total investments 3.9% | | | Net purchases/(sales) in | (£9,410,000) | Net purchases/(sales) in | (£3,673,000) | | yearto 31 August 2025 | | yearto 31 August 2025 | | 12 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Rakuten CyberAgent Sumitomo Mitsui Trust Group Internet conglomerate with CyberAgent is an internet Sole remaining independent strength in e-commerce and company focused on advertising, trust bank in Japan following online financial services and an gaming and providing streaming consolidation of the sector. innovative points system that video content. The online It has a significant asset links them together. Successes streaming video service, management business and include building Japan’s AbeemaTV, has attracted fees form a major part of the largest credit card business significant viewer numbers and business, which differentiates and large online banking and we think has considerable future it from the megabanks. It brokerage operations. Recently value. We believe that the different could be a major beneficiary of the company has built a new businesses mutually support each reflation as domestic investors mobile phone network in Japan other allowing for the development shift from vast cash savings and is growing the customer and curation of new content. into risk assets. We believe that base. The dynamic founder, The Founder-President, Susumu management show a healthy Hiroshi Mikitani, owns around Fujita, has resolutely pursued balance between ambition and a third of the shares, providing domestic growth opportunities conservatism, which is especially close alignment of interests. and we continue to see strong important in managing a bank. growth prospects ahead. | Valuation at 31 August 2025 £40,477,000 | | Valuation at 31 August 2025 £38,162,000 | | Valuation at 31 August 2025 £37,990,000 | | | --- | --- | --- | --- | --- | --- | | % of total investments 4.5% | | % of total investments 4.3% | | % of total investments 4.3% | | | Valuation at | £49,690,000 | Valuation at | £22,648,000 | Valuation at | £38,903,000 | | 31 August 2024 | | 31 August 2024 | | 31 August 2024 | | | % of total investments 5.6% | | % of total investments 2.6% | | % of total investments 4.4% | | | Net purchases/(sales) in | (£2,090,000) | Net purchases/(sales) in | (£350,000) | Net purchases/(sales) in | (£3,677,000) | | yearto 31 August 2025 | | yearto 31 August 2025 | | yearto 31 August 2025 | | 13 Strategic Report | GMO Internet | Sony | GA Technologies | | --- | --- | --- | | Domestic internet conglomerate | Major owner of game, music and | GA Technologies is an online | | and leading provider of internet | film content with some hardware | real estate technology company, | | infrastructure. It is the number | businesses. The PlayStation is | transforming Japan’s $2 trillion | | one provider of domain name | the leading console platform | real-estate market with digital | | registrations and hosting services | for networked games and a | tools for property management. | | and has a strong position in | front-runner in virtual reality | Specialising in online B2B | | hosting e-commerce websites | (VR). Sony is the world’s largest | services, the company offers | | and processing transactions | music publisher and a major | solutions such as RENOSY, | | as well as providing a variety | film producer and benefits | which uses AI software to buy | | of internet-related services. | from growing content demand. | and sell second-hand investment | | Founder Masatoshi Kumagai | It is investing in its areas of | properties, and ITANDI, a SaaS | | owns over 40% of the shares, | strength, notably content and | product automating property | | providing alignment between | its dominant position in image | management. GA Technologies | | management and shareholders. | sensors. We believe CEO | is targeting Japan’s fragmented | | Finally, the company trades | Kenichiro Yoshida continues to | and inefficient real estate | | at a significant discount to | provide effective leadership. | market, where traditional agents | | the value of its holdings. | | dominate and generate significant | commission revenues, providing ample growth opportunities. The company’s proprietary AI technology, coupled with a team of software engineers, positions it as a leader in Japan’s digital transformation of real estate. | Valuation at 31 August 2025 £37,044,000 | | | Valuation at 31 August 2025 £32,076,000 | | Valuation at 31 August 2025 £29,129,000 | | | --- | --- | --- | --- | --- | --- | --- | | % of total investments 4.2% | | | % of total investments 3.6% | | % of total investments 3.3% | | | Valuation at | £24,468,000 | | Valuation at | £26,447,000 | Valuation at | £12,614,000 | | 31 August 2024 | | | 31 August 2024 | | 31 August 2024 | | | % of total investments 2.8% | | | % of total investments 3.0% | | % of total investments 1.4% | | | Net purchases/(sales) in | | (£23,000) | Net purchases/(sales) in | (£603,000) | Net purchases/(sales) in year | £3,691,000 | | yearto 31 August 2025 | | | yearto 31 August 2025 | | to 31 August 2025 | | 14 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ©Matthieu Tuffet – stock.adobe.com FANUC Nintendo FANUC manufactures factory Nintendo is a global leader in automation systems and gaming and one of Japan’s most robots, with strength in CNCs iconic brands, underpinned by a (computerised numerical controls) portfolio of enduring characters which are specialist computers such as Mario and Zelda. attached to machine tools to TheSwitch console exemplifies its synchronise the actions. We ingenuity in hardware, widening expect the global automation the user base and deepening market to continue to grow as engagement. The upside case companies focus on efficiency rests on the combination of and productivity to improve their valuable first-party content competitiveness. We believe that (Mario, Pokémon, Zelda) and FANUC’s high market share and a reputation for innovative reputation in automation and hardware, which together have robotics will allow it to continue created strong goodwill and a generating attractive returns on notably loyal user community. capital and grow profitably. | Valuation at 31 August 2025 £22,018,000 | | Valuation at 31 August 2025 £21,095,000 | | | --- | --- | --- | --- | | % of total investments 2.5% | | % of total investments 2.4% | | | Valuation at | £23,915,000 | Valuation at | £16,778,000 | | 31 August 2024 | | 31 August 2024 | | | % of total investments 2.7% | | % of total investments 1.9% | | | Net purchases/(sales) in | (£628,000) | Net purchases/(sales) in | (£2,980,000) | | yearto 31 August 2025 | | yearto 31 August 2025 | | 15 Strategic Report # Distribution of Total Assets and Main Portfolio Themes Sectoral 2025 ![img-3.jpeg](img-3.jpeg) | | Sectoral | 2025 % | 2024 % | | --- | --- | --- | --- | | 1 | Information, communication and utilities | 22.6 | 16.8 | | 2 | Commerce and services | 17.0 | 18.0 | | 3 | Manufacturing and machinery | 14.4 | 14.5 | | 4 | Chemicals and other materials | 11.3 | 10.1 | | 5 | Financials | 11.3 | 9.2 | | 6 | Electricals and electronics | 11.1 | 14.5 | | 7 | Pharmaceuticals and foods | 5.4 | 6.7 | | 8 | Retail | 5.2 | 5.7 | | 9 | Real estate and construction | 1.0 | 2.9 | | 10 | Consumer staples | 0.7 | 0.9 | | 11 | Communication services | - | 0.7 | Main Portfolio Themes ![img-4.jpeg](img-4.jpeg) Agile ecosystems and rising pricing power SBI Holdings, Sumitomo Mitsui Trust Group ![img-5.jpeg](img-5.jpeg) Powering Japan's productivity revolution Softbank Group, Rakuten, CyberAgent, Money Forward ![img-6.jpeg](img-6.jpeg) The monetisation of evergreen franchises Nintendo, Sony, Sega Sammy 16 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Portfolio Positioning As at 31August 2025 Secular Growth Growth Stalwarts Earnings Earnings Time Time Opportunity to grow rapidly but where there are a Growth is less rapid but more predictable. number of potential outcomes. Holding period Secular Growth 55.4%* Growth Stalwarts 16.4%* Holding period Special Situations 15.1%* Cyclical Growth 13.1%* | >10 Years | SBI Holdings 6.1 Nintendo 2.4 >10 Years SoftBank Group 8.8 Sumitomo Mitsui Trust Group 4.3 | | | | | | --- | --- | --- | --- | --- | --- | | 61.2% | Rakuten 4.5 Unicharm 1.4 Sony 3.6 Sumitomo Metal Mining 1.5 | | | | | | | CyberAgent 4.3 | PARK24 | 1.0 Nifco 1.4 | | | | | GMO Internet 4.2 | Olympus | 0.9 | Murata | 1.2 | | | FANUC 2.5 | Kose | 0.7 | Rohm | 0.6 | | | Misumi 1.7 | Pigeon | 0.5 | | | Recruit 1.7 Kubota 1.5 M3 1.3 SMC 1.3 Broadleaf 0.9 Lifenet Insurance 0.9 Nidec 0.9 Sysmex 0.7 Infomart 0.4 | 5-10 years | Sato 2.0 | Calbee 2.3 5-10 years | | MIXI 1.7 Bridgestone 1.7 | | --- | --- | --- | --- | --- | | 18.9% | Keyence 1.8 Pola Orbis 1.4 COLOPL 1.0 DMG Mori 1.0 | | | | | | Raksul 1.1 | Sugi | 1.2 | | Shimano 0.7 Bengo4.com 0.5 Noritsu Koki 0.5 istyle 0.4 Rizap 0.4 Demae-Can 0.3 MonotaRO 0.3 Nippon Ceramic 0.3 PeptiDream 0.3 | <5 years | GA Technologies 3.3 Kansai Paint | | 1.1 <5 years Chugoku Marine Paints 0.7 | | --- | --- | --- | --- | | 19.9% | Oisix 2.4 | Nippon Paint 1.0 Sega Sammy 0.4 | | | | Eisai 1.6 | Shiseido 1.0 Shima Seiki 0.3 | | | | Seria 1.3 | Kao 0.8 | | | | TKP 1.1 | Square Enix 0.4 | | | | Daikin Industries 1.0 | Sawai Pharmaceutical 0.3 | | Money Forward 0.7 Vector 0.6 freee K.K. 0.5 Nakanishi 0.5 Nihon M&A Center 0.5 BASE 0.4 * % of total investments. 17 Strategic Report Special Situations Cyclical Growth Earnings Earnings Time Time Performance has not been good but there is a Earnings do not rise every year but are expected to reason to believe improvements are underway. be higher from one cycle to the next. Holding period Secular Growth XX%* Growth Stalwarts XX%* Holding period Special Situations 15.1%* Cyclical Growth 13.1%* >10 Years Rakuten XX Park24 XX >10 Years SoftBank Group 8.8 Sumitomo Mitsui Trust Group 4.3 41.5% SBI Holdings XX Sawai Pharmaceutical XX Sony 3.6 Sumitomo Metal Mining 1.5 GMO Internet XX Nifco 1.4 CyberAgent XX Murata 1.2 Kubota XX Rohm 0.6 Misumi XX Sysmex XX Broadleaf XX SMC XX Digital Garage XX 5-10 years FANUC XX 5-10 years MIXI 1.7 Bridgestone 1.7 23.4% Recruit XX COLOPL 1.0 DMG Mori 1.0 Keyence XX Sato XX MonotaRO XX Mercari XX PeptiDream XX Noritsu Koki XX Rizap XX Istyle XX Infomart XX Nippon Ceramic XX | <5 years | Oisix XX Calbee XX | <5 years Chugoku Marine Paints 0.7 | | | --- | --- | --- | --- | | 35.1% | Eisai XX Nintendo XX | | Sega Sammy 0.4 | | | GA Technologies XX Unicharm XX | | Shima Seiki 0.3 | Seria XX Pola Orbis XX TKP XX Shiseido XX M3 XX Olympus XX Vector XX Kansai Paint XX Nakanishi XX Pigeon XX Demae-can XX Bengo4.com XX Nihon M&A Center XX BASE XX * % of total investments. 18 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## List of Investments As at 31August 2025 | | 2025 | | 2025 | | Absolute* | | | --- | --- | --- | --- | --- | --- | --- | | | Value | % of total | | performance | | | | Name Business | £’000 | investments | | | | % | | SoftBank Group Technology investment and telecommunications | 77,931 8.8 86.8 | | | | | | conglomerate SBI Holdings Online financial services holding company 53,993 6.1 96.5 Rakuten E-commerce marketplace and fintech operator 40,477 4.5 (14.4) CyberAgent Digital advertising and mobile gaming company 38,162 4.3 73.7 Sumitomo Mitsui Trust Group Trust bank and asset management services 37,990 4.3 17.3 GMO Internet Internet infrastructure and domain services provider 37,044 4.2 54.0 Sony Electronics, gaming and entertainment conglomerate 32,076 3.6 39.5 GA Technologies AI real estate investment platform 29,129 3.3 77.6 FANUC Industrial automation and robotics manufacturer 22,018 2.5 (4.1) Nintendo Video game console and software developer 21,095 2.4 64.2 Oisix Organic food delivery subscription service 20,996 2.4 21.6 Calbee Snack food and cereal manufacturer 20,206 2.3 (18.8) Sato Barcode printer and labelling solutions 17,728 2.0 9.2 Keyence Industrial automation sensors and equipment 16,258 1.8 (21.0) Recruit Human resources and job placement services 15,440 1.7 (8.2) MIXI Social networking and mobile gaming platform 15,113 1.7 18.5 Bridgestone Tyre and rubber products manufacturer 14,985 1.7 18.0 Misumi Online mechanical components supplier 14,824 1.7 (19.7) Eisai Pharmaceutical drug developer and manufacturer 14,460 1.6 (26.2) Kubota Agricultural machinery and tractor manufacturer 13,339 1.5 (15.9) Sumitomo Metal Mining Non-ferrous metals mining company 13,167 1.5 (2.4) Unicharm Personal care and hygiene products 12,731 1.4 (43.2) Pola Orbis Direct-sales cosmetics manufacturer 12,408 1.4 (12.2) Nifco Automotive plastic components manufacturer 12,155 1.4 12.3 Seria Retail chain 11,770 1.3 (13.6) M3 Healthcare platform and medical services provider 11,436 1.3 51.4 SMC Pneumatic equipment and automation manufacturer 11,425 1.3 (33.9) Murata Electronic components manufacturer 11,344 1.2 (21.2) Sugi Drugstore chain operator 10,775 1.2 43.2 Kansai Paint Automotive and industrial paint manufacturer 10,626 1.1 (6.2) TKP Meeting room rental operator 10,563 1.1 12.1 Raksul Online printing services platform 9,716 1.1 7.4 DMG Mori CNC machine tools manufacturer 9,192 1.0 (10.8) Daikin Industries Air conditioning systems manufacturer 8,842 1.0 (1.9) PARK24 Parking lot and car-sharing operator 8,728 1.0 12.6 Shiseido Global cosmetics and beauty products 8,572 1.0 (28.1) COLOPL Mobile game developer 8,496 1.0 (10.7) Nippon Paint Paint and coatings manufacturer 8,468 1.0 13.8 Nidec Electric motor manufacturer 8,396 0.9 5.5 Broadleaf Vertical SaaS and e-ordering platforms for the automotive 8,038 0.9 (0.6) aftermarket and other industries 19 Strategic Report | | 2025 | | 2025 | | Absolute* | | | --- | --- | --- | --- | --- | --- | --- | | | Value | % of total | | performance | | | | Name Business | £’000 | investments | | | | % | Lifenet Insurance Online life insurance provider 7,875 0.9 23.4 Olympus Endoscopy-led medical device company 7,699 0.9 (37.0) Kao Personal care and cleaning products 7,232 0.8 1.0 | | # | | | † | | --- | --- | --- | --- | --- | | Shimano | | | Bicycle and fishing equipment manufacturer 6,386 0.7 (25.8) | | | | | # | | † | | Money Forward | | | Financial technology and accounting software 6,234 0.7 29.0 | | Chugoku Marine Paints Marine coatings and paint manufacturer 6,182 0.7 76.3 Kose Cosmetics and skincare manufacturer 5,947 0.7 (36.7) Sysmex Medical diagnostics equipment manufacturer 5,939 0.7 (35.4) Vector Japan’s largest PR company 5,256 0.6 19.9 Rohm Semiconductor and electronics manufacturer 5,146 0.6 18.7 freee K.K. Cloud accounting software provider 4,888 0.5 8.5 Noritsu Koki Diversified holding company with manufacturing and 4,516 0.5 19.1 healthcare businesses Pigeon Baby care products manufacturer 4,456 0.5 15.0 Nakanishi Dental equipment manufacturer 4,279 0.5 (19.9) Nihon M&A Center Merger and acquisition advisory services 4,213 0.5 11.6 Bengo4.com Legal services portal operator; provider of CloudSign 4,079 0.5 (3.9) e-signature/contract management istyle Beauty e-commerce platform 3,928 0.4 15.0 | | # | | | † | | --- | --- | --- | --- | --- | | Sega Sammy | | Video games and entertainment developer 3,896 0.4 1.9 | | | | Infomart B2B transaction platforms (ordering, e-invoicing, | | | 3,530 0.4 18.1 | | contracts), strong in food-service Rizap Personal fitness training company 3,373 0.4 (28.5) BASE E-commerce platform provider 3,346 0.4 35.7 # † Square Enix Video game publisher and developer 3,347 0.4 42.2 Nippon Ceramic Advanced ceramics manufacturer 3,277 0.3 30.3 MonotaRO Industrial supplies e-commerce platform 3,198 0.3 7.9 Demae-can Food delivery platform 3,180 0.3 (38.9) PeptiDream Biotechnology and drug discovery company 3,040 0.3 (43.5) Sawai Pharmaceutical Generic pharmaceutical manufacturer 2,630 0.3 (10.5) Shima Seiki Textile machinery manufacturer 2,584 0.3 (25.5) Total investments 889,768 100.0 Net liquid assets 14,327 Total assets 904,095 Borrowings (115,947) Equity shareholders’ funds 788,148 * Absolute performance has been calculated on a daily basis over the period 1 September 2024 to 31 August 2025 using the change in valuation, adjusted for income, purchases, and sales during the period. For investments held for part of the year, the return is for the period they were held. Absolute performance is in sterling terms. † Figures relate to part period returns. # New purchase during the year. Complete sales in the year were Digital Garage, LY Corp, Mercari, SWCC Showa, Tokyo Tatemono and Topcon. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93. Past performance is not a guide to future performance. 20 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Environmental, Social and ## Governance Engagement The Board believes that it is in the shareholders’ This enables the investment analyst to assess interests to consider environmental, social and relevant ESG factors alongside growth opportunity, governance (‘ESG’) factors when selecting and competitive advantage and financial characteristics retaining investments and has asked the Managers for every company the Managers analyse. to take these issues into account. The Managers Importantly, the Managers’ focus on materiality do not exclude companies from their investment means the precise ESG considerations will vary universe purely on the grounds of ESG factors but depending on several variables, including core adopt a positive engagement approach whereby business model, size andsector. matters are discussed with management with the aim The Japan team also has a designated ESG analyst of improving the relevant policies and management who provides additional expertise and support on systems and enabling the Managers toconsider ESG matters, contributes to stock discussions and how ESG factors could impact long-term investment assists the investors in further integrating ESG returns. The Managers’ Statement of Compliance considerations into their investment research and with the UK Stewardship Code can be found on the analysis process. Where a particular ESG issue Managers’ website: bailliegifford.com. The Managers’ warrants additional work, the team may also avail policy has been reviewed and endorsed by the itself of the support of the Manager’s central Board. The Managers are signatories to the United ESG function on voting, ESG data and emerging Nations Principles for ResponsibleInvestment and ESG-related regulations. The Managers also have have considered the Sustainable Finance Disclosures independent researchers based in Tokyo who can Regulations (‘SFDR’). Further details can be found on conduct ESG research where an on the ground page 97. perspective is helpful. This process ensures that As long-term investors, the Managers believe despite ESG’s vast complexity, for any individual due consideration of a company’s material company, the Managers have the scope and flexibility environmental, social and governance to go into the appropriate degree of detail to support characteristics will enable them to understand its the delivery of long-term returns for shareholders. long-term resilience and growth potential better. By engaging with companies, the Managers seek As such, ESG factors are not just complementary to build constructive relationships with them, to to achieving attractive long-term returns, but they better inform our investment activities and, where enable it when done sensibly and thoughtfully. At the necessary, effect change within our holdings, most fundamental and integratedlevel, the Japan ultimately with the goal of achieving better returns team’s investment research framework includes an for our shareholders. The Managers engaged with explicitlyESG-themed question: 47.7% of the companies in the portfolio on at least one of environmental, social or governance ‘Taking in turn environmental, social and governance factors during the 12 months to 31August 2025. factors, which do you believe are important and The examples on pages 22 and 23 demonstrate our relevant to the investment case?’ stewardship approach through constructive, ongoing engagement. † The benchmark is the TOPIX total return (in sterling terms). 21 Strategic Report The charts below set out engagement topics and the key engagement themes of meetings held with the Company’s portfolio holdings. Engagement Topics 30 25 20 15 10 5 0 Climate impacts strategy Customer Inequality experience Supply chain Proxy voting Human rights Environmental and leadership Remuneration Governance of Board Diversity Business conduct Risk management Shareholder rights Board effectiveness Board Independence ● Environmental ● Social ● Governance Engagement Themes Discussion: Decarbonisation efforts are currently constrained by technological and market limitations. 60 The company’s near-term strategy centres on 50 transitioning to liquefied natural gas (‘LNG’) and renewable energy for smelting, with long-term 40 ambitions focused on green hydrogen and ammonia. 30 Regulatory risks are presently limited, as Japanese 20 policies are not aggressively targeting the sector. 10 European regulation was noted as a potential but 0 uncertain future challenge. SMM has implemented internal carbon pricing, influencing some investment Portfolio Company Engagement Examples: decisions towards lower carbon options. Environmental The company also highlighted the lack of incentives and opportunities to accelerate the shift to more Sumitomo Metal Mining sustainable practices. Low demand for greener Sumitomo Metal Mining (‘SMM’) engages in mining, alternatives remains a barrier to driving change in smelting, and refining non-ferrous metals in Japan and both technology and operations. internationally. Outcome: SMM is taking a cautious, incremental Objective: The meeting focused on exploring approach to decarbonisation as it builds capacity and decarbonisation strategies, regulatory risks, and understanding. The engagement helped clarify the challenges within SMM’s operations. structural challenges slowing progress and provided insight into how the company is positioning itself to navigate evolving regulatory and market dynamics. Number of engagements 70 % 22 Annual Report and Financial Statements 2025 EnvironmentalSocialGovernance The Baillie Gifford Japan Trust PLC Portfolio Company Engagement Examples: Portfolio Company Engagement Examples: Social Governance CyberAgent Eisai CyberAgent together with its subsidiaries engages Eisai is a pharmaceutical research, development and in internet advertising, video streaming and gaming. manufacturing company. Eisai’s drug, Leqembi, was the WinTicket is an online betting service for sports events, first fully FDA-approved, disease-modifying drug for such as bicycle (keirin) and auto (motorcycle) racing. treating Alzheimer’s disease. Objective: The meeting aimed to understand Objective: We met with seven independent directors CyberAgent’s approach to problem gambling, of Eisai’s board to understand their oversight of particularly in their expanding keirin betting business. management, discuss board composition and Problem gambling, also known as gambling addiction capital allocation priorities, and explore governance or compulsive gambling, is characterised by considerations related to the Leqembi drug rollout continued gambling despite the negative impact it and the company’s long-term strategy. may have on an individual’s life. Discussion: We started by discussing the board’s Discussion: CyberAgent sees potential in integrating main areas of focus. Directors highlighted the US gambling with its AbemaTV platform as part rollout of the Alzheimer’s drug, Leqembi, as a key of a broader media ecosystem. This business priority, noting some challenges. They also shared currently represents less than 10% of overall group their thinking on the company’s long-term strategy, revenues. However, the company currently lacks a including enhancing digital technology capabilities comprehensive strategy for addressing potential and developing its approach to data use and privacy. problem gambling, particularly given that many Board composition was also discussed, particularly WinTicket users are first-time gamblers. how it might evolve to support long-term strategic Initial consideration is being given to using artificial priorities. We explored the skill sets the board may intelligence analysis to identify incidents of problem look to add, with data science and greater medical or gambling, although this initiative is still in its infancy. scientific expertise identified as priority areas. Current efforts are primarily focused on disclosing On capital allocation, the board plans to remain open information concerning addiction risks. This stands in to buybacks but is currently prioritising pipeline contrast with their mobile gaming operations, where expansion to drive sustainable growth. stronger protections are in place due to a younger audience demographic. Succession planning for CEO Haruo Naito was also addressed, underscoring the board’s commitment Outcome: CyberAgent’s approach to problem to a rigorous and orderly leadership transition. The gambling is currently limited, and engagement on this selection process is in its early stages, and we offered issue will remain a priority going forward. to act as a sounding board if needed. Outcome: The engagement reinforced the board’s focus on aligning future skill needs with long-term strategic priorities and highlighted the importance of a structured approach to leadership transition. Directors showed openness to incorporating these perspectives into ongoing board development and succession planning discussions. 23 Strategic Report Proxy Voting Company Meeting Record The Board has given discretionary voting powers to Baillie Gifford. The Manager believes that ‘active ownership’ of its clients’ holdings is as important as selecting the right investments in the first instance. The Managers vote against resolutions they consider may damage shareholders’ rights or economic interests and report their actions to the Board. These guidelines are aligned with BaillieGifford’s stewardship principles and describe their approach to proxy voting and company engagement, the key levers of active ownership, often described as ‘stewardship’. While these guidelines are intended to provide an insight into how Baillie Gifford approaches voting Number of meetings voted 61 on its clients’ behalf, it is important to note that with management every company is individually assessed. In voting, Number of meetings with at least 9 proposals will always be evaluated on a case-by-case one against, withhold or abstain basis, based on what Baillie Gifford believes to be in the best long-term interests of its clients, rather than rigidly applying a policy. Voting Distribution A broad cross section of Baillie Gifford’s investment staff is involved in its ongoing work on stewardship. In the same way that the investment approach is based around empowered and independent teams, voting and engagement is led by the individual investment teams. In keeping with a decentralised and autonomous culture, investment teams will, on occasion, elect to vote differently on the same general meeting resolutions. Where this happens, it is reported accordingly in the proxy voting disclosure on the website. Baillie Gifford also has clear processes in place to identify, prevent and manage potential proxy voting related conflicts of interest to ensure that in all cases the firm acts in the clients’ best interest. Baillie Gifford’s firm-wide conflict of Number of votes for 9 7.1 % interest disclosure is available on its website. Number of votes against 2.8% Prior to taking any voting action, specific ESG Number of votes abstain 0.1% concerns are usually addressed by engaging directly with the company, using voting as an escalation mechanism if sufficient progress has not been seen. Voting activity and the reasons for any resolutions voted against in the period is disclosed on the Company’s page of the Managers’ website and can be viewed at japantrustplc.co.uk. 24 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Business Review Business Model Business and Status The Company is an investment company within the The portfolio is actively managed and does not seek meaning of section 833 of the Companies Act 2006 to track the benchmark; hence a degree of volatility and carries on business as an investment trust. against the index is inevitable. Investment trusts are UK public listed companies In constructing the equity portfolio, a spread of risk and their shares are traded on the London Stock is achieved by diversifying the portfolio through Exchange. They invest in a portfolio of assets in investment in 40 to 70 holdings. Although sector order to spread risk. The Company has a fixed share concentration and the thematic characteristics capital, although, subject to shareholder approval ofthe portfolio are carefully monitored, there are sought annually, it may purchase its own shares nomaximum limits to deviation from benchmark, orissue shares. The price of the Company’s shares stock or sector weights, except as imposed by is determined, like other listed shares, by supply banking covenants on borrowings. anddemand. On acquisition, no holding shall exceed 5% of the The Company has been approved as an investment portfolio at the time of purchase and any holding trust by HM Revenue & Customs subject to the that as a result of good performance exceeds 5% Company continuing to meet the eligibility conditions. of the portfolio is subject to particular scrutiny. The Directors are of the opinion that the Company Aholding greater than 5% will be retained only if has continued to conduct its affairs so as to enable the Managers continue to be convinced of the merits itto comply with the ongoing requirements of of the investment case. section 1158 of the Corporation Tax Act 2010 and On acquisition, no more than 15% of the Company’s the Investment Trust (Approved Company) (Tax) total assets will be invested in other UK listed Regulations 2011. investment companies. The Company is an Alternative Investment Fund The Company may use derivatives which will be (‘AIF’) for the purposes of the UK Alternative principally, but not exclusively, for the purpose of Investment Fund Managers Regulations. efficient portfolio management (i.e. for the purpose of reducing, transferring or eliminating investment Objective and Policy risk in its investments, including protection against The Baillie Gifford Japan Trust aims to achieve currency risks). long-term capital growth principally through The Company recognises the long-term advantages investment in medium to smaller sized Japanese of gearing and has a maximum equity gearing level companies, which are believed to have above of 30% of shareholders’ funds. average prospects for growth, although it invests in larger companies when considered appropriate. Borrowings are invested in securities when it is considered that investment grounds merit the The Company’s holdings are generally listed in Japan Company taking a geared position. Gearing levels, although the portfolio can also include companies and the extent of equity gearing, are discussed by listed elsewhere whose business is predominantly the Board and Managers at every Board meeting. in Japan as well as unlisted companies. From A detailed analysis of the Company’s Investment time to time, fixed interest holdings, or non equity Portfolio is set out on pages 16 to 20 and in the investments, may be held. Managers’ Review and Review of Investments The portfolio is constructed through the identification onpages 08 to 15. of individual companies which offer long-term growth potential, typically over a three to five year horizon. 25 Strategic Report ## Key Performance Indicators The Board uses key performance indicators (KPIs) to measure the progress and performance of the Company over time when discharging its duties as set out on pages 55 and 56. These KPIs are established industry measures. ### Share price, net asset value and benchmark total returns* The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. ![img-7.jpeg](img-7.jpeg) ### Share price (discount)/premium* As stock markets and share prices vary, an investment trust's share price is rarely the same as its net asset value (NAV). When the share price is lower than the NAV per ordinary share it is said to be trading at a discount. If the share price is higher than the NAV per ordinary share, this situation is called a premium. ![img-8.jpeg](img-8.jpeg) ### Ongoing charges* Ongoing charges are the total recurring expenses (excluding the Company's cost of dealing in investments and borrowing costs) incurred by the Company as a percentage of the daily average net asset value. ![img-9.jpeg](img-9.jpeg) In addition to the total return of the Company's principal comparative index (TOPIX Total Return (in sterling terms)) the Board considers the performance of comparable companies. Across these measures, the Board looks for relative outperformance over the long-term, while remaining mindful that the nature of the investment policy and the growth characteristics of the portfolio investments may entail periods of underperformance over the short and medium-term. * Alternative Performance Measure - see Glossary of Terms and Alternative Performance Measures on pages 82 to 84. † The benchmark is the TOPIX total return (in sterling terms). Past performance is not a guide to future performance 26 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Borrowings provision 31 of the UK Corporate Governance Code, assessed the prospects of the Company over a Borrowings at 31 August 2025 and 2024 are set out period of five years from the Balance Sheet date. below and further details can be found in note 11 and The Directors continue to believe this period to be 12 on page 75. appropriate as it reflects the Company’s longer term As noted in the Chairman’s statement on page 06, the investment strategy and to be a period during which, Company secured a ¥15 billion revolving credit facility in the absence of any adverse change to the with The Bank of New York Mellon. The proceeds regulatory environment and to the tax treatment were used to repay the ¥15 billion term loan with the afforded to UK investment trusts, they do not expect same bank which expired in August 2025. Proceeds there to be any significant change to the current from private placement notes arranged in 2024 principal and emerging risks facing the Company nor repaid the ING and Mizuho loans that matured in late to the effectiveness of the controls employed to 2024 and early 2025 respectively. mitigate those risks. Furthermore, the Directors do not reasonably envisage any change in strategy or Maturity any events which would prevent the Company from Facility Lender date 2025 2024 operating over a period of five years. The Directors ¥15,000 Bank of August £55.453 – have no reason to believe that the continuation million New York 2026 million resolution will not be passed at the Annual Revolving Mellon GeneralMeeting. Credit Facility In considering the viability of the Company, the ¥15,000 Bank of August – £78.386 Directors have conducted a robust assessment million New York 2025 million of each of the principal and emerging risks and Term Loan Mellon uncertainties detailed on pages 28 to 31, and ¥9,300 ING Bank November – £48.599 in particular the impact of market risk where a million N .V. 2024 million significant fall in Japanese equity markets would ¥2,600 Mizuho March – £13.587 adversely impact the value of the investment million Bank Ltd 2025 million portfolio. Specific leverage and liquidity stress testing was conducted during the year, including the impact Unsecured Maturity of heightened market volatility and macroeconomic loan notes Fixed rate date 2025 2024 and geopolitical concerns, including inflation and | ¥4,000 | 1.56% November | | £20.165 | – | interest rates. The Company’s investments are | | --- | --- | --- | --- | --- | --- | | million | | 2029 | million | | listed and readily realisable and can be sold to meet | | ¥4,000 | 2.05% November | | £20.165 | – | its liabilities as they fall due with the main liability | | million | | 2034 | million | | currently being the bank borrowings. The Company’s | | ¥4,000 | 2.55% November | | £20.164 | – | primary third party suppliers including its Managers | | million | | 2038 | million | | and Secretaries, Depositary and Custodian, Registrar, | Auditor and Broker are not experiencing significant The main loan covenants are: total borrowings shall operational difficulties affecting their respective not exceed 30% of the Company’s net asset value; services to the Company. In addition, all of the key and, the Company’s minimum net asset value shall operations required by the Company are outsourced be ¥48,545,000,000 (£315,000,000). There were to third party service providers and it is reasonably no breaches of loan covenants during the year. considered that alternative providers could be engaged at relatively short notice. Currency Hedging The Board has considered the Company’s leverage It is extremely difficult to predict currency and liquidity in the context of its borrowings. The movements and currencies can appear cheap or leverage stress testing identified the impact of expensive for long periods of time. The Board leverage in scenarios where gross assets fall by remains of the view that it will not engage in 25% and 50%, reflecting a range of market currency hedging. conditions that may adversely impact the portfolio. The liquidity stress testing identified the reduction Viability Statement in value of assets that can be liquidated within one Notwithstanding that the continuation vote of the month that would result in the value of those assets Company is subject to the approval of shareholders falling below the value of the borrowings. The stress annually, the Directors have, in accordance with testing did not indicate any matters of concern. 27 Strategic Report Based on the Company’s processes for monitoring financial controls, the Directors have concluded that revenue projections, share price premium/discount, there is a reasonable expectation that the Company the Managers’ compliance with the investment will be able to continue in operation and meet its objective, asset allocation, the portfolio risk profile, liabilities as they fall due over the next five years. leverage, counterparty exposure, liquidity risk and Principal and Emerging Risks As explained on pages 46 and 47 there is an ongoing process for identifying, evaluating and managing the risks, including emerging risks, faced by the Company on a regular basis. The Directors have carried out a robust assessment of the principal and emerging risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity. There have been no material changes to the principal risks during the year. Baillie Gifford’s Business Risk Department provides regular updates covering the Company’s principal and emerging risks. A description of these risks and how they are being managed or mitigated is set out below. The Board considers the current global economic environment to be a factor which exacerbates existing risks, rather than it being a new emerging risk. The impact of this is considered within the relevant risks. Investment and Strategic Risks Financial risk What is the risk? How is it managed? Rating and Current assessment of risk change | The Company’s assets consist of listed | The Board has, in particular, considered | The prospect of market volatility | | --- | --- | --- | | securities and its principal financial risks | the impact of heightened market volatility | remains, given continuing | | are therefore market related and include | due to macroeconomic factors such as | geopolitical instability. | | market risk (comprising currency risk, | inflation, interest rates and geopolitical | | | interest rate risk and other price risk), | concerns. To mitigate this risk the Board | | | liquidity risk and credit risk. An explanation | considers various portfolio metrics | | | of those risks and how they are managed | including individual stock performance, | | | is contained in note 19 to the Financial | the composition and diversification of the | | | Statements and on pages 78 to81. | portfolio by growth category, purchases and | | sales of investments, the holding period of each investment, liquidity characteristics and the top and bottom contributors to performance. TheManager provides rationale for stock selection decisions. A strategy meeting isheldannually. The value of the Company’s investment portfolio would be affected by any impact, positively or negatively, on sterling but such impact would be partially offset by the effect of exchange movements on the Company’s yen denominated borrowings. Discount risk What is the risk? How is it managed? Rating and Current assessment of risk change | The premium/discount at which the | The Board monitors the level of premium/ | The Company’s shares traded | | --- | --- | --- | | Company’s shares trade relative to its | discount at which the shares trade and | at an average discount of | | net asset value can change. The risk of a | the Company has authority to issue new | 12.5% throughout the year | | widening discount is that it may undermine | shares or buy back its existing shares | and it bought back 10,041,174 | | investor confidence in the Company. | when deemed by the Board to be in | ordinary shares during the year. | the best interests of the Company and itsshareholders. Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 28 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Investment strategy and smaller company risk What is the risk? How is it managed? Rating and Current assessment of risk change Pursuing an investment strategy to fulfil To mitigate these risks, the Board regularly During the year, the Company’s theCompany’s objective which the market reviews and monitors: the Company’s NAV total return was ahead of perceives to be unattractive or inappropriate, objective and investment policy and the benchmark. Furthermore, or the ineffective implementation of an strategy; the investment portfolio, there are signs that the market’s attractive or appropriate strategy, may lead discussing the investment case and appetite for growth stocks, to reduced returns for shareholders and, as a portfolio weightings with the Managers, typically held by the Company, result, a decreased demand for the and its performance; the level of premium/ is recovering. Company’s shares. This may lead to the discount to net asset value at which Company’s shares trading at a widening the shares trade; and movements in the discount to their net asset value. shareregister and raises any matters of concern with the Managers. A spread of The Company has investments in smaller risk is achieved by holding a minimum of companies which are generally considered 40 stocks. higher risk as changes in their share prices may be greater and the shares may be harder to sell. Smaller companies may do less well in periods of unfavourable economic conditions. Climate and governance risk What is the risk? How is it managed? Rating and Current assessment of risk change | Perceived problems on environmental, | This is mitigated by the application of | The Manager continues to | | --- | --- | --- | | social and governance (‘ESG’) matters in | the Manager’s ESG stewardship and | employ strong ESGstewardship | | an investee company could lead to that | engagement policies, which are integrated | and engagementpolicies. | | company’s shares being less attractive to | into the investment process, as well as | | | investors, adversely affecting its share price, | the extensive upfront and ongoing due | | | in addition to potential valuation issues | diligence which the Manager undertakes | | | arising from any direct impact of the failure to | on each investee company. This includes | | | address the ESG weakness on the operations | the risk inherent in climate change (see | | | or management of the investee company | page 34). The Directors have considered | | | (for example in the event of an industrial | the impact of climate change on the | | | accident or spillage). Repeated failure by | Financial Statements of the Company and | | | the Managers to identify ESG weaknesses | this is included in note 1a tothe Financial | | | in investee companies could lead to the | Statements on page 69. | | Company’s own shares being less attractive to investors, adversely affecting its own share price. In addition, the valuation of investments could be impacted by climate change. Leverage risk What is the risk? How is it managed? Rating and Current assessment of risk change | The Company may borrow money | To mitigate this risk, all borrowings require | No significant change in risk | | --- | --- | --- | | for investment purposes (sometimes | the prior approval of the Board and leverage | level. Proceeds from private | | known as‘gearing’ or ‘leverage’). If the | levels are discussed by the Board and | placement notes repaid the ING | | investments fall in value, any borrowings | Managers at every meeting. Covenant levels | and Mizuho loans that matured | | will magnify the extent of this loss. If | are monitored regularly. The Company has | in late 2024/early 2025. The | | borrowing facilities are not renewed, the | a maximum equity gearing level of 30% | Company also entered into a | | Company may have to sell investments to | of shareholders’ funds. The Company’s | revolving credit facility with | | repay borrowings. | investments are in listed securities that | Bank of New York Mellon to | | | are readily realisable. Further information | refinance its existing term loan | | | on leverage can be found on page 84 and | with the same bank. Average | | | in the Glossary of Terms and Alternative | gross gearing during the year to | | | Performance Measures on pages 82 to 84. | 31August 2025 was 20.1%. | Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 29 Strategic Report Operational Risks Custody, Depositary and reliance on third party service provider risk What is the risk? How is it managed? Rating and Current assessment of risk change Safe custody of the Company’s assets may To mitigate this risk, the Audit Committee Control procedures are working be compromised through control failures receives six monthly reports from the effectively with no interruption by the Depositary, including cyber security Depositary confirming safe custody of the to Depositary, Custodian, incidents. Company’s assets held by the Custodian. Broker or Registrar services Cash and portfolio holdings are independently during theyear. Failure of Baillie Gifford’s systems or reconciled to the Custodian’s records by those of other third party service providers the Managers and the existence of assets is could lead to an inability to provide subject to annual external audit. Baillie Gifford accurate reporting and monitoring or a has a comprehensive business continuity plan misappropriation of assets. which facilitates continued operation of the business in the event of a service disruption or major disaster. The Audit Committee reviews Baillie Gifford’s Report on Internal Controls and the reports of the Depositary, Custodian and other key third party service providers are reviewed by Baillie Gifford on behalf of the Board and any concerns investigated. Cyber security risk What is the risk? How is it managed? Rating and Current assessment of risk change A cyber attack on Baillie Gifford’s network To mitigate this risk, the Audit Committee Cyber attacks are on a steep rise or that of a third party service provider reviews reports on Internal Controls globally and could proliferate could impact the confidentiality, integrity published by Baillie Gifford and other third further. Emerging technologies, or availability of data and systems. party service providers. Baillie Gifford’s including AI, could potentially Emerging technologies, including AI and Business Risk Department reports to the increase information security quantum computing capabilities, may Audit Committee on the effectiveness of risks. introduce new, and increase existing information security controls in place at information security risks that impact Baillie Gifford and its business continuity operations. framework. Cyber security due diligence is performed by Baillie Gifford on third party service providers which includes a review of crisis management and business continuity frameworks. Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 30 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC External Risks Regulatory risk What is the risk? How is it managed? Rating and Current assessment of risk change Failure to comply with applicable legal and To mitigate this risk, Baillie Gifford’s All control procedures are regulatory requirements such as the tax Business Risk, Internal Audit and working effectively. There have rules for investment trust companies, the Compliance Departments provide regular been no material regulatory FCA Listing Rules and the Companies Act reports to the Audit Committee on Baillie changes that have impacted the could lead to suspension of the Company’s Gifford’s monitoring programmes. Should Company during the year. Stock Exchange listing, financial penalties, major regulatory change seem likely to a qualified Audit Report and the Company impose disproportionate compliance burdens being subject to tax on capital gains. on the Company, representations are made Changes to the regulatory environment to the relevant authorities to ensure that the could negatively impact the Company. special circumstances of investment trusts are recognised. Shareholder documents and announcements, including the Company’s published Interim and Annual Report and Financial Statements, are subject to stringent review processes and procedures are in place to ensure adherence to the Transparency Directive and the Market Abuse Directive with reference to inside information. Political and associated economic risk What is the risk? How is it managed? Rating and Current assessment of risk change Political change in areas in which the To mitigate this risk, developments are The prospect of market volatility Company invests or may invest may have closely monitored and considered by remains, given continuing practical consequences for the Company. the Board and are regularly discussed at geopolitical instability. Board meetings. Emerging Risks As explained on pages 46 and 47, the Board has regular discussions on principal and emerging risks, including any risks which are not an immediate threat but could arise in the longer term. The Board considers emerging risks at each Board meeting and discusses any mitigations required. Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 31 Strategic Report Promoting the Success of the Company The Board recognises the importance of keeping the interests of the Company and its stakeholders, in (Section 172 Statement) aggregate, firmly front of mind in its decision making. Under section 172 of the Companies Act 2006, The Company Secretaries are available at all times the directors of a company must act in the way to the Board to ensure that suitable consideration is they consider, in good faith, would be most likely given to the range of factors to which the Directors to promote the success of the company for the should have regard. In addition to ensuring that the benefit of its members as a whole, and in doing Company’s stated investment objective was being so have regard (amongst other matters and to the pursued, key decisions and actions during the year extent applicable) to: a) the likely consequences which required the Directors to have regard to of any decision in the long-term; b) the interests applicable section 172 factors included: of the company’s employees; c) the need to foster the company’s business relationships with • The proceeds from the private placement loan suppliers, customers and others; d) the impact of notes were used to repay the ING and Mizuho the company’s operations on the community and loans which matured in late 2024/early 2025. the environment; e) the desirability of the company During the year, the Company entered into a maintaining a reputation for high standards of Revolving Credit Facility with the Bank of New business conduct; and f) the need to act fairly as York Mellon to refinance the Term loan which between members of the company. matured in August 2025; In this context, having regard to Baillie Gifford • the purchase of 10,041,174 of the Company’s own JapanTrust being an externally managed investment shares into Treasury at a discount to net asset company with no employees, the Board considers value, for subsequent reissue, in order to ensure the Company’s key stakeholders to be: its existing the Company’s shareholders found liquidity for and potential new shareholders; its externally- their shares when natural market demand was appointed Managers and Secretaries (Baillie Gifford); insufficient, and on terms that enhance net asset its portfolio companies; other professional service value for remaining shareholders; providers (Corporate Broker, Registrar, Auditorsand • between 1 September and 16 October 2025, Depositary); lenders; and wider society and the purchase of 570,000 shares, at a discount, theenvironment. enhancing net asset value for continuing The Board considers that the interests of the shareholders; and, Company’s key stakeholders are aligned, in terms • the Board’s decision to declare a final dividend of of wishing to see the Company deliver sustainable 10p per ordinary share. long-term capital growth, in line with the Company’s stated objective and strategy, and meet the highest standards of legal, regulatory, and commercial conduct, with the differences between stakeholders being merely a matter of emphasis on those elements. Stakeholder Why we engage How we engage and what we do Shareholders Shareholders are, collectively, the Company’s The Board places great importance on communication with owners: providing them with a return for their shareholders. The Annual General Meeting provides the key investment in accordance with the Company’s forum for the Board and Managers to present to shareholders investment policy and objective is the reason on the Company’s performance, future plans and prospects. for its existence. Italso allows shareholders the opportunity to meet with the Board and Managers and raise questions and concerns. TheChairman is available to meet with shareholders as appropriate. The Managers meet regularly with shareholders and their representatives, reporting their views back to the Board. Directors also attend certain shareholder presentations, in order to gauge shareholder sentiment first hand. Shareholders may also communicate with members of the Board at any time by writing to them at the Company’s registered office or to the Company’s Broker. These communication opportunities help inform the Board when considering how best to promote the success of the Company for the benefit of all shareholders over the long-term. 32 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Stakeholder Why we engage How we engage and what we do Baillie Gifford – The Company’s Board has delegated the The Board seeks to engage with its Managers, and other Managers and management of the Company’s portfolio, service providers, in a collaborative and collegiate manner, Secretaries and the administration of the Company’s encouraging open and constructive discussion and debate, operations including fulfilment of regulatory while also ensuring that appropriate and regular challenge and taxation reporting requirements, is brought and evaluation conducted. This approach aims to toBaillieGifford. enhance service levels and strengthen relationships with the Company’s providers, with a view to ensuring the interests of the Company’s shareholders are best served by keeping cost levels proportionate and competitive, and by maintaining the highest standards of business conduct. Portfolio companies As all of the Company’s operations are The Board is cognisant of the need to consider the impact of conducted by third party professional the Company’s investment strategy and policy on wider society providers, it is the companies held in its and the environment. In addition to monitoring the performance investment portfolio which have the primary of the Company’s investment portfolio, the Board considers real-world impact in terms of social and that its oversight of environmental, social and governance environmental change, both positively and (‘ESG’) matters is an important part of its responsibility to all negatively, as well as generating, through their stakeholders and that proper consideration of ESG factors sits commercial success, the investment growth naturally with Baillie Gifford Japan Trust’s aim of providing a sought by the Company’s shareholders. sustainable basis for adding value for shareholders. The Board’s review of the Managers includes an assessment of their ESG approach and its application in making investment decisions. Information on how the Managers engage with investee companies can be found on pages 21 to 24. Service providers The Company’s third party service providers The Board ensures that it promotes the success of the • Broker ensure the Company’s day-to-day operations Company by engaging third party service providers who have • Depositary run smoothly. the resources to deliver the service required. The service • Custodian providers report regularly to the Board throughout the year • Registrar and the Managers also engage regularly with the providers and inform the Board should any areas of concern arise. TheManagement Engagement Committee carries out a review annually of the level of services delivered by each service provider and the terms on which they are engaged. The Board seeks assurance that there has been no disruption to services provided to the Company during the year. Auditor The Company’s Auditor has a responsibility to The Company’s Auditor meets with the Audit Chair and provide an opinion on whether the Company’s the Board, in the absence of the Managers where deemed Financial Statements as a whole are free from necessary, and the Managers undertake to provide all material misstatement, as set out in more information requested by the Auditor in connection with the detail in the Auditor’s Report to the Members Company’s annual audit promptly and to ensure that it is on pages 58 to 64. complete and accurate in all respects. Lenders Lenders such as holders of debt instruments The Company’s legal advisers review all legal agreements in (private placement loan notes) and banks connection with the Company’s debt arrangements and advise providing fixed, floating or revolving credit the Board on the appropriateness of the terms and covenants. facilities have an interest in the Company’s The Managers and Secretaries ensure compliance with lenders’ ongoing financial health and viability. covenants and maintain a good working relationship. AIC/industry peers The Association of Investment Companies The Company is a member of the AIC, and the Directors and/ (‘AIC’) and the Company’s investment or the Managers and Secretaries (as appropriate) participate trust industry peers have an interest in in technical reviews, requests for feedback on proposed the Company’s conduct and performance, legislation or regulatory developments, corporate governance asadverse market sentiment towards discussions and/or training. one investment trust can affect attitudes towardsthe wider industry. 33 Strategic Report Culture Forceon Climate-Related Financial Disclosures (‘TCFD’) ClimateReport is available on the As an externally managed investment company Managers’ websiteat bailliegifford.com. A Japan with no employees, Baillie Gifford Japan’s culture Trust specific TCFD climate report is also available is expressed through its Board and its third party on the Company’s page of the Managers’ website service providers, in particular its Managers, in at japantrustplc.co.uk and is a means by which their interactions with shareholders and other the portfolio’s carbon footprint and exposure to stakeholders. The Board’s assessment of its climate risk are measured and reported. Companies own interactions is described in its Section 172 disclosing their emissions and communicating Statement on pages 32 and 33 and the Baillie emissions plans will be a helpful place from which Gifford Statement on Stewardship, which describes to begin more useful discussions with management the Managers’ culture of constructive engagement, teams, industry experts and regulators. Although which can be found on the Managers’ website: this can direct our efforts, the Managers believe that bailliegifford.com. carbon footprint metrics in isolation are unhelpful – that some firms pollute more than others is a mostly Employees, Human Rights meaningless observation. More significant is the andCommunityIssues Managers’ pursuit of long-term growth opportunities The Board recognises the requirement to provide which typically involves investment in entrepreneurial, information about employees, human rights disruptive and technology-driven businesses. These and community issues. As the Company has no companies are often capital-light with a low carbon employees, all its Directors are non-executive footprint. The Managers utilise data sourced from a and all its functions are outsourced, there are no third party provider (MSCI via the Factset platform) to disclosures to be made in respect of employees, map the carbon footprint of TheBaillie Gifford Japan human rights and community issues. Further Trust’s portfolio which is estimated to be 75.8% lower information on the Company’s approach to than the Company’s benchmark (TOPIX) and is based environmental, social and governance (‘ESG’) on 99.2% of the value of the Company’s equity matters is provided on pages 21 to 24. portfolio which reports on carbon emissions and other carbon relatedcharacteristics. Environmental, Social and Governance The Managers, Baillie Gifford & Co, are signatories Policy to the Carbon Disclosure Project and are also Details of the Company’s policy on socially members of the Asian Corporate Governance responsible investment can be found on page 21. Association and the International Corporate Governance Network. 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 Gender Representation human trafficking statement. In any event, the At 31August 2025, the Board comprises five Company considers its supply chains to be of Directors, two male and three female. The Company low risk as its suppliers are typically professional has no employees. The Board’s policy on diversity advisers. Astatement by the Managers under the isset out on page 45. Act has beenpublished on the Managers’ website atbailliegifford.com. Future Developments of the Company The outlook for the Company for the next 12 months Climate Change is set out in the Chairman’s Statement on page 07 The Board recognises that climate change poses a and the Managers’ Review on page 10. serious threat to our environment, our society and The Strategic Report which comprises pages 05 to economies and companies around the globe. to 34 was approved by the Board of Directors and Addressing the underlying causes is likely to result signed on its behalf on 20 October 2025. in companies that are high emitters of carbon facing greater societal and regulatory scrutiny and higher costs to account for the true environmental David Kidd impact of their activities. BaillieGifford’s Task Chairman 34 Annual Report and Financial Statements 2025 ## Governance Report This Governance Report, which includes pages 36 to 56 outlines the Board’s approach to the governance of your Company. We believe that good governance builds better outcomes and we are committed to high standards of corporate governance and transparency. Governance Report ## Directors David Kidd was appointed a Director in 2015 and became Chairman in June 2022. He has over 40years investment experience in the City, in the roles of chief investment officer and independent professional trustee. He is chairman of MidWynd International Investment Trust PLC. Hewas previously a director of Shires Income PLC, | David Kidd | Martin Currie International Portfolio Trust PLC, | | --- | --- | | Chairman | theSalvation Army International Trustee Company, | | Appointed 2015 | andTheGolden Charter Trust. | Sharon Brown was appointed a Director in 2019. She is Chair of the Audit Committee and a qualified accountant. She is currently a director and audit committee chair of Personal Assets Trust plc, European Opportunities Trust plc and Celtic plc. She was previously finance director ofDobbies Garden Centres plc and a director of McColl’s Retail Group | Sharon Brown | plc, Fidelity Special Values plc, CT UK Capital and | | --- | --- | | Director | Income Investment Trust PLC and anumber of unlisted | | Appointed 2019 | companies in the retailsector. | Joanna Pitman was appointed a Director in 2018 and appointed Senior Independent Director in June 2022. She is Chair of the Remuneration Committee. She read Japanese Studies at Cambridge University and speaks Japanese. She was Tokyo Bureau Chief of The Times from 1989 to 1994 and has since worked as a corporate research analyst focused Joanna Pitman on Japan. She is vice chair of the Great Britain Director Sasakawa Foundation and UK chair of SAIDIA. Appointed 2018 36 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Sam Davis was appointed a Director in 2021. He is Chair of the Management Engagement Committee. Sam studied Japanese at Oxford before joining Morgan Grenfell & Co. Ltd, working initially in corporate finance in both London and Tokyo. He moved to Morgan Grenfell Asset Management in 1996 to work with a Tokyo-based team. In 2000 he Sam Davis joined Putnam Investments first in Boston, MA and Director then in London where, over his 19 year tenure, he Appointed 2021 managed Asian, European and broad international equity portfolios. As Putnam’s co-head of equities heoversaw a global investment team and was CEOof Putnam Investments Ltd, the group’s UK regulated entity. Sam is a non-executive director of Allianz Technology Trust PLC and Schroder Oriental Income Fund Limited. Patricia Lewis was appointed a Director in 2023. Sheis a financial services executive with over 25years of experience in investment and capital management across the U.S. and Europe. She previously served as Managing Director and Head of EMEA Loans and Special Situations Sales at Bank of America Merrill Lynch. Patricia was also a director of | Patricia Lewis | Snowball Impact Management Ltd, prior to its | | --- | --- | | Director | acquisition by Tribe Impact Capital LLP, where she | | Appointed 2023 | chaired the Audit and Risk Committee and continues | as Deputy Chair of its Impact Investment Committee. All Directors are members of the following Committees: Nomination, Remuneration and Management Engagement. With the exception of David Kidd, all are members of the Audit Committee. No Director holds a Directorship in common with another member of the Board. 37 Governance Report Board of Directors Comprises independent non-executive directors Chair: David Kidd Senior Independent Director: Joanna Pitman Audit Management Nomination Remuneration Committee Engagement Committee Committee Committee Chair: Sharon Brown Chair: Sam Davis Chair: David Kidd Chair: Joanna Pitman Purpose: To provide oversight Purpose: To ensure that the Managers Purpose: To oversee Board Purpose: To review the level of of the financial reporting remain suitable to manage the portfolio, recruitment, succession remuneration paid to Directors process, the audit process, the management contract is competitive planning and Board within the limits approved by the Company’s system of and reasonable for shareholders, the appraisalsincluding shareholders and to set the internal controls and Company maintains appropriate identifying training needs. Company’s compliance with laws and administrative and company secretarial remunerationpolicy. regulations. support and performance of other third party service providers is reviewed. Key Third Party Service Providers Appointed by the Board Alternative Investment Fund Manager and Company Secretaries: Baillie Gifford & Co Limited (wholly owned subsidiary of Baillie Gifford & Co) Dealing activity and transaction reporting: Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited The Bank of Computershare Investec Ernst & Young LLP New York Mellon Investor Services Bankplc Auditor (International) PLC Company broker Limited Registrar Depositary and Custodian 38 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC # Directors' Report The Directors present their Report together with the Financial Statements of the Company for the year to 31 August 2025. ## Corporate Governance The Corporate Governance Report is set out on pages 44 to 48 and forms part of this Report. ## Managers and Company Secretaries Baillie Gifford is one of the largest investment trust managers in the UK and currently manages twelve closed-ended investment companies. Baillie Gifford also manages open-ended investment companies, together with investment portfolios on behalf of pension funds, charities and other institutional clients, both in the UK and overseas. Funds under the management or advice of Baillie Gifford total around £212.7 billion at 16 October 2025. Based in Edinburgh, it is one of the leading privately owned investment management firms in the UK, with 59 partners and approximately 1,640 employees. Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company's Alternative Investment Fund Manager (AIFM) and Company Secretaries. Baillie Gifford & Co Limited and Baillie Gifford & Co are both authorised and regulated by the Financial Conduct Authority. Baillie Gifford & Co Limited has delegated portfolio management and services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. Baillie Gifford & Co is an investment management firm formed in 1927 out of the legal firm Baillie Gifford, WS, which had been involved in investment management since 1908. The Investment Management Agreement between the AIFM and the Company sets out the matters over which the Managers have authority in accordance with the policies and directions of, and subject to restrictions imposed by, the Board. The Management Agreement is terminable on not less than 6 months' notice or on shorter notice in certain circumstances. Compensation would only be payable if termination occurred prior to the expiry of the notice period. Careful consideration has been given by the Board as to the basis on which the management fee is charged. The Board considers that maintaining a relatively low ongoing charges ratio is in the best interests of shareholders. The Board is also of the view that calculating the fee with reference to performance would be unlikely to exert a positive influence over the long-term performance. With effect from 1 September 2024, the annual management fee is 0.65% on the first £250 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly. Prior to 1 September 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. The Board considers the Company's investment management and secretarial arrangements on an ongoing basis and a formal review is conducted by the Management Engagement Committee annually. The Committee considers, amongst others, the following topics in its review: the quality of the personnel assigned to handle the Company's affairs; the investment process and the results achieved to date; investment performance; the administrative services provided by the Secretaries and the quality of information provided; the marketing efforts undertaken by the Managers; and the relationship with the Managers. Following the most recent review, it is the opinion of the Management Engagement Committee that the continuing appointment of Baillie Gifford on the terms agreed is in the best interests of the Company and shareholders as a whole. This is due to the strength and quality of the investment management team, the Managers' commitment to the investment trust sector and the comprehensive efficiency of the secretarial and administrative functions. 39 Governance Report Depositary circumstances surrounding them and confirms whether or not the potential conflicts should be The Bank of New York Mellon (International) Limited authorised. Having considered the lists of potential has been appointed as the Company’s Depositary conflicts there were no situations which gave rise in accordance with the requirements of the UK to a direct or indirect interest of a Director which Alternative Investment Fund Managers (‘AIFM’) conflicted with the interests of the Company. Regulations. The Company’s Depositary also acts as the Company’s Dividends Custodian. The Depositary’s responsibilities include The Board recommends a final dividend of 10p cash monitoring, safe keeping of the Company’s per ordinary share. If approved, the recommended financial instruments, verifying ownership and final dividend will be paid on 15December 2025 maintaining a record of other assets and monitoring to shareholders on the register at the close of the Company’s compliance with investment limits business on 14November 2025. The ex-dividend and leverage requirements. date is 13November 2025. A dividend reinvestment plan (‘DRIP’) is available to shareholders who would Directors prefer to invest their dividends in the shares of the Information about the Directors, including their Company. For those shareholders electing to receive relevant experience, can be found on pages 36 the DRIP, the last date for receipt of the election is and37. 24November 2025. All of the Directors will retire at the Annual General The ordinary shares carry a right to receive Meeting and will offer themselves for re-election, dividends. Interim dividends are determined by the with the exception of David Kidd who will be Directors, whereas the proposed final dividend is standing down from the Board. Following formal subject to shareholder approval. performance evaluation, the Chairman confirms that the Board considers that each Director’s Share Capital performance continues to be effective and that | they remain committed to the Company. The | Capital Structure | | --- | --- | | Board therefore recommends their re-election to | The Company’s capital structure consists of | | shareholders. | 77,491,440 ordinary shares of 5p each at 31August | 2025 (2024 – 87,532,614). At 31August 2025, Director Indemnification and Insurance 16,836,769 shares were held in treasury (2024 – 6,795,595). There are no restrictions concerning the The Company has entered into qualifying third party holding or transfer of the Company’s ordinary shares deeds of indemnity in favour of each of its Directors. and there are no special rights attached to any of The deeds which were in force during the year to the shares. 31August 2025 and up to the date of approval of this Report, cover any liabilities that may arise to a Capital Entitlement third party, other than the Company, for negligence, default or breach of trust or duty. The Directors On a winding up, after meeting the liabilities of the are not indemnified in respect of liabilities to the Company, the surplus assets would be paid to ordinary Company, any regulatory or criminal fines, any costs shareholders in proportion to their shareholdings. incurred in connection with criminal proceedings in which the Director is convicted or civil proceedings Voting brought by the Company in which judgement is given Each ordinary shareholder present in person or by against him/her. In addition, the indemnity does not proxy is entitled to one vote on a show of hands and, apply to any liability to the extent that it is recovered on a poll, to one vote for every share held. from another person. Information on the deadlines for proxy appointments The Company maintains Directors’ and Officers’ can be found on pages 89 and 90. liability insurance. Conflicts of Interest A register of potential conflicts of interest of each Director is maintained and considered at each Board meeting and also annually by the Nomination Committee. The Board and Nomination Committee consider these carefully, taking into account the 40 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC The Company has received notifications in Resolution 11 in the Notice of Annual General accordance with the Financial Conduct Authority’s Meeting seeks to renew the Directors’ general Disclosure and Transparency Rules of the following authority to issue shares up to an aggregate nominal interests in the voting rights attached to the amount of £384,607.20. This amount represents Company’s issued share capital. 10% of the Company’s total ordinary share capital in issue at 16 October 2025 and meets institutional Major Interests Disclosed in the Company’s Shares guidelines. No issue of ordinary shares will be made pursuant to the authorisation in Resolution11 which No. of ordinary would effectively alter the control of the Company 5p shares held | | at 31August | | % of | without the prior approval of shareholders in | | --- | --- | --- | --- | --- | | Name | | 2025 | issue* | generalmeeting. | | Rathbones Investment Management | 9,053,564 11.7 | | | | Resolution 12, which is proposed as a special Ltd (indirect) resolution, seeks to provide the Directors with 1607 Capital Partners LLC (indirect) 8,583,104 11.1 authority to issue shares or sell shares held in | Allspring Global Investments | 7,831,067 10.1 | treasury on a non pre-emptive basis for cash | | --- | --- | --- | | Holdings LLC (indirect) | | (i.e. without first offering such shares to existing | | Brewin Dolphin Limited (indirect) 4,635,012 6.0 | | shareholders pro-rata to their existing holdings) up | to an aggregate nominal amount of £384,607.20 City of London Investment 4,598,778 5.9 (representing 10% of the issued ordinary share Management Ltd (indirect) capital of the Company as at 16 October 2025). Quilter plc (indirect) 3,874,118 5.0 The authorities sought in Resolutions 11 and 12 * Ordinary shares in issue excluding treasury shares. will continue until the conclusion of the Annual General Meeting to be held in 2026 or on the expiry In the period from 31 August 2025 to 16 October of 15months from the passing of this Resolution, 2025, the Company was notified that Allspring Global ifearlier. Investments Holdings LL (indirect) held 8,534,663 Such authorities will only be used to issue shares shares (11.1% of shares in issue as at 16 October or re-sell shares from treasury at a premium to net 2025) and Quilter plc (indirect) held 3,826,205 asset value and only when the Directors believe that (5.0% of shares in issue as at 16 October 2025). it would be in the best interests of the Company There have been no other changes to the major to do so. The Directors believe that the ability to interests in the Company’s shares intimated up to buy back shares at a discount and re-sell them or 16October 2025. issue new shares at a premium are useful tools in Analysis of Shareholders at 31August smoothing supply and demand. 2025 2024 Market Purchases of Own Shares Number of Number of At the last Annual General Meeting, the Company shares held % shares held %* was granted authority to purchase up to 12,550,019 | Institutions 21,677,219 28.0 32,822,402 37.5 | | ordinary shares (equivalent to 14.99% of its issued | | --- | --- | --- | | Intermediaries/ | 52,281,649 6 7. 5 53,392,298 61.0 | share capital), such authority to expire at the 2025 | | Retail savings | | Annual General Meeting. The Directors are seeking | Platforms shareholders’ approval at the Annual General Individuals 352,352 0.4 48,733 0.1 Meeting to renew the authority to make market Marketmakers 3,180,220 4.1 1,269,181 1.4 purchases up to 14.99% of the Company’s ordinary shares in issue, excluding treasury shares, at the 77,491,440 100.0 87,532,614 100.0 date of passing of the Resolution, such authority * Ordinary shares in issue excluding treasury shares. to expire at the Annual General Meeting of the Company to be held in 2026. Share Issuance Authority During the year to 31August 2025, 10,041,174 At the last Annual General Meeting, the Directors ordinary shares were bought back at a cost of were granted authority to issue shares up to an £75,180,000 and held in treasury (2024 – 5,515,000 aggregate nominal amount of £430,438.07 and ordinary shares were bought back at a cost of to issue shares or sell shares held in treasury on a £39,186,000 and held in treasury). Between non pre-emptive basis for cash up to an aggregate 1September and 16 October 2025, the Company nominal amount of £430,438.07. These authorities bought back 570,000 ordinary shares into treasury are due to expire at the Annual General Meeting on at a cost of £5,236,000 ordinary shares were held in 10December 2025. treasury as at 16 October 2025. 41 Governance Report The principal reasons for share buybacks are: Directors’ Fee Limit • to enhance net asset value for continuing The Company’s Articles of Association provide that shareholders by purchasing shares at a discount Directors’ fees may not exceed £200,000 per annum in aggregate, or such larger amount as may be to the prevailing net asset value; and agreed by the Company by ordinary resolution. • to address any imbalance between the supply of and the demand for the Company’s shares that Articles of Association results in a discount of the quoted market price to The Company’s Articles of Association may only be the published net asset value per ordinary share. amended by special resolution at a general meeting The Company may hold bought-back shares ‘in of shareholders. treasury’ and then: • sell such shares (or any of them) for cash (or its Continuation of the Company equivalent under the Companies Act 2006); or The Company’s Articles of Association give shareholders the right to vote annually at the Annual • cancel the shares (or any of them). General Meeting of the Company on whether to All buybacks will initially be held in treasury and continue the Company. The Directors wish to draw shareswill only be resold from treasury at a premium your attention to Resolution 10 in the Notice of to net asset value per ordinary share. Treasury Annual General Meeting, which proposes that the shares do not receive distributions and the Company Company continues in operation until the 2026 shall not be entitled to exercise the voting rights Annual General Meeting. attaching to treasury shares. In accordance with the Listing Rules of the FCA, Financial Instruments the maximum price (excluding expenses) that may The Company’s financial instruments comprise be paid on the exercise of the authority must not its investment portfolio, cash balances, bank exceed the higher of: borrowings and debtors and creditors that arise directly from its operations such as sales and • 5 per cent above the average closing price on the purchases awaiting settlement and accrued income. London Stock Exchange of an ordinary share over The financial risk management objectives and the five business days immediately preceding the policies arising from its financial instruments and date of purchase; and the exposure of the Company to risk are disclosed in • an amount equal to the higher of the price of note 19 to the Financial Statements. the last independent trade of an ordinary share and the highest current independent bid for an Disclosure of Information to Auditor ordinary share on the trading venue where the The Directors confirm that, so far as each of them is purchase is carried out. aware, there is no relevant audit information of which The minimum price (exclusive of expenses) that may the Company’s Auditor is unaware and the Directors be paid will be 5p per ordinary share. Purchases of have taken all the steps that they might reasonably be shares will be made within guidelines established, expected to have taken as Directors in order to make from time to time, by the Board. Your attention is themselves aware of any relevant audit information drawn to the authority sought in Resolution 13 in the and to establish that the Company’s Auditor is aware Notice of Annual General Meeting, which relates to of thatinformation. the renewal of the Company’s authority to buy back ordinary shares. This authority, if conferred, will only Independent Auditor be exercised if to do so would result in an increase in The Auditor, Ernst & Young LLP, is willing to net asset value per ordinary share for the remaining continue in office and in accordance with section shareholders and if it is considered in the best interests 489(1) of the Companies Act 2006, resolutions of shareholders generally. concerning Ernst & Young LLP’s appointment and remuneration will be submitted to the Annual General Meeting. 42 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Post Balance Sheet Events The Directors confirm that there have been no significant post Balance Sheet events up to 16October 2025. Greenhouse Gas Emissions and Streamlined Energy and Carbon Reporting (‘SECR’) All of the Company’s activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. For the same reasons as set out above, the Company considers itself to be a low energy user under the SECR regulations and therefore, is not required to disclose energy and carbon information. Bribery Act The Company has a zero tolerance policy towards bribery and is committed to carrying out business fairly, honestly and openly. The Managers also adopt a zero tolerance approach and have policies and procedures in place to prevent bribery. Criminal Finances Act 2017 The Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion. Recommendation The Directors consider each resolution being proposed at the Annual General Meeting to be in the best interests of the Company and its shareholders as a whole and they unanimously recommend that all shareholders vote in favour of them, as they intend to do where possible in respect of their own beneficial holdings. On behalf of the Board David Kidd Chairman 20 October 2025 43 Governance Report ## Corporate Governance Report The Board is committed to achieving and demonstrating high standards of corporate governance. This statement outlines how the principles of the 2018 UK Corporate Governance Code (the ‘Code’), which can be found at frc.org.uk, and the relevant principles of the Association of Investment Companies Code of Corporate Governance (the ‘AIC Code’) issued in 2019 were applied throughout the financial year. TheAIC Code provides a framework of best practice for investment companies and can be found at theaic.co.uk Compliance comprising entirely non-executive Directors, there is no chief executive officer. The Financial Reporting Council (‘FRC’) has confirmed that AIC member companies who report against the The Directors believe that the Board has a balance AIC Code will be meeting their obligations in relation to of skills and experience that enables it to provide the UK Code. The Company has complied throughout effective strategic leadership and proper governance the year under review with the relevant provisions of of the Company. Information about the Directors, the Code and the recommendations of the AIC Code including their relevant experience, can be found except that the Company does not have a separate onpages 36 and 37. internal audit function, as explained on page 52. Given There is an agreed procedure for Directors to seek that the Company is an externally managed investment independent professional advice, if necessary, at the trust, the Board considers the provisions relating to Company’s expense. the role of the chief executive and executive-directors remuneration are not relevant. Appointments to the Board The terms and conditions of Directors’ appointments The Board are set out in formal letters of appointment which are The Board has overall responsibility for the available for inspection on request. Company’s affairs. It has a number of matters formally reserved for its approval including strategy, Under the provisions of the Company’s Articles of investment policy, currency hedging, gearing, treasury Association, a Director appointed during the year is matters, dividend and corporate governance policy. A required to retire and seek election by shareholders separate strategy session is held annually. The Board at the next Annual General Meeting. In accordance also reviews the Financial Statements, investment with the Code, all Directors are subject to annual transactions, revenue budgets and performance of re-election by shareholders. the Company. Full and timely information is provided As mentioned in the Chairman’s statement, the to the Board to enable it to function effectively and to Board plans to recruit a new director in early 2026, allow Directors to discharge their responsibilities. with the selection of an executive search firm At 31August 2025, the Board comprises five already at an advanced stage. Directors, each of whom are non-executive. The Chairman, David Kidd, is responsible for organising Chairman and Directors’ Tenure the business of the Board, ensuring its effectiveness It is the Board’s policy that all Directors, including and setting its agenda. the Chairman, shall normally have tenure limited The Senior Independent Director (‘SID’) is Joanna to nine years from their first appointment to the Pitman, and as such, is available to shareholders if Board. Exceptions may be made in particular they have concerns not properly addressed by the circumstances, for example to facilitate effective Chairman. The SID leads the Chairman’s appraisal succession planning or if the Company were in the and chairs the Nomination Committee when it middle of a corporate action, when an extension considers the Chairman’s succession. maybe appropriate. As noted in the Chairman’s statement on page 07, Mr David Kidd will be standing The executive responsibility for investment down from the Board at the conclusion of this year’s management has been delegated to the Company’s AGM taking place on 10 December 2025. Mr Sam Alternative Investment Fund Manager (‘AIFM’), Baillie Davis, a seasoned equity investor who is currently Gifford & Co Limited, and, in the context of a Board Chair of the Management Engagement Committee, 44 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC and who has been a member of the Board for 3 annual basis and at such other times as may be years, will assume the Chair at this point. required. The Committee has written terms of reference which include reviewing the composition of Independence of Directors the Board, identifying and nominating new candidates for appointment to the Board, Board appraisal, All the Directors are considered by the Board to succession planning and training. The Committee be independent of the Managers and free of any also considers whether Directors should be business or other relationship which could interfere recommended for re-election by shareholders. with the exercise of their independent judgement. TheCommittee is responsible for considering The Directors recognise the importance of Directors’ potential conflicts of interest and for succession planning for company boards and review making recommendations to the Board on whether the Board composition annually. or not the potential conflicts should be authorised. The Board is of the view that length of service will The Committee’s terms of reference are available on not necessarily compromise the independence or request from the Company and on the Company’s contribution of Directors of an investment trust website: japantrustplc.co.uk. company, where continuity and experience can be a benefit to the Board. The Board concurs with the Board Diversity view expressed in the AIC Code that long serving Appointments to the Board are made on merit with Directors should not be prevented from being due regard for the benefits of diversity including considered independent. gender, social and ethnic backgrounds, and Meetings cognitive and personal strengths. The priority in succession planning and appointing new Directors There is an annual cycle of Board meetings which is to identify the candidate with the best range is designed to address, in a systematic way, overall of skills and experience to complement existing strategy, review of investment policy, investment Directors, with a view to ensuring that the Board performance, marketing, revenue budgets, dividend remains well placed to help the Company achieve its policy and communication with shareholders. The investment and governance objectives. The following Board considers that it meets sufficiently regularly to disclosures are provided in respect of the FCA discharge its duties effectively. The table below shows Listing Rules targets that i) 40% of a board should the attendance record for the Board and Committee be women, ii) at least one senior role should be held meetings held during the year. The Annual General by a woman; and iii) at least one board member Meeting was attended by all Directors. should be from a non-white ethnic background as defined by the Office of National Statistics criteria. Directors’ Attendance at Meetings At 31 August 2025, the Board complies in all respects with the FCA Listing Rules targets. There have been no changes since 31 August 2025, data has been collected on a self-reporting basis. Board Audit Committee Nomination Committee Management Engagement Committee Senior | Number of meetings 4 2 1 1 | Gender identity Number % | roles | * | | --- | --- | --- | --- | | David Kidd* 4 – 1 1 | Men 2 40 | | 1 | | Sharon Brown 4 2 1 1 | Women 3 60 | | 2 | Sam Davis 4 2 1 1 Joanna Pitman 4 2 1 1 Senior Patricia Lewis 4 2 1 1 Ethnic background Number % roles * * David Kidd is not a member of the Audit Committee but attends by invitation. White 4 80 3 Black/African/Caribbean/ 1 20 – Nomination Committee Black British The Nomination Committee consists of the whole * As an externally managed investment company with no chief executive Board and the Chairman of the Board is the Chairman officer or chief financial officer, the roles which qualify as senior under of the Committee. The Committee meets on an FCA guidance are Chairman and Senior Independent Director (‘SID’). The Chairman is a man and the SID a woman. The Board also considers the role of Audit Committee Chair to represent a senior role within this context and this role is performed by a woman. 45 Governance Report The Board currently complies in all respects with the provided during the year on industry and regulatory FCA Listing Rules targets. matters. Directors receive other relevant training asnecessary. Board Composition The Committee reviewed the Board’s composition Management Engagement Committee during the year. The Board recognises the The Management Engagement Committee consists importance of having Directors with a range of skills of all Directors and Sam Davis is Chair of the and experiences balancing the benefits of length of Committee. The Board considers each member of service and knowledge of the Company with the the Committee to be independent. To discharge its desirability of ensuring refreshment of the Board. duties, the Committee met on one occasion during the year to consider: the performance and suitability Performance Evaluation of the Manager; the terms and conditions of the During the year the Board appointed Lintstock, a AIFM Agreement, including fees; the performance firm which assists companies with the external board of other third party service providers; and the evaluations. Lintstock has no other connection with Committee’s Terms of Reference. the Company or its Directors. Each Director completed The Committee’s Terms of Reference are available a questionnaire, provided by Lintstock, which was on request from the Company and on the Company’s followed up with an in-depth review. The Board pages of the Managers’ website: japantrustplc.co.uk. evaluation included a review of the following areas: • Board composition and expertise; Remuneration Committee • Board dynamics; The Remuneration Committee consists of all • Management and focus of meetings; Directors and Joanna Pitman is Chair of the Committee. The Remuneration Committee reviews • Board information and support; and makes recommendations to the Board in respect • Board Committees; of the level of remuneration paid to Directors within • Investment strategy and performance; the limits approved by shareholders. The Company’s • ESG activities; policy on remuneration is set out in the Directors’ Remuneration Report on page 49. • External relations; The Committee’s Terms of Reference are available • Risk management; and on request from the Company and on the Company’s • Succession. page of the Managers’ website: japantrustplc.co.uk. The initial survey conducted by Lintstock concluded the Company’s Board, Committees and Directors Audit Committee to be operating effectively. A number of minor The report of the Audit Committee is set out on recommendations were made to improve the pages 52 to 54. performance of the Board, and these have been considered and implemented. It is intended that an Internal Controls and Risk Management external evaluation will be carried out every three years. The Directors acknowledge their responsibility for Following this process, it was concluded that the the Company’s risk management and internal control performance of each Director, the Chairman, the systems and for reviewing their effectiveness. The Board and its Committees continues to be effective systems are designed to manage rather than eliminate and each Director, including the Chairman, remains the risk of failure to achieve business objectives committed to the Company. and can only provide reasonable but not absolute A review of the Chairman’s and the other Directors’ assurance against material misstatement or loss. commitments was carried out and the Nomination The Board confirms that there is an ongoing Committee is satisfied that they are capable of process for identifying, evaluating and managing devoting sufficient time to the Company. the significant risks faced by the Company in There were no significant changes to the Chairman’s accordance with the FRC guidance ‘Guidance on other commitments during the year. Risk Management, Internal Control and Related Financial and Business Reporting’. Induction and Training New Directors are provided with an induction programme which is tailored to the particular circumstances of the appointee. Briefings were 46 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC The practical measures in relation to the design, To comply with the UK Alternative Investment Fund implementation and maintenance of control policies Managers Regulations, The Bank of New York and procedures to safeguard the Company’s Mellon (International) Limited acts as the Company’s assets and to manage its affairs properly, including Depositary, and Baillie Gifford & Co Limited as AIFM. the maintenance of effective operational and The Depositary’s responsibilities include cash compliance controls, have been delegated to the monitoring, safe keeping of the Company’s financial Managers and Secretaries. instruments, verifying ownership and maintaining a The Board oversees the functions delegated to the record of other assets and monitoring the Company’s Managers and Secretaries and the controls managed compliance with investment limits and leverage by the AIFM in accordance with the UK Alternative requirements. The Depositary is liable for the loss of Investment Fund Managers Regulations (as detailed financial instruments held in custody. The Depositary below). Baillie Gifford & Co’s Internal Audit and will ensure that any delegate segregates the assets Compliance Departments and the AIFM’s permanent of the Company. As explained on page 40, the risk function provide the Audit Committee with Company’s Depositary also acts as the Company’s regular reports on their monitoring programmes. Custodian. The Custodian prepares a report on its The reporting procedures for these departments key controls and safeguards which is independently are defined and formalised within a service level reviewed by KPMG LLP. The reports are reviewed agreement. Baillie Gifford & Co conducts an annual by Baillie Gifford’s Business Risk Department and a review of its system of internal controls which is summary of the key points is reported to the Audit documented within an internal controls report which Committee and any concerns are investigated. complies with ISAE 3402 – Assurance Reports on The Depositary provides the Audit Committee with Controls at a Service Organisation. This report is areport on its monitoring activities twice a year. independently reviewed by Baillie Gifford & Co’s Auditor and a copy of the report is submitted to the The AIFM has established a permanent risk Audit Committee. management function to ensure that effective risk management policies and procedures are in place A report identifying the material risks faced by the and to monitor compliance with risk limits. The AIFM Company and the key controls employed to manage has a risk management policy which covers the risks these risks is reviewed by the Audit Committee. associated with the management of the portfolio, These procedures ensure that consideration is given and the adequacy and effectiveness of this policy is regularly to the nature and extent of risks facing the reviewed and approved at least annually. This review Company and that they are being actively monitored. includes the risk management processes and Where changes in risk have been identified during systems and limits for each risk area. the year they also provide a mechanism to assess The risk limits, which are set by the AIFM and whether further action is required to manage approved by the Board, take into account the theserisks. objectives, strategy and risk profile of the portfolio. The Directors confirm that they have reviewed the These limits, including leverage (see page 84), effectiveness of the Company’s risk management aremonitored and the sensitivity of the portfolio to and internal controls systems, which accord with key risks is undertaken periodically as appropriate the FRC’s ‘Guidance in the Risk Management, to ascertain the impact of changes in key variables Internal Control and Related Financial and Business in the portfolio. Exceptions from limits monitoring Reporting’ and they have procedures in place to and stress testing are escalated to the AIFM and review their effectiveness on a regular basis. No reported to the Board along with remedial measures significant weaknesses were identified in the year being taken. under review and up to the date of this Report. Going Concern The Board confirms that these procedures have been in place throughout the Company’s financial In accordance with FRC’s guidance on going concern year and continue to be in place up to the date of and liquidity risk, the Directors have undertaken a approval of this Report. rigorous review of the Company’s ability to continue as a going concern. 47 Governance Report The Company's principal and emerging risks are market related and include market risk, liquidity risk and credit risk. An explanation of these risks and how they are managed is contained in note 19 to the Financial Statements. The Board has considered severe but plausible downside scenarios, which include the impact of heightened market volatility and macroeconomic and geopolitical concerns, including inflation and interest rates through the performance of stress testing using a variety of parameters which have the potential to impact the Company's share price and net asset value. The Directors do not believe the Company's going concern status is affected. In addition, in accordance with the Company's Articles of Association, the Company is subject to an annual continuation vote which in previous years has been passed with a significant majority. At the December 2024 Annual General Meeting, of the votes received in respect of continuation, 85.3% were in favour, 14.6% were against and 0.1% were withheld. The Directors have no reason to believe that the vote will not continue to be in favour based on their assessment of the Company's performance and the views collated from shareholders. For these reasons the Directors have prepared the Financial Statements on a going concern basis. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings, excluding revolver facility rollovers, require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. During the year, the Company raised ¥15 billion through a revolving credit facility with Bank of New York Mellon to refinance its term loan with the same bank. Additionally, proceeds from fixed rate, senior unsecured private notes were used to repay ¥9.3 billion in ING fixed rate loans and ¥2.6 billion in Mizuho revolving credit facilities. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) Regulations 2011. The Company's third party suppliers, including its Managers and Secretaries, Custodian and Depositary, Registrar, Auditor and Broker are not experiencing significant operational difficulties affecting their respective services to the Company. Accordingly, the Financial Statements have been prepared on the going concern basis as it is the Directors' opinion, having assessed the principal and emerging risks and other matters set out in the Viability Statement on page 27 which assesses the prospects of the Company over a period of five years, that the Company will continue in operational existence until at least 31 October 2026, which is for a period of at least twelve months from the date of approval of these Financial Statements. If the continuation resolution is not passed, the Articles provide that the Directors shall convene a General Meeting within three months at which a special resolution will be proposed to wind up the Company voluntarily. If the Company is wound up, its investments may not be realised at their full market value. ### Relations with Shareholders The Board places great importance on communication with shareholders. The Company's Managers meet regularly with shareholders and their representatives, accompanied by the Chairman when requested and report shareholders' views to the Board. The Chairman is available to meet with shareholders as appropriate. Shareholders wishing to communicate with any members of the Board may do so by writing to them at the Company's registered office or through the Company's Broker, Investec Bank plc (see contact details on page 100). The Company's Annual General Meeting ('AGM') provides a forum for communication with all shareholders. The level of proxies lodged for each resolution is announced at the Meeting and is published at japantrustplc.co.uk subsequent to the meeting. The notice period for the AGM is at least twenty working days. Shareholders and potential investors may obtain up-to-date information on the Company from the Managers' website at japantrustplc.co.uk. On behalf of the Board David Kidd Chairman 20 October 2025 48 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Directors’ Remuneration Report This report has been prepared in accordance with the requirements of the Companies Act 2006. Composition the fees paid to the Directors should reflect the experience of the Board as a whole, be fair and The Remuneration Committee consists of all should take account of the level of fees paid by Directors, none of whom has a service contract comparable investment trusts. Any views expressed with the Company. Joanna Pitman is Chair of the by shareholders on the fees being paid to Directors Remuneration Committee. will be taken into consideration by the Board when reviewing the Board’s policy on remuneration. Role Non-executive Directors are not eligible for any The determination of the Directors’ fees is a matter other remuneration or benefits apart from the considered by the Remuneration Committee and reimbursement of allowable expenses. There are no recommended to the Board for approval. Baillie performance conditions relating to Directors’ fees Gifford & Co Limited, the Company Secretaries, and there are no long-term incentive schemes or provide comparative information when the Board pension schemes. No compensation is payable on considers the level of Directors’ fees. loss of office. The Committee’s authority and duties are clearly defined within its written terms of reference Limits on Directors’ Remuneration which are available on request from the Company The fees for the non-executive Directors are payable Secretaries and at japantrustplc.co.uk. The terms monthly and are determined within the limit set out ofreference are reviewed annually. in the Company’s Articles of Association which is currently £200,000 per annum in aggregate. Review of Directors’ Fees The fees paid to Directors in respect of the year The Board reviewed the level of fees during the year ended 31August 2025 and the expected fees and it was agreed that, with effect from 1September payable in respect of the year ending 31August 2026 2025, the Chairman’s fee would increase from are set out in the table below. The fees payable to the £44,000 to £45,000, the other Directors’ fees Directors in the subsequent financial periods will be would increase from £31,500 to £32,000 and the determined following an annual review of the additional fee for the Chair of the Audit Committee Directors’ fees. would remain at £6,000. The fees were last increased on 1September 2024. Expected fees for the year ending Fees as at Directors’ Remuneration Policy | | 31August | | | 31August | | | | --- | --- | --- | --- | --- | --- | --- | | The Directors’ Remuneration Policy is subject | | 2026 | | | 2025 | | | | | | £ | | | £ | to shareholder approval every three years or sooner if an alteration to the policy is proposed. Chairman’s fee 45,000 44,000 The Remuneration Policy which is set out below Non-executive Director fee 32,000 31,500 was approved at the Annual General Meeting in Additional fee for Audit 6,000 6,000 December 2024 and no changes to the policy CommitteeChair areproposed. Total aggregate annual fees that can 200,000 200,000 The Board’s policy is that the remuneration of be paid to the Directors in any year under the Directors’ Remuneration Directors should be set at a reasonable level that is Policy, as set out in the Company’s commensurate with the duties and responsibilities Articles of Association of the role and consistent with the requirement to attract and retain Directors of the appropriate quality and experience. The Board believes that 49 Governance Report Directors’ Remuneration for the Year (Audited) The Directors who served during the year received the following remuneration in the form of fees and taxable benefits. This represents the entire remuneration paid to the Directors. The table below also sets out the annual percentage changes in Directors’ fees to 31 August (where Directors have served for a full year in each of the two years and therefore fees can be compared on a like-for-like basis). | | | | | | 2025 | | | | | | 2024 | | | | | Percentage change of basic fees | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Taxable | | | | | | Taxable | | | | | | | | | | | | | | | | | | Fees | | benefits* | | Total | | Fees | | benefits* | | Total | | 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | | Name | | | | £ | | £ | | £ | | £ | | £ | | £ | | % | | % | | % | | % | | % | | David Kidd | † 44,000 2,535 46,535 43,000 2,483 45,483 2.3 7.5 35.6 13.5 0.0 | | | | | | | | | | | | | | | | | | | | | | | | | Sharon Brown | | # | 37,500 1,627 39,127 37,000 1,229 38,229 1.4 8.8 9.7 5.1 n/a | | | | | | | | | | | | | | | | | | | | | | | Sam Davis | ‡ | | 31,500 2,585 34,085 31,000 2,390 33,390 1.6 6.9 n/a n/a n/a | | | | | | | | | | | | | | | | | | | | | | Joanna Pitman 31,500 2,008 33,508 31,000 1,686 32,686 1.6 6.9 7.4 3.8 0.0 Patricia Lewis ¶ 31,500 3,037 34,537 31,000 3,304 34,304 1.6 n/a n/a n/a n/a 176,000 11,792 187,792 173,000 11,092 184,092 * Comprises expenses incurred by Directors in the course of travel to attend Board and Committee meetings. These amounts have been grossed up for income tax. | † Appointed Chairman 1 June 2022. | | --- | | # Appointed Audit Chair 5 December 2019. | | ‡ Appointed a Director 1 October 2021. | | ¶ Appointed a Director 1 August 2023. | Directors’ Interests (Audited) The Directors at the end of the year under review, and their interests in the Company, are shown in the following table. There have been no further changes in the Directors’ interests up to 16 October 2025. | | | | Ordinary | | Ordinary | | | --- | --- | --- | --- | --- | --- | --- | | | | | 5p shares | | 5p shares | | | | | | | held at | | held at | | | | Nature | 31August | | 31August | | | Name | of interest | | | 2025 | | 2024 | | David Kidd Beneficial | | | 42,500 | | 42,500 | | | Sharon Brown Beneficial | | | | 3,995 | | 3,995 | | Sam Davis Beneficial | | | | 8,782 | | 7,887 | | Joanna Pitman Beneficial | | | | 5,262 | | 5,262 | | Patricia Lewis Beneficial | | | | 5,319 | | 5,100 | 50 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Annual Report on Remuneration Company Performance An ordinary resolution for the approval of this report The graph below compares the share price total will be put to the members at the forthcoming Annual return (assuming all dividends are reinvested) to General Meeting. ordinary shareholders compared with the total shareholder return on a notional investment made up The law requires the Company’s Auditor to audit of shares in the component parts of the TOPIX total certain of the disclosures provided in this report. return (in sterling terms). This index was chosen for Where disclosures have been audited, they are | indicated as such. The Auditor’s opinion is included | comparison purposes as it is the index against which | | --- | --- | | in the Independent Auditor’s Report on pages 58 | the Company has measured its performance over | | to64. | the period covered by the graph. | | Statement of Voting at Annual General Meeting | Performance Graph | (figures rebased to 100 at 31August 2015) At the last Annual General Meeting, of the proxy votes received in respect of the Directors’ Remuneration Report, 99.8% were in favour, 0.1% 200 were against and 0.1% of votes were withheld. At the last Annual General Meeting at which the 150 Directors’ Remuneration Policy was considered 100 (December 2024), 99.5% were in favour, 0.2% were against and 0.3% of votes were withheld. 50 0 Relative Importance of Spend on Pay 2024 20252016 2019 2021 20232015 20182017 2020 2022 Cumulative to 31 August The table below shows the actual expenditure ● NAV total return * ● ● Share price total return * TOPIX total return during the year in relation to Directors’ fees and (in sterling terms) * distributions to shareholders. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93. 2025 2024 % * Alternative Performance Measure – see Glossary of Terms and | Name | | £’000 | £’000 | change | Alternative Performance Measures on pages 82 to 84. | | --- | --- | --- | --- | --- | --- | | Directors’ fees | | 176 | 173 1.7 | | Past performance is not a guide to future performance. | | Dividends paid | | 8,481 9,157 (7.4 ) | | | | | to shareholders | * | | | | Approval | | * The total dividend paid decreased due to share buybacks. The dividend | | | | | The Directors’ Remuneration Report on pages 49 | per share remained unchanged at 10.0ppershare. to 51 was approved by the Board of Directors and signed on its behalf on 20 October 2025. Joanna Pitman Remuneration Committee Chair 250 51 Governance Report ## Audit Committee Report Composition • the fairness, balance and understandability of the Annual Report and Financial Statements and The Audit Committee consists of all Directors with the whether it provided the information necessary exception of David Kidd, who attends by invitation. for shareholders to assess the Company’s Sharon Brown is Chair of the Audit Committee. The performance, business model and strategy; members of the Committee consider that they have the requisite financial skills and experience to fulfil • the effectiveness of the Company’s internal the responsibilities of the Committee. control environment including the internal audit work of the Manager; Role • the reappointment, remuneration and terms of The Committee’s authority and duties are clearly engagement of the external Auditor; defined within its written terms of reference • the policy on the engagement of the external which are available on request from the Company Auditor to supply non-audit services; Secretaries and at japantrustplc.co.uk. The terms of reference are reviewed annually. • the independence and objectivity of the external Auditor and the effectiveness of the audit process; The Committee’s effectiveness is reviewed on an annual basis as part of the Board’s performance • the need for the Company to have its own internal evaluation process. audit function; At least once a year the Committee meets with the • the internal controls reports received from the external Auditor without any representative of the Managers and Custodian; and Manager being present. • the arrangements in place within Baillie Gifford &Co whereby their staff may, in confidence, raise Main Activities of the Committee concerns about possible improprieties in matters The Committee met two times during the year of financial reporting or other matters. and Ernst & Young, the external Auditor, attended both of these meetings. In addition, Ernst & Young Internal Audit met with the Audit Chair on two occasions during The Committee continues to believe that the the year. Baillie Gifford & Co’s Internal Audit and compliance and internal control systems and the Compliance Departments and the AIFM’s permanent internal audit function in place within Baillie Gifford risk function provided reports on their monitoring provide sufficient assurance that a sound system programmes for each of these meetings. of internal control, which safeguards shareholders’ The matters considered, monitored and reviewed investment and the Company’s assets, is maintained. by the Committee during the course of the year An internal audit function, specific to the Company, included the following: is therefore considered unnecessary. • the results announcements and the Annual and Interim reports; • the Company’s accounting policies and practices; • the regulatory changes impacting the Company; 52 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Financial Reporting its investment portfolio, compliance with debt covenants, availability of borrowing facilities, and The Committee considers that the most significant the Company’s ability to meet its obligations as areas of risk likely to impact the Financial they fall due. The Committee also reviewed the Statements are the existence and valuation of Viability Statement on page 27 and statement on investments, as they represent 98.0% of total Going Concern on pages 47 and 48. Following this assets. Another area of risk considered by the assessment, the Committee recommended to the Committee is the accuracy, completeness and Board the appropriateness of the Going Concern allocation of income from investments. basis in preparing the Financial Statements and All of the investments are quoted securities and confirmed the accuracy of the Viability Statement market prices are readily available from independent and statement on Going Concern. external pricing sources. The Committee reviewed The Managers confirmed to the Committee that they the Managers’ Report on Internal Controls which were not aware of any material misstatements in the details the controls in place regarding recording context of the Financial Statements as a whole and and pricing of investments, accurate recording that the Financial Statements are in accordance with of investment income and the reconciliation of applicable law and accounting standards. investment holdings to third party data. The value of all the investments at 31August 2025 Internal Controls and Risk Management were agreed by the Managers to external price The Committee reviewed the effectiveness of the sources and the portfolio holdings agreed to Company’s risk management and internal controls confirmations from the Company’s Custodian. systems as described on pages 53 and 54. No The Committee reviewed the Managers’ Report on significant weaknesses were identified in the year Internal Controls which details the controls in place under review. regarding completeness and accurate recording of investment income. The accounting treatment of External Auditor each special dividend received or receivable during Following a formal audit tender process in 2022, the year was reviewed by the Managers. Seven Ernst & Young LLP was appointed as the Company’s special dividends totalling £188,000 were received Auditor at the Annual General Meeting held on in the year to 31August 2025 and were all classified 15December 2022. as revenue. Ernst & Young LLP has confirmed that it believes it The Committee considered the factors, including is independent within the meaning of regulatory and increasing geopolitical tensions, that might affect professional requirements and that the objectivity of the Company’s viability over a period of five years the audit partner and staff is not impaired. and its ability to continue as a going concern for at least twelve months from the date of signing of To fulfil its responsibility regarding the independence the Financial Statements, together with reports and objectivity of the external Auditor, the from the Managers on the cash position and cash Committee reviewed: flow projections of the Company, the liquidity of • the audit plan for the current year; 53 Governance Report • a report from the Auditor describing their There are no contractual obligations restricting the arrangements to manage Auditor independence Committee’s choice of external Auditor. and received confirmation of its independence; and The audit fee has increased from £51,450 to • the extent of non-audit services provided by the £53,000, in line with inflation. external Auditor. The Auditor will not provide any non-audit services unless approved in advance by Regulatory Compliance the Committee. There were no non-audit fees for The Committee confirms that the Company is in the year to 31August 2025 or 31August 2024. compliance with the requirements of the Statutory To assess the effectiveness of the external Auditor, Audit Services for Large Companies Market the Committee reviewed and considered: Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) • the Auditor’s fulfilment of the agreed audit plan; Order 2014, which relates to the frequency and • feedback from the Managers on the performance governance of tenders for the appointment of the of the audit team; and external Auditor and the setting of policy on the provision of non-audit services. • the Audit Quality Review from the FRC. To fulfil its responsibility for oversight of the external Accountability and Audit audit process the Committee considered and The respective responsibilities of the Directors reviewed: and the Auditor in connection with the Financial • the Auditor’s engagement letter; Statements are set out on pages 55 to 64. • the Auditor’s proposed audit strategy; • the audit fee; and On behalf of the Board Sharon Brown • a report from the Auditor on the conclusion of Audit Committee Chair theaudit. 20 October 2025 The audit partner responsible for the audit will be rotated at least every five years in accordance with professional and regulatory standards in order to protect independence and objectivity and to provide fresh challenge to the business. Caroline Mercer, the current partner, has held this role for 3years and will continue as audit partner until the conclusion of the 2027 audit. Having carried out the review described above, the Committee is satisfied that the Auditor remains independent and effective for the purposes of this year’s audit. 54 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Statement of Directors’ ## Responsibilities in respect of the Annual Report and the Financial Statements The Directors are responsible for preparing The Directors are responsible for keeping adequate the Annual Report and Financial Statements in accounting records that are sufficient to show and accordance with applicable law and regulations. explain the Company’s transactions and disclose with reasonable accuracy at any time the financial Company law requires the Directors to prepare position of the Company and enable them to ensure Financial Statements for each financial year. that the Financial Statements comply with the Under that law they are required to prepare the Companies Act 2006. They are responsible for such Financial Statements in accordance with applicable internal control as they determine is necessary to law and United Kingdom Accounting Standards, enable the preparation of Financial Statements that including FRS 102, the Financial Reporting Standard are free from material misstatement, whether due applicable in the UK and Republic of Ireland. to fraud or error, and have general responsibility for Under company law the Directors must not approve taking such steps as are reasonably open to them to the Financial Statements unless they are satisfied safeguard the assets of the Company and to prevent that they give a true and fair view of the state of and detect fraud and other irregularities. affairs of the Company and of the profit or loss Under applicable law and regulations, the Directors of the Company for that year. In preparing these are also responsible for preparing a Strategic Financial Statements, the Directors are required to: Report, Directors’ Report, Directors’ Remuneration • select suitable accounting policies and then apply Report and Corporate Governance Statement that | | them consistently; | complies with those laws and regulations. | | --- | --- | --- | | • state whether applicable United Kingdom | | In accordance with Disclosure Guidance and | | | Accounting Standards have been followed, subject | Transparency Rule 4.1.14R, the Financial Statements | | | to any material departures disclosed and explained | will form part of the Annual Financial Report | | | in the Financial Statements; | prepared using the single electronic reporting | format under the TD ESEF Regulation. The Auditor’s • make judgements and accounting estimates that Report on these Financial Statements provides no are reasonable and prudent; assurance over the ESEF format. • assess the Company’s ability to continue as a The Directors are responsible for the maintenance going concern, disclosing as applicable, matters and integrity of the Company’s page on the related to going concern; and Managers’ website. Legislation in the United • use the going concern basis of accounting unless Kingdom governing the preparation and they either intend to liquidate the Company or to dissemination of Financial Statements may cease operations, or have no realistic alternative differfrom legislation in other jurisdictions. but to do so. 55 Governance Report Responsibility Statement of the Directors in Respect of the Annual Financial Report We confirm to the best of our knowledge: • the Financial Statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and • the Strategic Report and Directors’ Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. We consider the Annual Report and Financial Statements taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy. On behalf of the Board David Kidd 20 October 2025 Notes The following notes relate to financial statements published on a website and are not included in the printed version of the Annual Report and Financial Statements: • The maintenance and integrity of the Baillie Gifford & Co website is the responsibility of Baillie Gifford & Co; the work carried out by the auditors does not involve consideration of these matters and accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. • Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 56 Annual Report and Financial Statements 2025 ## Financial Report The Financial Statements for the year to 31August 2025 set out on pages 65 to 81 have been prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK andRepublic of Ireland’. Financial Report ## Independent Auditor’s Report to the members of The Baillie Gifford Japan Trust PLC Opinion Independence We have audited the financial statements of Baillie We are independent of the Company in accordance Gifford Japan Trust plc (‘the Company’) for the with the ethical requirements that are relevant to our year ended 31 August 2025 which comprise the audit of the financial statements in the UK, including Income Statement, Balance Sheet, Statement the FRC’s Ethical Standard as applied to public of Changes in Equity, Cash Flow Statement, and interest entities, and we have fulfilled our other the related notes 1 to 19, including the summary ethical responsibilities in accordance with these of significant accounting policies. The financial requirements. reporting framework that has been applied in their The non-audit services prohibited by the FRC’s preparation is applicable law and United Kingdom Ethical Standard were not provided to the Company Accounting Standards including FRS 102 “The and we remain independent of the Company in Financial Reporting Standard applicable in the UK conducting the audit. and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice). Conclusions relating to going concern In our opinion, the financial statements: In auditing the financial statements, we have • give a true and fair view of the Company’s affairs concluded that the directors’ use of the going as at 31 August 2025 and of its profit for the year concern basis of accounting in the preparation of the then ended; financial statements is appropriate. Our evaluation of the directors’ assessment of the Company’s ability • have been properly prepared in accordance with to continue to adopt the going concern basis of United Kingdom Generally Accepted Accounting accounting included: Practice; and • Confirmation of our understanding of the • have been prepared in accordance with the Company’s going concern assessment process requirements of the Companies Act 2006. and engagement with the Directors and the Company secretaries to determine if all key factors Basis for opinion that we have become aware of during our audit We conducted our audit in accordance with were considered in their assessment. International Standards on Auditing (UK) (ISAs • Inspection of the directors’ assessment of going (UK)) and applicable law. Our responsibilities concern, including the revenue forecast, for the under those standards are further described in the period to 31 October 2026 which is at least twelve Auditor’s responsibilities for the audit of the financial months from the date the financial statements statements section of our report. We believe that the were authorised for issue. In preparing the revenue audit evidence we have obtained is sufficient and forecast, the Company has concluded that it is appropriate to provide a basis for our opinion. able to continue to meet its ongoing costs as they fall due. 58 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC • Review of the factors and assumptions, including Our responsibilities and the responsibilities of the impact of the current economic environment, the directors with respect to going concern are as applied to the revenue forecast and the liquidity described in the relevant sections of this report. assessment of the investments. We considered However, because not all future events or conditions the appropriateness of the methods used to can be predicted, this statement is not a guarantee calculate the revenue forecast and the liquidity as to the Company’s ability to continue as a going assessment and determined, through testing concern. of the methodology and calculations, that the methods, inputs and assumptions utilised were Overview of our audit approach appropriate to be able to make an assessment for Key audit Risk of incomplete or inaccurate revenue the Company. matters recognition, including the classification of special • In relation to the Company’s borrowing dividends as revenue or capital items in the Income Statement. arrangements, we have inspected the directors’ Risk of incorrect valuation or ownership of the assessment of the risk of breaching the debt investment portfolio covenants as a result of a reduction in the value Materiality Overall materiality of £7.88m which represents of the Company’s portfolio. We recalculated the 1% of shareholders’ funds. Company’s compliance with debt covenants in the scenarios assessed by the directors and performed reverse stress testing in order to An overview of the scope of our audit identify what factors would lead to the Company Tailoring the scope breaching the financial covenants. Our assessment of audit risk, our evaluation of • Consideration of the mitigating factors included materiality and our allocation of performance in the revenue forecast and covenant calculations materiality determine our audit scope for the that are within the control of the Company. We Company. This enables us to form an opinion on reviewed the Company’s assessment of the the financial statements. We take into account liquidity of investments held and evaluated the size, risk profile, the organisation of the Company Company’s ability to sell those investments in and effectiveness of controls, the potential impact order to cover working capital requirements should of climate change and changes in the business revenue decline significantly. environment when assessing the level of work to • For the continuation vote to be held at the AGM beperformed. in 2025, we reviewed analysis of the shareholder Climate change base; voting results of previous AGMs to establish voting patterns; and obtained feedback from the Stakeholders are increasingly interested in how Company’s shareholders and brokers on their climate change will impact companies. The assessment of expected voting intentions, to Company has determined that the impact of climate ascertain the likely outcome of the vote. change could affect the Company’s investments and the overall investment process. This is explained • Review of the Company’s going concern on page 29 in the principal and emerging risks disclosures included in the annual report in order section, which form part of the “Other information,” to assess that the disclosures were appropriate rather than the audited financial statements. Our and in conformity with the reporting standards. procedures on these unaudited disclosures therefore Based on the work we have performed, we have not consisted solely of considering whether they are identified any material uncertainties relating to events materially inconsistent with the financial statements or conditions that, individually or collectively, may cast or our knowledge obtained in the course of the audit significant doubt on the Company’s ability to continue or otherwise appear to be materially misstated. as a going concern for the period to 31 October 2026 Our audit effort in considering the impact of climate which is at least 12 months from when these financial change on the financial statements was focused statements are authorised for issue. on the adequacy of the Company’s disclosures In relation to the Company’s reporting on how they in the financial statements as set out in Note 1a have applied the UK Corporate Governance Code, and concluded that there was no further impact we have nothing material to add or draw attention to of climate change to be taken into account as the in relation to the directors’ statement in the financial investments are valued based on market pricing statements about whether the directors considered as required by FRS 102. We also challenged the it appropriate to adopt the going concern basis directors’ considerations of climate change in their ofaccounting. assessment of viability and associated disclosures. 59 Financial Report Key audit matters those which had the greatest effect on: the overall audit strategy, the allocation of resources in the Key audit matters are those matters that, in our audit; and directing the efforts of the engagement professional judgement, were of most significance in team. These matters were addressed in the context our audit of the financial statements of the current of our audit of the financial statements as a whole, period and include the most significant assessed and in our opinion thereon, and we do not provide a risks of material misstatement (whether or not due separate opinion on these matters. to fraud) that we identified. These matters included Key observations communicated to the Risk Our response to the risk Audit Committee Incomplete or inaccurate We have performed the following procedures: The results of our procedures revenue recognition, including identified no material We obtained an understanding of Baillie Gifford’s processes the classification of special misstatement in relation and controls surrounding revenue recognition, including the dividends as revenue or capital to the risk of incomplete classification of special dividends, by performing walkthrough items in the Income Statement or inaccurate revenue procedures. recognition, including Refer to the Audit Committee For all dividends received, we recalculated the dividend income incorrect classification of Report (page 53); Accounting by multiplying the investment holdings at the ex-dividend date, special dividends as revenue policies (page 70); and traced from the accounting records, by the dividend per share, or capital items in the Income Note02 of the Financial which was agreed to an independent data vendor. We also Statement. Statements (page 71) agreed all exchange rates to an external source. In addition, we The total revenue for the agreed the dividends received to bank statements. year to 31 August 2025 was For all dividends accrued at the year end, we reviewed the £14.94m (2024: £15.80m), investee company announcements to assess whether the consisting primarily of dividend entitlement arose prior to 31 August 2025. We agreed the income from listed equity dividend rate to corresponding announcements made by the investments. investee company, recalculated the amount receivable and The investment income agreed the subsequent cash receipts to post-year end bank receivable by the Company statements where received. during the year directly affects To test completeness of recorded income, we verified that the Company’s revenue return. dividends had been recorded for each investee company There is a risk of incomplete held during the year with reference to investee company or inaccurate recognition of announcements obtained from an independent data vendor. revenue through the failure For all investments held during the year, we reviewed the type to recognise proper income of dividends paid with reference to an external data source entitlements or to apply to identify those which were ‘special’ dividends. We identified an appropriate accounting seven (2024: one) special dividends, amounting to £0.19m treatment. (2024: £0.09m), received during the year. We assessed the In addition, the directors appropriateness of one special dividend which, in aggregate, may be required to exercise exceeded our testing threshold. All other special dividends, judgment in determining individually and collectively, were below our testing threshold. whether income receivable in For the selected dividend, we evaluated management’s the form of special dividends classification as revenue by reviewing the underlying rationale should be classified as of the distributions. ‘revenue’ or ‘capital’ in the Income Statement. 60 Annual Report and Financial Statements 2025 The Baillie-Gifford Japan Trust PLC | Risk | Our response to the risk | Key observations communicated to the Audit Committee | | --- | --- | --- | | **Risk of incorrect valuation or ownership of the investment portfolio** *Refer to the Audit Committee Report (page 53), Accounting policies (page 70); and Note 09 of the Financial Statements (pages 73 and 74)* The valuation of the investment portfolio at 31 August 2025 was £889.77m (2024: £886.34m) consisting of listed equities. The valuation of investments held in the investment portfolio is the key driver of the Company's net asset value and total return. Incorrect investment pricing, or failure to maintain proper legal title of the investments held by the Company, could have a significant impact on the portfolio valuation and the return generated for shareholders. The fair value of listed investments is determined using listed market bid prices at close of business on the reporting date. | **We have performed the following procedures:** We obtained an understanding of Baillie Gifford's processes and controls surrounding investment valuation and legal title by performing walkthrough procedures. For all investments in the portfolio, we compared the market prices and exchange rates applied to an independent pricing vendor and recalculated the investment valuations as at the year end. We inspected the stale pricing reports produced by Baillie Gifford to identify prices that have not changed within one business day and verified whether the listed price is a valid fair value. We did not identify any investments with stale pricing. We compared the Company's investment holdings at 31 August 2025 to independent confirmations received directly from the Company's Depositary. | The results of our procedures identified no material misstatements in relation to the risk of incorrect valuation or ownership of the investment portfolio. | ### Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. ### Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined materiality for the Company to be £7.88m (2024: £7.48m), which is 1% (2024: 1%) of shareholders' funds. We believe that shareholders funds' provides us with a materiality aligned with the Company's performance. ### Performance materiality The application of materiality is at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that performance materiality was 75% (2024: 75%) of our planning materiality, namely £5.91m (2024: £5.61m). We have set performance materiality at this percentage due to our past experience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected. Given the importance of the distinction between revenue and capital for investment trusts, we also applied a separate testing threshold for the revenue column of the Income Statement of £0.39m (2024: £0.45m). 61 Financial Report Reporting threshold • the strategic report and directors’ reports have been prepared in accordance with applicable legal An amount below which identified misstatements are requirements. considered as being clearly trivial. We agreed with the Audit Committee that we would Matters on which we are required report to them all uncorrected audit differences in to report by exception excess of £0.39m (2024: £0.37m), which is set at In the light of the knowledge and understanding of 5% of planning materiality, as well as differences the Company and its environment obtained in the below that threshold that, in our view, warranted course of the audit, we have not identified material reporting on qualitative grounds. misstatements in the strategic report or directors’ We evaluate any uncorrected misstatements against report. both the quantitative measures of materiality We have nothing to report in respect of the following discussed above and in light of other relevant matters in relation to which the Companies Act 2006 qualitative considerations in forming our opinion. requires us to report to you if, in our opinion: Other information • adequate accounting records have not been kept, or returns adequate for our audit have not been The other information comprises the information received from branches not visited by us; or included in the annual report, other than the financial statements and our auditor’s report • the financial statements and the part of the thereon. The directors are responsible for the other Directors’ Remuneration Report to be audited are information contained within the annual report. not in agreement with the accounting records and returns; or Our opinion on the financial statements does not cover the other information and, except to the extent • certain disclosures of directors’ remuneration otherwise explicitly stated in this report, we do not specified by law are not made; or express any form of assurance conclusion thereon. • we have not received all the information and Our responsibility is to read the other information explanations we require for our audit. and, in doing so, consider whether the other information is materially inconsistent with the Corporate Governance Statement financial statements or our knowledge obtained in We have reviewed the directors’ statement in relation the course of the audit or otherwise appears to be to going concern, longer-term viability and that part materially misstated. If we identify such material of the Corporate Governance Statement relating to inconsistencies or apparent material misstatements, the Company’s compliance with the provisions of the we are required to determine whether this gives UK Corporate Governance Code specified for our rise to a material misstatement in the financial review by the UK Listing Rules. statements themselves. If, based on the work we have performed, we conclude that there is a material Based on the work undertaken as part of our audit, misstatement of the other information, we are we have concluded that each of the following required to report that fact. elements of the Corporate Governance Statement is materially consistent with the financial statements or We have nothing to report in this regard. our knowledge obtained during the audit: • Directors’ statement with regards to the Opinions on other matters prescribed by appropriateness of adopting the going concern theCompanies Act 2006 basis of accounting and any material uncertainties In our opinion the part of the directors’ remuneration identified set out on pages 47 and 48; report to be audited has been properly prepared in accordance with the Companies Act 2006. • Directors’ explanation as to their assessment of the Company’s prospects, the period this In our opinion, based on the work undertaken in the assessment covers and why the period is course of the audit: appropriate set out on page 27; • the information given in the strategic report and • Directors’ statement on whether they have a the directors’ report for the financial year for which reasonable expectation that the Company will the financial statements are prepared is consistent be able to continue in operation and meets its with the financial statements; and liabilities set out on pages 47 and 48; 62 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC • Directors’ statement on fair, balanced and Explanation as to what extent the audit understandable set out on page 56; was considered capable of detecting • Board’s confirmation that it has carried out a irregularities, including fraud robust assessment of the emerging and principal Irregularities, including fraud, are instances of non- risks set out on pages 28 to 31; compliance with laws and regulations. We design procedures in line with our responsibilities, outlined • The section of the annual report that describes above, to detect irregularities, including fraud. The the review of effectiveness of risk management risk of not detecting a material misstatement due and internal control systems set out on pages 46 to fraud is higher than the risk of not detecting one and47; and; resulting from error, as fraud may involve deliberate • The section describing the work of the audit concealment by, for example, forgery or intentional committee set out on pages 52 to 54. misrepresentations, or through collusion. The extent to which our procedures are capable of detecting Responsibilities of Directors irregularities, including fraud is detailed below. As explained more fully in the directors’ However, the primary responsibility for the responsibilities statement set out on pages 55 and prevention and detection of fraud rests with both 56, the directors are responsible for the preparation those charged with governance of the Company and of the financial statements and for being satisfied management. that they give a true and fair view, and for such • We obtained an understanding of the legal and internal control as the directors determine is regulatory frameworks that are applicable to necessary to enable the preparation of financial the Company and determined that the most statements that are free from material misstatement, significant are United Kingdom Generally whether due to fraud orerror. Accepted Accounting Practice, the Companies In preparing the financial statements, the directors Act 2006, the Listing Rules, UK Corporate are responsible for assessing the Company’s Governance Code, the Association of ability to continue as a going concern, disclosing, Investment Companies’ Code and Statement as applicable, matters related to going concern of Recommended Practice, Section 1158 of the and using the going concern basis of accounting Corporation Tax Act 2010 and The Companies unless the directors either intend to liquidate the (Miscellaneous Reporting) Regulations 2018. Company or to cease operations, or have no realistic • We understood how the Company is complying alternative but to do so. with those frameworks through discussions with the Audit Committee and Company Secretaries Auditor’s responsibilities for the audit and review of Board minutes and the Company’s of the financial statements documented policies and procedures within the Our objectives are to obtain reasonable assurance financial statements. about whether the financial statements as a whole • We assessed the susceptibility of the Company’s are free from material misstatement, whether due to financial statements to material misstatement, fraud or error, and to issue an auditor’s report that including how fraud might occur by considering includes our opinion. Reasonable assurance is a the key risks impacting the financial statements. high level of assurance, but is not a guarantee that We identified a fraud risk with respect to the an audit conducted in accordance with ISAs (UK) incomplete or inaccurate revenue recognition will always detect a material misstatement when it through incorrect classification of special exists. Misstatements can arise from fraud or error dividends as revenue or capital items in the and are considered material if, individually or in the Income Statement. Further discussion of our aggregate, they could reasonably be expected to approach is set out in the section on key audit influence the economic decisions of users taken on matters above. the basis of these financial statements. 63 Financial Report • Based on this understanding we designed our Use of our report audit procedures to identify non-compliance This report is made solely to the Company’s with such laws and regulations. Our procedures members, as a body, in accordance with Chapter involved review of the reporting to the directors 3 of Part 16 of the Companies Act 2006. Our audit with respect to the application of the documented work has been undertaken so that we might state policies and procedures and review of the financial to the Company’s members those matters we are statements to ensure compliance with the required to state to them in an auditor’s report and reporting requirements of the Company. for no other purpose. To the fullest extent permitted A further description of our responsibilities for by law, we do not accept or assume responsibility to theaudit of the financial statements is located anyone other than the Company and the Company’s on the Financial Reporting Council’s website at members as a body, for our audit work, for this https://www.frc.org.uk/auditorsresponsibilities. report, or for the opinions we have formed. Thisdescription forms part of our auditor’s report. Other matters we are required to address | • Following the recommendation from the Audit | | Caroline Mercer (Senior Statutory Auditor) | | --- | --- | --- | | | Committee, we were appointed by the Company | for and on behalf of Ernst & Young LLP, | | | on 15 December 2022 to audit the financial | Statutory Auditor | | | statements for the year ending 31 August 2023 | Edinburgh | | | and subsequent financial periods. | 20 October 2025 | • The period of total uninterrupted engagement including previous renewals and reappointments is three years, covering the years ending 31 August 2023 to 31 August 2025. • The audit opinion is consistent with the additional report to the audit committee. 64 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Income Statement For the year ended 31August | | 2025 | 2025 | 2025 | | 2024 | 2024 | 2024 | | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | Capital | Total | Revenue | | Capital | Total | | Notes | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Gains on investments 9 – 114,301 114,301 – 51,567 51,567 Currency gains 14 – 3,155 3,155 – 4,776 4,776 Income 2 14,939 – 14,939 15,803 – 15,803 Investment management fee 3 (4,190) – (4,190) (4,297) – (4,297) Other administrative expenses 4 (781) – (781) (715) – (715) Net return before finance costs 9,968 117,456 127,424 10,791 56,343 67,134 and taxation Finance costs of borrowings 5 (2,507) – (2,507) (1,795) – (1,795) Net return on ordinary activities 7,461 117,456 124,917 8,996 56,343 65,339 before taxation Tax on ordinary activities 6 (1,487) – (1,487) (1,580) – (1,580) Net return on ordinary activities 5,974 117,456 123,430 7,416 56,343 63,759 after taxation for the financial year attributable to equity shareholders Return per ordinary share 7 7.32p 143.86p 151.18p 8.23p 62.55p 70.78p Total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in this statement derive from continuing operations. A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is both the profit and total comprehensive income for the year. The accompanying notes on pages 69 to 81 are an integral part of the Financial Statements. 65 Financial Report # Balance Sheet | | Notes | As at 31 August | | As at 31 August | | | --- | --- | --- | --- | --- | --- | | | | 2025 £'000 | 2025 £'000 | 2024 £'000 | 2024 £'000 | | **Fixed assets** | | | | | | | Investments | 9 | | 889,768 | | 886,335 | | **Current assets** | | | | | | | Debtors | 10 | 2,473 | | 2,871 | | | Cash and cash equivalents | 19 | 15,515 | | 5,305 | | | | | 17,988 | | 8,176 | | | **Creditors** | | | | | | | Amounts falling due within one year | 11 | (59,114) | | (146,132) | | | **Net current liabilities** | | | **(41,126)** | | **(137,956)** | | **Total assets less current liabilities** | | | **849,643** | | **748,379** | | **Creditors** | | | | | | | Amounts falling due after more than one year | 12 | | (60,494) | | - | | **Net assets** | | | **788,148** | | **748,379** | | **Capital and reserves** | | | | | | | Share capital | 13 | | 4,717 | | 4,717 | | Share premium | 14 | | 213,902 | | 213,902 | | Capital redemption reserve | 14 | | 203 | | 203 | | Capital reserve | 14 | | 556,398 | | 514,122 | | Revenue reserve | 14 | | 12,928 | | 15,435 | | **Equity shareholders' funds** | | | **788,148** | | **748,379** | | **Net asset value per ordinary share** | 15 | | **1,017.1p** | | **855.0p** | The Financial Statements of The Baillie Gifford Japan Trust PLC (Company registration number SC075954) on pages 65 to 81 were approved and authorised for issue by the Board and were signed on 20 October 2025. David Kidd Chairman The accompanying notes on pages 69 to 81 are an integral part of the Financial Statements. 66 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Statement of Changes in Equity For the year ended 31August 2025 | | | | Share | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | redemption | | Capital | Revenue | | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | | funds | | Notes | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | Shareholders’ funds at 1 September 2024 4,717 213,902 203 514,122 15,435 748,379 Ordinary shares bought back 13, 14 – – – (75,180) – (75,180) Net return on ordinary activities 14 – – – 117,456 5,974 123,430 aftertaxation Dividends paid during the year 8 – – – – (8,481) (8,481) Shareholders’ funds at 31 August 2025 4,717 213,902 203 556,398 12,928 788,148 For the year ended 31August 2024 | | | | Share | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | redemption | | Capital | Revenue | | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | | funds | | Notes | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | Shareholders’ funds at 1 September 2023 4,717 213,902 203 496,965 17,176 732,963 Ordinary shares bought back 13, 14 – – – (39,186) – (39,186) Net return on ordinary activities 14 – – – 56,343 7,416 63,759 after taxation Dividends paid during the year 8 – – – – (9,157) (9,157) Shareholders’ funds at 31 August 2024 4,717 213,902 203 514,122 15,435 748,379 The accompanying notes on pages 69 to 81 are an integral part of the Financial Statements. 67 Financial Report # Cash Flow Statement For the year ended 31 August | | Notes | 2025 $'000 | 2025 $'000 | 2024 $'000 | 2024 $'000 | | --- | --- | --- | --- | --- | --- | | **Cash flows from operating activities** | | | | | | | Net return on ordinary activities before taxation | | 124,917 | | 65,339 | | | *Adjustments to reconcile company profit before tax to net cash flow from operating activities* | | | | | | | Net gains on investments | 9 | (114,301) | | (51,567) | | | Currency gains | 14 | (3,155) | | (4,776) | | | Finance costs of borrowings | 5 | 2,507 | | 1,795 | | | *Other capital movements* | | | | | | | Changes in debtors | | 147 | | (250) | | | Changes in creditors | | 136 | | 22 | | | *Taxation* | | | | | | | Overseas withholding tax incurred | | (1,505) | | (1,580) | | | **Cash from operations^{†}** | | | **8,746** | | **8,983** | | Interest paid | | | (2,371) | | (1,783) | | **Net cash inflow from operating activities** | | | **8,379** | | **7,280** | | **Cash flows from investing activities** | | | | | | | Acquisitions of investments | | (59,469) | | (103,973) | | | Disposals of investments | | 169,229 | | 128,098 | | | **Net cash inflow from investing activities** | | | **109,790** | | **24,125** | | **Cash flows from financing activities** | | | | | | | Ordinary shares bought back | | (76,206) | | (36,519) | | | Dividends paid | 8 | (8,481) | | (9,157) | | | Bank loans drawn down | | 140,219 | | 184,231 | | | Loan notes drawn down | | 61,539 | | - | | | Bank loans repaid | | (221,146) | | (170,352) | | | **Net cash outflow from financing activities** | | | **(154,075)** | | **(35,797)** | | **Increase/(decrease) in cash and cash equivalents** | | | **12,060** | | **(472)** | | Exchange movements | | | (1,850) | | (253) | | Cash and cash equivalents at start of period | 19 | | 5,305 | | 6,030 | | **Cash and cash equivalents at end of period^{*}** | | | **16,318** | | **5,305** | * Cash and cash equivalents represent cash at back 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). The accompanying notes on pages 68 to 81 are an integral part of the Financial Statements. 68 Annual Report and Financial Statements 2025 The Baillie-Gifford Japan Trust PLC # Notes to the Financial Statements The Baillie Gifford Japan Trust PLC (the 'Company') was incorporated under the Companies Act 2006 in Scotland as a public limited company with registered number SC075954. The Company is an investment company within the meaning of section 833 of the Companies Act 2006 and carries on business as an investment trust. ## 01 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. ### a. Basis of Accounting All of the Company's operations are of a continuing nature and the Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include the revaluation of fixed asset investments and derivative financial instruments at fair value through profit or loss, and on the assumption that approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 will be retained. The Board has, in particular, considered the impact of heightened market volatility and macroeconomic and geopolitical concerns, including inflation and interest rates. It has reviewed the results of specific leverage and liquidity stress testing and does not believe the Company's going concern status is affected. In addition, the Company is subject to an annual continuation vote which in previous years has been passed with a significant majority. The Directors have no reason to believe that the vote will not continue to be in favour based on their assessment of the Company's performance and the views collated from shareholders. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. 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, and have concluded that it does not have a material impact on the Company's investments. The Directors consider the impact of climate change on the value of the investments included in the Financial Statements to already be reflected in their prices as quoted on a stock exchange. Accordingly, the Financial Statements have been prepared on a going concern basis as it is the Directors' opinion, having assessed the principal and emerging risks and other matters set out in the Viability Statement on page 27 which assesses the prospects of the Company over a period of five years, that the Company will continue in operational existence until at least 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. 69 Financial Report b. Financial Instruments g. Taxation The Company’s investments are classified as held at fair The taxation charge represents non-recoverable overseas value through profit and loss in accordance with sections taxes which is charged to the revenue account as it 11 and 12 of FRS 102. relates to income received. Deferred taxation is provided on all timing differences which have originated but not Purchases and sales of investments are recognised on a reversed by the Balance Sheet date, calculated on a non- trade date basis. discounted basis at the tax rates expected to apply when Investments in securities are initially recognised at fair the timing differences reverse, based on what has been value which is taken to be their cost excluding expenses enacted or substantially enacted, relevant to the benefit incidental to purchases, and are subsequently measured or liability. Deferred tax assets are recognised only to at fair value through profit and loss. The fair value of listed the extent that it is more likely than not that there will be investments is the last traded price which is equivalent taxable profits from which underlying timing differences to the bid price on Japanese markets. Changes in the fair can be deducted. value of investments and gains and losses on disposal are h. Foreign Currencies recognised as capital items in the Income Statement. Transactions involving foreign currencies are converted c. Cash and Cash Equivalents at the rate ruling at the time of the transaction. Monetary Cash and cash equivalents include cash in hand and assets, liabilities and equity investments held at fair value deposits repayable on demand. Deposits are repayable in foreign currencies are translated at the closing rates on demand if they can be withdrawn at any time without of exchange at the Balance Sheet date. Any gain or loss notice and without penalty or if they have a maturity or arising from a change in exchange rate subsequent to the period of notice of not more than one working day. date of the transaction is included as an exchange gain or loss in the Income Statement and classified as a revenue d. Income or capital item as appropriate. i. Income from equity investments is brought into account i. Capital Reserve on the date on which the investments are quoted ex-dividend or, where no ex-dividend date is quoted, when Gains and losses on disposal of investments, changes in the Company’s right to receive payment is established. the fair value of investments held, exchange differences of a capital nature and the amount by which other assets and ii. Special dividends are treated as repayments of capital liabilities valued at fair value differ from their book cost are or income depending on the facts of each particular dealt with in this reserve. Purchases of the Company’s own case. shares for cancellation are also funded from this reserve. iii. If scrip is taken in lieu of dividends in cash, the net j. Significant Estimates and Judgements amount of the cash dividend declared is credited to the The Directors do not believe that any accounting revenue account. Any excess in the value of the shares judgements or estimates have been applied to these received over the amount of the cash dividend foregone accounting statements that have a significant risk of is recognised as capital. causing material adjustment to the carrying amount iv. Interest from fixed interest securities is recognised on ofassets and liabilities within the next financialyear. an effective yield basis (none were held in the period). TheDirectors consider that the preparation of the Financial Statements involves the following key v. Overseas dividends include withholding tax deducted judgements: atsource. (i) the functional currency of the Company is sterling vi. Interest receivable on bank deposits is recognised on (seerationale in 1(a) above); and an accruals basis. (ii) the determination as to whether special dividends e. Expenses should be treated as a repayment of capital or income All expenses are accounted for on an accruals basis depending on the facts of each particular case. and are charged to the revenue account except where k. Single Segment Reporting they relate directly to the acquisition or disposal of an The Company is engaged in a single segment of business, investment (transaction costs), in which case they are being that of an investment trust company, consequently recognised as capital within gains/losses on investments. no business segmental analysis is required. Expenses directly relating to the issuance of shares are deducted from the proceeds of such issuance. f. Finance Costs Long-term borrowings are carried in the Balance Sheet at amortised cost, representing the cumulative amount of net proceeds after issue, plus accrued finance costs. The finance costs of such borrowings are allocated to the revenue account at a constant rate on the carryingamount. Gains and losses on the repurchase or early settlement ofdebt are wholly charged to capital. 70 Annual Report and Financial Statements 2025 The Baillie-Gifford Japan Trust PLC # 02 Income | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | **Income from investments** | | | | Overseas dividends | 14,938 | 15,800 | | **Other income** | | | | Deposit interest | 1 | 3 | | **Total income** | **14,939** | **15,803** | Special dividends received during the year amounted to £188,000 (2024 – £93,000) with £188,000 (2024 – £93,000) classed as revenue and none (2024 – none) classed as capital. # 03 Investment Management Fee – All Charged to Revenue | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | **Investment management fee** | **4,190** | **4,297** | Details of the Investment Management Agreement are disclosed on page 39. For the year to 31 August 2025, the annual management fee is 0.65% on the first £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. # 04 Other Administrative Expenses – All Charged to Revenue | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | General administrative expenses | 103 | 48 | | Directors' fees | 176 | 173 | | Marketing* | 100 | 95 | | Custody charges | 79 | 109 | | Depository fees | 77 | 79 | | Auditors' remuneration for audit services † | 53 | 51 | | Stock Exchange Listings | 36 | 34 | | Regulatory Fees | 35 | 32 | | Legal Fees | 32 | 3 | | Broker Fees | 30 | 30 | | Registrar fees | 24 | 26 | | AIC Fees | 22 | 21 | | Director's liability insurance | 14 | 14 | | | **781** | **715** | * The Company is part of a marketing programme which includes all the Investment Trusts managed by the Manager. The marketing strategy has an ongoing objective to stimulate demand for the Company's shares. The cost of this marketing strategy is borne in partnership by the Company and the Manager. The Manager matches the Company's marketing contribution and provides the resource to manage and run the programme. † Auditor's remuneration above is exclusive of VAT. There were no non-audit fees paid to the Auditor during the year (2024 – nil). 71 Financial Report ## 05 Finance Costs of Borrowings | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Bank loans | 1,501 | 1,795 | | Loan notes | 1,006 | – | | | **2,507** | **1,795** | The bank loan interest disclosed includes Nil (2024 – £17,000) paid in respect of yen deposits held at the Custodian bank. ## 06 Tax on Ordinary Activities | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | **Analysis of charge in year** | | | | Overseas taxation | **1,487** | **1,580** | | **Factors affecting tax charge for year** | | | | The tax assessed for the year is lower than the average standard rate of corporation tax in the UK of 25% (2024 – 25%). The differences are explained below: | | | | **Net return on ordinary activities before taxation** | **124,917** | **65,339** | | Net return multiplied by the average standard rate of corporation tax in the UK of 25% (2024 – 25%) | 31,229 | 16,335 | | Effects of: | | | | Capital returns not taxable | (29,364) | (14,086) | | Income not taxable | (3,734) | (3,950) | | Overseas withholding tax | 1,487 | 1,580 | | Taxable losses in year not utilised | 1,869 | 1,701 | | **Tax charge for the year** | **1,487** | **1,580** | ### Factors that may affect Future Tax Charges At 31 August 2025 the Company had surplus management expenses and losses on non-trading loan relationships of £23,020,000 (2024 – £21,151,000). No deferred tax asset has been recognised in respect of these amounts because the Company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the Company will make taxable revenue profits in the future and it is not liable to tax on its capital gains. The potential deferred tax asset has been calculated using a corporation tax rate of 25% (2024 – 25%). Due to the Company's status as an investment trust, and the intention to continue meeting the conditions required to maintain that status in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. 72 Annual Report and Financial Statements 2025 The Baillie-Gifford Japan Trust PLC ## 07 Net Return Per Ordinary Share | | 2025 Revenue | 2025 Capital | 2025 Total | 2024 Revenue | 2024 Capital | 2024 Total | | --- | --- | --- | --- | --- | --- | --- | | **Net return per ordinary share** | **7.32p** | **143.88p** | **151.18p** | **8.23p** | **62.55p** | **70.76p** | Net revenue return per ordinary share is based on the net revenue profit after taxation of £5,974,000 (2024 – net revenue profit of £7,416,000) and on 81,645,278 (2024 – 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. Capital return per ordinary share is based on the net capital profit for the financial year of £117,456,000 (2024 – net capital profit of £56,343,000) and on 81,645,278 (2024 – 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. Total return per ordinary share is based on the total profit for the financial year of £123,430,000 (2024 – total profit of £63,759,000) and on 81,645,278 (2024 – 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year. There are no dilutive or potentially dilutive shares in issue. ## 08 Ordinary Dividends Set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution out of current year profits by way of dividend for the year is £5,974,000. The revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable by way of dividend. | | 2025 | 2024 | 2025 £'000 | 2024 £'000 | | --- | --- | --- | --- | --- | | **Amounts recognised as distributions in the year:** | | | | | | Previous year's final (paid 18 December 2024, 2023 paid on 20 December 2023) | 10.00p | 10.00p | 8,481 | 9,157 | | | **2025** | **2024** | **2025 £'000** | **2024 £'000** | | **Dividends paid and payable in respect of the year:** | | | | | | Proposed final dividend (payable 15 December 2025, 2024 paid 18 December 2024) | 10.00p | 10.00p | 7,749* | 8,753 | * Based on ordinary shares in issue at 31 August 2025. ## 09 Investments | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | **Financial assets** | | | | Listed equities | 889,768 | 886,335 | | **Total financial asset investments** | **889,768** | **886,335** | 73 Financial Report 09 Investments (continued) | Listed | Listed | | --- | --- | | equities | equities | | £’000 | £’000 | Cost of investments held at start of year 847,222 814,448 Unrealised appreciation at start of year 39,113 44,038 Value of investments held at start of year 886,335 858,486 Movements in year: Purchases at cost 58,341 105,190 Sales – proceeds (169,209) (128,908) Sales – realised gains on sales 59,484 56,492 Movement in unrealised appreciation 54,817 (4,925) Value of investments held at end of year 889,768 886,335 Cost of investments held at end of year 795,838 847,222 Unrealised appreciation at end of year 93,930 39,113 Value of investments held at end of year 889,768 886,335 The transaction costs of purchases and sales were £22,000 (2024 – £49,000) and £48,000 (2024 – £45,000) respectively. The Company received £169,209,000 (2024 – £128,908,000) from investments sold during the year. The book costs of these investments when they were purchased was £109,725,000 (2024 – £72,416,000). These investments have been revalued over time and until they were sold, any unrealised gains/losses were included in the fair value of the investments. 2025 2024 £’000 £’000 Gains on investments Realised gains on sales 59,484 56,492 Changes in investment holding gains 54,817 (4,925) 114,301 51,567 10 Debtors 2025 2024 £’000 £’000 Due within one year: Income accrued and prepaid expenses 1,675 2,001 Sales for subsequent settlement 790 810 Other debtors 8 60 2,473 2,871 The carrying amount of debtors is a reasonable approximation of fair value. 74 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC 11 Creditors – Amounts Falling Due Within One Year 2025 2024 £’000 £’000 Bank loans 55,453 140,572 Purchases for subsequent settlement 270 1,399 Buybacks payable 1,640 2,666 Other creditors and accruals 1,751 1,495 59,114 146,132 Included in other creditors is £1,146,000, (2024 – £1,104,000) in respect of the investment management fee. Borrowing facilities At 31August 2025 At 31August 2024 Drawings Drawings Due within one year: | Revolving credit facility with Mizuho | – ¥500 million (£2.613 million) | | | | --- | --- | --- | --- | | Bank, Ltd. for ¥2,600 million, expired | | | at 1.22% | | March 2025 | | ¥1,000 million (£5.226 million) | | at 1.43% ¥1,100 million (£5.748 million) at 1.28% 1 year floating rate revolving credit ¥11,000 million (£55.453 million) – facility with Bank of New York Mellon for at 1.92% ¥15,000 million, expiring August 2026 7 year fixed rate loan facility with ING – ¥9,300 million (£48.599 million) Bank N.V. for ¥9,300 million, expired at 1.58% November 2024 2 year floating rate loan facility with – ¥15,000 million (£78.386 million) Bank of New York Mellon for ¥ 15,000 at 1.16% million, expired August 2025 The main covenants relating to the above loans are: i. Total borrowings shall not exceed 30% of the Company’s net asset value; and ii. The Company’s minimum net asset value shall be ¥48,545,000,000 (£315,000,000). There were no breaches of loan covenants during the year. 12 Creditors – Amounts Falling Due After More Than One Year | | 2025 | | 2024 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Drawings | | Drawings | | Loan notes Due after one year: Fixed rate unsecured private notes with Canada Life: – ¥4,000 million Series A Senior Notes ¥4,000 million at 1.56% (£20,165,000) – due 20 November 2029 – ¥4,000 million Series B Senior Notes ¥4,000 million at 2.05% (£20,165,000) – due 20 November 2034 – ¥4,000 million Series C Senior Notes ¥4,000 million at 2.55% (£20,164,000) – due 20 November 2038 60,494 – The main covenants relating to the above loan notes are: i. Net borrowings shall not exceed 30% of the Company’s adjusted assets; and ii. The Company’s minimum net asset value shall be ¥48,545,000,000 (£315,000,000). There were no breaches of loan covenants during the year. 75 Financial Report 13 Called-up Share Capital 2025 2025 2024 2024 Number £’000 Number £’000 Authorised ordinary shares of 5p each 77,491,440 3,875 87,532,614 4,377 Treasury shares of 5p each 16,836,769 842 6,795,595 340 Allotted, called-up and fully paid ordinary shares of 5p each 94,328,209 4,717 94,328,209 4,717 The Company’s authority permits it to hold shares bought back in ‘treasury’. Such treasury shares may be subsequently either sold for cash at a premium to net asset value per ordinary share or cancelled. In the year to 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 £5,236,000. 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. 14 Capital and Reserves | | | Share | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | redemption | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | At 1 September 2024 4,717 213,902 203 514,122 15,435 748,379 Ordinary shares bought back – – – (75,180) – (75,180) Gains on investments – – – 59,484 – 59,484 Changes in investment holding gains – – – 54,817 – 54,817 Exchange differences on borrowings – – – 5,005 – 5,005 Exchange differences on settlement – – – (353) – (353) of investment transactions Other exchange differences – – – (1,497) – (1,497) Dividends paid in the year – – – – (8,481) (8,481) Revenue for the year – – – – 5,974 5,974 At 31 August 2025 4,717 213,902 203 556,398 12,928 788,148 76 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC 14 Capital and Reserves (continued) | | | Share | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | redemption | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | At 1 September 2023 4,717 213,902 203 496,965 17,176 732,963 Ordinary shares bought back (39,186) – (39,186) Gains on investments – – – 56,492 – 56,492 Changes in investment holding gains – – – (4,925) – (4,925) Exchange differences on bank loans – – – 5,029 – 5,029 Other exchange differences – – – (253) – (253) Dividends paid in the year – – – – (9,157) (9,157) Revenue for the year – – – – 7,416 7,416 At 31 August 2024 4,717 213,902 203 514,122 15,435 748,379 The capital reserve includes unrealised investment holding gains of £93,931,000 (2024 – £39,113,000) as disclosed in note 9. The revenue reserve of £12,928,000 and the capital reserve (to the extent it constitutes realised profits) of £461,839,000 are distributable. 15 Shareholders’ Funds The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows: 2025 2024 Shareholders’ funds £788,148,000 £748,379,000 Number of ordinary shares in issue at the year end * 77,491,440 87,532,614 Shareholders’ funds per ordinary share 1,017.1p 855.0p * Excluding shares held in treasury at 31August 2025 and 31August 2024. 16 Analysis of Change in Net Debt | | | | At | | | | Other | | | | | At | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1September | | | | | non-cash | | Exchange | | 31August | | | | | | 2024 | | Cash flows | | changes | | movement | | | 2025 | | | | | £’000 | | | £’000 | | £’000 | | £’000 | | £’000 | | | Cash at bank and in hand 5,305 | | | | | 12,060 – | | | | (1,850) 15,515 | | | | | Loans due within one year (140,572) 80,927 – 4,192 | | | | | | | | | | (55,453) | | | | Loan notes due after one year – | | | | (61,539) 232 | | | | | 813 (60,494) | | | | (135,267) 31,095 232 3,508 (100,432) 17 Contingent Liabilities, Guarantees and Financial Commitments There were no contingent liabilities, guarantees or financial commitments as at 31 August 2025. At 31 August 2024, the Company had a commitment to draw down ¥12 billion of fixed rate, senior unsecured private notes which had been arranged in July 2024, with funds subsequently drawn down on 20 November 2024. 77 Financial Report 18 Related Party Transactions and Transactions with Manager Related Party Transactions The Directors’ fees for the year and Directors’ shareholdings at 31August 2025 are detailed in the Directors’ Remuneration Report on pages 49 to 51 respectively. No Director has a contract of service with the Company. Transactions with Manager The management fee due to Baillie Gifford and Co Limited is set out in note 3 on page 71 and the amount accrued at 31August 2025 is set out in note 11 on page 75. Details of the Investment Management Agreement are set out on page 39. 19 Financial Instruments The Company invests in medium to smaller sized Japanese companies and makes other investments so as to achieve its investment objective of long-term capital growth. The Company borrows money when the Board and Managers have sufficient conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests and could result in a reduction in the Company’s net assets. These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise the short-term volatility. The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period. Market Risk The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks and the Company’s Manager assesses the exposure to market risk when making individual investment decisions as well as monitoring the overall level of market risk across the investment portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown on pages 19 and 20. i. Currency Risk The Company’s assets, liabilities and income are principally denominated in yen. The Company’s functional currency and that in which it reports its results is sterling. Consequently, movements in the yen/sterling exchange rate will affect the sterling value of those items. The Manager monitors the Company’s yen exposure (and any other overseas currency exposure) and reports to the Board on a regular basis. The Manager assesses the risk to the Company of the overseas currency exposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed. However, the currency in which a company’s share price is quoted is not necessarily the one in which it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company’s valuation than a simple translation of the currency in which the share price of the company is quoted. Yen borrowings are used periodically to limit the Company’s exposure to anticipated future changes in the yen/sterling exchange rate which might otherwise adversely affect the value of the portfolio of investments. The Company has the authority to use forward currency contracts to limit the Company’s exposure to anticipated future changes in exchange rates so that the currency risks entailed in holding the assets are mainly eliminated. No forward currency contracts have been used in the current or prioryear. Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below. | | | | Cash and cash | | | | | Other debtors | | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | | equivalents | | Borrowings | | and creditors | | exposure | | | | At 31August 2025 | | £’000 | | | £’000 | | £’000 | | £’000 | | £’000 | | Yen 889,768 15,455 (115,947) 1,741 791,017 US$ – – – – – Total exposure to currency risk 889,768 15,455 (115,947) 1,741 791,017 Sterling – 60 – (2,929) (2,869) 889,768 15,515 (115,947) (1,188) 788,148 78 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC 19 Financial Instruments (continued) i. Currency Risk (continued) | | | | Cash and cash | | | Bank | Other debtors | | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | | equivalents | | loans | and creditors | | exposure | | | | At 31August 2024 | | £’000 | | | £’000 | £’000 | | £’000 | | £’000 | | Yen 886,335 5,248 (140,572) 849 751,860 US$ – 1 – – 1 Total exposure to currency risk 886,335 5,249 (140,572) 849 751,861 Sterling – 56 – (3,538) (3,482) 886,335 5,305 (140,572) (2,689) 748,379 Currency Risk Sensitivity At 31August 2025, if sterling had strengthened by 10% against the yen, with all other variables held constant, total net assets and net return on ordinary activities after taxation would have decreased by £79,102,000 (2024 – £75,186,000). A 10% weakening of sterling against the yen, with all other variables held constant, would mean total net assets and net return on ordinary activities after taxation would have had a similar but opposite effect on the Financial Statement amounts. ii. Interest Rate Risk Interest rate movements may affect the level of income receivable on cash deposits. They may also impact upon the market value of the Company’s investments as the effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company’s equity. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the amount of investments in cash and the income receivable on cash deposits. The Company finances part of its activities through borrowings at approved levels. The amount of such borrowings and the approved levels are monitored and reviewed regularly by the Board. The interest rate risk profile of the Company’s interest bearing financial assets and liabilities at 31August 2025 is shown below. Financial Assets | | | | | | 2025 | | | | | | 2024 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 2025 | Weighted | | | | | 2024 | Weighted | | | | | Weighted | | average | | | | Weighted | | average | | | 2025 | | average | | period until | | 2024 | | average | | period until | | | £’000 | interest rate | | | maturity* | | £’000 | interest rate | | | maturity* | | Cash: Yen 15,455 – n/a 5,248 (<0.1%) n/a US$ – n/a n/a 1 n/a n/a Sterling 60 1.4% n/a 56 0.7% n/a 15,515 5,305 * Based on expected maturity date. The cash deposits generally comprise overnight call or short-term money deposits and earn, or are charged, interest at floating rates based on prevailing bank base rates. 79 Financial Report 19 Financial Instruments (continued) Financial Liabilities The interest rate risk profile of the Company’s borrowings at 31August was: | | | | | | | 2025 | | | | | | | 2024 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 2025 | Weighted | | | | | | 2024 | Weighted | | | | 2025 | | Weighted | | average | | | 2024 | | Weighted | | average | | | Book value | | | average | | period until | | Book value | | | average | | period until | | | | £’000 | interest rate | | | maturity* | | | £’000 | interest rate | | | maturity* | | Borrowings: Floating rate – Yen denominated 55,453 1.9% 12 months 140,572 1.3% 8 months Fixed rate – Yen denominated 60,494 2.1% 108 months – – – Interest Rate Risk Sensitivity An increase of 100 basis points in interest rates, with all other variables held constant, would have decreased the Company’s total net assets and total return on ordinary activities for the year ended 31August 2025 by £39,000 (2024 – decreased by £149,000). Thisis mainly due to the Company’s exposure to interest rates on its cash balances and floating rate bank loans. Adecrease of 100 basis points would have had an equal but opposite effect. The Company does not hold bonds. iii. Other Price Risk Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Manager. The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company’s objectives and investment policies. The portfolio does not seek to reproduce the index, investments are selected based upon the merit of individual companies and therefore performance is highly likely to diverge from the comparative index. Other Price Risk Sensitivity A full list of the Company’s investments is shown on pages 19 and 20. In addition, analyses of the sector listing and portfolio positioning are shown on pages 16 to 18. 113% (2024 – 118%) of the Company’s net assets are invested in Japanese quoted equities. A 20% (2024 – 20%) increase in quoted equity valuations at 31August 2025 would have increased total net assets and net return on ordinary activities after taxation by £177,954,000 (2024 – £177,267,000). A decrease of 20% (2024 – 20%) would have had an equal but opposite effect. Liquidity Risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not significant as the majority of the Company’s assets are in investments that are readily realisable. The Board provides guidance to the Manager as to the maximum exposure to any one holding (see Investment Policy on page 25). The Company has the power to take out borrowings, which give it access to additional funding when required. The Company’s borrowing facilities are detailed in note 11 and 12. The maturity profile of the Company’s undiscounted financial liabilities at 31 August was: 2025 2024 £’000 £’000 In less than one year 55,453 140,572 In more than one year, but not more than five years 20,165 – In more than five years 40,329 – 115,947 140,572 Credit Risk This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. This risk is managed as follows: • where the Manager makes an investment in a bond or other security with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question; • the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates the assets of the Company. The Depositary has delegated the custody function to Bank of New York Mellon (International) Limited. Bankruptcy or insolvency of the Custodian may cause the Company’s rights with respect to securities held by the Custodian to be delayed. The Manager monitors the Company’s risk by reviewing the Custodian’s internal control reports and reporting its findings to the Board. 80 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC 19 Financial Instruments (continued) Credit Risk (continued) • investment transactions are carried out with a large number of Brokers whose creditworthiness is reviewed by the Manager. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s Custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed; • the creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein the creditworthiness of the entity acting as Broker or counterparty to the transaction is likely to be of sustained interest, are subject to rigorous assessment by the Manager; and • cash is only held at banks that have been identified by the Managers as reputable and of high credit quality. Credit quality of our banking provider is publicly available. Credit Risk Exposure The exposure to credit risk at 31August was: 2025 2024 £’000 £’000 Cash and cash equivalents 15,515 5,305 Debtors 2,473 2,871 17,988 8,176 None of the Company’s financial assets are past due or impaired. Fair Value of Financial Assets and Financial Liabilities The Company’s investments are stated at fair value and the Directors are of the opinion that the reported values of the Company’s other financial assets and liabilities approximate to fair value with the exception of the long-term borrowings related to loan notes which are stated at amortised cost. The fair value of borrowings is shown below. | 2025 | 2025 | 2024 | 2024 | | --- | --- | --- | --- | | Book | Fair* | Book | Fair* | | value | value | value | value | | £’000 | £’000 | £’000 | £’000 | Bank loans due within one year 55,453 55,453 140,572 140,653 Loan notes ¥4,000 million at 1.56% 2029 20,165 20,153 – – ¥4,000 million at 2.05% 2034 20,165 20,276 – – ¥4,000 million at 2.55% 2038 20,164 19,974 – – * The fair value of each debt instrument issued by the Company is calculated based on similar such instruments issued by comparable investment vehicles and corporate entities with similar geographic exposure. Capital Management The Company does not have any externally imposed capital requirements other than the loan covenants detailed in note 11 and note 12 on page 75. The capital of the Company is the ordinary share capital as detailed in note 13. It is managed in accordance with its investment policy in pursuit of its investment objective, both of which are detailed on page 25, and shares may be repurchased or issued as explained on pages 41 and 42. Fair Value of Financial Instruments The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement. Level 1 – using unadjusted quoted prices for identical instruments in an active market; Level 2 – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and Level 3 – using inputs that are unobservable (for which market data is unavailable). The financial assets designated as valued at fair value through profit or loss are all categorised as Level 1 in the above hierarchy (2024 – all categorised as Level 1). None of the financial liabilities are designated at fair value through profit or loss in the Financial Statements. 81 Financial Report # Glossary of Terms and Alternative Performance Measures ('APM') ## Total Assets The total value of all assets held less all liabilities (other than liabilities in the form of borrowings). ## Net Asset Value Also described as shareholders' funds, net asset value ('NAV') is the value of total assets less liabilities (including borrowings). The NAV per ordinary share is calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares). Borrowings are valued at their book value. The Company's yen denominated loans are valued at their sterling equivalent. Net Asset Value can also be expressed with borrowings valued at an estimate of their market worth or "fair value". The value of the borrowings at book and fair value are set out on page 81. ## Net Asset Value (reconciliation of NAV at book value to NAV at fair value) | | 2025 t'000 | 2024 t'000 | | --- | --- | --- | | Net asset value per ordinary share (borrowings at book value) | 1,017.1p | 855.0p | | Shareholders' funds (borrowings at book value) | 788,148 | 748,379 | | Add: book value of borrowings | 115,947 | 140,572 | | Less: fair value of borrowings | (115,856) | (140,653) | | **Shareholders' funds (borrowings at fair value)** | **788,239** | **748,296** | | Number of shares in issue | 77,491,440 | 87,532,614 | | **Net asset value per ordinary share (borrowings at fair value)** | **1,017.2p** | **854.9p** | ## (Discount)/Premium (APM) As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. 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. | | 31 August 2025 | | 31 August 2024 | | | --- | --- | --- | --- | --- | | | NAV (book) | NAV (fair) | NAV (book) | NAV (fair) | | NAV | 1,017.1p | 1,017.2p | 855.0p | 854.9p | | Share price | 901.0p | 901.0p | 756.0p | 756.0p | | **Discount** | **(11.4%)** | **(11.4%)** | **(11.6%)** | **(11.6%)** | 82 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Total Return (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. | 2025 | 2025 | 2025 | 2024 | 2024 | 2024 | | --- | --- | --- | --- | --- | --- | | NAV | NAV | Share | NAV | NAV | Share | | (book) | (fair) | price | (book) | (fair) | price | Closing NAV per ordinary share/share price (a) 1,017.1p 1,017.2p 901.0p 855.0p 854.9p 756.0p Dividend adjustment factor * (b) 1.0127 1.0127 1.0142 1.0135 1.0135 1.0150 Adjusted closing NAV per ordinary share/ (c) = (a) x (b) 1,030.0p 1,030.1p 913.8p 866.5p 866.4p 767.3p shareprice Opening NAV per ordinary share/share price (d) 855.0p 854.9p 756.0p 787.7p 787.9p 735.0p Total return ((c) ÷ (d)) –1 20.5% 20.5% 20.9% 10.0% 10.0% 4.4% * The dividend adjustment factor is calculated on the assumption that the dividend of 10.0p (2024 – 10.0p) paid by the Company during the year was invested into shares of the Company at the cum income NAV per ordinary share/share price, as appropriate, at the ex-dividend date. Turnover Annual turnover of the investment portfolio shares is calculated on a rolling 12 month basis. The lower of purchases and sales for the 12 months is divided by the average assets, with average assets being calculated on assets as at each month’s end. Ongoing Charges (APM) The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average netasset value. 2025 2024 £’000 £’000 Investment management fee 4,190 4,297 Other administrative expenses 781 715 Total expenses (a) 4,971 5,012 Average net asset value * (b) 698,645 723,432 Ongoing charges (a) ÷ (b) expressed as a percentage 0.71% 0.69% * Average of daily net asset values calculated during the year. 83 Financial Report Gearing (APM) At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders’ assets is called ‘gearing’. If the Company’s assets grow, the shareholders’ assets grow proportionately more because the debt remains the same. But if the value of the Company’s assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. The level of gearing can be adjusted through the use of derivatives which affect the sensitivity of the value of the portfolio to changes in the level of markets. Net gearing is the Company’s borrowings less cash and cash equivalents expressed as a percentage of shareholders’ funds. Gross gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds. 2025 2024 | | Net | Gross | | | Net | Gross | | | --- | --- | --- | --- | --- | --- | --- | --- | | gearing* | | gearing | † | gearing* | | gearing | † | | £’000 | | £’000 | | £’000 | | £’000 | | Borrowings (a) 115,947 115,947 140,572 140,572 | Cash and cash equivalents | (b) 15,515 – 5,305 – | | | --- | --- | --- | | Shareholders’ funds | (c) 788,148 788,148 748,379 748,379 | | | Gearing | | 12.8% 14.7% 18.1% 18.8% | * Net gearing: ((a) – (b)) divided by (c), expressed as a percentage. † Gross gearing: (a) divided by (c), expressed as a percentage. Leverage (APM) For the purposes of the UK Alternative Investment Fund Managers (‘AIFM’) Regulations, leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other. Active Share (APM) Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index. 84 Annual Report and Financial Statements 2025 ## Shareholder ## Information Shareholder Information ## Notice of Annual ## General Meeting Tram Stop Leith Walk Calton Square Omni Centre York Place John o w Queen Street Bus Lewis R Station e sid n e r e St Andrew Square G The Annual General Meeting of The Baillie Gifford Tram t e C a Stop e r l t o n H Japan Trust PLC will be held at the offices of t i l l S | orge Street | | | i t h | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | L e | | | | BaillieGifford & Co, Calton Square, 1Greenside Row, | | | | Balmoral | | | P l a | c e | | | | St Andrew Square | | | e r l o | o | | | | | St Andrew Square | Hotel | | W a t | | | | | | | | | C | | | Edinburgh EH1 3AN, on Wednesday, 10December | | | | | | a l | | | | | | | | | t o | | | | | | | | | n | R o a | | | | | | | | | d | | 2025 at 11.30am. You will find directions to the venue | A7 North Bridge by scanning the QR code above. A8 Princes Street Edinburgh To accurately reflect the views of shareholders of the Waverley Station Company, the Board intends to hold the AGM voting on a poll. The Board encourages all shareholders to By Rail: Edinburgh Waverley – approximately a 5 minute walk away submit proxy voting forms as soon as possible and, in any event, by no later than 11.30am on By Bus: Monday, 8December 2025. We would encourage Lothian Buses local services include: shareholders to monitor the Company’s website 1, 3, 5, 7, 8, 10, 14, 15, 16, 25, 34 at japantrustplc.co.uk. Should shareholders By Tram: have questions for the Board or the Managers Stops at St Andrew Square and Picardy Place or any queries as to how to vote, they are welcome, as always, to submit them by email to Access to Waverley Train Station on foot enquiries@bailliegifford.com or call 08009172113. Baillie Gifford may record your call. Further details on voting can be found on pages89to90. Ge 86 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Notice is hereby given that the forty fourth Annual provided that such authority shall be limited to | General Meeting of The Baillie Gifford Japan Trust | the allotment of shares and the grant of rights | | --- | --- | | PLC will be held at the offices of Baillie Gifford & | in respect of shares with an aggregate nominal | | Co, Calton Square, 1 Greenside Row, Edinburgh | value of up to £384,607.20 such authority to | | EH13AN, on Wednesday, 10December 2025 at | expire at the conclusion of the next Annual | | 11.30am for the following purposes: | General Meeting of the Company after the | passing of this resolution or on the expiry of Ordinary Business 15 months from the passing of this resolution, whichever is the earlier, unless previously To consider and, if thought fit, to pass the following revoked, varied or extended by the Company in Resolutions as Ordinary Resolutions. a general meeting, save that the Company may 01. To receive and adopt the Financial Statements at any time prior to the expiry of this authority of the Company for the year to 31August 2025 make an offer or enter into an agreement which with the Reports of the Directors and of the would or might require Securities to be allotted Independent Auditor thereon. or granted after the expiry of such authority and the Directors shall be entitled to allot or 02. To approve the Directors’ Annual Report on grant Securities in pursuance of such an offer or Remuneration for the year to 31August 2025. agreement as if such authority had not expired. 03. To declare a final dividend of 10p per ordinary To consider and, if thought fit, to pass Resolutions share. 12 and 13 as Special Resolutions. 04. To re-elect Sam Davis as a Director. 12. That, subject to the passing of Resolution 11 05. To re-elect Sharon Brown as a Director. above, and in substitution for any existing power 06. To re-elect Joanna Pitman as a Director. but without prejudice to the exercise of any such power prior to the date hereof, the Directors of 07. To re-elect Patricia Lewis as a Director. the Company be and they are hereby generally 08. To re-appoint Ernst & Young LLP as Independent empowered, pursuant to sections 570 and 573 Auditor of the Company to hold office from the of the Companies Act 2006 (the ‘Act’), to allot conclusion of this meeting until the conclusion equity securities (within the meaning of section | of the next Annual General Meeting at which | 560(1) of the Act), for cash pursuant to the | | --- | --- | | the Financial Statements are laid before the | authority given by Resolution 11 above, and to | | Company. | sell treasury shares for cash, as if section 561(1) | of the Act did not apply to any such allotment or 09. To authorise the Directors to determine the sale, provided that this power: remuneration of the Independent Auditor of theCompany. a. expires at the conclusion of the next Annual General Meeting of the Company after the 10. That, pursuant to article 165 of the Articles passing of this Resolution or on the expiry of of Association of the Company, this meeting 15 months from the passing of this Resolution, hereby approves the continuance of the whichever is the earlier, save that the Company Company until the Annual General Meeting may, before such expiry, make an offer or of the Company held in respect of the year agreement which would or might require to31August 2026. equity securities to be allotted or treasury | 11. That, in substitution for any existing authority, | | shares to be sold after such expiry and the | | --- | --- | --- | | | but without prejudice to the exercise of any such | Directors may allot equity securities or sell | | | authority prior to the date hereof, the Directors | treasury shares in pursuance of any such offer | | | of the Company be and they are hereby | or agreement as if the power conferred hereby | | | generally and unconditionally authorised in | had not expired; and | accordance with section 551 of the Companies Act 2006 (the ‘Act’) to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company (‘Securities’) 87 Shareholder Information | b. shall be limited to the allotment of equity | | d. unless previously varied, revoked or renewed | | | --- | --- | --- | --- | | | securities or the sale of treasury shares up to | | by the Company in a general meeting, the | | | an aggregate nominal value of £384,607.20 | | authority hereby conferred shall expire at the | | | being approximately 10% of the nominal value | | conclusion of the Annual General Meeting | | | of the issued share capital of the Company, as | | of the Company to be held in respect of the | | | at 16 October 2025. | | year ending 31 August 2026, save that the | Company may, prior to such expiry, enter 13. That, in substitution for any existing authority into a contract to purchase ordinary shares but without prejudice to the exercise of any such under such authority which will or might be authority prior to the date hereof, the Company completed or executed wholly or partly after be and is hereby generally and unconditionally the expiration of such authority and may make authorised, pursuant to and in accordance a purchase of ordinary shares pursuant to any with section 701 of the Companies Act 2006 such contract. (the ‘Act’) to make market purchases (within the meaning of section 693(4) of the Act) of fully paid ordinary shares of 5 pence each in By Order of the Board the capital of the Company (‘ordinary shares’) Baillie Gifford & Co Limited (either for retention as treasury shares for Company Secretaries future reissue, resale, transfer or cancellation), 20 October 2025 provided that: a. the maximum aggregate number of ordinary shares hereby authorised to be purchased is 11,530,523.86, or, if less, the number representing approximately 14.99% of the issued ordinary share capital of the Company as at the date of the passing of this Resolution; b. the minimum price (excluding expenses) which may be paid for each ordinary share is 5 pence; c. the maximum price (excluding expenses) which may be paid for each ordinary share shall not be more than the higher of: i. 5% above the average closing price on the London Stock Exchange of an ordinary share over the five business days immediately preceding the date of purchase; and ii. the amount equal to the higher of the price of the last independent trade of an ordinary share and the highest current independent bid for an ordinary share on the trading venue where the purchase is carried out; and 88 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Notes the instruction given to a previously appointed proxy must, in order to be valid, be transmitted 01. As a member you are entitled to appoint a proxy so as to be received by the Company’s Registrar or proxies to exercise all or any of your rights (ID 3RA50) no later than 2 days (excluding to attend, speak and vote at the AGM. A proxy non-working days) before the time of the need not be a member of the Company but meeting or any adjournment. For this purpose, must attend the AGM to represent you. You may the time of receipt will be taken to be the time appoint more than one proxy provided each (as determined by the timestamp applied to proxy is appointed to exercise rights attached to the message by the CREST Application Host) different shares. You can only appoint a proxy from which the Company’s Registrar is able to using the procedure set out in these notes and retrieve the message by enquiry to CREST in the notes to the proxy form. You may not use the manner prescribed by CREST. After this time any electronic address provided either in this any change of instructions to proxies appointed notice or any related documents (including through CREST should be communicated to the the Financial Statements and proxy form) to appointee through other means. communicate with the Company for any purpose other than those expressly stated. 05. CREST members and, where applicable, their CREST sponsors, or voting service providers 02. To be valid any proxy form or other instrument should note that Euroclear UK & Ireland Limited appointing a proxy, together with any power does not make available special procedures of attorney or other authority under which it in CREST for any particular message. Normal is signed or a certified copy thereof, must be system timings and limitations will, therefore, received by post or (during normal business apply in relation to the input of CREST Proxy hours only) by hand at the Registrars of the Instructions. It is the responsibility of the CREST Company at Computershare Investor Services member concerned to take (or, if the CREST PLC, The Pavilions, Bridgwater Road, Bristol, member is a CREST personal member, or BS99 6ZY or eproxyappointment.com no later sponsored member, or has appointed a voting than 2 days (excluding non-working days) service provider(s), to procure that his/her before the time of the meeting or any adjourned CREST sponsor or voting service provider(s) meeting. take(s)) such action as shall be necessary to 03. CREST members who wish to appoint a proxy ensure that a message is transmitted by means or proxies through the CREST electronic of the CREST system by any particular time. In proxyappointment service may do so by this connection, CREST members and, where usingthe procedures described in the CREST applicable, their CREST sponsors or voting Manual and/or by logging on to the website service providers are referred, in particular, euroclear.com/CREST. CREST personal tothose sections of the CREST Manual members or other CREST sponsored members, concerning practical limitations of the CREST and those CREST members who have appointed system and timings. a voting service provider(s), should refer to their 06. The Company may treat as invalid a CREST CREST sponsor or voting service provider(s), Proxy Instruction in the circumstances set out who will be able to take the appropriate action in Regulation 35(5)(a) of the Uncertificated on their behalf. Securities Regulations 2001. 04. In order for a proxy appointment or instruction 07. The return of a completed proxy form or other made using the CREST service to be valid, the instrument of proxy will not prevent you attending appropriate CREST message (a ‘CREST Proxy the AGM and voting in person if you wish. Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications, and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to 89 Shareholder Information | 08. Pursuant to Regulation 41 of the Uncertificated | | requests from either members representing | | --- | --- | --- | | | Securities Regulations 2001 and section 311 of | at least 5% of the total voting rights of the | | | the Companies Act 2006 the Company specifies | Company or at least 100 members who have | | | that to be entitled to attend and vote at the | a relevant right to vote and hold shares in the | | | Annual General Meeting (and for the purpose of | Company on which there has been paid up an | | | the determination by the Company of the votes | average sum per member of at least £100. Such | | | they may cast), shareholders must be registered | requests must be made in writing and must state | | | in the Register of Members of the Company no | your full name and address and be sent to the | | | later than 2 days (excluding non-working days) | Company at Calton Square, 1 Greenside Row, | | | prior to the commencement of the AGM or any | Edinburgh, EH1 3AN. | adjourned meeting. Changes to the Register 12. Information regarding the Annual General of Members after the relevant deadline shall Meeting, including information required by be disregarded in determining the rights of any section 311A of the Companies Act 2006, person to attend and vote at the meeting. isavailable from the Company’s page of the 09. Any person to whom this notice is sent who is Managers’ website at japantrustplc.co.uk. a person nominated under section 146 of the 13. Members have the right to ask questions at the Companies Act 2006 to enjoy information rights meeting in accordance with section 319A of the (a ‘Nominated Person’) may, under an agreement Companies Act 2006. between him/her and the shareholder by whom | he/she was nominated, have a right to be | 14. Any corporation which is a member can appoint | | | --- | --- | --- | | appointed (or to have someone else appointed) | | one or more corporate representatives who | | as a proxy for the Annual General Meeting. | | may exercise on its behalf all of its powers as a | | If a Nominated Person has no such proxy | | member provided that each representative does | | appointment right or does not wish to exercise it, | | so in relation to distinct shares. | he/she may, under any such agreement, have a 15. As at 16 October 2025 (being the last right to give instructions to the shareholder as to practicable day prior to the publication of this the exercise of voting rights. notice) the Company’s issued share capital | 10. The statement of the rights of shareholders in | | consisted of 76,921,440 ordinary shares, | | --- | --- | --- | | | relation to the appointment of proxies in notes | carrying one vote each. Therefore, the total | | | 1 and 2 above does not apply to Nominated | voting rights in the Company as at 16October | | | Persons. The rights described in those notes | 2025 were 76,921,440 votes. | can only be exercised by shareholders of 16. Any person holding 3% or more of the total theCompany. voting rights of the Company who appoints a | 11. The members of the Company may require the | | person other than the Chairman of the meeting | | --- | --- | --- | | | Company to publish, on its website, (without | as his/her proxy will need to ensure that both | | | payment) a statement (which is also passed | he/she and his/her proxy complies with their | | | to the Auditor) setting out any matter relating | respective disclosure obligations under the UK | | | to the audit of the Company’s Financial | Disclosure and Transparency Rules. | Statements, including the Auditor’s Report and 17. No Director has a contract of service with the conduct of the audit. The Company will theCompany. be required to do so once it has received such 90 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Further Shareholder ## Information Investor Disclosure Document Capital Gains Tax The UK Alternative Investment Fund Managers The cost for capital gains taxation purposes to Regulations require certain information to be made shareholders who subscribed for ordinary shares available to investors prior to their investment in (with warrants attached) is apportioned between the Company. The Company’s Investor Disclosure theordinary shares and the warrants on the Document is available for viewing at following basis: japantrustplc.co.uk. Cost of each ordinary share 96.548p Cost of fraction for warrant 3.452p How to Invest The Company’s shares are traded on the London 100.000p Stock Exchange. They can be bought by placing The market value of the ordinary shares on 31March 1982 was an order with a stockbroker or by asking a 15.4p. The market values on 20November 1991 (first day of professional adviser to do so. If you are interested dealing of new warrants) were as follows: in investing directly in Baillie Gifford Japan, you Ordinary shares 120p can do so online. There are a number of companies offering real time online dealing services. Find Warrants 26p out more byvisiting the investment trust pages at The above cost and market value figures have bailliegifford.com. beenrestated for the five for one share split in November 2000. Sources of Further Information on the Company Share Register Enquiries The price of shares is quoted daily in the Financial Computershare Investor Services PLC maintains Times and can also be found on the Company’s page the share register on behalf of the Company. In of the Managers’ website at japantrustplc.co.uk, the event of queries regarding shares registered in Trustnet at trustnet.com and on other financial your own name, please contact the Registrars on websites. Monthly factsheets are also available on 03708893221. the Baillie Gifford website. These are available from Baillie Gifford on request. This helpline also offers an automated self-service functionality (available 24 hours a day, 7 days a week) which allows you to: Baillie Gifford Japan Identifiers | ISIN GB0000485838 | • hear the latest share price; | | --- | --- | | Sedol 0048583 | • confirm your current share holding balance; and | | Ticker BGFD | • order Change of Address and Stock Transfer | forms. Legal Entity Identifier 54930037AGTKN765Y741 You can also check your holding on the Registrars’ website at investorcentre.co.uk. They also offer a Key Dates free, secure share management website service The Annual Report and Financial Statements which allows you to: are normally issued in October and the AGM is normally held in December. Dividends will be paid • view your share portfolio and see the latest market by way of a single final payment shortly after the price of your shares; Company’sAGM. 91 Shareholder Information • calculate the total market price of each You can instruct the platform how to vote your shareholding; shares or ask to be appointed as a proxy in respect of your shareholding should you wish to attend, • view price histories and trading graphs; speak and vote at the Annual General Meeting. • change address details; and Further guidance can be obtained from your platform provider or the Association of Investment Companies • use online dealing services. at the aic.co.uk/how-to-vote-your-shares. To take advantage of this service, please log in at investorcentre.co.uk and enter your Shareholder Data Protection Reference Number and Company Code (this The Company is committed to ensuring the information can be found on your share certificate). confidentiality and security of any personal data provided to it. Further details on how personal data Dividend Reinvestment Plan is held and processed on behalf of the Company Computershare operates a Dividend Reinvestment can be found in the privacy policy available on the Plan which can be used to buy additional shares Company’s website japantrustplc.co.uk. instead of receiving your dividend via cheque or into your bank account. For further information log into UK Alternative Investment Fund investorcentre.co.uk and follow the instructions or Managers (AIFM) Regulations telephone 0370 707 1694. In accordance with the UK AIFM Regulations, information in relation to the Company’s leverage Electronic Proxy Voting and the remuneration of the Company’s AIFM, If you hold stock in your own name you can choose Baillie Gifford & Co Limited, is required to be to vote by returning proxies electronically at made available to investors. In accordance with eproxyappointment.com. the Regulations, the AIFM remuneration policy If you have any questions about this service please is available at bailliegifford.com or on request contact Computershare on 0370 889 3221. (see contact details on page 98). The numerical remuneration disclosures in respect of the AIFM’s reporting period (year ended 31March 2025) are CREST Proxy Voting available at bailliegifford.com. If you are a user of the CREST system (including | a CREST Personal Member), you may appoint | The Company’s maximum and actual leverage | | --- | --- | | oneor more proxies or give an instruction to a | (see Glossary of Terms and Alternative | | proxy byhaving an appropriate CREST message | PerformanceMeasures on pages 82 to 84) levels at | | transmitted. For further information please refer to | 31August 2025 are shown on the next page: | the CREST Manual. Leverage Voting via an Investment Platform Gross Commitment method method If you are a shareholder who holds shares via a platform, you should be able to exercise your right Maximum limit 2.50:1 2.00:1 to vote by contacting the platform provider directly. Actual 1.17:1 1.17:1 92 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Automatic Exchange of Information data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or In order to fulfil its obligations under UK Tax subsequently becomes inaccurate. Legislation relating to the automatic exchange of information, the Company is required to collect Without limiting the foregoing, no Provider shall have and report certain information about certain any liability whatsoever to you, whether in contract shareholders. (including under an indemnity), in tort (including negligence), under a warranty, under statute or The legislation requires investment trust companies otherwise, in respect of any loss or damage suffered to provide personal information to HMRC on certain by you as a result of or in connection with any investors who purchase shares in investment trusts. opinions, recommendations, forecasts, judgements, As an affected company, The Baillie Gifford Japan or any other conclusions, or any course of action Trust PLC must provide information annually to determined, by you or any third party, whether or the local tax authority on the tax residencies of a not based on the content, information or materials number of non-UK based certificated shareholders contained herein. and corporate entities. All new shareholders, excluding those whose shares Notes are held in CREST, who come on to the share None of the views expressed in this document register will be sent a certification form for the should be construed as advice to buy or sell a purposes of collecting this information. particular investment. For further information, please see HMRC’s Quick Investment trusts are UK public listed companies Guide: Automatic Exchange of Information – and as such comply with the requirements of the information for account holders Financial Conduct Authority (FCA). They are not gov.uk/government/publications/exchange-of- authorised or regulated by the FCA. information-account-holders. The Baillie Gifford Japan Trust PLC currently conducts its affairs, and intends to continue to Third Party Data Provider Disclaimer conduct its affairs, so that the Company’s ordinary No third party data provider (‘Provider’) makes any shares can qualify to be considered as a mainstream warranty, express or implied, as to the accuracy, investment product and can be recommended by completeness or timeliness of the data contained Independent Financial Advisers to ordinary retail herewith nor as to the results to be obtained by investors in accordance with the rules of the FCA in recipients of the data. relation to non-mainstream investment products. 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 93 Shareholder Information # One year summary Year to 31 August 2025 The following information illustrates how the Company has performed over the year to 31 August 2025. The net asset value total return was 20.5% outperforming the Company's benchmark total return which was 12.1%. | | 31 August 2025 | 31 August 2024 | % change | | --- | --- | --- | --- | | **Total return (%)**^{1} | | | | | Net asset value per ordinary share | 20.5 | 10.0 | | | Net asset value per ordinary share (borrowings at fair value) | 20.5 | 10.0 | | | Share price | 20.9 | 4.4 | | | Benchmark^{2} | 12.1 | 14.7 | | | Total assets (before deduction of borrowings) | £904.0m | £889.0m | | | Borrowings | £115.9m | £140.6m | | | Shareholders' funds | £788.1m | £748.4m | | | Net asset value per ordinary share | 1,017.1p | 855.0p | 19.0% | | Net asset value per ordinary share (borrowings at fair value) | 1,017.2p | 854.9p | 19.0% | | Share price | 901.0p | 756.0p | 19.2% | | Discount^{3} | (11.4%) | (11.6%) | | | Revenue earnings per ordinary share | 7.32p | 8.23p | | | Dividend per ordinary share payable and paid in respect of the financial year | 10.00p | 10.00p | - | | Dividend yield | 1.1% | 1.3% | | | Ongoing charges^{4} | 0.71% | 0.69% | | | Yen/sterling exchange rate | 198.4 | 191.4 | 3.7% | | Active share^{5} | 84% | 84% | | | Year to 31 August | 2025 | 2025 | 2024 | 2024 | | --- | --- | --- | --- | --- | | **Year's high and low** | High | Low | High | Low | | Net asset value per ordinary share | 1,030.4p | 708.4p | 879.7p | 707.5p | | Share price | 915.0p | 657.0p | 766.0p | 641.0p | | Premium/(discount)^{6} | (7.2%) | (16.5%) | (6.1%) | (14.8%) | | Year to 31 August | 2025 | 2024 | | --- | --- | --- | | **Net return per ordinary share** | | | | Revenue return | 7.32p | 8.23p | | Capital return | 143.86p | 62.55p | | **Total return** | **151.18p** | **70.78p** | $^{1}$ Alternative Performance Measure - see Glossary of Terms and Alternative Performance Measures on pages 82 to 84. $^{2}$ The benchmark is the TOPIX total return (in sterling terms). Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93. Paid performance is not a guide to future performance. 94 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Five Year Summary The following charts indicate how an investment in Baillie Gifford Japan has performed relative to its benchmark † over the five year period to 31August 2025. Five Year Total Return Performance * Premium/(Discount) * to Net Asset Value (figures rebased to 100 at 31August 2019) (figures plotted on a monthly basis) 10% 5% 0% -5% -10% 80 -15% | 60 | | | | | | | -20% | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | 20252020 2021 2022 2023 2024 | | | | | 20252020 2021 2022 2023 2024 | | | | | Cumulative to 31 August | | | | | | | Cumulative to 31 August | | | | | | | | | | | Baillie Gifford Japan | ● Baillie Gifford Japan | | | | NAV total return | ● Share price | | | ● Benchmark | | | | | | | | | | | | | | | | | premium/(discount) | | average discount | | | | | total return | | | total return | | | | | | | Annual Change in Net Asset Value Total Return and Annual Change in Net Asset Value Total Return and * * † Share Price Total Return Share Price Total Return Relative to the Benchmark 10% 15% 0% 0% -10% (15%) -20% -30% | 2021 2022 2023 2024 2025 | | | 2021 2022 2023 2024 2025 | | | | | --- | --- | --- | --- | --- | --- | --- | | | Years to 31 August | | | | Years to 31 August | | | | | NAV total return relative | | ● | Share price total return | relative | | | | to the benchmark | | | to the benchmark | | 15% 160 20% 30% 140 120 100 * Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84. † The benchmark is the TOPIX total return (in sterling terms). Source: Refinitiv/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93. ● Past performance is not a guide to future performance. (30%) 95 ● ● ● NAV total return ● Share price total return Source: Refinitiv/Baillie Gifford and relevant underlying index providers # . Shareholder Information ## Ten Year Record at 31 August 2025 At 31August 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Capital Total assets (£’m) 904.0 889.0 864.7 940.4 1,097.6 923.8 859.7 870.6 657.7 500.3 377.9 Borrowings (£’m) 115.9 140.6 131.7 149.4 142.2 151.4 127.6 114.5 82.5 75.3 54.7 Shareholders' funds (£’m) 788.1 748.4 733.0 791.0 955.4 772.4 732.1 756.1 575.2 425.0 323.2 Net asset value per ordinary 1,017.1 855.0 787.7 842.2 1,012.6 840.8 792.1 835.8 685.8 539.8 430.2 | share (book) (p) | # | | | --- | --- | --- | | Net asset value per ordinary | | 1,017.2 854.9 787.9 841.6 1,010.4 839.8 789.3 834.0 682.4 534.6 425.4 | | share (fair) (p) | # | | Share price (p) 901.0 756.0 735.0 774.0 1,022.0 817.0 791.0 855.0 711.5 517.5 444.8 (Discount)/premium (%)* (11.4) (11.6) (6.7) (8.1) 0.9 (2.8) (0.1) 2.3 3.7 (4.1) 3.4 Revenue Income (£’m) 14.90 15.80 18.71 20.08 17.22 15.34 13.50 10.87 8.48 7.09 4.32 Revenue after tax (£’m) 5.97 7.42 9.83 10.66 7.34 6.05 4.76 2.23 2.24 1.82 0.20 Net return per ordinary share (p) 7.32 8.23 10.52 11.31 7.89 6.56 5.18 2.54 2.80 2.35 0.28 Dividend paid and proposed 10.00 10.00 10.00 9.00 6.00 4.50 3.50 0.60 – – – perordinary share (p) Ongoing charges (%)* 0.71 0.69 0.67 0.66 0.66 0.68 0.70 0.73 0.77 0.87 0.90 Gearing Net gearing (%)* 13 18 17 18 10 4 12 11 13 17 14 Gross gearing (%)* 15 19 18 19 15 20 17 15 14 18 17 Performance Total Returns* | Net asset value per ordinary | | 20.5 10.0 (5.4) (16.3) 21.0 6.6 (5.2) 21.9 27.0 25.5 19.9 | | --- | --- | --- | | share (p) % change | # | | | Net asset value per ordinary | | 20.5 9.9 (5.3) (16.2) 20.8 6.9 (5.2) 22.1 27.6 25.7 22.2 | | share (fair) % change | # | | Share price %change 20.9 4.4 (4.0) (23.8) 25.7 3.7 (7.4) 20.2 37.5 16.4 26.3 Benchmark %change † 12.1 14.7 6.7 (3.9) 16.3 (0.1) (0.6) 7.8 18.8 21.5 13.4 Yen/sterling exchange rate 198.4 191.4 184.5 161.3 151.2 142.0 129.3 144.1 141.8 135.5 186.4 Active share (%)* 84 84 83 82 81 82 84 84 85 86 87 Ten Year Total Return Performance* 300 250 200 150 100 50 0 20252015 2017 2020 2022 20242016 20192018 2021 2023 Cumulative to 31 August ● Share price total return● NAV total return ● Benchmark total return * Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 82 to 84. † The benchmark is the TOPIX total return (in sterling terms). # Net asset value per ordinary share and net asset value total returns have been calculated after deducting long term borrowings at either fair or book value. See note 19, page 81 and Glossary of Terms on pages 82 and 83. Source: Refinitiv/Baillie Gifford and relevant underlying index providers. See disclaimer on page 93. Past performance is not a guide to future performance. 96 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC ## Sustainable Finance Disclosure ## Regulation (‘SFDR’) The EU Sustainable Finance Disclosure Regulation value of investment due to the occurrence of (‘SFDR’) does not have a direct impact in the an environmental, social or governance event UK due to Brexit, however, it applies to third- or condition will vary and will depend on several country products marketed in the EU. As Baillie factorsincluding but not limited to the type, Gifford Japan is marketed in the EU by the AIFM, extent,complexity and duration of an event BaillieGifford & Co Limited, via the National Private or condition, prevailing market conditions and Placement Regime (‘NPPR’) the following disclosures existence of any mitigating factors. have been provided to comply with the high-level Whilst consideration is given to sustainability requirements of SFDR. matters, there are no restrictions on the investment The AIFM has adopted Baillie Gifford & Co’s ESG universe of the Company, unless otherwise Principles and Guidelines as its policy on integration statedwithin its Investment Objective & Policy. of sustainability risks in investment decisions. Baillie Gifford & Co can invest in any companies it believes could create beneficial long-term returns for Baillie Gifford & Co believes that a company investors. However, this might result in investments cannot be financially sustainable in the long run if being made in companies that ultimately cause a its approach to business is fundamentally out of negative outcome for the environment or society. line with changing societal expectations. It defines ‘sustainability’ as a deliberately broad concept which The underlying investments do not take into account encapsulates a company’s purpose, values, business the EU criteria for environmentally sustainable model, culture, and operating practices. economic activities established under the EU Taxonomy Regulation. Baillie Gifford & Co’s approach to investment is based on identifying and holding high quality More detail on the Manager’s approach to growthbusinesses that enjoy sustainable sustainability can be found in the ESG Principles competitive advantages in their marketplace. and Guidelines document, available publicly on the To do this it looks beyond current financial Baillie Gifford website bailliegifford.com and by performance, undertaking proprietary research to scanning the QR code below. 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 97 Shareholder Information ## Communicating ## with Shareholders Baillie Gifford Japan on the Web Up-to-date information about Baillie Gifford Japan can be found on the Company website at japantrustplc.co.uk. You will find full details on Baillie Gifford Japan, including recent portfolio information and performance figures. Client Relations Team Contact Details You can contact the Baillie Gifford Client RelationsTeam by telephone, email or post: Telephone: 0800 917 2113 Trust magazine Trust magazine Your call may be recorded for training or monitoring purposes. Trust Magazine Email: enquiries@bailliegifford.com Website: bailliegifford.com Trust is the Baillie Gifford investment trust magazine | which is published twice a year. It provides an insight | Address: | | --- | --- | | to our investment approach by including interviews | Baillie Gifford Client Relations Team | | with our fund managers, as well as containing | Calton Square | | investment trust news, investment features and | 1 Greenside Row | | articles about the trusts managed by Baillie Gifford, | Edinburgh EH1 3AN | including Baillie Gifford Japan. Trust plays an important role in helping to explain our products Please note that Baillie Gifford is not permitted to give sothat readers can really understand them. financial advice. If you would like advice, please ask an authorised intermediary. You can subscribe to Trust magazine or view adigitalcopy at bailliegifford.com/trust Suggestions and Questions Any suggestions on how communications with shareholders can be improved are welcomed, soplease contact the Baillie Gifford Client RelationsTeam and give them your suggestions. They will also be very happy to answer questions that you may have about Baillie Gifford Japan. 98 Annual Report and Financial Statements 2025 The Baillie Gifford Japan Trust PLC Recent Articles Japan Trust: Tour de France: the Healthy returns: Japan’s rethinking Japan Japanese connection assault on old-age disease by Matthew Brett by Thomas Patchett by Joji Sakurai Matthew Brett explores how Japan’s quiet influence on Ageing Japan is catalysing Japan’s reforms and inflation cycling’s biggest stage and healthcare innovators, from are driving opportunities in AI, what it signals about enduring Alzheimer’s diagnostics to gaming and healthcare. innovation and growth. peptide therapies, creating durable growth tailwinds. These articles can be viewed by scanning the QR codes below each. 99 Shareholder Information ## Company ## Information Directors Company Details Further Information Chairman: David Kidd japantrustplc.co.uk Client Relations Team Sharon Brown Sam Davis Baillie Gifford & Co Company Registration No. SC075954 Patricia Lewis Calton Square Joanna Pitman ISIN: GB0000485838 1 Greenside Row Edinburgh EH1 3AN Sedol: 0048583 T: +44 (0)800 917 2113 Ticker: BGFD enquiries@bailliegifford.com Legal Entity Identifier: 54930037AGTKN765Y741 Alternative Investment Fund Managers, Secretaries and | Registered Office | Registrar | Independent Auditor | | --- | --- | --- | | Baillie Gifford & Co Limited | Computershare Investor | Ernst & Young LLP Chartered Accountants | | | Services PLC | and Statutory Auditors | | Calton Square | The Pavilions | Atria One | | 1 Greenside Row | Bridgwater Road | 144 Morrison Street | | Edinburgh EH1 3AN | Bristol BS99 6ZZ | Edinburgh EH3 8EX | | T: +44 (0)131 275 2000 | T: +44 (0)370 889 3221 | | bailliegifford.com Depositary Company Broker The Bank of New York Mellon Investec Bank plc (International) Limited 180 Queen Victoria Street 30 Gresham Street London EC4V 4LA London EC2V 7QP 100 Annual Report and Financial Statements 2025 ## japantrustplc.co.uk Calton Square, 1 Greenside Row, Edinburgh EH1 3AN Telephone +44 (0)131 275 2000